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The Bailout Legislation

By Big Tent Democrat, Section Legislation
Posted on Sun Sep 28, 2008 at 03:46:43 PM EST
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Krugman's take:

Section 113, MINIMIZATION OF LONG-TERM COSTS AND MAXIMIZATION OF BENEFITS FOR TAXPAYERS, is where the rubber meets the road — it’s where the plan says something about how the deals will be done.

As I read it, Treasury can
(1) conduct reverse auctions and suchlike
(2) buy directly — but only if it gets equity warrants or, in companies that don’t issue stock, senior debt

. . . The plan’s real traction, if any, is in (2), which is a backdoor way to provide troubled firms with equity — and the bill seems to say that taxpayers have to own this equity, although I wish it was clearer how much equity will be judged sufficient. Not a good plan. But sufficiently not-awful, I think, to be above the line; and hopefully the whole thing can be fixed next year.

Obama and Dems should run on how they will take care of ordinary middle class American homeowners if and when they win the election.

By Big Tent Democrat, speaking for me only

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    The Bailout Legislation | 112 comments (112 topical)

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    If it were going to happen.... (5.00 / 2) (#1)
    by lambert on Sun Sep 28, 2008 at 03:49:16 PM EST
    ... it would already have happened.

    Why not do it NOW, and run on leadership and performance, instead of promising ponies, at some future date to be determined?

    The Senate doesn't take up the bill til Wednesday (interestingly, after the banks close their books for the last quarter) and so there's still time.

    Exactly how I feel. (none / 0) (#34)
    by Ga6thDem on Sun Sep 28, 2008 at 06:38:19 PM EST
    Once again the story is "it can be fixed next year". I'm tired of hearing it. Again there are absolutely to guarantees that this is going to be fixed at all. Sorry, I think what we see right now is what we get.

    Parent
    Wednesday's the first (none / 0) (#110)
    by Militarytracy on Mon Sep 29, 2008 at 08:16:00 AM EST
    I didn't even put that together. It is very interesting.

    Parent
    Note also Krugman's qualifier (5.00 / 2) (#2)
    by lambert on Sun Sep 28, 2008 at 03:55:30 PM EST
    Thus:
    Add: House staff tells me that there are significant changes from this draft. More info when I get it.

    So, Krugman blesses it -- which will be the story -- based on an early draft??? I'm not sure how much sense that makes.

    Scary that Krugman has to take the hopefully (5.00 / 1) (#13)
    by jawbone on Sun Sep 28, 2008 at 04:43:37 PM EST
    approach.  

    Parent
    Roubini: (5.00 / 1) (#3)
    by Faust on Sun Sep 28, 2008 at 03:55:53 PM EST
    link:

    The Treasury plan also does not explicitly include an HOLC-style program to reduce across the board the debt burden of the distressed household sector; without such a component the debt overhang of the household sector will continue to depress consumption spending and will exacerbate the current economic recession.

    Thus, the Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown. It is pathetic that Congress did not consult any of the many professional economists that have presented - many on the RGE Monitor Finance blog forum - alternative plans that were more fair and efficient and less costly ways to resolve this crisis. This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street. And it is a scandal that even Congressional Democrats have fallen for this Treasury scam that does little to resolve the debt burden of millions of distressed home owners.
    Roubini is not, however, commenting... (none / 0) (#5)
    by lambert on Sun Sep 28, 2008 at 03:58:25 PM EST
    ... on this exact (draft!!!) bill, since the post you cite is prior to the publication of the bill's text.

    Parent
    It was posted today (none / 0) (#9)
    by Faust on Sun Sep 28, 2008 at 04:33:11 PM EST
    Unless it's not the 28th of Sep.

    no?

    Parent

    Never mind (none / 0) (#10)
    by Faust on Sun Sep 28, 2008 at 04:33:44 PM EST
    I see what you are getting at now.

    Parent
    Team Obama will never have as much leverage (5.00 / 5) (#11)
    by karmadillo on Sun Sep 28, 2008 at 04:39:17 PM EST
    to help the middle class American homeowner as they have this very instant. They chose, however, not to use it for fear of offending our Coporate Masters who have run the economy into the ground.

    Running on the promise to help in the future when they specifically rejected the opportunity to help now will not convince many voters, not even us low information voters who used to think the Democratic Party was our party.

    and this surprises you? (none / 0) (#21)
    by kenosharick on Sun Sep 28, 2008 at 05:10:03 PM EST


    Parent
    This is THE defining line in the Rubini article (5.00 / 1) (#12)
    by thereyougo on Sun Sep 28, 2008 at 04:40:21 PM EST
    "This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street."

    The saving grace is if the bailout isn't enough, then, not even us the distraught taxpayer will be able to save Wall St. from themselves and we will ALL go down. I mean, this is one of those self fulfilling prophecies, just too big of a mess.

     

    Don't you wonder how the heck they (5.00 / 2) (#17)
    by befuddledvoter on Sun Sep 28, 2008 at 04:51:41 PM EST
    let it get to this point??  

    The meltdown has been happening for two years now, at least that I could observe in the Boston area.  I have a three unit condo building in my row and the condos have been on the market for one year.  Asking prices were very high.  Owners bought the building for 1.2 million and then gutted and rehabed and that took about a year.  They wanted their money back, but no one could get the financing to purchase, except one foreign buyer who is an investment banker.  LOL   Others are rental at this point.

    This never needed to be a rush job, if Congress was doing what they are supposed to do.  

    This did not happen over night.

    Parent

    Right you are (none / 0) (#61)
    by gyrfalcon on Sun Sep 28, 2008 at 08:15:21 PM EST
    The Dems were totally asleep at the switch.  OTOH, there was probably no hope of getting a fix of any kind through the morons on both sides in Congress unless the country's back was to a wall.

    Parent
    Too many weren't asleep, (5.00 / 1) (#73)
    by Jake Left on Sun Sep 28, 2008 at 09:10:33 PM EST
    they were feeding at the trough.

    Parent
    Anyone who's support hinges on something (5.00 / 2) (#25)
    by ruffian on Sun Sep 28, 2008 at 05:54:57 PM EST
    the Dems might do later better insist they do it up front. They are no more likely to do it later than they are right now. The Republicans remaining in congress will be more intransigent after the election.

    I find the amount and shade of lipstick they put on this pig immaterial.  I've not read one thing in this bill that addresses the root cause of the crisis - the cost of housing in some very populated areas like California and Florida is way out of line with middle class incomes. The drop in home prices will continue until that alignment occurs, and we are not nearly there yet. We won't know how much bad debt there is in these securities for at least another two years because most of the ARM resets happen in the next year or so, and they will provoke another wave of foreclosures.

    The implementation of HOLC all by itself with no bailout would do more to remedy the situation that the bailout.  The bailout will insulate Wall Street from the further blows sure to come, but will not fix anything.  

    Where is my insulation from the value of my house falling 30% in the last year?

    I'm with Kucinich - not only no, but hell no.

    housing prcies (5.00 / 2) (#37)
    by bigbay on Sun Sep 28, 2008 at 06:45:26 PM EST
    The only way to fix them is let them fall slowly, while weakening the dollar and allowing inflation. No way to make incomes go up %10-20 a year. A weak dollar will also help exporters. The gamble would be losing currency reserve status, but I don't see that happening.

