Fortis, B&B, Wachovia, Bailout Plan
Submitted by
CalculatedRisk on Sun, 09/28/2008 - 3:13pm (1108 comments)
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So do we still get 24 hours to review the final draft?
1st?
Need a bailout?
"Vinnie's Bail Bonds..BR 549"
The coolest part of the bailout plan is 0% bank reserves! Bank can create an infinite amount of money and loans, backed up by nothing.
What could possibly go wrong?
We need to find the father of the bailout
and make him pay child support.
Oversight of Paulson will be by...Paulson, Bernanke, Cox, the FHFA Director and the HUD Secratary.
What a joke.
House GOP and Dems have sold the lot of you down the river.
Don't worry Wachovia, $700 Billion is on the way!!
Will Mark-to-Hank accounting bring huge profits for banks? Better than Mark-to-myth or Mark-to-model?
is chaos contained?
is this a random event?
significant changes
house vote Monday, Senate Wednesday, conference committee after that
I'll be here all ze veek
Oh my gawd! I'm rooting for the Republicans. Halp!
0%
Sounds like they cannot take a vote count tonight. Which would mean they will have to take the count tomorrow; they can't take this to the vote without locking in the numbers beforehand or Dems will bolt.
Wow - Bush could not hold the Congress GOP.
cannot take a vote count tonight
Mark-to-Hank -- Level 4?
if everyone is going to bailout everyone, why don't we just cancel all the debt. worldwide.....
British taxpayers will be liable for more than £150 billion of potentially toxic mortgage debt following the nationalisation of Bradford & Bingley, one of the countrys biggest mortgage lenders.
Isn't the toxicity self-inflicted in this case? Not quite the same...
The problem is spreading to the Continent - German papers are openly stating that giant Hypo Real Estate group is teetering on the brink of insolvency:
Dax-Konzern in Schieflage: Der Hypo Real Estate droht die Insolvenz - Wirtschafts- & Finanzkrise - Wirtschaft - FAZ.NET
The only reason they refuse to count is because they know they don't have the numbers. And in the dead of night, more will defect from Sauron's ranks.
After the new administration comes in and see that that his was a miserable thing to do , what is the process for undoing it and how long would it take .
Why is there a Brazilian Honda ad on CR?
We are all BRIC now? Is this a sign that I should brush up on my rusty Portuguese and head south?
-Jaso
Yankee writes:
if everyone is going to bailout everyone, why don't we just cancel all the debt. worldwide.....
Hey yeah. Didn't Pat Robertson or someone during the S&L fiasco propose a "Christian year of jubilee" in which all debts would be forgiven/cancelled?
"Sunday is the new Monday ... "
What a succinct way to describe the transfer of power from the West to the East! A debtor can pretend to be great and "exceptional" only for a short while.
Fred writes:
After the new administration comes in and see that that his was a miserable thing to do , what is the process for undoing it and how long would it take .
Never happen. Bailout will pile onto bailout. Once you throw 700 bn down the well, the cost of changing course will only grow.
...Isn't the toxicity self-inflicted in this case? Not quite the same...
Of course USA toxicity is not self inflicted
I miss Saturday rock blogging. This may be appropriate:
YouTube - Economy Bailout Song: AIG, Freddie Mac, Lehman Bros
australia just rustled up $4b to buy mortgage back securities as well, so that shonky home loan shops can keep packaging and selling their debt .. zero debate about it ..
People! I know these bankers. They will f**k you without a kiss. One day you'll think, "it would have been nice to at least have gotten a kiss." But, no! -- nooooooo! -- you'll realize that you were f***ed without a kiss.
Top 25? Why am I reminded of the old saw "There are no aetheists in a foxhole"?
I like this bailout song better:
YouTube - the song! - 700 BILLION DOLLAR BAILOUT - the song!
I can haz 0% reserves?
who wants a kiss? we just want some lube
"is chaos contained?"
That is the central question.
"Top 25? Why am I reminded of the old saw "There are no aetheists in a foxhole"?"
Because you can't handle the truth.
You need a God
And now they moved the Bush statement into tomorrow morning.... the dyke is crumbling.
I am tired of this eternal din of bailout.
Nothing changes until the common people who bought a very overpriced house and are still making the payments get some relief.
I suggest that all mortgages made in vintages 2003-2008 have their interest automatically reduced to the current Fed funds rate of 2% upon proof of continued occupancy.
Nothing less will provide stability to current house prices, otherwise we will have too many more foreclosures, and then we might as well kill any financial institution holding this crap paper.
Once again, all of these bailouts are providing a band aid to wall street- which is already toast.
Allow bad institutions to fail- allow people to understand the risks of the investments they were sold as safe.
And sell more pitchforks!!!
Someday this war's gonna end...
Apologies if this has been already noted but the New York Times has a version of the draft plan that is more recent than the one posted by CR (it has a higher version number and contains addition provisions):
http://graphics8.nytimes.com/packages/pdf/business/20080928bailout_text.pdf
There could be other even newer drafts available.
Because you can't handle the truth.
You need a God
Can I haz Glod, instead?
Nikkei futures up 100 points... this won't spur anyone.
"And in the dead of night, more will defect from Sauron's ranks."
I've been wondering when someone would mention Sauron.
If the principals are under the control of Sauron, then this is no random event. But perhaps even Sauron is bollixed and has lost control.
Still trying to keep the consensus. From the Crypt:
Pelosi: Votes depend on us
Although House Democrats won't provide unanimous support for the financial rescue bill, House Speaker Nancy Pelosi says a Sunday evening meeting with her caucus went well.
Pelosi said Democratic leaders have been doing everything they can to meet members' concerns about the bill. "The number of votes that it gets will reflect how well we've done that," she said.
Next on Pelosi's agenda: a meeting with Blue Dog Democrats Sunday night.
Someone wrote: Nothing changes until the common people who bought a very overpriced house and are still making the payments get some relief.
Walk, m**********r, walk! It's the only relief you'll get.
WE ARE NOT COMMON PEOPLE
WE ARE ROBBERS
karelian - I see Nikkei down 40 on Bloomberg
Citizen AllenM,
You know as well as I that maintaining overpriced housing is no answer. You do properly reinforce the point that the problem isn't the bank's balance sheets, it's the public's.
Hey yeah. Didn't Pat Robertson or someone during the S&L fiasco propose a "Christian year of jubilee" in which all debts would be forgiven/cancelled?
Could it be worse than this plan?
I think not.
Opps, I see CR has a link to the latest also. Sorry for the misinformation.
Banco Santander was in the bidding for wachovia but was shot down for political reasons
well - S&P futures down 0.06%.
How's that for a yawn?
I smell a 3% rally in everything tomorrow. Except gold, which has no inherent value these days.
There is a petting zoo about two miles from my house. I drove by today and the ponies were all missing.
Coincidence? I think not. There will be an immense demand for ponies over the next few months. Hoarding and hiding have already begun.
I only read news on the web, but it seems to me that this event has pushed even the election campaign into second place in the public attention.
Allan- You could reduce it to 0% if you want and still have the same problem. Fully amortizing loans are the problem, if you can believe it.
"...Nothing less will provide stability to current house prices,..."
Nothing will provide stability to house prices until they have fallen to a market-clearing price, at which people can afford to buy them with a reasonable loan. You could cut the mortgage rates to 0%, but the people who hold these loans would still be under water, because they paid too much in the first place.
Congress has asked for a jingle/slogan for the coming bailout.
Just a little something for their commercial.
I was thinking Wow, I could of had a
bailout.
Winners get to choose between a Lehman or AIG coffee mug.
who wants a kiss? we just want some lube
They are offering the lube for the financial markets, but they've tossed in ground up glass and sand in our share to improve the experience for us.
We is speshul!
"I smell a 3% rally in everything tomorrow. Except gold, which has no inherent value these days."
Unlike dollars, which do have inherent value?
Puhleeze.
Just a little something for their commercial.
Dude, you're getting a bailout!
I can't believe they took something that was 3 pages of Terrible, got chewed on by the entire nation, and managed to come up with 100+ pages of something that's... just as terrible, if not more so.
Show me a part of this bill that isn't de-facto toothless (in terms of oversight, taxpayer benefit...) or outright stupid (0 reserves, selective elimination of mark-to-market).
