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Home Front Economy
Democrats Begin to Set Own Bailout Terms
2008-09-22
WASHINGTON -- Congressional Democrats began to set their own terms on Sunday for a plan to rescue the nation's financial institutions, including greater legislative oversight of the Treasury Department, more direct assistance for homeowners and limits on the pay of top executives whose firms seek help.

The Democrats' demands came as Treasury Secretary Henry M. Paulson Jr. blanketed the Sunday talk shows to promote the Bush administration's $700 billion bailout package, emphasizing that it was needed not just for Wall Street, but for all Americans. He urged Congress to move swiftly to approve a "clean" rescue plan without tacking on extra programs. "I hate the fact that we have to do it, but it's better than the alternative," Mr. Paulson said on "Fox News Sunday."

The Bush administration proposal could be the largest government bailout of private industry in the nation's history, and it calls for nearly unfettered powers to the Treasury secretary. There is intense pressure to pass a rescue measure quickly because the markets remain jittery.
Posted by:Steve White

#28  Angry Saver had this to say:

Bernanke, while fed chairman, testified to congress that bank write-offs would be $50 to $100 billion max. He has no idea what he is doing.

He understands numbers in a book, but not human behavior. He has no understanding of the source of wealth - productive capacity.

The best solution I see is debt forgiveness/default. Bad banks fail. Debt holders take haircuts and either receive/issue equity or sell assets. Look at the results of the Lehman failure - within a week large portions of Lehman are fuctioning again.

Short term lending at a real rate of interest is a necessity. Forcing negative rates stifles the basic reason for investing - to earn a return.
Posted by: Zhang Fei   2008-09-22 19:26  

#27  No chance of a buyout ot merger for any of these banks or brokerages if there's still an outstanding debt of yet to be determined amount.

My view is that any bailout should consist of an attempt to stabilize the markets and ensure that assets are sold at fair, not fire sale prices. If they get fair prices, and the banks get liquidated, that's fine with me.
Posted by: Zhang Fei   2008-09-22 19:08  

#26  Dodd just came up with a good idea - that Paulson opposes - any losses from the disposition of assets bought by the government from the banks or brokerages should be made good as debt owed to the Federal government on the balance sheets of those banks and brokerages. Paulson appears to prefer handing out free money at taxpayer expense by buying bank assets for more than they're worth.

I'm no fan of the bailout, but that won't work. No chance of a buyout ot merger for any of these banks or brokerages if there's still an outstanding debt of yet to be determined amount.
Posted by: Mike N.   2008-09-22 18:50  

#25  From the Corner:

The US government's $700bn bailout plan needs a name — what should it be called? The US Treasury likes 'Troubled Asset Relief Programme', or Tarp. One of our readers suggests 'Secured Housing Investment Trust'.
Posted by: Zhang Fei   2008-09-22 17:13  

#24  The socialism streak is in their genes.
Posted by: JohnQC   2008-09-22 16:59  

#23  These folks won't be happy until they preside over the death of capitalism and then kick the bones into history.
Posted by: JohnQC   2008-09-22 16:58  

#22  [Frank's] House Finance committee quietly voted out a reversal of a recent mortgage reform.

We'll be doing this again in 10 years. What's gross economic mismanagement when their is one iota of social "injustice" in this world.
Posted by: ed   2008-09-22 16:54  

#21  Dodd just came up with a good idea - that Paulson opposes - any losses from the disposition of assets bought by the government from the banks or brokerages should be made good as debt owed to the Federal government on the balance sheets of those banks and brokerages. Paulson appears to prefer handing out free money at taxpayer expense by buying bank assets for more than they're worth.
Posted by: Zhang Fei   2008-09-22 16:52  

#20  While we can blame Paulson, a Bushite, or even Phil Gram, the Republican instigating part of the legislation that led to it, it isn't addressing the problem. Many consider the Fed Reserve Chairman to be the most powerful person in the US, as well as the world, as they determine monetary policy yet are unelected and without oversight. The Depression era banking laws separating the investment banks were repealed by Allan Greenspan(wife is Andrea Mitchell, of oppositional NBC infamy) during the Clinton years. Paul Volcker, former Fed chief, was at the helm of the UN when Oil-for-Food was set-up, yet got to conduct the investigation into it, absolving himself from any responsibility. The UNDP's investment banks have even been traced to financing the Nork's nuclear program and have been unaccountable. Bernanke should have seen this coming, too. I hope Congress doesn't hastily pass legislation without correcting the real problem. And since these CEO's have paid themselves billions while stealing bread from the taxpayers' children, I'd hope some tracking of their Swiss/offshore accounts would lead to funds for restitution to our coffers. Every billion helps.
Posted by: Danielle   2008-09-22 16:40  

#19  The following is why the bailout must not go forward - while we're allocating dollars to the bailout, Democrats have insisted on the continual addition of new items to the books that will require future bailouts. From the Journal:

