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I couldn’t agree more. Very worriesome. I had similar thoughts when seeing the news today :Pisser:
hmm, i dont know….maybe with Obama it all changes, the measure of the gov purchasing equity in banks is only temporary in order to restore economic certainty….(I could be wrong)
I guess a lot also depends on Barney Frank’s efforts too.
I thought the government was only going to buy stock in some of the banks. I’m not sure if simply buying stock will lead to them having more control over the banks or not.
This is leaning towards Politics so I am moving it to that section.
My two cents, the Government is probably going to gain shares in the banks as a form of collateral for the loans/hand outs they are giving. This seems appropriate. They will not be assuming a majority stake and there are millions of stock holders that effectively prevent them assuming full control of anything.
I think the current administration is satisfied with lining its pockets through the usual methods rather then assume control of real entities as this entails real work to manage.
Real work is not high on their list of favorite things to do, so I think we are safe.
I also think you are jumping the gun. The Gov will buy non-voting senior preferred shares , as well as common stock, but will not have any say-so on how the bank is being run, except for executive compensation. And in 5 years the banks will be able to repurchase their shares.
the stock taken by the US/UK governments are preferred shares that come without voting rights. In the US, taking the money puts limits on raising dividend rates and limits executive pay until the governments shares are sold back to the bank.
This conspiracy theory is silly for a number of reasons:
1. Banks, Brokers, Exchanges, Insurance and Commodity traders are already regulated, their representatives are licensed and regulators have a variety of rights to audit certain aspects of the business already.
2. The government already has lots ablility to look at banking/financial information via the patriot Act. In short It’s Already Happening
3. Joining regulatory agencies in the US into a sort of Super Regulator, is likely inevitable and would happen with or without the government buying into the banks.This particular method of bailing out banks was just considered the fastest and least expensive way. It was initially rejected by the administration because they’d rather use the $750 billion to buy worthless securitys to recapitalize the banks, than buying equity and let the banks deal with their own “assets”, because they can’t bear the idea that something so socialist could happen. Better than paying gold for garbage in my mind
