[quote=urbanrealtor]How would your version of an equity purchase work?
A new entity or GSE owner or the govt itself?

Are there other negatives to diluting shareholder interest?

Wasn’t there some equity component in the defunct plan? (I thought there was but maybe I dreamed it).[/quote]

I don’t see why we couldnt follow the AIG example. I dont know who is exactly incharge of AIG shares that the GOV just bought, (treasury? FED?) but why cant we just keep doing that? When a certain painful threashold (not as bad as 24 hours from colapse but not just a handout to millionares) is reached, the GOV will step in and buy a few billion in senior stock. It recaps those that suck, rewards the stock holders of companies that survived because they were more prudent than the competion, and protects the taxpayers in that the senior stock can then be sold at a later date, hopefully for more than the original fire sale recapitalization price. People dont loose jobs, banks dont go under, idiot investors (both employeed and stockholders) bleed but dont die, and banks keep lending. It worked with AIG right? Why not use it on the other insolvent financials instead of just giving them HUNDREDS of BILLIONS of dollars. Just put in a clause that the shares must be sold when the market reaches a certain point, or the common stock reaches a certain point, and the institution gets the right of first refusal to buy back stock at that time so if they can, they could concentrate their shares again and bring back value.

I think equity stakes were talked about but I have not heard about them in the bill that went down in flames. The point of that bill was to protect shareholders and employees at the publics expense, not to find the best solution possible.