47 Comments

• 1. neocon  |  September 26th, 2008 at 9:19 am

  Congress needs to act today, but act responsibly. The Democrats plan to piece meal the issue last night was a joke and the idea to simply extend a $700 billion government hand out is also a bad idea.

  The liquidity market is in danger of completely drying up which means loans are either unavailable or available at very high interest which then means no home loans, no car loans, no payrolls for small to medium business’s that rely on revolving credit to pay that, and a complete lack of investor confidence sending the djia into a tailspin adversely affecting IRA’s, pensions and retirement accounts everywhere.

  This bail out could be packaged as a loan with a favorable amoritization schedule based on the 2% fed rate, or it should be combined with some private capital, as Buffet did yesterday. Needless to say this bill also needs to signal the end of outrageous executive compensation packages and parting gifts. Capitalism is still the best economic platform in the world but without effective oversight to curtail the excessive greed factor, this can happen, as we’ve all come to realize. And Barney Frank should be prosecuted.

• 2. Pain  |  September 26th, 2008 at 9:27 am

  Did you notice neocon that House Republicans and Senate GOP leaders like Shelby are calling foul on the Paulson Plan?

  It is the House GOP that is at war with their own President Sec’y of the Treasury and Fed Chairman.

  This is not about a “Democrat” plan it is about passing the White House Treasury Fed financial rescue plan. Fizzyok heal thyself!

• 3. neocon  |  September 26th, 2008 at 9:40 am

  Pain,

  Again I am reluctant to address you because I consider you to be such an inferior opponent.

  The Democrats floated a “trial” plan last night that would have piece mealed the package, which would have only served to extend and/or exaserbate the problem.

  This goes beyond poltics, which apparently you’re incaple of, and therefore I don’t want GOP congressman to just sign off on the Paulsons plan. If you’ll remember, it was the Democrats that kept telling us that there was no problem and opposing regulation over the last five years, so your partisan attemtpt to blame the GOP now is just mind numbingly ignorant.

  Go back to the pitchfork where people at least think you have a brain.

• 4. Retired Spook  |  September 26th, 2008 at 9:47 am

  Here’s the WSJ’s take on the WAMU collapse. I think the gravity of the situation cannot be overstated.

  WaMu Is Seized, Sold Off to J.P. Morgan,
  In Largest Failure in U.S. Banking History

  The failure of WaMu eclipsed what had long been America’s largest bank bust on record, the 1984 collapse of Continental Illinois, which had $40 billion in assets. (compared to WAMU’s $307 billion in assets)

  The fact that no bank was willing to buy WaMu until it failed shows how badly confidence has eroded in a banking system awash with record profits just a few years ago. Faced with deepening losses on mortgages, credit cards and other loans, big and small banks across the country are struggling with what many bank executives say is a crisis far deeper than the savings-and-loan debacle.

  The seizure of Washington Mutual is likely to send tremors through the thrift industry. Many of WaMu’s smaller brethren are also struggling with a wave of bad loans and some have already been ordered by regulators to raise capital and stop growing. Many community and regional financial institutions are also slashing dividends, selling branches and reining in lending in order to preserve capital.

• 5. congressive  |  September 26th, 2008 at 9:51 am

  “If you’ll remember, it was the Democrats that kept telling us that there was no problem and opposing regulation over the last five years”

  Your clever Jedi mind trick won’t work on us, oh evil one.

  Republicans didn’t just oppose regulation, they DEregulated. McSame’s top financial adviser Gramm deregulated us into this crater. If you’ll remember. But you won’t.

  Johnny Mac’s postponing the debate so he can cancel the VP debate completely. He knows Pit Bull Palin would be Sitting Duck Palin in that environment. McCain lied to Letterman about what he was doing. He’s lying to us, too. Spots on a leopard.