    Parent
    Ruffian (5.00 / 2) (#77)
    by gyrfalcon on Sun Sep 28, 2008 at 09:29:38 PM EST
    this bill is not intended to fix the economy, only to avert an imminent -- and I mean immenent, like next week -- total meltdown of the financial system.

    Truly, you are mixing apples and oranges here.  HOLC would absolutely be a Good Thing, but it won't, can't fix what's about to take us under here.  I won't even "fix" the economy, but it would at least  help some of the folks on the short end of the stick right now.

    Parent

    As long as many Americans... (5.00 / 0) (#30)
    by Dadler on Sun Sep 28, 2008 at 06:23:17 PM EST
    ...can work their honest 40 hours and not have enough to meet their basic needs and still have a little to spare, then none of this or that or the other will matter.  As long as so much wealth is in so few hands, as long as everyone knows that our economy is based on illusion and exclusion (pay as few people as possible as little as possible) then nothing will change.  It's as if we don't really understand the deeper meaning of the term confidence.  It is clear that the mass of American people do not believe our system is designed to allow the maximum amount of prosperity to the maximum amount of citizens.  In other words, we all understand that hard work is not rewarded, only certain kinds of work and certain kinds of hard.  

    We value profit more than people.  It is plain and simple and undeniable.  Dollars matter more than human beings.  We are sick and getting sicker, and this "bailout" will change none of that.  Not a single thing. UNLESS somehow it morphs into a second New Deal, and the chances of that are about the same as pigs wearing lipstick flying out of our aces.

    here, here (5.00 / 1) (#36)
    by liberalone on Sun Sep 28, 2008 at 06:41:32 PM EST
    I'm not sure about how we could structure a New Deal, but a New Deal is definitely needed.  

    I would only add to your comment a little something I heard on C-Span this morning:

    No JAIL; No BAIL.

    Some folks need to be held accountable, and not just Freedie and Fannie... I am thinking of the credit swappers, speculators, predatory lenders, and blind regulators... Until there are consequences to questionable business practices, we will continue to have the same types of problems.

    This one is a whopper that we MIGHT be able to avoid.  

    Parent

    You are correct that citizens do not (none / 0) (#35)
    by hairspray on Sun Sep 28, 2008 at 06:40:02 PM EST
    believe the system is designed to guarantee the maximum amount of properity to the maximum number of citizens.  That has happened since GWB became the president.  I don't recall feeling that way during the '90's.  Maybe it has to get this bad for people to get rid of the Republican brand.

    Parent
    I'm confused as heck. I just hope they know (5.00 / 2) (#32)
    by Teresa on Sun Sep 28, 2008 at 06:33:36 PM EST
    what they are doing. Kos himself says he hopes anyone voting for this is prepared to face a primary in 2010. Wonder if he'll want to primary Obama in 2012?

    I think primary challenging someone (5.00 / 2) (#33)
    by tigercourse on Sun Sep 28, 2008 at 06:36:53 PM EST
    for doing the right but politically tough thing is a bad idea. I hope Kos isn't suggesting that, but I wouldn't be surprised.

    Parent
    He says (5.00 / 2) (#38)
    by Teresa on Sun Sep 28, 2008 at 06:46:40 PM EST
    Do these jokers actually think this won't be a lasting political issue? Heck, I'm praying that the Bush Dogs (really bad Democrats) vote for this thing, just so that 1) it helps generate strong primary challengers in their districts, and 2) so that we can wield the vote against them in those primaries.

    I'm not big on going after Democrats in conservative districts either. I'd rather have them than the alternative. It's strange because Kos and people like Kucinich are on the same side as many on the extreme right. That's what makes this so confusing to understand.

    Parent

    Thanks, I guess I was too quick to (5.00 / 2) (#41)
    by tigercourse on Sun Sep 28, 2008 at 06:54:56 PM EST
    give Kos the benefit of the doubt. Kos is basically a Libertarian. It's no surprise I guess that he's against this.

    People like Kucinich and Shelby are ideologues and grandstanders (though of course I'm much closer to Kucinich's ideology). They can't put these two traits aside even at the most important times.

    I liken this vote in a way to something like voting against Don't Ask, Don't tell. It might not be politically the best thing, but it's morally and practically the right thing to do. And the stakes here are much, much higher.

    Parent

    Well (5.00 / 3) (#52)
    by Ga6thDem on Sun Sep 28, 2008 at 07:59:18 PM EST
    is he going to go after Pelosi? Reid? Or just the only kind of democrats that can be elected in someplace like GA so now the party can be "pure" and rid of the "riff raff"?

    Parent
    I would call this wrong and politically expedient (none / 0) (#60)
    by ruffian on Sun Sep 28, 2008 at 08:13:12 PM EST
    Not right and politically tough.

    Parent
    Members should be held accountable (5.00 / 1) (#74)
    by coast on Sun Sep 28, 2008 at 09:11:15 PM EST
    Just as the heads of the banks and investment firms that are in trouble now should be held accountable, so should the members (Democrat and Republican alike) should be held accountable.  Freddie and Fannie gave these members over $4.8M in campaign contributions.  One item that should be a part of any reform should be the inclusion of a rule forbidding any committe members from receiving contributions from any entity or person associated with the industry for which they are charged with oversight.  Everyone of these members should be targeted in the next election.

    Parent
    Are you aware (none / 0) (#99)
    by BrassTacks on Mon Sep 29, 2008 at 12:17:36 AM EST
    That Chris Dodd got the most money from Freddie and Fannie?  And that Obama was number two?  

    McCain's the only one who tried to reign in Freddie and Fannie, and democrats like Barney Frank opposed him, every single time.  Democrats should be ashamed of themselves.  

    My party is filled with greedy wimps!  I'm feeling pretty disgusted this evening.  

    Parent

    Oh man (5.00 / 0) (#102)
    by Steve M on Mon Sep 29, 2008 at 12:51:58 AM EST
    if you equate "transferring regulatory control to the Bush Administration" with "reining in" then I'm not sure how much attention you've been paying for the last eight years.

    What is it about John McCain's record that leads you to buy the line that he was trying to get tough on Freddie and Fannie by co-sponsoring that bill?  The zero other times he's been in favor of tougher regulation in his 26-year Senate career?

    Parent

    I am mystified (5.00 / 2) (#45)
    by Steve M on Sun Sep 28, 2008 at 07:26:33 PM EST
    at how they can avoid major problems if the bill doesn't pass until after September 30.  Everyone will have to mark their mortgage-backed securities to market as of the close of 3Q; will the mere announcement of a deal somehow create a market?

    I agree... (5.00 / 1) (#48)
    by santarita on Sun Sep 28, 2008 at 07:35:56 PM EST
    I guess the regulators can refrain from taking action pending enactment but wouldn't there be notices of Events of Default based on 3rd Q financials going out in private transactions?

    Parent
    Yeah (5.00 / 1) (#56)
    by Steve M on Sun Sep 28, 2008 at 08:05:29 PM EST
    There surely must be all sort of private contractual obligations out there which are based off the 3Q numbers.  Probably going to be a big headache for a few folks.

    Parent
    Is that the reason (none / 0) (#49)
    by standingup on Sun Sep 28, 2008 at 07:45:49 PM EST
    for stressing this must be completed by Monday?  I have been trying to think of what significance Monday played but what you are saying does make sense.  

