Obama's love of markets and his desire for "change" are not inherently incompatible. "The market has gotten out of balance," he says, and it most certainly has. Many trace this profound imbalance back to the ideas of Milton Friedman, who launched a counterrevolution against the New Deal from his perch at the University of Chicago economics department. And here there are more problems, because Obama--who taught law at the University of Chicago for a decade--is thoroughly embedded in the mind-set known as the Chicago School.
He chose as his chief economic adviser Austan Goolsbee, a University of Chicago economist on the left side of a spectrum that stops at the center-right. Goolsbee, unlike his more Friedmanite colleagues, sees inequality as a problem. His primary solution, however, is more education--a line you can also get from Alan Greenspan. In their hometown, Goolsbee has been eager to link Obama to the Chicago School. "If you look at his platform, at his advisers, at his temperament, the guy's got a healthy respect for markets," he told Chicago magazine. "It's in the ethos of the [University of Chicago], which is something different from saying he is laissez-faire."
House Republicans say that Senate leaders spoke too soon when they said a deal had been reached on a Wall Street bailout package.
In addition, a key Republican lawmaker stated that Sen. John McCain (R-Ariz.) wants to explore new ideas, like loaning money to financial institutions or insuring the companies, rather than buying their toxic debt.
Earlier Thursday, senators and House Financial Services Committee Chairman Barney Frank (D-Mass.) said they had a tentative agreement, though theyre still negotiating a bankruptcy provision. They said the deal was ready to be taken to the Bush administration.
Not so fast, responded House Minority Leader John Boehner (R-Ohio).
There is no bipartisan deal at this time, Boehner said in a statement. There may be a deal among some Democrats, but House Republicans are not a part of it.
That is key, because House Speaker Nancy Pelosi (D-Calif.) has said she wont bring up the bill in the House unless a substantial number of Republicans, possibly a majority, agree to vote for it.
Forget the whole deal thing. Let's figure out what's going to happen after they realize its not going to work.
After all, is the deal going to keep Pilgram's Pride from going BK? Is it going to boost RIMM's sales? Is it going to get us buying Detroit's gas guzzlers again? Get us to buy new houses?
Nope. It's just going to keep some of the bigger banks from going under. Maybe its worth doing, but it is not cure any problems.
Obama has been criticized by liberal supporters for putting people like former Clinton economic official Jason Furman and Austan Goolsbee of the University of Chicago - Obamas senior economic policy adviser s into key roles. Both have advocated pro-busines and free trade policies denounced by critics on the left who say international pacts like NAFTA have hurt workers and only benefit large corporate interests.
Dean,
That is key. One reason Pelosi and the left may be interested in taking the paper is that she can later issue some debt forgiveness based on means testing. On the right we have the "rape the taxpayer to help my Wall St buddies" crowd. That at least is more obvious at the moment.
once the government owns the mortgage then any write down of the debt of homeowners is going to come out of the pocket of the tax payer. Whats the bet when that happens the discussion will turn to all those undeserving people sticking the taxpayer with a loss!
In other words this is just a deal for the big financial institutions to get way from the responsibility of their bad decisions. Shame on Congress!
This could be the best of all possible worlds - no bailout, and McCain getting blamed for everything that goes wrong that supposedly would have gotten fixed by the bailout!
Dodd says White House meeting was a disaster
By Greg Robb
Last update: 6:13 p.m. EDT Sept. 25, 2008
WASHINGTON (MarketWatch) -- Sen. Chris Dodd, the top Democrat on the Senate Banking Committee, said Thursday that bipartisan meeting with President Bush at the White House on the mortgage rescue plan was nothing short of a disaster. In an interview on the CNN cable news network, Dodd described a meeting in which Democrats were blindsided by a new core mortgage proposal from House Republicans, with the tacit backing of Republican presidential candidate John McCain. "I am not going to sign on to something I just saw this afternoon," he said. Dodd said Republicans and Treasury Secretary Henry Paulson had to decide what they wanted to support. The whole meeting "looked like a rescue plan for John McCain," Dodd said. He said he was simply going to pretend that the meeting had never happene
I believe they are in such a hurry for the same reason a car salesman wants you to sign here, now. That is, so there won't be a reasoned debate. If Shelby gets on the news this weekend, they might be batting this around until after the elections.
I've caught few of the comments today, but one responded with: define "work". This bill's a giveaway and as someone said a cover-up.
Persecuted Comrade Anonymouse | Homepage | 09.25.08 - 6:23 pm | #
You know, I hate modern consultant speak, but I do really wish they would put a "misson statement" at the start of this bill so we could understand exactly the purpose.
I think everyone sees it as a cure for what ever ill they think the economy faces. Bernake has primarly sold it as recession prevention.
But how? Banks neither will, nor should, suddenly start making silly home loans again to boost prices. We won't suddenly want gas guzzler cars again. Commodity prices are more likly to go up than down after this. It might prevent a sudden grinding stop to the economy, but will not change any of causes of the slowdown.
Blaming the Republicans seems a bit odd given that 40% of the bad loans originated in California and most of the subprime from Democratic districts.
It is something of a mystery to me as to why, when we have such good data on most every other social issue in this country, we do not have a good picture of just who it is who has created all this bad debt.
We can know at a moments notice who has been denied a loan by race, sex, age, ethnicity surely the same data can be created as to mortgage default and delinquency and by zip code.
Please help me with this: the Treasury is issuing $198 of paper THIS WEEK. What exactly are "we" buying? Are these present expenses? Is the FDIC back-up battery being charged? Inquiring minds want to know!
"Liar Loan Says:
September 25th, 2008 at 3:20 pm
Matt-
Yes its true that servicers are renting out REO now. The main reason is not what most bloggers here would think. Were not worried about flooding the market with REOs resulting in lower sales prices.
Servicers for MBSs are required to keep losses on an MBS below a certain threshold which is set by the Pooling and Servicing Agreement, basically a thick contract that sets all the rules for an MBS. As an MBS ages, the acceptable loss threshold raises because the investors expect losses to rise over time as more properties are liquidated. If we were to liquidate all the REO we have as quickly as possible, it would result in hitting this loss trigger, which affects the company negatively in two primary ways.
1. MBSs are overcollateralized intitially to protect the AAA investors in the upper tranche. Once you hit the trigger date and keep losses under the threshold, that overcollateralization is released. This is essentially free money for our company.
2. If we dont keep losses under the threshold on the trigger date, the trustee or the investors could attempt to move the security to a different servicer.
In order to make #1 happen and prevent #2 from happening, were renting out REO to stall for time and getting an extra cashflow on the side."
Comrade hopeinsd said: "After all, is the deal going to keep Pilgrim's Pride from going BK? Is it going to boost RIMM's sales? Is it going to get us buying Detroit's gas guzzlers again? Get us to buy new houses?"
Those are the things that people aren't spending their money on, but what about all the other things that they are spending their money on?
More tunnel-vision. As if the only way things can be good anywhere is if everything is good everywhere.
The new definition of recession: Slower economic growth. The new definition of "credit crunch": People who don't qualify don't get loans.))
WAMU goes down and McCain declares the financial disaster a disaster and blames Obama and the Democrats for the delaying a bail out the House Republicans are actually opposed to but J6P does not know any better as all he hears is WAMU went down.
Then the Maverick can propose something that gets enough bipartisan support to say he saved the economy and makes Bush look bad and the he McCain put Country First and has now distinguished himself from Bush AND the Democrats! Brilliant! But will it work?
What should be a reasoned discussion has lapsed into pure politics. So much for suspension (of disbelief) in the name of patriotism (allegiance to the status quo).
Could not disagree more [that Dems have played this smart].
On the prez side, McCain is looking like someone who is at least trying, while Obama looks like a balloon adrift in the heavens waiting for a favorable wind.
On the house side, the Dems are coming across as not believing in this plan because they won't pass it even though they have enough non-GOP votes. And that section 3 - OMG - that is the STUPIDEST thing they could have possible put in there - Paulson must have been laughing his ass off when they "forced" him to add an m'f'ing ENTITLEMENT to housing.
"REQUIRES?"
While the 90% of Americans who are paying the mortgages on time get stuck with the bill? My God, this is one of the worst bits of politicking the Dems have ever done.
Meanwhile Main Street is asking itself how it can trust a Dem leadership on its knees sucking the Bad Boy of a President with worse approval ratings than Nixon.
And no - I'm not a GOPer - I'm a freakin' Liberal.
I'm telling you now - not only have the Dems lost what should have been an automatic term in the White House, they are now is serious danger of losing control of the House. Maybe late for this go-round, but watch out 2 years from now, when every GOPer running against a Dem incumbent is going to plaster Section 3 in 480 point type across every district in America.
This is a major major political cock-up on the Dems part - this will wreck the party for years to come.
Wow, what an about face. McCain comes into the White House with a brand new plan, ostensibly to become the economic hero to salvage his campaign...and manages to piss off everyone at the meeting.
Meanwhile Shelby is leading a full-scale Republican revolt. This is my kind of politics! Burn baby, burn.
If the Democrats want a bailout of some kind, then they should pass a bill with their majorities in both houses of Congress, with little or no Republican support, and present it to Bush for signing. Yes, it's true. Democrats in Congress are the majority party! They have the votes.
Unfortunately, they don't know what problem they're supposed to be solving, but they love posturing, and they hope to drag everyone along to share any blame, in case things go wrong.
McPain has blown the deal in a publicity stunt. I don't know if that is good or bad, but it is clear he doesn't want a deal. This is one serious game of chicken.
Please for the love of the Flying Spaghetti Monster let this crap not pass before the weekend. The longer they hear their constituents' outrage, the better.
This seems like a political ploy to make McCain look Presidental and in charge after not being involved to this point. I am very concerned the Dems are being setup by an "October surprise". A GOP Rep (don't remember his name) actually said that the lack of agreement in the GOP was that Dems find it easier to spend $700B. So the GOP is starting to run against their own proposal and blaming the Dems for the bailout they demanded.
I am beginning to think the Dems should just say no if this has degenerated to partisan politics.
No, no, no. This is, in my simple mind, a great moment in American governance. An act that many feel, for many different reasons, might have been -and still may be- disasterous public policy, has been brought back into the forum of debate by the balances in the system, as well as by the people, including many in this forum.
The election will go on, as will the Republic. Bank on it.
I hope all of y'all have been filling up your scrooge mcDuck pools, because if this deal don't go threw fractional banking is gonna be in a coma for a couple of years.
ABC's George Stephanopoulos Reports: Treasury Secretary Henry Paulson fears the Wall Street bailout deal is falling apart after a chaotic White House meeting, sources say.
Paulson walked into today's the room where Democrats were caucusing during today's meeting at the White House and pleaded with them 'please don't blow this up,' Stephanopoulos reports.
House Financial services Chairman Barney Frank, D-MA, was livid, saying 'Don't say that to us after all we've been through!'
Democrats believe that House Republicans are torpedoeing the framework deal reached in the bipartisan agreement of principles released by the Senate Banking Committee today.
I wrote this on the last thread... as the action has moved here:
All is not what it appears.
GOP minority isn't any more 'opposed' to this bailout than Dems are - they just don't want to vote for it.
They would LOVE to see it passed with 100% Dem votes and NO GOP votes... then they can crow when the pain comes because EVERYONE KNOWS there will be pain if its passed and pain if it does not. GOP can't lose if the bill passes with ONLY Dem votes & the pain rolls in.
Is it BS? Sure but it makes GREAT politics especially as deficits soar & taxes have to be raised...
The only way Dems win in this situation is if everything works out fine (no pain - bailout makes money, etc.) pretty quickly AFTER passing - what is the chance of that? Not good.
Dems rank and file on the other hand will secretly be hoping the bailout DOESN'T pass and all the obstruction comes from GOP... then when the pain comes ('cause there will be pain either way) Dems can say to joe laid off worker - "You lost your job & home & retirement account because of incompetent Bush policies, evil bankers and the GOP minority in congress obstructed the only fix available to us at the time... We tried but they stopped us, sorry..."
Is it BS - sure but it also makes great campaign fodder as unemployment & foreclosures rise...
The GOP only wins in this situation if nothing bad happens in the wake of the failed bailout... TED spread improves foreclosures decline, lay offs don't materialize, etc. What is the chance of that?
This is a classic political 'hot potato' where the other side 'winning' ensures your side wins later in the ballot box. Everyone - Shelby included - is aware of the stakes.
One item that needs more attention: to get the $700 billion, people will have to take money currently allocated to other uses, and use it to buy Treasuries. Taxpayer money doesn't come from nowhere, and printing (so far) is off the table.
What's the impact of that HUGE CAPITAL DRAIN on the global economy? It will be enormous; capital will have to flow out of all sorts of otherwise-productive investments and into Treasuries. Productive capital will be diverted to the "infinitely wise" investment choices of Secretary Paulson and his successor. Will that be a net win? I think not.
A million investors with $700,000 each, left to their own devices, will make better use of that $700,000,000,000 than Paulson will. As will a hundred million taxpayers with $7,000 each.
In short: regardless of the language, this is the wrong plan. It will make things worse.
just what Bush would need to launch an Presidential Directive
No way that happens, an executive order on this would be like Bush hiring a hitman to kill himself. Unless on January 20th he's planning on flying directly from the inauguration to his compound in Paraguay.
Commissar 4822 writes:
TREASURY SECRETARY HENRY PAULSON FEARS BAILOUT DEAL MAY COLLAPSE; PLEADS WITH DEMS, 'PLEASE DON'T BLOW THIS UP,' ABC NEWS HAS LEARNED
uh oh ... just what Bush would need to launch an Presidential Directive
Commissar 4822 | 09.25.08 - 6:40 pm | #
Why call on the Dems? He should be able to get the GOP majority to lock step and then just pick off a handful of Dems to get it through.
The MINUTE the Dems see GOP support (cover) they - sign on.
The bottleneck is Dem majority won't vote for ANYTHING this controversial WITHOUT a ton of GOP cover.
The election is only 6 weeks away. Whatever effect this plan would or would not have will not be apparent in such a short time.
If I were a Republican I would characterize this as a bailout of New York bankers and California deadbeats and why should people in my district bailout either?
The stakes just went through the roof. If McCain is serious about the "insurance" alternative plan, there's no way, in my opinion, this thing gets done tomorrow.
These are incredible times. An incredible moment in our nation's history.
Some things we had better start learning to say in Chinese: "Shine your shoes most honorable sir?","Would beautiful lady like to buy some flowers?","Would you or any/all of your group like to have sex with me/my mother/my father/my sister/my brother/my dog?".
It wasn't going to happen. Not this much money. Not this close to election time. Not when we haven't seen a whole lot of spill-over into the real economy.
