The Mother of All Bailouts - The Death of Fiscal Conservatism (TARP I)

[Talismen]

(Hat tip to Michelle Malkin for the title)


The endless bail-outs continue.

Essentially, you and I (and the rest of the American tax payers) now own bad debt. Thanks to our government's infantile idea of buying into the notion that if one business is "too big to fail", then there must be others.

In the span of the last two weeks...the American tax payers have purchased a 1978 Buick, that doesn't look bad, runs ok, but will continue to nickle-and-dime us to death, for decades to come. Without massive spending cuts (which are already needed), we've basically just inherited a brand new welfare program...for corporations who's business practices and bad choices have left them so strapped for cash, EVERY taxpayer must now kick-in to help them...thanks, once again, to the federal government.

Michelle has more...click here: http://michellemalkin.com/2008/09/19/the-mother-of-all-bailouts-the-death-of-fiscal-conservatism/

(snip)

Bush Treasury Secretary Hank Paulson just wrapped up his press conference announcing the Mother of All Bailouts. He said a “bold” approach was needed to achieve “stability” in the market.

Let me translate that.

“Bold” = Massively massive, taxpayer-funded rescue.

“Stability” = Privatizing profits and socializing losses on a scale we have never seen before in our lifetimes.

I have had it with Pollyanna conservatives who continue to parrot the “fundamentals of the market are great!” line.

The fundamentals of the market suck. The fundamentals of capitalism have been sabotaged.

Ace takes a slightly different tack:
http://ace.mu.nu/archives/273753.php

He notes the following:
(snip)

Solid plan -- reduce the size of the high-risk subprime mortgages these companies were floating -- which, by the way, Fannie and Freddie execs were making millions on in bonuses, as they kept the profits while the immense and growing risk was passed on to you, the taxpayer.

So what happened?

Democrats blocked any attempt at reform. Ostensibly to keep the pyramid scheme of easy money flowing to credit poor homeowners. But largely because their big donors at Freddie and Fannie successfully lobbied them to keep their fire sale going.

A free-market cannot exist if government owns, in part or in total, private business(es).
What we are witnessing is the slow death of capitalism...if we continue down this "bail-out" road.


I must agree with both Malkin and Ace, but I still maintain that the so-called "fundementals"...our work-force (blue and white collar), and their solid work ethic(s), are still sound, and will always be sound. We have simply (and unfortunately) found ourselves in the middle of a perfect (financial) storm...and we'll need to pull together to ride this one out. It's not beyond our capacity to do so. This IS America.

[Talismen]

So, who pays for it? Here's how this breaks down:

http://townhall.com/blog/g/9511b989-a5b3-4066-9149-38c600c38f58
http://www.kiplinger.com/features/archives/2007/11/taxrank.html

The top 50% of all wage earners pay for over 85% of the normal tax burden.
That top 50% includes folks making just $31,987 per year. If you make that amount, and pay a mortgage, at least one car payment, and have maybe one kid ready for college....you more than likely do NOT feel "rich". Yet, the dems think you are! And expect you to be "patriotic" (thank you Joe Biden), and pay "your fair share".

Friday, September 19, 2008

Who Pays For The Bailout?

Posted by: Jonathan Garthwaite at 3:50 PM


So, the banking bailout is going to cost taxpayers as much as $1,000,000,000,000.   

While the media discusses the "bad-debt bailout" being put together over the next few days and how much it's going to cost all of us taxpayers, it's worth taking a look at who will actually be paying that bill when it comes due.

Based on the 2006 IRS "Who pays taxes" data, the top income brackets will be the ones bailing out all the bad decisons of home-mortgage lenders and home-owners.
 

[Abigail Adams]

Normally I would not favor any kind of bailout for any financial services company. However in this instance one of the major problems is so many people's pension funds are involved [AIG alone handles billions of dollars in pension money]- if AIG & others were allowed to fail millions of people would see their pensions go with it- it would make Enron pale in comparison.

I think this was one of the main reasons why this was done. And IMO something like the FDIC must be set up to protect pension funds- that way in the future if a bank or investment firm does something stupid/greedy then the innocent do not get taken down along with the guilty.

[Talismen]

Normally I would not favor any kind of bailout for any financial services company. However in this instance one of the major problems is so many people's pension funds are involved [AIG alone handles billions of dollars in pension money]- if AIG & others were allowed to fail millions of people would see their pensions go with it- it would make Enron pale in comparison.

I completely understand your point here Abigail. And...normally, I would agree whole-heartedly. But, the thing that stops me is the fact that government itself has gotten us into this problem. The President, McCain and other GOP'ers wanted to do something about Freddie and Fannie a few years ago, because they could see our current situation on the horizon, and the dems simply would not allow them to touch anything.

Couple that with shady business practices, cheap (and undervalued) credit, and the housing bubble...and you have the mess we're in now.

I think this was one of the main reasons why this was done. And IMO something like the FDIC must be set up to protect pension funds- that way in the future if a bank or investment firm does something stupid/greedy then the innocent do not get taken down along with the guilty.

