On Wed, 11 Feb 2009, Jenny Brown wrote:
> > Thirdly, is it certain that the stress-testing that Geithner talks
> > about can't be a path to nationalizing the banks that fail it in the
> > near future? That this isn't an exercise in laying political
> > groundwork for nationalization?
>
> That was Krugman's take last night, as he was struggling to find a
> bright side.
Sadly, I've realized on re-reading that this is the naive question I have the firmest answer to: the injections are always referred to as convertible preferred shares, and there is specific reference made to the CCP, the program under which all previous preferance shares were bought. That might not be at at all bad from an government investment point of view, and for clawing back value for the public from the banks; the preferred shares bought so far certainly look better than the common. But it's specifically not nationalization.
Michael