Scared Monkeys Discussion Forum

The bail out bill has failed and the Dow is down 700+ points.  Why did the Republicans fail to support the bill even though it was proposed by the Republican administration?  Is there such a deep division in the Republican party that they would not support the President?  How will this affect the McCain campaign?  Will the Republicans - should the Republicans - come back with another plan or are they going to let the economy continue to tank?  Scary times, these . . .

Yes, A's . . . scary times.

IMO, this is a bi-partisan responsibility.  Before the vote, Nancy Pelosi took the time to stick the knife in and twist.  Wonder why she did that? 

The Democrats could have passed the bill, if all their members cooperated.  They did not.  The Democrats do not wish to take full responsibility for the bill.

Congress fiddled while Wall St. sparked.  They didn't react until Bush yelled fire!  This situation was been sparking for quite a while.

John Q. Citizen wished he had stuffed his mattress with marshmallows.  At least, there would be something to do to make use of the flames.  Roasting marshmallows beats watching the bi-partisans beating each other up.

With all due respect...this will tell you exactly who is responsible and who tried to stop it.

http://www.youtube.com/watch?v=NU6fuFrdCJY

This will show you how the concern was received in the House:

http://www.youtube.com/watch?v=_MGT_cSi7Rs

While these may be scarry times...we cannot 'solve' a problem with more of the same.

I remember some time ago, before the bailout watching a program that interviewed some mortgage bankers.

One said, he wished he'd gotten out in 2006, when the 'in' people started leaving.  He got stuck holding the bag of bad investments.  He gave a small speech about how the problem happened.

I wonder what the foreclosure rate is for these substandard / subprime loans?  From memory, I believe it was upwards of 50%.

Who was responsible for originating these loans?  Who did the legwork and investigation of these borrowers?

Who is going to ensure that someone keeps an eye on the originators of these loans?  Make sure there aren't so many future loans that go bad?

It seems like Wall St. (and a number of banks, foreign and domestic) got stuck holding the bag.  The US taxpayer, one way or another is the final resting place of the bag.

I don't know why Wall St. didn't just say "no more" years ago. 

Is this going to be a cycle for taxpayers?  Forever getting stuck with subprime/risky mortgages? 

Who is going to keep an eye on the standards for borrowers?  Loan originators?

Wall St. got greedy, but someone had to sell these people property and someone had to promote these risky loans to these borrowers. 

Was it the right thing to do?  Should this practice continue?

The "Community Reinvestment Act".  CRA has to either be abolished if it is not properly administered.  It has not been. 

This cannot be "fixed" with a bailout.  It will require more insurance coupled with natural market corrections.

I don't know what the point is of pointing fingers and placing blame at this point - and I'm sure there is plenty to go around.  On TV everyone has an opinion about who is responsible.  But that is not the issue now, it is just a diversion. The state of the economy is the issue and another day has gone by without a solution.  I don't think anyone was looking to this bill to "fix" the economy, but to stabilize the banking system so that the economy can function.   

I wonder what the administration can do without involving Congress.  Does the SEC have the authority to suspend mark to market accounting rules?  That could help stabilize things.  Can the Fed do anything to take this toxic debt off the banks' balance sheets - or to somehow neutralize it for the time being?  Can the Fed somehow guarantee this debt without actually buying it and thus remove it from the balance sheet?

Without intervention, I fear for the future of the economy.  We will continue to see banks fail.  Over $1 trillion was lost today, and that means you and I, our retirement plans, savings, 401K's, etc are losing value and will continue to do so.  If banks are not lending, the economy will slow, meaning severe job losses.  I fear for those in their 50's and 60's who may not have time to recover lost savings, or recover from job loss, before retirement.  Something needs to be done, and soon.  I truly hope that our pols can put their partisan issues aside and put the best interest of the average American first. 

I don't understand where all this toxic debt came from.

If the U.S. Government is backing this debt as I've read (Freddie & Fannie, maybe some other scheme), Why not let the U.S. provide relief as was intended?  

Why does there need to be a bail-out?

Maybe the best thing to do is put things aside and look at the problem from a new perspective?

If there was a free market to begin with (one not backed by the US government and taxpayers) I have to believe that the originators of these loans would have been more prudent in doling out the money.  IMHO they would have expected borrowers to pay the money back.

It seems like when the US is backing something, it becomes a "free for all" with regard to irresponsible behavior. 

 

The dog probably bought a house at an inflated price, someone profited by selling the house, and making fees on the loan.

I believe how somethings ends is just as important as how it began. 

Where are the roots to the problem?  Mess?  Future stability?

Old saying that goes something like this ~



Politicials are bound to go on and on and on...just watch CSPAN.