     

    Parent

    I believe (5.00 / 1) (#55)
    by Steve M on Sun Sep 28, 2008 at 08:04:25 PM EST
    that most people were concerned about having a deal in place before the Asian markets opened on Monday morning (Sunday night for us).  I haven't heard many people bring up the issue of 3Q accounting, which made me wonder if I'm missing something.

    Parent
    The Nikkei (none / 0) (#63)
    by standingup on Sun Sep 28, 2008 at 08:20:57 PM EST
    is open and so far responding favorably.  Welshman has been following it for us in comments at ePluribus Media:  

    Latest: After half an hour, now up 113.

    and

    Now up to 143
    Submitted by Welshman on Sun, 09/28/2008 - 19:00. *new

    The paradox is that the better market results posted, the more inclined the Republicans will feel able to play fast and loose with any agreement in Congress, believing damage from their doing so will be limited.

    I believe it could be a combination of all the above.  The psychology of the overseas markets and our own.  But I also have to think the 3rd Q accounting is also playing a role.  Couldn't it trigger a new round of write downs followed by possible credit downgrades which in turn will set off another chain of events?  


    Parent

    Because they are off for Rosh Hashannah on T. (none / 0) (#51)
    by Christy1947 on Sun Sep 28, 2008 at 07:57:11 PM EST


    Parent
    I just heard (5.00 / 1) (#58)
    by standingup on Sun Sep 28, 2008 at 08:08:20 PM EST
    on CNN the House could vote as early as tomorrow and the Senate as early as Wednesday.  I am a little nervous at the prospect of the Senate waiting that long.  

    Religious holidays should be observed as much as possible but these are not ordinary circumstances we find ourselves in here.  

    Parent

    They want to leave town! (none / 0) (#100)
    by BrassTacks on Mon Sep 29, 2008 at 12:19:01 AM EST
    And get home so that they can campaign!  I heard that from a Senate staffer last night.  They're dieing to get home and back to campaigning.  

    Parent
    I've come to the conclusion (none / 0) (#4)
    by andgarden on Sun Sep 28, 2008 at 03:57:12 PM EST
    that there really does have to be a govt bailout. It seems like we are a few steps away from an international banking meltdown, and it would be good for everyone if we could prevent that.

    If this plan gets us there, then it's what has to happen.

    Oh, sure (5.00 / 2) (#6)
    by lambert on Sun Sep 28, 2008 at 04:01:07 PM EST
    It's just that if I'm going to have to grab my ankles, I want the most cigarettes for it, know what I mean?

    Do I trust Bush + Reid + Pelosi + Obama +  Frank + Paulson to do that? Of course not. Why would I? Start with Bush + Reid + Pelosi + Obama already betraying us on FISA. Would they betray us on this, where there's so much more money and power at stake? Of course they would.

    Parent

    Yeah, dig it! (5.00 / 0) (#14)
    by gyrfalcon on Sun Sep 28, 2008 at 04:44:48 PM EST
    Barney Frank is a Bush stooge and a tool of Wall Street!!!

    Some of you people appear to be living in a "Star Wars" movie.

    Parent

    Ah yes, "some say" (5.00 / 1) (#22)
    by lambert on Sun Sep 28, 2008 at 05:36:57 PM EST
    This Bushian rhetorical tactic can be used by anyone!

    Parent
    From the Lou Dobbs Show (5.00 / 2) (#23)
    by Prana on Sun Sep 28, 2008 at 05:41:55 PM EST
    Yeah tools!


    LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): As the financial world awaits a lifeline from Washington, they're looking to friends in Congress whom they've helped over the years. Friends who have stood by in key committees as debts bloomed and regulation waned.

    DANIEL CLIFTON, STRATEGAS RESEARCH PARTNERS: They had politicians on both sides of the aisle that were pushing for easier credit. Chairman Frank and Chairman Dodd have been the facilitators of that on the committees. And moving forward legislation that has created a lot of this systematic risk that we are facing.

    SCHIAVONE: According to Opensecrets.org, the Web site for the Center for Responsive Politics, on the Democratic side from 1989 to present, Senate Banking Committee Chairman Chris Dodd has accepted a total of $13,205,556 in campaign contributions, both in PAC and individual money, from the finance, insurance of real estate sectors.

    MASSIE RITSCH, CENTER FOR RESPONSIVE POLITICS: The last time that Congress took out the structure of the financial industry, Senator Dodd supported letting banks get even larger and get into new lines of riskier businesses.

    SCHIAVONE: House Financial Services Committee Chairman Barney Frank has accepted a total of $2,494,611 in campaign contributions from the same sectors. In Frank's case, top donors include employees from the American Bankers Association, the company that's just bought Washington Mutual, JPMorgan Chase, and the National Association of Realtors. In the case of Senator Dodd, top donors include Citigroup, Bear Stearns and JPMorgan Chase. Dodd and Frank now play key roles in bailout talks.

    lou Dobbs Show

    A lot of people here are walking blind. When has anyone seen exactly what how much of this mess the 700 billion covers and who is it going to go to? No one.

    This is Iraq and the Patriot Act all over again with fear mongering and pushing something through before anyone can catch on to what is happening.

    Read the above again Lou Dobbs interview again and then go read the entire partial transcript. We are being had and the people here saying they are for it can't really give a detailed answer for it except that they have been convinced with very little information.

    People here have been praising Dodd and Franks with hopefully little clue that they are part and parcel of this entire mess. As people all over the net have been saying we are a one party system - Wall Street - with two sub-parties supporting it. It's time for everyone to wake-up and smell the deception.

    Parent

    As I said (5.00 / 1) (#27)
    by gyrfalcon on Sun Sep 28, 2008 at 05:56:33 PM EST
    Barney Frank is obviously a Bush stooge and a tool of the corporate masters on Wall Street.

    Do you even know who Barney Frank is?  I know who Lou Dobbs is, and I wouldn't trust him to be honest about where the sun rises in the morning.

    Doesn't it give you the slighest pause to see you're on the same side as Lou Dobbs, Mike Pence, Shelby, etc.?

    You guys are having just a wonderful time playing outraged revolutionary.  It's a lot easier than figuring out what's actually going on.

    Parent

    That's a pretty condescending post (none / 0) (#42)
    by Prana on Sun Sep 28, 2008 at 07:13:42 PM EST
    FYI because you can't read the quotes I provided was not Lou Dobbs talking. And the contributions mentioned to both Dodd and Franks nor the fact that they have been sitting on their hands until the last couple of weeks were pulled out of a hat.

    You are the one who doesn't realize what is going on to the tune of 700 billion.

    Call me a fiscally conservative Democrat when it comes to bailing out who knows who with a blank check where it says 'Pay to'.

    Hey if you want to piss away health care and a bunch of other things without any facts at your disposal then have a wonderful time trying to figure out how you were hoodwinked by BushCo again.

    Isn't it interesting how the party who almost every Democrat says is in Wall Streets pocket is against borrowing for Wall Street and the Party of the People is for borrowing for Wall Street? I guess that doesn't ring a loud alarm bell to you.

