Hat tip K Harris for this link to National Public Radio and this thought as well regarding Tom’s post below:
The issue at hand is that Treasury resisted the notion of equity in return for aid all the way along, and now is putting out the word that equity in return for aid is among the favored notions. Over the weekend, word was that lobbyists were toiling away to prevent the equity element from being used, but now the NYT characterizes equity for aid as among the favored notions on Wall Street.
The NYT is being used to announce a change in attitude toward this provision of the law. Treasury and banks are coming to realize that the strongest form of aid – new capital – is what is needed, since a very large dose of a lesser form of aid failed to work.
By the way, I gave youse guys a link on this on Sunday night. “This American Life” covered CDOs, CDSs, and equity infusion, and did a pretty good job. The point was that the authority was in the bill, but that banks were working hard to keep that authority from being used. That has now changed. That is why the NYT is being used to make this aspect of the bill better known. Treasury is about to use the equity authority.
By the way, the NYT keeps using the word “banks” but whatcha wanna bet an insurance firm or two gets some fresh equity?
k harris | | Email | 10.09.08 – 11:31 am | #