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This Sunday the Bush administration asked Congress to approve a “rescue package” that would give officials the ability to inject “billions of federal dollars” into Freddie Mac and Fannie Mae. The Federal Reserve also announced that it would make its short-term lending programs available to Freddie and Fannie, said the NYT.
An official said the Fed’s decision to permit the companies to borrow from its so-called discount window was approved at the request of the Treasury, but that it was temporary and would probably end once Congress approved Treasury’s plan. Some officials briefed on the plan said Congress could be asked to extend the total line of credit to the institutions to $300 billion.
The actions, which taken together could provide an overwhelming surge of capital to the companies, were the second time in four months that the housing crisis had prompted the government to scramble over a weekend to rescue a major financial institution.
Last March, the Treasury Department engineered the sale of Bear Stearns to prevent it from going into bankruptcy and cause a shock to the financial system.
Is this deja vu all over again? Nah, it’s just months of war money.
Didn’t the Bear Sterns Executives in the main get all their planned bonuses?
It makes sense to me to save entities from their own stupidities “if” their failure would bring others down and if the intervention will in fact save interest at issue.
Somehow I just don’t trust the government to be so decerning and what could easily be happening here is good money being thrown at bad businesses AS they go down, with all the golden parachutes fully inflated.
Just more corporate welfare. Don’t regulate us so we can make money, just give us tax dollars when we fail. Over and over again.
Gotta love those repuglicans. Good astute businessmen.
Corporate welfare sucks. Let them all tank, consequences be damned.
That’s the free market.
…is it time…?
Damn straight its time.
No one bailed out my record store when we went under.
Better brace for The GOP’s December Surprise!!
When these financial regulators and
pawnsleaders temporarily disregard their deep respect for the Lord’s day and work on the Sabbath, you know it must be important, and it was. Once a stampede starts, it’s impossible to predict the outcome, so preventing the stampede from ever starting is a very high priority.The good news is that to help pay off some of our debt, we’ve put the Washington Monument up on eBay, and the bidding is looking pretty strong so far. It’s already up to “French Toast Virgin Mary” level.
The bad news is that if we’re not able to preserve the social order in these stressful times, we may have to declare martial law for a brief time.
Show me the money!!! 3000 Million is chicken feed to the Chinese!
There’ll be another major bank go bankrupt within the next couple of weeks. IM was the tip of the iceberg. FM/FM _is_ the iceberg. And when that other one goes down, there will be a run.
Looking at the government trying to fix this makes me think of the little Dutch boy. But instead of a finger, he’s shitting in both hands and trying to plug the holes with that.
It’s kinda sad that everybody is blaming everybody else in this. Ron Paul predicted this years ago and everybody laughed at him.
Some of us didn’t laugh. We did our research and sold our 401ks to buy gold.
Those gold options due August 1 with a strike price of $650 look pretty good now, don’t they?
Wish I had 100 of ’em.
Thank you Ronald Reagan for your anti-regulation dogma.
Thank you conservatives for turning-off your brains when Right Wing talk show hosts and GOP leaders told you that regulation was bad for the economy.
You heard it here 1st (well, OK, 2nd).
Who’s next, Countrywide?
#10 – KD,
Countrywide was already bought by B of A.
#8, Unfortunately, I got seriously burned with options about 20 years ago. I don’t do options anymore. But . . . they would look good right now 🙂
Scott, you are correct. And just exactly why are they (Countrywide) still running TV commercials?
#14 – KD,
On that, I haven’t a freakin’ clue.
I’m with #2 let them all tank.
You want to know the reason the US dollar is tanking, there are too many dollars, tanks to trade deficits and deficit spending.
Banks actually add to the money supply every time they make a loan. (do a video google search for “Money as Debt”).
While it would be bad for the economy in the short run, in the long run is we should let these banks go belly up, all that debt money disappears, we have a recession instead of hyperinflation, and in the end we are better off.
Isn’t it amazing how Republicans and even some Libertarians hate government interference when they have opportunities to make lots of money, but when it all starts to come crashing down they want to socialize their losses on to the tax payers backs so in another decade or two they can do it all over again?
The hell with that! Corporate welfare needs to disappear. Let these millionaire CEOs take responsibility for their actions, greed, and yes FRAUD on the people.
LMAO @ skifree reference on the chart.