I totally 100% agree with you! I think that should have been done a long time ago.
I also think there should be a "fail safe" option for 401k's. Here's my idea:

When your 401k has lost a pre-determined percentage of it's value from the last quarter to the current quarter, we should have the option of rolling over a certain percentage the remaining value into a government guaranteed short-term CD that earns the same rate as a T-bill (for example). You must leave it in that CD for at least 1 quarter. You'll then have the option to roll it back into your 401k, after that mandatory 1 quarter, if you choose. You'll also have the option of keeping your money in the CD, for up to 1 year, after that, you must return the money to your 401k.

I think this would be a "fail safe" pressure valve that would be welcomed to most wage earners.
I know if I would have had that option over the past 6 months, I would have taken it.

[Talismen]

http://townhall.com/blog/g/53e57022-500b-472a-b7d8-4cb249564fa5

Friday, September 19, 2008

Enough is Enough

Posted by: Michele Bachmann at 4:50 PM


Yesterday, I joined several House colleagues to urge the Democrat controlled Congress, the Treasury, and the Federal Reserve to act with greater transparency and responsibility for the taxpayer when it comes to the financial markets crisis rattling our nation.

Check out the Wall Street Journal's Market Watch coverage of the press conference here.

Taxpayers must not be left on the hook to the tune of billions of dollars -- possibly in the ballpark of $500 billion -- in government-backed bailouts. If government is propping up Wall Street and taxpayers foot the bill for the government, that makes Americans the last line of insurance in these unstable financial times.

The question becomes:  Who will left to bail-out the taxpayer who is already saddled with a debt of about $455,000 per household just for runaway entitlement spending?

The government is embarking on a very dangerous path, and the recent financial takeover of AIG Insurance is an action we must not be quick to replicate. Privatizing reward and socializing risk is essentially rolling the dice with our nation's financial security and it is a surefire recipe for disaster for our economy.

If we bail out one, another lines up for their hand out, then another, and another, and another. If this keeps up, everyone from Starbucks to JC Penney's will see themselves as too big to fail and they too may be knocking on the doors of the Treasury looking for their bail-out.

Investor's Business Daily had a great editorial on this issue yesterday, too.  Check it out here.

http://www.marketwatch.com/news/story/small-group-republicans-slams-bailout/story.aspx?guid=%7BC5FE2F1F-A5F3-4FD6-8444-1AEDEDF6114A%7D&dist=msr_1

[Talismen]

A MUST READ!

http://www.ibdeditorials.com/IBDArticles.aspx?id=306544845091102

Congress Tries To Fix What It Broke
By INVESTOR'S BUSINESS DAILY | Posted Wednesday, September 17, 2008 4:20 PM PT

Regulation: As the financial crisis spreads, denials on Capitol Hill grow more shrill. Blame an aloof President Bush, greedy Wall Street, risky capitalism — anybody but those in Congress who wrote the banking rules.

Such denials won't hold against the angry facts banging on their doors. The only question is whether the guilty party can keep up the barricade until Election Day.

A visibly annoyed House Speaker Nancy Pelosi rejected suggestions that Democrats share blame for the meltdown. "No," she snapped at reporters who dared ask.

Stick to our narrative, she scolded: The bursting of the housing bubble was another story of market failure and deregulation.

"The American people are not protected from the risk-taking and the greed of these financial institutions," she said, while calling for investigations of the industry.

Only, the risk-taking was her idea — and the idea of all the other Democrats, along with a handful of Republicans, who over the past 30 years have demonized lenders as racist and passed regulation after regulation pressuring them to make more loans to unqualified borrowers in the name of diversity.

They were the ones who screamed — "REDLINING!" — and sent banks scurrying for cover in low-income neighborhoods, where they have been forced to lower long-held industry standards for judging creditworthiness to make the subprime loans.

If they don't comply, they are threatened with stiff penalties under the Community Reinvestment Act, or CRA, a law that forces banks to make home loans to people with poor credit risks.

No fewer than four federal banking regulatory agencies are responsible for enforcing the law. They subject lenders to racial litmus tests and issue regular report cards, the industry's dreaded "CRA rating."

The more branches that lenders put in poor neighborhoods, and the more loans they make there, the better their rating. Those lenders with low ratings can not only be fined, but also blocked from mergers and other business transactions needed to expand.

The regulation grew to monstrous proportions during the Clinton administration, obsessed as it was with multiculturalism. Amendments to the CRA in the mid-1990s dramatically raised the amount of home loans to otherwise unqualified low-income borrowers.

The revisions also allowed for the first time the securitization of CRA-regulated loans containing subprime mortgages. The changes came as radical "housing rights" groups led by ACORN lobbied for such loans. ACORN at the time was represented by a young public-interest lawyer in Chicago by the name of Barack Obama.

HUD, in turn, pressured Fannie Mae and Freddie Mac to purchase more subprime mortgages, and Fannie and Freddie, in turn, donated to the campaigns of leading Democrats like Barney Frank and Pelosi who throttled investigations into fraud at the agencies.

Soon, investment banks such as Bear Stearns were aggressively hawking the securities as "guaranteed." Wall Street's pitch was that MBSs were as safe as Treasuries, but with a higher yield.

But they weren't safe. Everyone in the subprime business — from brokers to lenders to banks to investment houses — absolved themselves of responsibility for ensuring the high-risk loans were good.

