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Politics : Politics for Pros- moderated
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To: Nadine Carroll who wrote (303538)5/3/2009 8:51:48 AM
From: carranza2   of 793868
 
It's a very cynical game being played very adroitly.

O! is working to have himself perceived as the enemy of the banks and hedge funds after going along with bailouts in an enormous way.

He knows that it is politically impossible to get taxpayer money to pay for any additional bailouts required if the stress tests are honestly done. He is therefore positioning himself to support the conversion of the banks' secured creditors interests into equity, i.e., the bonds for stock swap I guarantee you will be hearing about in the next few months.

If the bondholders refuse, he can excoriate them in the same way the hedge funds got excoriated in the Chrysler deal.

In the mean time, J6P has forgotten the billions upon billions O! showered on banks before the taxpayer rebelled, started sending tea bags to DC.

This tactic, becoming the Johnny-come-lately enemy of hedge funds and financiers after giving them anything they wanted, is incredibly cynical, totally devoid of principle and good policy. But very adroit and probably quite successful.

Giving the bondholders the choice of equity or bankruptcy was clearly the way to go from the beginning. But the bondholders have [had?] too much political power in a lapdog Treasury and Congress to even have had issue raised.
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