    Parent

    Are You Giving the Republicans A Free Pass? (5.00 / 1) (#62)
    by santarita on Sun Sep 28, 2008 at 08:15:39 PM EST
    The Republicans had a majority in the house and senate until 2006.   In 2006 we got a Democratic Senate majority but only by counting Mr. Friend to Republicans Lieberman.  We have had a Republican Administration since 2001.  During the period from 2001 - 2006, the Republicans held very few oversight hearings.  Laissez-faire was and remains Republican dogma.  

    Hank Paulson, the Republican Secretary of the Treasury, proposed a 3 page bail out bill with no oversight.  The Dems and the Republicans in the Senate worked on the bill and came up with protections.  The House Republicans grandstanded and came up with nonsense provisions.  

    Should our government have been watching over these institutions more carefully and taken appropriate action sooner?  Without a doubt.  But if you want to assign blame, how about an 80 - 20 split.  And by the way the Republicans are going to vote for this bill.  

    Parent

    I don't give anyone a pass (none / 0) (#69)
    by Prana on Sun Sep 28, 2008 at 08:49:44 PM EST
    But my original post was not about who was solely to blame or who were all to blame. My post was about two of our own who are culpable and was in response to a post saying we were not as Democrats culpable.

    You seem to want to shift the blame to the Republicans instead of acknowledging that we have way too many on our side whose hands are just as dirty. With people like you who are willing to turn a blind eye we will never have the Democratic Party we deserve.

    Parent

    On This Issue, I Assign Culpability .. (none / 0) (#72)
    by santarita on Sun Sep 28, 2008 at 09:07:44 PM EST
    80 - 20.

    The Dems share some responsibility but not nearly as much as the Republicans.

    I'm not happy with either party.  And it's hard to turn a blind eye to the failings of the Democrats after the show that they put on during the primaries.

    And you are right, with people like me, you won't have the Democratic Party you deserve.

    Parent

    Actually your math sucks (5.00 / 1) (#85)
    by Prana on Sun Sep 28, 2008 at 09:52:54 PM EST
    The beginning of this entire mess was the Financial Services Modernization Act of 1999 which Bill Clinton supported and signed.

    The total vote in favor of that bill in both houses was 255 GOP to 196 Democrats. That is 57 - 43, not even close to 80-20. When you add in the fact that the Democrats chaired the committees and determined what came to the floor since 2006 and did nothing to fix this earlier they even look worse 9 years later. Add to that that probably more Democrats will vote for the bailout than Republicans and the party is clearly moving backward. You really ought to do some research instead of trying to impress people with misinformation. Research makes one informed.

    I find it interesting that with the correction I gave you about your Dobbs bashing and how it was misplaced because Dobbs was not even quoted that you don't have the wherewith all to acknowledge that you were wrong. Don't worry though as there a millions like you on the internet who can't admit when they were wrong.

    And yes, with people who turn a blind eye, and assign more blame to the other side when the facts show the blame is much closer that you would like to believe or are willing to admit, those of us who want real change will never get the party we deserve because there are enough of you to keep it as corrupt as it is with your votes for people who really don't have your interests in mind.

    BTW I'm not a McCain supporter. That said I think you would find it interesting that Obama has received a total in his career tracking back to 1989 of $27,942,613 from the financial sector. That is about 1.4 million more that McCain has received in his in the same time period. Both are near the top in monies received from the financial sector. Beware of facts as they can really screw with your chosen realities.

    Parent

    Where to Begin... (5.00 / 0) (#87)
    by santarita on Sun Sep 28, 2008 at 10:18:40 PM EST
    You seem awfully sure that this entire mess began with the repeal of the Glass-Steagall Act.  I disagree.   Actually there was legislation that passed the following year that Gramm crammed through that was much more destructive in that it failed to regulate the derivative markets.  

    However, even with that failure, there was the possibility that appropriate regulation and enforcement would have prevented or at least mitigated this entire mess.  That's why I assign an 80-20 blame and I'm being generous to the republicans with that.  

    As to my math, I was hoping that 80 and 20 equalled 100.

    If you would like to enlighten me further, could you please identify the number of relevant oversight hearings that the republicans conducted while the majority party vs the number of oversight hearings that the Dems conducted while in the majority.

    As to the Lou Dobbs stuff, I think you have confused me with someone else.  

    I am not sure what your agenda is but it does seem that you have one.  So swing as hard as you can, you might hit something.

    Parent

    Be Skeptical Of Politicians and Pundits, including (5.00 / 0) (#46)
    by santarita on Sun Sep 28, 2008 at 07:27:47 PM EST
    Lou Dobbs, who plays a little fast and loose with the truth from time to time.  They have their own agendas.  The better ones try to mesh their own agendas with the public good.  But that doesn't mean you shouldn't be skeptical of their actions.

    With regard to the bailout it isn't enough to note the presence of influence, proper or improper.  Until McCain or Obama waives his magic wand and eliminates forever special interest lobbying, you will have to assess whether or not there is a crisis and whether or not the actions proposed are appropriate for the crisis.  And even after they waive the magic wand, you will still need a healthy dose of skepticism because you can't trust anyone to be completely free of hidden (or not so hidden) agendas.

    Parent

    The transcript I provided (5.00 / 2) (#67)
    by Prana on Sun Sep 28, 2008 at 08:43:07 PM EST
    was not even Dobbs talking or interviewing. I would have hoped that people reading it would not go blind as to who was talking or what organizations they represented at the sight of Dobbs name. Apparently I was wished for too much.

    Just downthread as part of this conversation I posted a little of who opensecrets.org is. You may want to read it and go there yourself along with doing a google on the other guest (who is not Dobbs!) and you will see they are non-partisan and reputable people who serve to expose government abuses when it comes to money.

    Parent

    Lou Dobbs (none / 0) (#59)
    by gyrfalcon on Sun Sep 28, 2008 at 08:13:08 PM EST
    only has people on who agree with him, except for a few patsies he sometimes brings on to scream them down.  His shows on this issue have been disgraceful.

    I agree with you entirely on hidden agendas, and also the need, which some don't seem to get, to do the homework to figure out some facts for themselves.

    We live, like it or not, in an uber-capitalist system.  Unfortunately for us, if it crashes, it takes us all with it.

    I hope when everybody in Washington is through posturing and pontificating, they'll actually come through with a few fixes around the edges, but that's all they're ever going to do.  I don't see the Dems being much more seriously committed to making the economic system fairer than the Republicans, but at least they're willing to stand up and do what has to be done in this circumstance despite the horrendous down side of the political repercussions from a public that simply doesn't understand what's happening here.

    Parent

    I was tempted to write into CNN about (5.00 / 1) (#64)
    by santarita on Sun Sep 28, 2008 at 08:22:41 PM EST
    the Lou Dobbs show in question because I thought he was either misinformed or deliberately being deceptive when he said that Paulson was asking for the $$$ without talking about a specific plan.  If Dobson had listened to the the Congressional hearings, he would have heard Paulson and Bernanke talking about what they would do with the $$$.  

    In a time as critical as this, don't people like Dobbs with access to the airwaves have a duty to at least be informed and truthful?  Ditto for the talking heads on radio on both the left and right.  This is too important to let people use the airwaves to just rant.  

    Parent

    Heh (none / 0) (#75)
    by gyrfalcon on Sun Sep 28, 2008 at 09:19:19 PM EST
    Dobson spent most of his hour the other day railing about how there had been no hearings on the plan.  And none of his cabana boy guests had the you know what to call him on it.

