executives make less, claw bonuses back if the company loses money etc… that is ridiculous. What they did was smart… they said that if you want money, come and get it but if you do get it, THEN we will impose these restrictions on executives. This isn’t a handout to executives, it increases a bank’s capital base which they were going to do ANYWAYS but they’re doing it with some hooks and trying to change executive compensation packages where they can. My bet is that most of the naysayers and doomsayers on this board have been anti-government, anti-establishment type before, have lost money in the markets or talking up their shorts, or just misinformed and don’t want to open their eyes. I’m not long, I’m in cash just watching… Yes, I totally agree, execs have been paid way too much and there are indeed horror stories out there but you can’t have the gov’t go in and ask for it back… if you want to blame anyone, blame the compensation committees… at least with this capital package, you are forced to change exec compensation which is a good thing.
[quote]The senior preferred shares will pay a dividend of 5
percent for the first five years and 9 percent after that, the
Treasury said. The purchase price of the stock will be the
market price of the banks’ common shares at the time of the
transaction. Companies will be able to buy back the equity at
par after three years.[/quote]
That seems to answer my pressing question. We won’t make out like bandits, but this is hardly a rotten deal. A 6%+ yield is generally considered a ‘buy’ (provided the banks suffer no real chance of bankruptcy).
–
Steve
So all the big banks are getting paid billions of dollars. What about all those small bank!? They claim they are protecting the free market, while only supporting their friends’ banks. This mess just keeps getting more unfair!
Aw, c’mon folks. The Money Masters are controlling this whole thing, and always have. If you are commenting (or even reading) this site, you are not one of them. So, none of us know exactly what’s going to happen…except that whatever it is, it will benefit THEM, not us. It’s fun to keep playing the game of guessing how its going to go. But, the truth is they are the only ones who really know. In the meantime, at least we have a place to express our anger…as if it did any good.
more like land of the naive, home of the slave
a new article from CNBC and what happened in the meeting with Paulson & Co with the CEO’s of big banks:
http://www.cnbc.com/id/27190596/
Shocking! …and then again, maybe not.
About bonds. When issued, a bond has a purchase price (par) and an interest rate. For example, say $1000 and 5%. This will yield the bondholder $50 a year during the life of the bond plus a return of the $1000 at maturity. The problem arises with long term bonds and interest rate changes. If the bond has, say, a thirty year maturity and interest rates double in the first year (to 10%), then a new bond purchased for 1000 will yield $100 a year. This has the effect of making the first bond less valuable, in fact the bond might have to be sold for as little as $500 so that it too yields 10%. There are mathematical formulas that you can use to calculate how much of a discount (or premium if rates go down) will be necessary to sell the bond before maturity. As the bond gets closer and closer to maturity the discount becomes less and less since the full $1000 will be paid when the bond matures. See:
http://www.precision-info.com/bondsonline/tut461876625-1.html
This is the problem I have always had with long term bonds, the fact that if interest rates go down and you have to sell before maturity you could take a financial bath. So I have always gone short term so that only under the very worst conditions would I have to sell before maturity and hence take a loss because of the discount.