The Bailout: $700 Billion of MY money?

[verothacamaro]

Basically rewarding bad behavior....

"Hey did you sign an adjustable loan on a house you couldn't afford in the first place?"

"yeah"

"here's $300 billion, hope that covers heating expenses"

how about fiscally responsible Americans who pay their mortgage every month, without fail.....? What do we get?

The bill.



so are you For or Against the proposed $700 billion bailout? Why?

[CrazyHondaOwnR]

No


simply ....section 8.........they would have zero oversight .....the current bill version states that the actions by the head honcho dude are NON reviewable by any one ....... so basically ...... we get to hand the 700 billion and say spend wisely ..... absolutely effin retarded ....and as the op said why the hell should i have to pay bc some jackass tried to buy a house they couldnt afford

[Gemini]

No


simply ....section 8.........they would have zero oversight .....the current bill version states that the actions by the head honcho dude are NON reviewable by any one ....... so basically ...... we get to hand the 700 billion and say spend wisely ..... absolutely effin retarded ....and as the op said why the hell should i have to pay bc some jackass tried to buy a house they couldnt afford

I heard about this today and I think its straight BS! Bail out the people who doesnt use their brain(sheeps) amd fuck over the ones that actually make good decisions

p.s. The incorrect grammar in your sig is annoying me

[bobbycos]

NEVER

one thing that congressman and senators are also looking into is the overly excessive compensation packages some of thses execs get. the outgoing CEO of Fannie Mae was to get 15 million in his severance package but the Fed put the kibosh on that.

[owequitit]

I have a feeling this will work out like the airline industry bailout in 2001.

We spent billion upon billions bailing out airlines that were hemmoraging cash, so that the industry in general would stay afloat.

I was against the idea, for the same reasons I am against this idea, but I later learned that I was largely incorrect.

1) The government assumed a lot of the debt, but in the end, they made over $400 million in interest back. So it ended up being a positive revenue scheme.

2) At some point with this housing issue, we are going to eat it anyway, so it isn't like you would get off scott free if they did nothing. I don't particularly care for the rewarding bad behavior part, but unfortunately, punishing the bad behavior is also going to punish the good behavior. We are all in it together, and it is going to affect everyone. One way or another.

3) Without it, housing prices would stay slumped. That would have a fairly significant long term affect on owners who are currently making their mortgage but just barely. Even those who didn't tap themselves out are suffering from a multi whammy of increasing cost of living, depressing or steady wages and loss of value on what usually amounts to their biggest investment. They can't get out of it, and they can't get ahead because of it.

4) If the crunch were to remain in effect, you would pay the price in the following ways. Inaccessibility to money. Lending standards would go up significantly. Maybe that is good, but only to a point. That limits your access to equity and capitol. Interest rates. Long term interest rates on homeloans would end up going up, further hampering the market. The bank aren't going to eat the money, they can't. They would end up writing it off, in which case you eat it anyway.

5) The cost of doing business is only one part of the picture. You must also consider the revenue picture. If this "bailout" generates itself back in increased economic activity, then it was worth it. It might not effect each 1 person much, but then again, neither will the bill. You also have to consider that they are looking at the payback over the same term it would take the market to completely recover, which would be years, possibly decades. A $700 billion investment now, could easily pay for itself by then since that is a fairly small % of our yearly GDP.

It essentially amounts to a swifter correction to a problem which one way or another would cost the system the same amount of money anyway.

[MadSpleen85]

Scott, I didn't want to quote your entire post, it was full of good points. The reasons that you gave are among the reasons that I am FOR this "bailout."

[baracuda]

some things to think about when you want to talk about this bill. how much can we trust paulson little info on him("Paulson presided over one of the most profitable runs on Wall Street as chairman and chief executive officer of investment banking titan Goldman Sachs & Co. from 1999 until President Bush nominated him on May 30, 2006 to take over the Treasury Department.") he is the one that is drawing up this 700 billion dollar bailout.(hhmmm i wonder who pays him millions of dollars a year to support them?the big firms and fat cats on wall street) sounds like he is going to be fighting for the common man, whom this will effect the most. with this intended bill he would have power to do what he wanted with the market and here is how he can do this.
ARTICLE:
The Treasury Morphs Into A Hedge fund

Moon of Alabama
September 23, 2008

The Mother of All Bailouts plan gives the Treasury not only authority to buy and sell Mortgage Backed Securities, but allows it to deal in any financial instruments including leveraged derivatives.

This evolved over the various versions.

The original Paulson proposal said:

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.– The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.
…
Sec. 12. Definitions.

(1) Mortgage-Related Assets.–The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

All media reports and blogs I have read about this assume that the Treasury under this plan would only buy Mortgage Backed Securities, i.e. bonds backed my mortgage payments.

But the above language also includes Credit Default Swaps. Insurance contracts or derivatives, that guarantee the recoverability of MBS and change their value in relation to an MBS’ value.

The language in the Treasury Fact Sheed on the proposal is even wider:

Treasury will have authority to issue up to $700 billion of Treasury securities to finance the purchase of troubled assets. The purchases are intended to be residential and commercial mortgage-related assets, which may include mortgage-backed securities and whole loans. The Secretary will have the discretion, in consultation with the Chairman of the Federal Reserve, to purchase other assets, as deemed necessary to effectively stabilize financial markets.

It seems like the fact sheed exceeds the breadth of the released proposal.




Oh, you say, the Democrats in Congress will prevent the Treasury from morphing into a investment bank backed by $700 billion of taxpayer capital?

Here is Senator Dodd’s expanded proposal of the Paulson plan. The language is even worse than in the original:

SEC. 2. AUTHORITY TO PURCHASE TROUBLED ASSETS.

