"The Fed has declined to provide any underlying detail so far."

Par for the course.

"U.S. taxpayers will pay for the remaining losses "

yeah -- any estimate on how much that will be??

To the legality question (ianal):

I would think it would be, since the government can whatever it wants with its own fiat currency, but part of me wonders what branch of the government is ultimately responsible for ok-ing offloading all the bad debts and failed leveraged speculation onto the US taxpayers. It would seem like an excessive concentration of power to allow the executive branch the power to effectively spend without bound (by "lending" to various industries taking toilet paper as collateral, and the absorbing the losses when they obviously "default"). It would seem like it might be an interesting legal question... any knowledgeable people want to share some info?

really, I hate to re-post this, but it is on topic:

Fed Reserve cant just make up rules on a Sunday night and force a bail out like they did (IMHO)!

The United States Senate Committee on Banking, Housing, and Urban Affairs has jurisdiction over matters related to: banks and banking, price controls, deposit insurance, export promotion and controls, federal monetary policy, financial aid to commerce and industry, issuance of redemption of notes, currency and coinage, public and private housing, urban development and mass transit, and government contracts.

Members, 110th Congress

The Committee is chaired by Christopher Dodd (D-Connecticut), and the Ranking Minority member is Richard Shelby (R-Alabama)

Will any of the banking vampires be returning those bonuses to us taxpayers (aka SUCKAS)?

Bernanke's facing the Congress tomorrow. I'm certain he's only get a softball or 2 as everyone in DC will be instructed that's how it HAS to be... to preserve faith in the capital markets.

Free markets? What's that? Total bullshit bailout-happy authorities, taking care of each other at the taxpayer's expense.

For less than 50 cents a day you can help house a billionaire. Please don't let this small group of people be neglected. Just because they are few in number doesn't mean they don't deserve your pity.

and the U.S. taxpayers will pay for the remaining losses (if any).

If any?....
Bwwwhhahahaha

When the music stops the Fed will be left with a balance sheet stuffed to the brim with MBS CDO... all the most worthless high maintenance obscure paper on the planet.

Securitization distributes risk. The fed is busy consolidating it. Pathetic.

I keep thinking about the idiot-in-chief explaining to America how complicated the securitized financial instruments are and how no one knows exactly who owns the paper. "Not bailing out lenders who took irrational risks".

Well, now he can find out who owns the paper. It's the US taxpayer.

Re: Bernanke's facing the Congress tomorrow.

Wiat until Thursday when he goes before Dodd!

Re: They should offer $0 to the shareholders and any shareholder that doesn't approve should get a distribution consisting of MBS and hedge investments.

I think Congress and The Senate should be paid with Bear Stearns MBS!!

To the extent permitted by law

They make that up as they go along here in the USSA

Re: Source: The provisions of Executive Order 12631 of Mar. 18, 1988, appear at 53 FR 9421, 3 CFR, 1988 Comp., p. 559, unless otherwise noted.

>

Can anyone explain to me why
The United States Senate Committee on Banking, Housing, and Urban Affairs >>>DOES NOT have >>> jurisdiction over matters related to: banks and banking, price controls, deposit insurance, export promotion and controls, federal monetary policy, financial aid to commerce and industry, issuance of redemption of notes, currency and coinage, public and private housing, urban development and mass transit, and government contracts??????

"News" anouncer claimed that the market rally today was because the market no longer fears the failure of any more solvent Banks.

It's not the solvent banks we're worried about.

Anyone else falling victim to gallows humor? I swear, I read an article, and my first reaction is to start laughing.

It's not the solvent banks we're worried about.

Do we have any of those?

It would seem like an excessive concentration of power to allow the executive branch the power to effectively spend without bound (by "lending" to various industries taking toilet paper as collateral, and the absorbing the losses when they obviously "default"). It would seem like it might be an interesting legal question... any knowledgeable people want to share some info?

You are exactly right. All spending must originate in the House of Representatives. The executive (Treasury) has NO authority to approve of this (potential) spending. It is blatantly unconstitutional.

Bernanke & Paulson are drunk with power and drinking Bush punch!

Time to take away the punch bowl!

Saving the financial system from ruin? Priceless

No the taxpayers will get the bill and it definitely will have a price don't you worry.

Re: "i argue that BK's need to occur to clear out the corrupt and irresponsible lenders. and to more importantly re-establish trust amongst Americans that the financial system is free and fair. this is the part that Paulson, BB,et all just doesn't seem to get."

Great words, wish Dodd had balls to stand up for America, but I wonder about his lack of involvement with PPT and thus he appears to be a puppet unable or unwilling to engage this coup!

This is a priceless old story!!

