Paulson will take equity stakes (stock) in banks if he wants to. His concept is to supply the banks with capital. Tax payers fund Treasury and Treasury funds banks. Treasury becomes a financial intermediary. Tax payers are stockholders willy-nilly. This ownership structure is highly inefficient (and unjust). The moral hazard problems are huge. Taxpayers cannot control Treasury and shift capital out. Treasury, being government, will not control banks properly. It socializes them, with all the attendant ills of that control structure. Capital should only be efficiently and properly supplied with the disciplines that private lenders place upon its use. Public … Continue reading Treasury to own the banks