Monday: Call to Stop Paulson's Plunder This from Progressive Democrats...and Independents
(1) Call your Senators at 800-473-6711 or 202-224-3121 and say No Bailout!
(2) Email them too and tell your friends:
http://democrats.com/stop-paulsons-plunder
More all week & below...MOST CURRENT or URGENTLY APPLICABLE AT TOP...
JUST IN 1:10 PM ET
BAILOUT FAILS IN HOUSE:
House ignores Bush, rejects $700B bailout bill
By JULIE HIRSCHFELD DAVIS, Associated Press Writer 8 minutes ago
In a stunning vote that shocked the capital and worldwide markets, the House on Monday defeated a $700 billion emergency rescue for the nation's financial system, ignoring urgent warnings from President Bush and congressional leaders of both parties that the economy could nosedive without it.
Stocks plummeted on Wall Street, beginning their plunge even before the 228-205 vote to reject the bill was officially announced on the House floor. The Dow Jones industrials sank nearly 700 points for the day.
Democratic and Republican leaders alike said they were committed to trying again, though the Democrats said GOP lawmakers needed to provide more votes. Bush huddled with his economic advisers about a next step.
In the House chamber, as a digital screen recorded a cascade of "no" votes against the bailout, Democratic Rep. Joe Crowley of New York shouted news of the falling stocks. "Six hundred points!" he yelled, jabbing his thumb downward.
Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home. Not enough members were willing to take the political risk just five weeks before an election.
"No" votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill.
The overriding question for congressional leaders was what to do next. Congress has been trying to adjourn so that its members can go out and campaign. "We are ready to continue to work on this," said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.
"The legislation may have failed; the crisis is still with us," said House Speaker Nancy Pelosi, D-Calif., in a news conference after the defeat.
"What happened today cannot stand," Pelosi said. "We must move forward, and I hope that the markets will take that message."
At the White House, Bush said, "I'm disappointed in the vote. ... We've put forth a plan that was big because we've got a big problem." He pledged to keep pressing for a measure that Congress would pass.
Republicans blamed Pelosi's scathing speech near the close of the debate — which attacked Bush's economic policies and a "right-wing ideology of anything goes, no supervision, no discipline, no regulation" of financial markets — for the vote's failure.
"We could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House," Minority Leader John Boehner said. Pelosi's words, the Ohio Republican said, "poisoned our conference, caused a number of members that we thought we could get, to go south."
Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosi's speech changed the minds of a dozen Republicans who might otherwise have supported the plan.
Frank said that was a remarkable accusation by Republicans against Republicans: "Because somebody hurt their feelings, they decided to punish the country."
The presidential candidates kept close track — from afar.
In Colorado, Democrat Barack Obama said, "Democrats, Republicans, step up to the plate, get it done."
Republican John McCain spoke with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke before leaving Ohio for a campaign stop in Iowa, a spokeswoman said.
Monday's action had been preceded by unusually aggressive White House lobbying, and Fratto said that Bush had been making calls to lawmakers until shortly before the vote.
Bush and his economic advisers, as well as congressional leaders in both parties had argued the plan was vital to insulating ordinary Americans from the effects of Wall Street's bad bets. The version that was up for vote Monday was the product of marathon closed-door negotiations on Capitol Hill over the weekend.
"We're all worried about losing our jobs," Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for it — not me.' "
With their dire warnings of impending economic doom and their sweeping request for unprecedented sums of money and authority to bail out cash-starved financial firms, Bush and his economic chiefs have focused the attention of world markets on Congress, Ryan added.
"We're in this moment, and if we fail to do the right thing, Heaven help us," he said.
The legislation the administration promoted would have allowed the government to buy bad mortgages and other rotten assets held by troubled banks and financial institutions. Getting those debts off their books should bolster those companies' balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the national economy that is already sputtering.
More than a repudiation of Democrats, Frank said, Republicans' refusal to vote for the bailout was a rejection of their own president.
Copyright © 2008 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.
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INSERT: JUST IN Mon midday (before Bailout FAILS in HOUSE) from fellow home "news analyst" Keith L. Some info on the financial situation:
WHO KNOWS?
For those of us who are not economists, where do we go to get a sense of just what is going on? Is the bailout a good or bad deal? Are things going to get worse before they get better or a lot worse before they get better?