The mortgage lenders didn't care, because they were going to sell the loans to other banks. The banks didn't care, because they were going to repackage the loans as MBSs. The investors and traders didn't care, because the MBSs were backed by Fannie and Freddie and their implicit government guarantees.

In other words, nobody up and down the line — from the branch office on main street to the high-rise on Wall Street — analyzed the risk of such ill-advised loans. But why should they? Everybody was just doing what the regulators in Washington wanted them to do.

So everybody won until everybody lost, including the minorities the government originally mandated the banks to serve.

The original culprits in all this were the social engineers who compelled banks to make the bad loans. The private sector has no business conducting social experiments on behalf of government. Its business is making profit. Period. So it did what it naturally does and turned the subprime social mandate into a lucrative industry.

Of course, it was a Ponzi scheme, because they weren't allowed to play by their rules. The government changed the rules for risk.

In order to put low-income minorities into home loans, they were ordered to suspend lending standards that had served the banking industry well for centuries. No one wants to talk about it, so they just scapegoat Wall Street. Even John McCain has joined the Democrat chorus on this.

The FBI is now investigating 24 large mortgage lenders for alleged abuses. But who will investigate the pols and the lobbyists and the community agitators who made the bad decisions that ultimately forced businesses to make their bad decisions?

[Talismen]

I hope to heck the GOP'ers fight this one.

We need to either re-write or recind the CRA, and totally to back to the old way of banking...if you can afford the loan, and your credit is good, you'll get it. You're not going to get it otherwise, no matter your ethnicity or the color of your skin!

http://www.foxnews.com/urgent_queue/index.html#55a9b4b0,2008-09-19

Sen Bunning says Fed/Treas plan "socialism" - may block bill
Friday, Sep. 19 2008


UPDATE ----- TO FOX FROM BUNNING SPOX:
When asked if Bunning is prepared to block upcoming legislation ----- "There is always a good chance of that. We'll know more when we get the final details and the Senator has a chance to go through it, but as you can tell from the release he is not happy."
WASHINGTON, D.C. -- U.S. Senator Jim Bunning today issued the following statement regarding the Treasury Departments bailout of Wall Street.
Instead of celebrating the Fourth of July next year Americans will be celebrating Bastille Day; the free market for all intents and purposes is dead in America, said Bunning. The action proposed today by the Treasury Department will take away the free market and institute socialism in America. The American taxpayer has been mislead throughout this economic crisis. The government on all fronts has failed the American people miserably.
My great grandchildren will be saddled with the estimated $1 trillion debt left in the wake of this proposal. We have gotten to this point because nobody has been minding the store. Both Secretary Paulson and Chairmen Bernanke should be held accountable for their inaction - and now because of that inaction - the American taxpayer is left with bill.
We must take care of Main Street. Small businesses in Ashland, Bowling Green, and Paducah are hurting because of high taxes, and energy costs. Those small businesses are the economic engines that fuel our economy. I hope in the closing days of this Congress we can pass legislation to help those good people on Main Street rather then helping the power brokers on Wall Street.

[Talismen]

Still think we need to just throw money at this problem to make it go away? Try this on for size:


http://www.politico.com/news/stories/0908/13690.html

Exclusive: Foreign banks may get help


By MIKE ALLEN | 9/21/08 7:24 AM EDT 

In a change from the original proposal sent to Capitol Hill, foreign-based banks with big U.S. operations could qualify for the Treasury Department’s mortgage bailout, according to the fine print of an administration statement Saturday night.

The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.

Treasury Secretary Henry Paulson confirmed the change on ABC's "This Week," telling George Stephanopoulos that coverage of foreign-based banks is "a distinction without a difference to the American people."

"If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said.

[NosferatusCoffin]

Outsourcing jobs and insourcing foreign debt.

The Democrat Way.

[Old Fart]

Notice how quick a Bi-Partisan Congress (and the President) can act when it comes to SPENDING our money? 
Under Obama, they should be able to act even more quickly.
Of course, when it comes to MAKING us some money, (drilling) don't hold your breath. 

[Talismen]

More:

http://corner.nationalreview.com/post/?q=M2IxN2FiNjgzZjQwM2ViMjExMmY4OTYyYTgyYzM3NjA=
(snip)

The Bailout   [Yuval Levin]


Everyone should read the actual text of the proposed bailout plan the administration is sending to Congress. It’s clearly not a final version (the part about only purchasing from financial institutions headquartered in the US has already been changed, as Kathryn notes below), but it’s the essential shape of the proposal. See if you can read through the whole of it without concluding that everyone in Washington has lost their minds.

Read the rest at the link above.


Also, here's a link to the actual text of the plan (in it's current form):
http://www.nytimes.com/2008/09/21/business/21draftcnd.html

[Talismen]

Newt chimes in....


http://corner.nationalreview.com/post/?q=ZGE5MmE0YmRiODA3YTRiNzFlN2FmNDU5N2I0ZDc3YTE=

Before D.C. Gets Our Money, It Owes Us Some Answers    [Newt Gingrich]


Watching Washington rush to throw taxpayer money at Wall Street has been sobering and a little frightening.