As an investor this bill does NOT increase my confidence in the system.
My capital will sit on the sidelines until something better shows up.
sm_landlord...ever try wiping your ass after taking a dump with an ingot? Of COURSE dollars have "inherent value"!!
some investor guy writes:
There is a petting zoo about two miles from my house. I drove by today and the ponies were all missing.
Coincidence? I think not. There will be an immense demand for ponies over the next few months. Hoarding and hiding have already begun.
some investor guy | 09.28.08 - 8:04 pm | #
I want squirrel and moose!
Dammit, I want MY pony!
We all oughta get a pony out of this shit....
the New York Times has a version of the draft plan that is more recent
This is troubling to me, not to mention suspicious. All these 'versions' out there, and yet no access to the 'official' version.
o more mark-to-market requirements and zero reserves...
voila! let's all just pretend there isn't a problem and the issue of toxic assets and undercapitalization will just go away...
Only a wall street bankster would come up with this solutio
Oooh, Rahm Emanuel, architect of the 2006 election which resulted in the most unpopular congress in U.S. history, was on TV just now denouncing free markets as a failed ideology.
What a great American.
The house republicans, the epicenter of the ideologs who eliminated regulation, or eviscerated it to the point it was useless, are now those resisting the new plan. They will truly be hoisted on their own petard.
sm landlord: Sorry, I was being snarky. I've got 7-8% of my "wealth" in gold, a few longs, a few shorts, and 80% "cash", which scares me the most.
Hate to beat a dead horse..err pony.
No bill will be passed so that each party can blame the other.
the_economist writes:
Congress has asked for a jingle/slogan for the coming bailout.
Just a little something for their commercial.
Brawndo: It's got what plants crave! Electrolytes!
people who get all 'gasm-ed up about deregulation miss the point entirely.
anonymous wrote:
The house republicans, the epicenter of the ideologs who eliminated regulation, or eviscerated it to the point it was useless, are now those resisting the new plan. They will truly be hoisted on their own petard.
Back to Daily KOS we go anon. I think we need to look at the Community Reinvestment Act of 1977(CRA), Financial Services Modernization Act of 1999, and then finally American Dream Downpayment Initiative(ADDI) of 2003, this was a monumental failure of touchy feely NEW DEAL liberalism.
That gratuitous Rahm Emmanuel interview is another reason why I hate CNN-- it cut away from Lou Dobbs interviewing Stiglitz, David Johnston, & another economist (demenici ?) (all 3 criticizing this plan)to cover the "breaking news" of Rahm sticking his mug into the camera to sell nothingburgers.
Dont know who Marcie Kaptor is, but she's a stud:
bailout parody - Google Videos
Someone wrote: Hey yeah. Didn't Pat Robertson or someone during the S&L fiasco propose a "Christian year of jubilee" in which all debts would be forgiven/cancelled?
I gotta tell you, I rode a bus and a guy said that the ten commandments were all that were necessary. I didn't tell him, but probably should have, that the ten commanddments represent a primitive legal system. They may suffice for primitive societies, but they will not and would never cope with the complexities of modern -- yes, advanced -- contract law.
Got Billions...if not you are:
YouTube -
Wiring dow
Dr. Munch,
Sorry, I missed the snark. Still trying to figure out where I can park some cash and have a hope of almost keeping up with inflation and not losing it in the next whipsaw.
Lib from chap hill: exactly. it wasn't all deregulation...a large part of the road to this point was financial institutions responding to incentives provided for in REGULATIONS BY THE US GOVT. Not all but a large part. there isn't a simple black and white answer such as regulation vs. deregulation.
The Daily Telegraph is incoherent. How will taxpayers be liable for the mortgage debt? Isn't the mortgage debt an asset (albeit, a troubled asset) of B&B's?
When the deal is finally done, will we see buxom chicks dancing in front of their computers when you visit the Federal Reserve or the Treasury's websites?
Back to Daily KOS we go anon. I think we need to look at the Community Reinvestment Act of 1977(CRA), Financial Services Modernization Act of 1999, and then finally American Dream Downpayment Initiative(ADDI) of 2003, this was a monumental failure of touchy feely NEW DEAL liberalism.
Liberal from Chapel Hill
~~~~~~~~~~
Wrong, both those programs have lower default rates than the public in general ...
STOP trying to blame this REPUBLICAN MESS on someone else ...
Ambrose Evans-Pritchard in the (UK) Telegraph:
"Even if Congress backs the Paulson bail-out, the $700 billion blast cannot save the US, Britain or the world from the deepest economic slump since the Thirties. If Congress balks, God help us"
As we say in California, have a nice day!
someone wrote: Oooh, Rahm Emanuel, architect of the 2006 election which resulted in the most unpopular congress in U.S. history, was on TV just now denouncing free markets as a failed ideology.
It's trickle-down that has failed. People are realizing that very little of the profits trickle-down, but, boy -- Oh, boy!! -- the debt surely will trickle-down.
Liberal from Chapel Hill writes:
Back to Daily KOS we go anon. I think we need to look at the Community Reinvestment Act of 1977(CRA), Financial Services Modernization Act of 1999, and then finally American Dream Downpayment Initiative(ADDI) of 2003, this was a monumental failure of touchy feely NEW DEAL liberalism.
Indeed yes. One big part of the problem is continual government interference in the economy. That interference has many forms, only one of which is "regulation". But the solution to the problem of government interference in the economy is not more government interference. Just as the solution to the problem of too much debt is not more debt.
Can someone please explain the 0% Reserves?
Now isnt the requirement 10%
this is a tired rant, i apologize in advance.
fax 'em tonight, and call them tomorrow morning.
i too feel its futile, but its the only voice we have.
"It's trickle-down that has failed."
I'm going down to my local Wachovia branch tomorrow with the following question:
can I haz umbrella plz?
craig and Liberal from Chapel Hill, do you still think supply side economics works?
"...the ten commanddments represent a primitive legal system."
A list of divine moral commandments on which natural law is based. Try violating them and see what happens.
There are plenty of laws, otherwise, in the Bible.
If we're so advanced, how to explain the past few months, years, or century?
stealthwii, I think it means that instead of being able to loan 90% of your deposit base, you can loan out 100%.
It certainly doesn't mean you can loan out an infinite amount, or at least I'm sure that wasn't the intent.
House Reps just caved. Free ponies for everyone.
VOTE THEM ALL OUT.
define "works"
"do you still think supply side economics works?"
Help me out here. What does supply-side economics have to do with demand-pull bubbles generated by EZCredit?
Or did I just miss the snark again?
I think this may be the most appropriate video for this bailout:
Google Videos Error
Sharpening my pitchfork. Torch already lit...
Look at their eyes. They don't believe a word of what they are saying.
Has anyone here heard from anyone in power at a large bank as to their opinion of the bailout plan?
Slider writes:
We need to find the father of the bailout
and make him pay child support.
Slider | 09.28.08 - 7:41 pm |
No problem. I've got his number - 1-800-HANK
From Rithholz assigning blame
http://bigpicture.typepad.com/comments/files/bar092908OVOI.pdf
Has anyone here heard from anyone in power at a large bank as to their opinion of the bailout plan?
they are staying silent, they can't believe their luck so why say anything?
jag writes:
The Daily Telegraph is incoherent. How will taxpayers be liable for the mortgage debt? Isn't the mortgage debt an asset (albeit, a troubled asset) of B&B
The taxpayer pays for this asset based on FALSE assumptions about the mortgage being paid back.
Example: How much is a 20 year $100,000 mortgage worth?? If you foreclose and can only sell the house (minus costs) for $50,000 but you paid $75,000 for that right, you LOSE $25,000.
Simplistic example but fairly accurate issue. The banks insist their is a high? likelihood of repayment but no one believes them (except our government)
People! Look at the market volume for the last few days. Does it not speak volumes? Someone is AWOL or refuses to participate. That can only mean that those AWOL think that the market is rigged. They cannot participate without surety about the rules. Up or down, tomorrow is meaningless without full participation.
Are we still looking for a catchy name?
How about
Backstopping Investments, Governmentally
IF anyone believes this is not going to be a HUGE tax burden and cause more problems than it solves,
HERE'S YOUR SIGN.
