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A key part of the proposal is the federal government's plan to buy up to US$700 billion of illiquid mortgage backed securities (MBS) with the intent to increase the liquidity of the secondary mortgage markets and reduce potential losses encountered by financial institutions owning the securities. The draft proposal of the plan was received favorably by investors in the stock market.
This plan can be described as a risky investment, as opposed to an expense. The MBS within the scope of the purchase program have rights to the cash flows from the underlying mortgages. As such, the initial outflow of government funds to purchase the MBS would be offset by ongoing cash inflows represented by the monthly mortgage payments. Further, the government eventually may be able to sell the assets, though whether at a gain or loss will be known only in future.
What else can I help you with?
What is the financial bailout package crisis?
There is no such crisis as the financial bailout package crisis. the bailout was created to overcome the financial crisis.
What were the major economic events 2008?
The Financial Bailout and the Big 3 bailout
What does bailout mean?
See: http://en.wikipedia.org/wiki/Bailout Bailout refers to the action of helping out somebody in trouble. You can compare the bailout in financial terms to the bail or parol we get for someone in jail. In bailout, a company with strong financial status offers to help a company that is in dire financial needs. Such a scenario is where the stronger company bails out the weaker one.
Define the 700 billion US bailout plan?
Much of it is still evolving. Suggest you review wikipedia under bailout plan.
What is a bailout?
A bailout is an act of rescue, especially of a financial nature, or a backup supply of air in scuba diving.
What is the latest bailout plan?
The latest "bailout" is the automotive bailout of the Big Three automakers, Ford, GM, and Chrysler. Legislation was introduced on Dec. 8th.
Who needs the 700 billion bailout plan?
1. The banks and financial institutions in US 2. The US Economy 3. The world Economy In short - All of us.
What issue in negotiations over the huge financial bailout is golden?
tickets
What is the Financial bailout bill?
See: http://en.wikipedia.org/wiki/Bailout_deal
What are the pros and cons of the stimulus plan?
for a stimulus plan to me it means a financial bailout or a type of insurance to keep your economy afloat. It depends on what the stimulus plan is used for to determine the pros and conns like for instance. If the government plans a stimulus plan for wall street will it be for the right reasons and how will you benifit form it if you are under a ressecion..
Who inserted the 2008 bailout earmarks and who did they benefit?
The US Senate. The bailout plan is intended to help the struggling financial institutions of the US and provide them with cash (in return for the illiquid assets they have which they cannot sell in the open market) which can be used to revive the fallen economy. At a later point of time the US Fed reserve may sell these assets back to these banks and recover a part or the full bailout money.
What is the bailout plan?
The initial bailout plan was for nearly $700 billion. The latest stimulus package is another $250 billion The aim of the bailout plans, stimulus packages etc are to purchase bad assets, reduce uncertainty regarding the worth of the remaining assets, and restore confidence in the credit markets. Below are some reasons for such packages: 1. To Stabilize the economy 2. Improve Liquidity 3. Improve Investor Confidence 4. Reduce the impact of the financial crisis on the US Economy and GDP.
