On Wed, Jan 21, 2009 at 9:33 AM, Julio Huato <[email protected]> wrote: > How low is low? Treasury is paying next to nothing now. And > preferred stock is almost like debt, guaranteed dividends, with the > warrants upside -- it becomes common stock if the price goes up. What > if the banks collapse? Well, there's self-reference here. It's like > the monopoly model: there's no supply curve. Because, it is up to the > government whether these banks get liquidated or not. So, it's not > clear to me that the bankers are getting any handout.
If by "bankers", you mean the common shareholders, they are probably not benefiting much from the TARP handouts. But debt-holders of banks do get a huge payout. And not just that: anyone who sold those infamous credit default swaps on bank debt (including I suspect many hedge funds) also get a big payout. And the extended banking system of hedge funds, private equity etc that depend on leverage provided by the banks get to continue to do business as before (more or less - subject to risk-averse partners redeeming their capital etc) on a heads-I-win-tails-the-taxpayer-loses basis. So, are the bankers getting a handout? I'd say that depends on who you mean by "the bankers". -raghu. -- OUT TO LUNCH - If not back at five, OUT TO DINNER! _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
