Posted on 02/05/2009 9:35:58 PM PST by tcrlaf
US officials are examining ways gradually to convert government stakes in banks into ordinary shares as banks accumulate losses, according to people close to the discussions.
The point would be to provide a drip-feed of additional common equity as needed to cover losses – without the government owning a larger stake in the banks than is necessary.
Treasury Secretary Tim Geithner will announce the financial sector rescue plan on Monday along with a set of policies designed to reduce foreclosures and boost the housing market. Treasury refused to comment on its deliberations.
One idea that has been considered by policymakers is for the government to change its existing holdings in the banks, which have taken the form of preferred shares – non-voting stock that carries a fixed dividend – into convertible preferred shares that could be converted into common stock.
Under this proposal, the shares would automatically convert into common equity if there were a decline in the bank's health – as measured by its so-called tangible equity ratio, for example. The government may also make future capital injections in the form of such convertible preferred shares.
Some policymakers think this would give the government more "bang-for-the-buck" than buying more preferred shares.
Bank stocks, meanwhile, rallied on Thursday as bankers expressed fresh confidence that the US authorities will find ways to circumvent mark-to-market rules as part of the new financial rescue packa
(Excerpt) Read more at m.ft.com ...
The END of Capitalism in America, and government control of corporations.
CHANGE HAS ARRIVED (In the form of FASCISM)
Banks are DESPERATE to avoid marking thier assets to market, and until they do, this will just CONTINUE to get worse!!
I agree. So when does the stuff hit the fan?
geez.
Is America paying attention yet?
“Is America paying attention yet?”
I think they are beginning to, as they get thier pink slips and realize that most smokers don’t make $250k per year, but it’s far too late now.
WE ARE SCREWED, and I’m beginning to fear that this can only end in violence.
You might enjoy this recent vanity.
Cheers!
In English, please ... for those of us that don’t understand what financial words men.
This is terrible why can’t we just give the banks all the money they want with no strings attached.
Corporate welfare is socialism.
Bank bailouts ARE a redistribution of wealth.
Bankers indignant behaviour and failure to be held accountable for their actions IS facism.
“In English, please ... for those of us that don’t understand what financial words men.”
Sure....
Until the underlying assets (mortgages, Derivitaves) are allowed to fall to thier ACTUAL, natural value (What someone is willing to pay for it.) this will just get worse and worse.
NO ONE knows if any bank is solvent, because they have no idea what it’s assets are really worth.
so why would any sane person buy these stocks of bankrupt “toxic” mortgage instruments....enquiring minds seek to know.
The local banks which didn’t do the bad loans seem to be financially fit.
Are there any reasons people shouldn’t switch to local banks now? (After verifying they didn’t do the subprime stuff, of course.)
Our few local banks are advertising how sound they are and were not involved in subprimes.
For those who want a few thousand dollars in cash on hand, I would strongly suggest no bills over $20 and mostly $10’s and $5’s and a bunch of $1’s.
It might seem like a “wad” but in an emergency, if you need to make a $7.00 purchase, you might not be able to get cash back from a $50 or $100 bill.
you from Houston? our banks are doing the same.
course, I imagine all safe, sane banks across the nation are doing the same.
Not from the Houston area. But I’m really considering moving my account over to a small local bank. Just wondering if there are risks involved in those small banks that I’m not aware of.
Lots of people here are more knowledgeable about this stuff than I am. FR is a great place to get answers.
Those are two good points to ask the banks. Will be interesting to hear their replies.
Thanks! I need help along these lines. :)
Heck, let me know what they say! I’m curious whether that commercial paper was getting sold-off, or if they’re holding most of it. :)
Well, shorting it sounds like a plan...
Shame on this administration for even floating this incredibly stupid idea. The Kenyan Clown and his circus are going far beyond the pale with this kind of outright socialist idiocy.
Another four years of this leftist nonsense is going to be unpleasant, and I hope that we will be able to eventually rewind the worst of it. However, our failure to get rid of Socialist Security or any other major government entitlement program doesn't make me optimistic on the rollback idea.
Don’t you believe in Capitalism? If there wasn’t greed you would have no economy! Bankers were just stupid to believe the Mortgage assets that Fannie Mae and Freddie Mac were selling them were good, the problem was only half of the assets were good! Fannie Mae and Freddie Mac held 5.5 trillion dollars in mortgages last Summer when they got 300 billion dollars in loans from the taxpayers! That was not near enough they need another 300 billion or so to tied them over!
Yep, I’ve heard that if the banks were forced to mark-to-market their bad assets, that nearly all of them would be bankrupt immediately. But as you said, we’ll never get out of this until that happens. It’s very ugly going down either path.
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