• 6. Rich  |  September 26th, 2008 at 10:30 am

  So who is going to get my taxpayer money? The Wallstreet fatcats or the dipshits that bought $300,000 houses on $20,000 incomes? Either way I’m going to be pissed. Yes something should be done, but I have no idea what. Putting politics aside. What does everyone here actually think is a fair a and needed solution? I have been reading over at Dailykos and it seems to be about 50-50 for the Dodd plan and for doing nothing at all. Others want to bail out people that are behind on credit cards and mortgage payments, which I think is ridiculous. This is serious and needs to be done right.

• 7. Damnright  |  September 26th, 2008 at 10:31 am

  I’m afraid it is over for McCain. He can’t win here, if there is a deal the media will say Obama did it anyway. The polls show McCain is sinking fast. The shine is off of Palin. Not gonna waste anymore of my money supporting this loser ticket.

• 8. Retired Spook  |  September 26th, 2008 at 10:32 am

  Even as bad as the WAMU collapse sounds, there’s also a flip side.

  
  

  Why Washington Mutual (WM) Does Not Matter

  WamuWashington Mutual (WM) failed yesterday and most of its assets where sold to JP Morgan (JPM). The price was $1.8 billion. JPM will have to write down $31 billion in bad loans, but, since Jamie Dimon is now the king of the banking world, he should be able to raise the capital to cover that. In the meantime, he has picked up $307 billion in assets.

  According to The Wall Street Journal, “The deal will vault J.P. Morgan into first place in nationwide deposits and greatly expand its franchise.” The people who get drawn-and-quartered in the process are the WaMu bondholders and those who own the common stock. Washington Mutual shares were at over $36 a year ago. Now, they are worth nothing. About $50 billion in market cap has been destroyed. (emphasis added)

  The failure, the biggest in US history, does not mean much. Depositors are protected. The beating shareholders take is no different than any other when a large company fails.The system worked well. A healthier firm got the pieces of the failed firm on the cheap. JP Morgan will be the better for the deal and when the financial markets recover, the purchase of WaMu’s assets may look like the deal of the century. (emphasis added)

  The collapse of WaMu was similar to what happened at Lehman. Outside firms including Nomura got some tremendous financial property for next to nothing. The Japanese company had the capital to do what Lehman could not. The assets which Nomura bought may be temporarily impaired, but the stronger company can wait that out

  Physicists claim that energy is never lost. It simply changes from one form to another. The current banking process may show that capital acts in roughly the same way, at least over long time periods.

  The purchase of WaMu’s assets again raises the issue of whether the government bailout of the financial system is necessary. Private capital has picked up the pieces of several bank and brokerage failures and the process has happened with speed and efficiency. Capital is available if the deals are good enough. (emphasis added)

  WaMu failed and, except for a relatively small number of shareholders and employees, no one should care.

  Maybe, but it would most certainly suck to be a WAMU employee or stockholder — or both.

• 9. OhioOrrin  |  September 26th, 2008 at 10:37 am

  I agree w the montana rancher’s comment on CNN -

  “aren’t these the same people that said there were nukes in Iraq?”

  I don’t feel another (bum)rush to judgement or more playing on fear solves anything. nor does throwing the shareholders under the bus.

  lastly, the FBI may yet establish criminal activity as in enron so involving public monies may be pre-mature.

• 10. Retired Spook  |  September 26th, 2008 at 10:40 am

  lastly, the FBI may yet establish criminal activity as in enron so involving public monies may be pre-mature.

  That would be heartening to see those who betrayed the public trust spend a little time in Leavenworth.

• 11. Damnright  |  September 26th, 2008 at 10:50 am

  We had everything going for us in 2002, controlled everything and Bush pissed it all away.

• 12. WhatChange  |  September 26th, 2008 at 10:54 am

  Affirmative action loans. Progressive Democrats.

  Any questions?

