U.S. May Convert Banks' Bailouts to Equity Share

NYT ^ | EDMUND L. ANDREWS

[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.

[Sarajevo]

Another government approved Ponzi scheme?

[TheRiverNile]

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.

[TheRiverNile]

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.

[NonValueAdded]

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?

[ExTxMarine]

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?!?!?!?

[ExTxMarine]

...some critics PATRIOTS would consider it a back door to nationalization, since the government could become the largest shareholder in several banks.