Government seeking $700 billion for financial bailout

[Maikeru-sama]

WASHINGTON - The Bush administration is asking Congress to let the government buy $700 billion in toxic mortgages in the largest financial bailout since the Great Depression, according to a draft of the plan obtained Saturday by The Associated Press.

The plan would give the government broad power to buy the bad debt of any U.S. financial institution for the next two years. It 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 proposal does not specify what the government would get in return from financial companies for the federal assistance.

“We’re going to work with Congress to get a bill done quickly,” President Bush said at the White House. Without discussing details of the plan, he said, “This is a big package because it was a big problem.”

The White House and congressional leaders are hoping the legislation, which is still being developed, could pass as early as next week.

Administration officials and members of Congress were to negotiate through the weekend. The plan is designed to let faltering financial institutions unload their distressed mortgage-related assets on the government, and in turn the taxpayer, in a bid to avoid dire economic consequences.

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, and 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.”

“In my judgment, based upon the advice of a lot of people who know how markets work, this problem wasn’t going to be contained to just the financial community,” the president said. He said he was concerned about “Main Street” and that what happens on “Wall Street” affects “Main Street.”

Sen. Chuck Schumer, D-N.Y., called the proposal “a good foundation,” but raised concerns it “includes no visible protection for taxpayers or homeowners.”

Democrats are insisting the rescue include mortgage help to let struggling homeowners avoid foreclosures. They also are also considering attaching additional middle-class assistance to the legislation despite a request from Bush to avoid adding controversial items that could delay action. An expansion of jobless benefits was one possibility.

Asked about the chances of adding such items, Bush sidestepped the question, saying only that now was not the time for political posturing. “The cleaner the better,” he said about legislation he hopes Congress sends back to him at the White House.

If passed by Congress, the plan would give the Treasury secretary broad power to buy and sell the mortgage-related investments without any additional involvement by lawmakers. The proposal, however, would 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.

While the proposal contains no requirement that the government receive anything from banks in return for unloading their bad assets, 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.

In a briefing to lawmakers Friday, Paulson and Federal Reserve Chairman Ben Bernanke painted a grave picture of an economy on the edge of a major recession and telling them that action was urgent and imperative.

In a session with House Democrats, they described a plan where 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 for the investments, said Rep. Brad Sherman, D-Calif., who participated in the conference call.

“You give them good cash; they give you the worst of the worst,” Sherman said. A critic of the plan, he complained that Bush and his economic advisers were trying to panic lawmakers into rubber-stamping it.

Paulson said the new troubled-asset relief program must be large enough to have the necessary impact while protecting taxpayers as much as possible.

“I am convinced that this bold approach will cost American families far less than the alternative — a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion,” Paulson said. “The financial security of all Americans ... depends on our ability to restore our financial institutions to a sound footing.”

Administration officials hoped the rescue plan could be finalized this weekend, to lend calm to Monday morning’s market openings, said Keith Hennessey, the director of the president’s economic council. The goal is to have something passed by Congress by the end of next week, when lawmakers recess for the elections.

link (http://www.msnbc.msn.com/id/26803347/)

[Maikeru-sama]

I have a huge problem with huge government bailouts. Not only are they going to raise the national debt limit and spend money they don't even have, but they really have no plan whatsoever to at least make some money off of the bailout according to this quote:

The proposal does not specify what the government would get in return from financial companies for the federal assistance.


Furthermore, Democrats need to shutup about bailing out folks that are about to be foreclosed on. As I have already mentioned, I worked and was recently laid off at a Mortgage company and alot that mess was due to fraud perpetrated by loan applicants and loan officers turning a blind eye.

I do not mind the government doing something but they shouldn't be given money without a plan and they should be forced to do something about all the fraud and extremely bad decisions made.

This is America, when you have the fortitude and nose for risk taking, you reap all the benefits when your business is successful. But when you make bad business decisions, you should also reap all the consequences and not expect to be bailed out, no matter how large your company is.

If you click on the article one of the links said "Lehman deal could save thousands of jobs". I have to admit, that kind of annoys me as alot of folks have lost their jobs (like myself and another member of this message board who I will not name). Just because your name is as prestigious and well known as Lehman Brothers, they should suffer the same consequences.

Not a finance guy but I don't understand why venture capitalist or maybe some banks can't step in like what happened with Countrywide. It is major horse crap to make the taxpayers foot the bill for other people's financial mistakes.

[theogt]

The government is going to make so much money off this it's ridiculous.

[ThaBigP]

The government is going to make so much money off this it's ridiculous.

Ugh. If that were the case, the banks would be making so much money off this. The problem is that these are subprime loans, going toes-up by the bucketfull nowadays. The only saving grace is that the Treasury will be buying them at a heavily discounted rate, so that *hopefully* may offset the legions of loans that go bad. It does still make the US government the #1 mortgage lender/holder in the world, the #1 owner of real-estate in the world (if I'm not mistaken), and the #1 insurance company in the world. And by "#1" I mean size, not quality of service.

[BrAinPaiNt]

This will be larger before it is said and done...probably closer to a trillion.

Also it looks as if they just did a short term solution to a long term problem and pushed the big thing out of the way until another takes it's place.

Just not a good thing by the government, and by government I mean BOTH parties.

Well...good for them and good for the businesses, just not good for the rest of us.

[theogt]

Ugh. If that were the case, the banks would be making so much money off this.Not true at all. The banks have short-term issues with these assets that they can't handle. The government's going to make hand over fist on this deal.

[Vintage]

Mao rolled over in his grave to wave hi.

[MetalHead]

Not true at all. The banks have short-term issues with these assets that they can't handle. The government's going to make hand over fist on this deal.

Help me understand this deal.
I'm not 100% clear on this.
Let's say individual X defaulted on his mortgage.He had $110k payoff balance.
Is the government gonna forgive the $110k but tax the $110k as income?

[theogt]

Help me understand this deal.
I'm not 100% clear on this.
Let's say individual X defaulted on his mortgage.He had $110k payoff balance.
Is the government gonna forgive the $110k but tax the $110k as income?They're not necessarily buying individual mortgages. In a variety of different ways, banks package a bunch of mortgages together and sell them as securities. All of the mortgages within the packaged securities aren't defaulting -- in fact, the vast majority of them aren't. But still, the market for these things have disappeared because investors don't want to buy them. Well, when there's no one to buy these assets, then the price obviously goes down. Because the banks have to re-price these assets at "market" prices, they have huge write-downs every quarter. While they're not actually losing money on them necessarily, they have huge losses on their financial statements. This causes all sorts of havoc.

So what the government's going to do is buy them up dirt cheap, wait for the irrational market to turn around, then sell them off for MAJOR profits. Of course there's risk. They might not be able to sell them for a profit. But chances are very good they will -- for a hefty profit.

[dbair1967]

When will the American people ever wake up and make a bold, loud statement:

QUIT WASTING ALL OUR FREAKING MONEY BY BAILING EVERYTHING OUT, CREATING HUGE CESS POOLS OF WASTEFUL AND CORRUPT SOCIAL PROGRAMS AND GROWING GOVERNMENT TO MASSIVE SIZE.