We are being told Treasury Secretary Henry Paulson has a plan which will shift $700 billion in obligations from private companies to the taxpayer.

We are being warned that this $700 billion bailout is the only answer to a crisis.

We are being reassured that we can trust Secretary Paulson "because he knows what he is doing".

Congress had better ask a lot of questions before it shifts this much burden to the taxpayer and shifts this much power to a Washington bureaucracy.

Imagine that the political balance of power in Washington were different.

If this were a Democratic administration the Republicans in the House and Senate would be demanding answers and would be organizing for a “no” vote.

If a Democratic administration were proposing this plan, Republicans would realize that having Connecticut Democratic senator Chris Dodd (the largest recipient of political funds from Fannie Mae and Freddie Mac) as chairman of the Banking Committee guarantees that the Obama-Reid-Pelosi-Paulson plan that will emerge will be much worse as legislation than it started out as the Paulson proposal.

If this were a Democratic proposal, Republicans would remember that the Democrats wrote a grotesque housing bailout bill this summer that paid off their left-wing allies with taxpayer money, which despite its price tag of $300 billion has apparently failed as of last week, and could expect even more damage in this bill.

But because this gigantic power shift to Washington and this avalanche of taxpayer money is being proposed by a Republican administration, the normal conservative voices have been silent or confused.

It’s time to end the silence and clear up the confusion.

Congress has an obligation to protect the taxpayer.

Congress has an obligation to limit the executive branch to the rule of law.

Congress has an obligation to perform oversight.

Congress was designed by the Founding Fathers to move slowly, precisely to avoid the sudden panic of a one-week solution that becomes a 20-year mess.

There are four major questions that have to be answered before Congress adopts a new $700 billion burden for the American taxpayer. On each of these questions, I believe Congress’s answer will be “no” if it slows down long enough to examine the facts.

Question One: Is the current financial crisis the only crisis affecting the economy?

Answer: There are actually multiple crises hurting the economy.

There is an immediate crisis of liquidity on Wall Street.

There is a longer time crisis of a bad energy policy transferring $700 billion a year to foreign countries (so foreign sovereign capital funds are now using our energy payments to buy our companies).

There is a longer term crisis of Sarbanes-Oxley (the last "crisis"-inspired congressional disaster) crippling entrepreneurial start ups, driving public companies private, driving smart business people off public boards, and driving offerings from New York to London.

There is a long term crisis of a high corporate tax rate driving business out of the United States.

No solution to the immediate liquidity crisis should further cripple the American economy for the long run. Instead, the liquidity solution should be designed to strengthen the economy for competition in the world market.


Question Two: Is a big bureaucracy solution the only answer?

Answer: There is a non-bureaucratic solution that would stop the liquidity crisis almost overnight and do it using private capital rather than taxpayer money.

Four reform steps will have capital flowing with no government bureaucracy and no taxpayer burden.

First, suspend the mark-to-market rule which is insanely driving companies to unnecessary bankruptcy. If short selling can be suspended on 799 stocks (an arbitrary number and a warning of the rule by bureaucrats which is coming under the Paulson plan), the mark-to-market rule can be suspended for six months and then replaced with a more accurate three year rolling average mark-to-market.

Second, repeal Sarbanes-Oxley. It failed with Freddy Mac. It failed with Fannie Mae. It failed with Bear Stearns. It failed with Lehman Brothers. It failed with AIG. It is crippling our entrepreneurial economy. I spent three days this week in Silicon Valley. Everyone agreed Sarbanes-Oxley was crippling the economy. One firm told me they would bring more than 20 companies public in the next year if the law was repealed. Its Sarbanes-Oxley’s $3 million per startup annual accounting fee that is keeping these companies private.

Third, match our competitors in China and Singapore by going to a zero capital gains tax. Private capital will flood into Wall Street with zero capital gains and it will come at no cost to the taxpayer. Even if you believe in a static analytical model in which lower capital gains taxes mean lower revenues for the Treasury, a zero capital gains tax costs much less than the Paulson plan. And if you believe in a historic model (as I do), a zero capital gains tax would lead to a dramatic increase in federal revenue through a larger, more competitive and more prosperous economy.

Fourth, immediately pass an “all of the above” energy plan designed to bring home $500 billion of the $700 billion a year we are sending overseas. With that much energy income the American economy would boom and government revenues would grow.

Question Three: Will the Paulson plan be implemented with transparency and oversight?

Answer: Implementation of the Paulson plan is going to be a mess. It is going to be a great opportunity for lobbyists and lawyers to make a lot of money. Who are the financial magicians Paulson is going to hire? Are they from Wall Street? If they’re from Wall Street, aren't they the very people we are saving? And doesn’t that mean that we’re using the taxpayers’ money to hire people to save their friends with even more taxpayer money? Won't this inevitably lead to crony capitalism? Who is going to do oversight? How much transparency is there going to be? We still haven't seen the report which led to bailing out Fannie Mae and Freddie Mac. It is "secret". Is our $700 billion going to be spent in "secret" too? In practical terms, will a bill be written in public so people can analyze it? Or will it be written in a closed room by the very people who have been collecting money from the institutions they are now going to use our money to bail out?