Re: Sunday is the new Monday ...
Very good! CR is the new WSJ
The BB&T Chairman and CEO sent a letter around via email saying the bailout was a disaster and just something to save Goldman and Morgan. Someone probably can post it.
The coolest part of the bailout plan is 0% bank reserves! Bank can create an infinite amount of money and loans, backed up by nothing.
What could possibly go wrong?
Become a bank....somehow.
Zero point zero.
YouTube -
Supply side economics may still work but supplicant side loan economics won't.
That is the real issue here. At the bottom of any financial crisis it is the inability of the borrower to repay the loan.
I can loan Larry Ellison $1 billion tomorrow ( if I had it) and expect to be repaid. I cannot loan leaf blower Hector Gonzalez $100,000 and expect the same happy conclusion to my contract.
What has happened is a deterioration in counterparty risk. A lot of people are not paying their loans back.
In order to get beyond this crisis we need to identify who those people are and not allow them to borrow.
This isn't rocket science. It is risk identification and denying credit to those who are high risk.
Picked this from a comment on Mish's site:
[ The Financial Ninja ]
The financial ninja notes:
I've noticed a lot of talk about "protecting" and "paying back" the taxpayer. I've even heard about the taxpayer "sharing in the upside".
All such talk is absolute fantasy. Out of 42 systematic banking crises across 37 countries, despite the implementation of a wide range of policies, all resulted in the re-allocation of wealth AWAY from taxpayers and towards debtors (banks). None avoided recessions and all recessions were SEVERE.
Not a single bailout resulted in anything but losses.
*** All Data Sourced from the IMF working paper: Systemic Banking Crises: A New Database ***
Still waiting for Republican comments, but WSJ is treating this like a done deal:
WASHINGTON -- The Bush administration and congressional leaders agreed on a deal to authorize the biggest banking rescue in U.S. history.
The $700 billion program would effectively nationalize an array of mortgages and securities backed by them -- instruments whose deteriorating value has clogged the nation's financial system.
Lawmakers finished writing the bill late Sunday, after which Speaker of the House Nancy Pelosi declared it "frozen," meaning no changes would be made. The bill leaves many mechanics of the operation up to the Treasury. Among these are the crucial issues of how the U.S. government would decide which assets it will buy and how it would decide what to pay for them. The legislation leaves the Treasury 45 days to issue guidelines on those procedures. The bill awaits votes in Congress starting on Monday.
Anonymous writes:
"I think this may be the most appropriate video for this bailout:
http://video.google.com/videoplay?docid=143046169681194289&ei=FB_gSI7dEJLAqALF3-ylCw&q=trillion+dollars&vt=lf&hl=en"
Nice
Nice, 0% reserves and fantasy accounting.
I say it's worth a $1billion and you have to accept that.
Fascism will return.
Mark-to-market will be replaced.
Mark-to-Hank will save the banks!
"Become a bank....somehow.
Notes To Self"
I happen to know people who are doing exactly that.
Re: "Look at the market volume for the last few days. Does it not speak volumes?"
That is the next logic step, i.e, no one has cash to play with and volume goes to zero; see Great Depression.
"I'm urging every member of our conference whose conscience will permit them to back this bill"
on Bloomberg radio: I guess that was Boehner or Blunt.
so both dems and repubs say "The Paulson Plan" was terrible and we fought it and won and now we have a better plan that we must do
who predicted that?
Anonymous writes:
The BB&T Chairman and CEO sent a letter around via email saying the bailout was a disaster and just something to save Goldman and Morgan. Someone probably can post it.
Report from a few days ago:
"House Republicans wont go on record as supporting this to avoid backlash back home from both rednecks and local community banks (BB&T?). Dems knew this soft spot so they keep saying its gonna pass so when it doesnt they can blame the Repubs."
The Notorious
Backstopping Investments, Governmentally
If they are getting rid of mark to market what do they need the rest of the bailout for?
Listened to House Republican leadership talk - danced around the question about how many would vote for it. I hope most Reps vote no. They said "we have made it clear to our members that we are supporting this" and hope they do as well.
step 2...
loan any amount on any term, collect whatever the mark is willing to pay.
step 3
retire.
BobbyFlav
I'm urging every member of our conference whose conscience will permit them to back this bill"
Meaning, if you have no conscience,
back this bill.
"That is the next logic step, i.e, no one has cash to play with and volume goes to zero;"
I doubt this. Plenty of hedge funds that must unwind. They have to sell their stuff to somebody. They just have to find the price.
Haz we got prize dizcovery?
tbapple: wow..."redneck" is pretty derogatory.
Max @8:31...
That statement about a deal being reached was for the Asian and European markets....
CR -
You may want to post this - from Dealbreaker:
MEMORANDUM
TO: SIFMA Government Reps Committee
FR: SIFMA Washington Office
DA: September 28, 2008
RE: Conference Call w. Treasury / 9:00PM TONIGHT
At 9:00pm tonight, Sunday, September 28th, there will be a call with Treasury officials to discuss the Troubled Asset Recovery Plan. This call is specifically for analysts. Please distribute ASAP to analysts in your firm who might be interested in participating. We have also distributed this call notice through various SIFMA Committees to solicit analyst participation.
Please find the conference call information below:
Date: Sunday, September 28th
Time: 9:00PM ET
Toll-free Dial-in: 1-866-843-0890
Entry Code: 1812173#
"Next on Pelosi's agenda: a meeting with Blue Dog Democrats Sunday night."
Max, Pelosi has to 'splain the bailout to them because if they just understood it, they would vote for it.
Did I mention that Pelosi is among the most wealthy in Congress? But I'm sure that has nothing to do with her support of the "bailout".
My daughter, a nurse, just moved out of her house today after turning it back to the lender. Single Mom with two kids lost $60,000. Hank is not saving her. She keeps asking me what she did wrong and all I can say is that she got had in the biggest scam this country has ever seen. Don't blame yourself and go rent something and keep going!
Mentalic
yeah, just for the asian markets. I'm sure the repub leadership didn't mean it. They will reverse course, vote no on the bill tomorrow, then abolish the federal reserve . . . .not.
I'm surprised that the German language doesn't have a phrase of its own for "Real Estate".
Can't get through to Pelosi's contact form on speaker.house.gov. It's swamped. We've slashdotted it.
Hanging by a thread writes:
My daughter, a nurse, just moved out of her house today after turning it back to the lender. Single Mom with two kids lost $60,000. Hank is not saving her. She keeps asking me what she did wrong
Um. I'll take a stab at it. She took out a loan for more than she could afford to pay? Just a guess..
I'm surprised that the German language doesn't have a phrase of its own for "Real Estate".
Die Immobilien.
Don't blame yourself
Sure. Having more people evade responsibility and blame "Wall Street Greed" is gonna make things better.
A borrower is responsible for ensuring they can afford a loan - period. Full stop.
Bloomberg radio, in what I think is an older (few hours old) audio clip -- republicans don't want to back the plan under it is written into a bill.
Sounds to me like there may be amendments offered on the floor of the House. Polical grandstanding?
A borrower is responsible for ensuring they can afford a loan - period. Full stop.
Mr. Cloudy Day
~~~~~~~~~~
No ... the loan broker is responsible for establishing the ability for the borrower to pay before offering the loan ... That is his fiduciary duty to the investors ...
that should be
"until it is written into a bill"
and
"political grandstanding".
Paulson can't stand, and I can't spell
SRC
how could anyone think a party led by John McCain would even consider grandstanding?
It's a trap.
GOP is being deeply dishonest as usual; they will not deliver the promised 50%. they didn't do the count and they are trying to trick Pelosi into carrying Bush while they bail.
She pushed her ability to pay and got caught by surge in gas prices, groceries, etc. Once the price dropped far enough to eat the equity, there was no point in keeping it.
that may be a great idea
the CR and T Bank.
cr's loyalists put up large dinero to start banko.
Once schooled in the art of 'hank, buy this crap, assho**', 'and send more money' , we'll IPO june 2009 and make the Palm Ipo look like vonage.