• 13. Aztec  |  September 26th, 2008 at 10:56 am

  I agree with Ohio. This is just another fearmongering tactic by this administration. Hurry, Hurry, we have to pass this fast, before we know all the facts. Just give me a huge chunk of taxpayer money and I’ll make it all better. In the inimitable style of Bush “fool me once shame on you, fool me twice (stutter,stammer) can’t get fooled again”. Let’s take our time and get it right this time.

• 14. Peter Benson  |  September 26th, 2008 at 10:58 am

  The “We the People” financial rescue plan

  Federal government to provide an unsecured loan of $50,000 at 4% repayable over 10 years to every taxpaying US citizen. The loan payments and interest to be managed by the IRS

  Conditions of the loan:
  To be used to settle debts in the following order:

  1. Back taxes
  2. Mortgage arrears
  3. Credit card debt
  4. Car loans
  5. Reduce mortgage principal

  Result: Immediate liquidity in the market, the majority of all home mortgages become compliant. Minimal loss of funds

• 15. hermie  |  September 26th, 2008 at 11:10 am

  Let us go back in time to the days where the Community Reinvestment Act was implemented and enforced to ‘encourage’ banks and other lenders into making loans to ‘unserved’ areas ie: poor and minority neighborhoods. The problem was that the common-sense rules of lending were also discouraged. You had to prove you were NOT discriminating by showing where you were lending and that you were making an effort to promote loans to those areas.

  It would’ve worked if groups like ACORN…yes THAT ACORN, were not in the habit of starting lawsuits and other legal manuvers to stop banks from expanding their business. They used the CRA to hammer the banks and if the banks ‘cooperated’ and lent more money to those targeted groups and neighborhoods, the lawsuits would vanish and opposition to expansion would disappear.

  That pushed banks to start making loans to less than credit-worthy borrowers. As lenders became bigger, they were targeted more heavily by these ‘community’ organizations and thus the Feds were pushed to enforce CRA even more. Regulators were split into two parts; Regulatory Compliance and Safety and Soundness auditing.

  Even though making riskier loans to areas affected the banks’ financial health, the Compliance regulators would ignore that and write up those banks who were not ‘adhering to the spirit of the CRA’. Thus government regulators placed banks in a ‘damned if you do, damned if you don’t situation’.

• 16. Percy Beezer  |  September 26th, 2008 at 11:16 am

  Um, Peter?

  Uh, if the loans are unsecured, and the borrower already owes back taxes, what assurences are there that the “loan” will be paid back to the IRS who, btw, is the entity administering this?

  If “back taxes” are the issue, the IRS already charges interest and penelties far exceeding the 4%, are you suggesting the IRS swap the receivables for unsecured no penelty no worldly reason to pay it back loans paid for by taxpayers?

  Factually, your suggestion would require a massive re-write of tax code, and a $10 billion printing of money for a liability that would never be repaid.

• 17. Pain  |  September 26th, 2008 at 11:28 am

  14. Peter Benson | September 26th, 2008 at 10:58 am

  Cost to taxpayers per month 505.97 USD over the 120 month period. Savings per month would be on the average well over 4900 USD and increasing as debt is relieved and no more credit is taken on. The up front cost to the Treasury however . . .

  based on 142 MM taxpayers . . .

  is 7.1 MMMM USD or roughly half the consumer economy.

  But you are right it would be a “Super injection” of liquidity.

• 18. Deejah Thoris  |  September 26th, 2008 at 11:31 am

  12. WhatChange | September 26th, 2008 at 10:54 am

  Oh shut up. Gramm and the banks knew this was going to be a sleazy way to profit from the greed of the poor and the stupid. Don’t confuse the good intentions of the Clinton administration with the carpetbagger mentality of men like Phil Gramm.

• 19. Aitch  |  September 26th, 2008 at 11:32 am

  The President and Vice President must make a deal to resign if they want to get the bailout bill passed. George Bush is for letting history vindicate him. Let him put his money where his mouth is.

