So I get the sense that there were a ton of dudes and dudettes all charged up when the TARP program came out. And by charged up I mean feeling good. They thought "man we've got all these 'toxic' bonds and we havent marked them right, but here comes the Fed and they are going to buy em from us! Probably at too high a price too! Happy Days!" Then on November 12, Treasury Secretary Paulson hit them with a big ol' thud. He and his lieutenant, Neel "cash and carry" Kashkari, said they werent going to buy those "toxic" bonds anymore. And by "toxic", I mean formerly AAA bonds backed by CDOs or CBOs or subprime loans, etc. That was not a good day for a lot of folks. It also caused the low prices on these "toxic" bonds to drop even lower. Now lets flash forward to today.
The Fed announced a new program called Term Asset-Backed Securities Loan Facility or TALF. Not to be confused with the old program, TARP. Just an aside, do you think theres a whole department in the government that come up with these catchy acronyms? I do. They work really hard too. Just hope they arent singing that big song back in the day, "Oh you say TARP and I say TALF, and you say toe-may-toe and I say tah-mott-oh, TARP, TALF, toe-may-toe, tah-Mott-Oh, lets call the whole thing off!"
Anyhoo, the Fed is backstopping a bunch of "AAA rated asset-backed securities backed by "newly and RECENTLY originated" loans, as in education, or credit cards, or auto loans. You know what? When this whole crisis started, these bonds in the new TALF program were viewed as very safe. No way these were labeled toxic. So its a sign of the times that THIS is the new toxic. I dont even want to say what the previous toxic stuff is now called. The Feds should come up with an acronym for those bonds. Perhaps S.H.Y.T.? Some Horrible Yucky Things? As in, "sorry we wont be buyin any SHYT today. Or any other day." In any event, you dudes and dudettes holding the SHYT hoping the Feds were gonna come bail you out, they aint. You might as well take the pain now and sell or at least mark the bonds to where they should be marked. Good luck.
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