    Dobson is a joke and a disgrace to CNN, IMO.

    Parent

    Opensecrets.org (5.00 / 1) (#65)
    by Prana on Sun Sep 28, 2008 at 08:36:49 PM EST
    which one of the guests quoted is a 25 year old award winning non-partisan non-profit which does research into "tracking the influence of money on U.S. politics, and how that money affects policy and citizens' lives". It was co-founded by Liberal Democratic Senator Frank Church who had a pretty damned good Liberal record when it came to government abuses.

    The other guest is just as non-partisan as is the organization he works for if you would bother to look him up.

    You really ought to do research before talking out your backside by painting all the guests on Dobbs with a broad partisan brush.

    You have no frigging clue what it is your talking about and try to cover that fact up by being condescending and talking about TV guests and other posters when you have no idea who they are or what they know.

    I invite anyone reading this to go to opensecrets.org and the other organization and to google the two guests to see for yourself that what gyrfalcon is posting here is pure void of the facts nonsense.

    Parent

    I would welcome that (none / 0) (#76)
    by gyrfalcon on Sun Sep 28, 2008 at 09:24:23 PM EST
    as long as people read widely about the FACTS and don't confine themselves to any one soure, especially one with an agenda.

    Look, Dobb is a joke and everybody who pays any attention knows it.  He's not a great crusader for the average guy anymore than O'Reilly is. He's a great crusader after ratings, not terribly bright, brutally and probably deliberately uninformed.

    You only demonstrate the shallowness of your information by referring to him.

    You can find "award-winning" this and that for any position you want to promote.  I'm zero impressed.  Dobbs doesn't even attempt to have a balanced exploratoin of this or any other issue and you will be grossly led astray if you rely on him for information.  He's a complete hack.

    Parent

    I refereed to his guests (none / 0) (#86)
    by Prana on Sun Sep 28, 2008 at 10:01:41 PM EST
    as quoted and as bioed. So they appeared on his show. So what? That does not diminish who they are and what they do. Your so hung up on Dobbs that you can't even be objective when Dobbs was not even quoted. Talk about being shallow.

    I think I'll end this conversation because you keep repeating yourself - Dobbs Dobbs Dobbs, when the real conversation is those quoted in my posat who you ignore. Shallow is as shallow does and you are shallow does. You're not interested in facts just idle blog chatter.

    Parent

    Now we know why (none / 0) (#101)
    by BrassTacks on Mon Sep 29, 2008 at 12:25:45 AM EST
    Frank and Dodd were so opposed to McCain's bills to regulate Freddie and Fannie.  I can't help but think of that old son, "Who's sorry now?".   They have some nerve now, acting like they had nothing to do with this mess.  

    I am NOT understanding why we have conservative republicans, Bush, and democrats, pushing this bill.  This just doesn't feel right to me.  I don't like it.  

    Parent

    Well, I'm starting from the premise (none / 0) (#7)
    by andgarden on Sun Sep 28, 2008 at 04:03:21 PM EST
    that the worst result would be to do nothing. I know that's different from what others have concluded.

    They're trading some horses in Congress. Frankly, that's how it works.

    Let's just find the least bad solution.

    And yes, it's in everyone's interest to have the bailout be completely bipartisan.

    Parent

    I'm with you (none / 0) (#47)
    by standingup on Sun Sep 28, 2008 at 07:32:07 PM EST
    on the least bad solution to the worst case scenario.  

    We are basically in a "heads I win, tails you (taxpayer) lose" situation anyhow.  

    I have been reading the SEC filings from some of these companies and the numbers on the exposure with the CDO market and CDS market are enough to make me believe the situation is nothing but a ticking time bomb waiting to explode.  
     

    Parent

    One thing the Dems seem to have finally learned is (5.00 / 1) (#15)
    by jawbone on Sun Sep 28, 2008 at 04:45:19 PM EST
    that fear is a great motivator--at least for the Dem Congress Critters.

    The votes ought to be interesting. Now, the Dems are getting the fear threat from both the WH and their own leadership (including the Standard Bearer).

    Parent

    Dennis Kucinich (none / 0) (#8)
    by JavaCityPal on Sun Sep 28, 2008 at 04:24:10 PM EST
    was just on TV saying the bill won't just receive his NO vote, it will be his h*ll NO vote.

    The one minute speeches today were almost all (5.00 / 1) (#18)
    by jawbone on Sun Sep 28, 2008 at 04:54:55 PM EST
    fiercely against the Paulson Fix (Is In), including Kucinich's.

    Marcy Kaptur said there was hearing with dissenting economists at 2:00PM today.

    Any news on that?

    There was at least one rep supporting the bailout, but both D's and R's were strongly against it. And angry.

    But the fear of economic meltdown is being ratcheted up, so who knows what the vote count will be.  This reminds me so much of the AUMF vote, runup to the Iraq Invasion, the initial Patriot Act fear mongering, the FISA threats--and this one's going to cost Big Time, as Cheney would say.

    Parent

    Like jawbone (none / 0) (#71)
    by cal1942 on Sun Sep 28, 2008 at 09:01:08 PM EST
    this matter is much like AUMF, FISA, Patriot Act, etc.

    Big emergency, must act now to prevent catastrophy, etc.

    The fact that it's an election year makes this whole matter toxic.  There is no way to get wise legislation.

    I've believed for some time that Democrats have been reluctant to show a spine believing that the trend was moving their way.  They are loathe to rock the boat they believe is headed into port. I believe that Republicans understand that and are trying to run through every bit of crap possible.

    The administration has a great advantage here.  They have the giant bullhorn to sound any alarm they chose.

    About a week or so back I decided that I would vote for Obama rather than leave my ballot blank at the top. My vote is in no way support for Obama, but, is a vote against Republicans and voting for Obama is the only way to wrest power from these revolting SOBs.

    We can deal with our party we can't deal with Republicans they've done enough damage and enough is enough.

    Parent

    He, like the Republicans he is joining, (5.00 / 1) (#31)
    by tigercourse on Sun Sep 28, 2008 at 06:26:07 PM EST
    is making a huge mistake.

    Parent
    Well (5.00 / 1) (#40)
    by Ga6thDem on Sun Sep 28, 2008 at 06:49:54 PM EST
    we don't know do we? If in fact, it is nothing but some sort of band aid that falls off in a few weeks he'll probably look completely different to you.

    Parent
    While I don't know that the bank bailout (5.00 / 1) (#43)
    by tigercourse on Sun Sep 28, 2008 at 07:13:52 PM EST
    will work, I do know that doing nothing will certainly result in failure.

    Parent
    Oh (5.00 / 1) (#53)
    by Ga6thDem on Sun Sep 28, 2008 at 08:01:43 PM EST
    I agree that something had to be done. I just expected something better. Why I don't know though. When has there been a good bill to come out of congress? Decades maybe?

    Parent
    International Banking Meltdown would look like.... (none / 0) (#19)
    by WS on Sun Sep 28, 2008 at 04:59:33 PM EST
    Ok, correct me if I'm wrong but a banking meltdown would look like this:

    1. If gov. doesn't buy up the toxic mortgage assets, banks are stuck with a lemon and a big money losing liabilities.  

    2. With these toxic assets that no one wants to buy, banks can't lend credit or capital at sufficient enough rates thus slowing or crippling the economy.