From Politico. Mixed messages indeed:
Moment of truth approaching for bailout
By DAVID ROGERS | 9/28/08 8:31 PM EDT Updated: 9/28/08 8:31 PM EDT
Monday's House vote on the financial bailout is not a sure thing, as resistance re-emerges from both the right and the left.
Treasurys $700 billion rescue plan for the financial markets goes to the House floor Monday, backed by the two major presidential candidates but facing resistance still on the right and left.
Coming just weeks before the November elections, the 110-page bill is a major test of whether the political center can hold behind whats become an unprecedented government intervention to try to break the credit crunch threatening the larger U.S. economy.
If we dont pass it, we shouldnt be in Congress, snapped Sen. Judd Gregg (R-N.H.), the lead negotiator for Senate Republicans.
But his fellow New Englander, Rep. Christopher Shays (R-Conn.) warned the depth of unhappiness among members is real. For this to pass, a lot of people are going to have to change their minds, Shays said.
House Republicans are at the center of the storm, with conservatives in open rebellion. But Democrats have their own defections, and within hours of the agreement, the leadership was already highlighting the bills promise to crack down on Wall Street pay, mitigate foreclosures and even allow Congress to cut off funding at $350 billion.
CR: "credit rescue"
What a prescient choice of weblog name! Bravo!
"Sure. Having more people evade responsibility and blame "Wall Street Greed" is gonna make things better.
A borrower is responsible for ensuring they can afford a loan - period. Full stop."
That is crap, in my opinion. Nobody can understand all the terms of their mortgage...there are plenty of cases of predatory lending.
Have some compassion - it must be hard being a single mom and bringing up kids.
But his fellow New Englander, Rep. Christopher Shays (R-Conn.) warned the depth of unhappiness among members is real. For this to pass, a lot of people are going to have to change their minds, Shays said.
Wow - sounds like opposition is more entrenched than it seemed.
I think the "End of an Era" bit about the end of investment banking was a little premature. With up to zero reserves, everyone can be an investment bank. Have all the leverage fun you want.
I'm sorry, after the changes to reserves and accounting, are we supposed to believe them that they are going to strengthen regulations for financial institutions? How stupid do they think we are?
My local paper on Sundays has the most popular subject to write in about and that was the bailout. Out of 394 letters, only 9 were for it.
Karelian
if too large a number of GOPers bail, then they will get politically slaughtered by McCain's grandstanding banner of "Country First."
General public anger is against the original Paulson Plan. General public sentiment is that something must be done. Blocking a deal again would be suicide for the party.
The details of the plan are another story. The politics today have little to do with whether its the best plan or not, but a lot to do with the fact that it is far from the worst plan, which was the original Paulson Plan.
tbapple writes:
Hate to beat a dead horse..err pony.
No bill will be passed so that each party can blame the other.
tbapple | Homepage | 09.28.08 - 8:11 pm | #
Yes but then it comes down to what happens in the markets... If we have no bill & Paulson's boogie man is real [whatever it is] and we have a visible 'disaster' - then GOP look very bad for 'obstruction'.
On the other hand if we have no bill & Hank is 'exaggerating' & nothing terrible happens except maybe some bad earnings for his pals - Dems look very bad.
I doubt they are both going to play this story to their advantage. Somebody is going to get a lot more egg on their face than the other. I have no idea which one.
I would not want to handicap that race.
"redneck" = Dixie Billionaire. look away, look away... reconstructio
With regard to Hangingbythread's daughter's sorrows, I'll note that Nouriel Roubini's HOME plan advocates some kind of assistance to homeowners at risk of default as a way of addressing the "bottom" of the problem. I haven't read the details of the plan as it's behind a registration wall.
Lest any of you think this is actually a bailout and not anything other than a giant looting hedge fund for Paulson & co. read the following and understand what is really going on:
Winter (Economic and Market) Watch » Massive Bailout? Hardly, a Massive Tar Pit Instead
Stinky tar pit bid indeed!
Billy H.
Immobilien is the German equivalent.
Re: At 9:00pm tonight, Sunday, September 28th, there will be a call with Treasury officials to discuss the Troubled Asset Recovery Plan. This call is specifically for analysts. Please distribute ASAP to analysts in your firm who might be interested in participating. We have also distributed this call notice through various SIFMA Committees to solicit analyst participation.
Crooks
@CloudyDay,
Most college graduates can't compute compound interest as opposed to simple. Most high school graduates can't compute a percentage with pencil and paper. It was a bankers decision to sell these people no doc neg am loans.
It became profitable for banks to peddle unpayable mortgages, so they invented new products and sold them wherever they could. They wanted their stinking collateral back to resell at a profit, and they wanted the fees from the refinance. Now they're stuck. Good! It's the bank's job to judge risk.
Hanging by a thread writes:
She pushed her ability to pay and got caught by surge in gas prices, groceries, etc. Once the price dropped far enough to eat the equity, there was no point in keeping it.
When I signed my mortgage documents, I don't recall anything that said I could walk away in the event my equity fell to zero. I just remember the parts about agreeing to pay back the money I borrowed. Is this how you raised your daughter? To abrogate contracts in the event that it becomes financially advantageous to do so?
How stupid do they think we are?
Bond Girl | 09.28.08 - 8:45 pm | #
Stupid enough to have voted for their fast-talking in the first place. None of their egos will allow them to believe that they won't be able to talk themselves into re-election again.
Sad thing is, they are probably right.
I'm actually thrilled that congress has the foresight to lend 25 billion to the autocompanies to build $50g pickups that buyers can write off completely.
They don't want to block this... they want to oppose it while Dems carry it through. It's a balancing act.
If 40% of GOP is for the plan and 60% of Dems are for it, Reps can campaign on trying to save the taxpayers.
Valiant effort... we were stabbed in the back... vote us back to the Reichstag and we will avenge the wrongs done to our people.
They're letting the moral hazard genie out for a binge. Rent strikes, public sector strikes, sabotage, coming to a political theater near you.
It's really a reverse hedge fund. Most of the hedge funds I know actually want to make a profit.
bailout = bullshit..
I agree with Joeshmoe. This is a very dangerous moment for the republican party. And I wonder whether it may be that the democratics are intelligently playing it that way. Both parties may be up to no good, exploiting the impending calamity for political gain. Who in his right mind wants to govern a nation in depression?
To abrogate contracts in the event that it becomes financially advantageous to do so?
Corey
~~~~~~~~~~~
just like Wall Street ... lol
Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.
But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.
Nobody -
Shays is an idiot and is no doubt pushing for this bill (probably the orginal draft) since his entire district (Fairfield County CT) is counting on it getting done. Shays is the genius who referred to the "Chicago Black Sox" scandel as the "Chicago Black Hawks" scandel during the steroid hearings. He was also a RE broker before becoming a rep....
Valiant effort... we were stabbed in the back... vote us back to the Reichstag and we will avenge the wrongs done to our people.
Only works if you can find a drunken Dutch Communist.
CEO of BB&T on CNBC. Housing needs to fall another 10%. Opposes the bailout bill. Wants a 10% tax credit = to the cost of the house purchase.
Morons on parade.
Damn, a big black swan just walked in the front door, while I was puking into the dumpster behind the building.
We still have a lot of Vau-U-Rite vodka, but its losing its kick.
The most unified lockstep party in modern history is going to splinter because they no longer want to be associated with anything Bush. They were for him before they were against him.
Most college graduates can't compute compound interest as opposed to simple.
"A man's got to know his limitations."
It's ok to not be able to do basic math. But if you can't, it's NOT ok to act like you can.
It was a bankers decision to sell these people no doc neg am loans.
It was a BORROWERS decision to sign the papers. Ain't nobody holding a gun to anyone's head during the process.
Why is everyone so afraid of holding ordinary citizens accountable? Why should congress critters hold themselves accountable, if you and I and that unfortunate nurse and her well-intentioned parent refuse to hold ourselves and each other responsible?
Democracy cannot survive like this.
It's your daughter's fault for taking these crooks at their word.
Sorry, but it's true.
mmckinly seems to be legalizing rape.
He suggests that if I offer a loan the person offered the loan must acquiesce to the terms and is powerless to stop my offer.
