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New Hampshire WMUR Interview
Articles by Herman Cain on Federal Bailouts
Wake up people! Owning a part of the major banks in America is not a bad thing. We could make a profit while solving a problem.
But the mainstream media and the free market purists want you to believe that this is the end of capitalism as we know it. It is not for several reasons that they have conveniently not explained.
First, instead of buying toxic mortgage-related assets of banks as originally proposed, the Treasury has changed tactics and will buy equity positions called preferred stocks, which gives us as taxpayers an ownership stake in their success for a limited period of time.
Preferred stock means we get paid a dividend before any other stockholders get paid a dividend when they make a profit. You got a problem with that?
Second, the purchase agreement between the Treasury and the participating banks has an incentive for the banks to re-purchase the stock back from the Treasury within five years.
If the banks do not re-purchase the stock in five years then we get a bigger dividend until they do re-purchase the stock. That’s a good deal!
The free market purists’ objection to this is that it smacks at government control of the banking industry, which is called nationalization. They are correct. It smacks, but it is not nationalization because that would require the government to own at least 51 percent of the entity for an indefinite period of time.
The ownership by the taxpayers is going to be relatively small and nowhere near the amount needed to be called nationalization. So what’s the problem?
While favoring Federal Bailouts he does not like how it was implemented.
I wish that was all. Its not. You could write a book just on how poor the coverage has been of the alleged housing bubble. The media have been foretelling a massive bust in housing prices for months now. On May 19, ABCs Elizabeth Vargas said: The run up in housing prices is now beginning to look something like the boom in Internet stocks, and we know what happened there. That kind of ignorance makes homeowners fear that their most expensive possession could turn worthless overnight.
That wont happen. No matter how much the media compared Bush to Herbert Hoover last year, this is not the Great Depression.