Not enough talk about the bailout

[AndyLL]

Here is the text of the proposed bailout from the Treasury:

http://money.cnn.com/2008/09/20/news/economy/treasury_proposal/index.htm?postversion=2008092011

Some highlights:

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.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;
​

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Congress is being told they have to pass this quickly.

Am I the only one concerned about this proposal?

Andy

 

[MossMan]

No, you are not the only one worried about this. Ever notice how socialism is bad - except when the socialism is for corporations.

If taxpayers are on the hook for almost a trillion dollars we better be getting something in return. I mean something serious in return.

 

[Mamu]

I find the bailout of greed unacceptable.

 

[Carly_Roach]

It takes a brave person to discuss this issue without knowing what their party line is going to be, which is why we haven't seen too much discussion of this new proposal here yet.

Personally, I think something has to be done but I don't like how little "regulation for the regulators" there is in the proposal. It seems they're being given free reign with no oversight and I hope that will change before Congress votes on this package. The last thing we need is the same people who got us into this mess using the same bad decision-making skills trying to get themselves (and the hell with the rest of the country) out of it.

IMO they need to get anyone over 50 or 60 who has a successful history of practicing good old fashioned financial skills onboard to administrate the bailout. Leave out the new MBAs and anyone making over $250,000 out of the picture and holding the bag of crap they created, not to mention making them pay back all those bonuses for "selling" BS loans in order to manipulate the bottom line into looking better than it was.

It was greed and the ability to screw up numbers on paper that got the institutions into this mess. It will be good, sound, and possibly blood-letting advice and practices that will get the rest of us out of it.

 

[dvcgirl]

We should all be concerned, very concerned in fact. It's amazing to look at the powers that the Fed and Treasury have been given in recent weeks.

I'm listening to CNBC now, and for one thing, we can count on the risk of stagflation going way up over the next two years. Makes sense as the banks are de-leveraging very quickly. So profits and growth for the economy will stall, and all of the money going into the economy to fund these bailouts will really increase the risk of inflation.

Stock markets hate stagflation.....

 

[escape]

I'm very sick about it. I don't know what to think. The bailout is being done for the taxpayers and not the corporations...so we're being told. Yet, the CEOs and cronies are still living high on the hog.

Where was Congress when the market speculation was taking place? Where was the White House? Where were the Wall Street regulators???? These banks took a BIG risk and they failed...with our money! Now, Congress is being told to act quickly. I can only imagine where that will lead.

Personally, I think something has to be done but I don't like how little "regulation for the regulators" there is in the proposal. It seems they're being given free reign with no oversight and I hope that will change before Congress votes on this package. The last thing we need is the same people who got us into this mess using the same bad decision-making skills trying to get themselves (and the hell with the rest of the country) out of it.

I agree!!! Yet, I hear some CEOs & others resonsible are being asked to stay on for a couple of more years with big $$$$ for bonuses. I'm sure this bailout is just the beginning. Yes, I'm sick about it.

 

[Master Mason]

I agree!!! Yet, I hear some CEOs & others resonsible are being asked to stay on for a couple of more years with big $$$$ for bonuses. I'm sure this bailout is just the beginning. Yes, I'm sick about it.

First off, I don't know if it is good or bad, I haven't looked at it closely enough to decide at this point. But do have a few general thoughts.

1. I am usually in favor of the idea that if a company fails it should go down, not get bailed out.

2. sometimes there are reasons why #1 is not acceptable, I don't know if this is truely the case here or not.

3. Lee Iacocca was kept on during the bail out that they were given, he turned the company around and repaid the loans ahead of time, so just the CEO being left in place is not in and of it's self a bad thing. But if I remember correctly he cut his salary to a dollar until things turned around as well.

4. Only time is going to truely tell if this is good or bad.

 

[Chicago526]

From what I understand (and I am by no means an expert, not even close!) the bail out is 100% nessesary, to the point that if we don't do it, $700B would have looked cheap by the time it would all be over. It ticks me off to no end, but there isn't much choice in the matter.

That said, there needs to be some oversight and accountability. Not so much that it ties the hands of those trying to turn it around, but enough to make sure the funny business stays to the absolute minimum. I saw Sen. Dodd on one of the Sunday shows saying they (the Dems) are hoping to do to just that, but he also said that they need to work quickly. I don't know if there will be enough time to put in all the safe guards that are needed.

What I would like to see added is something that this is all up for review in say, two to three months so if things don't go as planned, Congress has the ability to take some of these new powers away from Treasury.

 

[alldiz]

No, you are not the only one worried about this. Ever notice how socialism is bad - except when the socialism is for corporations.

If taxpayers are on the hook for almost a trillion dollars we better be getting something in return. I mean something serious in return.

