Wednesday, March 25, 2009

Throwing Water on the Toxics Program

WB Legal Currents has a useful outline of the toxic asset purchase plans and links to related SEC disclosure documents.

They also mention that one of the side effects of the rebirth of the MBS market will be that real valuations will be available for toxic assets. Mark-to-market + fire-sale prices may mean a balance sheet bloodbath for holders. Will holders keep their toxics in hopes of getting a better offer?

The Business Law Prof worries that hedge funds may use the program, buy credit default swaps and end up with zero exposure.

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