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  • Conservatives are right, small government and deregulation work....

    Or maybe not...

    http://news.yahoo.com/s/ap/20080920/...ncial_meltdown

    Bush team, Congress negotiate $700B bailout

    By JULIE HIRSCHFELD DAVIS and DEB RIECHMANN, Associated Press Writers 56 minutes ago

    WASHINGTON - The Bush administration asked Congress on Saturday for the power to buy $700 billion in toxic assets clogging the financial system and threatening the economy as negotiations began on the largest bailout since the Great Depression.
    ADVERTISEMENT

    The rescue plan would give Washington broad authority to purchase bad mortgage-related assets from U.S. financial institutions for the next two years. It does not specify which institutions qualify or what, if anything, the government would get in return for the unprecedented infusion.

    Democrats are pressing to require that the plan help more strapped borrowers stay in their homes and to condition the bailout on new limits on executive compensation.

    Congressional aides and administration officials are working through the weekend to fill in the details of the proposal. The White House hoped for a deal with Congress by the time markets opened Monday; top lawmakers say they would push to enact the plan as early as the coming week.

    "We're going to work with Congress to get a bill done quickly," President Bush said at the White House. Without discussing specifics, he said, "This is a big package because it was a big problem."

    But lawmakers digesting the eye-popping cost and searching for specifics voiced concerns that the proposal offers no help for struggling homeowners or safeguards for taxpayers' money.

    The government must bail out the financial system "because if we don't, it will have a tremendous impact on American consumers, homeowners, taxpayers and the rest," House Speaker Nancy Pelosi, D-Calif., said at a citizens' workshop in San Francisco.

    But, she added, "We cannot deal with this unless this bailout helps families stay in their homes."

    Sen. Chuck Schumer, D-N.Y., called the plan "a good foundation," but said it was missing "some kind of supervisory authority, and some kind of protection for homeowners and taxpayers."

    The proposal would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue.

    "The American people are furious that we're in this situation, and so am I," the House's top Republican, Ohio Rep. John A. Boehner, said in a statement. "We need to do everything possible to protect the taxpayers from the consequences of a broken Washington."

    Signaling what could erupt into a brutal fight with Democrats over add-on spending, Boehner said "efforts to exploit this crisis for political leverage or partisan quid pro quo will only delay the economic stability that families, seniors, and small businesses deserve."

    Bush said he worried the financial troubles "could ripple throughout" the economy and affect average citizens. "The risk of doing nothing far outweighs the risk of the package. ... Over time, we're going to get a lot of the money back."

    He added, "People are beginning to doubt our system, people were losing confidence and I understand it's important to have confidence in our financial system."

    Neither presidential candidate took a position on the proposal. GOP nominee John McCain said he was awaiting specifics and any changes by Congress.

    Democratic rival Barack Obama used the party's weekly radio address to call for help for Main Street as well as Wall Street.

    "We need to help people cope with rising gas and food prices, spark job creation by repairing our schools and our roads, help states avoid painful budget cuts and tax increases, and help homeowners stay in their homes," Obama said. "And we must also ensure that the solution we design doesn't reward particular companies, or irresponsible borrowers or lenders, or CEOs, some of whom helped cause this mess."

    Their language reflected a tricky balance that politicians in both parties are trying to strike, just six weeks before Election Day: Back a plan that doles out hundreds of billions to companies that made bad bets and still identify with the plight of middle-class voters.

    Besides mortgage help and executive compensation limits, Democrats are considering attaching middle-class assistance to the legislation despite a request from Bush to avoid adding items that could delay action. An expansion of jobless benefits was one possibility.

    Bush sidestepped questions about the chances of adding such items, saying that now was not the time for posturing. "I think most leaders would understand we need to get this done quickly, and you know, the cleaner the better," he said about legislation being drafted.

    Treasury officials met congressional staff for about two hours on Capitol Hill on Saturday. Discussions centered on how the plan would work, and Democrats proposed adding the executive compensation limits and new foreclosure-prevention measures.

    Among the key issues up for negotiation is which financial institutions would be eligible for the help. The proposed legislation doesn't make it clear, leaving open the question of whether hedge funds or pension funds could qualify.

