This would be your share of the $700 B he wants to use to buy back the bad investments his life-long pals on Wall Street made in mortgage backed securities and other investments they really didn’t understand, beyond recognizing an opportunity for making a easy buck. By-the-way, your spouse and each of your children owe $2300 also. Actually, scratch that; you and I won’t pay anything; we don’t have the $700B so we’re borrowing it. Only your kids, and their kids, will get stuck with the tab. Nice legacy.I’ve been wanting to write about this for days but who knows what to say? It’s changing minute-by-minute, and the whole thing is unbelievable. Not only is no one taking the blame, the people responsible – financial executives, Congress, and the regulatory agencies – are basically saying, “who could have foreseen such a situation?” Well, I did, for one. Not that I have any expertise or a crystal ball, but the major business books and economic pundits have been warning about something like this happening for years. There were even funny emails in broad distribution about the housing bubble; my favorite was the roller coaster view of housing prices.
So now the guys who got us into this mess want to help us out. It’s not so much a loan as extortion: “Lend us the money – now, without oversight, debate, or controls, no promise of success or payback (but with immunity from future liabilities) – or we’ll have our friends bring down such a financial shit storm on your heads you’ll wish you had.”
Fortunately, it looks like Congress has actually grown a pair since they were last asked to consider anything of importance, and may demand a different approach in which we the people at least get some equity in the firms we’re bailing out. I’m guessing some variation of the plan Senator Dodd put forth will be the final word.
Unfortunately, first we’ll have to listen to a week or two of Congressional hearings in which, Captain Renault-like, they express, “shock!” at the discovery that there was gambling going on below Canal Street.
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41 comments:
Bravo. Glad I'm not the only angry citizen out here. These guys have made uber-fortunes with no concern for anything but their annual bonuses. If we're forced to bail them out for the security of the global economy, we absolutely have to attch some strings...including salary caps. And...while I'm not big on lots government regulations, it appears that these boys need some adult supervision.
Just lucky I'm not trying to retire anytime soon...Harumph.
Well done Dennis. You're on to something here. Frankly, I don't know a Credit Default Swap from a table saw but I can recognized bullshit when I hear it. The notion that we should give these guys $700B with absolutely no strings or accountability is absurd on its face. I love the arguement that if we put salary caps on these guys, they'll leave. Really? Promise? These are the guys that got us in this mess. Find some way to put them in prison for all I care.
It does look like congress will pass something but it will have oversight, strings, and accountability. I don't see any way out but this proposal. If money freezes up, the economy will collapse. They shouldn't get a free ride at this however.
F^*%#m! BAIL OUT? I'M THINKING MORE LIKE JAIL TIME. THIS IS AN EASY ONE. THE MARKET CRASHING DOESNT COST ME A CENT. THE BAILOUT COST ME $2300. CRASH AWAY BOYS. IN THE 70'S CHRYSLER GOT BAILED OUT. THEY STILL HAVNT MADE A QUALITY CAR. THE POSSIBILITY OF FAILURE IS A HUGE STIMULANT WHICH WE'V REMOVED FROM AMERICAN BIG BUSINESS. YET MOM& POPS DEAL WITH IT EVERYDAY.
THE ARRESTS OF REALESTATE FIRMS & THEIR BANKERS SHOULD CREATE NEW JOBS BY INCREASING THE NEED FOR MORE JAILS & PEOPLE TO STAFF THEM. THE HOUSING INDUSTRY DOESNT NEED HELP,PEOPLE BUYING HOMES DO.
$700 BILLION FOR A WAR BASED ON A LIE & NOW ANOTHER $700 BILLION TO BAIL OUT THE PEOPLE THAT PROFITED FROM THE LIE, NO WAY. I LOVE MY GRANDAUGHTER TOO MUCH.
THE GOVERNMENT,DEMOCRATS & REPUPLICANS,KNOW THEY ARE DEALING WITH THE BLINDEST SAPS ON EARTH. THEY ARE GOING TO KEEP TAKING TIL WE STOP THEM.
