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Author Topic: The Bail Out Bill Fails to Pass House Vote  (Read 6360 times)
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WhiskeyGirl
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« Reply #20 on: September 30, 2008, 08:03:36 PM »

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.
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WhiskeyGirl
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« Reply #21 on: September 30, 2008, 08:12:57 PM »

Quote
With bad balance sheets from years of risky lending, some of the largest financial institutions in the county have cut back on lending.
 
All over the country, Harshbarger said, businesses big and small use short term loans to finance everything from inventory to capital improvements, even to payroll. Farmers get loans for their crop and fertilizer. It's not hard to make the connection with growing unemployment.

Taking their cue from the largest banks, many of the smaller banks had slowed loan-making or stopped it entirely. One of the nastiest indications of a coming crisis, Harshbarger said, was that in many cases banks had stopped lending to fellow banks.

“Money is like blood: You've got to keep the flow going through. ... The real question is, we've got to keep liquidity into the system,” said Harshbarger, “Whether this will encourage bankers to resume lending is the debate.”

How could such a crisis “creep up on us?”

Actually, it was clearly out there and growing, said Harshbarger,

“Economists for the last 10 years saw us getting into trouble with our savings situation. For the last six years we haven't been saving anything as consumers.”

Consumers, businesses, the government, the nation itself has been living on borrowed money, he pointed out; the basic question was “when” not “if” the bubble would break.

Many of those with burdensome loans and mortgages need to share a bit of the blame for their own situation, particularly those who refinanced mortgages to make additional purchases - believing home prices would never go down.

By Harshbarger's standards the U.S. is not yet in recession. He is keeping a happy thought if recession arrives and deepens.

We did learn our lesson from the Great Depression, he said: When the economy crashed and businesses went bust at that time, the federal reserve did the worst possible thing- tightened the money supply to further constrict spending.

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?
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WhiskeyGirl
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« Reply #22 on: September 30, 2008, 10:10:31 PM »

Lou Dobbs: Hooray for those who defeated bailout

Quote
Lou Dobbs, CNN host of "Lou Dobbs Tonight": Well, what happens now is that it sounds like the same fools who brought you this effort are going to try again.

Henry Paulson saying he's going to come right back, suggests he's not learning. And he's not paying attention to the Congress. These Congress people are all at home in their home districts, nearly every one of them and they're hearing an earful. The American people don't want to hear this nonsense about $700 billion to bail out financial institutions. Frankly, Kiran, they don't need it.

Economist after economist, with whom I've spoken, CEOs, they acknowledge that there are far better ways to deal with the issues confronting our financial system than this bailout. And it's absolutely obscenely irresponsible of House Speaker [Nancy] Pelosi, Treasury Secretary [Henry] Paulson, President Bush, Sen. Harry Reid, the leader of the Senate; for these people to be clucking about like hysterical -- so hysterically. It really must stop. And to hear there -- go ahead.

Quote
Chetry: You say that there's other ways around this. One of the things that everyone keeps talking about is the fact that credit markets are frozen and there has to be some way to free that up so that everyday business from Wall Street to Main Street can continue.

Do you buy that?

Dobbs: No, not at all. And neither do most of the CEOs and economists with whom I'm speaking certainly. The real issue, they say, is liquidity. The Fed has injected more than half a billion dollars in liquidity into this banking system.

What we are watching are business -- quote, unquote -- leaders who won't surface and put their faces before the American public who are hysterical. Absolutely hysterical. These are not leaders of moment. They are not leaders of great character or vision. Only Warren Buffett has had the courage to step forward. And that's after he puts $5 billion into Goldman Sachs.

To watch our political leaders, they have no idea in the world, Kiran, what they're doing. Literally. And the arrogance with which this administration asks for, not only money, almost $1 trillion, and surely more in the months ahead. But the absolute power for Treasury Secretary Paulson. Give me a break. The American people want this stopped. Those Congressmen and women at home right now, in their districts, are getting an earful because this is an absurdity and it has to end.

Quote
Chetry: What do you think if you were up there making decisions? What do you think we need to do?

Dobbs: Well, the first thing we need to do is return to a traditional role of regulation. ... The problem here is not simply the housing market. ... But $700 billion and nothing in that bill deals with the foreclosure crisis, if you can imagine that. That's arrogance. That's stupidity. That is your leadership in Washington, D.C. Democratic leadership in Congress and Republican leadership in the White House.