    The proposal does not require that the government receive anything from banks in return for unloading their bad assets. But it would allow the Treasury Department to designate financial institutions as "agents of the government," and mandate that they perform any "reasonable duties" that might entail.

    The government could contract with private companies to manage the assets it purchased under the rescue.

    Treasury Secretary Henry Paulson says the government would in essence set up reverse auctions, putting up money for a class of distressed assets — such as loans that are delinquent but not in default — and financial institutions would compete for how little they would accept.

    If enacted, the plan would give the treasury secretary broad power to buy, manage and sell the mortgage-related investments without any additional involvement by lawmakers. It would, however, require that the congressional committees with oversight on budget, tax and financial services issues be briefed within three months of the government's first use of the rescue power, and every six months after that.

  • #2
    The major problem with regulation is that it rarely is done in an efficient way. It usually winds up protecting inefficient businesses at the expense of consumers. It cost me more in absolute dollars (not inflation-adjusted dollars) to fly across the country in 1967 than it does now -- even with the increases in fares this year. While AT&T was allowed to have a monopoly, long-distance telephone service was exorbitant.

    Smaller government does seem to work for states. Those states with smaller governments seem to be growing and prospering, whereas states with high taxes and larger governments are facing high unemployment and economic decline.

    I have come to conclude that we need some regulation because a system based on full disclosure is impracticable. "Full disclosure" is impossible to make, and few people have the time or intellectual capacity to digest it. I have little doubt that many of the people who bought or refinanced houses in the last boom did not understand that they would face greatly increased payments within a short period of time, or that they were paying huge fees to intermediaries who were getting them bad deals or filing false documents. I also have no doubt that many of the borrowers were cheats or, at the very least, irresponsible.

    Unfortunately, regulation has a way of going overboard because of the politics involved. Long, involved public hearings and court challenges can cripple the economy.

    What is going on now with the bail-out plan illustrates another problem with regulation. The Democrats view this as an opportunity to give more benefits -- unemployment insurance payments, mortgage assistance -- to their constituents. They seem to think that the bail-out is a boon to all those investors who were irresponsible enough to invest in banks and investment banks. It purpose is to create liquidity so that businesses can get loans and jobs will be preserved. Those people who invested in financial companies have largely lost their money already. The companies have paid a high price for their stupidity, and the shareholders have suffered enormously.

    I do agree with reforms to executive compensation, however (but not as part of this bill). Incentive plans should be tied to long-term performance, not short-term results. Bad decisions come home to roost too slowly.
    Facts do not cease to exist because they are ignored. -- Aldous Huxley
    Two things are infinite: the universe and human stupidity. -- Albert Einstein

    Comment


    • #3
      What We Need To Know About The Bailout Plan
      Liz Moyer, 09.20.08, 1:08 PM ET

      Treasury Secretary Henry Paulson said Friday that there's a "bold" plan afoot in Washington to relieve banks of their toxic assets, and that details would be hashed out this weekend. Panicked stock markets fell in love instantly, even though the only certainty is that a plan will be expensive. Necessary, but expensive.

      Saturday, a brief proposal was unveiled by the White House: Price tag? $700 billion, paid for by expanding the ceiling on the national debt to $11.3 trillion. The Treasury would be authorized to buy and sell bad debt from banks as it sees fit, hiring the employees it needs to get the job done, as well as enlisting the help of outside firms. It would report to Congress on progress a couple times a year, and the entity would be chartered to run for two years.

      It's a bare-bones plan, one likely to draw criticism from lawmakers looking for more detail--and Democrats angling for a bailout for homeowners to go along with one for Wall Street. Expect grumbling and argument this week as Congress hashes out the particulars.

      As they do, we hope they ask the following 10 questions. Do you have questions to add? Post them in the comments section below. See earlier responses from readers.

      1. Who gets to participate?

      The outlines of the plan call for the creation of either a branch of the Treasury Department or an independent agency to buy or take on troubled assets, with the goal of either selling them at a profit later or working them off. In past iterations of this idea, like 1989's Resolution Trust Corp., failed institutions were the focus. The 1932 Reconstruction Finance Corp. lent $9 billion to ailing banks, thrifts, railroads, insurance companies and farm mortgage associations.