NO ONE BUY A NEW CAR NEXT YEAR. WATCH HOW QUICK "CHANGE" HAPPENS.
McCain has just suspended his campaign to return to Washington. He has asked Obama to do the same. This sounds like a logical step as it appears that something needs to be done or the economy may tank. Hopefully a bipartisan approach will protect the American taxpayer while avoiding rewarding the CEO's etc. who contributed to the current crisis. We need to stabilize the economy first then assign blame when we have time to do so. Kudos to the candidates for identifying how much bipartisan work is needed to make the current proposal workable. It appears they may actually be thinking about the country first. Too bad it takes a crisis like this to jolt the Congress into action. Maybe something positive can come out of this crisis.
As much as I don't like the attitude and plan of the bailout esp with a gun to the head, I also don't like the idea of the government becoming owners in American busines.
I have some ideas, I know simplistic, but they approach the problem from the homeowners postion not wall street. Here goes...
My understanding of the bailout is to pay for the foreclosed mortgages due in large part to adjustable rate mortgages. The mortgages that banks were to piggish to refinance so homeowners could afford to keep making payments at lower rates.
Additional fear is that there will be a wave of more of these kinds of loans going in to default. Creating more foreclosures and falling home prices.
REFINANCE ALTERNATIVE TO BAILOUT
Provide funding to Fanny Mae & Freddie Mac to refinance current adjustable rate mortgages.
Out law any future adjustable rate mortgages .
The new mortgages would have a fixed rate fee. At Prime plus X percentage amount no greater than X percentage amount. (Two or three percent above prime.)
The new mortgage would only be to pay off the current first at it’s current balance and closing costs. No payoffs of credit cards or cash at closing to owner or any other would be allowed.
Any licensed mortgage broker could submit these mortgages but would be limited to say 2 percent or X dollar amount per loan for fees.
No appraisal would be required. (Reason listed under benefits.)
To qualify owner must be employed and debt ratio / show ability to pay.
Mortgage holders that are currently delinquent or in foreclosure should be encouraged to apply as well- if due in large part to a current adjustable rate mortgage that has adjusted beyond homeowners ability.
If approved the new mortgage would include past due amounts limited to what the payment would have been at the new fixed rate. No late fees or legal fees to be included.
Again, these loans would be written without appraisals.
In all cases all property taxes to be escrowed with no exceptions.
In all cases each loan would have a built in PMI of .001% per $100K to be paid the Federal Reserve. (This is about $8.35 per month per $100K per loan.)
BENEFITS
This plan general in nature but meant as a direction would provide the following:
Homeowners will not only be able to keep their homes but stop the increase number of foreclosures and provide stability in housing prices.
By using the current mortgage as the homes value and not requiring a home appraisal this would assist in stabilizing home values.
Puts the homeowner in the position to be proactive.
Allowing mortgage brokers to submit the loans will help to generate income. At the same time limiting the amount of money they can make on any given loan. (In “boom times” this might not have been appealing but should be now.)
Escrow of taxes helps to insure communities that they will not lose revenues and therefore not have to make cutbacks in Police, Fire, and City services.
Built in PMI to be paid to Treasury department helps to build fund for those that do default.
Main street (American homeowners) are the ones that benefit not Wall Street.
Greenspan was so wrong in the 90's and Bernanke is equally as wrong today. Let's be honest, when has the Fed cared about Joe and Jane Working Class American?
We were snookered in the 90's and now they are trying to do it again in 2008.
Congress better do the right thing. They screwed up everything else!
I read this quote by Paulson in the 9/29 Fortune (given before the most recent events):
"When there is intervention, I really believe the shareholders need to lose. I don't know how you canput government money in and protect them."
What changed?
Like Global Warming, this crisis will probably be denied as having been caused by people. At least by those with there hands in the cookie jar.
