It's not that investors are going to be clamboring to buy these assets.
Rather, the market likes the plan because it allows banks and financial institutions to take these severely depressed financial instruments "off their books" ... and put them into a segregated clearing house, so to speak, where the govt act as a partner in selling them to private investors.
The accounting aspects of the plan, I believe, will allow banks to instantly replenish their holdings with fresh money which can (hopefully) be lent properly to creditworthy customers.
Understand, banks are ALREADY making money in the first quarter of 2009. But they are severely limited because their underlying holdings have 40/1 leveredged mortgage type assets dragging down their value.... dragging down their net worth, their portfolios, and thus they have little to no capital to work with.
Thus, businesses can't get the quick loans needed to spur commerce, etc.
Listen, I take a back seat to no one in despising Obama and Geithner. My mission in life is to see them driven from office in disgrace.
Yet, I am pragmatic enough to see that this plan (which was initially proposed last fall before Obama even got his grubby hands into it) has the potential to add confidence back into the stock and bond market.
Do I like the fact that Obama is gonna claim credit when in fact he deserves none? Nope.
Rest assured, Obama will make enough screw ups in the coming weeks. This new plan will not make him a hero. It will just help the stock markets gain some long needed strength.
You cannot just get rid of a loan, someone has to buy this loan. I do not see private investors coming to buy them. If this was the case then we would not have had this problem to begin with.