Chris Marshall

Bailout 1.1 Passed. Will We Have to Go Back to the Well for v2.0?

I was wondering whether the Government has taken into account how private equity/sovereign wealth funds can now invest in financials?

1) mark to market eased ( hide more crap under the carpet)
2) undetermined warrants for the Treasury, to dilute the financials equity values
3) Deal to make good all losses, in the event that the bailout loses money.

So if you are inclined to invest in preferred equity of a large bank, for a long term investment, how would you now value it?

This package has made the financials more opaque than ever, it looks likely that the only people that can recapitalize the banks, in these circumstances, is the Treasury. Therefore you can expect a further massive bailout plan in the new year.