TARP for banks, the healthy ones

Discussion in 'Economics' started by abducens, Dec 17, 2008.

  1. Why are "healthy banks" all rushing to get TARP money? Here are the conditions below, it seems like a really bad deal for shareholders. The bank must be expecting a huge windfall of profit from getting this money .>>

    Under the program, which is part of the government's $700 billion economic bailout, the Treasury would receive shares of E Virginia preferred stock, which would pay a 5 percent dividend for the first five years and 9 percent annually thereafter if the shares are not redeemed.

    The Treasury also would receive a 10-year warrant entitling it to purchase shares of E Virginia common stock in an amount equal to 15 percent of its investment in preferred stock.