The Fish Rot Head First

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Blending two stories from our Opening Bell this morning, we cannot think it coincidence that the administration has picked this time to begin discussing nationalizing (really nationalizing- not just conducting an FDIC raid and dropping firms into receivership) the banks in its TARP clutches by converting its holdings into common stock, putting conditions on TARP repayment like another inventive "test," (giving PR and spin cover to banks that don't pay it back because they can't without rupturing their own spleens) and angsting over the timing of stress test releases.
Why, we might ask, is the administration so worried about tests that, in their own words, the banks cannot fail? Why, we might ask, is it only now that we are hearing about the much more aggressive nationalization possibility- and why is it mentioned only in the same breath with the notion that it will provide new capital? Just when Bank of Amerillwide and Chris Marinac are talking about the end of this nationalization-speak (B of A one-time gains in the period saving the bacon- if you buy that sort of "saving the bacon") the administration fires up the nationalization-speak. Hmmm.
Something is rotten in the state(s) of Denmark.
US to put conditions on Tarp repayment [The Financial Times]
U.S. May Convert Banks' Bailouts to Equity Share [The New York Times]

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