All the people opposed to the bailout are calling the President Bush, Secretary Paulson, and Chairman Ben liars. Not exactly news, I realize, but I hope y'all are voting for Dems in a few weeks.
The new definition of recession: Slower economic growth. The new definition of "credit crunch": People who don't qualify don't get loans.))
Sebastian
Sebastian | 09.25.08 - 6:35 pm |
I agree 100%. Starting from Bernanke on down, our leaders see a need to intervene in an economy going through a necessary process of purging after a credit orgy. Banks deciding to give only resonable amounts of credit is not a "crises" Nor is our choice to use our limited resources to buy fewer new cars and houses.
I think we should do the minumum needed to prevent any sudden crises, but to think that ANY amount of goverment money can fix every ill of our economy is hubris. This bailout will not prevent layoffs and BK's, so I expect lots of people will view it as a "failure," even if that isn't the intended purpose of the bailout.
At what point will our leaders accept that they are powerless to "fix" the economy? At what point will they tell us that "fixing" the economy requires us to work a little harder and save a little more?
Kos kids need to grow up. This catastrophe is totally non-partisan. The tit-for-tat gotcha games are a big reason the general public has been blind to this coming storm. Those advocating partisan rancor ar just as much to blame as the pigmen banksters.
If it's just another political game, then he's doing the exact right thing. Let the House Republicans kill his own plan and blame the Democrats.
ferg | 09.25.08 - 6:49 pm | #
That blows up in their face... Dems congressmen play ball but GOP minority is 'obstructionist'... looks great until the credit markets blow up over then next few weeks (which they are doing and will do w/ or w/out this bill).
The way they blow up Dems is somehow convince them to pass it on their own... won't happen unless Dems are suicidal.
Jon Stewart made a good point last night on McCain trying to delay the debates - Isn't this exactly the time we need to see a debate ? The financial crisis makes a debate more not less imperative.
Is McCain afraid of Obama's obvious better command of the issues and speaking ability. Less one on one comparisons would benefit McCain who could hide behind attack ads.
I also called my Mayors office. Spoke to the Deputy Chief of Staff. He/They have no opinion of federal programs to which I responded that if I have to pay more fed taxes I aint got the money to pay local taxes and that I needed the Mayors position on using tax payer money to pay off failing financial institutions apparently the Mayor "will never comment on the use of taxpayer money". WTF. Next election woo hoo!
I suppose that if the Repubs balk and Paulson pleads to the Dems, then the Dems could rewrite the Frank/Dodd bill to make it much more agressive on regulating Wall St and extending help to people in mortgage trouble, i.e., make less a rescue for Wall St and more a rescue for the middle class. Then give it to Hank and say if you want a few billion, here it is, on our terms.
And by the way: Before this fiasco, I always considered RP a crackpot.
I hope the RP-ers will forgive me for that. I don't agree with him about the gold-standard issue, but he's definitely out of my crackpot file.
The GOP created this mess. The Republicans are responsible for the investment banks being able to leverage 40:1. It is blood on Bush, Paulson, and McCain's hands.
The fools on here saying Dems are wrong are just plain shills who would say that no matter what. They have no understanding of economics.
China's banking regulator sought to reassure jittery financial markets, denying a report that it had told local banks to stop lending to US banks and stressing that foreign bank operations in China were healthy.
CathyG writes:
Sen. Bob Casey (PA) is saying that John McCain has derailed the agreement and is meeting with Republicans to put together a new direction.
GO JOHN!!
CathyG | 09.25.08 - 6:53 pm | #
New Direction = McCain's Bailout
I can hardly wait.
These guys keep snatching defeat from the jaws of victory.
The anchor on CNN earlier today said lots of protests are planned for tomorrow all around the nation. They are afraid that if reps go home they'll never get a bill, because they will have to actually face angry constituents. Especially the ones that are campaigning. So the heat is on to get it done this weekend.
"Kos kids need to grow up. This catastrophe is totally non-partisan. The tit-for-tat gotcha games are a big reason the general public has been blind to this coming storm. Those advocating partisan rancor ar just as much to blame as the pigmen banksters."
The GOP invented most of the current tit-for-tat, starting approximately with Ken Starr. They are the ones most directly at fault for the ridiculous Manichaeism which pervades national politics.
Dodd said on CNN that McCain wasn't able to explain to the WH meeting what he was supporting, and that Dodd couldn't understand anything McCain said.
Pelosi and Reid talked with Paulson afterward and said Paulson needed to get the Republicans lined up, because the Dems would not even introduce a bill unless a majority of Repubs in both houses supported it.
The current plan outline, a much amended revision of the original $700B proposal from Treasury and the White House takes the core proposal of Paulson's original bill and works with that. Apparently the House GOP thing (which even Boehner couldn't explain to the WH meeting) goes an entirely different direction, with investors being asked to the bailout, but getting substantial tax breaks. It appears that the House GOP doesn't think tax breaks cost the taxpayers any money.
Good old Washington. If spending $700 billion would save the economy AND cure cancer, end toe nail fungus and make everyone live to 120 the current bunch of politicians would amend, attach, argue it into a bill to fund their brother in laws failed auto dealership.
Let the economy go south, it probably will anyway but in two years we can get our republic back.
Organizers? There are no organizers to the outburst against this. It's a taxpayer's rebellion, and they better figure it out soon before the massive taxpayer's revolt next year if this goes through.
This whole mess is straight out of Karl Rove's playbook. Have the GOP leaders scream "We need a bailout!" at the top of their lungs and propose legislation that the American taxpayer HATES. Then have the GOP members of congress refuse to get on board. When the deal fails, the GOP has a win-win position: if the economy tanks, they blame the Dems for not doing the deal. If the economy doesn't tank, they take credit for saving taxpayer dollars.
"Sept. 25 (Bloomberg) -- More than 150 prominent U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely.
In a letter yesterday to congressional leaders, 166 academic economists said they oppose Treasury Secretary Henry Paulson's plan because it's a ``subsidy'' for business, it's ambiguous and it may have adverse market consequences in the long term. They also expressed alarm at the haste of lawmakers and the Bush administration to pass legislation."
That must be it, cause a big panic and have McCain come in as The Super hero to save America, as he ducks out of the debate. I think Republicans can go along with that...
less than 5% of the subprime loans oriniated since the beginning of greenspans lowlow low interest rate gaem...
are in default
we are being robbed by the banksteres and the bush administration
the rescue should be bottom up not top down
the bailout, 700 billion dollars is enough money to pay down to zero all of the subprime mortgages that are in default with hundreds of billions of dollars left over
i intend to vote against my incumbent senator (s) and / or representative if they vote for a top down bailout bill
they have been so told
this proposal even with ceo pay limits and oversight is just theft.
the oversight and pay limits dont make the rape not a rape.
better yet
take a trillion and start a bank of the United States of America
screw the new york investment banks, and the federal reserve.
I just received a cryptic notice from JP Morgan of an investor conference call tonight at 9:15 eastern time. No explanation; could be earnings pre-release, or a large transaction, but it's very odd.
I am committed to voting anti-incumbent. I encourage all of you to do the same.
I'll gladly support my incumbents if they vote against this bill (and I don't mean waiting until there's enough votes to guarantee passage, I mean actual opposition).
Alas, from all current appearances, it would appear that neither my congressman nor my senator will give me the chance to support them.
I agree. I think what's going on now - whether a fiasco with no bill or a fiasco that produces a bill that attempts to do a partial Paulson - will set up a much more assertive house cleaning of the financial system by Obama and a Dem Congress. New Deal II.
Obama and Dems will light up McCain so that he goes off like a roman candle. Not hard to do these days.
McCain is doing this intentionally. Apparently, he's supporting the alternative House Republican effort. If so, it's an obvious political ploy to stall the debate.
Best thing about it is that it will backfire and the Dems won't keep a discussion going, and can now blame the ensuing collapse on McCain!!!
That McCain guy is so damn dumb it is amazing!! He's making Shrub look bright.
Yah, Im here thinking money mkts can freeze up -- but it looks more and more like a soap opera which can be played with for weeks, as in by design, to fuck with the election process, i.e, something we have not seen since hanging chads!
Ol' pap, rest his soul, made money on commercial and residential real estate. Always said that 6-7% interest was right. Now we got people freaking out that interest rates are high. WTF?
As a lifelong progressive I find myself in the strange position of cheering on the Republican right-wingers who so far are the only people ready to stand up to the insane bailout plan that you, Barney Frank and President Bush support, and the rest of the country rejects. The Pelosi-Frank-Bush bailout is the worst idea I have ever heard, and a few cosmetic changes will not make it better. Sorry to say this, but the changes I heard you describe this morning are just lipstick on a pig.
Instead of you cosying up to Bush and Co. force through this daylight robbery and impose another $700,000,000,000 on this already bankrupt nation, I would like to see you calling for impeachment of the president and prosecutions of those responsible for the malfeasance that has brought us to this pass.
What we need now is not the Washington establishment closing ranks against the country in so-called "bipartisanship," but fierce partisanship to stand up to the unprecedented malfeasance of the government.
When you won the majority in 2006, you promised us change. Instead, once again, the Democrats tag along behind another Bush policy. Iraq, the Patriot Act, you name it, and it couldn't have passed without Democratic support. Now we are being threatened with economic mushroom clouds if we don't fork over the cash by Friday. If the situation is so bad, where were you? Why did you not know? I suspect it is because the entire Washington elite is in on the scam that you are now working hand in hand to cover it up -- at our expense.
No bailout, No way. I would rather eat beans and rice for the next ten years than see this pass.
Pelosi and Reid talked with Paulson afterward and said Paulson needed to get the Republicans lined up, because the Dems would not even introduce a bill unless a majority of Repubs in both houses supported it.
Bingo.
I knew that had to be going on behind the scenes.
GOP nightmare is McPain throwing out 'his ideas' make his party discuss them... Dems will pay for the air time... this topic is that toxic for ANY AND ALL OF THEM.
Shelby memo to McCain... 'STFU - we had them boxed in you old fool!'
McCain is a true American hero for stepping in and throwing a monkey wrench in this travesty of a "deal".
Prediction - he will hold firm. After all, what are the pigmen going to do, try to bribe a man who spent years in a POW camp being tortured for his country?
God Bless you, John McCain, and may you always have the Lords favor.
breaking news o WSJ, J.P. Morgan to acquire deposits of Washington Mutual, according to people familiar with the matter. The deal won't impact the FDIC insurance fund
The bad debt is the core of the problem. The bad debt was not created
by the banks. It was created by defaulting "homeowners" a very disproportionate number of whom live in Democratic Congressional districts.
So where does the blame lie. I like to go to the source.
I don't think this is a well-oiled plan because there is no chance the economy will do well over the next couple of years. No chance.
Plus the panic now is real. Even if it didn't develop organically, it is real now. Bush and Paulson made sure of that.
Bill or no bill, there is no way that markets will be calm by Nov 4. No way that unemployemnt will level off. No way foreclosures will stop or even slow.
Obama gets to run against Bush and against McCain career as a deregulator.
IN response to this comment above: "Blaming the Republicans seems a bit odd given that 40% of the bad loans originated in California and most of the subprime from Democratic districts"...I answer with this article. I'm sorry I am posting the entire thing but it is very important history and few here know this, it appears. (And anyone who refuses to look at the facts because it was penned by Spitzer has their head up their ass, in my opinion.) Predatory Lenders' Partner in Crime
By Eliot Spitzer
The Washington Post
Thursday 14 February 2008
How the Bush administration stopped the states from stepping in to help consumers.
Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.
Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.
Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.
What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.
Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.
Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.
In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.
Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.
When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.
Game, set, match - Democratic party has publicly stated they don't want to make the hard decisions. That they will politics over principles.
Talk about snatching defeat from the jaws of victory.
No they aren't going to force people to take nasty medicine - not without a 'second opinion' from the GOP minority. No 30 second 'bailout' sound bites for them...
I didn't post the title to the video, I thought it sucked too, I just posted the most up-to-date info on Shelby. Guess I should have held out the title; sorry!
This ones and oldie but a goodie, goin' out to the pigmen:
There is no political solution
To our troubled evolution
Have no faith in constitution
There is no bloody revolution
We are spirits in the material world
Are spirits in the material world
Are spirits in the material world
Are spirits in the material world
Our so-called leaders speak
With words they try to jail you
The subjugate the meek
But its the rhetoric of failure
We are spirits in the material world
Are spirits in the material world
Are spirits in the material world
Are spirits in the material world
Where does the answer lie?
Living from day to day
If its something we cant buy
There must be another way
Twofer in Seattle tonight? Protest the bailout at the Seattle federal building, which is just a block away from WaMu headquarters (they do have a nice looking building).
After any agreement among the negotiating leadership the rank and file still must vote on and pass the legislation. That's far from a sure thing as by now they know how large numbers of their constituents feel about it.
This reminds me of the final scene of the movie "Special Bulletin"...the bomb squad starts arguing about how to disarm the nuke and a second later Charleston becomes an ashtray.
I am honestly at a loss as to how to view this--
On the one hand, I tell myself this is how the US government works. This is how it should work..congress needs to decide this, not the President and not the Sec'y of the Treasury. And I am sincerely glad that for once the neocons have not been able to hijack the government with their disaster politics.
On the other hand, there's that loud ticking sound...
I honestly don't believe the bailout is going to prevent anything. This time next year when the next Alt-A vintage resets, we will be faced with the same nightmare 1.5x over.
There is no point subsidizing or bailing out Wall Street. Let them die. Taxpayer money is our money, and it should be saved to keep our government functioning and provide basic needs for the citizens in times of economic disaster, which now seems to be a distinct possibility.
"The bad debt was not created
by the banks. It was created by defaulting "homeowners""
Yes. If I give a random guy living on the street a $100 bill and tell him it is a loan, and that I will be back in a month to collect my interest...who's fault is it that I don't see the interest or the $100 ever again.
It was both the borrowers' faults (looky, we can afford a house now and be rich!), and the bankers fault (just look the other way, house prices always go up!)
Re: JPM/WaMu possibilities. I tried to open a 5% on-line CD account at WaMu this afternoon and got the following (approximate)
message, "Technical difficulties, please try later."
unit472 writes:
The bad debt is the core of the problem. The bad debt was not created
by the banks. It was created by defaulting "homeowners" a very disproportionate number of whom live in Democratic Congressional districts.
So where does the blame lie. I like to go to the source.
Shorter unit472: I will be agitating in favor of bailout of the banks at my next Klan meeting.
I bet the sticking point is the part that says the Secretary can't be "arbitrary and capricious." His job won't be nearly as much fun if that is included.