    3. These liabilities could also be big enough to collapse whole banks.  

    4. For the collapsed banks, FDIC insures the accounts but they only have so much assets and might not be able to keep up with requests.

    5. Companies in the wider economy have trouble acquiring capital and thus have to cope with job losses, reduced capital expenditures, or even cause bankruptcies due to lack of capital.    

    Am I missing anything?

    I think you're leaving out (none / 0) (#20)
    by gyrfalcon on Sun Sep 28, 2008 at 05:09:17 PM EST
    a critical component of this, which is the one the Paulson proposal was intended to directy address, which is the inability to calculate price and risk.

    Because the worst of these securitized mortgage crapola thingies are such a mish-mash of good mortgages and bad and because the housing price meltdown is continuing and will continue for a while, nobody feels they can determine the value of these things, and what the risk level of them is.

    That, to my understanding, is the main thing freezing up the business credit market.  Nobody can tell what's a good risk and waht isn't, so they're unwilling to loan money based on them.

    If the government buys up a good bunch of this stuff, it establishes a de facto market value for them.  That enables financial institutions to begin to sell and/or buy them again-- at least the  reasonably good ones that are made up primarily of "good" mortgages.

    There's plenty of capital out there, it's just that institutions are refusing to let it flow.  They're hoarding it out of fear of a run on their institutions and also because they literally don't know where to lend it at a reasonable level of risk.

    Parent

    This sounds interesting (none / 0) (#24)
    by befuddledvoter on Sun Sep 28, 2008 at 05:43:41 PM EST
    and I do hope you are correct that there is plenty of capital out there and entitites are withholding out of fear and the inability to value and predict.  I thought with all the foreclosures that the stream of capital just was not there and this made $$$$ hard to come by.

    To be honest, this really literally gives me a headache.  I have never been interested in the intricacies of the economy, as I never did aim to accumulate wealth.  I wish I understood more but I don't.  

    90-year old mother asked over supper where all this money would be coming from.  I told her it is a fiction; the Treasury really does not have it.  She said our dollar will be worth nothing on the world market.    

    Parent

    dollar (none / 0) (#39)
    by bigbay on Sun Sep 28, 2008 at 06:47:48 PM EST
    I think the Euro is way over valued now.  I suspect the dollar will weaken against the Asian currencies , but strengthen against the Euro.

    Parent
    Money supply (none / 0) (#66)
    by gyrfalcon on Sun Sep 28, 2008 at 08:41:40 PM EST
    There's loads of money sloshing around.  In fact, as I understand it, that's why these cuckoo "securitized" mortgage thingies were invented in the first place, to have something to soak up all the dough looking for a home-- not just U.S. at all, but lots from China and other rapidly developing Asian countries.

    If you can read through this, you'll get a sense of the basis for all this.  It's long, but it's a very entertaining presentation about how the mortgage thing went so wrong and why so many bad ones were written.

    And for whatever the distinction is worth, this whole hoo-hah is about the financial system, not the economy.  The "bail-out" is aimed at preventing the financial system's screw-ups from cascading over into the economy as a whole.

    Ironically, Bush and McCain are actually right, despite the ridicule they've gotten, that the fundamentals of the U.S. economy are quite strong.  The problem is that the U.S. economy has been so heavily taken over by financials that its health is no longer reflected in the average guy's income while the fat cats who make money off of money are going gangbusters.

    My mother, like yours, lived through the Depression, and if she were still alive (she passed a few years ago at 93), she'd be having serious deja vu, like yours is.  Please reassure here that it's not the same thing at all, and that Bernanke is a life-long scholar of the Great Depression and knows pretty well where the levers are to keep it from happening again-- if we're willing to listen to him.

    Parent

    Thanks for the informative post (none / 0) (#108)
    by befuddledvoter on Mon Sep 29, 2008 at 02:00:10 AM EST
    and I will read the article later.  Prepping for a client/inmate visit so time constrained.  I will pass on your words to mother.  She still has some kind of food stamps she got from the great depression.  Provided them a couple of years ago to an oral historian doing a book on our neighborhood.  

    Parent
    Oe more reason (none / 0) (#26)
    by ruffian on Sun Sep 28, 2008 at 05:56:21 PM EST
    They're hoarding it out of fear of a run on their institutions and also because they literally don't know where to lend it at a reasonable level of risk.

    And why should they give it up when they can blackmail Congress into doing it for them?

    Parent

    exactly (none / 0) (#29)
    by of1000Kings on Sun Sep 28, 2008 at 06:21:36 PM EST
    it's basically blackmail...

    but we've put ourselves in a position where anytime the financial markets want to blackmail us they can, and we can't do anything about it...

    money moving hands like a magician plays with cards is the basis of our economy...

    Parent

    Doing what for them? (none / 0) (#68)
    by gyrfalcon on Sun Sep 28, 2008 at 08:46:37 PM EST
    You're not making any sense.  The government is about to buy up some of the most toxic "mortgage-based securities."  It's not getting involved in the loan business.

    Please, PLEASE try to read up on what's actually going on here.

    Parent

    Please forgive me if I only trust any of these (none / 0) (#28)
    by Militarytracy on Sun Sep 28, 2008 at 06:14:03 PM EST
    people as far as I can throw them today.

    So don't trust them (none / 0) (#78)
    by gyrfalcon on Sun Sep 28, 2008 at 09:31:49 PM EST
    I don't trust them, either.  READ up on the underlying details of what's been going on here.  It's really not all that hard.  Stay away from opinion columnist and read the business reporters at the Times, the Post, and yes, very much the Wall Street Journal, whose reporters are completely independent of their idiot editorial board.

    Seriously.  Read up on it.  PLEASE.

    Parent

    Perhaps you should indicate (none / 0) (#113)
    by Militarytracy on Mon Sep 29, 2008 at 08:36:02 AM EST
    what you want me to read so that I will have the opinion you want me share with you.  I have read numerous things on the bailout and it is still a bad idea in my opinion.  Once again I trust none of these people as far as I can throw them.

    Parent
    Republican meeting just ended. It sounds (none / 0) (#44)
    by Teresa on Sun Sep 28, 2008 at 07:19:16 PM EST
    like they are voting for it. Live on MSNBC.

    Please, these are Republicans. (none / 0) (#50)
    by Christy1947 on Sun Sep 28, 2008 at 07:56:16 PM EST
    What Boehner said is that he has urged all those who conscience will not bar voting for this to vote for this. What only they know is just how many will find their conscience requires them to vote against it for whatever reason their conscience gives. He said he didn't know how many would vote for it. That's a version of what he did last week, suggesting they would but not committing. We do not in fact have any idea how many, if any, are aboard on this, and Nancy won't introduce it unless and until she knows.

    A couple of questions for those knowledgeable enough or who read the copy of the bill posted on the internet.

    1. The summaries I have heard say the bill gives the Treasury Secretary the ability or option to use the mortgage insurance principle the House Repubs liked. The press conference I just saw Boehner give says that the insurance is mandated, that is, required. Which is it?

