Comments on: More Accounting Games

By: Dan Wylie-Sears

Dan Wylie-Sears — Mon, 11 May 2009 04:59:29 +0000

If you take something a firm has to pay, and turn it into something the firm doesn’t have to pay, you haven’t changed the chances that it will go bankrupt. Hmm. That’s going to take some more explaining.

By: Stress Tests for Beginners « The Baseline Scenario

Stress Tests for Beginners « The Baseline Scenario — Mon, 04 May 2009 17:48:29 +0000

[...] is a widespread expectation, fostered by the administration, that any capital deficiencies will be plugged by converting preferred to common stock in an [...]

By: More Accounting Games « The Baseline Scenario | Greatest Guides

More Accounting Games « The Baseline Scenario | Greatest Guides — Sat, 25 Apr 2009 22:40:23 +0000

[...] Read the original: More Accounting Games « The Baseline Scenario [...]

By: WNYC - WNYC News Blog » Why “Common” Could Be More Desirable Than “Preferred”

Thu, 23 Apr 2009 23:35:03 +0000

[...] valuable to the banks than preferred shares? Financial 411 friend James Kwak takes a crack at it here. Basically, $100 million of frozen shrimp or long-stemmed roses would also be worth $100m. But [...]

By: martin parlato

martin parlato — Wed, 22 Apr 2009 23:11:32 +0000

saw your article baseline scenario. Q-is the Tarp money for C currently on balance as equity or liability.

I think i lost a bet on this.

By: Top Posts « WordPress.com

Top Posts « WordPress.com — Wed, 22 Apr 2009 00:09:22 +0000

[...] More Accounting Games The New York Times is reporting that the administration is thinking of stretching its TARP funds further by converting [...] [...]

By: Bailout for Breakfast: Stocking Up? | The Paris - San Francisco

Bailout for Breakfast: Stocking Up? | The Paris - San Francisco — Tue, 21 Apr 2009 15:25:08 +0000

[...] to ask for more bailout money). Sounds good. Except some say it’s not clear what it would accomplish. And it would make the money taxpayers have already invested in the banks more vulnerable to [...]

By: Evening Reading: Seeing Sun Micro in a New Light | Blogoboro.com Blogs

Evening Reading: Seeing Sun Micro in a New Light | Blogoboro.com Blogs — Tue, 21 Apr 2009 07:37:26 +0000

[...] James Kwak weighs in on the possibility of the U.S. government converting its preferred shares in banks into common stock. [...]

By: EKCP

EKCP — Tue, 21 Apr 2009 04:57:52 +0000

“And it opens the possibility that the government could use its large stake in the firms to influence board of directors composition and otherwise exert control over the firms.” (MY) It doesn’t seem necessary for the government to convert to common stock in order to gain voting rights. The U.S. Government carries a bigger stick than the average stock holder. After all, a call from the President got Rick Wagoner to step down. I don’t see why so-called “voting power” is a legitimate concern for Treasury.

“The 19 big banks have received more than $140 billion from the Treasury’s financial rescue fund, and all of that has been in exchange for nonvoting preferred shares that pay an annual interest rate of about 5 percent.” (NYT) If the dividend cash flow savings is what’s going to help the banks reach prosperity, isn’t that the definition of holding on by a thread?

But what alarmed me too was; “[The Treasury as controlling shareholder] could lead to increasingly difficult conflicts of interest for the government, as policy makers juggle broad economic objectives with the narrower responsibility to maximize the value of their bank shares on behalf of taxpayers.” (NYT) Is this a substantial conflict of interest or am I just growing paranoid?

In addition, with the benefits to the banks from this conversion, what concessions are they making in exchange – or dare I ask?

By: Preferred, common: same banana « ˈā-kwə-tēs

Preferred, common: same banana « ˈā-kwə-tēs — Tue, 21 Apr 2009 04:26:05 +0000

[...] points made by James Kwak of Baseline Scenario: By converting preferred into common, you haven’t changed the chances of the bank going bankrupt, [...]

By: blog8866

blog8866 — Tue, 21 Apr 2009 04:21:27 +0000

so,so

By: Abdul Syair

Abdul Syair — Tue, 21 Apr 2009 03:05:45 +0000

Thank’s…………

By: Deepak

Deepak — Tue, 21 Apr 2009 02:55:37 +0000

Yes, I completely agree on that point. Krugman has a good example on this (http://krugman.blogs.nytimes.com/2009/04/20/preferred-shares-to-common-equity-an-analogy)

By: Evening Reading: Seeing Sun Micro in a New Light | OptionHustler.com

Evening Reading: Seeing Sun Micro in a New Light | OptionHustler.com — Tue, 21 Apr 2009 01:00:43 +0000

[...] James Kwak weighs in on the possibility of the U.S. government converting its preferred shares in banks into common stock. [...]

By: Remembering Thomas Paine's Common Sense and lessons it may have for us NOW!

Remembering Thomas Paine's Common Sense and lessons it may have for us NOW! — Tue, 21 Apr 2009 00:57:23 +0000

Thank you AA, I know, but honestly, how can anything really get better unless the system is redone to properly reflect what is in the best interest of the country, not the private bankers? Maybe IMPOSSIBLE to imagine, easier to see the resistance and believe impossible, but sometimes it takes the impossible happening for things to be made better……who would have ever believed women could vote, and all the rest that the courage of American’s have achieved? I know you don’t hate us otherwise you wouldn’t waste your time with your thoughtful remarks!!! And by the way, thank you very kindly AA!