      This time, it looks like the government will take on assets from otherwise healthy institutions. But Paulson hasn't detailed whether it would be available to all 7,200 commercial banks and 1,200 thrifts or to just a portion of them deemed to be "at risk,"--or where that "at risk" bar would be set. Also, would the program welcome assets from investment banks (perhaps even the estate of Lehman Brothers? Lehman Brothers), hedge funds and other funds that have exposures? What about the private equity funds that have been buying distressed debts or foreign banks or funds?

      2. How much will individual companies be allowed to dump?

      Wachovia is said to be considering a "bad bank" for toxic assets, including some portion of a potentially lethal $122 billion portfolio of alt-A mortgages on its books. Citigroup is trying to work off $500 billion of its "legacy" assets. Paulson hasn't said what limits would be set for contributions from individual banks, if any. Does that mean banks could unload absolutely everything, or would they be required to retain some portions for their own books?

      3. How will the assets be priced?

      The new entity could buy the assets at a distressed price, but what would the price be? Collateralized debt obligations and mortgage-backed securities and their various iterations are sliced and repackaged so many times that one firm's holdings wouldn't necessarily match up with another's, making it impossible to just assign price marks per category.

      Merrill Lynch, for example, sold its $30 billion CDO portfolio in July for 22 cents on the dollar. That didn't spark a wave of CDO portfolio selling. Last year, E*Trade sold its $3 billion portfolio of asset-backed securities for 27 cents on the dollar, and ditto--no mass selling elsewhere. Another thought is that the government could run an auction, which would force banks themselves to price their assets.

      4. How open will the books be?

      Herbert Hoover's Reconstruction Finance Corp. kept its books open, listing the names of the banks that borrowed money and the amount they borrowed. It slowed bankruptcies down a bit, but the mere appearance on the list threatened a run on deposits, an erosion of confidence that was exactly the opposite of the agency's mission.

      Still, one of the problems of the current crisis is the lack of information about bank exposures. If the goal is to restore confidence and the efficient workings of the banking system, perhaps making the entity's portfolio an open book wouldn't be such a bad thing. Asset valuation information might even lead to a more robust secondary market to take some of these assets off the government's hands.

      5. Who will run it?

      There are plenty of bankers and finance types out of jobs these days. A few seasoned executives have landed at companies on shaky ground. That includes Robert Steel, who left the Treasury Department for Wachovia earlier this summer, Edward Liddy, this week named chief executive officer of American International Group, David Moffett, named head of Freddie Mac last month, and Herb Allison, named head of Fannie Mae.

      John Thain might be looking for a job after selling Merrill Lynch to Bank of America. Does Alan Greenspan need a hobby? There's no shortage of policy wonks and former and current regulators in the Beltway who could take on the task.

      6. How long will this thing be around?

      Paulson's initial proposal gives the program two years to get the job done. That seems ambitious. The RTC lasted six years: from 1989 until 1995, when its authority was transferred to the Federal Deposit Insurance Corp. During its life, the RTC closed or resolved 747 thrifts with total assets of $394 billion. The Reconstruction Finance Corp. lasted 21 years; after the 1930s, much of that was dedicated to the war effort. It was abolished as an independent agency in 1953. One of its affiliated entities, the Federal Deposit Insurance Corp., had its 75th anniversary this year. FDIC chairman Sheila Bair was in New York Friday, ringing the opening bell at the New York Stock Exchange.

      7. How much will a new agency cost taxpayers?

      Paulson's plan asks Congress for $700 billion, but as everyone knows, no initial government estimate ever jibes what the ultimate cost turns out to be. The RTC, initially funded with $50 billion, ended up costing taxpayers $160 billion. The Treasury has already pledged to inject $200 billion into Fannie and Freddie and $200 billion into AIG, plus a smattering of other spending. (It'll buy back more mortgage-backed securities from banks, it said Friday, for example). The out-of-the-gate cost of all these bailouts seems to be $1 trillion.

