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The government is considering converting the 'preferred' stocks into 'common' stocks in all the banks it has control of - How will this affect the taxpayer and will it give the government more control in ownership ?
The holders of common stock can reap two main benefits from the issuing company: capital appreciation and dividends. Common stock ownership has the additional benefit of enabling its holders to vote on company issues and in the elections of the organization's leadership team. Usually, one share of common stock equates to one vote.
Preferred stock doesn't offer the same potential for profit as common stock, but it's a more stable investment vehicle because it guarantees a regular dividend that isn't directly tied to the market like the price of common stock. This type of stock guarantees dividends, which common stock does not. The price of preferred stock is tied to interest rate levels, and tends to go down if interest rates go up and to increase if interest rates fall. Owners of preferred stock do not get voting rights in the business.
Typically, preferred stock is favored by private companies, which often want to separate stockholders' economic interest in the company from the actual governance of the business.
So the stockholders actually benefit from common stock in that one share = one vote.
Common shares gives the government LESS control.
Common stocks are available through PUBLIC OFFERINGS, and traded among investors on the secondary market.
Preferred stock is sold by companies and is then traded among investors on the secondary market.
Should the company default on dividends and declare bankruptcy, preferred stock holders are entitled to assets before common stock holders.
So, once again amblessed, common stock benefits the general public and preferred stocks benefit the "special" investors since it is not offered through public offerings.
We get it amblessed, you hate obama, you think that anything he is proposing MUST be bad.
My father was investment vice-president of Dean Witter and he taught me much. Trust me, you are off base on this one.
A stock that is offered publically has LESS chance of control by one faction.
"Preferred" means that these stockholders get the first crack at dividends, but only common stockholders can actually vote on company management or policy. Now, by changing this fundamental element of the TARP plan, Obama will give Washington a voting majority among the common stockholders of these banks and other financial institutions. The almost 500 companies receiving TARP money will be, in effect, run by Washington.
And whoever controls the banks controls the credit and, therefore, the economy. That's called socialism.
Forcing stocks to switch either way looks like a lot of government control to me. What would the harm be in allowing the people to pick what stocks they want based on what the company offers them? You can not force a company in a direction then call it less control from the government. At least thats what it sounds like to me.
Actually, that'd give the government less control and make it harder to get our money back, this must be a partial quote OR Fox news, right?
Basically,common shares are more democratic, and prefferred shares are autocratic.
