Lee A. Sheppard (Contributing Editor, Tax Analysts) has published Do-It-Yourself Interest Deductions March On, also available on the Tax Analysts web site as Doc 2005-24792, 2005 TNT 238-6.  Here is part of the Introduction:

This week’s subject is what Investment Dealers Digest calls "the next big thing in hybrid capital" — enhanced capital advantaged preferred securities (Ecaps). Ecaps, like MIPS (monthly income preferred securities), are designed to give the issuer equity capital and debt treatment for tax purposes. Their creator, Lehman Brothers, argues that they give more equity capital than trust preferreds like MIPS.

That was last August. Since then, other investment banks have reverse-engineered Ecaps, given their ideas new names, and poked each other in the eye about whose version is better. Goldman Sachs calls its product Apex, JPMorgan calls its high equity credit securities (HECS), while UBS sticks with the more subtle "capital notes" for its simpler 60-year security. Banks expect to issue $5 billion to $10 billion worth of Ecap-type securities over the next two years — the deals take a while to put together. The other banks are trying to achieve an equity credit result in slightly different ways than the product discussed in this article.

So there will be more on this subject. And yes, we’d often like to ask the IRS what the hell is going on.