      8. Doesn't this make it hard to say no to other bailouts?

      Paulson refused to step in and save Lehman, insisting that just a week after seizing Fannie and Freddie, the government was no longer in the bailout business. Then a day later, the Treasury and the Fed were all over AIG--and now this. It doesn't take a great leap of imagination to assume the ailing U.S. auto industry might go and demand equal treatment. Homebuilders are hurting. Hey, how about homeowners? Paulson's plan is bound to be criticized for helping rich bankers out of a quagmire of their own making while leaving average Americans to pick up the tab.

      9. What happens next week in Congress?

      It's an election year, and Congress was expected to adjourn at the end of the week to go home and campaign. Now they face having to bomb through one of the most expensive pieces of legislation in U.S. history with one eye on the markets, another on the taxpayer and the clock ticking. To get it done, there will have to be compromises, most likely involving a big bailout for distressed homeowners for which Democrats are clamoring. There will also be hearings to probe the downfall of Lehman, and there are calls for investigating evidence of manipulative stock trading.

      10. Will this end the credit crisis?

      Stock investors certainly seemed enthusiastic about the plan Friday, driving the markets to erase all of their losses for the week. That may be the bounce in confidence Paulson was looking for, but there are more dark days ahead. Banks still face mounting loan losses, and the new entity isn't going to get off the ground quickly enough to prevent more write-downs.

      In the longer term, the creation of the entity will be accompanied by regulatory reforms and a likely reshaping of the way financial companies are regulated. Banks are reducing leverage and shying away from risk, which will restore stability but lower profits. Eventually, though, someone will innovate another product that will become the hottest thing on Wall Street. The only question at that point: Will regulators have enough determination to keep it in check?
      "Against the machinations of your enemies you can take defense, but against the stupidity of fools, the very gods themselves fight in vain" ~ Johann C.F. Von Schiller


      "Man once surrendering his reason, has no remaining guard against absurdities the most monstrous, and like a ship without rudder, is the sport of every wind. With such persons, gullibility, which they call faith, takes the helm from the hand of reason, and the mind becomes a wreck."
      --Thomas Jefferson

      Comment


      • #4
        Put a mortgage on the white house? I don't know much about economics but will that work lol?

        Comment


        • #5
          Economists see financial bailout as necessary

          By MARTIN CRUTSINGER, AP Economics Writer Sat Sep 20, 5:25 PM ET

          WASHINGTON - The economy could suffer a massive hangover from the government's efforts to rescue the financial system in the form of a soaring debt burden. But the alternatives look infinitely worse.

          The $700 billion the administration is seeking from Congress as the upper bounds of what it will need to take a mountain of bad loans off the books of financial firms is certainly an eye-popping figure.

          To get the funds to buy up the bad mortgage loans that have threatened to bring the financial system to its knees, the government will have to borrow. And that borrowing will come at a time when the federal budget deficit is already soaring.

          The deficit for this budget year, which ends on Sept. 30, is expected to rise to $407 billion, a figure that is more than double the $161.5 billion imbalance for 2007, reflecting what the economic slowdown and this year's $168 billion economic stimulus program are already doing to the government's books.

          The Bush administration is estimating that the deficit for the budget year that begins Oct. 1, which will cover the new president's first year in office, will hit $482 billion, a record in dollar terms.

          And that forecast doesn't include the $200 billion the administration committed to spending two weeks ago when it took over the nation's two biggest mortgage companies, Fannie Mae and Freddie Mac.

          And it doesn't have any of the $700 billion the administration is seeking to soak up the bad mortgage-backed securities that have been at the heart of the severe credit crisis the country has been struggling with since August 2007.

          The legislation Congress passed this summer that gave the authority to rescue Fannie and Freddie boosted the limit on the national debt by $800 billion to $10.6 trillion.

          The legislation the administration is now seeking to authorize the financial system bailout, according to a draft obtained by The Associated Press, would boost that debt limit to $11.3 trillion, up another $700 billion.

          It is the rapidly rising debt that is cause for concern. The government is already spending more than $400 billion a year just to pay interest on the national debt. The higher that debt goes, the higher the government's borrowing costs and the less it has to spend on other programs.