There are people in the 50's and 60's and better that lost and never recovered with all the previous scandals - Enron (and dozens of others at the same time), dot.coms, etc. 

Will the bailout just put off the end for another month?  Year?

When will common sense return to the financial system? 

No more risky business paid for by the US Taxpayer? 

Is there anyone who will offer something other than finger pointing or words?

Where is the savior?  When will salvation come for the taxpayers?

If salvation is available in January 2009, why not today?

I'm thinking taxpayers will have to wait until January 2009 for help from the candidates...that sound like a Jim Jones thing.  The end is coming and you must follow me...drink more Kool-Aid.

Who will step up to the plate this week for taxpayers?

Where is the political party that walks the walks, and does something more than talk?

Thank you for the links. I'll add this one without further comment other than to say, thank God for the technology to record history,

http://www.youtube.com/watch?v=VgctSIL8Lhs

Those who are concerned about others palcing blame are missing the point.  The bailout failed because the democrats lead by Pelosi could not bring the needed votes to pass it.  There were twelve more votes needed and out of the thirty-seven members of Barney Frank's committee twelve voted against their own bill.  Why??? 

Look deep people.  In order to understand what happened yesterday we need to understand how it got that way in the first place. 

Sound bite information does not tell the story.  Bottomline they tried to pass a bill that the people did not want.  They tell us that we are wrong and that they should have done a better job 'selling' it.  Comeon folks.  We are smarter than that.  Understanding the solution will involve understanding the root causes.  Until the causes are eliminated there cannot be a viable solution.  I'm not trying to make this political.  It has to be about the truth.

I do believe mark to market can be suspended or changed.  In fact I believe that may be happening today.  It's a step toward stabilization for now.  I don't believe in writing off the debt.  Too many people lose that way.  Neutralizing it for a period of time was what they were trying, in a way, to do with the bill.  They just had too large of a price tag for something that 'might' be profitable.  The bill was a risk and the people have said no.  For once, elected officials were listening.

Thank you, both!  We need to know more, be more aware.

Fannie, Freddie disclose subpoenas, investigations:

By ALAN ZIBEL, AP Business Writer
Tue Sep 30, 5:33 AM ET
 


WASHINGTON - Adding to their woes, mortgage finance giants Fannie Mae and Freddie Mac are facing a federal grand jury investigation into their accounting practices.

ADVERTISEMENT
 
The mortgage finance companies said Monday that a federal grand jury in New York is investigating accounting, disclosure and corporate governance issues at Washington-based Fannie and McLean, Va.-based Freddie.

More :   //news.yahoo.com/s/ap/mortgage_giants_investigations   

I think increasing FDIC to $250K would promote some confidence.  Overextending could be a problem, but building confidence would help.

Mark to Market:  I'm struggling to understand this one, but several have mentioned Mark to Market as a problem.  Suspending it, temporarily, could be helpful.  We could see the results almost immediately.  Is that correct?

Slogger,

Here is mark to market:

Mark to Market.......

1. The act of recording the price or value of a security, portfolio or account to reflect its current market value rather than its book value.

2. In terms of mutual funds, a MTM is when the net asset value (NAV) of the fund is valued upon the most current market values.

1. This is done most often in futures accounts to make sure that margin requirements are being met. If the current market value causes the margin account to fall below its required level, the trader will be faced with a margin call.

2. Mutual funds are marked to market on a daily basis at the market close so that investors have an idea of the fund’s NAV.


According to some calculations making a change will make a difference.  If you trust Newt Gingrich, which I know some people do not like him, changing this to a 3 year rolling average could free up to 500 billion.  It's difficult to tell if that is a good number without seeing the internals that he used.  But, I think it should be considered.

While this is a good thing don't get your hopes up that anything will happen with this.  Here's an interesting article from back in 2000.  Check this out: 

http://www.motherjones.com/news/outfront/2000/07/outfrontja00.html

Here's a snippet:

"The industry certainly had plenty of clout on Capitol Hill. From 1991 to 1994, lenders handed out $2.3 million in campaign contributions, and the investment paid off. At a meeting of the Mortgage Bankers Association in 1993, the FHA unveiled a “lender select” policy allowing bankers to choose appraisers. The news was greeted by a standing ovation."

Nothing seems to have happned then.  If a lot of the bad paper FM/FM bought and sold is a result of flipping who knows if anything will actually be done.

Thanks, Truth.  The above does give me a little better idea of the subject.  Trust Newt, trust a politician, is a "trust . . . but verify" proposition.  I am hearing that Mark to Market is being discussed.

