Thursday, January 29, 2009

$4 Trillion Bank Bailout?

by Calculated Risk on 1/29/2009 05:36:00 PM

From CNBC: Bank Bailout Could Cost Up to $4 Trillion: Economists

Goldman Sachs estimated that it would take on the order of $4 trillion to buy troubled mortgage and consumer debt. That number could shrink if the program were limited to only certain loans or banks, but it could also grow if other asset classes such as commercial real estate loans were included.
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The Wall Street Journal said government officials had discussed spending $1 trillion to $2 trillion to help restore banks to health, citing people familiar with the matter.
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The government would not necessarily have to spend the full $4 trillion to buy the assets. If it follows the model used in a Federal Reserve program to support consumer and small business loans, the government could potentially put up just 10 percent of the total.
We need more details ...