Two blogs I'm watching closely at the moment are Paul Krugman's blog at the NYT and Nouriel Roubini's blog at RGE Monitor. Roubini is the man of the moment for, to a great degree, predicting well in advance much of what has transpired over recent months and weeks. Economist Brad DeLong's blog and Barry Ritholtz's blog are also key.
To be clear, these are only a few examples. And we're going to try to put together a lengthier and more comprehensive list. But these are some places to start.
In case you're wondering, Krugman's take seems to be that we need a major government intervention and that even though the Dodd/Frank revision of the original Paulson plan is pretty bad on a lot of counts, it was probably the best the Dems could do with Bush still in office. And at this moment it's probably better than the other politically-viable alternatives -- including doing nothing and waiting for January. Here are the details from Paul.
What I find increasingly troubling is that a lot of people whose opinions I respect seem to think the buying up the toxic debts model is fundamentally misguided -- that we'd be better stewards of taxpayer money and accomplishing more good by using the government money to recapitalize these ailing firms by buying big equity stakes in them. In a sense, I guess, we'd be setting up what amounted to a limited lifetime US sovereign wealth fund (I know it's not precisely like that, but a little) to do what the Gulf emirates and others have been doing on an ad hoc basis through much of this year.
(ed.note: On most issues I write about on TPM, I do so with what I believe is some level of expertise, at least a solid enough understanding of the issues to know what I do and don't know. This high-wire economics and finance stuff is in a different category. So I'm trying to strike a balance between not writing about what I don't know about while also trying to point you in the direction of people who do. All of which is to say that on these topics I would more aggressively than usual check my speculation against other more knowledgable sources like the ones I've linked to above. -- jmm)
Late Update: Seems some economists don't think they're in a much better position than I am. From an academic economist ...
I suppose we economists are in a relatively good position to pontificate on the bailout. But it's an elephantine analysis. I know that the government is likely to do badly in most trading situations because of private information. I know that there can be liquidity problems in an economy.
But our real training is to boil a problem down to one or maybe two choice variables and figure out what effect small changes have on a fairly simple measure of welfare. Here, the problem is what to do with a melting down economy that has a central problem of information in a market (housing) that is beyond our comprehension in itself. I like to flatter myself that I am a leading housing economist, but all I know about the fundamental value of my house is that it is somewhere between $450,000 and $1,250,000. Economists do not have the tools to forecast with any precision what effect a major intervention would have, even if you held constant a lot of stuff that will not be held constant over the course of the intervention.
Things like "this bailout will create bad incentives down the road" may be true and important but are impossible to quantify on the same dimension as the also impossible to calculate "the economy will shut down if we don't do something soon."
Latter Update: I'm interested in what seems to be a growing consensus that Hank Paulson made an extremely bad decision letting Lehman go down the tubes.
--Josh Marshall
Continuing from the Progressive Dems (who sound sometimes like independents, Greens & others)
After a week of high-drama negotiations, Congress and Hank Paulson issued Bailout version 1.1, which is just the original Paulson pig with a lot of lipstick.
Republicans say the deal will be profitable for taxpayers, but they are lying - just as they did about the invasion of Iraq producing lower gas prices. It's a lie because Paulson has full power to pay too much for the securities and he will because his real goal is a bailout of bank executives and shareholders with our money - a massive ($2,333 per person!) transfer of wealth from the poor and middle class to the rich.
Democrats say they got oversight, accountability, and limits on executive compensation but each of these provisions is so full of Republican-written loopholes that they are meaningless - just like all other restrictions imposed on the Bush Administration, from Iraq to wiretapping. And that's before Bush simply negates any restrictions he doesn't like with one of his unconstitutional (and hence impeachable) signing statements.
So our answer remains ABSOLUTELY NOT.
The House will vote on Monday and the Senate will vote on Wednesday.
So call your Senators and Representative right now to say "No $700 Billion Bailout for Wall Street" - dial the Capitol switchboard at 800-473-6711 or 202-224-3121 or dial direct using the instant phone lookup on the right side of http://usalone.com
And if you have not e mailed your Senators and Representative , please do it now:
http://www.democrats.com/stop-paulsons-plunder
Find more information and comment here:
http://www.democrats.com/still-no-bailout
Thanks for all you do!
