Sweet dreams and flying machines in pieces on the ground.

Election day is finally here. Both candidates have seen fire and rain throughout the contest. Voters have endured much as well. Depending who wins the election, some of my readers may feel as though the future appears bleak. Let's put things into proper perspective. We are choosing between two candidates, elected democratically, who will (in their own way) preserve the freedoms to which we are guaranteed. We need not worry about a despot assuming power or a rolling back of our civil rights. Compared with much of the rest of the world, we do not have much about which to worry. Our problems and concerns are trivial to that of much of the world. We may have much to lose, but this is only because we have so much to lose.

Enough with the civics lesson. Tomorrow we all have to make a living and protect our clients. Depending on which candidate wins and how much of a Democratic majority of Congress, there could be more government intervention or influence on banks, lenders and insurance companies.

Ever since Treasury Secretary Paulson (with pressure from Barney Frank and Chris Dodd), wiped out the GSE preferreds, the markets have been very wary of government "help" My concern is that the next administration and Congress may change the rules of the TARP plan.

The government has the power to dictate how government funds are used by the banks. This includes forcing banks to use funds to issue more loans and force banks to suspend dividends on common and preferred equity. It is because dividends of assisted institutions will be paid only with the blessing of the government, I suggest buying trust preferreds, which have a debt component, rather than DRD/QDI preferreds. Because of their debt component, trust preferreds are SENIOR to the preferreds being purchased by the government. If you trust the government, feel free to buy non-cumulative preferreds. I would rather stay senior to Uncle Sam, thank you.

By the way, I am not alone with my concerns about the Government intervention. The following is from an article in today's online Wall Street Journal:

"Any expansion would likely prompt calls by U.S. lawmakers to attach more conditions. Members of Congress have begun pushing Treasury to force banks to lend the money they've received, complaining to Mr. Paulson that they're sitting on the cash or using it to fund acquisitions and pay dividends."

Caveat Emptor!