So that's an absurdity. The first thing that has to be dealt with is mitigating the foreclosure crisis, period. Secondly, in terms of instilling confidence in the banking system and in our credit markets, the first thing to do is to deal with those institutions that are wildly out of balance, whose balance sheets, frankly, are a joke. And the regulators who should have been tending to them over the years are also a joke.

It's time to end the joke. That means aggressive regulation. It means aggressive intervention on an institution-by-institution basis.

http://www.cnn.com/2008/US/09/30/dobbs.qa/index.html
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A's Fever
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« Reply #23 on: September 30, 2008, 11:15:17 PM »

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.

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truthseeker2
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« Reply #24 on: October 01, 2008, 12:16:20 PM »

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

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« Reply #25 on: October 01, 2008, 01:13:22 PM »


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.
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« Reply #26 on: October 01, 2008, 01:26:42 PM »

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.  I posted  link to S.190 and an informative article on the history of CRA.



http://www.govtrack.us/congress/billtext.xpd?bill=s109-190


http://www.cato.org/pubs/regulation/regv17n4/vmck4-94.pdf

Well, the pundits have there own opinions especially when you consider whether of not it's coming from the MSM, as they will do anything to insure a McCain/Palin defeat and it they can lay the current economic problems on the Republicans or the Bush administration~that would Obama directly into the White House. But, the mark to market accounting measure is unrealistic, they are assets as all MBS are not subprime. We sold 15mm Monday and 20mm 2 weeks ago-but you must look at the delinquency rates for the tranche and the states involved. For example you might make sure there are no California, Nevada or Florida loans in that bond. The FASB 157 (mark to market), assumes that since the security doesn't constantly trade that there is no market for it and that is an entirely false premise-you wouldn't value your home a ZERO when filling out a balance sheet just because no one had made an offer on it-and that is what the firms are having to do with MBS securities. The broad opinion in the financial community is that mark to market has helped create the whirlpool of bailouts we find ourselves in. Don't get me wrong, the SEC doesn't think there should be no oversight, just that it should accurately reflect the farim market value of an asset.

On another note, just how did FNMA and FHLMC get into their mess, well that goes back to the Carter Administration & CRA - Community Reinvestment Act. Under the Clinton administration the CRA was really ramped up by the dems to put tremendous pressure on banks which sell their loans to FNMA  & FHLMC to loan to low income communities, and that's very compassionate but fiscally irresponsible if they lower the loan requirements. They were loaning money to those with very little income, no assets and weren't requiring a down payment. Well, that's all well and good in a great housing enviroment, but on a downturn those loans go into default. Senators Hagel, McCain, Sununu and Dole tried to implement S. 190, a very comprehensive piece of legislation that would have definitely put the brakes on FNMA and FHLMC's lending practices, but the Dems shot it down. Finally in 2005 Franklin Raines was booted-but with a 50mm golden parachute.

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?

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fatcatlurker
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« Reply #27 on: October 01, 2008, 05:53:31 PM »

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.


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« Reply #28 on: October 01, 2008, 08:47:41 PM »

Or, we could travel back to Jimmy Carter time.
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islandmonkey
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« Reply #29 on: October 01, 2008, 10:50:08 PM »

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.

Well, the original CRA was implemtented during the Carter Administration, it was ramped up during the Clinton Admn in 95, and FNMA & FHLMC ended up leveraging the assets at a ratio of 100 x 1. That on top of slowing home sales, which lead many people owing 150m more on their homes than they were worth in today's market-particularly NV, CA and FL lead to a disaster that could have been averted with some oversight and NO golden parachutes for the CEO's that walked away with 100mm +. CRA hwas even penalizing banks for NOT making loans. I don't know about you, but I put 20% down on my home to get the best interest rate, and alot of the sub-primes were allowing nothing down, no income verification assuming that the home would be the collateral until the homes prices took a dive. I say go back and ask Franklin Raines and the rest of the cronies to cash in their 8mm dollar homes to add a cash infusion in the market they live in! That would be priceless

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« Reply #30 on: October 02, 2008, 12:49:18 AM »


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!

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