Fed: TARP injection is high-level capital (lowering the bar)

Market Watch ^ | 05/22/09

[TigerLikesRooster]

Fed: TARP injection is high-level capital

WASHINGTON (MarketWatch) - The Federal Reserve on Friday adopted a rule that will allow banks receiving capital from the bank bailout fund to consider some of the financial injections they have received to be a high-level of capital. According to the Federal Reserve, banks can consider senior perpetual preferred stock they have received from the Treasury Department as grade-A, Tier 1 capital, the kind of assets a bank needs to have lots of. Private preferred equity stakes are often considered Tier 2, a lower form of capital, while common equity has traditionally been considered Tier 1 capital.

[TigerLikesRooster]

This won't be the last. They will keep changing rules whenever the system is about to go under, lowering the bar again and again.

[TigerLikesRooster]

Ping!

[lainie]

When something isn’t perceived as being good enough, despite your best intentions, rework the parameters and/or lie. That’s what they do in Hollywood.

[javachip]

This isn't a change.

According to Treasury's Capital Purchase Program Term Sheet, the TARP preferred was considered Tier 1 capital from the beginning.