Now, let's see, we invaded a country that turned out to be holding a gun loaded with blanks. We've compromised our constitutional rights. Now we have dug ourselves into a hole up to our necks, dragging the rest of the world into an economic abyss. Are we having a crisis of leadership? Who is the greater evil, the White House or Congress? Is failure an orphan?
McCAIN SUSPENDS CAMPAIGN TO GO BACK TO WASHINGTON OVER CONCERNS FOR THE ECONOMY & ASKS OBAMA TO DO THE SAME. TRUE,TO SOME EXTENT BUT PLEASE, GIVE ME A BREAK. HE SUSPENDED THE CONVENTION OVER CONCERNS FOR A HURRICANE BUT YOU DIDNT SEE HIM IN TEXAS MAKING SAND BAGS.
FOR ONE, HIS MAJOR CONCERN IS THAT THE BAILOUT WILL DIECTLY EFFECT CINDY'S SEVEN HOMES. SECOND HE'S STARTING TO TRAIL IN THE POLLS. IF OBAMA DOESNT SUSPEND HIS CAMPAIGN JMc CAN USE THAT AGAINST HIM. THIRD,IT GIVES PALIN MORE TIME TO HID WHILE SHE GOES TO SCHOOL. AND LASTLY,JMc'S NEXT SHIPPMENT OF Q CARDS GOT LOST IN THE MAIL THUS DELAYING HIS ABILITY TO GIVE ANYMORE SPEECHES.
BTW,ACCORDING TO CHRIS ROCK,AFTER WATCHING THE PALIN MOOSE HUNT,MICHAEL VICK WANTED TO KNOW WHY HE WAS IN JAIL.
McCain called for a suspension of campaigning and canceling the debate after Obama called him and suggested that they issue a joint statement calling for bi-partisan support for a solution.
Mr. "the economy is not my strong suit" is not exactly going to roll up his sleeves and resolves this. It is just a politcal move. But a good one to put Obama on the defensive.
Dennis is correct about many people have seen this coming. It seems absurd to just say to Paulson, here is $700 billion, spread it around Wall Street and get this fixed. Although I am sure neither Paulson nor Bernacke are sure how to go about trying to pull the chestnuts out of the fire.
Paulson did reassure us on Meet the Press that the financial system is sound because the American worker is the best in the world. It must mean that the problem with the economy is too many foreign workers.
I say no bailout just deport.
Is McCain afraid to debate Obama? Is that the reason for canceling the debate Friday?
Is this another example of his “hair trigger” decision making?
THE DEBATES WILL BE KENNEDY VS NIXSON REVISITED.
BTW SPEAKING OF CHRYSLER. WHILE WE WERE LOOKING THE OTHER WAY AT THE $700 BILLION, CONGRESS TODAY SENT THE BIG THREE AUTO COMPANIES $25 BILLION FOR THEIR BAILOUT. IF WE'R LUCKY THEY'L USE THE MONEY TO BUY HONDA OR TOYOTA.
How will this ripple through the markets? Inflation by printing money. The dollar will further depress. Oil will go way up. What else?
The immediate problem is the credit markets are frozen. It is impossible to get a loan. Banks will not even loan money to other banks. If nothing is done the economy will come to a screeching halt. There will be a massive loss of jobs, retirement plans will go up in smoke, foreign countries will withdraw their investments in the USA and things will go to hell in a handbasket. If the government buys the 5% of mortgages that are expected to fail (700 billion dollars), the credit crunch will ease, the economy will move forward, people will continue to work, and hopefully regulations can be put in place to prevent this from happening again. The Congress is working on safeguards to protect the taxpayer. The gov't will buy the mortgages for 10 cents on the dollar and probably make a profit when the real estate is purchased in the future. The Savings and Loan bailout years ago actually ended up making money for the US treasury. Now is not the time for paralysis by analysis. It is the time to roll up the sleeves and get something done that helps the country. We have identified the problem, act responsibly, face it headon and fix it! There will be plenty of time for second guessing and playing the blame game after the crisis is averted. Wait too long and the crisis worsens exponentially.
