Sunday, May 3, 2009

I pronounced myself baffled

From the NY Times:

May 3, 2009, 12:46 pm

Bank capital hocus-pocus

Aha. When the proposal to bulk up bank capital by converting the government’s preferred shares into common equity came out, I pronounced myself baffled. But was I missing something? Via Henry Blodget, Paul Kasriel of Northern Trust says the same thing, in more detail.

PS: Kasriel should be careful about hypothetical examples involving Gotham City Bank. I used Gothamgroup — and the legal department got a call from the Gotham Bank of New York, which had to be assured that it wasn’t about them."


I’m getting really confused these days. I thought that, absent an FDIC type seizure, people wanted the govt to take controlling interest of some of these banks and manage them. Now, we want the govt to remain creditors. Or, force everybody to be shareholders, but we’ll run the banks.

Now, are the laws about shareholder rights, including minority rights, going to be operative, or does the govt have the right to make up its own rules.

The advantage of owning a company is that you own it. That’s also the disadvantage of owning a company.

— Don the libertarian Democrat

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