• 20. Percy Beezer  |  September 26th, 2008 at 11:43 am

  Not sure how you got those numbers, Pain (sockpuppet) since the “loan” has no maturity listed, but using simple interest calculations and using your base numbers the service of the debt is $11,500 per taxpayer, or $95.86/month.

  Savings? You sound like my wife, she saved $10.00 on a pair of shoes so I sent her back to buy more, we needed the money.

• 21. Eric T  |  September 26th, 2008 at 11:50 am

  For the people getting foreclosed on, why not just extend the length of the loan.

  If they can’t handle the 30 yr loan, drag out the terms of the loan, make it a 40, 50, 60 year loan, with a lower monthly payment. The bank still gets there money, the people are not thrown out in the street.

• 22. Damnright  |  September 26th, 2008 at 11:51 am

  Who is running McCain’s campaign? Dan Rather?
  Now he is going to debate, what a incompetent bunch these idiots are. They are done!

• 23. Percy Beezer  |  September 26th, 2008 at 11:54 am

  Eric,
  Renegotiating the terms of the balance due is always a good idea, problem is the outstanding loan is for greater than the value of the property already, extending the loan to new terms means an underwriter has to verify that the property is worth the amount to be loaned, and that won’t happen. (obviously because its not.)

• 24. New Conservative  |  September 26th, 2008 at 12:10 pm

  Might as well relax and get ready for the debate tonight guys. If they get something done we will know.
  http://thenewconservatives.blogspot.com/

• 25. Retired Spook  |  September 26th, 2008 at 12:10 pm

  Your clever Jedi mind trick won’t work on us

  Yeah, Congressive, that would require a cerbral cortex on the receiving end.

• 26. neocon  |  September 26th, 2008 at 12:24 pm

  Spook,

  Despite the fact that Bush has been warning Congress for 6 years on the lack of oversight of Fannie and Freddie and the possible dire ramifications and espite the fact the McCain addressed the same issue in 2006 and despite the fact that Barney Frank pontificated in 2005 that nothing was wrong, we get that kind of comment from congressive.

  One big problem in America, there are too many apathetic and uninformed people.

• 27. phnx  |  September 26th, 2008 at 12:31 pm

  No wonder the Dems want their plan to go through. It calls for 20% of funds going to entities like ACORN!!!

  http://www.openmarket.org/2008/06/16/an-untrustworthy-housing-fund-housing-bill-has-likely-acorn-slush-fund/

  What a disaster this would be. Fleecing the taxpayers in another transfer of wealth plan.

• 28. The Arctic Fox  |  September 26th, 2008 at 12:37 pm

  The big banks gave out $120Bn in bonuses to their collective leaders over the past two years. That they should be given $700Bn under ANY circumstances is disgraceful.

  I do agree, that in this the Democrats are completely wrong to try and fiddle with this treasury plan a little bit and push it through. If it goes through then whoever becomes president is going to end up being unable to meet some of his promises because there isn’t enough money left over.

  Personally I would like to see this bail out deferred until after the election. I simply don’t believe that the sky will come crashing down if the fatcats are unable to raid the taxpayers purse. This needs to be done RIGHT, and I don’t trust ANYONE who has been previously involved in the situation that bought us to this to just take money and use it responsibly.

  We need a new plan, properly proposed, not by lobbyists or fatcats but by other groups of financial experts, that has transparency built in and most important of all takes as little money as possible from the taxpayers purse to bail out these companies. Just giving them $700Bn is ridiculous.

• 29. Retired Spook  |  September 26th, 2008 at 12:44 pm

  One big problem in America, there are too many apathetic and uninformed people.

  A wise man once said that “ignorance is our most expensive commodity.” I would say trying to take advantage of a dire situation to score political points comes in a close second.

  Our Lefties keep bringing up Phil Gramm’s name as the architect of deregulation, and, while he certainly has some culpability, the bill that he was the “architect” of, received strong bi-partisan support (89 votes, IIRC).

