Heads I Win, Tails You Lose ...

It's touching to listen to Henry Paulson explain why those bankers don't really want this new capital injection, but how as a civic duty they will graciously set aside their morals and agree to take our money. But Adam Levitin explains how (surprise!) the bankers have pretty well bought themselves the best of both worlds: we (taxpayers) are coming in below debt, but we don't really have the protections of equity (link). Adam calls the new scheme "subordinated debt," which is true in a way but beside the point. The real kicker is that equity can continue to get dividends. I wonder if this trumps the usual rule under which you can't pay a dividend while insolvent? Adam thinks he sees a regulatory motive here, but I suspect he's being too generous: I infer it just proves that bankers are willing to take all the money in the world as long as it doesn't destroy the comfort and convenience of the bankers' life. Well, who among us can blame them for that?