    2. As to the stinky  mortgaged backed securities, how many of them were bought from Fannie Freddie and therefore already covered by that guarantee, and how many were not, if that is known? If they are already covered by a guarantee presumbly because they were conforming mortgages save which Fannie and Freddie were not allowed to buy them, what is the point of insurance, and what is its scope since there is no point in covering securities already covered by the Fannie-Freddie guaranty. Is the risk on these things all the mortgages or only those not covered by Fannie Freddie already?


    Parent
    I thought he said they are supporting it. (none / 0) (#54)
    by Teresa on Sun Sep 28, 2008 at 08:02:03 PM EST
    After he said that, I quit paying close attention so I didn't hear him add all the other conditions.

    Parent
    I have heard (none / 0) (#57)
    by Steve M on Sun Sep 28, 2008 at 08:06:05 PM EST
    that about 50% of the securities at issue are already guaranteed/insured, although I don't recall where I heard that from.

    Parent
    I'm honestly not following (none / 0) (#70)
    by gyrfalcon on Sun Sep 28, 2008 at 08:55:17 PM EST
    your questions.  But if it helps, the amount of mortgage-based securities and other dreck owned by Freddie and Fannie is insignificant.  I'm not even certain they hold any, but I'd have to go look that up somewhere.

    Don't, please, fall for the Republican crapola about how this whole thing is Freddie and Fannie's fault.  It isn't.  The right wing has always hated, hated, hated the idea of helping less affluent people to become home owners.  I've read, though don't know for sure that it's true, that the mortgages written in the poorer/African-American areas through Fannie Freddie have an excellent rate of success.

    Parent

    Where did you read that? (none / 0) (#83)
    by BrassTacks on Sun Sep 28, 2008 at 09:50:09 PM EST
    I have read exactly the opposite.  People with no down payments have nothing invested in their homes and are much more likely to not make the mortgage payments and to walk away from the loan.  If you think about it, it kinda makes sense.  They really have nothing to lose by walking away.  

    I am all for poor people owning homes, but I am not for them getting mortgages that they cannot afford.  Many poor people, in my own family, worked hard and saved for years, before buying their homes.  I don't see anything wrong with that.  If people haven't saved a dime, and have very little income, they really shouldn't have gotten mortgages, imo.  

    Parent

    he says something about persons (5.00 / 1) (#90)
    by of1000Kings on Sun Sep 28, 2008 at 10:33:57 PM EST
    in African-American neighborhoods, which before the regulations were made were not given mortgages at the same rate as their white counterparts...

    and you automatically assume that persons in A-A neighborhoods don't save money, don't have a down payment and are bad risks...

    hmmmmmm.....

    my guess is that the bigger problem is the middle-america white people who overbought in Suburban McCrapsions b/c they thought that the price of the house would automatically go up and it would be a great investment, even if they were house-poor...

    also, people seem to forget that another apsect of the problem is that wages and employment have gone down in recent times, making it harder for persons to make the same payment they were making 1 or 2 years ago....

    this problem actually has little to do with poor people not making their payments, and more to do with middle america, flippers, housing developers who built way too much stock and drove down house prices and the fed lowering the interest rate to the point that banks decided to make as much money as possible on mortgage fees by giving loans to anyone and everyone...

    Parent

    I was talking about MY AA family! (none / 0) (#103)
    by BrassTacks on Mon Sep 29, 2008 at 12:55:45 AM EST
    Sheeze.  

    Sorry, but I just don't see the race thing.  I guess that's because my family is so mixed.  

    Truth be told, I read that it was poor Latinos in CA that were given loans they couldn't begin to repay.  But your results may vary.  We all read different stuff.

    Parent

    For anyone who doubts this is serious (none / 0) (#79)
    by andgarden on Sun Sep 28, 2008 at 09:35:43 PM EST
    See the Times:
    Citigroup and Wells pressed regulators to seize Wachovia and let them buy its assets and deposits, as JPMorgan did with WaMu

    Do you people realize how effed up it is that Wachovia could fail???

    For my family, (none / 0) (#81)
    by BrassTacks on Sun Sep 28, 2008 at 09:46:40 PM EST
    It will be nothing short of disaster if Wachovia fails.  I just cannot believe that all of this happening.

    I am worried and this bailout is not the least bit reassuring to me.

    Parent

    My understanding is (none / 0) (#84)
    by andgarden on Sun Sep 28, 2008 at 09:50:48 PM EST
    that the bailout is intended to prevent a chain reaction that could cause lots of failures.

    Parent
    So some say (none / 0) (#107)
    by BrassTacks on Mon Sep 29, 2008 at 01:14:20 AM EST
    I am very conflicted about this.  Very.  I wish that someone, preferably Obama, would take a lead on this and sell it to the voters.  I need convincing that this will work, or at least be a big help.  

    Parent
    Yes (none / 0) (#88)
    by standingup on Sun Sep 28, 2008 at 10:20:31 PM EST
    that is where Wachovia has been headed since the close of the markets Friday.  And there is no incentive for any purchaser to do anything if they can work a deal behind the scenes like JPMorgan did with Washington Mutual.    

    (Bloomberg) - Wachovia Corp.'s suitors may use a template honed by JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon last week: Wait to see whether regulators will seize the bank, then buy the best assets and let the government sort out the rest, according to analysts.

    Citigroup Inc., Wells Fargo & Co. and Banco Santander SA are in talks with Wachovia, the Wall Street Journal reported yesterday. They're part of the same group that passed on a chance to buy Washington Mutual Inc., which the U.S. closed two days ago, leaving JPMorgan to buy WaMu for $1.9 billion, a fraction of its previous offer in March.

    The bidders may try that tactic again at Charlotte, North Carolina-based Wachovia following its 27 percent plunge in New York trading yesterday, according to analysts at Goldman Sachs Group Inc. and Egan-Jones Ratings Co. They may get help from regulators, who said the U.S. benefited from seizing and selling WaMu because the Federal Deposit Insurance Corp. didn't have to tap its $45 billion insurance fund.

    ``WaMu's takeover has proven that there's an easy way, if the FDIC is involved,'' said Sean Egan, president of Egan-Jones in Haverford, Pennsylvania. ``You kick the hell out of the equity holders and bondholders. That may be the new model for bank takeovers.''

    Here is one of the downsides to the government intervention that should concern us.  It is not good if we are creating a situation where banks that could be solvent with a little assistance are allowed to be taken over and their assets allowed to be redistributed to other banks at fire sale prices.  

    I am in favor of action but have no preconceptions that it will solve all of our problems.  The way I see it, the sooner we have something in place to begin sorting this out, the better our chances to lessen the losses.  But there will be a lot more bad news to come in the next 6 months or longer.  I recently read the FDIC is now expecting 200-250 banks to fail which is up from the 117-150 they had previously thought would fail.  

    Parent

    Yup, and those people with (none / 0) (#89)
    by andgarden on Sun Sep 28, 2008 at 10:25:42 PM EST
    more than $100K at Wachovia: if I were one: I'd be racing for the exit first thing Monday morning.

    It woud probably cause the failure of the bank, but who wants to be the last one left holding the bag because he tried to do the "right thing?"

    Parent

    That is what the did (none / 0) (#95)
    by standingup on Sun Sep 28, 2008 at 11:10:32 PM EST
    at WaMu to the tune of $16.7 billion in cash in the last 9 days before they were seized.  