          Republican John McCain and Democrat Barack Obama are both running for president, making campaign promises about what new programs they will implement once in office, promises that could be severely constrained by the costs of a financial bailout.

          The escalating borrowing also means that the government is competing with the private sector for loans, driving up interest rates. And then there is the matter of the country's large trade imbalances which mean the United States has to borrow $2 billion a day from foreigners.

          Will foreigners still want to lend as much to the United States if there are concerns that all the borrowing could weaken the dollar's value against other currencies.

          But even with all these threats, economists said the government has to take decisive action because the alternative of letting the financial system slide into even deeper problems which could jeopardize the routine loans that businesses and consumers need was simply not an option.

          "It was critical to arrest the downward slide in financial markets," said Sung Won Sohn, an economist at California State University, Channel Islands.

          The dire situation was dramatically demonstrated this past week when the Federal Reserve, working with the central banks of other nations, poured billions of dollars into the financial system without any significant impact because of the fear keeping banks from lending.

          The financial system has already been staggered with $500 billion in losses from the mortgage mess and the International Monetary Fund has estimated the ultimate price could be $1 trillion.

          What the administration's plan would do is at least establish a price for the mortgage-backed securities, which at the moment no one wants to own.

          Officials who have briefed Congress on Treasury Secretary Henry Paulson's plan have suggested that one approach would be for the government to buy the toxic debt through a reverse auction process in which companies wanting to unload their mortgage-backed securities would propose a price to the government — say 50 cents on the dollar — and those offering the lowest price would win the bid.

          By establishing a price for assets no one currently wants to buy, it could allow a market to develop and allow financial firms to get on with the effort of taking their losses and getting the damaged assets off their books.

          "This could go a long way toward solving these problems," said Mark Zandi, chief economist at Moody's Economy.com, who has written a book on the mortgage meltdown.

          And the final cost to the government?

          No one knows for sure, but Zandi said if the experience with cleaning up all the assets left over from the savings and loan mess is any guide, it should be less than the $700 billion that the administration is seeking.

          In the S&L crisis, the government was able to recoup about two-thirds of its initial costs when it sold the assets it had obtained from the failed S&Ls.

          "Obviously there is a big upfront cost to taxpayers," Zandi said, "but the ultimate cost may be measurably lower."
          Facts do not cease to exist because they are ignored. -- Aldous Huxley
          Two things are infinite: the universe and human stupidity. -- Albert Einstein

          Comment


          • #6
            Originally posted by DAL View Post
            The major problem with regulation is that it rarely is done in an efficient way. It usually winds up protecting inefficient businesses at the expense of consumers. It cost me more in absolute dollars (not inflation-adjusted dollars) to fly across the country in 1967 than it does now -- even with the increases in fares this year. While AT&T was allowed to have a monopoly, long-distance telephone service was exorbitant.
            You are absolutely right about price controls not working. That is most definitely not the type of regulation that we need. I think what is needed is more oversight type regulation of the financial industry. It seems that people tend to lie about and hide the risks of teh securities that they are selling. That is what caused the current financial crisis. Some oversight is needed to keep people honest.

            Smaller government does seem to work for states. Those states with smaller governments seem to be growing and prospering, whereas states with high taxes and larger governments are facing high unemployment and economic decline.
            That is true, however in the case of the current financial crisis the lack of regulatory oversight of the financial industry has caused the government to become larger anyway through teh huge bailout.

            I have come to conclude that we need some regulation because a system based on full disclosure is impracticable. "Full disclosure" is impossible to make, and few people have the time or intellectual capacity to digest it. I have little doubt that many of the people who bought or refinanced houses in the last boom did not understand that they would face greatly increased payments within a short period of time, or that they were paying huge fees to intermediaries who were getting them bad deals or filing false documents. I also have no doubt that many of the borrowers were cheats or, at the very least, irresponsible.
            A bigger factor in the current crisis was the failure of financial companies to disclose the actual risk entailed in teh complex mortgage backed secrities (derivatives). Most of these securities were rated as being a low risk, yet in actuality they were pretty much junk because they were based upon mortgages that will go into default.

