[davelj]

drunkle,

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.

[davelj]

drunkle,

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.

[davelj]

drunkle,

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.

[davelj]

drunkle,

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.

[davelj]

I can see Paul Volcker right now shaking his head and muttering, “Rank amateurs.”

[davelj]

I can see Paul Volcker right now shaking his head and muttering, “Rank amateurs.”

[davelj]

I can see Paul Volcker right now shaking his head and muttering, “Rank amateurs.”

[davelj]

I can see Paul Volcker right now shaking his head and muttering, “Rank amateurs.”

[davelj]

I can see Paul Volcker right now shaking his head and muttering, “Rank amateurs.”

[davelj]

I’m kind of a small-L libertarian at heart and this bailout shit drives me nuts. BUT…..

It wouldn’t bother me nearly as much if the Fed had said, “OK, we’re going to take on this collateral for 28 days (or whatever the term is that the JP Morgan conduit is using) and at the end of that 28 days we’re going to mark this crap to market – REAL market – and it’s going to come out of Bear Stearns’ common equity. That would basically be saying, “OK, folks, we’re going to save you bond holders in this one, but you equity holders get zippo. Zilch. We’re taking the losses out of your hide.”

At least this would scare the piss out of investors without causing any additional pain on the debt/liquidity front. I feel the same way about some of these banks. I’m not as ardent about wiping out the debt holders (assuming there are more bailouts)… but the equity holders should get nothing. You want to organize a government-sponsored bailout of Citigroup, Fannie Mae, etc.? Fine. But they get re-capped at $1 per share. That’s the way the cookie crumbles when you’re at the bottom of the balance sheet.

[davelj]

I’m kind of a small-L libertarian at heart and this bailout shit drives me nuts. BUT…..

It wouldn’t bother me nearly as much if the Fed had said, “OK, we’re going to take on this collateral for 28 days (or whatever the term is that the JP Morgan conduit is using) and at the end of that 28 days we’re going to mark this crap to market – REAL market – and it’s going to come out of Bear Stearns’ common equity. That would basically be saying, “OK, folks, we’re going to save you bond holders in this one, but you equity holders get zippo. Zilch. We’re taking the losses out of your hide.”

At least this would scare the piss out of investors without causing any additional pain on the debt/liquidity front. I feel the same way about some of these banks. I’m not as ardent about wiping out the debt holders (assuming there are more bailouts)… but the equity holders should get nothing. You want to organize a government-sponsored bailout of Citigroup, Fannie Mae, etc.? Fine. But they get re-capped at $1 per share. That’s the way the cookie crumbles when you’re at the bottom of the balance sheet.

[davelj]

I’m kind of a small-L libertarian at heart and this bailout shit drives me nuts. BUT…..

It wouldn’t bother me nearly as much if the Fed had said, “OK, we’re going to take on this collateral for 28 days (or whatever the term is that the JP Morgan conduit is using) and at the end of that 28 days we’re going to mark this crap to market – REAL market – and it’s going to come out of Bear Stearns’ common equity. That would basically be saying, “OK, folks, we’re going to save you bond holders in this one, but you equity holders get zippo. Zilch. We’re taking the losses out of your hide.”

At least this would scare the piss out of investors without causing any additional pain on the debt/liquidity front. I feel the same way about some of these banks. I’m not as ardent about wiping out the debt holders (assuming there are more bailouts)… but the equity holders should get nothing. You want to organize a government-sponsored bailout of Citigroup, Fannie Mae, etc.? Fine. But they get re-capped at $1 per share. That’s the way the cookie crumbles when you’re at the bottom of the balance sheet.

[davelj]

I’m kind of a small-L libertarian at heart and this bailout shit drives me nuts. BUT…..

It wouldn’t bother me nearly as much if the Fed had said, “OK, we’re going to take on this collateral for 28 days (or whatever the term is that the JP Morgan conduit is using) and at the end of that 28 days we’re going to mark this crap to market – REAL market – and it’s going to come out of Bear Stearns’ common equity. That would basically be saying, “OK, folks, we’re going to save you bond holders in this one, but you equity holders get zippo. Zilch. We’re taking the losses out of your hide.”

At least this would scare the piss out of investors without causing any additional pain on the debt/liquidity front. I feel the same way about some of these banks. I’m not as ardent about wiping out the debt holders (assuming there are more bailouts)… but the equity holders should get nothing. You want to organize a government-sponsored bailout of Citigroup, Fannie Mae, etc.? Fine. But they get re-capped at $1 per share. That’s the way the cookie crumbles when you’re at the bottom of the balance sheet.

[davelj]

I’m kind of a small-L libertarian at heart and this bailout shit drives me nuts. BUT…..

It wouldn’t bother me nearly as much if the Fed had said, “OK, we’re going to take on this collateral for 28 days (or whatever the term is that the JP Morgan conduit is using) and at the end of that 28 days we’re going to mark this crap to market – REAL market – and it’s going to come out of Bear Stearns’ common equity. That would basically be saying, “OK, folks, we’re going to save you bond holders in this one, but you equity holders get zippo. Zilch. We’re taking the losses out of your hide.”

At least this would scare the piss out of investors without causing any additional pain on the debt/liquidity front. I feel the same way about some of these banks. I’m not as ardent about wiping out the debt holders (assuming there are more bailouts)… but the equity holders should get nothing. You want to organize a government-sponsored bailout of Citigroup, Fannie Mae, etc.? Fine. But they get re-capped at $1 per share. That’s the way the cookie crumbles when you’re at the bottom of the balance sheet.

[davelj]

As a bank director that sees SARs every month, I can assure you that the $10K trigger is not a myth (exception noted below). Having said that, and this may be where the confusion lies, simply because an SAR is filed does not mean that you’re “in trouble.” Most of the time you can put $10K (or whatever) in cash in the bank (or withdraw it) and never be the wiser. But, don’t kid yourself – an SAR is going to be filed unless the bank is aware, and has documentation, that your business has a large cash component and large cash deposits are part of the “normal course” in your business. (This is why parking lots, restaurants, dry cleaners, etc. are great businesses for money laundering.)

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