Friday, October 10, 2008

Ex-Fed Governor Angell Lays Out PEU Plan on Recapitalizing Banks

Wayne Angell suggested the federal government form a new government services enterprise to recapitalize the flagging financial sector. The feds would pony up 10% of the initial capital, the private sector provides the rest. Governor Angell expects private money to flood the GSE, such that it could garner a AAA rating. Private equity underwriters would finally get their way.

The GSE would provide capital to shore up failing banks, in return for an ownership position. Existing shareholders would take it on the chin. The PEU boys could become major players on the cheap. With crisis, comes opportunity. The Carlyle Group knows this well.