UPDATES
The Fiscally Insane Bailout Bill Might Not Pass -- Here's 5 Reasons It Shouldn't
By David Sirota, Blog for Our Future
Posted on September 29, 2008, Printed on September 29, 2008
Alternet dot org
There was news Sunday afternoon of a congressional deal to bailout Wall Street fat cats with $700 billion of taxpayer cash (you can read the draft legislation here). Though the deal negotiated between congressional leaders and the White House is better than what Treasury Secretary Henry Paulson originally proposed early last week, it remains an insulting atrocity, having omitted even basic aid to homeowners, bankruptcy reforms and any modicum of future financial industry regulation. Now, the New York Times reports that the Democratic leadership may not have the votes to pass this bailout. So without further ado, here are the top 5 reasons (in no order) why every single member of Congress -- Democrat and Republican -- should vote this sucker down. Please feel free to copy and paste this post into an email to your congressperson. They are deciding right now -- let them hear your voice.
1.This Bailout's Inherent Fiscal Insanity Could Make Problem Worse
When an individual consumer uses a new credit card to pay off astounding debt from an old credit card, it's akin to check kiting, which is is illegal. Apparently, though, when the government does it, it's billed as Serious Public Policy. Because that's what this supposedly prudent bailout bill would do: Force taxpayers to borrow $700 billion from foreign banks to pay off the bad debt of Wall Street banks. During a crisis that is aimed at preventing interest rates from skyrocketing, nobody has been able to explain how adding almost a trillion dollars to the interest rate-exacerbating national debt would do anything other than undermine the plan's underlying objective. Worse, the U.S. Treasury Department itself admits that the $700 billion number is "not based on any particular data point" -- that is, they created it out of thin air because "We just wanted to choose a really large number." Slapping that amount of money onto the national credit card when our government can't even justify the amount is beyond absurd -- it is insane.
It didn't have to be this way, of course. As I noted in my newspaper column this week, Senator Bernie Sanders proposed a temporary tax on millionaires to finance part of this bailout. Similarly, Blue Dog Democrats proposed a future tax on financial firms if and when taxpayers lose cash on the deal. These proposals were discarded in favor of language asking the government to "submit a plan to Congress on how to recoup any losses," according to the Associated Press. Not only is that language toothless, but it opens up the possibility of a plan being submitted that says we should raise middle-class taxes or slash middle-class social programs to pay for Wall Street's misbehavior.
2. Experts on both the left and right say this bailout could make things worse
Primum non nocere is the latin phrase for "first do no harm" -- the priority principle for any EMT working on a sick patient. It should be the same priority for Congress at this moment -- and a growing group of esteemed experts on both the Right and Left are insisting that this bailout bill could make things worse. Here's a review:
* The Washington Post reported on Friday, almost 200 academic economists "have signed a petition organized by a University of Chicago professor objecting to the plan on the grounds that it could create perverse incentives, that it is too vague and that its long-run effects are unclear."
* NYU's Nouriel Roubini, the visionary who had been predicting this meltdown, says "The Treasury plan (even in its current version agreed with Congress) is very poorly conceived and does not contain many of the key elements of a sound and efficient and fair rescue plan."
* Harvard's Ken Rogoff, a Former Federal Rerserve and IMF official, insists that the prospect of this bailout is, unto itself, taking a manageable problem and making it into a more intense crisis. He says that credit is frozen primarily because banks want to avoid dealing with other banks that might drive a hard bargain, and instead would rather wait for free money from the government. Without the prospect of that free money, Rogoff suggests that credit would probably begin moving again, if slowly.
* Dean Baker of the Center on Economic and Policy Research says that spending so much cash so quickly on such a poorly conceived plan could have the effect of making it impossible to fund economic stimulus that is the real way out of this mess. "Suppose the Paulson plan goes through," he writes. "It is virtually certain that the economy will weaken further and the number of foreclosures and people without jobs will continue to rise. This is the fallout from a collapsing housing bubble…When families respond to their loss of home equity by cutting back their consumption it will deepen the recession. In this context it might prove very important to have the resources needed to provide a substantial stimulus. [and] there is no doubt that this bailout will make further stimulus much more difficult to sell politically."