Twofer in Seattle tonight? Protest the bailout at the Seattle federal building, which is just a block away from WaMu headquarters (they do have a nice looking building).
Reluctant Serf Ken
As the GOP and Dems argue and maneuver their way into irrelevancy, it seems Americans are finally getting serious about taking it to the streets. Bye bye, two-party system. It hasn't got ten years left.
...because the Dems would not even introduce a bill unless a majority of Repubs in both houses supported it.
Game, set, match - Democratic party has publicly stated they don't want to make the hard decisions. That they will politics over principles.
Absolutely not. No bailout of this scale should pass on this timescale without strong consensus support. That's basic respect for the American political system.
Unit472, Have you ever been in California? Or looked at the demo data? Most of the foreclosures are in
Republican districts--high on the list is Modesto-Stockton, the only metro in North-Central California where W dared to campaign. You're busted!
BERLIN (Reuters) - Germany blamed the United States on Thursday for spawning the global financial crisis with a blind drive for higher profits and said it must now accept more market regulation and a loss of its financial superpower status.
The ONLY way this deal doesn't affect FDIC is if JPM takes on the toxic assets (HA!) or if the toxic assets are rolled into the still-theoretical bailout.
I finally got it. If Republicans vote for this bill, they will be in hot s..t when they return to their home states. They fear they will not be re-elected. Dems on the other hand, can say "we tried". Looks like the chips are going to fall.
I vote way down for the Dow tomorrow, because this bailout is not happening in the next 36-48 hours which means there's a real danger it will not happen at all. Which will cause people to take the money and run.
Doc Holiday writes:
That must be it, cause a big panic and have McCain come in as The Super hero to save America, as he ducks out of the debate. I think Republicans can go along with that...
No bailout of this scale should pass on this timescale without strong consensus support. That's basic respect for the American political system.
Agreed! But the PERCEPTION is that it's the Republican congress critters who don't want to rush into this and it's the PERCEPTION the Dems are ready to sign off RIGHT NOW - if only those darn Republicans would lock arms and sing Kumbaya instead of worrying over silly little details of the plan.
Please understand - THIS DOES NOT MAKE ME HAPPY - I'm a liberal.
The U.S. government has brokered a deal for J.P. Morgan to acquire the deposits and some branches of Washington Mutual, according to people familiar with the matter. The deal won't impact the FDIC insurance fund.
If the Dems hadn't loaded the bill up with lets bail out student loans, credit cards, etc., etc. there would be less opposition from the repubs. Now having said that can I go charge everything to the limit, go back to UNC and get my Ph.D. and then bail? Thanks Nancy!
Vladimir Illyich's Useful Idio writes:
If the Dems hadn't loaded the bill up with lets bail out student loans, credit cards, etc., etc. there would be less opposition from the repubs. Now having said that can I go charge everything to the limit, go back to UNC and get my Ph.D. and then bail? Thanks Nancy!
Paulson added those things in, not the Dems. I believe it was right before he informed us we would be bailing the foreign banks out as well.
mal writes:
As the GOP and Dems argue and maneuver their way into irrelevancy, it seems Americans are finally getting serious about taking it to the streets. Bye bye, two-party system. It hasn't got ten years left.
mal | 09.25.08 - 7:08 pm | #
Not until there is SERIOUS unemployment... which is why they are (1) grasping at straws for a solution and (2) trying like hell to blame the other side for all the pain and taking credit for any gain
That is the one guiding principal BOTH sides have. The irony is BOTH sides seem to be maneuvering themselves 'out of position'.
We probably won't get a bill as a result - no hair off my balls either way. We'll get our RTC-Two eventually. I'd much rather see it come AFTER the failures and mass lay offs not before the failures and mass lay offs (they are coming either way).
I don't know. Paulson/Bush have poisoned the financial well pretty bad with their comments. Markets will react badly (short-term) to a breakdown that slows a bill, or stops a bailout entirely. Then it will look like Bush told the truth (oh, how that hurts me to say it) because his prophecy will be self-fulfilled. And the repubs who stood on principle (or whatever) will look awfully responsible for the ugly financial scene of the ensuing weeks . . .
I hear now on the radio that McCain is saying he is working on bringing republicans on board . . .
McCain's panic to act now and delay the debate can't be squared with shelby's saying there isn't such a rush.
And not GS or MS???? So is JPM the bail out / buy out bank of the FED/Treasury these days. Geesh. JPM already collected some pocket change on BS and LEH. Not that is change you can believe. But is it the change we need?
"Jeffrey Miron, a Harvard University professor and self- described libertarian, objects to what he says is `` a stunningly broad, aggressive government intervention without appropriate precedents.''
He advocates allowing the normal process of business failure and bankruptcy to run its course. ``It's just nothing like the calamity the administration is making it out to be,'' he said."
So many great reactions -- I actually do think that the revolt is working.
The problem with the new plan is that it's basically the same as the old plan -- for all of the "hard bargaining and negotiating", it's not substantively different than what Paulson originally wanted.
C'mon look at what it adds:
1) Treasury Sect. "to set standards to prevent excessive or inappropriate executive compensation" -- fox guarding the hen house or what?
2)Equity sharing -- undefined. So again, whatever the Treasury Sect. wants
3)Treasury Secretary is prohibited from acting in an arbitrary or capricious manner -- operationally define what these terms mean? Free ponies for all if he wants?
4)Oversight and Transparency -- it's all after the fact. Treasury Sect can do whatever he wants -- years later somebody tells him to stop.
5) Homeownership Preservation
Yea, and motherhood and apple pie and ponies as well. Meaningless provision.
Bottom line -- Paulson get $350B to spend any way he wants NOW (and another $350B LATER)
If they had crafted a decent plan, maybe they would have gotten it through. But it is, for all intents and purposes, the same plan as last week.
posting again from other thread -
OT -
but yesterday the House passed a bill for
$612 Billion for Defense and the War.
Must be we have more money in our checking account than we thought?
What is this?
The WAMU deal could keep the bulls happy for a while, and the bulls are the only ones left in the market right now. Don't spook the herd, keep the market afloat, and the whole "urgent necessity" argument for the bailout is weakened.
I would never vote for McCain/Palin however McSame votes on the Paulson-Bush bailout.
Additionally I will also never vote for anybody that votes aye on the bill
Re: The House has passed and sent to the Senate a major military bill that includes a pay raise for soldiers and money for the Iraq war.
Quick Senate passage and President Bush's expected signature, are designed to protect lawmakers from election season charges that they do not support the troops. The $612 billion bill permits the Pentagon to give military personnel a 3.9 percent pay raise.
To win Bush's signature instead of a veto, Congress dropped a ban on private interrogators at detention facilities and what amounted to congressional veto power over a security pact with Iraq.
You political guys are strategizing WAAAY too deeply. Bad shit is happening - Bush is in charge. McCain is Bush's successor. That's about the level of most people's thinking & it's essentially correct.
"Additionally I will also never vote for anybody that votes aye on the bill."
Not only that, I will actively donate and campaign for their opposition.
Just got this in the mail. I LIKE it.
Dear Friends:
The financial meltdown the economists of the Austrian School predicted has arrived.
We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.
Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.
Still, at least a few observations are necessary.
The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?
We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.
Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).
Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."
Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?
Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.
It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.
The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.
F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:
Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.
To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.
The only thing we learn from history, I am afraid, is that we do not learn from history.
The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.
The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.
I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.
H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.
dryfly =
"We probably won't get a bill as a result - no hair off my balls either way. We'll get our RTC-Two eventually. I'd much rather see it come AFTER the failures and mass lay offs not before the failures and mass lay offs (they are coming either way)."
well, it's hair off my balls as far as investments. but agree completely with the outcome.
Me no understand WaMu deal
Thats Ballgame Comrades
Me either. Will some branches be open for business tomorrow and some not? If not, I can think of some little old ladies who "bank on Friday, dear" who are going to panic if they can't get into their local branch.
I agree. economy sucks. economy will suck next week and week after that, down to Nov 4. Bush was President, McCain supported Bush. Unless McCain's oppo research turns up a story about Obama having black children then there is no way he can win.
For those keeping Score, JP morgan just took all of the good stuff from WAMU
per CNBC
email,fax and call.
as for mccain more grand stand cause he is down 9% points.
One-two weeks DJI 5300....Now taking bets payable in gold only
In the Feds $29 billion loan to facilitate JPMorgans (JPM) purchase of Bear Stearns, common shareholders were virtually wiped out while preferreds and debt holders were protected. The governments 79.9% equity stake in their conservatorship of Fannie Mae (FNM) and Freddie Mac (FRE), severely diluted common shareholders, preferred shareholders lost their dividend, yet bond and subordinated debt holders were protected. One of the most vocal lobbyists urging government takeover of Fannie and Freddie along with inflicting moral hazard on the shareholders was PIMCO, who made $1.7 billion on September 8 as a result of the governments quasi-nationalization. Ironically, PIMCOs call for moral hazard came back to bite them in the bankruptcy of Lehman Brothers.
Anonymous writes:
McCain is sucking everything into his own personal drama... with Sarah they are a double-fisted dose of pure drama queenery...
Can the Republic survive this tsunami of pure soap opera???
Anonymous | 09.25.08 - 7:16 pm | #
Absolutely they can survive & 'benefit' - offer up a 'big bail out' MOST can support. He does that Dems can't argue or end up looking 'obstructionist' themselves...
The jockeying in this thing is amazing - a decade worth of jostling in just a few days.
PARIS (AP) French President Nicolas Sarkozy said Thursday the world came within "a whisker of catastrophe" during the recent financial crisis and that those responsible for the crisis must be identified and held accountable.
In his first major public address since the start of the crisis, Sarkozy also criticized "abuses and scandals" involving executive pay, and pledged to intervene to halt these practices unless executives come up with their own solution.
"Self-regulation as a way of solving all problems is finished. Laissez-faire is finished. The all-powerful market that always knows best is finished," Sarkozy said.
"The world came within a whisker of catastrophe. We can't run the risk of it happening again," Sarkozy, a conservative, said in an address in the southern Mediterranean port city of Toulon.
Sarkozy warned that the ongoing crisis "will have consequences in the coming months on growth, on unemployment and on spending power."
"The crisis is not finished ... its consequences will be lasting," Sarkozy said.
Asking again - if something the size of WaMu can be "saved" like this, why are we wasting time arguing over a bailout plan that apparently isn't even necessary?
F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar.
We had boom busts long before central banks - just sayin'. Both Austrians & Keynsians put too much stock in their own 'medicine'.
"Self-regulation as a way of solving all problems is finished. Laissez-faire is finished. The all-powerful market that always knows best is finished," Sarkozy said.
I think congress should recess for a week so the congressmen can go back to their consitutencies and take a pulse on this. I think they'll find there's no pulse whatsoever. Then they can come back and vote having been told their political career is over if they agree to it.
Here's what I sent my senators and representative today, if anyone needs ideas:
As one of your constituents, I want you to vote AGAINST the proposed bailout of financial institutions, in whatever its final form is, even if it includes provisions to give the federal government an equity stake in participating companies, to limit executive pay, or to provide additional funds to struggling homeowners. While these provisions are well-intentioned, they will not compensate American taxpayers for the sacrifice they will be making. Furthermore, despite the testimony of Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, many economists and market participants question how successful the bailout plan will be in staving off a downturn or in rescuing the banks.
I have a MBA and my wife is a bond analyst. We understand more than most people what has caused this market turmoil and how these events have been addressed historically, so it is not merely on principle that we question the bailout plan. We believe Congress is making a grave mistake. We work hard to earn a living and dutifully pay our taxes, which already represent a large fraction of our earnings. It is too much to add to that burden to support a bailout plan that is destined to fail. I want you to know that this single issue is important enough to our household that we will not vote to re-elect you if you support the bailout in any form. We are watching closely to see how you vote. I also want you to know that all of my friends and family that I have spoken with are against this bill.
Here is a list of reasons you should vote against this bill:
1.\tIt is unlikely that the bailout will stave off a recession because there is nothing to ensure that the banks will make the capital available to consumers and businesses in the form of credit. The banks are more likely to hoard the capital, exactly as they are doing now. Economic theory suggests that in the event of a liquidity trap, which is what we are in, the government should by-pass financial intermediaries and provide funds directly to consumers and businesses - not provide funds to the financial intermediaries.
2.\tIt is unknown how many of the institutions that are eligible to receive assistance will not be solvent in the future and will fail anyway. Warrants or stock will be useless in this event. How many of them are technically solvent now? Has anyone answered this? It is also unclear how much money going forward will be spent to prevent this from happening, and whether more than $700 billion is necessary. As far as I can tell, $700 billion is an arbitrary figure. Bill Gross, manager of the countrys largest bond fund, estimates that an additional $500 billion will be necessary on top of the proposed $700 billion to keep the financial institutions afloat. (This number may grow to the extent foreign financial institutions are involved.) That is $1.2 trillion of taxpayer funds, on top of whatever the ultimate cost of bailing out Fannie and Freddie, AIG, and Bear Stearns will be. Now, if you had $1.2 trillion to spend, would you choose to spend it this way? What is the opportunity cost of this program to taxpayers? How many new schools can you construct with that money? How many interstate bridges could you fix with that money? You have to be very certain that a second Great Depression is imminent to vote for this legislation, because otherwise you just set Americans standard of living back pretty far purely for the sake of equity investors. And wouldnt it be a waste if the Treasury literally spent billions of dollars to bail out a bank that fails anyway?
3.\tI do not mean to be insulting, but how does the federal government plan to oversee this fund? Build all the oversight provisions you want into the bill, but how many public servants can manage a portfolio of debt derivatives? How many public servants can verify the value of a mezzanine collateralized debt obligation? Please be realistic. Are you going to trust some of the very institutions you are going to save to manage this portfolio the very institutions that mis-valued and misrepresented the investments in the first place? At this point, Congress has not even received a straight answer as to whether the assets would have to be bought at a premium in order to recapitalize the banks. I assure you they will. The only question is at how much of premium and which banks will benefit the most. It is difficult to watch my elected leaders dance around this reality.
You know it is unlikely that the characteristics of the investments in the fund will improve to such an extent that they will be able to be sold at a profit for taxpayers, as some have conveniently suggested. I know you have read in the newspapers about the banks loan practices, some of which border on fraud. You know they misrepresented peoples incomes or did not ask about their incomes at all. You know they assumed that housing prices would continue to appreciate, and downplayed the fluctuations in interest rates that would have deterred many homeowners from entering into adjustable rate mortgages. You know they hyped borrowers ability to refinance so they could get them into larger loans, irrespective of whether borrowers would be able to afford the loans in the long term. So I know you understand that an economic recovery would not improve homeowners ability to pay off these loans. I hope you also understand that just because the federal government buys a mortgage-related derivative investment, it is not thereby entitled to modify the underlying loans. These investments are highly unlikely to appreciate.