BTW you are all screwed with your subprime crisis.
In case anyone is having any trouble understanding the financial instruments that created the subprime crisis, please check this brief slideshow. It’s hilarious and true at the same time.
Subprime Primer
Three minor points that were a bit oversimplified in the slideshow:
1) There are 5 tranches not 3. (A – the good through E – the ugly)
2) They don’t keep the “E” (ugly) tranche. They bundle them together then cut that up into tranches too. Then you can buy the A tranche of a bunch of E tranches. The E of the E is sometimes called toxic waste.
3) The slideshow doesn’t discuss all of the government deregulation that allowed this. Mostly initiated by Foreclosure Phil Gramm, McBush’s economic advisor.
#10, it’s not that some regulation where it is absolutely necessary is bad, it is that the instinct of Liberals seems to be that everything should default to being regulated.
It’s hilarious and true at the same time.
Subprime Primer
That, my friend, was friggin’ awesome.
#18. OK, most of the time when someone provides an external link and says “check this out it’s informative and funny” it’s neither.
But that’s GREAT! I wonder if I get the guy in to where I work to give that presentation over beer 🙂
#19 – Sea Lawyer,
People should default to freedom. Corporations are tools, like hammers. They have no rights in and of themselves. Let their owners be free and the corporations themselves be tightly regulated.
Make people take responsibility for their actions under the guise of corporations.
Corporations should not be ways for people to hide from their actions, especially when those actions cause economic collapse, or worse in some cases, e.g. Union Carbide’s reckless poisoning of Bhopal India resulting in 3,000 deaths.
Why bail them out? Why give these companies a government line of credit to begin with? Basically the management used the quasi-government status to get better bond ratings, and they never paid taxes. They took those benefits and made plenty of money for themselves, now they are getting the Feds to shore up their stock price. Let’s nationalize these guys, or make it fully private.
# 19 – Sea Lawyer
The ‘instinct’ of the corporations and the wealthy aristocrats in North America seems to be: no regulation by default – or any other fault.
Apparently all the neo-con propaganda has baffled the brains of most citizens and they’ve forgotten the whole idea of government in the first place was to protect the poor and the middle class from the more egregious depredations of the wealthy.
Scott, the Subprime Primer is a real piece of work. Haven’t you posted that on the Cage Match before? If not, may I suggest it?
#22, if freedom should be the default, which I agree, then a minimum of regulation is the corresponding state. You don’t just impose regulations on the corporations within an industry, you impose them on the entire industry. If your aim is to heavily regulate corporations, then you must also heavily regulate the sole proprietor and partnerships too, otherwise your actions are discriminatory.
#3 I agree it sucks. But so does individual welfare for the exact same reasons.
One question to ask yourself though. Unless you are a politition, when was the last time a poor person gave you a job?
#26–Sea Lawyer==have a rough weekend? I have never heard such a load of dogmatic nonsense since I told Dr. Dodd as much.
WTF are you thinking? Big bad strawman villians all over the place.
Lets begin with==name one important liberty that should not be regulated?
#28, and there you go making up things I have not said. Minimal regulation does not equal no regulation. Scott Scott suggested that people should be free, but that corporations should be heavily regulated. So does that mean that the sole proprietor isn’t going to be made to operate under the same regulatory rules as a corporation, if he is so free and the corporation is not? How is that in any way just to the owners of the corporation?
Lots of collosal misconceptions being thrown around…
Corporations LIKE to have their indutries regulated because it is a way to limit competition. Large companies that are already started can easily absorb any regulatory costs but startups dont have a snowballs chance in hell.
I keep hearing that our economic problems are because companies aren’t regulated, but has anyone looked around? Our economy is more regulated than it has EVER been.
The real problem is too much government involvement with the economy rather than too little involvement. In particular the feds arbitrary control of the money supply has led to the devaluation of the dollar and malinvestment caused from the easy credit policies.
Republicans have surely been for less regulation than democrats…but they definitely aren’t anything resembling pro-free markets.
#20 – UTH,
Thanks.
#25 – BubbaRay,
Yes. I posted it in reply to this topic that also has a good comedy bit about it.
Aussie Comedy Duo Explain Subprime Meltdown
I also posted it on my own blog at about the same time.
Subprime Primer
Thanks for the hint to give both a plug.