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While the administration of Obama has to announce its plans to stabilize the financial sector and to deploy the remainder of $700 billion the last fall in funds financial-reinflation, a principal obstacle appears indistinctly large: How to evaluate the toxic capital weighing to the bottom of the banks and other finance companies.

The treasure seems attentive on bringing investors of private sector to be bought, and to evaluate thus, capital. That would lend credibility to the prices arrived in the process, and could also help to make sure that the effort is enough large to handle the volume of toxic values there outside. But the attraction of the private investors is likely to require guarantees of government against at least some losses on the capital to draw the sufficient private sector investment.

And at the end, the fixing of a price on these guarantees is much identical that appearing outside the value of the stock capital.


This central challenge is changed little since two former efforts to solve the problem of poison-capital. Pay too much, and the banks obtain a subsidy with the expenses of the taxpayers; the wages too little and the banks will not want to be sold - or will make so much in any event, and to be rolled up to the top so much badly profited fails or needs more than assistance of government.

A report/ratio last week of the congressional panel of inadvertency maintaining the order the treasure 'financial reinflation of underlined S.A. just how much hard it can be to evaluate investments. The report/ratio concluded that the government overpaid when the purchases preferred shares at large banks the last fall approximately of 33% on average, that the panel partly blamed on the treasure the 'decision of S to invest at all the banks in the same conditions within the framework of its program of capital purchase.

However the conclusion in a manner of evaluating capital exactly - or, in a paramount way, the fixing of the prices on which the purchasers and the salesmen will agree - is critical to open the markets of credit.

The fundamental problems are that the banks and the investors evaluate the capital differently. The investors will not pay what the banks want for the house, the car, construction and other loans on their books; the banks will not take which investors are been willing to pay, by fear to have to take more massive depreciations.

And as long as the investors do not make confidence with the values of the credits of credit on assessments of bank, boxes gained 't obtain a capital much more private, other forcing their loan. Only the capital injections of government will not make much to solve this, the financial experts say; as long as the random credits remain lit bank books, and remain so opaque, the investors will continue to worry about new explosions.

The result: Without solving the problem of evaluation, it could take years so that the prices of the credits shake outside, raising the spectrum long, interminable crisis like one Japan faces in the Nineties.

The civils servant implied of two former efforts to evaluate the toxic real goods declares that it proved among more the big challenges that they raised on before housing.

The outlines early of last summer of the 'hope of S for the legislation of owners of a house included a program under which the government raflerait the capital iffy banks, along the lines of the programme of relief concerned about capital that Minister for Finance Henry Paulson later proposed. The federal reservation and the congressional personnel spent the hours trying to establish how to surely fix prices of such an effort, by the biddings reversed or the similar procedures, according to a person implied in the discussions.

Vehement opposition of the treasure of Paulson, and the administration of Bush generally, finally meant that the provision was stripped invoice. It just seemed like a total reinflation then, said a former civil servant of administration. But the official one declared that it nevertheless formed the base of the COVER OF PROTECTION of Paulson while the financial crisis deepened in autumn.

A structure of bad bank, in which the government places a quasi-private entity for rafler the toxic capital - supplemented with the private funds capital or borrowed of EDF - installations primarily the same problem, like a program of insurance guaranteeing most of the potential losses on various capital. They carry out the same thing, but the principal obstacle for both is how you made the evaluation, so of the capital directly, or a premium of insurance, the former civil servant of administration declares.

The effort of the financial-stabilization of the administration is likely to include multiple facets, and could be prolonged beyond the $350 billion to remain congress $700 billion put on side the last fall.

In addition to announcing a manner of drawing aside the toxic capital the bank books, one expects that the administration describes parameters for new capital infusions in banks and puts forward additional measures to prevent preclusions and to stop the slide of the market of housing. Various parts of the proposal could be announced separately.

On before housing, the administration is likely to support to let judges modify more real loans in the bankruptcy, a Democratic assistance of senate known as. Such proposals are popular among Democrats but are hated by the industry of financial-services. The assistance also says one expects that the administration proposes legal protections for the servicers of mortgage, which indicate that they fear lawsuits when the modifications with the mortgages harm some investors in titrized loans more than others.

Wall Street Journal paid during the weekend that the administration could also propose other devices, to increase a program of federal reservation to finance investors buying the debt of the consumer, with a greater authority so that Federal Deposit Insurance Corp. guarantees the loan of bank and for dismantles the institutions financial failing.

Last week, former President Paul Volcker, maintaining an principal advisor of EDF with Obama on the long-term reform of financial-payment, informed a committee of senate which the effort is likely to be expensive, toting to the top of a good number of billion dollars more.