Question Four: In two months we will have an election and then there will be a new administration. Is this plan something we want to trust to a post-Paulson Treasury?

Answer: We don’t know who will inherit this plan.

The balance of power on election day will shift to either McCain or Obama. Who will they pick for Treasury Secretary? What will their allies want done? We are about to give the next administration a level of detailed control over big companies on a scale even FDR did not exercise during the Great Depression. Is this really wise?

For these reasons I hope Congress will slow down and have an open debate.

And in the course of that debate, I hope someone will introduce an economic recovery act that makes America a better place to grow jobs. I hope the details will be made public before the vote.

For more details on my action plan for getting the American economy back on track and building long-term economic prosperity, you can read this message recorded yesterday to American Solutions members.

This is a very important week for the integrity of the Congress.

This is a very important week for the future of America.

If Washington wants our money, then it owes us some answers.



09/21 03:08 PM

[RVD]

Real crisis is loss of American principles

Star Parker
Monday, September 22, 2008

My sense is that the attention that most Americans are paying as the power brokers of our government re-mold our future is not too deep.

Sure, we're watching to see which Wall Street firm emerges as the basket case du jour.

And the 50 percent or so of us who own stocks in some form are paying attention to the impact that each major announcement has on the market and on our nest eggs.

But beyond this, it's like watching the mechanic play around under the hood of your car. You stand by with your fingers crossed hoping that he knows what he's doing and that the price tag of the damage won't ruin you.

What's bothering me today, and what I think should bother you, .......

Rest of Article:

http://townhall.com/Common/PrintPage.aspx?g=51ab242a-ec4c-4836-bd21-6a270d3d751f&t=c

[RVD]

Michael Reagan: Wall Street Bailout 'Robbery'

Sunday, September 21, 2008 7:08 PM

By: Phil Brennan 


The runaway government bailout of Wall Street at taxpayer expense is nothing less than "robbery,” according to Michael Reagan.


The top-rated talk-show host and Newsmax columnist told the 5 million listeners of "The Michael Reagan Show" on Friday that their pockets and those of their fellow Americans were being picked clean by the panic-driven bailout.


"Democrats Franklin Raines, Jim Johnson, Jamie Gorelick, Penny Pritzker, Chris Dodd and Barney Frank are robbing the American taxpayer, and Republicans in the House and Senate had been tapped to drive the getaway car," said Reagan.


“In a political system where well-paid Democrat operatives can enrich themselves at the expense of the American people with zero downside, there is no incentive to behave properly, when the taxpayer will bail you out. Enough is enough, bad decisions have consequences and those consequences ought to include indictments and jail time for those who cashed in."


Speaking to Newsmax.com, Reagan added: “I hope John McCain will not shrink from pointing the finger of blame where it belongs – at Barack Obama, who fed greedily at the trough of Fannie Mae and Freddy Mac while their top people, including two of his own campaign associates, were flim-flamming the American people. It’s a Democratic scandal from beginning to end, and the American people deserve to know it.”

 http://www.newsmax.com/insidecover/michael_reagan_bailout/2008/09/21/132947.html?

[Talismen]

Michelle Malkin has EXCELLENT coverage here, on Paulson:

http://michellemalkin.com/2008/09/22/why-henry-paulson-must-be-contained/

(snip)

Both parties in Washington are about to screw us over on an unprecedented scale. They are threatening us with fiscal apocalypse if we don’t fork over $700 billion to Treasury Secretary Henry Paulson and allow him to dole it out to whomever he chooses in whatever amount he chooses — without public input or recourse. They are rushing like mad to cram this Mother of All Bailouts down our throats in the next 72-96 hours. And right there in the text of the proposal is this naked power grab: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

Stop.

My question for fellow conservatives: Do you trust this man?

I don’t.

Do you trust Hank Paulson’s judgment?

I don’t.

Read more at the link above....(includes embedded links as well).

[Talismen]

McCain has been cautious, up to now, about this bailout plan.
Well, now that he's had a chance to skim through it, he seems to be more opposed to it, as it is written right now:

http://www.foxnews.com/urgent_queue/index.html#3bd5f36a,2008-09-22

Scranton, Pa McCain town hall
McCain told a town hall meeting here in Scranton that he is "deeply uncomfortable" and proposed a bipartisan board to oversee the Paulson/Treasury mortgage bailout plan. He also attacked Obama for a lack of leadership, saying the nation does not "have time to wait for Senator Obama's input for our nation to act."
VERBATED TIMECODED REMARKS
10:45:38 On Friday I laid out a plan for addressing this crisis. At its heart, my plan is about keeping ppl in their homes and safeguarding the lifes savings of all Americans by protecting our financial system and capital markets. Those are our priorities.Keep ppl in their homes and protect their savings. We must do that (applause)
Senator Obama has declined to put forth a plan of his own. At a time of crisis, when leadership is needed, Senator Obama has simply not provided it.
10:46:17 And the truth is that we dont have time to wait for Senator Obamas input for our nation to act. I think it is clear that Congress must act and act quickly. I laid out my plan and my priorities last Friday. I spoke to Secretary Paulson about it over the weekend , and Ive been looking at the plan that the administration has put forth.
10:46:37 I urge Congress to study this proposal carefully as they consider the remedy for this crisis.
As for me, 10:46:42 I am greatly concerned atbout the plan that gives a single individual the unprecedented power to spend $1 trillion - $1 trillion - dollars without any meaningful accountability. Never before in the history of our nation has so much power and money been concentrated in the hands of one person-a person I respect and admire a great deal Secretary Paulson. This arrangement makes me deeply uncomfortable. When we are talking about a trillion dollars of taxpayer money trust me just isnt good enough. (applause)
10:47:24 We wont not solve a problem caused by poor oversight with a plan that has no oversight. Part of the reason we are facing this crisis is an antiquated regulatory system of uncoordinated agencies that just havent been doing the job.
I believe we need a high level oversight board to impose accountability and establish concrete criteria for who gets help and who does not. They must ensure that throughout this crisis, the government is a careful steward of the taxpayers dollars. 10:48:02 The oversight board should be bipartisan and have qualified citizens who have no agenda but the protection of taxpayers and the financial markets. People like: Warren Buffet, who supports my opponent, Governor Mitt Romney, or maybe Michael Bloomberg, an independent to oversee this.
10:48:40 The firms we help need accountability too. We cannot have taxpayers footing the bill for bloated golden parachutes like we see in the Lehman Brothers bankruptcy, where the top executives(applause) they are asking for $2.5 billion in bonuses after they ran the company into the ground. (boos) 10:48:53 The senior executives of any firm that is bailed out by the treasury should not be making more than the highest paid government official. We should have that criteria.
And lets have some transparency in this process. Lets have some transparency. The American people have the right to know which firms will be helped, what that selection will be based on and how much that help will cost. The details of the process and the transaction itself should all be made available online for public scrutiny. (applause)
10:49:37 As Congress examines this package, I would encourage all members to set aside the pressures of Washington and Wall Street. As we determine what to do, we need to put our country first and focus whats best for Main Street. (applause) Its the excess and greed of Washignton and Wall street that got us in this situation to start with. We must help keep people in their homes. 10:50:01 We must protect Americans savings. And we must keep students with loans in school. What we need (applause)
What we need in any reform is accountability for Wall Street, accountability for government, and a commitment to protecting peoples' homes and life savings and restoring our financial markets.
10:50:22 Times are tough, times are tought for our economy, and I expect more tough economic news before the election. My commitment to the American people is to fix the Wall Street mess, reform Washington, and most importantly, enact a pro-growth agenda to create jobs for Americans and get this country back on track.

I have to say...I think I almost totally agree with him.
If there's one area of our society that should have over-sight (and redundant over-sight), it's the financial markets. We're talking about people's hard earned money here! Newt Gingrich had GREAT ideas, which McCain should start co-opting immediately!

Our financial markets do NOT exist for the purpose of doing social experiements!
If you cannot afford the loan, you're not going to get it! If you're a CEO of a financial institution and know your business practices are less-than-honorable, say so!

I'm sick of these asswipes taking my 401k money and doing with it what they will!

[Talismen]

I would guess that many of these "most conservative" folks who want to formulate an alternative plan are many of the same people who took charge of the energy debate, after Pelosi and company went on vacation.

http://www.foxnews.com/urgent_queue/index.html#ed5ffde,2008-09-22

Urgent: Conservative GOPers to offer alternative financial crisis plan
Per Pergram-Capitol Hill
Members of the most-conservative bloc of Republicans in the Housethe Republican Study Committee (RSC) have called an emergency meeting tonight at 5:30 pm et in 2456 Rayburn.
There is broad opposition to the plan the Democratic Leadership is drafting as well as the special powers portion proposed over the weekend by Treasury Secretary Hank Paulson.
Fox has learned that the RSC is crafting a completely new alternative to the leadership bill (which should hit the floor later this week) as well as proposed amendments tailored to water down the Paulson plan.
Alsowe are interview Rep. Mike Pence (R-IN), one of the ringleaders of the RSCand someone who is adamantly opposed to the planaround 2:20 pm et (on tape) at the Will Rogers statue in the Capitol.

[Talismen]

Who didn't see this coming?

http://townhall.com/blog/g/18a7e1ef-2cf4-4b3a-88d9-91156b45b415

Monday, September 22, 2008

ACORN Wants a Bigger Bailout

Posted by: Amanda Carpenter at 6:03 PM


ACORN, a government-funded non-profit that seeks to install low-income persons in homes they can't afford and has a disturbing record of voter fraud, wants a bigger bailout.

Of course they do. $700 billion just isn't enough.Cue their press release:
 

"The Bush plan calls for spending at least 700 billion taxpayer dollars to bail out Treasury Secretary Paulson's former colleagues on Wall Street, who fueled the current crisis, but does not devote a single penny to rescue American homeowners who were victimized by the predatory lending of these same institutions," said Maude Hurd, President of ACORN.

We have ACORN to thank for all the alarmist "NO REDLINING" activities that have gone on over the past 15 to 20 years. It was ACORN that lobbied (and continues to lobby) congress and the WH to force lending institutions to give loans to those who more than likely cannot afford them to begin with...all because the people are of a non-white ethnicity or are in a low-income bracket.