Has 'shit for brains' become the new standard of commerce? I was offered the 'chance' to buy an $85,000 Jaguar. I must admit I did like the car. The salesman said it was within my reach. I could afford it. Somehow I didn't think I could. There were things like insurance, taxes and upkeep that dissuaded me from buying that handsome automobile.
mmckinly thinks that I was a pawn unable to fathom these considerations. I was. I bought a much less prestigious vehicle. Yet he tells me I should not be allowed to post on this forum because I am to stupid to get the real reasons for the credit crunch. I think I am. I think mmckinly is too stupid to grasp them because I don't believe I was being particularly clever to evade the salesman's pitch.
Wow - sounds like opposition is more entrenched than it seemed.
Nobody | Homepage | 09.28.08 - 8:44 pm | #
I'm not surprised. Would YOU want to vote for it if you where a HOR?
I actually have considerable amounts of Confederate cash that I could deploy - offer me a workout to consider.
SIFMA call the other day Sept 26
SIFMA: Securities Industry and Financial Markets Association
Go listen to Tim Ryan about Bailout; why, I don't know...
It's a TARP!
Deregulation led to the development of an entire shadow market in CDSs
Lowering interest rates to 0% after inflation led to massive speculation in real estate
Lack of any regulatory oversight encouraged outright fraud.
Pretty much all last 8 yrs inder Bush, The GOP and John 'yes I am unstable" McCain.
The GOP contingent trying to dictate terms now in the House and Senate is joke !
Best line in GOP's recent press conference: Boehmer, saying "there is no risk to the taxpayers" with this bill. !!!
It is amazing how the language in this has morphed over a week-- from a "bailout" to a "rescue" to Pelosi's "taxpayer investment" & now according to Boehmer, a "risk-free" taxpayer investment, at that.
So tomorrow, in the 2-minute "love" we'll all be told "really, it was a good thing this happened, because now "they" can really get in there and "clean house"-- for us, the poor taxpayers. Cuz they love us so much.
Just saw Senator Lindsey Graham on Fox trying to defend the "bi-partisan" nature of this, & the poor guy was so stressed at the big fibs he's forced to tell that he literally got an eye-tic-- his right eye kept closing involuntarily as he spoke.
Nobody -
Shays is an idiot and is no doubt pushing for this bill (probably the orginal draft) since his entire district (Fairfield County CT) is counting on it getting done. Shays is the genius who referred to the "Chicago Black Sox" scandel as the "Chicago Black Hawks" scandel during the steroid hearings. He was also a RE broker before becoming a rep....
That notwithstanding, it still seems that the opposition to this bill could well be rather larger than many thought.
Mr. Cloudy Day
Those people should have never been offered loans ...
I know it , you know it , now Wall Street knows it ... STFU
Democracy looks pretty healthy. Capitalism is taking a hit, but the pendulum never stands still.
Corey: Low interest loans and inflation were tantalizing to the working class. Perhaps they should have been smarter, they should have known that it was like Lucy and the football but who can be critical of them making the attempt to make that jump. Hope springs eternal, or used to!
They don't want to block this... they want to oppose it while Dems carry it through.
And Dems know that - and GOP knows that Dems know that - so all this is grandstanding by the GOP to try and paint a residual image of GOP opposition to the plan.
Which they will vote FOR, along with the Dems, come vote time, like the good little politicians they all are. Because they all have more in common with each other than they have with you and me.
462 Visitors Online
What a difference 3 years makes !
Lefty, you might want to stock some of this stuff.
Folks we should be relieved. FTXE 100 down 4%. And it is turmoil in their markets, not ours. Let them lead the way for awhile. I am getting tired that it is our markets leading the collapse.
unit472 -
fine as long as you are loaning your own money ...
but the loan brokers weren't , and they knew it , and they loaned other peoples money to anyone ....
It is called fraud and any lawyer will tell you : Fraud changes everything ...
Comrade Ackbar:
Best "It's a trap!" spoof: YouTube -
Once the price dropped far enough to eat the equity, there was no point in keeping it.
Hanging by a thread | Homepage | 09.28.08 - 8:41 pm
Word. If she ran a hedge fund, her peers would call her "innovative".
Maybe just maybe the GOP can blame the libruls & coloreds !
It was a BORROWERS decision to sign the papers. Ain't nobody holding a gun to anyone's head during the process
Thanks mr welch
Those people should have never been offered loans ...
Why?
Spell it out - explain to me exactly why a nurse - an educated American - should not even be allowed to see an offer for credit.
SRC writes:
I agree with Joeshmoe. This is a very dangerous moment for the republican party. And I wonder whether it may be that the democratics are intelligently playing it that way. Both parties may be up to no good, exploiting the impending calamity for political gain. Who in his right mind wants to govern a nation in depression?
SRC | 09.28.08 - 8:49 pm | #
It depends on the outcome - this situation could work in the favor of either party. Seriously - most people are NOT that ideological - make the system work... we will reward those who make the system work.
So if no meltdown and we waste a bunch of tax money... the party promoting the taxes will pay at the poll.
On the other hand if we do nothing & we have a meltdown... the party that killed the rescue pay at the poll.
Tell me what happens to the markets & economy in the future & how the vote went prior to that and I can almost for sure tell you the winners at the polls.
The gov't will NOT pay distressed prices. Anyone who believes that doesn't have the slightest idea about accounting structures that are currently in use by these "lovely" institutions.
With the elimination of real market prices we have now allowed them to take all of the crap that sits in Level 3, write it back up (key point) and place it back on the balance sheet.
That in itself is not the entire picture as Paulson will now take the bulk of the first installment payment to begin purchasing these pieces of shit. When enough of it is purchased he will then have established "observable market prices" that can be then used as real input pricing.
Purchasing these "assets" for far above what they are worth now (in most cases .20/1.00) allows him to point at those sales as real undistressed sale prices, since it was under a government mandated program and since most banks have had observable market prices for over a year and ignored them under a FASB clause that states they don't have to use them if the sale was distressed.
Translation:
Allowing the entire world's shitpile of assets to be marked up to whatever level he will have determined by the purchasing power he was just given.
We are all fucked.
Ciao
MS
SIFMA Needs Your Immediate Help
Contact Your Members of Congress
SIFMA Urges Congress to Enact the Troubled Asset Relief Program | SIFMA Legislative Issues
We urgently need your help. As you know Congress and Treasury are working on a plan to restore market stability and increase credit availability for Main Street Americans. However, we are extremely concerned that the agreement on a compromise has stalled.
We need everyone to show support for this critically important legislation. Congress needs to hear from you today
To call and e-mail your representatives visit U.S. Senate and United States House of Representatives, 111th Congress, 1st Session Or, if these sites are non-responsive visit Congress.org - Get informed, get involved and look in the upper right hand side of the screen.
lease let your representatives know the following:
We believe this legislation is critically important and should be enacted into law at the earliest possible time in order restore market stability and increase credit availability for Main Street Americans.
Every day, working Americans rely on healthy credit markets for home loans, auto loans, student loans and other types of financing. These credit markets help support small businesses as well, which need cash flow to meet their payroll.
Only the compromise on the Paulson-led plan will restore confidence, credit availability and market stability in a timely manner. None of the alternatives put forward would achieve these fundamental objectives.
Republicans on CSPAN now.
Boehner is "hopeful." God help us.
WOW!!
Re: JAPANESE share prices opened 0.53 per cent higher on Monday following the announcement by US lawmakers that a deal had been reached on a massive Wall Street bailout plan.
The Tokyo Stock Exchange's benchmark Nikkei-225 index rose 62.63 points to 11,955.79 in the first few minutes of trading.
US lawmakers on Sunday agreed on the details of the unprecedented US$700b (S$998b) and have sent the proposal to Congress for approval.
See, it's a done deal, waiting for approval, just like SIFMA wants!
Sorry but Fuck SIFMA
Ciao
MS
Mr. Cloudy Day writes:
Those people should have never been offered loans ...
because of their credit scores , their salaries or both ...
simple ... I am old enough to remember when you had to have 20% down and pledge your first born ...
liar loans, no downs , pick a payment, no docs ... this is fraud by the Financial Industry plain and simple ...
Ron Suskind called the Enron meltdown "the 1993 World Trade Center attack to our current 9/11." He pointed out that the accountability pieces of Sarbanes/Oxley were mostly stripped away, and the rest weren't enforced. He also said that financial services companies got themselves exempted from a lot of the Sarbanes/Oxley rules.
