Our murder mystery company did a show for a birthday party last night. The bill was paid by a very nice guy who runs a small bank here in Colorado.
After the show, we had a talk about the state of the financial world. He also filled me in on the details of how the bailout is playing out in the banking world. He says that the government is forcing his bank, and other banks in good shape, to take money in return for 10% of his stock, and limiting what salary he can take. However, since his bank is in good shape, the money is being put in his hands with the expectation that they will then buy up some weak banks, after which the government will buy the bad banks bad assets.
Does that sound convoluted to you? Because it sure does to me. I thought that bailout money was supposed to encourage more credit availability. Of course, before this conversation, this guy had spent 3 hours enjoying the open bar he was paying for, that was about 5 feet from his seat for dinner, so I'm not sure he was doing as good a job of explaining this as he would like (which is why I am not using his name here). The dude was pretty faced.
I'm not sure what to make of this. He did say that they wanted to do this instead of re-creating the RTC, which bought up all the banks during the S&L problem almost 20 years ago. He seemed to think the RTC was a better idea, and that he is getting screwed for having to take on the money and restrictions, when his bank is sound.
The good news is, the economy hasn't hurt this dude too much. He probably paid about $4k for the party, and presented his girlfriend, the birthday girl, with a beautiful full-length mink. I really wish I hadn't spilled that glass of red wine on it.
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