This is OUR money, quit voting people in office who do nothing but get rich off of us, and make out like they are doing us a favor. And when they lie about it to get elected (ie, say they are for cutting spending, taxes, government size etc etc) VOTE THEM THE HELL OUT.

The government plays alot of you people for suckers.

[theogt]

When will the American people ever wake up and make a bold, loud statement:

QUIT WASTING ALL OUR FREAKING MONEY BY BAILING EVERYTHING OUT, CREATING HUGE CESS POOLS OF WASTEFUL AND CORRUPT SOCIAL PROGRAMS AND GROWING GOVERNMENT TO MASSIVE SIZE.

This is OUR money, quit voting people in office who do nothing but get rich off of us, and make out like they are doing us a favor. And when they lie about it to get elected (ie, say they are for cutting spending, taxes, government size etc etc) VOTE THEM THE HELL OUT.

The government plays alot of you people for suckers.This is probably the best $700 billion spent of US government revenues in history.

Someone needs to get a clue.

[dbair1967]

This is probably the best $700 billion spent of US government revenues in history.

Someone needs to get a clue.

We should have never been in the position where this was needed in the first place.

Your right about somebody needing to get a clue there Theo.

[BrAinPaiNt]

This is probably the best $700 billion spent of US government revenues in history.

Someone needs to get a clue.

Don't you mean the best $700 billion spent by the US government on the tax payers credit card?

[theogt]

We should have never been in the position where this was needed in the first place.

Your right about somebody needing to get a clue there Theo.Saying we shouldn't have been here and *****ing about the "bail out" are two different things. We're not here because anyone was "bailed out."

But my guess is you haven't a clue as to why we're here.

Don't you mean the best $700 billion spent by the US government on the tax payers credit card?The government's able to borrow extremely cheap for this, compared to the profits they're going to make.

This is a win-win situation. The government ends up saving the financial situation and it makes money in the process.

[Maikeru-sama]

Funny, the article states that the Government doesn't know what it will get in return but one person on this board is so certain of it :rolleyes:.

[theogt]

Funny, the article states that the Government doesn't know what it will get in return but one person on this board is so certain of it :rolleyes:.I think you're having a hard time reading.

[dbair1967]

[QUOTE]Saying we shouldn't have been here and *****ing about the "bail out" are two different things. We're not here because anyone was "bailed out."

But my guess is you haven't a clue as to why we're here.

Actually I know exactly why we're here, and we shouldnt have to be.

What exactly do you think this 700 billion is for Theo?

[Maikeru-sama]

[QUOTE=theogt;2272863]

Actually I know exactly why we're here, and we shouldnt have to be.

What exactly do you think this 700 billion is for Theo?

Your wasting your time.

Theo is smarter than all of us. That is why he responds with personally attacks when you have the nerve to ask his highness questions regarding this matter.

[BrAinPaiNt]

[QUOTE=dbair1967;2273071]

Your wasting your time.

Theo is smarter than all of us. That is why he responds with personally attacks when you have the nerve to ask his highness questions regarding this matter.

I still think he misses the point that the Tax payers will take the brunt of this while the Government and the failing businesses will be the ones making what profits that might come out of it.

[ThaBigP]

I'm going to voice (er, type?) a very unpopular scenario here: we deserve this. We being the voters, that is. And, might I add, we will be dragging down the rest of the tax payers with us (not all tax payers vote). I'll also submit not all voters vote the same way, and many opposed the policies that got us in this mess (like myself), so I'm speaking "in general" here without regards to specifics...but here goes...

The voters (again, in general) supported with our votes Representatives and Senators, not to mention two Presidents (Carter first, then Clinton), who pushed hard the Community Reinvestment Act. That act, along with Congressional "hot seat" inquiries, forced lenders to extend loans to those who could not repay. All in the great cause of patting ourselves on the backs that we were "helping those less fortunate", with not too little a racial component attached, so we could also pat ourselves on the back with the remaining free hand that we "weren't racist!". So..Congress inacted these policies, and they were enforced, usually with cries of "RACISM" or "YOU DON'T CARE ABOUT THE POOR!" for any who dared question the policy. What it amounted to though, was the most massive transfer of wealth in this nation's history - likely to rival Johnson's "Great Society", and all in the span of about a decade. We're currently looking at a price tag of approx. one TRILLION dollars to foot this bill when it's all said and done. All so we could feel good about ourselves. Even today the truth is being buried in most of the media. It is simply touted as "greed" that got us in this mess...or lack of regulation. Sorry, but the demand that business conduct VERY VERY risky transactions simply on demand by the government is hardly lax regulation. It is the very essence of total regulation. Free markets were NOT at work here, the do-gooder hand of politicians and those who sent them to Washington was at work. I think it is the very foundation of hypocracy for this government to DEMAND market behavior that causes financial collapse, then fold their arms and say "Hmmpf...we're not bailing you out, this is YOUR mess". I'm against bailouts of industries that screw up on their own. But the one factor that makes me reconsider that position here is that it was GOVERNMENT that screwed this up, not the markets. And that government derives its power from the consent of the governed. Enjoy your tax bill folks.

[theogt]

I still think he misses the point that the Tax payers will take the brunt of this while the Government and the failing businesses will be the ones making what profits that might come out of it.Explain how the government making a profit on this deal is bad for the taxpayer.

[theogt]

Actually I know exactly why we're here, and we shouldnt have to be.

What exactly do you think this 700 billion is for Theo?I've already explained in this very thread what it is being used for.

Your wasting your time.

Theo is smarter than all of us. That is why he responds with personally attacks when you have the nerve to ask his highness questions regarding this matter.Sorry, they're not personal attacks. If you don't know what's going on in this situation (and it's clear neither of you do) then I'll point it out. It's not a personal attack on you, though.

[BrAinPaiNt]

Explain how the government making a profit on this deal is bad for the taxpayer.

Because the profit they make will probably go to programs the taxpayer will not benefit from or their own back pockets instead of paying off national debt or towards SS.

By your logic we should give the government all of our money and just trust them?

[WoodysGirl]

Paulson resists calls for added help in bailout
By MARTIN CRUTSINGER, AP Economics Writer
33 minutes ago



WASHINGTON - Treasury Secretary Henry Paulson said Sunday that the nation's credit markets remain frozen and Congress must move quickly to pass a $700 billion bailout package for financial firms. But key Democrats said the legislation needs changes to provide better protections for taxpayers and homeowners in danger of losing their homes.

ADVERTISEMENT

"The credit markets are still very fragile right now and frozen," Paulson said in an interview on NBC's Meet the Press. "We need to deal with this and deal with it quickly."

Paulson made the rounds of the television talk shows to stress the need for speed in getting the bailout package approved. The administration spent the weekend negotiating the details of the proposal with members of Congress with the expectation that it can be passed in the next week.

Paulson said that "it pains me tremendously to have the American taxpayer put in this position but it is better than the alternative."

Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, said that what Congress was being asked to approve was the "mother of all bailouts" which Shelby said would end up costing more like $1 trillion rather than $700 billion when the costs of the government taking over mortgage giants Fannie Mae and Freddie Mac and insurance giant American International Group Inc. were added.