Republicans can whine about the taxpayers all they want, but this meltdown is a direct result of the policies they championed and pushed through. Too many Democrats went along, but as the House Republicans' stupid alternative shows, you can't trust Republicans to fix a mess they created, especially when they can't see what went wrong in the first place.
Can we agree to a bipartisan effort to unseat both Pelosi and Boehmer at a minimum? We should focus efforts to send a message.
Lobbyists are already opening their shops:
Giuliani's Firm is Ready for Bailout Business - Gothamist
MSNBC poll now underway (8:51 pm Eastern)
As Congress moves closer to a deal on the $700 billion bailout plan, do you think lawmakers should approve it?
YES: 35.8% (56,011 votes)
NO: 64.2% (100,350 votes)
SIFMA = Securities Industry and Financial Markets Associatio
Who knew shit could float upstream. Now we know. It takes a complicit CONgress with a corrupt administration.
mmckinl, if you have EVIDENCE that people were being forced to sign loan contracts against their will then I apologize. You are correct.
However, if you do not I would submit you are an idiot. I have been inside banks many times. I have never seen a loan officer get up from his or her desk and suggest I borrow some money.
It is my experience that I have to walk over to their cubicle or desk and ask them if I COULD borrow money.
Further, upon asking them this question they have never forcibly detained me, threatened me with violence or in any other way intimidated me into taking out a loan.
The most recent occasion when I approached a lending officer was for them to say I had could credit and that they would be happy to finance a new car. I paid cash instead.
"Why is everyone so afraid of holding ordinary citizens accountable? Why should congress critters hold themselves accountable, if you and I and that unfortunate nurse and her well-intentioned parent refuse to hold ourselves and each other responsible?"
Amen to that!!!
We're closing in on 20,000 signatures against. Lots of great comments. We're taking them to the Hill tomorrow.
No Wall Street Bailout |
so the House GOP is OK, deal is done
NO on this bailout bill.
A watered down bad idea is still a bad idea.
Time to call the congressmen and vent on their staff.
Those people should have never been offered loans...
I'm not asking why they shouldn't have been GIVEN loans, I'm asking why they shouldn't be OFFERED loans.
You guys are making an implicit assumptiong that these borrowers - that that distraught parent's nurse daughter - are idiots and incapable of managing their own finances.
If that's the case, the best thing society can do is let them crash and burn OR IT DEVALUES EVERYONE WHO IS CAPABLE.
Boehner "working with members."
unit472 writes:
mmckinl, if you have EVIDENCE that people were being forced to sign loan contracts against their will then I apologize.
~~~~~~~~~
They were told they could afford these loans. Most of the sub prime loans were not "new Money " but refinances of existing owners . They already owned their home !
You sir haven't an honest bone in your body ...
.
El Cliffo, thanks for the input, but we are leveraging down on vino, and going long on lubricants. Please note our lubricants do not contain glass fragments, and are caught in porpoise free nets for you fish worshipers out there.
Ju,
What do you mean the deal is done?
There is a heart here beating that controls the circulatory system of the derivatives.This heart is literally sucking precious energy and blood at the expense of the brain and other organs of the financial system. It is literally the lynch pin of the whole system. Bringing it down would save the other organs at the expense of a major heart attack. Were we willing to go through with it, it could mean wresting our financial and political future from the brink of hyperfascism. It has its cells in every other organ from the political spectrum to the financial. It holds positions in key areas of government and banking. Maybe if we kill the tyrant we would be free.
This heart is Goldman Sachs.
A duty owed to investors does not translate into a duty owed to borrowers. That's pretty basic.
IMO PPT will drive security markets down Mon morning until house passes and market will reverse for large gain.
They were supposed to give the vote count and Bush was supposed to speak tonight.
Neither happened. The deal has not yet gelled.
Anonyshe writes:
"Why is everyone so afraid of holding ordinary citizens accountable? Why should congress critters hold themselves accountable, if you and I and that unfortunate nurse and her well-intentioned parent refuse to hold ourselves and each other responsible?"
~~~~~~~~~~
They are being held accountable, they are losing their houses. More than I can say for the mortgage brokers and Wall Street Bankers that gave them loans they never should have had.
.
I need to add some more to get back on point, Just to make it worse, she had just returned from a years active duty as an Army Nurse and had savings to use for the down. Income was tight but adequate based on cost of living three years ago. I suggested that she was pushing her luck but lender was OK with it. Just one of a million stories out there and nothing special. A lot of people went too far for all the right reasons and got caught.
this whole thing is window dressing.AT BEST
Boehner: "Urging all members, whose conscious will allow them, to vote for this bill."
It's going to be a long night in the House.
"They were told they could afford these loans. "
Wow man, just dig it deeper why don't you.
I got an email once that told me if I sent some money to the deposed Nigerian Finance Minister that I could share in his millions.
Ever hear of Caveat Emptor? Buyer beware? So the "unfortunate" people were tricked into buying $400k homes and then HELOC'ing them for rims or 4-wheelers?
And my grandchildren are supposed to pay for this. To what end. You still haven't explained how this does anything beyond perhaps one month.
House GOP leaders back bailout bill, urge passage ...
Don't know if it was posted, a Section by Section analysis of the bailout bill.
Bailout bill "Emergency Economic Stabilization Act of 2008" searchable summary. - Lynn Sweet
Comments from SIFMA analyst call
"Draft bill is very positive for both markets and our companies"
Much explanation of Executive Comp
Residential and commercial mortgages. But very importantly, it can be any asset.
Excited about ability to guarantee assets in exchange for a guarantee fee.
Sought as much authority and as much flexibility as possible.
Eligibility: as broad participation by institutions as possible. The more participation, the more effective it will be. Want banks of all sizes or any financial institution that has a meaningful presence in the US to be interested and enthusiastic.
Purpose is to help private sector clean up their balance sheets.
Highest priority: make sure it works, will attract companies to participate. Warrants and exec comp. were very highly negotiated.
still listening ...
mmckinl: In other words it's called a contract. Something was signed. Was that promised refi in writing?
And again, you wish my grand-children to pay for these imbeciles lack of comprehension?
I believe that, based on Boehner's statement, this is going to descend into a huge pile of shit.
basically he said if you have no conscience you vote for it.
Ciao
MS
Max writes:
Boehner: "Urging all members, whose conscious will allow them, to vote for this bill."
It's going to be a long night in the House.
Max | Homepage | 09.28.08 - 9:12 pm | #
Obviously Boehner's been sufficiently scared... wonder what the boogie man is that has these guys so motivated.
I mean we are all but on election eve & they are crafting the most high risk & controversial legislation possible.
Hypo is huge an international. It looks like they have a significant presence in the US in comm. real estate. Pension funds, banking. These people are everywhere. It looks like they are connected to DEPFA bank.
If the recent political cartoons are a good gauge of popular sentiment, I think that incumbents may be in trouble whatever they do. If they vote for, they're blamed for helping irresponsible WS fatcats. If they vote against, their blamed for the resulting trouble. And there will be trouble regardless of what plan is implemented.
Wall Street Bailout
Boehner is assuming that congresspeople have consciences. It is questionable that anyone could get elected to an office like that with their conscience intact. Folks who talk about their conscience may be "protestesting" a bit too much.
Yeah... it is an open bitch slap... if your conscience really allows it, why don't you vote for it.
How could you do an emptier and snider endorsement?
It was an anti-endorsement.
So who knows where the $700B is coming from? Sounds like they need this cash ASAP to start buying stuff..
Is China doing a wire transfer once the Bush signs the bill?
I'm curious how exactly the Feds come up with $700B so quickly.
Warrants:
Direct purchases from failing institution e.g. Bear Stearns, AIG, F&F: will do the same thing, take maybe 79.9% equity.
Market mechanism: Congress wanted taxpayer benefit in upside. Sell warrants for assets over $100M , but the amount of warrants is still TBD. WE want healthy institutions to participate so it should not be punitive.