(a) OFFICES; AUTHORITY.—

(1) AUTHORITY.—The Secretary is authorized to establish a program to purchase, and to make and fund commitments to purchase troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with policies and procedures developed by the Secretary.
…
SEC. 21. DEFINITIONS.

(7) TROUBLED ASSETS.—The term ‘‘troubled assets’’ means—

(A) residential or commercial mortgages, and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case were originated or issued on or before March 14, 2008; and

(B) upon the determination of the Secretary, in consultation with the Chairman of the Board of Governors of the Federal Reserve System, any other financial instrument, as the Secretary determines necessary to promote financial market stability.

The Dodd version gets lauded by Krugman, DeLong and other ‘liberal’ luminaries.

This while the bailout language morphed from "mortgage related assets" to "any financial instrument."

The Dodd version added some nice little extras for a homeowners in distress and some oversight provision. But it also extended the scope of the Paulson plan far beyond housing and mortgages towards an all encompassing bailout for any financial issue.

Since 2003 Dodd collected over $4 million in contributions from Securities and Investment companies. His top five doners include Citibank, SAC Capital Partners and Royal Bank of Scotland. That may well be the reason why he does not want to keep the bill restricted to mortgage related assets but wants to include any financial instrument.

If this becomes law, Paulson and whoever replaces him in January will have the authority to buy Asset Backed Securities from car loans and credit card loans. He will be able to buy and sell derivatives based on ABS that have build in leverage effects. The Treasury may even deal in synthetic Collateral Debt Obligations and derivatives base on those. It can buy and sell shares of public dealt companies, precious metals, future contracts on these and it can speculate on interest moves of Russian government bonds.

Are there any big long future positions on the Canadian dollar the U.S. president does not like? Just get the Treasury buy them up. Congress is giving it the right to do so.

With a capital of $700 billion and the authority to buy and sell any highly leveraged financial instruments, the Treasury will become one gigantic hedge fund that can and may well act to move multi-trillions.

If such an entity makes one wrong move, it can bankrupt its owners within a few hours. The Treasury is too knowledgeable to make such mistakes? So were two Nobel Price winners at LTCM.

there is no way i would want this to pass i why should help defeat the propose of a free market system? when there is a business that is going to fail it will if it gets bought out and has nothing change then it starts to kill the market same goes for all these loans(survival of the fittest in a sense) the gov. is going to buy up just more properties, business, loans, bonds ex... making the gov. biggest player in the market monopolizing parts of the market, which monopolies are illegal unless your the gov. i guess.these investment firms and banks did all of these sub. prime loans they knew would fault and do what they have just done.the market has no one but them self's to blame.

[xfactortype1]

it simple really. we have government by and for the corporations. so yeah we will basically get fucked in the ass. what would really be scary is that if countries started selling the dollar currency and then our money would be even more worthless than it is. we be like some african countires that have the 20 million dollar bill. kids and students are better off learning a trade like along time ago. so you can barter sevices and trade and get paid in beans and vegetables. at least youll live. id take an h22 for pay or a f20b engine.

[F22HB]

If my dad's small buisness, Jorgenson Manufacturing Inc when into extreme debt of even ONE million dollars, would the gov bail us out?

[DA92CB7]

If my dad's small buisness, Jorgenson Manufacturing Inc when into extreme debt of even ONE million dollars, would the gov bail us out?

no because if your dads business fails it doesn't hurt the economy as much as say wamu taking a shit on its self.

[F22HB]

Either way the gov should stay out of it and let it happen. No one rich ever has to be held accountable.

[Fake Thug]

Its amazing the hypocrisy thats ignorned here. When individuals get welfare or file bankruptcy they are villiafied something fierce and outkast, but even when a GBE or corp. like these two fuck up, the consumers STILL get the blame. Gorvernemnts that nationalize buisness or interfere are socialist point blank. It is impossible for the consumer/taxpayer to win, everyone just passes on the cost to them. No accountability on the corparation or gorvernment side. These companies should be dealt a dose of capitalism and be allowed to fail. All of sudden there are investigations of fraud?Whats going here is so blatantly obvious. Its insulting when the media treats us all like we are stupid.

[slammed4thgen]

These companies should be dealt a dose of capitalism and be allowed to fail. All of sudden there are investigations of fraud?Whats going here is so blatantly obvious. Its insulting when the media treats us all like we are stupid.

well thats a wonderful idea, except when they fail others do also and so on.

the media isnt treating us like idiots, as they are being fed the same shit we are.

we can bail people out but this country is set on a path of fail.

[Rusty]

I'm just curious how many people here complaining about this Bill Own a home?
Its easy to sit back and scream at the government and say that the people who are in ARM are idiots but thats not always the case. What about the loan officer who sold that loan, what if he was just looking ot make a quick buck. You mean to tell me that they are not at fault. Before you sign a loan mortgage companies are suppose to know every bit of debt you have and what all of your savings are. The common consumer can't be expected to know everything about the industry so they rely on someone who is expected to be an 'expert'

And if you really think about it.. how is this bill any different than our welfare system. Every year billions are spent so that people (some deserving some not) can survive. Should we say to them...sorry you bought bread you couldn't afford to fucking bad.

Being honest I didn't read every post fully in here and I"m not completely familiar with the details of the actual bill but I can almost guarantee that the money isn't going to just be handed out with no strings attached and no consequences. Although the Gov does fuck up from time to time I don't think that 'bailing out' these companies is going to have a dramatic negative affect on our daily lives.

[deevergote]

I'm heading to work, where I talk to people that are losing their homes... so I'll make this brief.

I understand the frustration that people feel about havng to pay to bail out those that were less responsible with their money. However, it IS for the good of the economy (as Scott pointed out). We're going to pay one way or another. This will be the swiftest route to recovery, unfortunately.

When democracy stumbles, communism is there to pick it up and dust it off.