Responses to the 700 Billion Blank Check.

[MKSheppard]

It doesn't help that the government explicitly took actions designed to "encourage home ownership". This was all encouraged from the very top: trickle-down theory doesn't work for wealth, but it sure works for financial irresponsibility.

Nice theory; except it was Democrats who pushed for that part basically; which of course were to be funded via loans to certain demographic segments who would traditinoally be "OH GOD DON'T LEND TO!" aka the NINJA segment.

Link to past thread referencing a 2005 NYT Article

I think the key part of that article is by Barney Frank (D-NY):

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

[K. A. Pital]

Nice theory; except it was Democrats who pushed for that part basically

Aren't US Democrats, who are also a part of U.S. Government, basically the spineless "more-to-the-center" version of US Republicans anyway? Also, aren't there a lot of lobbyists for Fannie and Freddie among the US Dems?

Since most of the US Democrats are just a softer version of Republicans, and also corruption-prone as the entire US Government is, does it really matter?

Or are you saying that Republicans opposed the leniency on Fannie and Freddie and did push for tighter regulation?

[MKSheppard]

Also, aren't there a lot of lobbyists for Fannie and Freddie among the US Dems?

Oh yeah. Tons.

Since most of the US Democrats are just a softer version of Republicans, and also corruption-prone as the entire US Government is, does it really matter?

Or are you saying that Republicans opposed the leniency on Fannie and Freddie and did push for tighter regulation?

The Republicans basically wanted some more tighter control over Fannie and Freddie; but they were basically opposed by the Democrats who were fat on bribe checks from Fannie and Freddie

LA Times Article

Obama, despite being a junior Senator, already has $112~k of bribe money, while McCain having been around for 25+ years; only has $12~k of bribe money.

It gets better. Jamie S. Gorelick; the Deputy AG during the Clinton Administration, went on to be Vice Chairman of Fannie from 1997 to 2003; alongside Franklin Raines; the former Clinton White House Budget Director, who was CEO of Fannie from 1999 to 2004.

Mmmm....corruption.

[K. A. Pital]

Hmm... interesting. Also:

McCain campaign manager Rick Davis is past president of the Homeownership Alliance, an advocacy group whose members included Freddie and Fannie. In that role, he defended the companies against increased regulation.

It seems that while McPain took less money, he has some rather questionable people as well on his "team".

Bah. That whole financial crisis really exposed the uglies sides of lobbying in U.S. government, I hope it will help to cut it down at least, if not exterminate outright as some European nations managed.

[MKSheppard]

It seems that while McPain took less money, he has some rather questionable people as well on his "team".

Oh yeah. Obama's no better though. Obama has two former CEOs of Fannie Mae James Johnson and Franklin Raines in his inner political circle advising him on stuff.

Where's the "Nuke everything from orbit" button?

[Covenant]

Frank Raines has never been a close advisor, and I think they both disputed there was any election advice given, but James Johnson is dirty and was indeed close. Johnson was also associated with Lehman and other financial institutions. It's a fair criticism. It's hard to find any money people who aren't tied up in some kind of fradulent bullshit, it seems.

[Patrick Degan]

is it just me or is the current administration trying to see if they can create the right enviornment for a marxist/leninist revolt in the US?

The actual object may be to bring about the conditions so fondly wished for by Grover Norquist and co., of driving the Federal government so completely into the ground and forcing such a titanic financial crisis that it will essentially have to defund everything except national defence, and lead to government "small enough to drown in a bathtub".

Of course, it would be beautifully ironic if the other possibility you allude to occurred instead.

[Darth Wong]

Nice theory; except it was Democrats who pushed for that part basically;

Why is it that every time I discuss some kind of left/right issue such as government regulation/deregulation, you always think it devolves into Democrats vs Republicans?

There is no viable opposition to Reagan's ideologies in America today. How many times do I have to say this? You can't blunt criticisms of right-wing politics by saying that the Democrats have been doing it. The whole goddamned country drank the Reaganomics Kool-Aid in the 1980s and has been continuing to drink it ever since.

[The Duchess of Zeon]

is it just me or is the current administration trying to see if they can create the right enviornment for a marxist/leninist revolt in the US?

I do have to admit I'd adapt to Communist America pretty well. The really high-peaked caps are sexy awesome and I'd finally get to be a reserve officer, with my primary job being helping mass-produce and assemble 200 nuclear powerplants as part of the First Five Year Plan, which would be considerably aided by the total lack of environmental overviews and safety lawsuits and the ability to condemn land at will to create an exclusion zone.

[Crayz9000]

I wonder what Stas Bush thinks of that idea.

[Winston Blake]

One thing I find annoying is how the comment sections of various news articles always have someone saying 'It's not a bailout, you silly fools, it's just a loan, the banks will pay the government back with interest!'.

Well if I gambled away my money and couldn't make the rent, and a friend offered a loan to cover it, then I'd say I got bailed out. Why? Because the danger of eviction was eliminated. Now consider that every day that these institutions stay in business, these banking executives are still getting their pay - just like the janitors. They're still getting their enormous salaries or bonuses or whatever. No danger of consequences. In the morning they walk in, and in the afternoon they effectively walk out with taxpayers money stuffed in their pockets.

You know what they consider that? Earnings. You know what it goes toward? Their net worth. As if they earnt a cent of it, or as if they have an iota of human worth.