Democrats said they understood the need for urgency but insisted that the measure needed to provide help for homeowners threatened with losing their homes, perhaps by changes in bankruptcy laws to allow for mortgages to be modified, and by capping pay and benefit packages for executives at the huge Wall Street firms that will be selling their bad debt to the government.

"I don't want the American taxpayer to get this bad debt and then the guy (whose company once held the bad loans) gets millions of dollars on his way out the door," said House Financial Services Chairman Barney Frank, D-Mass.

Paulson and President Bush have argued that the alternative would be credit markets that remain frozen, meaning that businesses will fail because they can't get the loans they need to operate and the economy will grind to a halt because consumers, who account for two-thirds of economic activity, won't be able to get the credit they need to keep spending.

Bush said Saturday the White House is ready to work with Congress to quickly enact legislation to allow the government to purchase hundreds of billions of dollars worth of bad debt linked to the collapse of the housing market.

The administration proposal would be the biggest government intervention since the Great Depression. It would dole out huge sums of money to financial firms to purchase their holdings of bad mortgage-backed securities so that these firms can resume normal lending operations. The bad mortgage debt has been at the heart of the current credit crisis which hit more than a year ago but erupted with special ferocity in the past two weeks forcing extraordinary government actions.

Two weeks ago, the government seized control of the nation's two largest mortgage companies, Fannie Mae and Freddie Mac, and then last week, it took control of the country's largest insurance company, American International Group Inc.

The measure that the administration sent up to Congress on Saturday is a mere three pages in length. While Paulson emphasized the need for speed, Democrats said Sunday that they could do it quickly while also adding necessary protections for taxpayers and help for people facing the threat of mortgage foreclosures.

Senate Banking Committee Chairman Christopher Dodd, D-Conn., appearing on ABC's "This Week," said if all of this help was being directed to Wall Street there was also a need to provide help for people on Main Street.

But Paulson, also appearing on ABC, said, "We need this to be clean and to be quick."

Paulson resisted suggestions being made by Democrats that the program be changed to include further relief for homeowners facing mortgage foreclosures and to include an additional $50 billion stimulus effort. Some Democrats have also suggested capping compensation of executives at firms who get the bailout help.

Paulson said he was concerned that debate over adding all of those proposals would slow passage of the bill, delaying the rescue effort that is so urgently needed to get financial markets moving again.

"The biggest help we can give the American people right now is to stabilize the financial system," Paulson said.

But Sen. Charles Schumer, D-N.Y., said that he believed there would be changes to Paulson's plan and that agreement could still be reached quickly.

Schumer said that he was pushing to get a provision where the government would receive stock warrants in return for the bailout relief and for creation of a government oversight board to supervise the huge operation, which under Paulson's plan would be run out of the Treasury Department. He said Paulson seemed receptive to changes when he had discussed his ideas with him.

"I have told him ... we need changes related to housing, we need to put the taxpayer first ahead of bondholders, shareholders," Schumer said on "Fox News Sunday."

However, Republican lawmakers said that the Democratic efforts risks slowing down a measure that was urgently needed.

"This would be the most serious financial crisis that the world has ever dealt with. It is not a time to be playing games," said House Republican Leader John Boehner.

Paulson said in the interviews that he had been talking to other governments about the need for them to offer similar relief because the current financial crisis is global.

He said that the nation's outdated regulatory system for financial markets must be overhauled but the first job is to get the most sweeping rescue package since the Great Depression passed by Congress in coming days.

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.

http://news.yahoo.com/s/ap/20080921/ap_on_bi_ge/financial_meltdown

Exclusive: Foreign banks may get help

Mike Allen
Sun Sep 21, 8:24 AM ET



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.

ADVERTISEMENT

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.

"That's a distinction without a difference to the American people. The key here is protecting the system. ... We have a global financial system, and we are talking very aggressively with other countries around the world and encouraging them to do similar things, and I believe a number of them will. But, remember, this is about protecting the American people and protecting the taxpayers. and the American people don't care who owns the financial institution. If the financial institution in this country has problems, it'll have the same impact whether it's the U.S. or foreign."

The legislative outline that went to Capitol Hill at 1:30 a.m. Saturday had said that an eligible financial institution had to have “its headquarters in the United States.” That would exclude foreign-based institutions with big U.S. operations, such as Barclays, Credit Suisse, Deutsche Bank, HSBC, Royal Bank of Scotland and UBS. 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.

But a Treasury “Fact Sheet” released at 7:15 Saturday night sought to give the administration more flexibility, with an expanded definition that could include all of those banks: “Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets.”

The major change in the suggested eligibility requirements is the biggest change that Treasury publicly made after a day of briefings and conversations with Capitol Hill, and is likely the first of many.

Aspects of the $700 billion, two-year proposal that are still under negotiation include what, if anything, will be added to the administration’s simple but sweeping proposal. And the parliamentary route, such as what committees or hearings might be involved, has not been finalized.

House Financial Services Committee Chairman Barney Frank (D-Mass.) has a hearing scheduled for Wednesday that is likely to focus on the proposal.

Under what congressional officials called a likely scenario, the measure could go to the House floor on Thursday, with passage expected the same day.

The Senate could take the package up as soon as Friday and send it to President Bush for his signature, although the Senate schedule is less predictable and had not been determined.

Officials expect passage by huge margins in both chambers because Paulson and Federal Reserve Chairman Ben Bernanke have told congressional leaders the country’s financial stability depends on it.

House Democrats plan to insist on adding protections for homeowners facing foreclosure. They also want to add a measure to help homeowners facing bankruptcy and an executive compensation restriction designed to prevent golden parachutes for the heads of troubled institutions.

Sen. Barack Obama (D-Ill.), who was supportive of the bailout concept in a statement released Friday, believes that “whatever gets done in Congress has to protect Main Street,” senior adviser Stephanie Cutter said on MSNBC on Saturday.

On “Fox News Sunday,” Paulson told Chris Wallace that he would resist the Democrats' desired limits on executive compensation.

"If we design it so it's punitive and institutions aren't going to participate, this won't work the way we need it to work," Paulson said. "Let's talk executive salaries: There have been excesses there. I agree with the American people. Pay should be for performance, not for failure. We've got work to do in that regard. We need to do that work. But we need this system to work. And so reforms need to come afterwards. My whole objective with the plan we have is to give us the maximum ability to make it work.”

And the secretary told NBC’s Tom Brokaw on “Meet the Press” that he doesn’t want new regulations simultaneously: “That's not doable to do that immediately. But we very much need new regulations.”

Senate Banking Committee Chairman Chris Dodd (D-Conn.) told Stephanopoulos on ABC: “If we’re going to spend taxpayer money to get rid of bad debt in these places, what is the reciprocal obligation … from the firms? … I think there’s going to be a strong interest to deal with the Main Street aspects.”

