Is anyone else perplexed by the Governments plan of action regarding the banks that are failing the big scary "STRESS TEST?"

I'm not getting the downside to these banks. 

The rules as I understand them are:

1.  Bank Fails Stress Test and needs $xxx amount of capital.
2.  Bank has six months to raise capital from the private sector.
3.  If the banks can't raise private capital, the Government bails out bank with Taxpayer Money?

What's wrong with this picture?. 

Under this plan the banks are not required to improve operations.  It will be business as usual.  Short Sales, REO's and Foreclosures will continue to be grossly mismanaged. 

Unless the rules have changed in the last few days :

• As a consumer if you fail to pay your mortgage the banks foreclose, no bailout, no reprieve no safety net.
• If your business fails the banks won't give you a bailout.  No safety net there.  You lose your business - period.

These under-capitalized banks need to be broken up into smaller regional banks that can effectively react to the needs of the local market. There is no excuse or logical argument that can explain the current enviornment.

Under the current capital plan, the only downside to the banks is that the government is given preferred stock that it may or may not be able to convert to common stock at some point in the future.

hmmmm, Government owned common stock equates to nationalization of our banking system.  Is that what this is all about nationalizing our banks or am I just missing something? 

I am Kate Bourland.  I help my clients get out of debt, get loan modifications and establish a debt free lifestyle.  We Guarantee our Loan Modifications.    You can reach me at 530-419-3967. 

How To Get Out Of Debt Blog

http://www.katebourland.com

Things to Do In Redding California