On Wed, Sep 24, 2008 at 10:26 AM, John Williams <[EMAIL PROTECTED]>wrote:
> > Tyler Cowen wrote: > > > How or whether do equity holdings give the government "upside" in > eventual bank recovery? Holding equity yields nothing if the banks > never recover. If the banks will recover, you would think a loan from > the Fed would suffice. One short answer -- risk. Debt financing makes far less sense when the risk is high or unknown. Only equity financing offers the potential to yield a return that is appropriate to high risk. Often it makes sense to do both. All things being equal, any plan that puts the risk in the hands of private investors is better, since it not only removes the risk from the taxpayers, it would implicitly mean that the market will regain liquidity... since the private sector isn't going to participate in any scheme that doesn't have an exit strategy. Nick _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