Appearing with him, House Republican Leader John A. Boehner of Ohio retorted: “We’ve already dealt with that, when we had the housing bill last summer. I didn’t vote for it, because it’s $300 billion bailout for scam artists and speculators and others around the housing industry. But there are a lot of tools in there to help the Federal Housing Administration deal with the foreclosure problem that’s out there. We need to rise above partisan politics … and deal with this as adults.”

http://news.yahoo.com/s/politico/20080921/pl_politico/13690

[WoodysGirl]

Paulson resists calls for added help in bailout
By MARTIN CRUTSINGER, AP Economics Writer
33 minutes ago



WASHINGTON - Treasury Secretary Henry Paulson said Sunday that the nation's credit markets remain frozen and Congress must move quickly to pass a $700 billion bailout package for financial firms. But key Democrats said the legislation needs changes to provide better protections for taxpayers and homeowners in danger of losing their homes.

ADVERTISEMENT

"The credit markets are still very fragile right now and frozen," Paulson said in an interview on NBC's Meet the Press. "We need to deal with this and deal with it quickly."

Paulson made the rounds of the television talk shows to stress the need for speed in getting the bailout package approved. The administration spent the weekend negotiating the details of the proposal with members of Congress with the expectation that it can be passed in the next week.

Paulson said that "it pains me tremendously to have the American taxpayer put in this position but it is better than the alternative."

Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, said that what Congress was being asked to approve was the "mother of all bailouts" which Shelby said would end up costing more like $1 trillion rather than $700 billion when the costs of the government taking over mortgage giants Fannie Mae and Freddie Mac and insurance giant American International Group Inc. were added.

Democrats said they understood the need for urgency but insisted that the measure needed to provide help for homeowners threatened with losing their homes, perhaps by changes in bankruptcy laws to allow for mortgages to be modified, and by capping pay and benefit packages for executives at the huge Wall Street firms that will be selling their bad debt to the government.

"I don't want the American taxpayer to get this bad debt and then the guy (whose company once held the bad loans) gets millions of dollars on his way out the door," said House Financial Services Chairman Barney Frank, D-Mass.

Paulson and President Bush have argued that the alternative would be credit markets that remain frozen, meaning that businesses will fail because they can't get the loans they need to operate and the economy will grind to a halt because consumers, who account for two-thirds of economic activity, won't be able to get the credit they need to keep spending.

Bush said Saturday the White House is ready to work with Congress to quickly enact legislation to allow the government to purchase hundreds of billions of dollars worth of bad debt linked to the collapse of the housing market.

The administration proposal would be the biggest government intervention since the Great Depression. It would dole out huge sums of money to financial firms to purchase their holdings of bad mortgage-backed securities so that these firms can resume normal lending operations. The bad mortgage debt has been at the heart of the current credit crisis which hit more than a year ago but erupted with special ferocity in the past two weeks forcing extraordinary government actions.

Two weeks ago, the government seized control of the nation's two largest mortgage companies, Fannie Mae and Freddie Mac, and then last week, it took control of the country's largest insurance company, American International Group Inc.

The measure that the administration sent up to Congress on Saturday is a mere three pages in length. While Paulson emphasized the need for speed, Democrats said Sunday that they could do it quickly while also adding necessary protections for taxpayers and help for people facing the threat of mortgage foreclosures.

Senate Banking Committee Chairman Christopher Dodd, D-Conn., appearing on ABC's "This Week," said if all of this help was being directed to Wall Street there was also a need to provide help for people on Main Street.

But Paulson, also appearing on ABC, said, "We need this to be clean and to be quick."

Paulson resisted suggestions being made by Democrats that the program be changed to include further relief for homeowners facing mortgage foreclosures and to include an additional $50 billion stimulus effort. Some Democrats have also suggested capping compensation of executives at firms who get the bailout help.

Paulson said he was concerned that debate over adding all of those proposals would slow passage of the bill, delaying the rescue effort that is so urgently needed to get financial markets moving again.

"The biggest help we can give the American people right now is to stabilize the financial system," Paulson said.

But Sen. Charles Schumer, D-N.Y., said that he believed there would be changes to Paulson's plan and that agreement could still be reached quickly.

Schumer said that he was pushing to get a provision where the government would receive stock warrants in return for the bailout relief and for creation of a government oversight board to supervise the huge operation, which under Paulson's plan would be run out of the Treasury Department. He said Paulson seemed receptive to changes when he had discussed his ideas with him.

"I have told him ... we need changes related to housing, we need to put the taxpayer first ahead of bondholders, shareholders," Schumer said on "Fox News Sunday."

However, Republican lawmakers said that the Democratic efforts risks slowing down a measure that was urgently needed.

"This would be the most serious financial crisis that the world has ever dealt with. It is not a time to be playing games," said House Republican Leader John Boehner.

Paulson said in the interviews that he had been talking to other governments about the need for them to offer similar relief because the current financial crisis is global.

He said that the nation's outdated regulatory system for financial markets must be overhauled but the first job is to get the most sweeping rescue package since the Great Depression passed by Congress in coming days.

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.

http://news.yahoo.com/s/ap/20080921/ap_on_bi_ge/financial_meltdown

Exclusive: Foreign banks may get help

Mike Allen
Sun Sep 21, 8:24 AM ET



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.

ADVERTISEMENT

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.

"That's a distinction without a difference to the American people. The key here is protecting the system. ... We have a global financial system, and we are talking very aggressively with other countries around the world and encouraging them to do similar things, and I believe a number of them will. But, remember, this is about protecting the American people and protecting the taxpayers. and the American people don't care who owns the financial institution. If the financial institution in this country has problems, it'll have the same impact whether it's the U.S. or foreign."

The legislative outline that went to Capitol Hill at 1:30 a.m. Saturday had said that an eligible financial institution had to have “its headquarters in the United States.” That would exclude foreign-based institutions with big U.S. operations, such as Barclays, Credit Suisse, Deutsche Bank, HSBC, Royal Bank of Scotland and UBS. 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.

But a Treasury “Fact Sheet” released at 7:15 Saturday night sought to give the administration more flexibility, with an expanded definition that could include all of those banks: “Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets.”

The major change in the suggested eligibility requirements is the biggest change that Treasury publicly made after a day of briefings and conversations with Capitol Hill, and is likely the first of many.

Aspects of the $700 billion, two-year proposal that are still under negotiation include what, if anything, will be added to the administration’s simple but sweeping proposal. And the parliamentary route, such as what committees or hearings might be involved, has not been finalized.

House Financial Services Committee Chairman Barney Frank (D-Mass.) has a hearing scheduled for Wednesday that is likely to focus on the proposal.

Under what congressional officials called a likely scenario, the measure could go to the House floor on Thursday, with passage expected the same day.

The Senate could take the package up as soon as Friday and send it to President Bush for his signature, although the Senate schedule is less predictable and had not been determined.

Officials expect passage by huge margins in both chambers because Paulson and Federal Reserve Chairman Ben Bernanke have told congressional leaders the country’s financial stability depends on it.

House Democrats plan to insist on adding protections for homeowners facing foreclosure. They also want to add a measure to help homeowners facing bankruptcy and an executive compensation restriction designed to prevent golden parachutes for the heads of troubled institutions.