So far these banks have not been held accountable for these practices and will in fact be rewarded for them by being relieved of the financial consequences of their actions. Congress will be passing on the ultimate moral hazard onto future generations, and that too will have real costs.
I suggest you let the market run its course, and if that means major financial institutions will collapse, so be it. There will be new banks and new sources of capital, and the banks that should survive will survive. It will be very painful, but it will not be the end of the world.
If Congress is itching to spend over one trillion dollars of taxpayer money, spend it on building schools or on repairing and extending our nations crumbling infrastructure. Spend it on new innovative technologies. Please do something with the money that will allow Americans to live in such a way that they are less dependent on credit. This would be a much better legacy than a failed bailout of Wall Street.
I hope you all see the lack of value in information, i.e, billions of people with supercomputers are making the markets too efficient! Society can't keep up with this dynamic entropy..
Does anyone have a take on the Republican "insurance" idea? From what I heard about it I thought it sounded much better than the Democratic idea since it does not require buying the MBS.
Also, I went to one of he protests. Just the usual bunch of aging hippies/ 9/11 deniers milling around.
I have called my congresswoman and senators, I have called Barney Franks office, Shelby's office. I have called or email numerous other congress critters after they appear on CNBC, either encouraging them fight on or threatening them with my vote.
I am heartened to see that my republicans are coming down on the right side...I just hope they stand strong.
Liquidity in the money markets in maturities over a week is desperately scarce,'' said Tim Bond, head of global asset allocation at Barclays Capital in London.A near-term solution to the crisis is urgent. Unchecked, the current crisis would turn into a self-reinforcing vortex of defaults, bank-capital contraction and deep recession within a matter of weeks.''
Money-market rates signal banks have all but stopped lending to each other. Treasury Secretary Henry Paulson's bailout plan, which proposes removing tainted assets from bank balance sheets, may be cut back in size, U.S. House Budget Committee Chairman John Spratt said today. The U.S. faces a ``painful'' recession if the package isn't approved, President George W. Bush said yesterday.
`Nothing's Working'
Banks are balking at lending to each other because they are concerned counterparties may hold tainted assets at a time when demands on their own cash are rising. General Motors Corp. on Sept. 19 said it would draw the remaining $3.5 billion from a $4.5 billion revolving credit line from banks, a decision Chief Executive Officer Rick Wagoner described today as ``defensive.'
JimPortlandOR writes:
i like 'nutshave' way better than haircut as a financial term. Then the question is whether it is a dry shave or lathered.
JimPortlandOR | 09.25.08 - 7:32 pm | #
Obama's love of markets and his desire for "change" are not inherently incompatible. "The market has gotten out of balance," he says, and it most certainly has. Many trace this profound imbalance back to the ideas of Milton Friedman, who launched a counterrevolution against the New Deal from his perch at the University of Chicago economics department. And here there are more problems, because Obama--who taught law at the University of Chicago for a decade--is thoroughly embedded in the mind-set known as the Chicago School.
He chose as his chief economic adviser Austan Goolsbee, a University of Chicago economist on the left side of a spectrum that stops at the center-right. Goolsbee, unlike his more Friedmanite colleagues, sees inequality as a problem. His primary solution, however, is more education--a line you can also get from Alan Greenspan. In their hometown, Goolsbee has been eager to link Obama to the Chicago School. "If you look at his platform, at his advisers, at his temperament, the guy's got a healthy respect for markets," he told Chicago magazine. "It's in the ethos of the [University of Chicago], which is something different from saying he is laissez-faire."
Hola
Ok, why is Shelby going for what seems like a plan from Goolsbee??
Both Obama and McCain look like deer in headlights on this one.
They don't have a clue.
Dodd was on MSNBC and he said it was a waste of time in the WH
Umm, what is so friggin pressing that Congress cant stay in DC for another week and get this right?
Dirk - campaigning?
Dirk - campaigning?
Umm, what is so friggin pressing that Congress cant stay in DC for another week and get this right?
They are about to be voted out of office and believe that campaigning can save the butts.
Pelosi's comments:
House Republicans say that Senate leaders spoke too soon when they said a deal had been reached on a Wall Street bailout package.
In addition, a key Republican lawmaker stated that Sen. John McCain (R-Ariz.) wants to explore new ideas, like loaning money to financial institutions or insuring the companies, rather than buying their toxic debt.
Earlier Thursday, senators and House Financial Services Committee Chairman Barney Frank (D-Mass.) said they had a tentative agreement, though theyre still negotiating a bankruptcy provision. They said the deal was ready to be taken to the Bush administration.
Not so fast, responded House Minority Leader John Boehner (R-Ohio).
There is no bipartisan deal at this time, Boehner said in a statement. There may be a deal among some Democrats, but House Republicans are not a part of it.
That is key, because House Speaker Nancy Pelosi (D-Calif.) has said she wont bring up the bill in the House unless a substantial number of Republicans, possibly a majority, agree to vote for it.
News Archive - TheHill.com
the butts = their butts.
Is this the first time in history where a "candidate" was invited to strategy meeting at the White House to discuss policy? kinda strange...
Forget the whole deal thing. Let's figure out what's going to happen after they realize its not going to work.
After all, is the deal going to keep Pilgram's Pride from going BK? Is it going to boost RIMM's sales? Is it going to get us buying Detroit's gas guzzlers again? Get us to buy new houses?
Nope. It's just going to keep some of the bigger banks from going under. Maybe its worth doing, but it is not cure any problems.
Mayor Bloomberg could declare tomorrow, run a 40-day campaign and be our next president.
Is this a stalling tactic for McCain to not debate???
Economic advisers to McCain, Obama debate at Stanford
Economic advisers to McCain, Obama debate at Stanford - San Jose Mercury News
http://elections.foxnews.com/2008/09/24/washington-advisers/
This is all about the elections. Protests, votes, and withdrawing cash are about the only leverage I can think of at the moment. Any other ideas?
After this news, the combination of Dow down 400 and WaMu officially failing will make tomorrow a rather busy day.
For the first time in my life, I contacted all my DC reps to voice my opposition to any bailout. Hopefully Sens. Cantwell and Murray get a clue.
Comrade hopeinsd writes:
Let's figure out what's going to happen after they realize its not going to work.
I've caught few of the comments today, but one responded with: define "work". This bill's a giveaway and as someone said a cover-up.
They are being overwhelmed by their constituents and can't ignore it.
Good job, organizers!
Any loan written down by Treasury needs a lien allowing govt to recoup any write down + portion of appreciation on sale of said home...
Haven't even heard this suggested by anyone on the Hill.
Where is Monty Clark when you need him? I think this time Congress will pick Door #3 and get a goat.
They are being overwhelmed by their constituents and can't ignore it.
Good job, organizers!
HOORAH !
Dean,
That is key. One reason Pelosi and the left may be interested in taking the paper is that she can later issue some debt forgiveness based on means testing. On the right we have the "rape the taxpayer to help my Wall St buddies" crowd. That at least is more obvious at the moment.
once the government owns the mortgage then any write down of the debt of homeowners is going to come out of the pocket of the tax payer. Whats the bet when that happens the discussion will turn to all those undeserving people sticking the taxpayer with a loss!
In other words this is just a deal for the big financial institutions to get way from the responsibility of their bad decisions. Shame on Congress!
This could be the best of all possible worlds - no bailout, and McCain getting blamed for everything that goes wrong that supposedly would have gotten fixed by the bailout!
Dodd says White House meeting was a disaster
By Greg Robb
Last update: 6:13 p.m. EDT Sept. 25, 2008
WASHINGTON (MarketWatch) -- Sen. Chris Dodd, the top Democrat on the Senate Banking Committee, said Thursday that bipartisan meeting with President Bush at the White House on the mortgage rescue plan was nothing short of a disaster. In an interview on the CNN cable news network, Dodd described a meeting in which Democrats were blindsided by a new core mortgage proposal from House Republicans, with the tacit backing of Republican presidential candidate John McCain. "I am not going to sign on to something I just saw this afternoon," he said. Dodd said Republicans and Treasury Secretary Henry Paulson had to decide what they wanted to support. The whole meeting "looked like a rescue plan for John McCain," Dodd said. He said he was simply going to pretend that the meeting had never happene
I believe they are in such a hurry for the same reason a car salesman wants you to sign here, now. That is, so there won't be a reasoned debate. If Shelby gets on the news this weekend, they might be batting this around until after the elections.
The whole meeting "looked like a rescue plan for John McCain," Dodd said. He said he was simply going to pretend that the meeting had never happenened
does this make you want to buy stock LOL
Both sides should ante up - take equity from the banks for assistance, and take equity from anyone getting writedowns.
Obama on CNN, not taking a position, just repeating the Democratic party line.
Dirk van Dijk writes:
Umm, what is so friggin pressing that Congress cant stay in DC for another week and get this right?
Congress is probably anxious to get home and get their personal affairs in order for what is about to be unleashed on all of us.
I doubt we'll see too much heavy campaigning in most districts. With all these calls and emails, it will be easier to do talk shows and mailers.
Can't get trampled by the bewildered herd.
I've caught few of the comments today, but one responded with: define "work". This bill's a giveaway and as someone said a cover-up.
Persecuted Comrade Anonymouse | Homepage | 09.25.08 - 6:23 pm | #
You know, I hate modern consultant speak, but I do really wish they would put a "misson statement" at the start of this bill so we could understand exactly the purpose.
I think everyone sees it as a cure for what ever ill they think the economy faces. Bernake has primarly sold it as recession prevention.
But how? Banks neither will, nor should, suddenly start making silly home loans again to boost prices. We won't suddenly want gas guzzler cars again. Commodity prices are more likly to go up than down after this. It might prevent a sudden grinding stop to the economy, but will not change any of causes of the slowdown.
On the email front....I have sent out over 300 emails to every Senator most Reps. and several TV anchors.
I got Pimm Fox (B'Berg TV) to discuss the reverse repo issue that is draining liquidity out of the system when it "supposedly" needs it.
It will work (emails) if you try.
Please try.
Ciao
MS
Seriously, I am a bleeding-heart, left coast liberal and I am pleading with the Democrats to GROW A PAIR!!!!
Keep calling!! Its working!!
Maybe the PPT will be the Plunge Provider Team tomorrow
gab writes:
Dirk - campaigning?
With just about every seat gerrymandered into absolute safety that excuse just doesnt cut it with me.
Have we reached the ungovernable moment?
Maybe the election won't happen after all. I don't see McCain allowing it to happen if polls indicate an Obama lead outside Diebold's margin or error.
What if he calls for a suspension of the election and 44% stop paying taxes altogether? Is 44% enough to overturn the Republic? Could very well be.
senator richard shelby says no deal on zionist wall street bail out scheme
YouTube - senator richard shelby says no deal on zionist wall street bail out scheme (yet)
lmfao!!!
NY times changed their "deal is done" headline to "deal reamains elusive"
Blaming the Republicans seems a bit odd given that 40% of the bad loans originated in California and most of the subprime from Democratic districts.
It is something of a mystery to me as to why, when we have such good data on most every other social issue in this country, we do not have a good picture of just who it is who has created all this bad debt.
We can know at a moments notice who has been denied a loan by race, sex, age, ethnicity surely the same data can be created as to mortgage default and delinquency and by zip code.
Please help me with this: the Treasury is issuing $198 of paper THIS WEEK. What exactly are "we" buying? Are these present expenses? Is the FDIC back-up battery being charged? Inquiring minds want to know!
Tanta, any thoughts to the comment below left on the Padilla blog?
Huntington Beach’s housing market still slipping, agent says - Mortgage Insider : The Orange County Register
"Liar Loan Says:
September 25th, 2008 at 3:20 pm
Matt-
Yes its true that servicers are renting out REO now. The main reason is not what most bloggers here would think. Were not worried about flooding the market with REOs resulting in lower sales prices.
Servicers for MBSs are required to keep losses on an MBS below a certain threshold which is set by the Pooling and Servicing Agreement, basically a thick contract that sets all the rules for an MBS. As an MBS ages, the acceptable loss threshold raises because the investors expect losses to rise over time as more properties are liquidated. If we were to liquidate all the REO we have as quickly as possible, it would result in hitting this loss trigger, which affects the company negatively in two primary ways.
1. MBSs are overcollateralized intitially to protect the AAA investors in the upper tranche. Once you hit the trigger date and keep losses under the threshold, that overcollateralization is released. This is essentially free money for our company.
2. If we dont keep losses under the threshold on the trigger date, the trustee or the investors could attempt to move the security to a different servicer.
In order to make #1 happen and prevent #2 from happening, were renting out REO to stall for time and getting an extra cashflow on the side."
"Deal or No Deal" indeed
We need Howie Mandel involved in this
Comrade hopeinsd said: "After all, is the deal going to keep Pilgrim's Pride from going BK? Is it going to boost RIMM's sales? Is it going to get us buying Detroit's gas guzzlers again? Get us to buy new houses?"
Those are the things that people aren't spending their money on, but what about all the other things that they are spending their money on?
More tunnel-vision.
As if the only way things can be good anywhere is if everything is good everywhere.
The new definition of recession: Slower economic growth. The new definition of "credit crunch": People who don't qualify don't get loans.
))
Sebastia
"Investment, commercial banks borrow $218 bln from Fed"
Needless to say, that total doesn't include the $750 billion.
Conjure says, "If you folks can't see what's going on here, you're fools."
MarketWatch - Stock Market Quotes, Business News, Financial News
...printMidSectio
Sorry, $198 Billion!
WAMU goes down and McCain declares the financial disaster a disaster and blames Obama and the Democrats for the delaying a bail out the House Republicans are actually opposed to but J6P does not know any better as all he hears is WAMU went down.
Then the Maverick can propose something that gets enough bipartisan support to say he saved the economy and makes Bush look bad and the he McCain put Country First and has now distinguished himself from Bush AND the Democrats! Brilliant! But will it work?
What should be a reasoned discussion has lapsed into pure politics. So much for suspension (of disbelief) in the name of patriotism (allegiance to the status quo).
From the previous thread (so hard to keep up!)
Could not disagree more [that Dems have played this smart].
On the prez side, McCain is looking like someone who is at least trying, while Obama looks like a balloon adrift in the heavens waiting for a favorable wind.
On the house side, the Dems are coming across as not believing in this plan because they won't pass it even though they have enough non-GOP votes. And that section 3 - OMG - that is the STUPIDEST thing they could have possible put in there - Paulson must have been laughing his ass off when they "forced" him to add an m'f'ing ENTITLEMENT to housing.