            Also, unscrupulous lenders contributed to this by writing risky mortgages to house-flippers and real estate speculators who provided no source of income and who were not even using the mortgage for a primary residence. When real estate prices go down on these type of mortgages, the borrower ends up upside down and it is easier for them to simply default (it's not even their primary residence anyway and they put no money down, so what do they have to lose other than credit score?). These were the tyope of loans that strted the wave of defaults. Of course when a bunch of homes go into foreclosure it tanks the real estate market and makes things rough for anybody who has to sell their house.


            Of course when the market is hot, those type of loans to speculators drive up real estate costs for everybody else, and sometimes regular homebuyers have no choice but to take some kind of ARM just to be able to buy a house in a high cost area.

            Unfortunately, regulation has a way of going overboard because of the politics involved. Long, involved public hearings and court challenges can cripple the economy.

            What is going on now with the bail-out plan illustrates another problem with regulation. The Democrats view this as an opportunity to give more benefits -- unemployment insurance payments, mortgage assistance -- to their constituents. They seem to think that the bail-out is a boon to all those investors who were irresponsible enough to invest in banks and investment banks. It purpose is to create liquidity so that businesses can get loans and jobs will be preserved. Those people who invested in financial companies have largely lost their money already. The companies have paid a high price for their stupidity, and the shareholders have suffered enormously.
            Hopefully the politicians won't go too overboard in trying to give away government money to earn political points. The current bailout plan will increase the budget deficit enough as it is.

            I do agree with reforms to executive compensation, however (but not as part of this bill). Incentive plans should be tied to long-term performance, not short-term results. Bad decisions come home to roost too slowly.

            While I think executive compensation is out of whack, I don't really think that it is the government's place to determine what a private company should pay it's executives. There do need to be limits on what executives should be able to do with company stock that they earn as part of compensation packages though.

            Comment


            • #7
              Chances are that the risks were disclosed somewhere in a 100-page prospectus. Very few people understood them. (Warrent Buffett apparently did.) The banks were surely aware of the risks, but misjudged how serious they were.

              Having experienced the crisis that spawned the RTC, I appreciated the risks entailed in making those loans and in buying property at inflated prices, so I did not invest in banks, investment banks, or residential real estate. But I am still getting clobbered, because of the economy's dependence on financial liquidity. So I don't think disclosure alone is sufficient in the financial industry. It is fine for businesses that are a small part of the economy, but not for banks and large players in finance.
              Facts do not cease to exist because they are ignored. -- Aldous Huxley
              Two things are infinite: the universe and human stupidity. -- Albert Einstein

              Comment


              • #8
                Big Pat,
                I haven't had the chance to locate the story but my wife saw a television news report 09/21 over the bailouts. Seems the article attributes it to legislation signed by Clinton. If so how does that jibe w/ your theory of the evil W and his gang of conservative cronies ?

                Comment


                • #9
                  Originally posted by BigPat View Post
                  Or maybe not...

                  http://news.yahoo.com/s/ap/20080920/...ncial_meltdown

                  Bush team, Congress negotiate $700B bailout

                  By JULIE HIRSCHFELD DAVIS and DEB RIECHMANN, Associated Press Writers 56 minutes ago

                  WASHINGTON - The Bush administration asked Congress on Saturday for the power to buy $700 billion in toxic assets clogging the financial system and threatening the economy as negotiations began on the largest bailout since the Great Depression.
                  ADVERTISEMENT

                  The rescue plan would give Washington broad authority to purchase bad mortgage-related assets from U.S. financial institutions for the next two years. It does not specify which institutions qualify or what, if anything, the government would get in return for the unprecedented infusion.

                  Democrats are pressing to require that the plan help more strapped borrowers stay in their homes and to condition the bailout on new limits on executive compensation.

                  Congressional aides and administration officials are working through the weekend to fill in the details of the proposal. The White House hoped for a deal with Congress by the time markets opened Monday; top lawmakers say they would push to enact the plan as early as the coming week.

                  "We're going to work with Congress to get a bill done quickly," President Bush said at the White House. Without discussing specifics, he said, "This is a big package because it was a big problem."

                  But lawmakers digesting the eye-popping cost and searching for specifics voiced concerns that the proposal offers no help for struggling homeowners or safeguards for taxpayers' money.