That's like making someone buy a new car for a guy on life-support....because it will make him "feel" better.

*huff

[NosferatusCoffin]

Actually, the main reason they are screaming for more is that will give them a bigger slice of the pie....

[Old Fart]

http://www.post-gazette.com/pg/08265/913529-373.stm
Crony capitalism
The Democrats are good at the crony part
Sunday, September 21, 2008
By Jack Kelly, Pittsburgh Post-Gazette
Lending money to people who probably won't pay it back isn't good business.

Jack Kelly is a columnist for the Post-Gazette and The Blade of Toledo, Ohio (jkelly@post-gazette.com, 412-263-1476).If you wrap crummy loans in a clever package, they're still crummy loans.

Your typical Wal-Mart shopper understands this. But the Masters of the Universe on Wall Street and in Washington evidently didn't.

There are a lot of people to blame for the subprime mortgage crisis.

The Federal Reserve Board under Chairman Alan Greenspan (1987-2006) pursued what seems in hindsight clearly to have been way too loose a monetary policy. Banks were awash with money to lend and got careless in how they lent it.

Ostensibly to aid the poor and working class, the Clinton administration and Congress encouraged lenders to give mortgages to bad credit risks. The combination of easy money and the expansion of the number of borrowers unable to repay their loans sent housing prices through the roof, creating the bubble whose bursting has led to this crisis.

Congress in 1999 repealed the law that established a bright line between commercial and investment banks. This meant bad investments by banks could jeopardize depositors.

Wall Street created "derivatives" which multiplied profits in good times, but which also multiplied risk if there were defaults.

Most important was corruption and mismanagement at the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac), which together controlled 90 percent of the secondary mortgage market.

Once your bank has lent you money to buy a house, it can't lend the money again until you pay it back. But if your bank sells your mortgage, it can make another loan right away. Without the secondary market, most of the funds for home mortgages would dry up.

Fannie and Freddie went broke because they bought billions of dollars worth of subprime mortgages, on which borrowers defaulted when the housing bubble popped. Fannie bought most of its bad mortgages from Countrywide Financial, whose CEO, Angelo Mozilo, gave sweetheart loans to senior executives of Fannie Mae.

Fannie and Freddie cooked their books so senior executives would be paid millions of dollars in bonuses to which they were not entitled. Inadequate regulation kept the book-cooking from being discovered until the crisis had become a catastrophe.

President Bush proposed regulatory reforms in 2003, but Congress took no action. In 2005, John McCain and three other GOP senators proposed a strong reform bill. It died when Democrats threatened a filibuster.

Democrats opposed reform in part because they feared it would mean fewer loans to poor people.

"Fannie Mae and Freddie Mac are not facing any kind of financial crisis," Rep. Barney Frank, D-Mass, told The New York Times when the Bush bill was introduced. "The more pressure there is on these companies, the less we will see in terms of affordable housing."

Democrats and some Republicans opposed reform in part because Fannie and Freddie were very good at greasing palms. Fannie has spent $170 million on lobbying since 1998 and $19.3 million on political contributions since 1990.

The principal recipient of Fannie Mae's largesse was Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee. No. 2 was Barack Obama.

Mr. Dodd was also the second largest recipient in the Senate of contributions from Countrywide's political action committee and its employees, and the recipient of a home loan from Countrywide at well below market rates. The No. 1 senator on Countrywide's list? Barack Obama.

Fannie Mae CEO Franklin Raines was forced to resign in December 2004 because of "accounting irregularities." The Washington Post reported July 16 that the Obama campaign has called Mr. Raines "seeking his advice on mortgage and housing policy matters."

Mr. Obama appointed Mr. Raines' predecessor, James Johnson, as head of his vice presidential search committee until he also was implicated in "accounting irregularities," and it was revealed he'd received cut-rate loans from Countrywide.

Chicago billionaire Penny Pritzker, head of Mr. Obama's finance committee, chaired the now-defunct Superior bank when it began to cook the books to conceal losses from subprime mortgages. The holding company her family owned collected $200 million in dividends on phony profits.

The trouble with crony capitalism isn't capitalism. It's the cronies.

First published on September 21, 2008 at 12:00 am

[Talismen]

Kevin Hassett at Bloomberg chimes in:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0

(snip)

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.


Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

[Talismen]

At least he had the spine to actually say that the dems aren't interested in saving the businesses that provide jobs in this economy.