"REQUIRES?"
While the 90% of Americans who are paying the mortgages on time get stuck with the bill? My God, this is one of the worst bits of politicking the Dems have ever done.
Meanwhile Main Street is asking itself how it can trust a Dem leadership on its knees sucking the Bad Boy of a President with worse approval ratings than Nixon.
And no - I'm not a GOPer - I'm a freakin' Liberal.
I'm telling you now - not only have the Dems lost what should have been an automatic term in the White House, they are now is serious danger of losing control of the House. Maybe late for this go-round, but watch out 2 years from now, when every GOPer running against a Dem incumbent is going to plaster Section 3 in 480 point type across every district in America.
This is a major major political cock-up on the Dems part - this will wreck the party for years to come.
Wow, what an about face. McCain comes into the White House with a brand new plan, ostensibly to become the economic hero to salvage his campaign...and manages to piss off everyone at the meeting.
Meanwhile Shelby is leading a full-scale Republican revolt. This is my kind of politics! Burn baby, burn.
Just want to throw out there the danger of celebrating the "no deal" when it just seems so damn likely they'll pass something big by Sunday.
jem writes:
Maybe the PPT will be the Plunge Provider Team tomorrow
No way. If the peons see a big fall and the sun still comes up the following day, they will realize that the bailout is unnecessary.
If the Democrats want a bailout of some kind, then they should pass a bill with their majorities in both houses of Congress, with little or no Republican support, and present it to Bush for signing. Yes, it's true. Democrats in Congress are the majority party! They have the votes.
Unfortunately, they don't know what problem they're supposed to be solving, but they love posturing, and they hope to drag everyone along to share any blame, in case things go wrong.
Apologies if this has already made the rounds here, but if not:
From Forbes online:
"In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.
"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."
Is it just me, or does this call into question the whole F%#@ing enterprise?
Just want to throw out there the danger of celebrating the "no deal" when it just seems so damn likely they'll pass something big by Sunday.
How much debate is planned? Is there a schedule out there yet?
If you want to help and you don't think writing works then at least go to marketwatch.com
here is the link
Letters to the editor: The bailout is un-American - MarketWatch
Vote for this story and email marketwatch to put it on the front page.
SR
McPain has blown the deal in a publicity stunt. I don't know if that is good or bad, but it is clear he doesn't want a deal. This is one serious game of chicken.
Please for the love of the Flying Spaghetti Monster let this crap not pass before the weekend. The longer they hear their constituents' outrage, the better.
Whoa, just got a text msg from ABC news that reads:
TREASURY SECRETARY HENRY PAULSON FEARS BAILOUT DEAL MAY COLLAPSE; PLEADS WITH DEMS, 'PLEASE DON'T BLOW THIS UP,' ABC NEWS HAS LEARNED
don't know whether to giggle or hide under my bed.
Oh come on, Cliffo, you're trying to tell us that Republicans never engage in grandstanding and posturing?
This seems like a political ploy to make McCain look Presidental and in charge after not being involved to this point. I am very concerned the Dems are being setup by an "October surprise". A GOP Rep (don't remember his name) actually said that the lack of agreement in the GOP was that Dems find it easier to spend $700B. So the GOP is starting to run against their own proposal and blaming the Dems for the bailout they demanded.
I am beginning to think the Dems should just say no if this has degenerated to partisan politics.
Jim
"Have we reached the ungovernable moment?"
No, no, no. This is, in my simple mind, a great moment in American governance. An act that many feel, for many different reasons, might have been -and still may be- disasterous public policy, has been brought back into the forum of debate by the balances in the system, as well as by the people, including many in this forum.
The election will go on, as will the Republic. Bank on it.
TREASURY SECRETARY HENRY PAULSON FEARS BAILOUT DEAL MAY COLLAPSE; PLEADS WITH DEMS, 'PLEASE DON'T BLOW THIS UP,' ABC NEWS HAS LEARNED
uh oh ... just what Bush would need to launch an Presidential Directive
bluestatedon: Are you suggesting that if we filmed Hank drooling on a Mylar balloon the red team would pump the flag and go?
I hope all of y'all have been filling up your scrooge mcDuck pools, because if this deal don't go threw fractional banking is gonna be in a coma for a couple of years.
Enjoy your victory laps.
McCain is Nero with a flamethrower.
Paulson fears deal may collapse
Stephanopoulos: Paulson Fears Deal May Collapse - Political Radar
ABC's George Stephanopoulos Reports: Treasury Secretary Henry Paulson fears the Wall Street bailout deal is falling apart after a chaotic White House meeting, sources say.
Paulson walked into today's the room where Democrats were caucusing during today's meeting at the White House and pleaded with them 'please don't blow this up,' Stephanopoulos reports.
House Financial services Chairman Barney Frank, D-MA, was livid, saying 'Don't say that to us after all we've been through!'
Democrats believe that House Republicans are torpedoeing the framework deal reached in the bipartisan agreement of principles released by the Senate Banking Committee today.
This is all about saving McPain's butt. What brilliant leadership.
I wrote this on the last thread... as the action has moved here:
All is not what it appears.
GOP minority isn't any more 'opposed' to this bailout than Dems are - they just don't want to vote for it.
They would LOVE to see it passed with 100% Dem votes and NO GOP votes... then they can crow when the pain comes because EVERYONE KNOWS there will be pain if its passed and pain if it does not. GOP can't lose if the bill passes with ONLY Dem votes & the pain rolls in.
Is it BS? Sure but it makes GREAT politics especially as deficits soar & taxes have to be raised...
The only way Dems win in this situation is if everything works out fine (no pain - bailout makes money, etc.) pretty quickly AFTER passing - what is the chance of that? Not good.
Dems rank and file on the other hand will secretly be hoping the bailout DOESN'T pass and all the obstruction comes from GOP... then when the pain comes ('cause there will be pain either way) Dems can say to joe laid off worker - "You lost your job & home & retirement account because of incompetent Bush policies, evil bankers and the GOP minority in congress obstructed the only fix available to us at the time... We tried but they stopped us, sorry..."
Is it BS - sure but it also makes great campaign fodder as unemployment & foreclosures rise...
The GOP only wins in this situation if nothing bad happens in the wake of the failed bailout... TED spread improves foreclosures decline, lay offs don't materialize, etc. What is the chance of that?
This is a classic political 'hot potato' where the other side 'winning' ensures your side wins later in the ballot box. Everyone - Shelby included - is aware of the stakes.
Oh wow, so this is the end of America. Somehow I thought it would be more momentous than a bunch of grown guys in suits whinging at each other.
Treasury Secretary Henry Paulson fears the Wall Street bailout deal is falling apart after a chaotic White House meeting, sources say.
Shouldn't his reply be "no comment"?
Who has a copy of The Chicago Plan or whatever Shelby has??
Oh come on, Cliffo, you're trying to tell us that Republicans never engage in grandstanding and posturing?
Both sides (as if there are two sides?) engage in grandstanding.
I'm willing to overlook it this one time, because finally it serves my purpose.
Republicans must either support or reject the plan. It's their plan from their president.
Keep up the good work!
One item that needs more attention: to get the $700 billion, people will have to take money currently allocated to other uses, and use it to buy Treasuries. Taxpayer money doesn't come from nowhere, and printing (so far) is off the table.
What's the impact of that HUGE CAPITAL DRAIN on the global economy? It will be enormous; capital will have to flow out of all sorts of otherwise-productive investments and into Treasuries. Productive capital will be diverted to the "infinitely wise" investment choices of Secretary Paulson and his successor. Will that be a net win? I think not.
A million investors with $700,000 each, left to their own devices, will make better use of that $700,000,000,000 than Paulson will. As will a hundred million taxpayers with $7,000 each.
In short: regardless of the language, this is the wrong plan. It will make things worse.
just what Bush would need to launch an Presidential Directive
No way that happens, an executive order on this would be like Bush hiring a hitman to kill himself. Unless on January 20th he's planning on flying directly from the inauguration to his compound in Paraguay.
Rep. Barney Frank just reported that House Republicans have rejeted the bil.
William Isaac former FDIC also just stated on Bloomberg that there will be no bill.
Re: Oh wow, so this is the end of America.
How bout NO, yah crazy Dutch Bastard!
lama writes:
If Shelby gets on the news this weekend, they might be batting this around until after the elections.
At which point they will realize that life has gone on, the world hasn't ended and the bailout isn't needed!
William Isaac former FDIC also just stated on Bloomberg that there will be no bill.
WTF
The fateful words of Bush linger on the airwaves - he has to do SOMETHING now.
I am certain that I was the first to suggest that no deal would happen.
Many fine points made here. Arguments on both sides and supportive of both.
But John Mccain is a monkey wrench in a blue suit.
Didja see the look he was tossing W's way? sort of a fuck you for South Carolina look to me.
Commissar 4822 writes:
TREASURY SECRETARY HENRY PAULSON FEARS BAILOUT DEAL MAY COLLAPSE; PLEADS WITH DEMS, 'PLEASE DON'T BLOW THIS UP,' ABC NEWS HAS LEARNED
uh oh ... just what Bush would need to launch an Presidential Directive
Commissar 4822 | 09.25.08 - 6:40 pm | #
Why call on the Dems? He should be able to get the GOP majority to lock step and then just pick off a handful of Dems to get it through.
The MINUTE the Dems see GOP support (cover) they - sign on.
The bottleneck is Dem majority won't vote for ANYTHING this controversial WITHOUT a ton of GOP cover.
Paulsen should be talking to his own tribe.
The election is only 6 weeks away. Whatever effect this plan would or would not have will not be apparent in such a short time.
If I were a Republican I would characterize this as a bailout of New York bankers and California deadbeats and why should people in my district bailout either?
I would prefer to believe that at least one of our representatives is holding out for our best interests, call me naive.
For me,it was one encouraging moment watching Shelby speaking at the Congressional "meeting".
Give 'um hell, Shelby, tell it like it is...
And then some.
Comrade Volker the Viking writes:
I am certain that I was the first to suggest that no deal would happen.
I'm still waiting on those loads of devalued currency
TREASURY SECRETARY HENRY PAULSON FEARS BAILOUT DEAL MAY COLLAPSE; PLEADS WITH DEMS, 'PLEASE DON'T BLOW THIS UP,'
Let the son of a bitch blow up. I'm certainly not going to hold the dynamite for him.
Re: Didja see the look he was tossing W's way? sort of a fuck you for South Carolina look to me.
I thought it was kinda like a fuck you for wearing those high heels look
Oh come on, Cliffo, you're trying to tell us that Republicans never engage in grandstanding and posturing?
No, not at all. I'm just describing what happened today and yesterday.
I am for adjournment. Adjourn now.
Start faxing!
I think Paulson is a Democrat. Know Corzin, Diamond and Rubin are. So why can't they convince their tribe?
brian writes:
Rep. Barney Frank just reported that House Republicans have rejeted the bil.
William Isaac former FDIC also just stated on Bloomberg that there will be no bill.
brian | 09.25.08 - 6:43 pm | #
If true the spin has begun...
The stakes just went through the roof. If McCain is serious about the "insurance" alternative plan, there's no way, in my opinion, this thing gets done tomorrow.
These are incredible times. An incredible moment in our nation's history.
Some things we had better start learning to say in Chinese: "Shine your shoes most honorable sir?","Would beautiful lady like to buy some flowers?","Would you or any/all of your group like to have sex with me/my mother/my father/my sister/my brother/my dog?".
the democrats can rail against "the Paulson plan," too. No one but Paulson and Bush support the Paulson plan.
Frank/Dodd offered an alternative and had some leading repubs on stage with them this morning saying it was basically worked out.
I don't see how McCain can pull a rabbit out of this hat.
"Paulsen should be talking to his own tribe."
Only if he's serious about the plan.
If it's just another political game, then he's doing the exact right thing. Let the House Republicans kill his own plan and blame the Democrats.
It wasn't going to happen. Not this much money. Not this close to election time. Not when we haven't seen a whole lot of spill-over into the real economy.
They keep saying 96% of voters don't want this -- but yet only 4% understand where this may end up, if they don't get this shit together fast!
All the people opposed to the bailout are calling the President Bush, Secretary Paulson, and Chairman Ben liars. Not exactly news, I realize, but I hope y'all are voting for Dems in a few weeks.
GO TEAM AMERICA!!!!
gadzooks... political posturing over real leadership. and of course who is the loser... the non-connected citizens.
unit472 writes:
I think Paulson is a Democrat.
unit472 | 09.25.08 - 6:48 pm | #
Wrong - hardcore GOP, worked in earlier administrations w/ Rummy Chenny etc.
Do you seriously think this admin would place a dem in this sensitive a spot? Hell they didn't even hire Dem civil servants...
Hold tight folks, the markets shall be collapsing momentarily! How many hours until Asia opens?
Well done, Senator Shelby and House Republicans !!! This may persuade me to support the Republicans. Hold off this bill FOREVER.
Hot off the wires: JP Motgan to hold conference call tonight, 9 ET.
The bottleneck is Dem majority won't vote for ANYTHING this controversial WITHOUT a ton of GOP cover.
Absolutely correct, sir!
Unfortunately for Dem election hopes, sir, they are doing so in very transparent manner and Main Street sees it.
The new definition of recession: Slower economic growth. The new definition of "credit crunch": People who don't qualify don't get loans.
))
Sebastian
Sebastian | 09.25.08 - 6:35 pm |
I agree 100%. Starting from Bernanke on down, our leaders see a need to intervene in an economy going through a necessary process of purging after a credit orgy. Banks deciding to give only resonable amounts of credit is not a "crises" Nor is our choice to use our limited resources to buy fewer new cars and houses.
I think we should do the minumum needed to prevent any sudden crises, but to think that ANY amount of goverment money can fix every ill of our economy is hubris. This bailout will not prevent layoffs and BK's, so I expect lots of people will view it as a "failure," even if that isn't the intended purpose of the bailout.
At what point will our leaders accept that they are powerless to "fix" the economy? At what point will they tell us that "fixing" the economy requires us to work a little harder and save a little more?
The new definition of stupid : "Sebastian"
Apologies
Abit off topic
your previous post
"WaMu Cliff Diving"
Has not the death of WaMu now become MORE CERTAIN.
Why would any free capital committ to WaMu.
Just wait and Hank will have the all the money required to provide it to Golman Sachs who will then take out WaMu.
Keep calling!!!
Dow down 800 tomorrow and a necessary market correction trudges onward?
Or martial law?
Kos kids need to grow up. This catastrophe is totally non-partisan. The tit-for-tat gotcha games are a big reason the general public has been blind to this coming storm. Those advocating partisan rancor ar just as much to blame as the pigmen banksters.
