Legal Commentary

TARP Repayment And A New Deck Chair Arrangement For The Banks

By Big Tent Democrat

Via Atrios, apparently some TARP repayment is more equal than others:

TCF Financial Corp (TCB.N) said it received approval to pay back $361 million in funds it received from the U.S. Treasury's Capital Purchase Program, and cut its quarterly dividend by 80 percent. . . . TCF Financial said it will buy back all of its 361,172 shares of its preferred stock from the U.S. Treasury at a price of $361.2 million plus a final pro rata accrued dividend.

Meanwhile, back of the megabank ranch, the Obama Administration is rearranging the deck chairs, floating the idea of converting its preferred shares to common stock. As Krugman notes, this is pointless:

[C]onverting preferred into common does nothing: it’s just a swap among the junior stuff, with no impact further up the line. It’s certainly not a fresh infusion of capital in any meaningful sense. So who is supposed to be fooled by this? The markets? The pundits?

I think this should be filed under "don't just stand there, do something" - giving the illusion that the Obama Administration is on it. They aren't.

Spoeakng for me only

Full post as published by TalkLeft on April 20, 2009 (boomark / email).