Sen. Barack Obama (D-Ill.), who was supportive of the bailout concept in a statement released Friday, believes that “whatever gets done in Congress has to protect Main Street,” senior adviser Stephanie Cutter said on MSNBC on Saturday.

On “Fox News Sunday,” Paulson told Chris Wallace that he would resist the Democrats' desired limits on executive compensation.

"If we design it so it's punitive and institutions aren't going to participate, this won't work the way we need it to work," Paulson said. "Let's talk executive salaries: There have been excesses there. I agree with the American people. Pay should be for performance, not for failure. We've got work to do in that regard. We need to do that work. But we need this system to work. And so reforms need to come afterwards. My whole objective with the plan we have is to give us the maximum ability to make it work.”

And the secretary told NBC’s Tom Brokaw on “Meet the Press” that he doesn’t want new regulations simultaneously: “That's not doable to do that immediately. But we very much need new regulations.”

Senate Banking Committee Chairman Chris Dodd (D-Conn.) told Stephanopoulos on ABC: “If we’re going to spend taxpayer money to get rid of bad debt in these places, what is the reciprocal obligation … from the firms? … I think there’s going to be a strong interest to deal with the Main Street aspects.”

Appearing with him, House Republican Leader John A. Boehner of Ohio retorted: “We’ve already dealt with that, when we had the housing bill last summer. I didn’t vote for it, because it’s $300 billion bailout for scam artists and speculators and others around the housing industry. But there are a lot of tools in there to help the Federal Housing Administration deal with the foreclosure problem that’s out there. We need to rise above partisan politics … and deal with this as adults.”

http://news.yahoo.com/s/politico/20080921/pl_politico/13690

[theogt]

Because the profit they make will probably go to programs the taxpayer will not benefit from or their own back pockets instead of paying off national debt or towards SS.

By your logic we should give the government all of our money and just trust them?Well, I agree with that. In essence, this particular decision is a good one. But subsequent decisions that result from this good one will almost certainly be poor ones. I agree with that. But that's a wholly different problem.

[BrAinPaiNt]

Well, I agree with that. In essence, this particular decision is a good one. But subsequent decisions that result from this good one will almost certainly be poor ones. I agree with that. But that's a wholly different problem.

Well that is part of the problem most of us have.

You can't rail on the government wanting to raise taxes and universal health care and smaller government and so on...and applaud a move like this.

Sure something had to be done but don't expect many conservatives, not republicans, to be happy about it.

Honestly I am shocked anyone is ok with it from a government standpoint.

[theogt]

Well that is part of the problem most of us have.

You can't rail on the government wanting to raise taxes and universal health care and smaller government and so on...and applaud a move like this.

Sure something had to be done but don't expect many conservatives, not republicans, to be happy about it.

Honestly I am shocked anyone is ok with it from a government standpoint.I just don't understand why anyone would be against this.

The government is actually doing something that will (1) save our economy, and (2) ACTUALLY MAKE MONEY IN THE PROCESS!

Seems like a win-win to me.

[BrAinPaiNt]

I just don't understand why anyone would be against this.

The government is actually doing something that will (1) save our economy, and (2) ACTUALLY MAKE MONEY IN THE PROCESS!

Seems like a win-win to me.

When you give the government more power it is only a win/lose. Win for the government, lose for the citizens.

Those in power have a consistent pattern of perverting the power and money they gain no matter the best intentions.

I guess you have more trust in the government than I do.

[theogt]

When you give the government more power it is only a win/lose. Win for the government, lose for the citizens.

Those in power have a consistent pattern of perverting the power and money they gain no matter the best intentions.

I guess you have more trust in the government than I do.I have trust in Hank Paulson, who'll be running the world's biggest hedge fund now. LOL.

[Viper]

I have trust in Hank Paulson, who'll be running the world's biggest hedge fund now. LOL.

If the Gov. can run this so well, why not the Medical or the Auto industries.:rolleyes:

[theogt]

If the Gov. can run this so well, why not the Medical or the Auto industries.:rolleyes:What on earth are you talking about? I think you're a bit confused.

[ThaBigP]

Explain how the government making a profit on this deal is bad for the taxpayer.

Even presuming your *hope* that this is profitable turns out to be true (and it certainly could if things go well), where, oh where in our Constitution does it provide the government the authority to run businesses for profit? Especially in light of how this potential profit would have come about: First, the government DEMANDS market behavior (under penalty of law) that collapses an industry and devalues their product, then rushes in to the "rescue" with taxpayer money to mop up the mess the government made in the first place, at seriously discounted prices I might add...then gets to benefit from it's meddling in the first place by showing a profit on its balance sheet when those spoils are resold. It's profiteering from theft, plain and simple. And, as much money will have gone to fill the coffers of the treasury (again, assuming it *does* become profitable) will go there only after having been swiped from private industry. Rearranging cookies on a plate does not create more cookies.

[Viper]

What on earth are you talking about? I think you're a bit confused.

As a conservative we rail against the gov. running anything, yet you feel the gov. should run this. Personally, I'm against the gov. bailing these companies out. But if we can afford to bail them out, why can't we afford to provide medical care for everyone? I want smaller gov., this is a huge gov. project.

[theogt]

Even presuming your *hope* that this is profitable turns out to be true (and it certainly could if things go well), where, oh where in our Constitution does it provide the government the authority to run businesses for profit?Commerce Clause. Next question.

[theogt]

As a conservative we rail against the gov. running anything, yet you feel the gov. should run this. Personally, I'm against the gov. bailing these companies out. But if we can afford to bail them out, why can't we afford to provide medical care for everyone? I want smaller gov., this is a huge gov. project.I'm fiscally conservative, but when something makes sense, it just makes sense. We're not bailing a company out. There's no "them." It's us -- we're saving OUR entire financial system. And in the process the government can turn a little profit. It's lack of regulation that got us here. It's "free market" exuberance that got us here.

This is a no brainer. Which is why this will pass through by an overwhelming majority.

[Viper]

I'm fiscally conservative, but when something makes sense, it just makes sense. We're not bailing a company out. There's no "them." It's us -- we're saving OUR entire financial system. And in the process the government can turn a little profit. It's lack of regulation that got us here. It's "free market" exuberance that got us here.

No brainer. Which is why this will pass through by an overwhelming majority.

I guess I just cringe when I hear the gov. is in business to turn a profit. My point again, where will it end once they sink thier teeth into turning an easy profit. I do understand this is a necassary evil, yet I don't like it. We are on slippery slope here.

[ThaBigP]

Commerce Clause. Next question.

Oh. My. God. Your ignorance of the Constitution is breathtaking.

[theogt]

Oh. My. God. Your ignorance of the Constitution is breathtaking.Are you a lawyer?

[Haley94]

The unprecedented intervention of the Fed may be justified or not in narrow terms, but it reveals, once again, the profoundly undemocratic character of state capitalist institutions, designed in large measure to socialise cost and risk and privatize profit, without a public voice. This is Corporate welfare.

