I’d prefer that neither the equity nor debt holders be bailed out. But IF we’re going to bail people out – and that’s a given as far as I can tell – the LEAST the Fed can do is let the equity of these companies go to $1 (or thereabouts). (They can wipe out the preferred holders as well, if they like.) Again, the debt holders should feel pain too. No doubt about it. But that may be asking too much from the current Fed. Thus, all I ask is that at MINIMUM the equity holders get hosed. Recall that we already have something called the FDIC which is going to bail out most bank depositors (which are really just banks’ senior most debt holders). Extending such protection to the next level of debt holders in the capital structure isn’t a stretch considering all the BS that’s been going on as of late.
