Tuesday, April 15, 2008

The $20 Billion a month dilution

The banks have been suffering from an overdose of cheap credit and easy money and are in need of a quick fix. The needle of choice: dilute shareholder interest with capital raisings. Quite an about-face from the old buy-back racket of the last few years.

David Gaffen, at the WSJ blog MarketBeat, is spreading the news from Dealogic that major US financial companies have been diluting shareholder values at the average rate of roughly $20 Billion per month for the last seven months. Citigroup has had the largest such capital raising and Wachovia the latest.

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