Timmy's Free Cash Emporium

Timmy's boys released the details on the CAP (Capital Assistance Plan) for the banks today (h/t CalculatedRisk). The first thing on the list?

Capital provided under the CAP will be in the form of a preferred security that is convertible into common equity at a 10 percent discount to the price prevailing prior to February 9th.

Which is, you know, the date both BoA and Citi were trading at their relative peaks over the last month.

Which is, also, about 40% above what they were yesterday. Both stocks up up up after trading in the basement all morning.

That's a nice touch, Timmy.

[UPDATE] Bank stocks exploding across the board. My favorite part of the story?

The option to convert the preferred shares into common shares is a change in the rescue program designed to give financial markets greater confidence.

Common shares absorb losses before preferred shares do, which means that under a stock-conversion plan taxpayers would be on the hook if banks keep writing down billions of dollars' worth of rotten assets, such as dodgy mortgages, as many analysts expect they will.

Like I said, bend over. You just bought a financial system, and if these banks go under, we all get wiped out.