Recapitalizing Troubled Banks

Recapitalizing troubled banks has become the priority of financial policymakers. The British model seems to have trumped the American one as the way of doing that. Only the most rabid free-marketer doesn’t now accept some state ownership of banks, even if only on the lesser evil theory.

The advantage of taking preferred stock is that it makes it easier for the institutions to issue new common stock — some suggest a 2:1 ratio is possible — further boosting the recapitalization.


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