"The bottleneck is Dem majority won't vote for ANYTHING this controversial WITHOUT a ton of GOP cover."
Good! No, not good, it's goddamned GREAT!
Keep calling!
Sen. Bob Casey (PA) is saying that John McCain has derailed the agreement and is meeting with Republicans to put together a new direction.
GO JOHN!!
If it's just another political game, then he's doing the exact right thing. Let the House Republicans kill his own plan and blame the Democrats.
ferg | 09.25.08 - 6:49 pm | #
That blows up in their face... Dems congressmen play ball but GOP minority is 'obstructionist'... looks great until the credit markets blow up over then next few weeks (which they are doing and will do w/ or w/out this bill).
The way they blow up Dems is somehow convince them to pass it on their own... won't happen unless Dems are suicidal.
but I hope y'all are voting for Dems in a few weeks.
I am committed to voting anti-incumbent. I encourage all of you to do the same.
I am allowing exactly 2 exemptions: RP and Shelby. No others, don't even bother asking.
Jon Stewart made a good point last night on McCain trying to delay the debates - Isn't this exactly the time we need to see a debate ? The financial crisis makes a debate more not less imperative.
Is McCain afraid of Obama's obvious better command of the issues and speaking ability. Less one on one comparisons would benefit McCain who could hide behind attack ads.
Just a thought,
Jim
Keep calling!! Its working!!
crispy& cole
I also called my Mayors office. Spoke to the Deputy Chief of Staff. He/They have no opinion of federal programs to which I responded that if I have to pay more fed taxes I aint got the money to pay local taxes and that I needed the Mayors position on using tax payer money to pay off failing financial institutions apparently the Mayor "will never comment on the use of taxpayer money". WTF. Next election woo hoo!
I hope they understand that owning mortgage-related derivatives does not give them the ability to modify the underlying loans.
China tells banks to stop inter-bank lending to the US.
halt lending
Holy crap we are really f***.
Isn't this exactly the time we need to see a debate ? The financial crisis makes a debate more not less imperative.
Not when both candidates have no clue what is happening.
Any ideas what this Morgan conference call is going to be about?
I suppose that if the Repubs balk and Paulson pleads to the Dems, then the Dems could rewrite the Frank/Dodd bill to make it much more agressive on regulating Wall St and extending help to people in mortgage trouble, i.e., make less a rescue for Wall St and more a rescue for the middle class. Then give it to Hank and say if you want a few billion, here it is, on our terms.
And by the way: Before this fiasco, I always considered RP a crackpot.
I hope the RP-ers will forgive me for that. I don't agree with him about the gold-standard issue, but he's definitely out of my crackpot file.
The GOP created this mess. The Republicans are responsible for the investment banks being able to leverage 40:1. It is blood on Bush, Paulson, and McCain's hands.
The fools on here saying Dems are wrong are just plain shills who would say that no matter what. They have no understanding of economics.
No one but Paulson and Bush support the Paulson plan.
Don't forget Barney and Laura - they're behind it too.
China tells banks to stop inter-bank lending to the US.
That supposedly is old news.
Page not found | Herald Sun
China's banking regulator sought to reassure jittery financial markets, denying a report that it had told local banks to stop lending to US banks and stressing that foreign bank operations in China were healthy.
JPM buying WM???
CathyG writes:
Sen. Bob Casey (PA) is saying that John McCain has derailed the agreement and is meeting with Republicans to put together a new direction.
GO JOHN!!
CathyG | 09.25.08 - 6:53 pm | #
New Direction = McCain's Bailout
I can hardly wait.
These guys keep snatching defeat from the jaws of victory.
John McCain is not synonymous with planning, so is this just a soap opera to swing votes and delay the debates?
"China tells banks to stop inter-bank lending to the US."
F*^k them, anyway.
The anchor on CNN earlier today said lots of protests are planned for tomorrow all around the nation. They are afraid that if reps go home they'll never get a bill, because they will have to actually face angry constituents. Especially the ones that are campaigning. So the heat is on to get it done this weekend.
McCain is a Liar.
Bush is a Liar.
Paulson is a Liar.
"Kos kids need to grow up. This catastrophe is totally non-partisan. The tit-for-tat gotcha games are a big reason the general public has been blind to this coming storm. Those advocating partisan rancor ar just as much to blame as the pigmen banksters."
The GOP invented most of the current tit-for-tat, starting approximately with Ken Starr. They are the ones most directly at fault for the ridiculous Manichaeism which pervades national politics.
Dodd said on CNN that McCain wasn't able to explain to the WH meeting what he was supporting, and that Dodd couldn't understand anything McCain said.
Pelosi and Reid talked with Paulson afterward and said Paulson needed to get the Republicans lined up, because the Dems would not even introduce a bill unless a majority of Repubs in both houses supported it.
The current plan outline, a much amended revision of the original $700B proposal from Treasury and the White House takes the core proposal of Paulson's original bill and works with that. Apparently the House GOP thing (which even Boehner couldn't explain to the WH meeting) goes an entirely different direction, with investors being asked to the bailout, but getting substantial tax breaks. It appears that the House GOP doesn't think tax breaks cost the taxpayers any money.
Good old Washington. If spending $700 billion would save the economy AND cure cancer, end toe nail fungus and make everyone live to 120 the current bunch of politicians would amend, attach, argue it into a bill to fund their brother in laws failed auto dealership.
Let the economy go south, it probably will anyway but in two years we can get our republic back.
Organizers? There are no organizers to the outburst against this. It's a taxpayer's rebellion, and they better figure it out soon before the massive taxpayer's revolt next year if this goes through.
This whole mess is straight out of Karl Rove's playbook. Have the GOP leaders scream "We need a bailout!" at the top of their lungs and propose legislation that the American taxpayer HATES. Then have the GOP members of congress refuse to get on board. When the deal fails, the GOP has a win-win position: if the economy tanks, they blame the Dems for not doing the deal. If the economy doesn't tank, they take credit for saving taxpayer dollars.
"Sept. 25 (Bloomberg) -- More than 150 prominent U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely.
In a letter yesterday to congressional leaders, 166 academic economists said they oppose Treasury Secretary Henry Paulson's plan because it's a ``subsidy'' for business, it's ambiguous and it may have adverse market consequences in the long term. They also expressed alarm at the haste of lawmakers and the Bush administration to pass legislation."
YES!!! , finally what took them so lone?!?
That must be it, cause a big panic and have McCain come in as The Super hero to save America, as he ducks out of the debate. I think Republicans can go along with that...
I think GWB should have to pay for it all.
Gridlock: it's a beautiful thing.
less than 5% of the subprime loans oriniated since the beginning of greenspans lowlow low interest rate gaem...
are in default
we are being robbed by the banksteres and the bush administration
the rescue should be bottom up not top down
the bailout, 700 billion dollars is enough money to pay down to zero all of the subprime mortgages that are in default with hundreds of billions of dollars left over
i intend to vote against my incumbent senator (s) and / or representative if they vote for a top down bailout bill
they have been so told
this proposal even with ceo pay limits and oversight is just theft.
the oversight and pay limits dont make the rape not a rape.
better yet
take a trillion and start a bank of the United States of America
screw the new york investment banks, and the federal reserve.
I just received a cryptic notice from JP Morgan of an investor conference call tonight at 9:15 eastern time. No explanation; could be earnings pre-release, or a large transaction, but it's very odd.
YES!!! , finally what took them so lone?!?
You can always count on Robert Lucas.
I am committed to voting anti-incumbent. I encourage all of you to do the same.
I'll gladly support my incumbents if they vote against this bill (and I don't mean waiting until there's enough votes to guarantee passage, I mean actual opposition).
Alas, from all current appearances, it would appear that neither my congressman nor my senator will give me the chance to support them.
"The fools on here saying Dems are wrong are just plain shills who would say that no matter what.
Pot, meet kettle. Tit-for-tat, large majorities of both parties are beholden to the pigmen. I pity your hatred.
Rumor is WM will close at 9pm eastern time. For what its worth.
Henry Paulson's plan because it's a ``subsidy''
okay then, you can kill some parts of NAFTA!
MP
I agree. I think what's going on now - whether a fiasco with no bill or a fiasco that produces a bill that attempts to do a partial Paulson - will set up a much more assertive house cleaning of the financial system by Obama and a Dem Congress. New Deal II.
Obama and Dems will light up McCain so that he goes off like a roman candle. Not hard to do these days.
stock_regulator writes:
Rumor is WM will close at 9pm eastern time. For what its worth.
same time as JPM conference call?
McCain is doing this intentionally. Apparently, he's supporting the alternative House Republican effort. If so, it's an obvious political ploy to stall the debate.
Best thing about it is that it will backfire and the Dems won't keep a discussion going, and can now blame the ensuing collapse on McCain!!!
That McCain guy is so damn dumb it is amazing!! He's making Shrub look bright.
Comrade Kaboom
Yah, Im here thinking money mkts can freeze up -- but it looks more and more like a soap opera which can be played with for weeks, as in by design, to fuck with the election process, i.e, something we have not seen since hanging chads!
Rumor is WM will close at 9pm eastern time. For what its worth.
Left just enough in my accounts to pay the bills.
Ol' pap, rest his soul, made money on commercial and residential real estate. Always said that 6-7% interest was right. Now we got people freaking out that interest rates are high. WTF?
A note I just sent to Nancy Pelosi via her official address for non constituents:
AmericanVoices@mail.house.gov
Dear Madam Speaker,
As a lifelong progressive I find myself in the strange position of cheering on the Republican right-wingers who so far are the only people ready to stand up to the insane bailout plan that you, Barney Frank and President Bush support, and the rest of the country rejects. The Pelosi-Frank-Bush bailout is the worst idea I have ever heard, and a few cosmetic changes will not make it better. Sorry to say this, but the changes I heard you describe this morning are just lipstick on a pig.
Instead of you cosying up to Bush and Co. force through this daylight robbery and impose another $700,000,000,000 on this already bankrupt nation, I would like to see you calling for impeachment of the president and prosecutions of those responsible for the malfeasance that has brought us to this pass.
What we need now is not the Washington establishment closing ranks against the country in so-called "bipartisanship," but fierce partisanship to stand up to the unprecedented malfeasance of the government.
When you won the majority in 2006, you promised us change. Instead, once again, the Democrats tag along behind another Bush policy. Iraq, the Patriot Act, you name it, and it couldn't have passed without Democratic support. Now we are being threatened with economic mushroom clouds if we don't fork over the cash by Friday. If the situation is so bad, where were you? Why did you not know? I suspect it is because the entire Washington elite is in on the scam that you are now working hand in hand to cover it up -- at our expense.
No bailout, No way. I would rather eat beans and rice for the next ten years than see this pass.
Yours,
FDIC Board Meeting Tomorrow. Webcast.
FDIC Board Meetings & Advisory Committees
...because the Dems would not even introduce a bill unless a majority of Repubs in both houses supported it.
Game, set, match - Democratic party has publicly stated they don't want to make the hard decisions. That they will politics over principles.
Talk about snatching defeat from the jaws of victory.
VERY VERY UNHAPPY.
Pelosi and Reid talked with Paulson afterward and said Paulson needed to get the Republicans lined up, because the Dems would not even introduce a bill unless a majority of Repubs in both houses supported it.
Bingo.
I knew that had to be going on behind the scenes.
GOP nightmare is McPain throwing out 'his ideas' make his party discuss them... Dems will pay for the air time... this topic is that toxic for ANY AND ALL OF THEM.
Shelby memo to McCain... 'STFU - we had them boxed in you old fool!'
LOL
I Want My Pony Damnit!!
CSC,
So this is the financial version of "On The Beach"?
McCain is a true American hero for stepping in and throwing a monkey wrench in this travesty of a "deal".
Prediction - he will hold firm. After all, what are the pigmen going to do, try to bribe a man who spent years in a POW camp being tortured for his country?
God Bless you, John McCain, and may you always have the Lords favor.
Rumor - WM assets gobbled up by JPM and the rest is on the FDIC...here we go boys and girls
F--- them all with a razor blade.
Doc Holiday writes:
senator richard shelby says no deal on zionist wall street bail out scheme
Take your antisemitic garbage elsewhere. This site used to be above that, but I guess the witchhunt scumbags are out again.
breaking news o WSJ, J.P. Morgan to acquire deposits of Washington Mutual, according to people familiar with the matter. The deal won't impact the FDIC insurance fund
Thank God somebody had the balls to stop this misbegotten fiasco from getting rammed through Congress.
And I'm not even religious.
John McCain is not synonymous with planning, so is this just a soap opera to swing votes and delay the debates?
Doc Holiday
No this is Phil Gram the new Sec Treasury asserting what he would like in HIS bailout plan.
The bad debt is the core of the problem. The bad debt was not created
by the banks. It was created by defaulting "homeowners" a very disproportionate number of whom live in Democratic Congressional districts.
So where does the blame lie. I like to go to the source.
Comrade Kaboom
I don't think this is a well-oiled plan because there is no chance the economy will do well over the next couple of years. No chance.
Plus the panic now is real. Even if it didn't develop organically, it is real now. Bush and Paulson made sure of that.
Bill or no bill, there is no way that markets will be calm by Nov 4. No way that unemployemnt will level off. No way foreclosures will stop or even slow.
Obama gets to run against Bush and against McCain career as a deregulator.
"The deal won't impact the FDIC insurance fund"
Not sure about that!
IN response to this comment above: "Blaming the Republicans seems a bit odd given that 40% of the bad loans originated in California and most of the subprime from Democratic districts"...I answer with this article. I'm sorry I am posting the entire thing but it is very important history and few here know this, it appears. (And anyone who refuses to look at the facts because it was penned by Spitzer has their head up their ass, in my opinion.) Predatory Lenders' Partner in Crime
By Eliot Spitzer
The Washington Post
Thursday 14 February 2008
How the Bush administration stopped the states from stepping in to help consumers.
Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.
Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.
Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.
What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.
Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.
Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.
In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.
But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.
Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position.
When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.
--------
C&C you have a link? or what is the source?
It would certainly throw gasoline on the fire. Whatever it is, somebody is trying to influence asia + europe markets.
Shelby didn't use the word "Zionist." It was the in the title of the linked You Tube video.
Game, set, match - Democratic party has publicly stated they don't want to make the hard decisions. That they will politics over principles.
Talk about snatching defeat from the jaws of victory.
No they aren't going to force people to take nasty medicine - not without a 'second opinion' from the GOP minority. No 30 second 'bailout' sound bites for them...
LOL
oh eliot. Why couldn't you have just kept it in your pants.
