Fed Plan to Sell Toxic Assets

[James Young]

It is not my intention to start a 'Bash the Government' thred but to gather opinions.

The AP is reporting this weekend that on Monday the Fed. Govt. is releasing a plan to sell toxic assets to lure investors with discount prices and Govt. aid.

The plan as reported is three-fold.

1. to create an FDIC backed entity to purchase and hold bad loans.

2. to expand a Fed. Reserve facility to include "Legacy Assets" that is currently only set up to buy newly issued securities. (not exactly sure what a Legacy Asset is - sounds racey though)

3. to use public / private investment funds to purchase mortgage backed securities.

I am wondering what if any affect such a plan might have on the average invoestor. Namely should the FDIC purchase bad loans how will that affect the broader forclosure and REO market? and how would the governments holding of these loans affect the cost of aquiring said properties?

Again I am not looking to Government Bash I am just wondering what the Forum is thinking about the Federal Government's attempts to intervene in Housing / Mortgage / investments.