Financial Times FT.com

When two tribes war over saving the financial system

By John Dizard

Published: September 30 2008 03:00 | Last updated: September 30 2008 03:00

There are two parties in the struggle over the nature of the US government's support of the private financial system - not Republicans and Democrats. You could call them the "stealths" and the "explicits".

The Paulson plan, as it has evolved, is an example of a "stealth" initiative. It injects capital through the purchase of assets at prices above balance sheet marks or market prices. An "explicit" alternative would be government purchases of preferred stock, or debt with equity warrants so taxpayers have a chance to make a profit. The stealth strategies are losing out to the explicit ones. It's been at the heart of the House Republican-White-House and Congressional-Democrat fight.

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