US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury’s $1,000bn (£680bn) plan to revive the financial system.Really very little commentary is needed. If this is allowed to happen, then the current mortgage crisis will essentially become a close-circuited, self-perpetuating problem. I mean really: buying depreciated loans to help raise money to pay off your existing depreciated loans. Sounds like the person who cuts off their left arm to buy a better right one.
The plans proved controversial, with critics charging that the government’s public-private partnership - which provide generous loans to investors - are intended to help banks sell, rather than acquire, troubled securities and loans.
Congress must act quickly to prevent this brazen effort by certain banks that exist only because the Federal government is propping them up as it appears that the Treasury Department is prepared to allow this to go forward.