Meanwhile, it's not even close to clear that this is a problem that requires such an enormous response. As mentioned above, the Treasury Department admits it has absolutely no factual basis for requesting $700 billion -- an amount equivalent to about 5 percent of our entire economy. Additionally, the Washington Post reports that "Banks throughout the United States carried on with the business of making loans yesterday even as federal officials warned again that their industry is on the verge of collapse, suggesting that the overheated language on Capitol Hill may not reflect the reality on many Main Streets." Indeed, "many smaller banks said they were actually benefiting from the problems on Wall Street" and "even some of the nation's largest banks, which have pushed hard for a federal bailout, deny that the current situation is forcing them to reduce lending."
The questions, then, are simple: In the face of this bipartisan opposition from objective experts, why should a lawmaker instead believe the same Bush officials who helped create this crisis with their deregulation, the same Bush officials who just months ago said everything was AOK? Shouldn't there be almost complete unanimity among both objective and partisan observers before spending 5 percent of our entire economy after just one harried week of White House demands? Fool me once shame on you, fool me twice, shame on me. It's time, as The Who said, that we "don't get fooled again."
3. There are clearly better and safer alternatives
The mantra throughout the week has been that America has "no choice" but to pass Treasury Secretary Henry Paulson's $700 billion giveaway -- that, in effect, there are no alternatives. But that's an out-and-out lie -- one with a motive: Making it seem as if the only thing we can do is hand the keys to the federal treasury over to both parties' corporate campaign contributors.
The truth is, there are a number of alternatives. Here are just a few:
* In the Washington Post last week, Galbraith outlined a multi-pronged plan shoring up and expanding the FDIC, creating a Home Owners Loan Corporation, resurrecting Nixon's federal revenue sharing, and taxing stock transactions (a tax that would fall mostly on speculators) to finance the whole deal.
* The Service Employees International Union has drafted a plan based around a massive investment in public services and national health care, and regulatory reforms preventing foreclosures and forcing banks to renegotiate the predatory terms of their bad mortgages.
* For those in the mindless, zombie-ish "someone has to do something, so we have to do what the White House says!" camp, consider the possibility that you are under the spell of the same kind of White House fear that led us to invade Iraq because of Saddam's supposed WMD. Consider, perhaps, that there may not even be a compelling basis for doing anything just yet (or at least not anything nearly so huge), and that the whole reason there is this urgent push right now has nothing to do with the financial situation, and everything to do with creating the political dynamic to pass a wasteful giveaway -- one that couldn't be passed otherwise without a sense of emergency. And ask yourself why you would listen to this White House instead of listening to those experts who have been predicting this crisis and are now advising against this bailout -- experts like CEPR's Baker. In two separate posts (here and here), he says that letting the problem play out could be the best path, because Treasury and the Fed may already have the tools they need. Following this path, the worst thing that happens is "The Fed and Treasury will have to step in and take over the banks [which] is exactly what many economists argue should happen anyhow," Baker writes. "So the outcome of the worst case scenario is a really frightening day in which the whole world financial system is shaken to its core, followed by a government takeover of the banks. Eventually the government straightens out the books and sells them off again. But the real threat here is not to the economy, it is to the banks."
* Then there is the idea of simply taking the $700 billion and simply give it to struggling homeowners to help them pay off part of their mortgages. This hasn't even been discussed but the thought experiment it involves is important to understanding why there is, indeed, an alternative to the Paulson plan. If the root of this problem is people not being able to pay off their mortgages, and those defaults then devaluing banks' mortgage-backed assets, then simply helping people pay their mortgages would preserve the value of the mortgage-backed assets and recharge the market with liquidity. That would be a bottom-up solution helping the mass public, rather than a top-down move helping only financial industry executives.
On this latter proposal, some may argue that giving any relief to homeowners is "unfair" in that those homeowners created their problems, so why should taxpayers have to help them? But then, is helping homeowners any less fair than simply giving all the money away to Wall Street, no strings attached? I'd say no -- and helping homeowners also serves a second purpose: namely, keeping people in their homes, which not only helps them, but helps an entire neighborhood (as any homeowner knows, nearby properties can be devalued when foreclosures hit).
