Clandestine Hand ≠ Invisible Hand
nor underhand, with bonus finger
Just when you think the political class may have learned something [who thought that, rly? hands?] in months of trying to fix the banking system, the ghost of Hank Paulson returns to haunt the Treasury. The latest Beltway blunder—and it would be a big one—is the Obama Administration’s weekend news leak that it may insist on converting its preferred shares in some of the nation’s largest banks into common equity.
The stock market promptly tumbled by more than 3.5% yesterday, ... Note to White House: Sneaky nationalizations aren’t any more popular with investors than the straightforward kind.
...Yet Secretary Timothy Geithner and the White House have concluded that they can’t risk asking Congress for more bailout cash.
Voila, they propose a preferred-for-common swap, which can conjure up an extra $100 billion in bank tangible common equity, a core measure of bank capital. Not that this really adds any new capital; it merely shifts the deck chairs on bank balance sheets. Why Treasury thinks anyone would find this reassuring is a mystery.
Well, at least someone is making earning getting money…
On the day the new Congress convened this year, Sen. Dianne Feinstein introduced legislation to route $25 billion in taxpayer money to a government agency that had just awarded her husband’s real estate firm a lucrative contract to sell foreclosed properties at compensation rates higher than the industry norms
So proud…
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