Businesses are bad...bad businesses!!!!
Bad rich men...bad!


http://www.foxnews.com/urgent_queue/index.html#3dd5fb64,2008-09-23

Hoyer: "Our intent is not to save Wall Street"
Tuesday, Sep. 23 2008


At his on-the-record, but off-camera briefing with reporters this morning, House Majority Leader Steny Hoyer (D-MD) declared that "our intent is not to save Wall Street" with the pending financial rescue legislation.
Hoyer pointed out that the real goal here is to save working class people. But when I pressed him on this point...considering the fact that working class folks would get smoked if Wall Street liquefies, he acknowledged that there would be a trickle-down effect.
Hoyer conceded that the Democratic Leadership was a little boxed in with this...since Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke came to the Capitol Thursday night for a grim conclave to describe how bad the fiscal problems were.
"The Administration has said we've got a problem. And if you don't act, it's going to be a bigger problem."
Hoyer went on to say that "I don't think there is any Member comfortable with this request."
Hoyer then essentially implored the President to use his bully pulpit to help pass this plan.
"I would hope the President would go on television" to explain the severity of the situation.
"He spoke in the Rose Garden for about 120 seconds," said Hoyer. "He echoes the words of Herbert Hoover."
Hoyer also remained hopeful the bill would be ready Thursday or Friday. And he added that work was still underway on a temporary spending bill to keep the government running past September 30 and speculated Congress would be in session this weekend.
Hoyer said there had been no discussion yet about how to handle Rosh Hashana next week for Jewish lawmakers.

[Covertness]

I talked to my Mom about this crisis last night.  She's a Certified Financial Planner for a large investment firm and knows more than I about wall street, stocks and bonds, et al.  She says that this bail out while unfair to John Q. Taxpayer is necessary to avoid going into another Depression. 

My Mom's a smart woman and I usually take her advice when it comes to investments and such.  However, I disagree with her on this one. 

Here's the deal.  I invest my money in company ABC and that company goes under and I lose my investment.  Who compensates me for making a bone headed investment decision?  Nobody.  Sucks to be you Mike, spin the wheel and try again.  So now we have mister CEO and his board of investors making stupid investments with the money they are entrusted with.  At the same time they are compensated in the tens of millions of dollars for handling this trust.  They got their money and lost "our" shirt and we have to bail them (read us, the average tax-payer) out. 

Fuck that, I'm with Newt Gingrich on his solution.  Except that I would seize all the assets of these CEO's and their board of investors, sell them and pay off the national debt.  Yes, that would include their dog spot, and their first born if I could get away with it. 

[Talismen]

I talked to my Mom about this crisis last night.  She's a Certified Financial Planner for a large investment firm and knows more than I about wall street, stocks and bonds, et al.  She says that this bail out while unfair to John Q. Taxpayer is necessary to avoid going into another Depression. 

My Mom's a smart woman and I usually take her advice when it comes to investments and such.  However, I disagree with her on this one. 

Here's the deal.  I invest my money in company ABC and that company goes under and I lose my investment.  Who compensates me for making a bone headed investment decision?  Nobody.  Sucks to be you Mike, spin the wheel and try again.  So now we have mister CEO and his board of investors making stupid investments with the money they are entrusted with.  At the same time they are compensated in the tens of millions of dollars for handling this trust.  They got their money and lost "our" shirt and we have to bail them (read us, the average tax-payer) out. 

Fuck that, I'm with Newt Gingrich on his solution.  Except that I would seize all the assets of these CEO's and their board of investors, sell them and pay off the national debt.  Yes, that would include their dog spot, and their first born if I could get away with it. 

I totally agree!

Rush was talking this morning about how Fannie and Freddie (back in the Clinton admin) were encouraging banks (who must comply with the Community Reinvestment Act) to make those risky loans, so they could buy them up, and increase their portfolios.

That's all part of this too.

That damn Community Reinvestment Act is nothing more than a social experiment forced onto the banking system by the federal government. In the old days, if you didn't have the funds, or your credit rating sucked, you didn't get the loan...it was that simple. Now - if you live in a shoddy house, and yet want a HELOC (home equity line of credit), and you have enough money to make the payment, but your credit isn't good...you'll probably get the loan. All because "lower income" families should be given a "chance"....

BS!!!

We have the CRA to thank for that.

[Talismen]

Newt is at his best, when he's tackling things like this.
If McCain wins, he needs to give Newt a cabinet position.

http://www.usnews.com/blogs/capital-commerce/2008/9/23/newt-gingrich-kill-the-paulson-plan-hard.html

Newt Gingrich: Kill the Paulson Plan. Hard.

September 23, 2008 01:56 PM ET | James Pethokoukis


I just got back from a Newt Gingrich press conference where I had a nice back-and-forth dialogue with the former Speaker of the House about the Paulson Plan, which he totally hates. A few quotes and Gingrichian observations:

1) He called it a "stupid plan" that looks like it had been designed by autocrat Vladimir Putin. He also said it will be a "nightmare" to implement and full of corruption.

2) He said the Paulson Plan would be a "dead loser" on Election Day that will "break against anyone who votes for it." It will hurt even worse with the 2010 election once Americans see what a drag it is on the economy when implemented.

3) He recently chatted with economic historian Alan Meltzer who advocated doing nothing rather than implanting the Paulson Plan. Meltzer apparently joked to Gingrich that this was about the third time he had seen Wall Street scream "the apocalypse was nigh" only to have the economy keep right on chugging along.

4) Gingrich thinks that if the Paulson Plan isn't passed by this weekend, it is dead and the White House better have a Plan B, economic-growth package ready. Right now, he still thinks it has an 80 percent chance of passage, partly because of Paulson's apocalyptic tone that if a bill isn't passed, "the whole world will end on Tuesday."

5) He advises McCain to play the maverick and come out against the Paulson Plan. Then it will be the Obama-Bush plan.