4. Any Incumbent Voting for This Puts Themselves At Risk of Being Thrown Out of Office
As a preface, let me state that I think we live in a country where politicians too often listen to their donors and to the Establishment rather than their constituents, not the other way around. America is a country where our leaders dishonestly invoke the concepts of "Statesmanship" and "Seriousness" and their supposed hatred of "pandering" to justify ignoring what the public wants (as if giving the public what it wants is somehow not the objective of a democratic republic). So, in short, I don't think there's anything wrong with this bill being "politicized" by coming down the pike right before an election -- in fact, I think it's a good thing because the election -- and the fear of being thrown out of office forces our politicians to at least consider what the public wants. I mean, really -- would we rather have this decision made after the election, when the public can be completely ignored?
Polls overwhelmingly show a public that sees voting for this bill as an act of economic treason whereby the bipartisan Washington elite robs taxpayer cash to give their campaign contributors a trillion-dollar gift. As just two of many examples, Bloomberg News' poll shows "decisive" opposition to the bailout proposal, and Rasmussen reports that their surveys show "the more voters learn about the proposed $700 billion federal bailout plan for the U.S. economy, the more they don't like it." Put another way, this bailout proposal has unified both the Right and Left sides of the populist uprising that I described in my new book and that is now even more angry than ever.
Any sitting officeholder that votes for this -- whether a Democrat or a Republican -- should expect to get crushed under a wave of populist-themed attacks from their opponents. We've already seen it start. In Oregon, Democratic challenger Jeff Merkley (D) is airing scathing television ads hammering Republican incumbent Gordon Smith for potentially supporting the deal. Similarly, this morning on Meet the Press, we saw Republican Senate challenger Bob Schaffer (CO) dishonestly papering over his own votes for deregulation and ripping into his opponent Rep. Mark Udall (D) for potentially supporting the deal. Incumbents, get ready for that kind of election-changing heat in your face if you vote "yes."
This, by the way, could play out in the presidential contest. Barack Obama has been taking the advice of the Wall Street insiders in his campaign in endorsing this bailout. McCain has endorsed the vague outline, but he may ultimately back off once he sees the details, allowing him to then run the last month of the campaign as the economic populist in the race. I'm not saying it would work, considering McCain's 26-year record of supporting the deregulatory agenda that created this crisis. But such a move could end up help him flank Obama on the defining economic issues of the race.
5. Corruption and Sleaze Are Swirling Around These Bailouts -- and America Knows It
The amount of brazen corruption and conflicts of interest swirling around this deal is odious, even by Washington's standards -- and polls suggest the public inherently understands that. Consider these choice nuggets:
* Warren Buffett is simultaneously advising Obama to support the deal, while he himself is investing in the company that stands to make the most off the deal.
* McCain's campaign is run by lobbyists from the companies that stand to make a killing off a no-strings government bailout.
* The New York Times reports that the person advising Paulson and Bernanke on the AIG bailout was the CEO of Goldman Sachs -- a company with a $20 billion stake in AIG.
* The Obama campaign's top spokesman pushing this deal is none other than Roger Altman, who Bloomberg News reports is simultaneously "advising a group of investors who are trying to prevent their shares from being diluted in the U.S. takeover of American International Group Inc." -- that is, who have a direct financial interest in the current iteration of the bailout.
Add to this the fact that the negotiations over this bill have been largely conducted in secret, and you have one of the most sleazy heists in American history.
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If this bill passes, it will be a profound referendum on the dominance of money over democracy in America. That -- and that alone -- would be the only thing an objective observer could take away from the whole thing.
Money will have compelled politicians to not only vote for substantively dangerous policy, but vote for that policy even at their own clear electoral peril. Such a vote will confirm that the only people these politicians believe they are responsible for representing are are the fat-cat recipients of the $700 billion -- the same fat cats who underwrite their political campaigns, the same fat-cats who engineered this crisis, and want to keep profiteering off it. Any lawmaker who takes that position is selling out the country, as is any issue-based political non-profit group -- liberal or conservative -- that uses its resources to defend a "yes" vote rather than demand a "no" vote. This is a bill that forces taxpayers to absorb all of the pain, and Wall Street executives to reap all of the gain. It doesn't even force the corporate executives (much less the government leaders) culpable in this free fall to step down -- it lets them stay fat and happy in their corner office suites in Manhattan.