                  The government must bail out the financial system "because if we don't, it will have a tremendous impact on American consumers, homeowners, taxpayers and the rest," House Speaker Nancy Pelosi, D-Calif., said at a citizens' workshop in San Francisco.

                  But, she added, "We cannot deal with this unless this bailout helps families stay in their homes."

                  Sen. Chuck Schumer, D-N.Y., called the plan "a good foundation," but said it was missing "some kind of supervisory authority, and some kind of protection for homeowners and taxpayers."

                  The proposal would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue.

                  "The American people are furious that we're in this situation, and so am I," the House's top Republican, Ohio Rep. John A. Boehner, said in a statement. "We need to do everything possible to protect the taxpayers from the consequences of a broken Washington."

                  Signaling what could erupt into a brutal fight with Democrats over add-on spending, Boehner said "efforts to exploit this crisis for political leverage or partisan quid pro quo will only delay the economic stability that families, seniors, and small businesses deserve."

                  Bush said he worried the financial troubles "could ripple throughout" the economy and affect average citizens. "The risk of doing nothing far outweighs the risk of the package. ... Over time, we're going to get a lot of the money back."

                  He added, "People are beginning to doubt our system, people were losing confidence and I understand it's important to have confidence in our financial system."

                  Neither presidential candidate took a position on the proposal. GOP nominee John McCain said he was awaiting specifics and any changes by Congress.

                  Democratic rival Barack Obama used the party's weekly radio address to call for help for Main Street as well as Wall Street.

                  "We need to help people cope with rising gas and food prices, spark job creation by repairing our schools and our roads, help states avoid painful budget cuts and tax increases, and help homeowners stay in their homes," Obama said. "And we must also ensure that the solution we design doesn't reward particular companies, or irresponsible borrowers or lenders, or CEOs, some of whom helped cause this mess."

                  Their language reflected a tricky balance that politicians in both parties are trying to strike, just six weeks before Election Day: Back a plan that doles out hundreds of billions to companies that made bad bets and still identify with the plight of middle-class voters.

                  Besides mortgage help and executive compensation limits, Democrats are considering attaching middle-class assistance to the legislation despite a request from Bush to avoid adding items that could delay action. An expansion of jobless benefits was one possibility.

                  Bush sidestepped questions about the chances of adding such items, saying that now was not the time for posturing. "I think most leaders would understand we need to get this done quickly, and you know, the cleaner the better," he said about legislation being drafted.

                  Treasury officials met congressional staff for about two hours on Capitol Hill on Saturday. Discussions centered on how the plan would work, and Democrats proposed adding the executive compensation limits and new foreclosure-prevention measures.

                  Among the key issues up for negotiation is which financial institutions would be eligible for the help. The proposed legislation doesn't make it clear, leaving open the question of whether hedge funds or pension funds could qualify.

                  The proposal does not require that the government receive anything from banks in return for unloading their bad assets. But it would allow the Treasury Department to designate financial institutions as "agents of the government," and mandate that they perform any "reasonable duties" that might entail.

                  The government could contract with private companies to manage the assets it purchased under the rescue.

                  Treasury Secretary Henry Paulson says the government would in essence set up reverse auctions, putting up money for a class of distressed assets — such as loans that are delinquent but not in default — and financial institutions would compete for how little they would accept.

                  If enacted, the plan would give the treasury secretary broad power to buy, manage and sell the mortgage-related investments without any additional involvement by lawmakers. It would, however, require that the congressional committees with oversight on budget, tax and financial services issues be briefed within three months of the government's first use of the rescue power, and every six months after that.
                  '...If enacted, the plan would give the treasury secretary broad power to buy, manage and sell the mortgage-related investments without any additional involvement by lawmakers. It would, however, require that the congressional committees with oversight on budget, tax and financial services issues be briefed within three months of the government's first use of the rescue power, and every six months after that...'

                  Let's read that paragraph more carefully. According to the paragraph below, it seems your article plays down the impact of the government involvement. And, any questioning will be long after the elections.