  The current mess is much like a hurricane. Just as there are 3 major components to a hurricane: wind, storm surge and rain, there are multiple components to the current financial crisis. Both parties share some blame, but from everything I’ve read, about 70% of the fingerprints on this mess are Democrats or Democrat front groups like ACORN. The question now is, are the American people going to reward the Dems by electing Obama and taking the country in a GIANT step leftward? I think anyone who still believes that the government works for us and not the other way around should think long and hard before pulling that lever for Obama on November 4th.

• 30. The Central Scruitinizer  |  September 26th, 2008 at 12:49 pm

  The Central Scruitinizer wishes to launch an attack on the liberals on this thread, and hopes in doing so he will fall back into the good graces of those he admires so greatly (Neocon, Spook, JS, etc).

  As Hermie (#15) points out, this problem was caused by the brown people, as is usually the case for all problems. Bill Clinton - who is a filthy liberal - forced Wall Street to make loans to brown people (someone should investigate if Clinton got some sort of kickback from the brown people). Backed into this terrible position, Wall Street had no choice but to enter into dangerously creative and highly leveraged financial instruments. Time and time again they begged Washington to regulate them, but were constantly rebuffed. It was little consolation to Wall Street that they were making fantastic profits. “Sure, the money’s nice,” they said, “But what would really make us happy is more regulation.”

  And the Central Scruitinizer backs the opinion of Spook, who generously concedes that Republicans share some of the blame. But 30% seems too high. A more reasonable figure is 1%. Their only fault is that they could have tried 111% instead of the 110% effort they applied to curb the excesses of the brown people of this country.

• 31. hermie  |  September 26th, 2008 at 12:56 pm

  When government ‘encourages’ you to give loans to those who are less likely to pay it back, that’s not ‘compassion for the poor’, that’s telling someone who lent the money ’so long sucker!’.

  We can also point fingers at those who used ‘minority’ loans to buy and ‘flip’ properties; increasing their ‘value’ on paper but not actually increasing the actual worth.

  There has to be a rewriting of the CRA and its enforcement procedures, and we have to prosecute those lenders who too willingly made bad loans, with the knowledge that these mortgages could be pawned off on someone else.

• 32. Deejah Thoris  |  September 26th, 2008 at 1:12 pm

  20. Percy Beezer | September 26th, 2008 at 11:43 am

  Peter’s proposal clearly states Percy a 120 month term of the loan at 4%.

  The formula I think Pain, who is not a sockpuppet, used looks like this M= (P*R*Q) / [1200 (Q-1)] where M is the monthly payment, P is the amount borrowed, R is the rate in whole numbers, and Q is derived by a formula of (1+ R/1200) exp N where N is the term of the loan in months. No voodoo here Beezer just simple interest loan calculation. Like most Americans you don’t know shit about finance and want everyone to think any numbers you pulled out of your ass are valid. Life must be rosy as you.

• 33. Retired Spook  |  September 26th, 2008 at 1:26 pm

  and we have to prosecute those lenders who too willingly made bad loans, with the knowledge that these mortgages could be pawned off on someone else.

  Hermie, not a bad idea, but how do you differentiate between the institutions who did so out of greed and those that were blackmailed into doing so by ACORN?

• 34. hermie  |  September 26th, 2008 at 1:53 pm

  It’s more of looking at the volume of loans and looking at a pattern: Same names of buyers and sellers, same appraisers, loan officers, agents, etc.

  Safety and soundness audits by the FDIC and Fed will still note the volume and quality of ‘troubled’ loans; mainly because of the split personality of regulating agencies. S&S auditors and not usually the same people as the regulatory compliance auditors; thus one has little effect on the other.

  If it gets to the regulators at the supervisory level, then you have to give them a share of the blame as well, since they are obligated to warn banks regarding their bad loan exposure.

  It won’t be a snap to do, but you can catch at least some of the players.