BTW, I like your signature line!   :cheers:

I work in the Capital Markets industry and sell MBS (Mortgage Backed Securities), agencies, municipal bonds and corparate bonds, but the bulk are MBS. They are bundled and packaged together in tranches and sold. They factor down every month on principal and interest until they pay off. The mark market accounting system is almost impossible to do accurately as on pool # of a MBS could hold 1200 or more mortgages-it's next to impossible to value that as a security daily. So, when the market is up they are valued higher, but in a down market the firm holding the inventory has really no way to value them as an asset, so they will write the down to zero. There really is value behind the assets, the homes themselves. If you suspended mark to market which could be done without legislation, the companies that hold these assets woldn't have to borrow money to have the proper leverage ratio. It would change the entire scenario for all the holding companies with these assets on there books. Hope that helps explain it better. ::MonkeyEek::

Thanks, Island!

I have no idea what the drawbacks would be.

I heard some CNBC pundits discussing the drawback of suspending the mark to market rule that it would allow banking execs wide discretion in valuing these assets, which obviously could cause other problems down the road.  Some are calling for the assets to be sold on the open market, that is, creating a market for those investors who wish to bid on them.  That way, the process would be transparent, the open market would establish value and all parties would be on the same page.  If this could be accomplished it could make a floor for RE values currently spiraling downward.

I agree also that increasing the FDIC limits would go a long way to stop runs on banks.  I think Sheila Bair, Chairman of the FDIC, is on record saying she is for it.  Today the Irish government moved to insure all deposits in that country. 

It is very heartening to see this crisis being taken seriously and seeing all these ideas surfacing in lieu of the rescue plan.  Perhaps with a revived rescue of some sort, and these other creative ideas, we can get the credit markets to function again.  We still have a long way to go, probably years, to sort out this mortgage mess, but if we can keep the economy at least limping along a lot of jobs will be saved.  Does anyone think an interest rate cut could help here?  Any other ideas that would  help without putting a lot of taxpayer dollars on the line?

What good would an interest rate cut do if various entities are still writing these risky mortgages and loans?

If these companies could go "mark to market" without legislation, why haven't they? 

What is the value of a bogus mortgage, loan, or other investment?  What is the past, present, and future value of "0"?

There was a Democrat on CSPAN this morning.  My summary - the executives of some of these companies spent every waking moment and stayed up late at night thinking up new versions of "junk bonds" and other schemes backed by the US taxpayer.  Some, made $10 million a day for their labor. 

How much of that $10 million was put away for a rainy day?  For the day the schemes failed?

Why isn't there something in the pay scheme for these people that includes giving these monies back if the company goes south?

I have to believe there are good sound financial companies.  Companies that are good investments for the future of the US.  Companies that aren't choking in speculation?  Why not make these companies the conduit for business, mortgage, and other loans?  Grease the wheels of responsible lenders and banks?

I don't know to many on Main Street that make $10 million a day.  I saw a special at the show I.O.U.S.A. that showed a Chinese couple that together make $10 a day and saved $5 of that to better their life. 

What benefit does the $700 million bailout have for Main Street?

One of the talking heads suggested a trickle up scheme for Main Street.  Instead of a bailout/rescue/rip-off, give each taxpayer a check for $5,000.

http://www.wabashplaindealer.com/articles/2008/09/30/local_news/local1.txt (http://www.wabashplaindealer.com/articles/2008/09/30/local_news/local1.txt)

Why not let the money flow to institutions that have a good lending track record?  Those that did not engage in risky loan practices? 

Isn't there value in helping the small and medium sized banks?  Those on Main Street?  Maybe the banks that struggled for years to compete with their larger neighbors that engaged in junk lending practices?  Where is the reward for responsible lenders?

Lou Dobbs: Hooray for those who defeated bailout




http://www.cnn.com/2008/US/09/30/dobbs.qa/index.html (http://www.cnn.com/2008/US/09/30/dobbs.qa/index.html)

An interest rate cut by the Fed would show that the Fed is moving to actively encourage commercial borrowing, like a show of faith in the system to keep it moving,  probably largely symbolic.  Mortgage loans rates are tied to treasuries so would not be affected at all.

Looks like we are going to have another go-round with this bill Wednesday night.  Interestingly one of those who announced it is the House Minority leader.

************************

http://money.cnn.com/2008/09/30/news/economy/bailout_tuesday/index.htm?cnn=yes

Bailout: Senate to vote Wednesday
The bailout package adds new provisions - including raising the FDIC insurance cap. Democratic sources tell CNN that they expect bipartisan support.


NEW YORK (CNNMoney.com) -- The Senate plans to vote on the $700 billion bank rescue plan Wednesday evening - two days after the House failed to pass it.

