Reminds me of back during the Vietnam war when if you wanted a federal research grant that had the words “war” or “soldier” in the application, head to the bank and cash the check. But want to study something useful, go away. We’re at war!
In a change from the original proposal sent to Capitol Hill, foreign-based banks with big U.S. operations could qualify for the Treasury Department’s mortgage bailout, according to the fine print of an administration statement Saturday night.
The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.
Treasury Secretary Henry Paulson confirmed the change on ABC’s “This Week,” telling George Stephanopoulos that coverage of foreign-based banks is “a distinction without a difference to the American people.”
“If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution,” Paulson said.
“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.”
Liquidity crisis means give the silly investors back their money and let them run away before the real $hit hits the fan.
The Asian-Flu bailouts allowed many of these same institutions to flee foreign economies mostly intact while the citizens of those economies got hosed.
Is this one different?
Two words: “Keating Five”
If you are aware of that part of US history and are still willing to vote for Palin-McCain you deserve any financial misfortune that may befall your family.
They should stretch this out as long as possible, since the Chimperor wants to keep Paulson in charge of the bailout, them being the same two guys (with the aid of basically the entire McCain advisory group) that drove the economic ship into the iceberg.
One question? Where to put my money now, so it is safe from an economic crash AND the devaluation that will rocket in the next few months?
When you subsidize and reward bad behavior, you create more of it.
We need to re-align risk and profit again, separating them allows for too much greed-driven stupidity on too grand a scale. Fannie & Freddie need to die.
As large as it is, the current bail-out is not as important as what we do next.
In the most recent 3-4 bailouts over the last 6-7 years, the next steps were to continue de-regulation and increase the risk taking.
I have seen nothing so far to make me think anything has changed.
“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.”
The president has requested the above in a bill this weekend. Unreviewable executive power ought to fix our banking problems, and good.
It will be long lasting period of peace and prosperty too, since the court will be disallowed of reviewing this bill if it becomes law, so says the bill!
http://www.huffingtonpost.com/larisa-alexandrovna/welcome-to-the-final-stag_b_127990.html
All the money in the World, ends up on Wall Street. The global economy has no nationality.
If you think about it, partisan attempts to overstep the limitations of the initial draft might be the best thing that can happen at this stage.
With no indication of how the paper being bought will be valued, no explanation of how the plan will solve the problem and the attempt to execute it without any kind of legislative or judicial oversight, Paulson’s plan is wholly unacceptable.
And it’s probably going to fly right in under the public radar, because something of this magnitude is simply off the scope for most people. For all the good it will do, everyone should be writing their congress person to object to this proposal, if for no other reason than to be able to claim that they opposed the measure later on, when USA Inc. finally tanks.
I’m on Bush’s side on this now – print more treasury bonds and sell them China. I need to buy a new Lexus soon.
Folks, if we keep this republican house of cards propped up long enough most of us will be in the clear – Repubs, Dems and Liberals alike.
Life’s too short to worry about those rug rats. Also, things will just work themselves out anyway.
Does this include the Bank of China?
During the 1929 stock market crash, J.P. Morgan (the man, not the bank) tried to hold off the crash by attempting to bail-out the entire market. He did not succeed.
Now Paulson thinks he can do it. Simply put, there isn’t enough money in the world to re-inflate the market bubble. and it shouldn’t be re-inflated. The market was massively over-valued. A 1000-point downward correction (minimum) is required.
All this bail-out will do is allow the large banks to dump their worthless debt onto the taxpayer.
This weekend, every bank in the world is pouring over their books to see what they can dump next week – in anticipation of the U.S. treasury buying it all up.
The main thing is that the CEO’s continue on in their leadership positions and continue to be paid the same multimillion dollar salaries which are far less than they are worth. Really.
#10. Surely, Steve Jobs is an exception?
Bailout no one. Let the chips fall where they will. This is the only way to fix this problem.
Stupid and greedy investments should fail. The S&L bailout from the late eighties, encouraged the stupid and greedy investments that are now failing.