I think McCain's move yesterday is one of the more craven politcal acts in recent history. Rather than accepting Obama's proposal to issue a joint statement of support and concern for the process congress is going through now, he decides (10 minutes after telling Obama he'll consider it) to go to Washington to take credit for a product on which he had no influence. Every person on the hill (R and D) says that bringing presidential politics into this process will not be helpful. Based on his performance on this issue in the past 10 days, its clear he doesn't have a clue what's going on and will bring nothing to the table in Washington. He's not even on any of the committees considering this leglislation. What does he specifically think he's going to do other than grandstand?
This has more to do with his deteriorating poll numbers and the possibility that Palin is not ready for the debate with Biden (an idea from Bob Shieffer) than with Country First.
as I understand it, doesn't the $700B represent 5% of the outstanding mortgages and that the gov/we will be buying theses mortgages at 10-20 cents on the dollar? Looking at it that way I dont see a problem.
JB -- I think that is approximately correct, and at the risk of sounding like an indecisive, spineless wimp, whose opinion blows in the wind, the fact that Warren Buffett is now strongly supporting the Paulson plan makes me feel much better about it.
Birdman -- i can no more see into John McCain's heart than you or David Letterman can. i happen to think the debates should go on, but why assume the worst in this man who has sacrificed more for his country, and taken more political risks on behalf of doing the right thing, than any other living politician? isn't that the "old politics" Obama so eloquently decries?
Dennis, don't you think his selection of VP stains his judgement if he is thinking about his country first? She was a political choice, not the best person for the pinch hitter for President.
The dynamics and ramifications of being a prisoner of war are also beyond the scope of our ken. We can appreciate the sacrifice but, in and of itself, it is not the touchstone for Presidency. If service on the battlefield was a trump card, the VA would be better funded and administered. We don't owe anyone the position of President. We do owe it to the nation and future generations to vote for the person who, in our minds, best fits the bill.
That said, who, who would be President could possibly be without serious baggage? Between ambition/ego, compromises, and the very nature of politics, purity is not the issue. Hypocrisy is.
I'm wasn't talking about who should be President in the comment above. What I'm saying is (as I believe your man Obama is saying) that it is counter-productive to be constantly throwing stones at and questioning the motives of, your political opponents. All that does is make the bipartisan compromises that will be necessary to solve the nation's problems more difficult to achieve.
I listened to Joe Lieberman speak on Wed evening. He stated that both Pelosi(House) and Reid(Senate) told him that the bailout would not pass without Republican support. Lieberman stated that McCain had a proven track record of building bipartisan consensus. McCain should be applauded for recognizing the severity of the credit crisis and putting the needs of the country above his own. Contrast McCain's response to Obama's--"I am preparing for the debates. Call me if you need me".
Each party has worked out a strategy for election in accordance with the rules of the game. What might not appear to be productive is, for the most part, intentional. The founders, whether by choice or happenstance, have left us with the path of least resistance being adversarial party interaction rather than quick solutions to legislation and election. Our strength is that we play this game according to rules. Our weakness is that no one was guarding the hen house.
But, yes, I agree it would be better for the voters if they stuck to issues rather than rabbit punches.
Washington and Adams were both adamantly opposed to political parties – we have Jefferson to thank for this. The most obnoxious members of each party today are the ones who are most partisan. The polarizers do what they do, but that doesn’t mean the people have to follow that lead. Wouldn’t it be great if come November 5th there were two men the nation could look up to and respect? Wouldn’t that be so much better for all of us?
Woody, like me, you are a product of the slop bucket we eat out of. Your sense of McCain being a great man for rolling up his sleeves is met by my feeling that candidates who get involved with this will only politicize the process. That McCain is stalling for time and playing as if he is the great man in dealing with the issue. I feel as Obama, that this is the time for the candidates to stand up before the electorate and prove they understand the situation. Do you believe John McCain is needed other than for his vote? That he is the only scout to lead us through the bipartisan maze to the final solution? You see a hero and I see an opportunist. I see a pragmatist and you see a self-serving politician.