[theogt]

The unprecedented intervention of the Fed may be justified or not in narrow terms, but it reveals, once again, the profoundly undemocratic character of state capitalist institutions, designed in large measure to socialise cost and risk and privatize profit, without a public voice. This is Corporate welfare.Right. Corporate welfare that provides home mortgages for millions of Americans. Provides a financial market for businesses to fund daily operations so millions of Americans can keep their jobs.

Corporate welfare. LOL.

[ThaBigP]

Are you a lawyer?

One does not need to be a lawyer to have the capacity for reading and reason. If you believe the opposite, God help us all, because you can (and probalby do) vote.

[Viper]

theogt,

A question if I may. Is the gov. going to:

1. attempt to run this business?
2. bail these companies out, returning them to the individuals that made this mess?
3. take it over, selling it off piece by piece to the highest bidder?
4. other

[theogt]

One does not need to be a lawyer to have the capacity for reading and reason. If you believe the opposite, God help us all, because you can (and probalby do) vote.Didn't think so. Amateur constitutional scholars are always a hoot.

theogt,

A question if I may. Is the gov. going to:

1. attempt to run this business?
2. bail these companies out, returning them to the individuals that made this mess?
3. take it over, selling it off piece by piece to the highest bidder?
4. otherBasically 3. They're just buying certain assets (i.e., mortgage securities), they're not actually buying the companies.

And the individuals responsible have long been fired by most of the banks in question.

[Haley94]

Right. Corporate welfare that provides home mortgages for millions of Americans. Provides a financial market for businesses to fund daily operations so millions of Americans can keep their jobs.

Corporate welfare. LOL.

Where did the money go? bonuses? The american taxpayer is going to have to assume the risk. Can you imagine if we spent 700 billion and put it in the hands of the people who owe on their mortgages.

What a joke, keep thinking your right and live under the illusion that one of the parties really gives a crap about you.

[theogt]

Where did the money go? bonuses? The american taxpayer is going to have to assume the risk. Can you imagine if we spent 700 billion and put it in the hands of the people who owe on their mortgages.Maybe you missed the past year, but the banks in question have lost billions of dollars on this already. They're not making money on this deal.

What a joke, keep thinking your right and live under the illusion that one of the parties really gives a crap about you.Says that guy without a clue as to what's going on here.

[ThaBigP]

The Congress shall have power . . . To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;

The Congress (http://en.wikipedia.org/wiki/United_States_Congress) shall have Power - To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers (http://en.wikipedia.org/wiki/Enumerated_powers), and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

If you can read into that the power to actually *run* those companies for profit, then that means you think the clause(s) can and do mean anything you want them to mean. That logically means they have no meaning whatsoever. The purpose of the clause(s) was to allow for a uniform tax and regulation code for interstate/international commerce, so as to avoid a mish-mash of codes that must be complied with which would otherwise stifle said commerce. One of the models for the *wrong* way to handle that was pre-revolutionary France at the time the Constitution was written. Every single municipality in France was able to form any regulation or tax code they saw fit - leading to a strangulation of commerce crossing municipal boundaries. The Framers were quite aware of this situation at the time they wrote our document. But I digress - I'm not a lawyer and as such my reading into the meaning of our Framers' document is to be summarily dismissed.

[theogt]

The Congress shall have power . . . To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;

The Congress (http://en.wikipedia.org/wiki/United_States_Congress) shall have Power - To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers (http://en.wikipedia.org/wiki/Enumerated_powers), and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

If you can read into that the power to actually *run* those companies for profit, then that means you think the clause(s) can and do mean anything you want them to mean. That logically means they have no meaning whatsoever. The purpose of the clause(s) was to allow for a uniform tax and regulation code for interstate/international commerce, so as to avoid a mish-mash of codes that must be complied with which would otherwise stifle said commerce. One of the models for the *wrong* way to handle that was pre-revolutionary France at the time the Constitution was written. Every single municipality in France was able to form any regulation or tax code they saw fit - leading to a strangulation of commerce crossing municipal boundaries. The Framers were quite aware of this situation at the time they wrote our document. But I digress - I'm not a lawyer and as such my reading into the meaning of our Framers' document is to be summarily dismissed.:laugh2:

If you only knew enough to know how silly you look.

[Viper]

Didn't think so. Amateur constitutional scholars are always a hoot.

Basically 3. They're just buying certain assets (i.e., mortgage securities), they're not actually buying the companies.

And the individuals responsible have long been fired by most of the banks in question.

Thanks theogt, 3 I can understand, may not like it but it is necessary.

[theogt]

Thanks theogt, 3 I can understand, may not like it but it is necessary.No prob. That's exactly it, a "necessary evil."

[ThaBigP]

:laugh2:

If you only knew enough to know how silly you look.

If you only knew how frightening your opinion is to the cause of liberty and self-determination. The violence you would do to our Republic, if you had your way, would be astounding. And you'd do as much with a smile on your face and a "take THAT!" in your heart.

[theogt]

If you only knew how frightening your opinion is to the cause of liberty and self-determination. The violence you would do to our Republic, if you had your way, would be astounding. And you'd do as much with a smile on your face and a "take THAT!" in your heart.Sure thing, Justice BigP. Keep on keepin' on with the amateur lawyer bit.

[ThaBigP]

Didn't think so. Amateur constitutional scholars are always a hoot.

Basically 3. They're just buying certain assets (i.e., mortgage securities), they're not actually buying the companies.

And the individuals responsible have long been fired by most of the banks in question.

Wrong on three counts. Fannie and Freddie have been absorbed into our federal budget. And an 80% stake has been purchased of AIG. The purchase of mortgage securities is above and beyond the three companies I just mentioned.

[Haley94]

:laugh2:

If you only knew enough to know how silly you look.

You are the one who is silly, my friend. I thought we were in a free market system. If you don't make good decisions, you fail. Let the banks fail, maybe we, as a nation, will learn something and develop better public policy. Why should we, the taxpayers, assume the debt of wall street banks.

[ThaBigP]

Sure thing, Justice BigP. Keep on keepin' on with the amateur lawyer bit.

Saying it is so does not make it so.

[theogt]

Wrong on three counts. Fannie and Freddie have been absorbed into our federal budget. And an 80% stake has been purchased of AIG. The purchase of mortgage securities is above and beyond the three companies I just mentioned.Hello, did you not read the thread topic?

You are the one who is silly, my friend. I thought we were in a free market system. If you don't make good decisions, you fail. Let the banks fail, maybe we, as a nation, will learn something and develop better public policy. Why should we, the taxpayers, assume the debt of wall street banks.Holy cow. You don't understand what's going on here at all do you? We're not assuming the debt of Wall Street banks. We're taking over debt OWED TO Wall Street banks.

Goodness. Why do people have to discuss topics about which they're clueless?

[ThaBigP]

Hello, did you not read the thread topic?

If you're going to have the attitude of "move along, nothing to see here" and parade around your pretense that none of these are related, then you're really showing who the amateur is.

[ThaBigP]

Hello, did you not read the thread topic?

Holy cow. You don't understand what's going on here at all do you? We're not assuming the debt of Wall Street banks. We're taking over debt OWED TO Wall Street banks.

Goodness. Why do people have to discuss topics about which they're clueless?

