As we’ve noted, Monday the federal government rolled out a new plan for the banks in which our preferred stock from the last deal could be converted into common stock. Without going into too much detail, this would strengthen the banks financial position — at least in a notational sense. And it wouldn’t require a direct injection of new money from the Feds. However, it amounts to a much better deal for the banks because it relieves them of having to pay us dividends and various other rights attached to preferred stock ownership. So we don’t have to pay more money, just agree not to get the money we’re currently entitled to.
In any case, the Dems don’t really seem to be raising much of a ruckus over this, perhaps because it’s a Democratic president calling the shots.
On the other hand, as Elana Schor found out yesterday when talking to various Republican lawmakers, Republicans are criticizing the plan — and pinpointing a lot of the key weaknesses. That’s good in one sense. But since they aren’t willing to entertain the other option — some form of nationalization — they’re criticizing this plan while refusing to sign on for the only obvious alternative.
