DEBT HOLDERS SHOULD PARTICIPATE IN FURTHER 'LET'S MAKE A NEW, NEW, NEW DEAL'
I've been a big advocate of doing what is necessary, but these exchange programs that give taxpayers common equity, rather than first-class seating, are gaseous.
At least for Citi, they forced some changes to the corporate governance. Also, it is finally a frank recognition that the pay-out period imagined by Paulson and his Cash-n-Carry guy was a fantasy (as was the strike price).
For AIG, it looks like they cut the size of one of the supplemental facilities.
I would have preferred it (pun intended) if some of the Citi debt-holders had taken a haircut (i.e. pre-packaged bankruptcy-like stuff).
We cannot continue mightily to subsidize debt, during a debt-deflation.
Update: It's not just debt. It might be nice if the future Treasury invited Citi to do its exchange alongside fresh, private capital, common-stock investment.
Monday, March 2, 2009
Treasury: "some taxpayer money to fly coach"
