Shell Game Continued

So the banks are supplying money to back their SIVs. How is this supposed to help? Where are the banks getting the cash to do this, other than off their own balance sheets, which were exposed to the SIVs in the first place?

Well, the big three behind the deal are going to pull in other banks to help fund the backup pool. Banks that aren't worried about SIVs won't do it -- why should they? Only banks with problem SIVs will participate.

Maybe it's just a back door government bailout. The Treasury helped put the deal together. No doubt they will persuade the Fed to back it -- which is to say, the taxpayer.

Hiding the risk doesn't get rid of it.