The only people involved in all of this are politicians. I don’t know where you get these special insights into McCain’s motives, but they seem very clear and unambiguous. Are you channeling Shirley McLain possibly?
I trust neither. I do believe each will act to their advantage. McCain needs to disassociate himself from failures of the current administration and appear knowledgeable on economic issues. The last poll I heard put the current crisis as the number one issue among voters. Those polled felt Obama is better at dealing with it. Obama wants to press his advantage, McCain wants to look hands on. The one thing we can be certain about is the underlying motivation for each is to get elected. Both have clawed their way to get this far. The very nature of politics is duplicity: pleasing conflicting interests.
I'm sorry...I do have great respect for John McCain and his history of service for this country, but that ended a long time ago when he decided to thwart all of his ideals that made him so respectable, to follow Karl Rove-style politics in order to get elected. He has flip-flopped, side-stepped, and back-pedaled more in the past 9 days than I've EVER seen. And this latest "move" that WE should accept a cancellation of the debates so that he can "save" the day, on a committee which he doesn't serve in Congress, instead of being at the 1st debate of the most important election of this century, is transparent, and desparate, and pathetic. He said he had to "rush to Washington," but only after doing a Katie Couric interview and attending a Clinton Global Initiatve function? When he got to Capitol Hill, the committee that had been working on this move day-and-night behind closed doors, was meeting and McCain wasn't even allowed in! Obama was right....the President of the US has to be able to handle multiple, significant issues at once...especially when one is occuring at 9 pm on Friday evening. And the suggestion that the VP debate perhaps won't happen at all due to re-scheduling? Seriously...pathetic is the only appropriate term...
Pat Buchanan said that when Obama went to McCain for a joint statement that put McCain in a bind, so he chose to counter by suspending campaigning and going to DC to gain the upper hand.
Maybe there are arms he could twist to reach a deal, but it was not going to be with the hard right in the House who can't stand him. They appear to be the obstacle to the deal.
The White House had discussed and rejected before what is the new house gop plan.
There are some great dirty politics going on in Northern Va. People are getting voice mails announcing an absentee ballot will be arriving in the mail. The absentee ballot is bogus so if you send it in, you will not get the ballot. This is the area of Va that Obama has to take with a high turnout to win the state.
Can't believe it would be Republicans doing this, must be the Bob Barr crowd.
Can't anyone see what's happened? It's May Day, Sept '08. The Bolshevik filth has won in a bloodless, financial coup.
America (the America invented by MEN - T. Jefferson & Co.) died without a whimper.
The pustules who get teary-eyed at the Marxist dirge "Imagine" have made the lyrics reality.
Now that the pillars of the American economy have been nationalized, we're officially a SOCIALIST state, comrades!
DO YA GET IT YET!?!?!?
Masses of CSI-watchng imbeciles, certain that white-collar vilains have fleeced them, scream for the FBI (the same thick-tongued brown shirts who missed 9/11 and produced the WACO extravaganza)to dust for fingerprints and prosecute... SOMEBODY! In their logic-free TV and movie based world, there simply MUST be a villain -- surely a white, rich villain -- for Keifer Sutherland to punsih.
In truth, the villains are legion. The sit-on-your-ass-link-arms-and-sway-as-you-sing-Woody-Guthrie-tunes crowd are the villains. The ones who believe EVERYONE -- regardless of effort and income, is ENTITLED to a 3,500 sq. ft crib and 2 Escalades.
The kumbaya legislators relaxed the lending regs and human greed did the rest.
Predatory lenders? BULLSHIT!
How about greedy, stupid borrowers? Morons making $90k who had to live LARGE and thought they could swing a $1.7 million home.
Wall St. deserves NO bail out. Neither does John Q. Jackass Public. Let him foreclose and go swing a mop at Mickey D's - it's more in keeping with his talents and intelligence.
How about a bailout for people who live within their means?!? Hmmm?