Fan and Fred's patrons on Capitol Hill didn't care about the risks inherent in their combined trillion-dollar-plus mortgage portfolios, so long as they helped meet political goals on housing. Even after taxpayers have had to pick up a bailout tab that may grow as large as $200 billion, House Financial Services Chairman Barney Frank still won't back a reduction in their mortgage portfolios." In the Journal's Political Diary, Holman Jenkins Jr. adds, "[Frank's] House Finance committee quietly voted out a reversal of a recent mortgage reform. The latest bill would again require the Federal Housing Administration to allow seller financed downpayments — which even the FHA calls an engine of fraud.
Posted by: Zhang Fei   2008-09-22 16:14  

#18  Bush should threaten a veto on any earmarks.
Posted by: Nimble Spemble   2008-09-22 16:13  

#17  Think of the "Fox in the henhouse," "The inmates in charge of the asylum" and the donks in charge of the checkbook. I don't see much of a chance at a break for the American people anytime soon unless McCain get elected. Even at that I would anticipate more of the same--an obstructionist Congress at every turn and partisan politics ratcheted up a few more notches.
Posted by: JohnQC   2008-09-22 16:13  

#16  This two-year plan would be risky even if you trusted Paulson to do the right thing (which I don't). The fact is - in four months, a Democratic presidency might be in charge of this thing. Why would we give them a blank check over $700b?
Posted by: Zhang Fei   2008-09-22 16:03  

#15  We need oversight/

We need a Special Prosecutor

I was thinking of a cigarette, wall, and blindfold. Oh, and yes, most importantly, a firing squad.
Posted by: JohnQC   2008-09-22 15:09  

#14   From what I can gather.. Senator John Kerry .Pelosi lost pots of money when Fannie and Freddie fell of the cliff

TW - I was wondering about that. It was AIG that they lost big money in and AIG was the one that got the bailout.

I don't know enough to comment, but I can't help wonder if Pelosi, Kerry et al would have lost MORE money if the bailout had not happened.

Not commenting on if the bailout was a good idea or not, just noting that it was "good fortune" for Pelosi and Kerry that it got a bailout.
Posted by: Betty Grating2215   2008-09-22 14:50  

#13  Still we need _some_ oversight. Or at least make this very, very, transparent. No 'secret funds' or 'An undisclosed congressman asked for 45M for Hostile Takeover Bank in bumcluck Iowa'...

Unfortunately I fear that, while we need this now, the Democrats in congress won't be able to decide which pork, earmarks, and outright giveaways to include in this before its too late.

Its a case of so-much pork to choose from.... so little time...
Posted by: CrazyFool   2008-09-22 14:38  

#12  #7: I have no problem with some oversight -

You're setting the wolves who've been eating your sheep to be your sheepdogs if you let the dems get anywhere near this cash, it sticks to their hands FIRST, then what's left MIGHT go where needed. (But don't count on it)
Posted by: Redneck Jim   2008-09-22 13:26  

#11  Pig Men Lobbyists moving in
"Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it...investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees." -- These are the same firms that earned millions of $ originating these bad assets. Nice work if you can get it.
Posted by: Anguper Hupomosing9418   2008-09-22 12:11  

#10  Reed wants Treasury to speculate in firms under temporary regulation with *warrants*? Yeah, that'll end well.
Posted by: Mitch H.   2008-09-22 10:56  

#9  #6 We need a Special Prosecutor

I nominate Rudy Giuliani to set it up! We need to shut down operations like this CARPETBAGGER! who have been making housing loans to the unqualified for years and immediately pawning them off to Freddie and Fannie.
Posted by: Besoeker   2008-09-22 09:35  

#8  From what I can gather, Senator John Kerry (or at any rate his charming wife) and Representative Nancy Pelosi lost pots of money when Fannie and Freddie fell of the cliff.
Posted by: trailing wife    2008-09-22 09:30  

#7  I have no problem with some oversight -- nice to see the Dhimmis finally agree that oversight is needed after years of killing the calls for oversight of Fannie and Freddie. In return for more oversight, not a single earmark. Not. One.
Posted by: Steve White   2008-09-22 09:26  

#6  We need a Special Prosecutor to expose and indict the democrats who have contributed to this clusterphuck mortgage situation. That $700,000,000.00 is your money, don't let go without kicking ass a plenty. Demand full accounting, or surrender to corruption.
This scam started by Slick Willy Clinton, and enhanced by Dodd, Obama, Kerry, Barney Frank and company. Let's roll !
Posted by: lollypop   2008-09-22 08:58  

#5  Oversight is needed. Michelle Malkin has a long article on the Treasury Secretary Henry Paulson and (among other things) his ties to the Chicoms.

And this guy would have sole discretion (without review or oversight) of where the $700B goes?
Posted by: CrazyFool   2008-09-22 08:51  

#4  Don't forget all the earmarks they are stuffing the bailout with. I expect it'll reach at least $800B after all the earmarks are added.
Posted by: CrazyFool   2008-09-22 08:36  

#3  Calling all Dems: Great tax-and-spend opportunity with options for plenty of pork and vote-buying!
Posted by: gorb   2008-09-22 07:09  

#2  more direct assistance for homeowners

Mules, 40 acres, reparations, all credited to the Obamessiah, Pelooosi, Harry Reid? They simply cannot let any type of salvation take place during a "W" administration.
Posted by: Besoeker   2008-09-22 03:51  

#1  as Democrats pushed for oversight authority of the bailout program.

greeeat.
Posted by: Betty Grating2215   2008-09-22 03:31  

00:00