"Heck of a job...Cox." Our Financial Katrina

I like this plan a whole lot better than the blank check with one person deciding how the money is spent.  I keep hearing Paulson say we need to pass a "clean" bill but this gave one person wayyy too much power for my comfort.  If we can find money to bail out companies then there is money for those who are in so far over their haeds because of this mess.  Too many people have been taken advantage of to let this slide. 

Michelle

I blog at http://www.mommycan.blogspot.com/

Hell to the fricking YES! ( http://www.msnbc.msn.com/id/26835745/ )

...a government official with knowledge of the talks said the administration had agreed to create a plan to help prevent foreclosures on mortgages it acquires as part of the bailout — a key demand of Democratic lawmakers.

Under other additions the Democrats are asking to the administration package, according to a draft of the plan obtained by The Associated Press:

    * Judges could rewrite mortgages to lower bankrupt homeowners' monthly payments.
    * Companies that unloaded their bad assets on the government in the massive rescue would have to limit their executives' pay packages and agree to revoke any bonuses awarded based on bogus claims.

The proposal by Sen. Chris Dodd, D-Conn., the Banking Committee chairman, would give the government broad power to buy up virtually any kind of bad asset — including credit card debt or car loans — from any financial institution in the U.S. or abroad in order to stabilize markets.

But it would end the program at the end of next year, instead of creating the two-year initiative that the Bush administration has sought. And it would add layers of oversight, including an emergency board to keep an eye on the program with two congressional appointees, and a special inspector general appointed by the president.

"I thought I woke up in FRANCE."

And now he has also mentioned China.

``We no longer have a free market in the United States, we have a government controlled free market,'' Bunning said in an interview. Paulson, a former chief executive officer of Goldman Sachs Group Inc., ``is acting like the minister of finance in China.''

Bunning, 76, criticized Paulson's successful effort in July to obtain congressional authority to pump unlimited amounts of money into Fannie and Freddie to keep them afloat.

``When I picked up my newspaper yesterday, I thought I woke up in France. But no, it turned out it was socialism here in the United States,'' he told Paulson at a July 15 Senate Banking Committee hearing.

Following Paulson's Sept. 7 announcement of the takeover of Fannie and Freddie, Bunning said he now feels like a citizen of China.

``No company fails in communist China, because they're all partly owned by the government,'' said the former pitcher for the Philadelphia Phillies.

(source:  Bloomberg ( http://www.bloomberg.com/apps/news?pid=20601087&am... ))

take your pic.

It could go either like Canada's 'crown corporations' ...gov't back companies..usually Hydro or Transport.

Orrrrr....like Russia or China. 

Look for me at http://crunchycarpets.com or check out the ladies at www.wetcoastwomen.com ( http://www.wetcoastwomen.com )

...I'm looking for more.  Can't find many yet.

So, Bunning is accusing his own party of institutionalized socialism.  McCain has already come out against paying the executives their golden parachutes and is for "greater oversight", but has tempered that by saying that he is "still reviewing the bill."

Has anyone else seen other Republican's bucking the White House on this one?

...with the rest of the Dems on this: ( http://news.yahoo.com/s/politico/13703 )

Even if the Treasury recovers some or most of its investment over time, this initial outlay of up to $700 billion is sobering. And in return for their support, the American people must be assured that the deal reflects some basic principles.

• No blank check. If we grant the Treasury broad authority to address the immediate crisis, we must insist on independent accountability and oversight. Given the breach of trust we have seen and the magnitude of the taxpayer money involved, there can be no blank check.

• Rescue requires mutual responsibility. As taxpayers are asked to take extraordinary steps to protect our financial system, it is only appropriate to expect those institutions that benefit to help protect American homeowners and the American economy. We cannot underwrite continued irresponsibility, where CEOs cash in and our regulators look the other way. We cannot abet and reward the unconscionable practices that triggered this crisis. We have to end them.

• Taxpayers should be protected. This should not be a handout to Wall Street. It should be structured in a way that maximizes the ability of taxpayers to recoup their investment. Going forward, we need to make sure that the institutions that benefit from financial insurance also bear the cost of that insurance.

• Help homeowners stay in their homes. This crisis started with homeowners and they bear the brunt of the nearly unprecedented collapse in housing prices. We cannot have a plan for Wall Street banks that does not help homeowners stay in their homes and help distressed communities.

• A global response. As I said on Friday, this is a global financial crisis and it requires a global solution. The United States must lead, but we must also insist that other nations, who have a huge stake in the outcome, join us in helping to secure the financial markets.

• Main Street, not just Wall Street. The American people need to know that we feel as great a sense of urgency about the emergency on Main Street as we do the emergency on Wall Street. That is why I call on Sen. McCain, President Bush, Republicans and Democrats to join me in supporting an emergency economic plan for working families — a plan that would help folks cope with rising gas and food prices, save one million jobs through rebuilding our schools and roads, help states and cities avoid painful budget cuts and tax increases, help homeowners stay in their homes and provide retooling assistance to help ensure that the fuel-efficient cars of the future are built in America.

• Build a regulatory structure for the 21st century. While there is not time in a week to remake our regulatory structure to prevent abuses in the future, we should commit ourselves to the kind of reforms I have been advocating for several years. We need new rules of the road for the 21st century economy, together with the means and willingness to enforce them.

“The bottom line is that we must change the economic policies that led us down this dangerous path in the first place. For the last eight years, we’ve had an 'on your own-anything goes' philosophy in Washington and on Wall Street that lavished tax cuts on the wealthy and big corporations; that viewed even common-sense regulation and oversight as unwise and unnecessary; and that shredded consumer protections and loosened the rules of the road. Ordinary Americans are now paying the price. The events of this week have rendered a final verdict on that failed philosophy, and it is a philosophy I will end as president of the United States.”

What has Obama said about it?

And do Republicans actually support this thing?   

Look for me at http://crunchycarpets.com or check out the ladies at www.wetcoastwomen.com ( http://www.wetcoastwomen.com )

Because that is what the White House is asking for.

The Democratic senators have taken the floor to demand that changes be made to the bill to make sure that taxpayers are NOT paying the ridiculous benefit and salary packages to the executives of these companies which are being bailed out.

They are also fighting against new and far reaching powers that would be extended to Paulson and others to spend the $700 BILLION of taxpayer money without oversight.  Yes, that's right.  Paulson and the White House are saying that they need all of the money and no accountability.  TO ANYONE.  Period.

I'm watching Dick Durbin (Democratic Senator from Illinois) and Jim Webb (Democratic Senator from Virginia) argue against delegating that much power to Wall Street, the Executive Branch, the Treasury and the Fed.   Especially if they are playing with that much of OUR money.

Now he has launched into the comparison of this situation to the granting of historically broad powers to the Executive Branch before being dragged into Iraq.

Dick Durbin:  "Excuse me if I'm cynical and skeptical, but I've seen this movie.  And I don't like the ending."

I don't care if you aren't interested in Wall Street usually.  I don't care if you don't know how to balance a checkbook.

If you tell me that you are a "woman who doesn't understand these complicated financial things", I will tell you that you are copping out.

There is history being made on the floor of the Senate right now. ( http://www.youtube.com/watch?v=f-nrjvsETQU )  Riveting, bloody, fighting for what is right frickin' history.  Whatever happens, the decisions made today and over the next few days will be in your FACE for years.

I've lived in Chicago for 20 years.  I moved here voluntarily and didn't want to leave.  I'm listening to Dick Durbin right now and I am so PROUD to be from Illinois that I think I might explode.

Wow, the financial news is just flowing fast and furiously.

The bottom line?

Henry Paulson and the White House want Congress to write them a check for $700 billion in taxpayer money to buy the bad debt on Wall Street.

Democrats in Congress are saying "not so fast" ( http://www.nytimes.com/2008/09/23/business/23pauls... ) and pushing for ammendments similar to those outlined by Robert Reich in my post above (make CEO's forgo their millions in compensation this year and next, let taxpayers have a stake in any assets for the risk that they are taking on, etc) in order to force accountability.

The White House and the Republicans are saying, "We shouldn't have to agree to anything!  Fast, fast!  The market needs you to pass this plan!!!  No changes!"

As Paul Krugma ( http://www.nytimes.com/2008/09/22/opinion/22krugma... )n is puts it:

Others are calling the proposed legislation the Authorization for Use of Financial Force, after the Authorization for Use of Military Force, the infamous bill that gave the Bush administration the green light to invade Iraq.
The current plan, as it is written, gives extraordinary power to Paulson and his successor, with little oversight or accountability.  Sound familiar ( http://writ.news.findlaw.com/dean/20020607.html )?

Democrats want pay limits for Wall Street execs, and loan aid for mortgage holders in bailout ( http://www.msnbc.msn.com/id/26835745/ )

Robert Reich lists 5 things that must be included in the bailout plan in order to protect taxpayers and try to restore accountability on Wall Street:

 1. The government (i.e. taxpayers) gets an equity stake in every Wall Street financial company proportional to the amount of bad debt that company shoves onto the public. So when and if Wall Street shares rise, taxpayers are rewarded for accepting so much risk.

2. Wall Street executives and directors of Wall Street firms relinquish their current stock options and this year’s other forms of compensation, and agree to future compensation linked to a rolling five-year average of firm profitability. Why should taxpayers feather their already amply-feathered nests?

3. All Wall Street executives immediately cease making campaign contributions to any candidate for public office in this election cycle or next, all Wall Street PACs be closed, and Wall Street lobbyists curtail their activities unless specifically asked for information by policymakers. Why should taxpayers finance Wall Street’s outsized political power – especially when that power is being exercised to get favorable terms from taxpayers?

4. Wall Street firms agree to comply with new regulations over disclosure, capital requirements, conflicts of interest, and market manipulation. The regulations will emerge in ninety days from a bi-partisan working group, to be convened immediately. After all, inadequate regulation and lack of oversight got us into this mess.

5. Wall Street agrees to give bankruptcy judges the authority to modify the terms of primary mortgages, so homeowners have a fighting chance to keep their homes. Why should distressed homeowners lose their homes when Wall Streeters receive taxpayer money that helps them keep their fancy ones?

What are some other implications of all of this?  Michael Hudson expressed it thusly:

They’ve already spent $5 trillion in the last two weeks to double the size of the national debt by taking over Fannie Mae. How can they bail out the gamblers, how can they bail out Wall Street and not—and claim that the Social Security system doesn’t really exist? They’ve used the Social Security money basically for the bailout. There it goes. They’ve made a choice. The choice is to bail out Wall Street against the people.

The Treasury is supposed to represent the government and the economy, and the Fed is supposed to be the board of directors of commercial banks, but now Wall Street plays both sides of the game. It not only supplies the heads of the Fed; it supplies the Secretary of the Treasury. And that’s why I said the class war is back in business with a vengeance. 

Class war?  More intense than the one that we have already?  Interesting.

...back in this next White House.

What an incredible systems thinker.  His rational, compassionate and measured opinions astound me.  His integity rocks me to the core.

Robert Reich Answers Your Questions ( http://freakonomics.blogs.nytimes.com/2008/05/01/r... )