New York, Sept. 22: A sweeping government plan to buy up to $700 billion in bad mortgages may not be enough to save some banks, which experts say may be forced to absorb big losses if they sell their troubled assets. The proposal for the government to soak up the mortgage-backed securities would be the biggest bailout plan since the Great Depression, but experts say a critical issue will be how much it actually pays for the troubled assets.
How the government might acquire banks’ toxic debt is still being ironed out, but one approach suggested by treasury secretary, Mr Henry Paulson involves a process under which financial institutions would propose a price for their mortgage-backed securities and the government would choose the lowest bids.
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(source:DC)
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