    I found the article I had read about expected bank failures and my recollection was not correct:

    The Federal Deposit Insurance Corporation deemed 117 banks "troubled" at the end of June, up from 90 in the first quarter. Sheila C. Bair, the F.D.I.C. chairwoman, said Thursday that more failures are likely, although they would constitute only a handful of the nation's 8,400 banks.
    ...
    Those concerns were reflected in the stock market Friday, where investors pushed down financial shares as conditions for banks continued to worsen. In addition to mortgage defaults, losses tied to auto loans, credit cards and commercial real estate are increasing along with unemployment. Analysts now project that several hundred banks could fail over the next three years, far more than the roughly 150 or so that they estimated this summer.


    Parent
    Yup (none / 0) (#96)
    by andgarden on Sun Sep 28, 2008 at 11:15:16 PM EST
    And what's going to satisfy those people with big deposits?

    They'll have to be convinced that the bank is safe. I think that's why a bailout is necessary.

    Parent

    haven't most rich people (none / 0) (#104)
    by BrassTacks on Mon Sep 29, 2008 at 12:57:32 AM EST
    Done that at all the banks last week?   I kept hearing that on the radio, people getting their money down to less than $100,000 at banks.

    Parent
    BTD, what should we get? (none / 0) (#80)
    by BrassTacks on Sun Sep 28, 2008 at 09:45:23 PM EST
    As a middle class homeowner what should we get?  Those of us who saved for years to buy a house, bought a house only as big as we could afford, and have always made our mortgage payments, what do we get for our efforts?  Those who never saved a dime, bought a house they couldn't afford, and haven't met their mortgage payments, get bailed out.  They get to continue to live in a house they can't afford, and have no investment in.  What do we get?  Why are the wrong doers getting MORE money and the right doers get nothing, other than their bill?  

    Color me unimpressed.  

    The question is (5.00 / 0) (#82)
    by andgarden on Sun Sep 28, 2008 at 09:48:23 PM EST
    how many innocents are you willing to sacrifice in order to punish the wrongdoers?

    Bank failures are devastating, even with the FDIC as a cushion.

    Parent

    A friend expressed almost the same (none / 0) (#92)
    by oculus on Sun Sep 28, 2008 at 10:42:32 PM EST
    sentiments this afternoon, i.e., why reward those who were foolish.  I think she may vote for McCain and she likes the fact Palin is an "outsider."  

    Parent
    when you say foolish (5.00 / 1) (#94)
    by of1000Kings on Sun Sep 28, 2008 at 11:00:09 PM EST
    are you talking about the banks that were bringing in huge profits and borrowing money from the government at a thief's rate, the consumers that were duped by agents and brokers telling them the market would continue to rise, middle america that has been duped it's whole existence into believing that a big house (and all that it represents) is the staple of being a worthwhile human in America (we all do this, giving people with money more respect and more benefit of the doubt just b/c they have money/better clothes, straight teeth, etc--just look at job interviews for a pretty good example), or the stockholders and bondholders who bought into these financial markets?

    there's a lot of foolishness to go around

    Parent

    Well, a little bit of anger (none / 0) (#93)
    by andgarden on Sun Sep 28, 2008 at 10:45:45 PM EST
    can take you a long way from the most good for the most people.

    It's very easy to say "eff the banks". . .until you can't get a loan because there were massive failures.

    Parent

    I am reconsidering my vote for Obama (none / 0) (#105)
    by BrassTacks on Mon Sep 29, 2008 at 12:59:16 AM EST
    He took so much money from these guys and he doesn't seem to have a problem with bailing them out with MY money and your's.  

    Parent
    wrongdoers have been getting (none / 0) (#91)
    by of1000Kings on Sun Sep 28, 2008 at 10:40:28 PM EST
    more in America for as long as America has been here...

    just ask the Native Americans...or the recent CE0's of financial institutions...or any common used car dealer...

    have you ever worked in sales...not a lot of morality there...

    we'd have to change our whole philosophy in America if those who took advantage of the system weren't in the best position...

    and btw, the short answer is that you get to keep value in your home...if the market is flooded with foreclosures then your house value will continue to drop...

    but if you don't care about that, then here's a cookie for being very good all these years...

    Parent

    I don't have any problems (none / 0) (#106)
    by BrassTacks on Mon Sep 29, 2008 at 01:02:19 AM EST
    with letting markets work.  I'll sit it out in my own little house.  Seems better than letting everyone who screwed up off the hook.  Everyone who made this mess, from Freddie and Fannie down to the guy who took a mortgage he knew he couldn't afford, to our politicians (like Dodd and Barney) who supported it, make out like bandits while hard working Americans get the bill for THEIR mistakes.  Just doesn't seem right to me.

    Parent
    Panic Attack (none / 0) (#97)
    by DeanOR on Sun Sep 28, 2008 at 11:34:06 PM EST
    Some economists are saying this plan won't do what is needed, i.e. providing capital to lenders. At best, it seems to be an attempt to avert a cascade of panic among financiers while rewarding stockholders and lobbyists. Aren't such panics self-correcting at some point? If treating panic is the goal, it's the most expensive treatment for a panic attack in history. Prozac is now generic and a whole lot cheaper.

    Best idea I've heard yet.... (none / 0) (#98)
    by NYShooter on Sun Sep 28, 2008 at 11:59:45 PM EST
        Give the 700 B to Warren Buffet. Let him decide where the needs, values, and potentials lie. Let market forces determine the price of assets. Buffet could then buy those that make sense and that have a potential for recovery and growth. The equities for those banks would then be available for the public to invest in, and presumably, under Buffet's management, have a good chance to grow and prosper.
    Oh yeah, Buffet would do it as a public service, and all profits would flow to the American public. They could take the form of rebates, tax reduction, education, health care, and/or dedicated for infrastructure and things like that.
    Warren would do it, he's a patriot, incorruptible, and who would the public trust; Warren buffet or Henry Paulson?
    Warren Buffet still lives (none / 0) (#109)
    by oldpro on Mon Sep 29, 2008 at 05:37:43 AM EST
    in the $31,000 house he bought in the 50s.

    Parent
    I love Warren Buffet (none / 0) (#112)
    by Militarytracy on Mon Sep 29, 2008 at 08:22:28 AM EST
    He is totally THE MAN!  A house is only shelter.  We bought this house and it is one of the smallest in the neighborhood at about 2800 sq ft all one level for our special needs son.  My husband felt like it was a bit skimpy and I felt like it was a step up.  Now I wish I were stepping down.  After this, if we ever buy another home it will be smaller than this affair is.  I have other things I would like to do with my life other than clean the cobwebs out of the mostly unused 1200 sq ft weekly.

    Parent
    wouldn't the best kind of capital . . . (none / 0) (#111)
    by allys gift on Mon Sep 29, 2008 at 08:17:53 AM EST
    come from the borrowers themselves.  Why can't the government bail out the homeowners.  Rework their mortgages into 30 yr fixed at the going rate (HOLC) and create jobs in green transportation and energy.  Shore up FDIC and reregulate the industry.

    It seems to me that the Democratic platform of job creation, increases in minimum wage, regulation where it makes sense, etc. along with a new agency, HOLC, for the specific problem, is the best solution.  I don't understand taking my money out of treasury and giving it to private investment banks.  Seems to me, that's stealing.  

    The Bailout Legislation | 112 comments (112 topical)

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