Term Asset Backed Loan Facility

The Term Asset Backed Loan Facility is another government program designed to get the economy rolling again. When reading the details I have to wonder if the politicians who created this program stopped to consider how the United States got into the mess it is in now.

The government will lend investors from 86 to 95% of the cost at low interest rates to purchase bonds backed by various types of consumer loans. Wasn't over leverage the initial problem that brought our economy to it's knees?

If the government is funding virtually all of the purchase price why don't they purchase the bonds themselves? Clearly such a plan must be profitable to the investors or they would not participate so once more the government is handing out tax dollars out to investment firms such as hedges funds, the crew who led us down this merry path of financial disaster.

We must also remember that this is designed to make more money available for the average consumer to borrow again. All this at a time when the average consumer is either over-leveraged and can't borrow or doesn't really want a loan.

The lenders who will benefit according to the article I read are mostly finance arms of automobile firms, didn't we already lend them billions of dollars? Isn't this a backdoor way of lending them more money without their having to succumb to the torture and micro-mismanagement of Congress being visited upon TARP recipients?

Supposedly this plan will also support the acquisition of Mortgage Backed Securities. This need leaves me a bit confused. The only mortgages being issued these days are to rock solid credit risks and a vast majority of these are for refinancing existing homes where the owners were prudent and didn't waste all their equity. Since the refinancing pays off the existing mortgage the holder of that mortgage should find themselves with excess cash needing to be invested which should naturally support the market for mortgage backed bonds. Why does the government need to provide a stimulus?

In case someone in Mr. Geithner's office reads this I want you to know that I have $100,000 sitting around to invest along with a wonderful credit score and very little debt. I would be more then happy to sign the legal paperwork and borrow $1,900,000 to invest in asset backed bonds with high ratings. If this figure is too small just let me know the minimum required and I will quickly put together a group that qualifies.

The government acting as a Prime Broker, I would have never predicted this.