Isn't it amazing

It takes a brave person to discuss this issue without knowing what their party line is going to be, which is why we haven't seen too much discussion of this new proposal here yet.

Personally, I think something has to be done but I don't like how little "regulation for the regulators" there is in the proposal. It seems they're being given free reign with no oversight and I hope that will change before Congress votes on this package. The last thing we need is the same people who got us into this mess using the same bad decision-making skills trying to get themselves (and the hell with the rest of the country) out of it.

IMO they need to get anyone over 50 or 60 who has a successful history of practicing good old fashioned financial skills onboard to administrate the bailout. Leave out the new MBAs and anyone making over $250,000 out of the picture and holding the bag of crap they created, not to mention making them pay back all those bonuses for "selling" BS loans in order to manipulate the bottom line into looking better than it was. It was greed and the ability to screw up numbers on paper that got the institutions into this mess. It will be good, sound, and possibly blood-letting advice and practices that will get the rest of us out of it.

Exactly....I know a few of these "mortgage lenders"....yeah they are looking for new employment....but let em pay all those commissions back on bad loans.

Pisses me off the banks all cried "deregulate" us.....we can run ourselves....we don't need the gov't ....
UNTIL THEY SCREW UP AND THE TAXPAYERS LINE UP HOLDING THEIR ANKLES AGAIN
Kerri

 

[Disneycrazymom]

I am very concerned about this! Who is going to regulate the regulators? They have not been doing their job and now we the tax payer gets the consequence of it all.

The same committee in Congress that allowed all this to happen now gets to be in charge of finding a solution? That is just nuts!

The same CEO who allowed this to happen now gets to stay and earn my tax $$? Again just nuts!

 

[Laugh O. Grams]

We should all be concerned, very concerned in fact. It's amazing to look at the powers that the Fed and Treasury have been given in recent weeks.

I'm listening to CNBC now, and for one thing, we can count on the risk of stagflation going way up over the next two years. Makes sense as the banks are de-leveraging very quickly. So profits and growth for the economy will stall, and all of the money going into the economy to fund these bailouts will really increase the risk of inflation.

Stock markets hate stagflation.....

If we are indeed entering an inflationary period, it sure sounds like a good time to pay off some that debt to China. Sometimes, these things look like they may be done on purpose...

 

[ntsammy5]

Just to point out something here - banks are heavily regulated - investment firms not so much. Most of the problems were with investment firms who were leveraging at 30:1 ratios - investing in risky products out of pure greed. The last two large investment firms are converting to banks and will be much more regulated than before.

No large banks have failed or have been bailed out to my knowledge - they're not very profitable but other than WAMU, not in danger of failing. The ones in the most serious financial straights are those with huge investment portfolios.

 

[chris1gill]

The ones in the most serious financial straights are those with huge investment portfolios.

And just to point out, these places are not regulated by the Government to any degree of specificity.

 

[Biscuitsmom31]

Here's what burns me about the whole deal. These big businesses mess up and we're going to bail them out. Meanwhile, the people who got the bad loans are still losing their homes and owing the money. Once again, save the big business and squash the little guy.

I think they have equal responsibility in the problem so it's ridiculously unfair for the corporations to skate and leave the consumers and taxpayers holding the bag.

 

[AndyLL]

Here's what burns me about the whole deal. These big businesses mess up and we're going to bail them out. Meanwhile, the people who got the bad loans are still losing their homes and owing the money. Once again, save the big business and squash the little guy.

That is what is irritating. If the foreclosers could be stopped or reduced then the problem goes away.

But that is bailing out individuals that maybe made bad choices and can't be done.

Instead we'll bailout companies who made bad choices (and millions of dollars)

What worries me about the proposal that it puts so much power to spend Trillions of dollars into the Feds hands without oversight.

It takes a brave person to discuss this issue without knowing what their party line is going to be, which is why we haven't seen too much discussion of this new proposal here yet.

This is a frightening statement also.

I don't doubt many here won't talk about it because they haven't been told by their party what to say.

I don't expect anyone here to be able to discount the cashflows of a CMO but it is not to hard to learn about what securitizing of mortages means.

 

[Brianne]

I'm still reading and watching everything that's going on so I haven't formed too much of an opinion on it yet.

However, I am very bothered by the "pass it all yesterday!" comments being made by Bush and a couple others (Paulson, I believe). Yes, I do think it'll probably be inevitable, which I think stinks to high heaven. I also agree that it should be fairly rapid before things get worse. But I don't see anything wrong with Congress looking everything over before signing off on it, nor asking for provisions be put in place to make sure this doesn't happen again!

I don't sign off on a loan or any other sort of official document without reading everything over first---and yes, I'm not a favorite of title companies because I will not sign something until I've read it first.

I don't think it's too much to ask that Congress proceed carefully first!