Even if they believe that something must be done right now, lawmakers should still vote no on this specific bill, and force one of the very prudent alternatives to the forefront. They shouldn't just vote no on Paulson's proposal -- they should vote hell no. Our economy's future depends on it.
David Sirota is a best-selling author whose newest book, "The Uprising," was just released this month. He is a fellow at the Campaign for America's Future and a board member of the Progressive States Network -- both nonpartisan organizations. His blog is at www.credoaction.com/sirota.
© 2008 Blog for Our Future All rights reserved.
View this story online at: http://www.alternet.org/story/100700/
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Posting to Headlines Wire of Scoop
Column: Michael Collins
Date: Monday, 29 September 2008
Time: 10:18 pm NZT
Bailout Bill Defies Will of the People
Contact for your member of the House or Representatives.
White House and Congress Suspend Democracy To Help Wall Street
Michael Collins
"Scoop" Independent News
(Wash. DC) The White House and Congressional leaders from both
parties announced a tentative bill to bailout failed financial
institutions. The bill is a response to the $700 billion initially
request by the White House last week. The bill allocates $250
billion to start with a total authorized of $700 billion. The
money will cover the losses of distressed Wall Street firms facing
bankruptcy due to bad investments, primarily in risky real estate
securities known as subprime securities and "derivatives."
There were no provisions announced to bailout citizens facing
foreclosure or help with their bad investments.
Congress plans vote on the legislation today, Monday, Sept. 29,
if the leadership gets their way.
Calls to Capitol Hill are reported to be 30 to 1 opposed to legislation
that bails out the rogue Wall Street investors. Public opinion
polling has shown a majority opposed to the legislation, unless
the question contains the unproven assumption that the economy
will collapse in a few days without a bill. In a remarkable
show of opposition to the bill, 1,200 marched down Wall Street
Friday. There were also protests in Chicago and Ohio plus more
planned for Monday, Sept. 29.
Sept. 25, 2008 Wall Street bailout protest Video
This public stance developed in spite of dire warnings of a national
and global collapse of the economy should the legislation fail
to materialize. These predictions are not universal, by far.
A public appeal by 200 economists opposes the congressional
rush to judgment, summarized in these terms:
" --- we ask Congress not to rush, to hold appropriate hearings,
and to carefully consider the right course of action, and to
wisely determine the future of the financial industry and the
U.S. economy for years to come." See Story: McClatchy Newspapers,
Sept 25, 2008 with Open letter & signatures
Concerns about Proposed Bailout Bill
The original bailout proposed by the White House gave the Secretary
of the Treasury unlimited discretion in doling out $700 billion
and barred any Congressional or judicial review. The new legislation
calls for "consultation" with the following entities. Please
note that not one of those to be consulted is an elected official
and that Congress is out of the loop.
"(b) CONSULTATION.—In exercising the authority under this
section, the Secretary shall consult with the Board of Governors
of the Federal Reserve System, the Corporation, the Comptroller
of the Currency, the Director of the Office of Thrift Supervision,
and the Secretary of Housing and Urban Development." Title I,
Sec 101, (b) "Consultation" page 7, lines 18-23 and pages 15,
lines 23-24, and page 16, lines 1-9.
The people get involved in the decision making process, presuming
Congress is listening. Sec.115. Graduated Authorization to Purchase
(pages 40 - 49) provides an option to overrule any particular
bailout. Congress has 15 days after a purchase notice by Treasury
to introduce a joint resolution disapproving of the bill. The
resolution has a tight window to passage, three days, and is
subject to a presidential veto. The "fast track" aspects of
this guarantee the same types of hurried votes characterized
by a majority of members failing to even read a proposed bill
(e.g., The Patriot Act).
The bill requires that the Secretary of the Treasury report to
Congress no more than seven days after a commitment to purchase
a failed financial institution or at $50 billion dollar disbursement
intervals. Title 1, Sec. 105, Reports, (b) Tranche Reports to
Congress, (b) Timing, page 19, lines 7-24 and page 20, lines
1-10. The only direct option Congress has is the above mentioned
"Joint Resolution of Disapproval."
The bill addresses overpayment for troubled firms with the intent
of preventing "unjust enrichment." This is done "by preventing
the sale of a troubled asset to the Secretary at a higher price
than what the seller paid to purchase the asset." Title I, Sec
101, (e) Unjust Enrichment, page 9, lines 15-18.