Bush’s Plan: A View From the 2008 Crowd - The Caucus Blog - NYTimes.com

January 24, 2007, 10:09 am
Bush’s Plan: A View From the 2008 Crowd

By Sarah Wheaton

As the Senate Foreign Relations Committee begins considering resolutions opposing President Bush’s plan to increase troop levels in Iraq by 21,500, many of the potential 2008 presidential contenders have weighed in with their own positions. At this juncture, here’s how they stand:

Senator Hillary Rodham Clinton of New York, Democrat:

What I’m trying to do is to figure out what are our points of leverage on the [Nouri Al] Maliki government and, frankly, on our own government.

Mr. Dodd’s bill: S. 308 (text currently unavailable)

Released later ([My bill] says that, prior to sending any more troops -- the 20,000 the president wants to put into Iraq, 17,000 of them into Baghdad, a city of 6 million people -- it would require a prior authorization by the Congress.)

Mr. Obama’s bill not yet available.

Senator John McCain of Arizona, Republican:

I believe that President Bush now has the right strategy. I’ve been deeply disappointed in the strategy in the past, as is well known, and I think this is our last chance. Will it succeed?

I can’t guarantee that. I think we have a good chance of it, but I guarantee the catastrophic results of failure.

"incestous cannibalism"

Great heavy metal band. I love their music.

idoc, I enjoyed my ride up being 100% in gold mining stock mutual funds over '05-'06.

I look forward to getting back in with both feet post stock market crash, when gold takes a big -- but temporary -- hit.

But, this waiting for the stock market to crash is a real drag. I hope something comes of these Senate hearings.

Irritating, but I can live with irritating. Margin calls if the S&P hits 1500 are another matter, though.

So here's an interesting question. How is it constitutional for Paulson to promise this bailout given Article 1, Section 9

No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.

What law allows treasury to do this?

Walker, Paulson's response would be "Law? We don't need no steenkin' law!"

Truly, we are through the rabbit hole. The Treasury Department has now usurped the functions of Congress.

Ironically, this was what the GOP slammed Rubin for in the Mexico bailout. But at least he went to Dole and Gingrich to get their agreement before plunging into it.

The all-embracing language of the Boland Amendment appeared to prevent further circumventions by executive officials: During fiscal year 1985, no funds available to the Central Intelligence Agency, the Department of Defense, or any other agency or entity of the United States involved in intelligence activities may be obligated or expended for the purpose or which would have the effect of supporting, directly or indirectly, military or paramilitary operations in Nicaragua by any nation, group, organization, movement, or individual.
112
Congress constructed this tortured language because the administration
had demonstrated a willingness to exploit every possible loophole. It was the intention of Congress in 1984 to close them all. Once the Iran-Contra scandal became public in 1986, some executive officials used the excuse that they found the statutory restrictions too confusing or inconsistent.

Senator Christopher Dodd (D-Conn.) suspected early in 1985 that the administration might
seek ways of continuing assistance to the Contras. During Senate hearings, he said there had been rumors or newspaper stories that the administration might try to fund the Contras “through private parties or through funneling funds through friendly third nations, or possibly through a new category of assistance and asking the Congress to fund the program openly.

The Politics of
Executive Privilege
Louis Fisher

Come on Dodd, don't be a pussy!

"I think the German bonds returned something like 24% last year after you take the FX moves into account. That's a darned fine return."
R. Manhammer

I wish you luck. I'm too skeptical right now. My common sense tells me that the dollar should fall more as overseas investors lose faith in our rigged system.

But that leads me to believe that the dollar will rally because it really shouldn't. That's the way things have been working so far. Opposite of sense.

If the dollar does rally, it could wipe out overseas returns.

I'm gonna change my name to chicken-shit. That's how I feel right now.

Yves Smith was kind enough to remind us that Mr. Paulson in his first round of public service worked for the administration of U.S. President Richard Nixon, serving as assistant to John Ehrlichman from 1972 to 1973.

For the younger crowd, Mr Ehrlichman was a key figure in events leading to the Watergate first break-in and the ensuing Watergate scandal, for which he was convicted of conspiracy, obstruction of justice and perjury. He served a year and a half in prison for his crimes.

Bush knew that Paulson was his kind of guy.

MEFO had no actual existence or operations and was solely a balance sheet entity.balance sheet entity!

No one is outraged because everyone knows the music stopped. They are mulling around perfunctorily waiting for the final curtain. Zombies? or dead men walking?

Everyone know that at the end of this year they will be much poorer than at the start.

They just hope at the end of this financial episode they can JUST be poor.

@Robert:

What is the URL for "TickForums"? I'd be very interested in reading the discussion thread you reference, and a Google query for the term returns your comment above as the only hit.