• 35. Retired Spook  |  September 26th, 2008 at 1:57 pm

  But 30% seems too high. A more reasonable figure is 1%.

  CS, 1% seems a “bit low”. Do you have a credible source that supports that figure?

• 36. Nate  |  September 26th, 2008 at 3:05 pm

  oops — mccain flip flopped on the debate — looks like the financial crisis wasn’t such a problem. how pathetic — he’s a reactionist just like bush — the same government for another 4 years if he’s elected — think of how much more the usa will sink, in so many ways, if that happens.

• 37. Some Assembly Required  |  September 26th, 2008 at 3:21 pm

  Opps,conservatives asking Palin to step down for the good of the Party and Country…

• 38. OhioOrrin  |  September 26th, 2008 at 3:58 pm

  chris rock says vote 4 the guy w one house.

  I say vote 4 the guy w the cutest wife.

  I mean you’ll be lookin at it for 4 yrs at least, right? and chris, taint michelle.

  ur turn mr rock.

• 39. Pain  |  September 26th, 2008 at 4:05 pm

  “If BS were currency, Ms. Palin could bail out Wall Street herself.

  If Ms. Palin were a man, we’d all be guffawing, just as we do every time Joe Biden tickles the back of his throat with his toes. But because she’s a woman – and the first on a Republican presidential ticket – we are reluctant to say what is painfully true.

  What to do?

  Mr. McCain can’t repudiate his choice for running mate. He not only risks the wrath of the GOP’s unforgiving base, but he invites others to second-guess his executive decision-making ability. Mr. Obama faces the same problem with Mr. Biden.

  Only Ms. Palin can save Mr. McCain, her party and the country she loves. She can bow out for personal reasons, perhaps because she wants to spend more time with her newborn. No one would criticize a mother who puts her family first.

  Do it for your country. “–Kathleen Parker, ultra conservative pundit in today’s Dallas Morning News.

• 40. phnx  |  September 26th, 2008 at 4:18 pm

  ONE conservative commentator, who BTW, has an anti-christian bent, as did her mentor H.L.Menken, wants Palin to step down, and suddenly its conservativeSSSS.

  What is even more laughable is the expressed interest to ‘help’ McCain by having him select another running mate so that he can improve his chances against Obama.

  Leftist paranoia is fun to watch.

• 41. Pain  |  September 26th, 2008 at 4:28 pm

  40. phnx | September 26th, 2008 at 4:18 pm

  Really? Now Kathleen Parker is an anti-Christian???

  How quickly you shrewish wingnuts turn on your own when you realize the light in the tunnel is a train!

  Please do point Us in the direction of her “anti-Christian” opinions. Please do!

• 42. hermie  |  September 26th, 2008 at 4:34 pm

  Troll hijack again…can’t stay on the subject and come in late when they think that nobody is looking so they can post their drivel.

• 43. Pain  |  September 26th, 2008 at 4:36 pm

  phnx,

  We now understand.

  Parker criticized Rick Warren and she is an adovcate for the separation of church and state.

  What she is is an anti-Theocrat, not an anti-Chrsitian.

• 44. Rich  |  September 26th, 2008 at 4:46 pm

  Ok here is a question we need answered. If the dem plan is so good, why don’t they just pass it? They have the voted do they not?

• 45. Rich  |  September 26th, 2008 at 4:48 pm

  sorry votes

• 46. Kahn  |  September 26th, 2008 at 4:51 pm

  The office of candidate is not defined in the Constitution. Neither is the office of majority leader or majority whip. Parties do not exist as a concept in our Constitution.

  They better just fix it. Frankly, I have only a rudimentary grasp of high finance. It’s far more complicated than anyone here is willing to admit.

• 47. phnx  |  September 26th, 2008 at 5:41 pm

  Deeja #18

  Hermie is right and you are uninformed. Read and learn:

  http://www.city-journal.org/html/10_1_the_trillion_dollar.html