What if the price the seller paid for the asset was an inflated
home price in a down real estate market at the time of a bailout?
By paying higher than market value prices, not limited by the
bill, "enrichment" would be guaranteed.
Even if that there were a real prohibition that failed firms
not make out under this bill, there is an open gate to enrichment,
firms in "conservatorship or receivership."
"This subsection does not apply to troubled assets acquired in
a merger or acquisition, or a purchase of as sets from a financial
institution in conservatorship or receivership, or that has initiated
bankruptcy proceedings under title 11, United States Code."
Title I, Sec 101, (d), page 9, lines 18-23.
Thus, there can be what would be considered "unjust enrichment"
if a firm just declares Chapter 11 bankruptcy.
How long will it be before people compare this generous bankruptcy
provision for billion dollar firms with the draconian bankruptcy
reform bill passed by Congress in 2005?
What if the Public Knew This?
On Saturday, Sept. 27, Gretchen Morgenson of the New York Times
reported a remarkable story that may further shake public confidence
in the bailout and the man in charge, Secretary of the Treasury,
Henry M. Paulson. The Secretary held a top level meeting at
the New York Federal Reserve Bank with "the nation’s most powerful
regulators and bankers." There was only one Wall Street executive
in the room, Lloyd C. Blankfein, CEO of Goldman Sachs, the investment
banking firm Paulson ran as chief executive before joining the
Bush administration.
Discussed at the meeting was the fact that AIG owed Goldman Sachs
$20 billion and was about to default. Following the meeting
AIG was bailed out to the tune of $85 billion dollars. Paulson's
former firm, Goldman Sachs, clearly benefited as a result of
the AIG bailout.
How would citizens react to that, were it presented as part of
the bailout debate?
They would probably be furious and demand that there be careful
consideration and deliberation of this bill. They might even
determine that it was blackmail with the people who caused the
problem threatening a world financial meltdown if they don't
get their way. Then they would connect the dots between the
bailout and the head dispenser of funds, Secretary of the Treasury
Henry Paulson, former CEO of Goldman Sachs. This firm received
huge financial benefits from Secretary Paulson before this bill
was even conceived.
The will of the people is just "collateral damage" if members
of Congress determine that details like democracy and honesty
are less important than the instructions of their leadership
and the Wall Street firms that created this problem in the first
place.
END
This article may be reproduced in whole or in part with attribution
of authorship, a link to this article, and image credit acknowledgment.
Please contact your member of the House or Representatives.
House Committee on Financial Services Web Site (for original
House bill and updates on legislation)
See Original House Bailout Bill Archived by Michael Collins & many others
"A Cascade of Ruin" The Money Party (part 6)
The next disaster: AIG’s Dangerous Collapse & A Credit Derivatives
Risk Primer by Daniel R. Amerman, CFA, Sept. 17, 2008
************* Scoop dot co dot nx
“It is well enough that the people of the nation do not understand our banking and monetary system for, if they did, I believe there would be a revolution before tomorrow morning.” — Henry Ford
"Capital must protect itself in every possible manner by combination and legislation. Debts must be collected, bonds and mortgages must be foreclosed as rapidly as possible. When, through a process of law, the common people lose their homes they will become more docile and more easily governed through the influence of the strong arm of government, applied by a central power of wealth under control of leading financiers. This truth is well known among our principal men now engaged in forming an imperialism of Capital to govern the world. By dividing the voters through the political party system, we can get them to expend their energies in fighting over questions of no importance. Thus by discreet action we can secure for ourselves what has been so well planned and so successfully accomplished."
- USA Banker's Magazine, August 25 1924
“Allow me to control the issue and the nation’s money and I care not who makes its laws!”— Amshell Rothschild
Banks that hold the controlling stock in the Federal Reserve Corporation:
Rothschild Banks of London and Berlin
Lazard Brothers Bank of Paris
Israel Moses Sieff Banks of Italy
Warburg Bank of Hamburg and Amsterdam
Lehman Brothers Bank of New York
Kuhn Loeb Bank of New York
Chase Manhattan Bank of New York
Goldman Sachs Bank of New York
John le Carré's new book
