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U.S. May Convert Banks' Bailouts to Equity Share
NYT ^ | EDMUND L. ANDREWS

Posted on 04/19/2009 6:56:03 PM PDT by zaphod3000

WASHINGTON — President Obama’s top economic advisers have determined that they can shore up the nation’s banking system without having to ask Congress for more money any time soon, according to administration officials.

In a significant shift, White House and Treasury Department officials now say they can stretch what is left of the $700 billion financial bailout fund further than they had expected a few months ago, simply by converting the government’s existing loans to the nation’s 19 biggest banks into common stock.

Converting those loans to common shares would turn the government aid into available capital for a bank — and give the government a large equity stake in return.

While the option appears to be a quick and easy way to avoid a confrontation with Congressional leaders who are wary of putting more money into the banks, some critics would consider it a back door to nationalization, since the government could become the largest shareholder in several banks.

SNIP

The change to common stock would not require the government to contribute any additional cash, but it could increase the capital of big banks by more than $100 billion.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Constitution/Conservatism; Government; News/Current Events
KEYWORDS: bailout; bankbailout; nationalization; socialism

1 posted on 04/19/2009 6:56:03 PM PDT by zaphod3000
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To: zaphod3000

Raise your hand if you DIDN’T see this coming.


2 posted on 04/19/2009 7:00:17 PM PDT by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: zaphod3000
Yep
Buy the Banks

That's the Ticket

More Creerie Newz

3 posted on 04/19/2009 7:00:29 PM PDT by HangnJudge
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To: zaphod3000

Here it comes Folks! Socialism 101, it’s a Pass/fail course. Freshman year non honors course.


4 posted on 04/19/2009 7:01:47 PM PDT by acapesket
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To: zaphod3000

They can force the banks to issue more common stock - to be issued only to a specific party ?


5 posted on 04/19/2009 7:06:24 PM PDT by stylin19a (Obama - the ethically waivered administration)
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To: zaphod3000

The day my bank is owned by Tim Geithner & Co. is the day I close my account and put it into one of the many small Texas banks that did not get any TARP funds. I refuse to do financial business with a Leftist government.


6 posted on 04/19/2009 7:06:27 PM PDT by kittymyrib
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To: zaphod3000

That’s a sure way for the banking system to collapse. Who trusts the government when they can break an agreement at any time? If I’m an investor in one of these banks, I’d pull my money out tomorrow.


7 posted on 04/19/2009 7:07:06 PM PDT by NoobRep
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To: acapesket
Ried and Pelosi as voting shareholders?

Insanity.

8 posted on 04/19/2009 7:08:16 PM PDT by highpockets
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To: zaphod3000

At some point those socialists will use their “equity position” as a mechanism to stop the mortgage interest deduction.


9 posted on 04/19/2009 7:08:53 PM PDT by G Larry (Obama's plan = "STEALING FROM THOSE WHO CREATE THE JOBS!")
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To: zaphod3000
...some critics would consider it a back door to nationalization, since the government could become the largest shareholder in several banks.

EXACTLY!
10 posted on 04/19/2009 7:16:52 PM PDT by callisto (It's the three T's, stupid: Too Many Taxes, Trillions in Debt, and Transparency)
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To: zaphod3000

Paging Dick Armey. This is as Unconstitutional as anything done since our nation was founded.


11 posted on 04/19/2009 7:19:21 PM PDT by NoobRep
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To: stylin19a

Preferred shares are convertible into common shares at a set price. This is common financial transaction, except usually the government is not involved. ;)


12 posted on 04/19/2009 7:19:51 PM PDT by zaphod3000 (Free markets, free minds, free lives)
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To: zaphod3000
This ones going a long way down



13 posted on 04/19/2009 7:21:18 PM PDT by HangnJudge
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To: zaphod3000

Horrifying. Of course, for now, this is just another one of Geithner’s infamous “trial balloons”, to gauge market reaction.


14 posted on 04/19/2009 7:25:01 PM PDT by FreepShop1 (www.FreepShop.com)
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To: zaphod3000

15 posted on 04/19/2009 7:28:14 PM PDT by PugetSoundSoldier (Indignation over the sting of truth is the defense of the indefensible)
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To: HangnJudge
And More Cheerie Newz

16 posted on 04/19/2009 7:34:29 PM PDT by HangnJudge
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To: Lurker

Who Is John Galt?

Many saw this coming decades ago.


17 posted on 04/19/2009 7:38:34 PM PDT by NoLibZone (Because I am against Abortion - The DNC Controlled Fed Says I am terrorist.)
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To: zaphod3000

“In a significant shift”...

Significant shift? Who see’s this as a shift? This has been the direction all along.

The useless idiots in the MSM are working hard to spin Maobama’s Marxist ways.


18 posted on 04/19/2009 7:40:17 PM PDT by armyofprinciples (I dressed as 0bama for Halloween. I disguised myself as a Christian.)
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To: HangnJudge

I don’t understand this graph. Could you give a simple explanation?
Much appreciation.


19 posted on 04/19/2009 7:43:56 PM PDT by WestwardHo (Whom the god would destroy, they first drive mad.)
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To: WestwardHo
Adjusted Monetary Base

The total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank's reserves. This measure of the money supply typically only includes the most liquid currencies.

Another Link http://research.stlouisfed.org/fred2/data/BASE_Max_630_378.png


20 posted on 04/19/2009 7:50:34 PM PDT by HangnJudge
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Comment #21 Removed by Moderator

To: zaphod3000

Another government approved Ponzi scheme?


22 posted on 04/19/2009 8:03:21 PM PDT by Sarajevo (You jealous because the voices only talk to me.)
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To: NoLibZone
Who Is John Galt? Many saw this coming decades ago.

You know, it's really sad that people that I personally knew refused to believe me because it wasn't on CNN or Fox or in the newspaper, etc.

They knew me, knew I was trustworthy, but they refused to listen. Even when I held the proof.


23 posted on 04/19/2009 8:28:16 PM PDT by TheRiverNile
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To: SonOfPyrodex
Capitalist 6th graders, that is. It takes buildings full of Harvard PhDs to come up with these multi-generation-bankrupting nightmares.

Conspiracy. Also (hint, hint) never trust any expert from an Ivy League school or a Nobel prize winner. They don't give out either of those without approval.
24 posted on 04/19/2009 8:30:34 PM PDT by TheRiverNile
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To: highpockets
Ried and Pelosi as voting shareholders? Insanity.

No, Reid and Pelosi as Directors! Total insanity.

Who decides how to vote the stock? Obama? Geithner? Congress? How is that Constitutional?

25 posted on 04/19/2009 10:18:24 PM PDT by NonValueAdded (May God save America from its government; this is no time for Obamateurs. Emmanuel = Haldeman?)
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To: kittymyrib

I agree completely! I can see BoA losing my account REAL fast! Of course, Timothy & Co. might change the rules and force us to keep the account! Who knows with this group of yahoos?!?!?!?


26 posted on 04/20/2009 8:42:10 AM PDT by ExTxMarine (For whatsoe'ver their sufferings were before; that change they covet makes them suffer more. -Dryden)
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To: zaphod3000
...some critics PATRIOTS would consider it a back door to nationalization, since the government could become the largest shareholder in several banks.
27 posted on 04/20/2009 8:44:25 AM PDT by ExTxMarine (For whatsoe'ver their sufferings were before; that change they covet makes them suffer more. -Dryden)
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