"1. What does government on the line mean? If the government is on the line for five dollars he will wipe out shareholders? Govt on the line could mean alot of diff things. 1: FDIC deposit insurance for basically any bank 2: FDIC designations of too big to fail financial institution. if either of entities were to go under the govt would be on the line. This would have to be in the case of declaring Bankruptcy or being in imminent default. "
Or it could mean that if they have to choose between missing their golf appointment and wiping out shareholders, they will choose the later. The concept is so ambiguous, it could mean practically anything.
"2. Why should shareholders in a private organization be on the line for government folly? We didn't invest in the government. not sure how to answer this "
That's ok...neither can the government.
3. How in the world can you interpret his words to mean that shareholders should be preserved. Even if you don't think he said the exact opposite, he definitely didn't say anything close to that shareholders should be preserved. based on his response that is how I took it. If Title II were to be executed for a failing institution where the govt is on the hook then shareholders can we wiped out. In the case of FNMA he clarifies that there are circumstances where this is not always true. In my interpretation he said that because he has no intention of wiping out shareholders. He would have no other motive to say that in that situation. If he intended to wipe out shareholder he just would of said yes, if Title II is executed the stockholders are wiped out and assets liquidated....period
This interpretation is unreasonable from an objective standard. You are saying that because he said he would wipe out shareholders if the government were at risk, it must mean he wouldn't wipe out shareholders if they aren't at risk. He said nothing even close to that. To suggest as such is wild speculation, and nothing more...period.
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