The British Bank Bailout

I just got back from being on Britain’s SkyNews where I mentioned that Britain’s policy today is better than the Paulson plan, at least in the eyes of taxpayers.
British policy, until now, has been far too reactive and unimaginative. The key difference is that under today’s plan, British taxpayers get a stake in the banks through preferred stock in exchange for loaning banks money. What banks needs is an injection of capital. I think it will be interesting to see how many banks that have hitherto claimed perfect health will start crawling towards the government’s money line.
The key advantage in our takeover of Fannie and Freddie is that we fire management. Some CEOs in Britain deserve the same fate. I should add that I’m not one who’s terribly worried about the issue of CEO compensation. When the conversation involves trillions, we can worry about millions latter.

Posted by Eddy Elfenbein on October 8th, 2008 at 2:48 pm

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