Bloomberg teevee reports JP Morgan to buy some WAMU branches. No details. Sheila shampooing...
Story on WSJ.com
Haha we beat the WSJ!!!
Hey neo,
I didn't post the title to the video, I thought it sucked too, I just posted the most up-to-date info on Shelby. Guess I should have held out the title; sorry!
This ones and oldie but a goodie, goin' out to the pigmen:
There is no political solution
To our troubled evolution
Have no faith in constitution
There is no bloody revolution
We are spirits in the material world
Are spirits in the material world
Are spirits in the material world
Are spirits in the material world
Our so-called leaders speak
With words they try to jail you
The subjugate the meek
But its the rhetoric of failure
We are spirits in the material world
Are spirits in the material world
Are spirits in the material world
Are spirits in the material world
Where does the answer lie?
Living from day to day
If its something we cant buy
There must be another way
Sting
Twofer in Seattle tonight? Protest the bailout at the Seattle federal building, which is just a block away from WaMu headquarters (they do have a nice looking building).
After any agreement among the negotiating leadership the rank and file still must vote on and pass the legislation. That's far from a sure thing as by now they know how large numbers of their constituents feel about it.
"Pot, meet kettle. Tit-for-tat, large majorities of both parties are beholden to the pigmen"
Yup, there aren't 35,000 lobbyist in DC giving cash to just one side. They are all beholden, some more the others.
This reminds me of the final scene of the movie "Special Bulletin"...the bomb squad starts arguing about how to disarm the nuke and a second later Charleston becomes an ashtray.
I am honestly at a loss as to how to view this--
On the one hand, I tell myself this is how the US government works. This is how it should work..congress needs to decide this, not the President and not the Sec'y of the Treasury. And I am sincerely glad that for once the neocons have not been able to hijack the government with their disaster politics.
On the other hand, there's that loud ticking sound...
I honestly don't believe the bailout is going to prevent anything. This time next year when the next Alt-A vintage resets, we will be faced with the same nightmare 1.5x over.
There is no point subsidizing or bailing out Wall Street. Let them die. Taxpayer money is our money, and it should be saved to keep our government functioning and provide basic needs for the citizens in times of economic disaster, which now seems to be a distinct possibility.
"The bad debt was not created
by the banks. It was created by defaulting "homeowners""
Yes. If I give a random guy living on the street a $100 bill and tell him it is a loan, and that I will be back in a month to collect my interest...who's fault is it that I don't see the interest or the $100 ever again.
It was both the borrowers' faults (looky, we can afford a house now and be rich!), and the bankers fault (just look the other way, house prices always go up!)
JPMorgan buys Wamu ON CNBC RIGHT NOW
JPM to aquire WaMu, CNBS reports
El Cliffo,
Thanks!
CR readers smoked the MSM!!
Re: JPM/WaMu possibilities. I tried to open a 5% on-line CD account at WaMu this afternoon and got the following (approximate)
message, "Technical difficulties, please try later."
Apparently WaMu is going down tonight. Ha.
Nothing like a little chaos. We'll be down 800 tomorrow, and the Dems will blame it all on McBrezhnev for walking into the WH and torpedoing the deal.
Viva la Respublica!
unit472 writes:
The bad debt is the core of the problem. The bad debt was not created
by the banks. It was created by defaulting "homeowners" a very disproportionate number of whom live in Democratic Congressional districts.
So where does the blame lie. I like to go to the source.
Shorter unit472: I will be agitating in favor of bailout of the banks at my next Klan meeting.
WaMu to be acquired by JPMorga
I bet the sticking point is the part that says the Secretary can't be "arbitrary and capricious." His job won't be nearly as much fun if that is included.
Twofer in Seattle tonight? Protest the bailout at the Seattle federal building, which is just a block away from WaMu headquarters (they do have a nice looking building).
Reluctant Serf Ken
Please let the pizza guys through.
The stock was down huge today....where is the F'n SEC????
We'll be down 800 tomorrow,
Only if the bailout appears scuttled. Otherwise 400 up cuz the problem is solved by a merger/takeover/conservatorship. Again.
As the GOP and Dems argue and maneuver their way into irrelevancy, it seems Americans are finally getting serious about taking it to the streets. Bye bye, two-party system. It hasn't got ten years left.
The stock was down huge today....where is the F'n SEC????
Are they zeroing out the shareholders?
...because the Dems would not even introduce a bill unless a majority of Repubs in both houses supported it.
Game, set, match - Democratic party has publicly stated they don't want to make the hard decisions. That they will politics over principles.
Absolutely not. No bailout of this scale should pass on this timescale without strong consensus support. That's basic respect for the American political system.
No, Mccain wants a clause that says he can be arbitrary and capricious, and cancel state of the union addresses whenever he doesn't feel like talking.
WaMu to be acquired by JPMorgan
Conjure says, "I got that one right. You people owe me TWO ponies."
BREAKING NEWS - Zeeks Pizza gets the order from the FDIC!!
"CR readers smoked the MSM!!"
Yep. Posts above that (a) JPM call's at 9:15, and (b) WM will close at 9:00.
Didn't need no slide rule to cipher that one out. Good job!
Unit472, Have you ever been in California? Or looked at the demo data? Most of the foreclosures are in
Republican districts--high on the list is Modesto-Stockton, the only metro in North-Central California where W dared to campaign. You're busted!
BERLIN (Reuters) - Germany blamed the United States on Thursday for spawning the global financial crisis with a blind drive for higher profits and said it must now accept more market regulation and a loss of its financial superpower status.
Era of U.S. financial dominance at an end: Germany
| Top News
| Reuters
PLEASE TAKE 1 MIN. Go to marketwatch.com search Open letter to Dodd. Email marketwatch to put it front page and vote for it.
It will help with the newsflow tomorrow. We are all writing so much here - that is great but this letter will get national support. PLEASE.
SR
FDIC warming up the helicopters and ordering pizzas right now, according to sources.
Sheila is in her jumpsuit.
No they aren't going to force people to take nasty medicine - not without a 'second opinion' from the GOP minority.
This is all about perception, right? I believe we're agreed on that.
Republicans are painting the perception that they won't vote for it because it's a bad deal - ie that they're standing on principles.
Dems are painting the perception that they won't vote for it because Republicans won't vote for it - ie that they're playing politics.
It doesn't take a brainiac to see which position is more energizing come election day. The Dems just f'ed themselves where the sun don't shine.
The White House is McCain's to lose.
The ONLY way this deal doesn't affect FDIC is if JPM takes on the toxic assets (HA!) or if the toxic assets are rolled into the still-theoretical bailout.
Effers.
Bye bye, two-party system. It hasn't got ten years left.
I'd even be happy with two parties that were in fact different.
I finally got it. If Republicans vote for this bill, they will be in hot s..t when they return to their home states. They fear they will not be re-elected. Dems on the other hand, can say "we tried". Looks like the chips are going to fall.
I vote way down for the Dow tomorrow, because this bailout is not happening in the next 36-48 hours which means there's a real danger it will not happen at all. Which will cause people to take the money and run.
Doc Holiday writes:
That must be it, cause a big panic and have McCain come in as The Super hero to save America, as he ducks out of the debate. I think Republicans can go along with that...
Hell yes. This is a Hail Mary.
jp morgan to buy wamu via the fed
"The White House is McCain's to lose."
Conjure says, "If McCain does win, it will be a pyrrhic victory."
Does JP need the bailout for this to work?
No bailout of this scale should pass on this timescale without strong consensus support. That's basic respect for the American political system.
Agreed! But the PERCEPTION is that it's the Republican congress critters who don't want to rush into this and it's the PERCEPTION the Dems are ready to sign off RIGHT NOW - if only those darn Republicans would lock arms and sing Kumbaya instead of worrying over silly little details of the plan.
Please understand - THIS DOES NOT MAKE ME HAPPY - I'm a liberal.
Where the hell is CR? Is he hiking??
WSJ ONLINE - JPM TAKING OVER DEPOSITS AND SOME BRANCHES OF WAMU - NO FDIC HIT
JO
I can haz plazmaz and playstayshens plez?
Keep 'em coming, boys!
The U.S. government has brokered a deal for J.P. Morgan to acquire the deposits and some branches of Washington Mutual, according to people familiar with the matter. The deal won't impact the FDIC insurance fund.
If the Dems hadn't loaded the bill up with lets bail out student loans, credit cards, etc., etc. there would be less opposition from the repubs. Now having said that can I go charge everything to the limit, go back to UNC and get my Ph.D. and then bail? Thanks Nancy!
Infotainment:
Maybe he's a Republican?
YouTube - Maybe he's a Republican?
"Warm to be acquired by JPMorgan"
Sorry on the government short list won't do business with either one of these clowns.
Kudlow is about to have a seizure.
Conjure says, "If McCain does win, it will be a pyrrhic victory."
With a little petrolic thrown in for good measure...
Am in complete agreement with Conjure.
If JPM is getting the deposits and some branches, what happens to the toxic majority of WaMu? bankruptcy?
FDIC can't take it over if deposits are not involved.
Me no understand WaMu deal
No bailout of this scale should pass on this timescale without strong consensus support. That's basic respect for the American political system.
Absolutely.
The committee hearings were a kangaroo court in retrospect.
weeks of debate in the Congress would be called for on a measure of this magnitude.
The constituents would be marching on government offices with torches and pitchforks if this was a fait accompli.
CR is out acquiring a news service with all that's been going on.
Vladimir Illyich's Useful Idio writes:
If the Dems hadn't loaded the bill up with lets bail out student loans, credit cards, etc., etc. there would be less opposition from the repubs. Now having said that can I go charge everything to the limit, go back to UNC and get my Ph.D. and then bail? Thanks Nancy!
Paulson added those things in, not the Dems. I believe it was right before he informed us we would be bailing the foreign banks out as well.
mal writes:
As the GOP and Dems argue and maneuver their way into irrelevancy, it seems Americans are finally getting serious about taking it to the streets. Bye bye, two-party system. It hasn't got ten years left.
mal | 09.25.08 - 7:08 pm | #
Not until there is SERIOUS unemployment... which is why they are (1) grasping at straws for a solution and (2) trying like hell to blame the other side for all the pain and taking credit for any gain
That is the one guiding principal BOTH sides have. The irony is BOTH sides seem to be maneuvering themselves 'out of position'.
We probably won't get a bill as a result - no hair off my balls either way. We'll get our RTC-Two eventually. I'd much rather see it come AFTER the failures and mass lay offs not before the failures and mass lay offs (they are coming either way).
Au Secours
I don't know. Paulson/Bush have poisoned the financial well pretty bad with their comments. Markets will react badly (short-term) to a breakdown that slows a bill, or stops a bailout entirely. Then it will look like Bush told the truth (oh, how that hurts me to say it) because his prophecy will be self-fulfilled. And the repubs who stood on principle (or whatever) will look awfully responsible for the ugly financial scene of the ensuing weeks . . .
I hear now on the radio that McCain is saying he is working on bringing republicans on board . . .
McCain's panic to act now and delay the debate can't be squared with shelby's saying there isn't such a rush.
neither side here has such a clear path
"WaMu to be acquired by JPMorgan"
And not GS or MS???? So is JPM the bail out / buy out bank of the FED/Treasury these days. Geesh. JPM already collected some pocket change on BS and LEH. Not that is change you can believe. But is it the change we need?
Country First!
Maybe there's a little more opposition to the plan than initially thought?
bloomberg.com
Hundreds of Economists Urge Congress Not to Rush on Rescue Plan
Hundreds of Economists Urge Congress Not to Rush on Rescue Plan - Bloomberg.com
"Jeffrey Miron, a Harvard University professor and self- described libertarian, objects to what he says is `` a stunningly broad, aggressive government intervention without appropriate precedents.''
He advocates allowing the normal process of business failure and bankruptcy to run its course. ``It's just nothing like the calamity the administration is making it out to be,'' he said."
So many great reactions -- I actually do think that the revolt is working.
The problem with the new plan is that it's basically the same as the old plan -- for all of the "hard bargaining and negotiating", it's not substantively different than what Paulson originally wanted.
C'mon look at what it adds:
1) Treasury Sect. "to set standards to prevent excessive or inappropriate executive compensation" -- fox guarding the hen house or what?
2)Equity sharing -- undefined. So again, whatever the Treasury Sect. wants
3)Treasury Secretary is prohibited from acting in an arbitrary or capricious manner -- operationally define what these terms mean? Free ponies for all if he wants?
4)Oversight and Transparency -- it's all after the fact. Treasury Sect can do whatever he wants -- years later somebody tells him to stop.
5) Homeownership Preservation
Yea, and motherhood and apple pie and ponies as well. Meaningless provision.
Bottom line -- Paulson get $350B to spend any way he wants NOW (and another $350B LATER)
If they had crafted a decent plan, maybe they would have gotten it through. But it is, for all intents and purposes, the same plan as last week.
Keep those calls/letters/faxes/emails going!
McCain is sucking everything into his own personal drama... with Sarah they are a double-fisted dose of pure drama queenery...
Can the Republic survive this tsunami of pure soap opera???
wamu and bear employees in the same room...? Sick
posting again from other thread -
OT -
but yesterday the House passed a bill for
$612 Billion for Defense and the War.
Must be we have more money in our checking account than we thought?
What is this?
The WAMU deal could keep the bulls happy for a while, and the bulls are the only ones left in the market right now. Don't spook the herd, keep the market afloat, and the whole "urgent necessity" argument for the bailout is weakened.
Since nobody will short JPM tomorrow, WS should rocket. Headlines: "Market loves the JPM deal!!"
Au Secours! Moi aussi!
If they can willy-nilly shove the unwanted WaMu assets onto the gov't plate, why exactly do we need a bailout plan?
The JPM deal does NOT change the fact that Washington Mutual just became the biggest bank failure in American history.
J6P and the man ivory tower economists agree -
no T$B !
wait a second, I thought JPM was Bear Stearns?
wamu and bear employees in the same room...? Sick
Punditry
LOL!
Recent news on WaMu - looks like the vultures aren't going to wait till the body has cooled:
14 minutes ago \t[WM,JPM] JPMorgan deal won't affect WaMu FDIC insurance fund: report - MarketWatch
15 minutes ago \t[WM,JPM] J.P. Morgan to acquire deposits of WaMu: report - MarketWatch
I would never vote for McCain/Palin however McSame votes on the Paulson-Bush bailout.
Additionally I will also never vote for anybody that votes aye on the bill
Go Ralph Nader agai
Please Help Me Understand! writes:
If they can willy-nilly shove the unwanted WaMu assets onto the gov't plate, why exactly do we need a bailout plan?
Exactly. Paulson is just plowing happily ahead, doing whatever the Hay he wants.
