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Right way to bail out banks

January 30, 2009 Economy No Comments

according to George Soros….

gsoros

In my view, an equity injection scheme based on realistic valuations, followed by a cut in minimum capital requirements for banks, would be much more effective in restarting the economy. The downside is that it would require significantly more than $1,000bn of new capital. It would involve a good bank/bad bank solution, where appropriate. That would heavily dilute existing shareholders and risk putting the majority of bank equity into government hands.

Source:
The right and wrong way to bail out the banking sector,
by George Soros, Financial Times, 1/22/09

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