You really don't understand economics, do you? Yes, the mortages represent money owed *to* the financial institutions. However, much of that money lent came from deposits and borrowing, representing debt *of* the banks. The depositors and lenders expect their money back. FDIC is ostensibly there to protect depositors, up to $100k per individual (and POD accounts), but the lenders are still on the hook. Their money likewise represents further deposits and loans outstanding. THAT is how this tangle is interrelated.

[ThaBigP]

Might I also add that, for the love of God and all that is Holy, may I never have to accept representation from Theo if indeed he/she is a lawyer. I'd hope my council would have a better rebut to a legal challenge than sticking his/her hands in his/her ears and going "nya nya nya! you look silly! nya nya nya! take THAT!".

[theogt]

If you're going to have the attitude of "move along, nothing to see here" and parade around your pretense that none of these are related, then you're really showing who the amateur is.In other words, no you didn't.

[theogt]

You really don't understand economics, do you? Yes, the mortages represent money owed *to* the financial institutions. However, much of that money lent came from deposits and borrowing, representing debt *of* the banks. The depositors and lenders expect their money back. FDIC is ostensibly there to protect depositors, up to $100k per individual (and POD accounts), but the lenders are still on the hook. Their money likewise represents further deposits and loans outstanding. THAT is how this tangle is interrelated.Yeah, Goldman Sachs has all those depositors to worry about.

LOL. You probably don't even get why that's funny.

[iceberg]

Yeah, Goldman Sachs has all those depositors to worry about.

LOL. You probably don't even get why that's funny.

WG - i take back wanting to hear what he has to say about it. doesn't look like he really gets it after all and i was blinded by earlier bling i suppose.

[ThaBigP]

Yeah, Goldman Sachs has all those depositors to worry about.

LOL. You probably don't even get why that's funny.

I presume you're referring to the fact that they are an investment bank, not a commercial bank. OK. Tell me, then, where they get their money? They did not grow it on trees after all... Seriously, follow the money...where did it come from for them to purchase securities and make enormous investments...??

Cute, also, that you would truncate my "deposits and loans" to simply "deposits" so you could "knock it outta the park". Problem is, you don't get to manufacture the arguments you wish to refute.

[hairic]

Has anyone found the text of the bill? I've found one source for it, but one source isn't enough.

http://calculatedrisk.blogspot.com/2008/09/bailout-proposal.html

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY
TO PURCHASE MORTGAGE-RELATED ASSETS


Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

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.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.

(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

[theogt]

I presume you're referring to the fact that they are an investment bank, not a commercial bank. OK. Tell me, then, where they get their money? They did not grow it on trees after all... Seriously, follow the money...where did it come from for them to purchase securities and make enormous investments...??

Cute, also, that you would truncate my "deposits and loans" to simply "deposits" so you could "knock it outta the park". Problem is, you don't get to manufacture the arguments you wish to refute.Their leverage was outrageous, no doubt. But that doesn't change the fact that we're NOT buying their debt. We're buying what's OWED TO THEM.

Now that you've googled enough information and are somewhat up to speed on the issue, I hope you get it now.

[MetalHead]

Funny, the article states that the Government doesn't know what it will get in return but one person on this board is so certain of it :rolleyes:.


Funny,I have gotten into brawls with that member,but still he gives an answer.
You do not...he's a part of the solution.
You are a part of the problem,like all the dummies who work in government.
That's why the smartest work in the private sector.

[masomenos]

I'm fiscally conservative, but when something makes sense, it just makes sense. We're not bailing a company out. There's no "them." It's us -- we're saving OUR entire financial system. And in the process the government can turn a little profit. It's lack of regulation that got us here. It's "free market" exuberance that got us here.

This is a no brainer. Which is why this will pass through by an overwhelming majority.

Bingo.

Really, the thread should have ended after that post.

[theogt]

Funny,I have gotten into brawls with that memberThat's what she said.

[Maikeru-sama]

Funny,I have gotten into brawls with that member,but still he gives an answer.
You do not...he's a part of the solution.
You are a part of the problem,like all the dummies who work in government.
That's why the smartest work in the private sector.

It Theo 5 pages to give a reasonable answer not filled with condescending responses like "get a clue" or "your stupid".

Don't really care who you have gotten into it with in the past and what your thoughts about me are on a personal level. You don't like me and I don't like you, no big deal to me. But the fact that you paint such a broad stroke such as stating that all the folks that work in government are dummies says quite a bit about you.

Condie Rice works for the Government and I am pretty...no I am positively certain she is smarter than you.

[bbgun]

http://marklevinshow.com/wp-content/themes/levin/player/?url=http://podloc.andomedia.com/dloadTrack.mp3?prm=2824xhttp://abcrad.vo.llnwd.net/o1/levin/rss/levin09192008.mp3

DL and listen to a classic rant. This travesty goes back to the Peanut Farmer.

[Heisenberg]

I'm not going to lie. I'm really not sure what to think about all this. I guess that's why I'm not in high levels of government. :)

[Heisenberg]

http://bloomberg.com/apps/news?pid=20601087&sid=a7iCv1F0kuvQ&refer=home

It now pretty much has to be more than the $700 billion dollars originally requested. Again, I don't know much about this, but that doesn't seem like a good thing. It really does seem like a blank check at this point.

[hairic]

Okay, found more sources. This legislation sucks serious ***. $700B is also not the cost, but the "credit limit". The total cost is how much debt the secretary cycles thru in 2 years.

In its current state, it makes the secretary of the treasury the most powerful man in the US. There's no recourse in court for you if his actions as secretary happen to **** you over; he'd be a kind of economic dictator.

Section 2b3, section 6, and section 8 are all problem sections. I probably also don't like 2b2, but I'm not going to go thru the US code to be sure.

[Heisenberg]

Okay, found more sources. This legislation sucks serious ***. $700B is also not the cost, but the "credit limit". The total cost is how much debt the secretary cycles thru in 2 years.

In its current state, it makes the secretary of the treasury the most powerful man in the US. There's no recourse in court for you if his actions as secretary happen to **** you over; he'd be a kind of economic dictator.

Section 2b3, section 6, and section 8 are all problem sections. I probably also don't like 2b2, but I'm not going to go thru the US code to be sure.

Uh. Yeah. On that note:

"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."

[Viper]

2.5 Billion dollars in bonuses to the exec's of Lehman Brothers.:bang2:

http://hiddenmysteries.net/geeklog/article.php?story=2008092116462740

[BrAinPaiNt]

2.5 Billion dollars in bonuses to the exec's of Lehman Brothers.:bang2:

http://hiddenmysteries.net/geeklog/article.php?story=2008092116462740

You know I would love to see these bonus that these top guys get for these bail out companies be stripped from them and put towards the debt they accrued. :laugh2:

[Viper]

You know I would love to see these bonus that these top guys get for these bail out companies be stripped from them and put towards the debt they accrued. :laugh2:

I agree, a couple years ago my company went under... We lost our retirement, while the high exec's received 50 mil bonuses.