Brian,
Your grandkids are paying for exactly what...? The poor nurse has lost her home, and she is suffering the loss of $60,000
What everyone is paying for is the excessive leveraging and reckless bets placed by WS bankers
So keep your anger focused on the banksters and their congress shills who are selling you out
@SRC
Roubini's HOME plan mirrors the HOLC agency of 1933
Home Owners' Loan Corporation - Wikipedia, the free encyclopedia
basically he said if you have no conscience you vote for it.
No, its an expression used on Capitol Hill, its a signal that leadership isn't going to arm-twist people who feel strongly against the bill. In other words, there's no punishment for a no vote in the GOP conference.
mmckinl, as I just explained, a salesmen from the local Jaguar dealership 'explained' to me that I could afford an $85,000 Van den Plas
sedan. I could too, if I were willing to make some rather heavy monthly payments. It's a judgement call.
I would rather live in a Belvedere mansion than my crummy 2 bedroom condo. I have dreams and desires like anyone else. But I am realistic. My income is what it is. My wealth is what it is. I cannot afford to live like those who have more than I do. I wish that were not the case but it is.
Going to a bank and asking for them to help me escape reality is not the way to live in a multi-million dollar property. We are where we are because too many people thought there was a shortcut to the good life.
karelian writes:
Yeah... it is an open bitch slap... if your conscience really allows it, why don't you vote for it.
How could you do an emptier and snider endorsement?
It was an anti-endorsement.
karelian | 09.28.08 - 9:17 pm | #
Dems aren't any different - I'm certain they are EXPECTING GOP to kill it... GOP going along could really bugger them.
Cascading unintended consequences.
good point where does the money come from?Intrest rates will rise dramaticliy
It's not wise to step into someone else's argument, but here goes.
The interests of borrowers and lenders are not parallel. Yes, most borrowers who today are in trouble borrowed irresponsibly. But it's also true that a lot of lenders promoted loans that made minimal sense only if house prices would continue to rise. That's the same bet that others in the MBS food chain made. There's blame to go all around.
Nemo said here about a week ago that he'd been having bad dreams. Also.
No, its an expression used on Capitol Hill, its a signal that leadership isn't going to arm-twist people who feel strongly against the bill. In other words, there's no punishment for a no vote in the GOP conference.
Angry Renter | 09.28.08 - 9:19 pm | #
Then it is dead, yes/no?
Exec comp.
Most difficult part of negotiation.
Direct deal: fire the management, like AIG etc.
Market mechanism: if sell over $300M into fund, some exec comp limits come with it. For 2 years, the firm could not enter into NEW contracts including golden parachute, for involuntary departure. And lose some deductibility.
We feel really good that we have encouraged healthy institutions to participate, not just bailouts of sick institutions.
Hu's your daddy....
Come to papa...
Ciao
MS
Clawback of taxpayer losses:
1. it's a long way out, "a lot can happen in that time"
2. it's targeted at all financial institutions, not just participants! (that means it will never happen)
3. would need more congressional and presidential action to implement this.
They will pass something, they are just trying to get enough House GOP votes to give the Dems cover....without splitting the party in a civil war between conservatives and moderates.
Cascading unintended consequences.
dryfly | 09.28.08 - 9:20 pm
At a speed that is making the situation unmanageable. This is going worldwide quickly.
Events in Germany are huge. The Germans loaned a lot of money in eastern Europe. They didn't invade Poland this time; they bought it.
Spain and its real estate problems are directly tied to German banking problems.
Excited about ability to guarantee assets in exchange for a guarantee fee.
Who has the balance sheet to guarantee $700B more worth of shit?
Deal is dead..
GOP Will vote against
DEMs 50% will vote against
STEP UP CALLING, FAXING, SHITTING
We feel really good that we have encouraged healthy institutions to participate, not just bailouts of sick institutions.
Hank, take a nap. Think of your heart. Don't drop over dead til you finish destroying America. Imagine the crisis if you croak.
I am surprised that there are no big problems in ESPANA
Sorry, but the banksters had an inherent advantage over the rest of us in that they knew they could offload the risk to parties further down the line, including institutional investors, China, all the way up to the ultimate bag holders -- the US taxpayer.
This doesn't mean Joe and Jane Sixpack or Mary Houseflipper bear no responsibility for this clusterfuck, but the blame falls 97.5% on the financial institutions who pushed these loans knowing there was slim-to-none possibility of repayment.
Oversight (Bob Hoyt)
How is Fritz Sixpacken currently handling the news?
Frued,
There is a huge housing bubble in Spain that is crashing - 30% of GDP is tied to the housing market/construction and they are feeling the squeeze - I think there were some big construction companies that went under. This is also related to the housing market in UK as folks in UK were pushing up demand for second homes in Spai
Tranching of $700B (I didn't know that was a limit)
Entire 700B is appropriated entirely by the act, no further appropriation necessary.
Tranching: first $250B
Then Secretary determines that more is needed and tells Congress, another $100B
Then Secretary determines that more is needed and Congress has 15 days to refuse, the remaining $350B
No time limits. Can request all the tranches at once, no need for delays.
"I'm curious how exactly the Feds come up with $700B so quickly."
Sell bonds, notes, and bills, with a few cash management bills thrown in. Splatter the entire yield curve on China's windshield.
BB says he will not monetize the issuances. We will see.
Brian in New Orleans writes:
How is Fritz Sixpacken currently handling the news?
Brian in New Orleans | 09.28.08 - 9:29 pm | #
No, no, no... its Fritz Litermug... I know him well.
Anonymous's post | 09.28.08 - 8:59 pm
That sums it up well! You nailed it.
CBO gives a review:
Impact on Federal Finances
CBO expects that the Treasury would use most or all of the $700 billion in purchase authority within two years (after which the authority to enter into agreements to purchase various troubled assets would expire). To finance those purchases, the Treasury would have to sell debt to the public. Federal debt held by the public would therefore rise by about $700 billion, although the government would also acquire valuable financial assets in the process. As noted above, CBO expects that since the acquired assets would have some value, the net budget impact would be substantially less than $700 billion; similarly, net cash disbursements under the program would also be substantially less than $700 billion over time because, ultimately, the government would sell the acquired assets and thus generate income that would offset much of the initial expenditures.
In addition to any net gain or loss on the purchase of $700 billion or more in assets, the government also would incur administrative costs for the proposed program. Those costs would depend on the kinds of assets purchased or insured. On the basis of the costs incurred by private investment firms that acquire, manage, and sell similar assets, CBO expects that the administrative costs of operating the program could amount to a few billion dollars per year, as long as the government held all or most of the purchased assets.
Other provisions in the legislation would on net increase the budget deficit. For example, the legislation would allow the Federal Reserve to pay interest immediately on certain reserve balances of depository institutions, rather than starting on October 1, 2011, as allowed under current law. CBO estimates that, over the next three years, the provision would reduce the Federal Reserves payments of its profits to the Treasury, which are classified as revenue in the federal budget.
In addition, a number of provisions in the bill would affect federal revenues by changing tax law, including provisions that would limit the deductibility of executive compensation for certain firms selling assets; allow losses incurred by certain taxpayers on preferred stock in Fannie Mae and Freddie Mac to be treated as ordinary rather than capital losses; and exclude from income amounts attributable to the cancellation of mortgage debt of individuals in certain circumstances. The Joint Committee on Taxation estimates that, on net, these provisions would reduce federal revenues.
Enacting the legislation could also affect other federal spendingincluding, for example, outlays from the operations of Fannie Mae, Freddie Mac, federal housing programs, and deposit insurance. Some of those effects would be related to how TARP would be used to purchase assets (including what kinds of assets would be acquired and from what types of institutions), and how successful the program would be in restoring liquidity to the nations financial markets.
Director’s Blog » Blog Archive » Emergency Economic Stabilization Act of 2008
SIFMA: "Only the compromise on the Paulson-led plan will restore confidence, credit availability and market stability in a timely manner. None of the alternatives put forward would achieve these fundamental objectives."
Wow! Not only did Paulson hit on the exact best fix, but he hit on the only fix that would work.
For everyone panicking about a sudden and catastrophic lack of credit for home buyers and businesses, what in this plan comforts you, other than 'hope'? Is spending $350B now and $350B later worth the 'hope' you will be buying with your fellow Americans' (and their childrens') money? Is your fear so great that you don't care what gets done, as long as it gets done NOW? Will you actually feel better if the current plan passes, because you can be less fearful of the future, at least for another month or two?
