I added a bit to complete the thought.
I think there is a bit more to this - the person who borrowed funds to buy the horse got a loan with 1% interest for 6mo (the race is in 5mo) that will reset to 8% after that time. He must sell it after the race or he won’t be able to make the payments. The horse has a weak leg and is only worth 25k at most. The bank that made the loan to the owner sold the debt to a third party who then counted the 50k + interest (@8%) as an asset and borrowed $1.5 million against it to invest in (or bet on) other horse races. The party that loaned the $1.5 mil then counted that as an asset and… etc. etc. Others sold insurance against any party in the chain defaulting and will have to pay out millions if the owner of the $25k horse defaults on his $50k loan.
The bailout plan intends to buy the $50k debt for $50k and thus prop up the pyramid of debt based on that loan, but as the horse is only worth $25k there will be a loss of at least $25k for the government. However, lots of other folks also bought over-priced horses and their loans haven’t yet reset - they will also be in default in a few months and more funds will be needed to keep the pyramid intact. Additionally, the government doesn’t have the $50k to loan and must borrow the funds from investors who made bets on the horse race and are angry that they weren’t told that the horse had a bad leg. Proposed rules changes will allow banks to value horses with bad legs at $50k when figuring assets used to back loans and borrowing - yet horses with bad legs can never be sold for $50k, so the banks position will remain unchanged and they will fail if they need to come up with cash (everyone now knows the horses have bad legs).