Let these stupid and greedy investments fail, or the problem will be far greater the next time.
During the Great Depression Grandpa once told pop that the good news was everything was cheap. The bad news was nobody had any money.
In the next one it will take a trillion dollars to buy enough used paper to start a fire. The good news being you can get that for a match. That is if you have a match.
Our fearless leaders are insane.
They should bail me out! I’m in debt
#14 – Sleepy One
Yeah, well f&ck you and the horse you rode in on. Nobody cares about you. They only care about paper-shuffling mega-corporations and obscenely overpaid paper-shuffling executives.
Nobody who actually does anything for a living has a chance.
Wait 120 days. When we blow out the bad air and inhale the good air, maybe regular folks can get a break.
Isn’t this bailout the equivalent of a zero down, interest only loan? At what point will the country owe more in interest than it takes in through taxes? I listened to part of a screech by Gov. Palin where the crowd booed every time she mentioned patriotism and taxes in the same sentence. If we the people, who in theory are the government, are unwilling to pay for what we get, we won’t be getting much more credit when our credit rating tanks.
How much BS can one man take ?
You want to make some money ?
Short the greenback.
Neither McCain nor Obama have a hair long enough on their ass to do what needs to be done to fix this. They are going to put another trillion dollars out there, devalue the dollar by another 10%, save all the big companies who have contributed to their campaigns, and leave us with the bill. We are all about to take a 10% pay cut.
People say we shouldn’t let them fail. I asked a buddy of mine from the FDIC about that today and he said if we did, no one could get any credit to buy anything because all the creditors (mainly foreigners) would turn the tap off.
I asked, is that so bad? He seemed to think it would force everybody to live within their means because there would be no more boat loans, no more new credit cards, no new jet skis, no new vehicles, no new campers, no new anything unless you paid cash. He did say that if these big companies went into bankruptcy, the gov would end up owning the debts anyway, for free. This bailout package is to keep the money-loaning business in business.
Obama and McCain are both supporting a bill that will do nothing more than keep the loaning businesses in business. The government is going to get those properties in either case.
If this doesn’t show how closely tied these two parties are to each other, nothing does. One wants to protect their buddies and the other wants to make sure they get their social programs — and the solution is the same for both. Does this tell us something?
#18 – LibertyLover
So. What do we do? Channel Abby Hoffman and start a revolution? Write in Ralph Nader? Have you got a suggestion, or just more “woe is me” bitching and moaning?
Why do people blame the repeal of Glass-Steagall for this? Banks failed while that law was in place too.
This is happening because of the post-Enron regulations, plus the use derivatives, plus the higher interest rates that made loans unaffordable.
Without the first two, banks wouldn’t have failed, they would have been a little less profitable, and had plenty of houses on their hands.
clueless thought:
i would imagine its pointless..its all going to crash anyway..imo this is just phony political/media cannon fodder to make everything seem ok until our elections are over..or to keep the boat afloat until the end of the fiscal year..(for whatever reason?)
i’m curious what’s going to happen september 30th, -the end of the fiscal year for the US and the true depth (abyss?) of our economy comes out..
/me opens an umbrella..
-time to to head south of the equator…
Do I have this right?
1) Mortgage bankers (the folks who offer mortgages) write and approve loans for folks who cannot afford the loans. In some cases the applicant lied. In some cases the lender lied. In some cases the terms of the loan were unsistainable. In some cases everything looked good and was accurately represented, but bad things happen, even to good people.
2) Soon after the loans went through, often within days or weeks, the loans were sold and the originating lender was of-the-hook if the loan went bad. The same loan is then resold, and sold again. At each step loans were packaged together sold in bunches and eventually offered as mortgage-backed securities. Those securities themselves were traded.
3) The bad loans began be revealed as the housing market cooled, equity growth reversed, and adjustable rate mortgages priced folks out of their homes.
4) Large investment firms holding many of these securities are now left holding a bag of worthless securities.
What to do?
A) Identify the fraudulent borrowers, and lenders and prosecute them? No.
B) Identify the good-faith borrowers and work with them to structure loans that they can pay. America does not need more people living on the street through no fault of their own. No.
C) Remind investors that there is no guarantee that the value of investments will rise? That a lack of due diligence and transparency is a good reason to avoid some investments? That entrepreneur means risk taker. No. No. No.
D) The government, would probably spend the least if it simply became the mortgage holder. Eventually that debt would be repaid. it might take thirty years,but it would be repaid. No, couldn’t possibly do that.
It appears the thing to do is to protect the investors holding those securities, not the homeowners.
The poor investment houses had no way of knowing they were buying a pig in a poke. Let the mortgage bankers off the hook entirely. It’s all in the game. Just pile another few hundred billion on to the national debt. And do it fast, no time for debate or alternative proposals to be put forward.
The investors, not the taxpayers, should pay for the investors mistakes. If that happened, investor behavior would change. Who would invest in a security that can’t be accurately valued? Who would allow naked short selling? Who would buy a mortgage on the secondary market if the originator had nor financial risk in approving the loan? Who would lie on a mortgage application. No one would. The risk would be too great.
As it is now, the risk is gone. The taxpayer will cover the losses.
Doing otherwise, as is being done, simply means this will happen again and again. Bad behavior is being rewarded, not punished. Rewarded behavior is more (not less) likely to occur in the future.
#22 Couldn’t have said it better myself.
I’m John McCain, and I approved this meltdown.
#24
LOL!
“protecting the American people”???
LOL!!!
This is about NOTHING but transferring even more wealth from the middle, and lower, classes into the hands of the ultra wealthy.
Enjoy the road to serfdom.
I think we are helping the wrong people here. Should we help financial institutuions who knowingly made bad business practices. Or the home buyer’s who were not properly educated on accepting these loans. Another, trickle down theory. Let’s bail out the banks then hopefully the rest will benefit.
The poor people of America say a big “NO” to bail out.
The poor people of America do not have any savings and they say, “Who cares about those Wall Street Investors”.
They lost the money let them pay the cost.
That is what I am hearing this morning.
#19, MM, I’ll overlook the acidic response as you seemed to truly want to know my thoughts.
What do we do?
1) In another post I found that inflation had increased a certain amount over 40 years yet our income had only increased 1/2 of that. So how is it we all seem to live a little higher on the hog? Credit.
As proof — think about this — since the days of the Romans, one ounce of gold would feed one person at sustenance levels for one year. (Note I am not necessarily advocating a return to the gold standard but we need a point to measure from and this fits the bill perfectly.) In the mid-60’s that was $35 a year. Today that is nearly a $1,000. As someone who feeds a great many people from time to time, that number is still accurate. I can feed any number of people a day for $2.75 each (I do have to shop around). Has our income grown to match this? Hardly. The reason we’re able to afford this is because we buy everything else on credit. This leaves our real income available to pay these prices.
As a people we should to decide if living on credit is how we want to live. I say, “No.”
2) As there is no way we’re going to talk our “leaders” out of letting these companies fail, we all vote for someone other than the two parties who’ve been running this country into the ground for the last century. We’re going to end up with the debts anyway, so where does that really leave us? As a people, we should make a statement that we do not approve of this and voting them out is the best way to do it.
3) As a people, we should ask ourselves if “need” is a reason worth putting ourselves in debt for. For so long we’ve felt that if someone “needs” something, they are entitled to it. Is that true? There are only three things people need: Food, Shelter, and Clothing. I’ll admit, there are some who cannot afford even this. There are organizations that help, but we still have a homeless problem. As a people we should to donate to these organizations. Forced donations are nothing more than slavery. The American Dream is just that — a Dream, not an entitlement.
As a people, we need to take a stand against this corruption, tell our “leaders” that enough is enough, and get them out of office.
Wait, I’m wrong here — we don’t “need” to do it.
We “should” do it.
Gold is only recently approaching $1000. Two years ago could you have made it on $500?