Thanks,
Ant

29 * 10 ^9 / 300 * 10 ^6 =~ $100 for every man, woman and child in US. How many more of these do I have to pay for?

seems to me that a good investment for that $600 that is so generously being sent to me to spend would be in tar and feathers.

Career highlights

Paulson was Staff Assistant to the Assistant Secretary of Defense at The Pentagon from 1970 to 1972.[7] He then worked for the administration of U.S. President Richard Nixon, serving as assistant to John Ehrlichman from 1972 to 1973.

He joined Goldman Sachs in 1974, working in the firm's Chicago office. He became a partner in 1982. From 1983 until 1988, Paulson led the Investment Banking group for the Midwest Region, and became managing partner of the Chicago office in 1988. From 1990 to November 1994, he was co-head of Investment Banking, then, Chief Operating Officer from December 1994 to June 1998;[8] eventually succeeding Jon Corzine (now Governor of New Jersey) as its chief executive. His compensation package, according to reports, was US$37 million in 2005, and US$16.4 million projected for 2006.[9] His net worth has been estimated at over $700 million.[9]

[edit]

I want full disclosure on bernanke and paulson, bush, etc

Doom, when you can't bring yourself to invest in the markets, but holding the cash is bothering you, invest in yourself instead. Buy a tool that would let you earn money on the side, or an additional job certification, or hell, go back to school.

Cristofay:
to balance our swirling around the rim of a depression the country is also losing two minor wars overseas, and the hood that lead the attack against us (which the president was aware of the plot) is still living free 7 years after the event.

At this point, bin Laden is at more risk of dying from a blood sugar crash than from getting captured by Bush.

the fact that they are mbs doesnt really say anything (unless you dont know what you are talking about, then you might be afraid of the term "mbs"). its a very generic comment as there are many types, qualities and current market values. depending on the combination of these things, they may or may not be bad investments. the fact that jp took on the next 3+ points of loss on them tells me they are probably valued conservatively already. concern for my tax dollars needs more info before i run and hide crying under my bed.

there are many many mbs bonds i wish i could buy today for my own portfolios, i already own many now.

best

Re: Buy a tool that would let you earn money on the side, or an additional job certification, or hell, go back to school.

I'm sure many wall street gurus are pondering the future as well!

Bad Credit Car Loans provides various information on bad credit car loans. Know more about personal car loans, used car loans, bad credit car loans and bad credit car loans UK.

The man who reads nothing at all is better educated than the man who reads nothing but newspapers.
Thomas Jefferson

\tOur country is now taking so steady a course as to show by what road it will pass to destruction, to wit: by consolidation of power first, and then corruption, its necessary consequence.
Thomas Jefferson

A Bill of Rights is what the people are entitled to against every government, and what no just government should refuse, or rest on inference.
Thomas Jefferson

I was thinking about these guys today, more so about Congress:

Re: The Massachusetts Assembly suggested a meeting of all the colonies to work for the repeal of the Stamp Act. All but four colonies were represented. The Stamp Act Congress passed a "Declaration of Rights and Grievances," which claimed that American colonists were equal to all other British citizens, protested taxation without representation, and stated that, without colonial representation in Parliament, Parliament could not tax colonists.....

I was thinking that there were no political parties, no divisive corruption linked to insane ideology -- just a common cause:

The United States Constitution is the supreme law of the United States of America. It provides the framework for the organization of the United States Government. The document outlines the three main branches of the government. The legislative branch is embodied in the bicameral Congress. The executive branch is headed by the President. The judicial branch is headed by the nine member Supreme Court. Besides providing for the organization of these branches, the Constitution carefully outlines which powers each branch may exercise. It also reserves numerous rights for the individual states, and, thus, establishes the United States' federal system of government.

WHY, do we have so much corruption inside our government today???????

Dirksen Senate Office Building

The Second Senate Office Building

Below the new building’s west pediment is the inscription: “The Senate is the Living Symbol of Our Union of States.”

The only saving grace we anti-bailout folks have on our side is this: the government will fuck this up, just like they fuck up everything else.

The unintended consequences will be far worse than if they simply allowed the system to crash, then managed the aftermath the best they could.

They think they're going to stop Great Depression 2.0 by bailing out all the bad actors under the guise of preserving the financial system. Well, if one slimy investment bank going bankrupt is enough to crash the system, then the system is shit and it should be allowed to crumble.

I've had enough of these blogs, like this one, that used to talk a tough game, but now are siding with bailouts now that the sh!t is hitting the fan. Don't believe me? Start taking Tanta and CR to task when they advocate bailouts, and they'll refer to you as a member of the "pain caucus."

It's time for me to leave behind these blogs, make sure my six-figures in cash is as safe as possible and tell the government to go right ahead and do their worst. They'll fuck it up anyway, and then Tanta and CR can comment on that aftermath all they want.

