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Various Questions from the Financial Crisis of Fall 2008

Various Questions from the Financial Crisis of Fall 2008 -...

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Various Questions from the Financial Crisis of Fall 2008 What effect will a “too big to fail” doctrine have on firms going forward (i.e., how will firms behave if they anticipate a gov’t bailout will occur if they start to perform poorly in the future)? Should the government impose short-sale restrictions (as it did last fall for financial stocks)? Historically, the government has guaranteed the bank deposit of an individual up to a limit of $100,000 in case the bank fails (i.e., if the bank fails, the individual will not lose all their deposits with the bank, the gov’t will pay the individual up to $100,000). Should the government increase this guarantee up to $250,000 or guarantee the full amount of deposits if the bank fails?
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Unformatted text preview: What are the pros and cons? How should corporate managers react to an environment when asset markets are showing high degrees of uncertainty about the future global economy? – Discount Rates? – Capital Structure (debt vs. equity and convertible bonds)? – Real Options? – Mergers and Acquisitions? – Executive Compensation? – Payout Policy? Why did the gov’t ask for and receive preferred stock, and not bonds or common stock, in the various financial institutions it provided an infusion of capital? Is securitization good or bad for the economy? What are the weaknesses and strengths of securitization?...
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