Obama/McCain? Two empty-rhetoric bread-and-circus, system-puppet frauds. Ron Paul was the only choice, but he was denied a union card by GE, Disney, Newscorp, Viacom and Time Warner.
The American show is OVER, folks. Go home to your collective. LIBERTY has left the arena.
signed, Fistinyoface
The McCain-Obama debate will take place tonight as planned. This must mean that significant progress in the rescue plan has occurred. Hopefully the public will be protected and the Wall Street fat cats will not get richer.
I liked Wanda Skyes' line about the bailout. If these rich CEO's are getting government handouts then they should be treated like other folks on welfare.
No private pools, their pools should be open to the public like all the pools in the projects are. Why not, they are getting more government money than somebody in the projects.
I think she is on to something.
Finally, a voice of reason. thank you Fistinyourface.
Last week Paulson came out with his bailout plan.
On Monday or Tuesday of this week McCain was asked if he supported the plan.
His response; “I haven’t had time to read it”.
Senator, it is 2 and a half pages long.
When do you think you could get around to reading it?
Senator Dobbs said yesterday that the plan was for the most part worked out until McCain rode into town.
Regarding the fact that the dems wanted a majority of GOP to support the bailout was because they wanted to make sure that no one could have situational amnesia in the future about why they voted for the bailout.
I still believe a plan should be written from the point of view of the homeowner and not Wall Street. (Trickle up instead of trickle down.)
However or whatever that would look like, the homeowner would have to pay some penalty and get relieve from adjustable rate mortgages. The homeowner would have to take the incentive to seek the new loan.
And regulations would be written to limit the profit to the lenders.
POLLS: Small article to day in the paper from the PEW Research Center may increase pressure on polling organizations to include people who use only cell phones in their surveys.
Pew found that of people under age 30 with only cell phones, 62 percent were Democrats and 28 percent Republicans. Among landline users the same age, that gap was narrower: 54 percent Democrats, 36 percent Republicans.
Hmmmm, maybe the gap between BO & JM is greater than we think.
As usual, David Brooks, the liberals' conservative, sums it up for me and explains why, in 2000, I gave $1000 to the McCain campaign (full disclosure: the Bradley campaign, also). And how and why McCain is no longer that person.
http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/davidbrooks/index.html
Fenway -- my beliefs are almost exactly the same as JM's were in 2000. could you please send me some money?
(Chris?)Dodd indicated on the CBS Evening News that the American people didnt want to hear about bailing out Wall St. If he knows that then, who is he working for? Let it crash.
I agree that the bailout is complete insanity. However, I don't pretend to be economically savvy enough to know what the REAL ramifications could be without one? If Warren Buffett says we need it, then that's good enough for me!
However, I DO want to point fingers for a second, just to raise a question. Many here are saying that the banks should not be blamed for the # of people who got into loans over their heads (I agree on many levels). However, it was the deregulatory policies of the last 8-10 years that even ALLOWED it to happen. We now know that many lenders were ENCOURAGING policies for people to get larger loans than they needed. Should there still be individual accountability in accepting that loan? Sure.
Here's my simple question: If other areas of the private sector are held to regulatory standards for consumers (doctors, lawyers, etc), should the "experts" in the financial world also be held to standards that don't take advantage of the average consumer, in order to make more money? Can a doctor push un-necessary medications on you, the non-medically-trained consumer, and then say, "Well, you're the one that accepted them! Too bad that you now realize that you shouldn't have taken them!" It's an extreme analogy, I know, but the deregulatory legislation is what REALLY started all of this...
As a business owner who employes over 250 people the credit crunch is potentially fatal. I rely on loans for equipment and lines of credit to cover payroll when clients delay in paying.
So far no loans have been called and our line is still intact, but if those go away or we need to purchase new equipment then we are in trouble.
Lack of credit would kill any expansion. I am not Wall Street but a meltdown of the credit markets could force 250 people out of work.
Although I would have more time to play golf.
i'm just impressed you know the name Captain Reynaud.
thank you, but it's just age -- i even know he was played by claude raines.
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