Cheers.

OT: Perhaps CR can address these concerns regarding the stated unemployment rate:

Unemployment rate doesn't tell job market weakness story - Apr. 2, 2008

The Enron guys should try and get new trials. If the FED window was open to Enron, perhaps they would not have collapsed? See;
Get busted and go broke(like Enron)= major scandal
Get busted, go broke, get bailed out (Bear Stearns)= financial genius/saving the banking universe

It's all about perspective. If Enron was around today, their writeoffs would be a bullish indicator!

i think the key argument here is will a BSC failure trigger a systemwide catastrophe via the CDS exposure. i sincerely doubt this is the case and should be tested.

Picture, if you will, that you are in a position of stewardship of the economy and are facing this decision yourself. You're sitting in a conference room and the other people are debating with you this very topic. There are basically 2 arguments: do nothing and there is a real risk of financial catastrophe, or step in and backstop knowing that you may not really have to and may lose some money. Frankly, I'd step in and let people scream rather than plunge over the abyss. You err on the side of caution in such cases, but reading this thread, all I see is a bunch of people the enjoy watching people be miserable and pretty much absent of any cogent analysis.

Let's take the acronym MBS. It covers a lot of ground. And, if you know what you are talking about (which from reading this I seriously doubt 98% does), you take it as a very generic term, just like and Hedge Fund paper. Could be good, could be not so good. Could be the face was pledged already discounted, the Fed isn't saying. And frankly the Fed would be remiss if it did, causing trades to happen just because the Fed holds something. How absolutely devoid of reasoning could you all be? The Fed is going to TELL everyone what they have? Do you put your cards on the table before you begin betting? The Fed wants the money back so it's not about to poison the well for the market on this.

Get a grip.

So the markets are totally propped now up by the taxpayers devaluing currency and devaluing assets, unless you recently owned commodities. Makes sense. I am sure that there will be no trans location of resources as this unwinds from the nearly valueless paper to real tangible assets with real tangible value, in that the real assets can be eaten or used to build something that people can use.

The top 10% of taxpayers pay 75% of all the tax.

Which is only fair, since they make more than 75% of the money.

OT: Porsche's 911 sales down 42%.

Trouble with using a true luxury brand as a measure of anything is the numbers are so low (2624 units) that noise will make draw all kinds of wrong conclusions. In the article they blamed the recession, but unless you examine all luxury car brands at once, and all possible substitutions (like 2004 when a bunch of erstwhile beemer drivers in cali bought prii), I'm not sure you can demonstrate a trend here.

Luxury brands are highly vulnerable to the whims of fashion. Honestly, maybe everyone's Tesla orders are finally shipping... If I had the money, that's what I'd buy.

[disclaimer: I'm not arguing that luxury brands are recession proof]

Dirk van Dijk writes:
"Thats total BS, ... SS taxes start with the 1st $ earned and then stop after you reach about $100k. Thus most Americans pay them all year long while Wall St. CEO's are not even over their New Years Eve hangovers by the time they stop paying them."

I think you misunderstood. CEO's make up the top 0.001% of earners. I referred to the top 10% of earners, which includes (as I recall) anyone with a income of $75K and up. My point is that the middle class ($75K to $500K) pay most of the taxes.

Look -

"Pay Raise" and whomever else is overusing the Ctrl+C regarding whether the Fed's actions with respect to BSC were legal... please stop.

Our understanding of the matter won't be improved by CapsLock-riding cut&pasters beating us to death with Wikipedia selections about Congressional committees' jurisdiction. Have mercy. [If you must, a hyperlink will do just fine, thank you.]

It is starting to sound like the conspiracy theorist ramblings about FEMA being established by executive order.

Committee jurisdiction is irrelevant. The Constitution does not hold your answer. The question you seek to answer is whether the Fed's actions exceeded the authority delegated to the Fed in the Federal Reserve Act and whatever other enabling statutes govern Fed activity. Now, admittedly, Fatal does not have the first clue which those might be, but is quite certain that your answer is not to be found in Wikipedia, the US Constitution, or Sen. Dodd's press releases.

Particularly on the Constitution. Fatal reads a lot of crankistry in his line of work, and is quite convinced that there is a direction relation between the number of times someone invokes the Constitution and their crank quotient. Now the secret is out.

If you must wade through something in search of your answer, try title 12 of the US Code.

US CODE: Title 12,TITLE 12—BANKS AND BANKING 

This is not legal advice unless Fatal bills you for it.

"JPMorgan will take the first $1 billion in losses on the $30 billion portfolio, and the U.S. taxpayers will pay for the remaining losses (if any)."

IF ANY? ha ha ha ha ha ha ha ha ha ha ha ha ha ha.

That's a good one.