                  '...The Bush administration seeks ``dictatorial power unreviewable by the third branch of government, the courts, to try to resolve the crisis,'' said Frank R***ano, a former assistant chief trial attorney at the Securities and Exchange Commission now at Pepper Hamilton LLP in Washington. ``We are taking a huge leap of faith.''

                  The way I interpret this is, we will not have any legal rights to question the Treasury Sec actions. What he does with our money is non-questionable.

                  http://www.bloomberg.com/apps/news?p...idM&refer=home

                  Comment


                  • #10
                    The plan is still being negotiated.
                    Facts do not cease to exist because they are ignored. -- Aldous Huxley
                    Two things are infinite: the universe and human stupidity. -- Albert Einstein

                    Comment


                    • #11
                      Originally posted by katseiye View Post
                      Big Pat,
                      I haven't had the chance to locate the story but my wife saw a television news report 09/21 over the bailouts. Seems the article attributes it to legislation signed by Clinton. If so how does that jibe w/ your theory of the evil W and his gang of conservative cronies ?
                      1). I have presented no theory on "evil W and band of cronies". Did you read anything I wrote? I am just pointing out the dangers in the conservative philosophy of extreme deregulation of the financial industry.

                      2). It is extremely naive and simplistic to blame the current fiancial crisis on any specific piece of legislation. The current crisis was caused by reckless lending packages and the packaging of high risk mortgage loans as securities that were rated as low risk (and the continued investment in them even when the financial firms became aware of their true risk level)

                      Also the Republicans controlled the congress in Clinton's Administration, if legislation is to blame they are also responsible.

                      Some responsibility for the crisis is attributable to actions by the Fed, but that is an independent institution.

                      The executive branch bears the most responsibility for regulating markets. It appears in this case regulation has been far to lax for quite a long time. While no president can be fully blamed for the current crisis, it represents a dramatic failure of the Bush Administartion to regulate and oversee financial markets. Clinton had his regulatory failures too, leadingto the spectacular demise of Enron and Worldcom.

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                      • #12
                        Patience fella's, I'm still searching for the video. However the crises apparently has its roots in the 1999 repeal of Glass - Stegall act of 1933, repeal signed by Bill Clinton.

                        In all fairness the articles I have found indicate the dem's and rep's were participating in some mutual reach around activity and bilking you and I in the process.

                        dog ticks, deer ticks, bed ticks and politics, their all parasites.

                        Stop fingerpointing they all had a hand in it, just make em accountable at the polls.

                        Comment


                        • #13
                          Originally posted by katseiye View Post
                          Patience fella's, I'm still searching for the video. However the crises apparently has its roots in the 1999 repeal of Glass - Stegall act of 1933, repeal signed by Bill Clinton.

                          In all fairness the articles I have found indicate the dem's and rep's were participating in some mutual reach around activity and bilking you and I in the process.

                          dog ticks, deer ticks, bed ticks and politics, their all parasites.

                          Stop fingerpointing they all had a hand in it, just make em accountable at the polls.

                          Okay, this is kind of silly. You are trying to blame a piece of legislation on Clinton, who was the President. This piece of legislation was sponsored by Phil Gramm (McCain's Economic policy adviser). It was also approved by a vote that went strictly along party lines (Repubs Yes, Dems No). Would you care to guess how a certain Senator From Arizona who is running for President voted on this?

                          See for yourself:
                          http://www.senate.gov/legislative/LI...n=1&vote=00105

                          Regardless of how anybody voted, I think it is extremely simplistic to blame the current financial crisis on one piece of legislation.

                          Comment


                          • #14
                            Accusations of not reading posts go both ways. I'm not blaming Bill Clinton alone, but your position of a conservative philosophy ( most read republican ) of deregulation is assinine in my view.

                            I think conservatives try to guard the henhouse better, although they are not above reproach.

                            I don't trust any of them.

                            Comment


                            • #15
                              The bigger problem was allowing more leverage for investment banks, which occurred under Bush.

                              We are not going back to Glass-Steagall. Just the opposite is occurring: Goldman Sach and Morgan Stanley are becoming bank holding companies.
                              Facts do not cease to exist because they are ignored. -- Aldous Huxley
                              Two things are infinite: the universe and human stupidity. -- Albert Einstein

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