Sen. Shelby is my hero, Sen. Shelby for prez.
Yah that is nice??
Re: The House has passed and sent to the Senate a major military bill that includes a pay raise for soldiers and money for the Iraq war.
Quick Senate passage and President Bush's expected signature, are designed to protect lawmakers from election season charges that they do not support the troops. The $612 billion bill permits the Pentagon to give military personnel a 3.9 percent pay raise.
To win Bush's signature instead of a veto, Congress dropped a ban on private interrogators at detention facilities and what amounted to congressional veto power over a security pact with Iraq.
180 billion a day from fed?????
Anybody seen this???
UPDATE 1-Banks snap up Fed cash at record $188 bln per day
| Reuters
"Me no understand WaMu deal"
They aren't buying it the FED is.
You political guys are strategizing WAAAY too deeply. Bad shit is happening - Bush is in charge. McCain is Bush's successor. That's about the level of most people's thinking & it's essentially correct.
180 billion a day from fed?????
Anybody seen this???
how long can that go on? are they "printing money" now?
"Additionally I will also never vote for anybody that votes aye on the bill."
Not only that, I will actively donate and campaign for their opposition.
Just got this in the mail. I LIKE it.
Dear Friends:
The financial meltdown the economists of the Austrian School predicted has arrived.
We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.
Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.
Still, at least a few observations are necessary.
The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?
We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.
Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).
Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."
Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?
Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.
It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.
The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.
F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:
Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.
To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.
The only thing we learn from history, I am afraid, is that we do not learn from history.
The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.
The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.
I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.
H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.
In liberty,
Ron Paul
Anonymous writes:
"Me no understand WaMu deal"
They aren't buying it the FED is.
Sounds like a bank failure to me. ... And if they don't want to involve the FDIC in word, they will have to in cash.
dryfly =
"We probably won't get a bill as a result - no hair off my balls either way. We'll get our RTC-Two eventually. I'd much rather see it come AFTER the failures and mass lay offs not before the failures and mass lay offs (they are coming either way)."
well, it's hair off my balls as far as investments. but agree completely with the outcome.
Me no understand WaMu deal
Thats Ballgame Comrades
Me either. Will some branches be open for business tomorrow and some not? If not, I can think of some little old ladies who "bank on Friday, dear" who are going to panic if they can't get into their local branch.
Blueridge
I agree. economy sucks. economy will suck next week and week after that, down to Nov 4. Bush was President, McCain supported Bush. Unless McCain's oppo research turns up a story about Obama having black children then there is no way he can win.
For those keeping Score, JP morgan just took all of the good stuff from WAMU
per CNBC
email,fax and call.
as for mccain more grand stand cause he is down 9% points.
One-two weeks DJI 5300....Now taking bets payable in gold only
WaMu/JPM plan now posted on wsj.com, but under subscription access.
Anybody with wsj access to post the deal?
Apparently NOT a total buyout, but deposit/branches takeover/buyout. Toxic parts unknown (until the article is posted, or press release).
Where is the WM crap going to go?
SOunds like WM is an organized BK! JPM gets the good and FDIC gets the junk
In the Feds $29 billion loan to facilitate JPMorgans (JPM) purchase of Bear Stearns, common shareholders were virtually wiped out while preferreds and debt holders were protected. The governments 79.9% equity stake in their conservatorship of Fannie Mae (FNM) and Freddie Mac (FRE), severely diluted common shareholders, preferred shareholders lost their dividend, yet bond and subordinated debt holders were protected. One of the most vocal lobbyists urging government takeover of Fannie and Freddie along with inflicting moral hazard on the shareholders was PIMCO, who made $1.7 billion on September 8 as a result of the governments quasi-nationalization. Ironically, PIMCOs call for moral hazard came back to bite them in the bankruptcy of Lehman Brothers.
Negative Return on Investment on Paulson’s Moral Hazard -- Seeking Alpha
Anonymous writes:
McCain is sucking everything into his own personal drama... with Sarah they are a double-fisted dose of pure drama queenery...
Can the Republic survive this tsunami of pure soap opera???
Anonymous | 09.25.08 - 7:16 pm | #
Absolutely they can survive & 'benefit' - offer up a 'big bail out' MOST can support. He does that Dems can't argue or end up looking 'obstructionist' themselves...
The jockeying in this thing is amazing - a decade worth of jostling in just a few days.
Associated Press just now:
The article requested is no longer available.
French leader says markets neared catastrophe
By GREG KELLER 2 hours ago
PARIS (AP) French President Nicolas Sarkozy said Thursday the world came within "a whisker of catastrophe" during the recent financial crisis and that those responsible for the crisis must be identified and held accountable.
In his first major public address since the start of the crisis, Sarkozy also criticized "abuses and scandals" involving executive pay, and pledged to intervene to halt these practices unless executives come up with their own solution.
"Self-regulation as a way of solving all problems is finished. Laissez-faire is finished. The all-powerful market that always knows best is finished," Sarkozy said.
"The world came within a whisker of catastrophe. We can't run the risk of it happening again," Sarkozy, a conservative, said in an address in the southern Mediterranean port city of Toulon.
Sarkozy warned that the ongoing crisis "will have consequences in the coming months on growth, on unemployment and on spending power."
"The crisis is not finished ... its consequences will be lasting," Sarkozy said.
Re: "hose responsible for the crisis must be identified and held accountable."
ROTFLMAO LOL Bawhahahahhahhaa
I'm going to print up T-shirts called "I Survived WaMu Bank Run Friday, 9/26/08" and start selling 'em Saturday.
BB HP and Dodd meeting at 8pm to rig the system. according to a twitchy kudlow.
gosh, that sounds democratic.
Asking again - if something the size of WaMu can be "saved" like this, why are we wasting time arguing over a bailout plan that apparently isn't even necessary?
Pelosi and Schumer look like fools.
Obama is getting there fast.
SOunds like WM is an organized BK! JPM gets the good and FDIC gets the junk
But who gets the mortgage assets?
Alan Greenspend... here in New York we call that "Three Men in a Room"!
F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar.
We had boom busts long before central banks - just sayin'. Both Austrians & Keynsians put too much stock in their own 'medicine'.
BB HP and Dodd meeting at 8pm to rig the system. according to a twitchy kudlow.
To trot out a Presidential Directive, perhaps?
Bush must be furious.
Sarkozy just lost Georgie Bush as his bf forever.
"Self-regulation as a way of solving all problems is finished. Laissez-faire is finished. The all-powerful market that always knows best is finished," Sarkozy said.
rich writes:
Pelosi and Schumer look like fools.
Obama is getting there fast.
rich | 09.25.08 - 7:28 pm | #
Wouldn't want to be out done by the other side... its an arms race of foolishness.
I think congress should recess for a week so the congressmen can go back to their consitutencies and take a pulse on this. I think they'll find there's no pulse whatsoever. Then they can come back and vote having been told their political career is over if they agree to it.
dodd and reid on bloomberg now!
Here's what I sent my senators and representative today, if anyone needs ideas:
As one of your constituents, I want you to vote AGAINST the proposed bailout of financial institutions, in whatever its final form is, even if it includes provisions to give the federal government an equity stake in participating companies, to limit executive pay, or to provide additional funds to struggling homeowners. While these provisions are well-intentioned, they will not compensate American taxpayers for the sacrifice they will be making. Furthermore, despite the testimony of Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, many economists and market participants question how successful the bailout plan will be in staving off a downturn or in rescuing the banks.
I have a MBA and my wife is a bond analyst. We understand more than most people what has caused this market turmoil and how these events have been addressed historically, so it is not merely on principle that we question the bailout plan. We believe Congress is making a grave mistake. We work hard to earn a living and dutifully pay our taxes, which already represent a large fraction of our earnings. It is too much to add to that burden to support a bailout plan that is destined to fail. I want you to know that this single issue is important enough to our household that we will not vote to re-elect you if you support the bailout in any form. We are watching closely to see how you vote. I also want you to know that all of my friends and family that I have spoken with are against this bill.
Here is a list of reasons you should vote against this bill:
1.\tIt is unlikely that the bailout will stave off a recession because there is nothing to ensure that the banks will make the capital available to consumers and businesses in the form of credit. The banks are more likely to hoard the capital, exactly as they are doing now. Economic theory suggests that in the event of a liquidity trap, which is what we are in, the government should by-pass financial intermediaries and provide funds directly to consumers and businesses - not provide funds to the financial intermediaries.
2.\tIt is unknown how many of the institutions that are eligible to receive assistance will not be solvent in the future and will fail anyway. Warrants or stock will be useless in this event. How many of them are technically solvent now? Has anyone answered this? It is also unclear how much money going forward will be spent to prevent this from happening, and whether more than $700 billion is necessary. As far as I can tell, $700 billion is an arbitrary figure. Bill Gross, manager of the countrys largest bond fund, estimates that an additional $500 billion will be necessary on top of the proposed $700 billion to keep the financial institutions afloat. (This number may grow to the extent foreign financial institutions are involved.) That is $1.2 trillion of taxpayer funds, on top of whatever the ultimate cost of bailing out Fannie and Freddie, AIG, and Bear Stearns will be. Now, if you had $1.2 trillion to spend, would you choose to spend it this way? What is the opportunity cost of this program to taxpayers? How many new schools can you construct with that money? How many interstate bridges could you fix with that money? You have to be very certain that a second Great Depression is imminent to vote for this legislation, because otherwise you just set Americans standard of living back pretty far purely for the sake of equity investors. And wouldnt it be a waste if the Treasury literally spent billions of dollars to bail out a bank that fails anyway?
3.\tI do not mean to be insulting, but how does the federal government plan to oversee this fund? Build all the oversight provisions you want into the bill, but how many public servants can manage a portfolio of debt derivatives? How many public servants can verify the value of a mezzanine collateralized debt obligation? Please be realistic. Are you going to trust some of the very institutions you are going to save to manage this portfolio the very institutions that mis-valued and misrepresented the investments in the first place? At this point, Congress has not even received a straight answer as to whether the assets would have to be bought at a premium in order to recapitalize the banks. I assure you they will. The only question is at how much of premium and which banks will benefit the most. It is difficult to watch my elected leaders dance around this reality.
You know it is unlikely that the characteristics of the investments in the fund will improve to such an extent that they will be able to be sold at a profit for taxpayers, as some have conveniently suggested. I know you have read in the newspapers about the banks loan practices, some of which border on fraud. You know they misrepresented peoples incomes or did not ask about their incomes at all. You know they assumed that housing prices would continue to appreciate, and downplayed the fluctuations in interest rates that would have deterred many homeowners from entering into adjustable rate mortgages. You know they hyped borrowers ability to refinance so they could get them into larger loans, irrespective of whether borrowers would be able to afford the loans in the long term. So I know you understand that an economic recovery would not improve homeowners ability to pay off these loans. I hope you also understand that just because the federal government buys a mortgage-related derivative investment, it is not thereby entitled to modify the underlying loans. These investments are highly unlikely to appreciate.
So far these banks have not been held accountable for these practices and will in fact be rewarded for them by being relieved of the financial consequences of their actions. Congress will be passing on the ultimate moral hazard onto future generations, and that too will have real costs.
I suggest you let the market run its course, and if that means major financial institutions will collapse, so be it. There will be new banks and new sources of capital, and the banks that should survive will survive. It will be very painful, but it will not be the end of the world.
If Congress is itching to spend over one trillion dollars of taxpayer money, spend it on building schools or on repairing and extending our nations crumbling infrastructure. Spend it on new innovative technologies. Please do something with the money that will allow Americans to live in such a way that they are less dependent on credit. This would be a much better legacy than a failed bailout of Wall Street.
"Sarkozy just lost Georgie Bush as his bf forever. "
With a wife like his, who needs male friends, anyway.
comrade Alan Greenspend wrote:
dryfly =
"We probably won't get a bill as a result - no hair off my balls either way.
No hair off my balls either...cause a sensitive modern liberal metrosexual doesn't have hair on his balls.
I hope you all see the lack of value in information, i.e, billions of people with supercomputers are making the markets too efficient! Society can't keep up with this dynamic entropy..
don't have access to bloomberg now. can you please give a summary of what's said?
No hair off my balls
Is that a song?
So, Dr. Ron says I must take the drop in my house price or my retirement fund, or both? Can I have another option, please?
What are Dodd and Reid saying? They are going to ruin this election for Obama!
don't have access to bloomberg now. can you please give a summary of what's said?
All I heard was price floor in housing, Republicans are to blame.
Does anyone have a take on the Republican "insurance" idea? From what I heard about it I thought it sounded much better than the Democratic idea since it does not require buying the MBS.
Also, I went to one of he protests. Just the usual bunch of aging hippies/ 9/11 deniers milling around.
I have called my congresswoman and senators, I have called Barney Franks office, Shelby's office. I have called or email numerous other congress critters after they appear on CNBC, either encouraging them fight on or threatening them with my vote.
I am heartened to see that my republicans are coming down on the right side...I just hope they stand strong.
And Wamu is gone.
i like 'nutshave' way better than haircut as a financial term. Then the question is whether it is a dry shave or lathered.
cnbc saying right now that FDIC to seize wamu.
Stop it, y'all. I'm going to get TESTE
So FDIC does WAMU on a Thursday. Do they let WAMU open tomorrow?
Liquidity in the money markets in maturities over a week is desperately scarce,'' said Tim Bond, head of global asset allocation at Barclays Capital in London.A near-term solution to the crisis is urgent. Unchecked, the current crisis would turn into a self-reinforcing vortex of defaults, bank-capital contraction and deep recession within a matter of weeks.''
Money-market rates signal banks have all but stopped lending to each other. Treasury Secretary Henry Paulson's bailout plan, which proposes removing tainted assets from bank balance sheets, may be cut back in size, U.S. House Budget Committee Chairman John Spratt said today. The U.S. faces a ``painful'' recession if the package isn't approved, President George W. Bush said yesterday.
`Nothing's Working'
Banks are balking at lending to each other because they are concerned counterparties may hold tainted assets at a time when demands on their own cash are rising. General Motors Corp. on Sept. 19 said it would draw the remaining $3.5 billion from a $4.5 billion revolving credit line from banks, a decision Chief Executive Officer Rick Wagoner described today as ``defensive.'
What is the Repub insurance idea? Does it make the US Govt into the AMBAC or something like that? isn't that a failed business model?
JimPortlandOR writes:
i like 'nutshave' way better than haircut as a financial term. Then the question is whether it is a dry shave or lathered.
JimPortlandOR | 09.25.08 - 7:32 pm | #
I say give them a 'Hot Halls Brazilian'...
David Faber says Wamu execs no nothing of the deal. FDIC is running this show.