[ThaBigP]

Along those lines, McCain has suggested that execs of these financial institutions who accept a Fed/Treasury bailout have their compensation whacked down to $400k/year max across the board. That, by the way, is based on the highest salary in government, the President's.

Update: Dems appear to be on board with this too - dunno whether the chicken or the egg came first...it's such a mess I dunno that it matters on this issue.

[ThaBigP]

Didn't think so. Amateur constitutional scholars are always a hoot.

Basically 3. They're just buying certain assets (i.e., mortgage securities), they're not actually buying the companies.

And the individuals responsible have long been fired by most of the banks in question.

Now you're wrong on a 4th count. From the news today:

"A draft of the plan obtained Monday by The Associated Press shows that Senate Banking Committee Chairman Chris Dodd also wants the government to get a stake in the companies helped by the unprecedented rescue."

http://www.foxnews.com/story/0,2933,425861,00.html

[ThaBigP]

Didn't think so. Amateur constitutional scholars are always a hoot.

Basically 3. They're just buying certain assets (i.e., mortgage securities), they're not actually buying the companies.

And the individuals responsible have long been fired by most of the banks in question.

Now you're wrong on a 5th count. Dodd (as well as Obama) want to allow the borrowers on these mortgages to get to keep the homes they can no longer pay for, and the government is buying. Therefore, the properties cannot be sold to recoup the cost of buying the morgages.

[ThaBigP]

Their leverage was outrageous, no doubt. But that doesn't change the fact that we're NOT buying their debt. We're buying what's OWED TO THEM.

Now that you've googled enough information and are somewhat up to speed on the issue, I hope you get it now.

2a. Freudian Projection


The following is a collection of definitions of projection from orthodox psychology texts. In this system the distinct mechanism of projecting own unconscious or undesirable characteristics onto an opponent is called Freudian Projection.

"A defense mechanism in which the individual attributes to other people impulses and traits that he himself has but cannot accept. It is especially likely to occur when the person lacks insight into his own impulses and traits."
"The externalisation of internal unconscious wishes, desires or emotions on to other people. So, for example, someone who feels subconsciously that they have a powerful latent homosexual drive may not acknowledge this consciously, but it may show in their readiness to suspect others of being homosexual."
"Attributing one's own undesirable traits to other people or agencies, e.g., an aggressive man accuses other people of being hostile."
"The individual perceives in others the motive he denies having himself. Thus the cheat is sure that everyone else is dishonest. The would-be adulterer accuses his wife of infidelity."
"People attribute their own undesirable traits onto others. An individual who unconsciously recognises his or her aggressive tendencies may then see other people acting in an excessively aggressive way."
"Projection is the opposite defence mechanism to identification. We project our own unpleasant feelings onto someone else and blame them for having thoughts that we really have."There - I Googled something you can actually use.

[Sasquatch]

I'm not going to lie. I'm really not sure what to think about all this. I guess that's why I'm not in high levels of government. :)

The recent resurgence of my portfolio is telling me that this a good thing. Of course, that could change, in which case I reserve the right to flip flop.

[Sasquatch]

I'm fiscally conservative, but when something makes sense, it just makes sense. We're not bailing a company out. There's no "them." It's us -- we're saving OUR entire financial system. And in the process the government can turn a little profit. It's lack of regulation that got us here. It's "free market" exuberance that got us here.

This is a no brainer. Which is why this will pass through by an overwhelming majority.

This isn't a gotcha question, I'm just curious.

Did the seriousness of financial crisis exceed your expectations? I seem to recall you predicting a mild economic downturn. What happened and how, if at all, has you assessment of the situation evolved?

[ScipioCowboy]

I'm not going to lie. I'm really not sure what to think about all this. I guess that's why I'm not in high levels of government. :)

Ditto.:)

And this is the very reason we live in a representative democracy rather than a direct democracy.

I won't feign any expertise or thorough knowledge of the subject matter, but I do have a question: The freedom of markets to regulate themselves and set their own rates is one component, nay, the central component, of free market capitalism, correct?

Of course, this philosophy can only be effective if businesses are allowed to fail when they make poor decisions; in doing so, the market can learn and actually correct itself. In the long run, it seems that these repeated bail outs only facilitate and encourage bad business practices and - if Ron Paul can be believed - prolong ownership of bad debt. Where's the incentive to exercise caution and sound business practices when big brother government is always rescuing floundering businesses and assuming their bad debt?

Last week, Neil Cavuto stated that the bureaucracy regulating the financial industry is much larger now than it was during the New Deal of the 1930s. Consequently, it seems increased government regulation isn't necessarily the answer. However, perhaps smarter government regulation is.

But I'm no expert. Far from it.

[DaBoys4Life]

I wonder where the country gets all the money from they are already 7-8 trillion dollars in debt.

[masomenos]

I wonder where the country gets all the money from they are already 7-8 trillion dollars in debt.

read this...

http://wcco.com/national/good.question.national.2.564093.html

[Sasquatch]

Consequently, it seems increased government regulation isn't necessarily the answer.

If that were true, why did the crisis originate in the lax financial environments of the United States and Britain instead of the heavily regulated economies of places such as Germany and France? European leaders seem to think that the problem lay in the lack of oversight by the United States government and its ad hoc approach to managing the crisis once it became apparent. Is there any merit to their criticism?

[ScipioCowboy]

If that were true, why did the crisis originate in the lax financial environments of the United States and Britain instead of the heavily regulated economies of places such as Germany and France? European leaders seem to think that the problem lay in the lack of oversight by the United States government and its ad hoc approach to managing the crisis once it became apparent. Is there any merit to their criticism?

You didn't finish my thought.;)

I said, "Consequently, perhaps increased government regulation isn't the answer. However, perhaps smarter government regulation is."

Even copious amounts of federal regulation will assists us very little if the government fails to address the problems that catalyzed this mess. For instance, according to my very limited understanding of the situation, the congressman responsible for overseeing Fannie Mae and Freddie Mac was Barney Frank - liberal democratic representative from Massachusetts. Unfortunately, Frank was so concerned with ensuring that a certain amount of bad credit risks received loans he overlooked the signs and indicators that were harbingers to this impending crisis.

Obviously, Frank's oversight is not the only cause of this mess. Far from it. However, it is an example of federal regulation and oversight failing to oversee and regulate the correct things.

Furthermore, it's not as if Europe has never experienced a financial crisis, and it's not as if our market is truly unregulated...as Ron Paul so eloquently explains:

http://cowboyszone.com/forums/showthread.php?t=129219

[masomenos]

Consequently, perhaps increased government regulation isn't the answer. However, perhaps smarter government regulation is."


That is exactly what I would say the answer is. I think it is analogous to how we view technological advancement. There is no question that technology has brought about both very beneficial and very destructive inventions, but we don't damn technology and halt all research just because something destructive is created. Instead, we preach responsible use, or non use, of that technology and we go forward with that in mind.

To me, government is the same way. We need it in order to continue societal advancement but it's not always going to affect the most beneficial change. When that occurs we don't need to just swear off government, we just have to make sure that we do it better the next time around.

I'm not against the idea of free markets but I do understand that they require rational self interest. Unfortunately, the rationality that is required is very hard to come by.