raghu wrote: > 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 man > 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.
raghu, Yes, the bankers are the common equity holders. I don't have the FoF accounts in front of me now, but I'm sure that what (regular or shadow) banks owe to each other is not that big a deal. And then, those amounts (largely) cancel out if you consolidate the balance sheets for the entire U.S. banking system. A net bank debt holder is, of course, the Fed via discount loans. But that is not bulk of the banks' liabilities. By far, the bulk of bank debt holders are called "depositors" or "investors" (mostly households but also businesses; nonprofits; local, state, federal, and foreign governments). But, precisely, the rationale of propping up the banks is to keep the assets of all these bank debt holders safe. Their assets in and out of the banks are the sources of income in the economy. If we make the argument that TARP is handing out money, not to the legal owners of the banks (common-equity holders) but to their depositors (and the Fed), people will say, "Duh, of course! That's the intention." _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
