And Edward Harrison Gets It As Well

The blogger behind Credit Writedowns wrote, in a post about Wells Fargo selling distressed assets for 35 cents on the dollar (and that was twice what most hedge funds were offering!):

To me, this explains very well why the PPIP program was a failure: if banks can sell distressed assets quietly over time to private bidders, they might be able to delay taking writedowns. But, the price discovery involved in the PPIP program would be a blood bath for banks already capital-constrained. This is why the program has failed.

Yup. As I wrote on March 23, in "Five Reasons Why U.S. Banks are Secretly Terrified of Geithner's Plan":

2. Your game of vastly over-marking assets grinds to a halt.

Once your impaired bank assets are put in pools for private investors to bid upon, and real market bids result, you will be under enormous pressure to revalue huge swaths of your holdings. You can maintain that fictive price of $80 only if you keep the assets cloistered away, locked in a high tower away from judgmental eyes. Once you invite bids, you invite price discovery that, even if you reject the sale, will force you into what could be a crippling re-evaluation of how financially sound you are.