Wednesday, April 08, 2009

Bailout Bonds

by Bill McBride on 4/08/2009 09:31:00 PM

From Graham Bowley and Michael de la Merced at the NY Times: U.S. Imagines the Bailout as an Investment Tool

[T]he Obama administration is encouraging several large investment companies to create the financial-crisis equivalent of war bonds: bailout funds.

The idea is that these investments ... would give ordinary Americans a chance to profit from the bailouts that are being financed by their tax dollars. ...

But, as with any investment, there are risks. If, as some analysts suspect, the banks’ assets are worth even less than believed, the funds’ investors could suffer significant losses. Nonetheless, the administration and executives in the financial industry are pushing to establish the investment funds, in part to counter swelling hostility against the financial industry.
...
The new funds are still under discussion, and they are unlikely to be established for several months, if indeed the plans go through at all.
I assume PIMCO, BlackRock and others will charge minimal or no fees for individual investors.

You, too, can help bailout Citigroup and BofA! (in addition to your taxes)

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