Bank stocks are all up strong this morning on hope of some new good bank/bad bank scheme being hatched by the feds. We don’t know what shape it will take, but it’s true that the market seems to rally every time the government starts talking about buying the trash assets and leaving “good” assets in place.
But don’t get distracted by jargon. There’s only one reason bank stocks are up: The hope that more money will be transferred from the taxpayer to their balance sheets. That’s it. If that’s not what the new scheme is all about, there’d be nothing for shareholders to get excited about, right? It’s pretty simple.
Meanwhile, we wonder. Will this good bank/bad bank scheme require a vote? Will politicians actually be forced to say yea or nay on another massive, TARP-squared plan? Or will the Treausry, FDIC, FED and the Obama administration find a way to accomplish this via executive dictat? Anyone have the answer?