Just askin'.
More about tranching:
To block the last $350B, Congress has to say no. Then the President can veto that. To override that veto, Congress needs 2/3 majority.
ALL of that must happen within 15 days, otherwise the money goes out.
Can't the President wait and veto it with one minute left in the 15 days?
RTC had to go back to Congress. Kudos for making this program much EASIER!
Plantangenet,
I don't think that HP needs to "source" the money any faster than he can spend it, and that appears to be (testimony last week) about $50B/month.
yep spain is a clusterf*k largely due to expat brits cashed up from home equity loans buying holiday apartments..
some places along the coast are almost 100% british working class accents. They re-invented east london and northern england, except in the sun.
No coincidence the london financial engineers, at home on both sides of the atlantic, were at work there as well.
Is it too much to hope a senate investigation (after all this is 10x bigger than Enron) will result in disgrace and jail terms for many? IRS investigations and bonus claw-backs?
"When I signed my mortgage documents, I don't recall anything that said I could walk away in the event my equity fell to zero. I just remember the parts about agreeing to pay back the money I borrowed."
When I signed my mortgage documents, I don't recall anything that said I might be buying late into a decades old credit binge that was sponsored by the FR, banks and congress, and which might destroy the entire bank/credit system, mortgage lending, consumer buying, and the value of my new home.
The user is criticized and as usual, the drug dealers Greenspan, Fannie-Freddie-Bank-S&L execs and others are given immunity.
My feeling is that just suspending mar-to-market will allow most banks to appear profitible. Only if non-performing loans are so high as to mean no profits, will auditors force them to recognize it. Welcome to Japan.
Can Congress Appoint Members of the Bailout Oversight Committee?
Politico has a leaked internal Democratic memo with some deal terms. One of perhaps a little Sunday afternoon note:
Composition and ratio of Congressional Oversight Panel
Issue: Size of panel and ratio of appointees: 2-1 from both House and
Senate, with members to select a chair for a total of 7 members; or
1-1 from both House and Senate, for a total of 5.
If this oversight panel is simply meant to be the way Congress will organize itself when getting reports from Tresury, fine. But if this panel (and the bailout oversight mechanism more generally) is vested with particular statutory responsibilities, then it is possible to run into trouble. Congress probably can't appoint its own members to an independent oversight panel created by the statute. That's this case. Moreover, Congress can overstep its authority if, as the DC Circuit has said, it sets up a review commission that would be essentially controlled by the legislature and could overturn or overly interfere with executive power. The mere appointment by Congress of officials to such a board might not transgress that prohibition. But in another context:
Congress has here encroached beyond the legislative sphere because the Board of Review has been vested with a range of powers ..., [and] it sets forth requirements that both in principle and in practice continue to ensure congressional domination of the Board.
Hechinger v. Metro. Wash. Airports Auth., 36 F.3d 97 (D.C. Cir. 1994)
Conglomerate Blog: Business, Law, Economics & Society
And is funding for the community organizers who have been so industrious in "empowering" the hopelessly dysfunctional still included?
Price: not a fire-sale price, not an outrageous price, a "fair" price. Firms might get a price higher than their current mark.
(Congress will be voting on this, with this aspect totally undetermined.)
by the way it isn't just CR that gets the huge comments on this issue.
marketwatch.com - a site that used to get 20 to 80 comments per article, is getting 1700 comments per bailout article. Nearly all furious.
"that appears to be (testimony last week) about $50B/month."
It would cost $700B to reload the decimated Federal Reserve balance sheet. Hank could do it in two weeks.
Warrants for their arrests!
Based on the comments from the leadership, they have no idea how the vote will go tomorrow. All the confidence being projected is an illusion. We won't know until after it's over.
Then the Senate gets it.
If that nurse's loan was no recourse then the
lender took on the risk and should have done
more diligence. But since they most likely sold the loan they didn't care.
Hypobank? Anyone know the size? Isn't this some sort of central mortgage bank in Germany?
Is it too much to hope a senate investigation (after all this is 10x bigger than Enron) will result in disgrace and jail terms for many? IRS investigations and bonus claw-backs?
Yes.
Germany, Spain, etc... having troubles. Wonder how sales of "The World" in Dubai are going?
NO on this bailout bill. A watered down bad idea is still a bad idea.
How is Fritz Sixpacken currently handling the news?
Based on the comments I see here:
Finanzkrise: Dax-Konzern Hypo Real Estate vor Kollaps - Nachrichten Wirtschaft - WELT ONLINE
It sounds a lot like it does here. "The bankers should be jailed", "get your money into silver and gold", etc.
Hi Plantangenet,
Yes, it has been proposed that this is secretly about that. I haven't a clue.
spot physical gold (suisse bars) is about $1000 an oz on ebay .. vs $870 or so on the markets ..
Not trying to maximize return to the taxpayer, but to provide liquidity to the system as a whole.
Hypobank? Anyone know the size? Isn't this some sort of central mortgage bank in Germany?
It's a Munich-based mortgage bank and it's pretty huge. 2nd biggest lender in Germany and listed on the DAX.
Seems the goal is to maximize transfer from taxpayer to the "system".
Free Homes For All Deadbeats And Illegals!
my tax dollars hard at work!
PASS THE FRIGGIN BAILOUT BILL!
Roubini is not happy:
link at CR sidebar
RGE - Is Purchasing $700 billion of Toxic Assets the Best Way to Recapitalize the Financial System? No! It is Rather a Disgrace and Rip-Off Benefitting only the Shareholders and Unsecured Creditors of Banks
Seems the goal is to maximize transfer from taxpayer to the "system".
For many, that has always been the goal.
"SEC. 132. SUSPENSION OF MARK-TO-MARKET ACCOUNTING."
Note this: Cox gets to apply this selectively firm by firm. As if he and Hank did not have enough power already. "Play ball or we'll mark you to market."
The user is criticized and as usual, the drug dealers Greenspan, Fannie-Freddie-Bank-S&L execs and others are given immunity.
The Drug War is an EXCELLENT analogy. It has focused on the suppliers while avoiding anything related to meaningful reduction in demand.
This is a democracy - and the buck stops in only one place - at the feet of the voters. As has been said well elsewhere...
Nothing will change until Main Street Americans accept their involvement and responsibility for this crisis. ***** is absolutely right - the average American has turned a blind eye to all the everyday subsidies (ie, slow-motion bailouts) - has turned a blind eye to incredibly irresponsible federal spending habits - has flatly rejected each and every political candidate who even tried to bring about a measure of fiscal responsibility.
The populace demanded to be pandered to. In a democracy, the populace gets what it wants.
And now that same popluce is getting what it deserves.
On the buyer/lender "responsibility" issue-- its clear some here did not live in bubblezones & don't know what it was like. In Norfolk VA, even if you *didn't" want to overextend yourself on a teaser loan to buy an overpriced house, many buyers were pushed into it by the huge LACK of rental homes.
It was supply/demand writ large-- as people who'd owned rental properties quickly cashed out & sold them at peak in the "no-contingencies" over-bid era.
With very few rental homes left available, yet easily available teaser mortgages, it was possible to buy that same size house for less than the rental price. So many people bought.
Because people have to live somewhere!!
They will prefer to help healthy banks become even healthier, as opposed to rescuing a failing bank, because the healthy bank is more likely to relend into the system.
They expect that the exec. comp. limits won't constrain the healthy banks, since they are so light.
mmckinl, if you have EVIDENCE that people were being forced to sign loan contracts against their will then I apologize. You are correct.
I used to work for a CREDIT UNION and we instructed our employees to mention Home Equity loans to everyone who came in for any reason. Of course we weren't commission based so our tactics were much less aggressive and deceptive then when I worked for a Big Broker.
In addition, many real estate brokers had lucrative arrangements with lenders that paid both parties handsomely to direct stupid/gullible buyers to houses they couldn't afford with loans they didn't understand. Now we have everyone losing their shirts but $700 bil for the politically powerful.
I am sure you read and understand every contract you agree to including all the stupid ones you get when you install software on your computer and every prospectus BEFORE you make an investment.