Thank you all for coming to hear my opinion this evening. Let me try to be brief because I know we all have other things to do with my time.
If the big bank was a widget company, we'd just toss the keys on the table. Wipe out the old equity, reconstitute the old debt as new equity. I.e., equity dies and debt is wounded and life goes on. Except that if the business recovers, maybe debt gets rich.
In the current uproar, I hear a few mutterings about turning debt into equity but nothing fully formed. I admit, maybe banks are different. It's a trust and relationships business, and these can vanish in a heartbeat (remember Enron, Drexel). OTOH, I guess this is kind of what is happening to Lehman.
Short of stuffing it to debt, I think it is a no brainer to let the government take equity (hello, Bear Stearns). Sure the chances are the government will screw it up, but in the light of what has gone before, that's not a very forceful argument. Let em take equity, hire some unemployed bankers to run it at $165 thou a year, then sell it out when the dust settles.
Preferred is fine, doesn't have to be common, just as long as it is real preferred, not hocus pocus.
Thank you all for coming, I won't be taking any questions.