The bill adds new provisions - including raising the FDIC insurance cap to $250,000 from $100,000 - and will be attached to an existing revenue bill that the House also rejected Monday, according to several Democratic leadership aides.

The vote is scheduled for after sundown, in observance of Rosh Hashanah. Republican presidential nominee John McCain and Democratic nominee Barack Obama and his running mate Joe Biden confirmed that they would be present for the vote.

Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., announced the plan Tuesday.

"Senate Democrats and Republicans believe it is essential that we work quickly on this important legislation to restore confidence to our financial system and strengthen the economy," Reid said in a statement.

White House spokesman Tony Fratto said the administration welcomes the "modified bill" and the scheduled vote.

Democratic sources told CNN that they expect bipartisan support.

Earlier Tuesday, Federal Deposit Insurance Corp. Chairman Sheila Bair asked Congress to allow her agency to increase the $100,000 limit per account that has been in place since 1980. To do so would help restore confidence in the markets, she said. Bair did not say what she thinks the new limit should be.

The revised bailout bill also includes a "Mental Health Parity" provision, which would require health insurance companies to cover mental illness at parity with physical illness.

Because the bill must originate in the House, the Senate is attaching the rescue plan to a bill that deals with renewable energy tax incentives. This would allow the Senate to vote before the House.

House Speaker Nancy Pelosi, D-Calif., said that House leaders are discussing ideas offered by other lawmakers about how to modify the bill defeated on Monday. "House Democrats remain strongly committed to a comprehensive bill that stabilizes the financial markets, restores confidence, and protects taxpayers," she said.

Round 1 failed
The bailout package, a collaboration of Treasury Secretary Henry Paulson and leaders from both parties, was rejected by the House in a 228-205 vote Monday. Two-thirds of Republicans and about one-third of Democrats voted against the bill.

Following the defeat, the Dow Jones industrial average dropped 777 points, its biggest one-day point decline ever. The decline of nearly 7% was the largest percentage decline since the Black Monday crash of 1987.

But stocks rallied Tuesday, with the Dow jumping 485 points on bets that Congress will pass a version of the government's $700 billion package.

The bill, if approved, would allow the federal government to buy troubled mortgage-related investments from financial institutions, freeing them up for lending in a bid to pull the economy out of its credit freeze.

Proponents of the bill believe it would prevent the United States from sliding into a serious financial crisis, but opponents saw it as an unbearable burden to taxpayers and a rescue for Wall Street.

The Bush administration and key lawmakers had regrouped on Tuesday and vowed to push ahead. "Unfortunately, the measure was defeated by a narrow margin," President Bush said in a brief televised address at the White House. "I'm disappointed by the outcome, but I assure our citizens, and citizens around the world, that this is not the end of the legislative process."

The House is adjourned and not scheduled to return to session until Thursday at noon.

Bush pushed hard for lawmakers to act. "Our economy is depending on decisive action from the government," he said. "The sooner we address the problem, the sooner we can get back on the path of growth and job creation. This is what elected leaders owe the American people, and I am confident that we'll deliver."

On Tuesday, Bush spoke to Obama and McCain about the financial crisis, according to Fratto. The presidential candidates "offered ideas and reaffirmed what they have said publicly - that this is a critical issue that needs to be addressed," Fratto said.

I worry that the answers to all of your questions lie in the third step of ideological subversion.  That step is 'Crisis'.

Here is a video link that explains.  If this is what is really happening I'm not sure what will stop it.  It is 16 minutes long and the last two steps are toward the end.  I find the enitre video startling.

http://www.dailymotion.com/video/k6KUDv1wzraWhwlBt1

Whew!  Certainly, you can see the march at Universities.

The Propaganda Machines have been working for almost 20 years, that I have noticed.

Very worrisome.

Before we blame Freddie and Fannie we need to start a little higher up the food chain  and a whole lot further back in history.   Start with HUD in 1992 for the true picture of the beginning of the whole mess.  Some of the current players are still here and some are new to the game.  He!!, I've even read rumors that there is a P!ssing contest between Clinton and Bush to see who could get a higher percentage of "Americans in Homeownership" while in office.  Excuse the french.  Not that this means either President past or current is due ownership of this, but they didn't really put a stop to it either.  HUD and Andrew Cuomo are the beginning go there for the true picture, than check all Congressional votes for the facts before slinging mud.  JMO.

Or, we could travel back to Jimmy Carter time.

The whole 450 pages:  (including wooden arrows, recycling, bicycles, etc.)


http://money.cnn.com/2008/10/01/news/pdf/index.htm


Imagine the emergency in wooden arrows.
 
What an urgent matter!

:2brickwall: