This is so much better than buying up worthless securites at a premium. Preferred stock with a 5% return for five years then 9% after that represents a great return on the investment for taxpayers. Kudos to Paulson, that was a smart move. I probably wouldn’t even label it a “bailout” anymore assuming they only do these types of deals going forward.
Update – But where does the money come form? If they simply print money to make the loans, they devalue the dollar. Hmm.