BTW, the thread title is a bit odd - a cheque with $700B on it isn't blank. More like a $700B-capped slush fund.

[K. A. Pital]

It's not "capped" at 700 billion.

Paulson - the same one who said US economy is "healthy" and the credit crisis is "contained" and "past" in 2007-2008, and the same one who said "no bailouts" - said that the 700 billion figure can be revised upwards for "as much as required".

That's not a blank check. That's a blank piece of paper.

[Winston Blake]

It's not "capped" at 700 billion.

Paulson - the same one who said US economy is "healthy" and the credit crisis is "contained" and "past" in 2007-2008, and the same one who said "no bailouts" - said that the 700 billion figure can be revised upwards for "as much as required".

That's not a blank check. That's a blank piece of paper.

Ah. I thought it was limited to a max of $700B at any given time, but had no limits on throughput. Having no maximum either - just what is the point of putting a number on it anyway? It might as well have gone:

'So how much are we looking at?'
'Oh, 9 or 10 billion should do it, to be revised whenever I feel like it'.
'Good. Wait, what was that?'
'Oh nothing'.

[K. A. Pital]

Well, Paulson essentially said he'd be not held accountable to anyone, so in reality, he could do anything with any amount of money... and there'd be no way of pinging him down.

It's good that after the panic some congresscritters came to their senses over Czar Henry's proposals, but can they be reliably expected not to fold on the issue, when Wall Street hogs are playing Russian roulette with the market in hopes of getting this bailout "clean and fast"?

[Raj Ahten]

The sheer ridiculousness of the fed plan has truly pissed me off. I've written to my Congressmen asking them to not pass this sack of shit without at least some accountability for how the money will be spent, for whatever good that will do. Writing angry letters beats sitting on my ass anyway.

[K. A. Pital]

Yeah, and today Paulson once again said the Senate should immediately sign the bill, with Bernanke chiming in.

God, what despicable human trash those people are. Greenspan, Bernanke and Paulson basically architects of the current disaster, all claimed there was "no danger of crisis", "economy healthy" and other bullshit.

Now they ask for a freaking 700 billion bailout.

Can you actually jail the fuckers for lying? I mean, Paulson said the crisis is "contained" and "no more bailouts" just a few month before going on a bailout spree and seeing the "murkit!" crash, right? That was a huge lie as we see.

It's fucking sad that no one will be ever held accountable, and the former Goldmine Sachs buddy will probably push through with his outrageous plan to save his fucker friends on Wall Street (note Nitram's article about most of the funds going to Goldman, he-he).

If the bill passes, that's just another indication that America is reckless, and no longer can't hold anyone, even it's own government, accountable for anything that happens in the US, or in the world.

[Darth Wong]

One thing I find annoying is how the comment sections of various news articles always have someone saying 'It's not a bailout, you silly fools, it's just a loan, the banks will pay the government back with interest!'.

When the government loaned Chrysler a shitload of money to keep them afloat a few decades ago, it was called a "bailout". But if there's one thing I've seen consistently from right-leaning people, it's that they love to twist the language.

If confidence was so high that they could pay it all back, then a bailout would not be necessary. Cash-rich investors such as Arab sovereign funds or Chinese corporations would loan these organizations the money with confidence that it would be paid back someday. But none of them are biting, because they don't think it will be paid back.

I think it's worth pointing out that when a delinquent son gets hooked on drugs, he "borrows" money from friends and family to support his habit. He doesn't call it a bailout either.

[Illuminatus Primus]

Since most of the US Democrats are just a softer version of Republicans, and also corruption-prone as the entire US Government is, does it really matter?

You guys got some bad guys and are just more moderate versions of the shittastic corrupt motherfuckers, so why not just uh, keep voting Republican?

The GOP's response to their obvious guilt in the crisis, in a nut shell.

[MKSheppard]

Uh, Illuminatus; that's Stas you're replying to. I accidentally didn't snip out his stuff completely.

[SirNitram]

Dodd has his proposal out.

Link

Breaking this down from legal speak, here's what I get...

1) When the big fund sells a Troubled Asset it got from it's 700 billion handouts at a loss, it immediately gets 125% of the loss in equity. In short, if they hand over a guaranteed loser, they pay the full loss, plus a penalty fee, to the US government. A 25% fee. Privatizing the risk.

2) Penalties for executives. Paulson is still adamant about how this would cause the end of the world as we know it. He's probably right. The end of the Wall Street world is basically holding people responsible.

3) Oversight. The board is unfortunately destined to be populated with political appointees(Chairmen of FDIC, SEC, Fed Reserve) but includes one non-government guy appointed by the Majority Leadership of the House and Senate. Monthly reports are required to be given to the Senate and other basic oversight stuff. The Sec of the Fed will also be required to report, weekly, how much of the piggybank he's put into this, as well as how much bought or sold in the past week.

4) Any profits made will be 65/35 to the Fed Housing fund and Capital Magnet fund. I suspect it's kinda really optimistic, but you might as well have it go into these funds. Anything left over goes to the Treasury which must be used to pay down the debt.

5) Cap at 700B at a time being held at any given time.

6) Judges can alter the terms of mortgages held by this, and the rulings can only be set aside if general misbehavior is proven.

It includes the necessary raising of the debt limit that this requires, and has some basic slow-the-mad-rush-of-foreclosures stuff.

I don't know if it's good, or if I translated this all back into reality sanely. But it definitely sounds better than '700B, no questions, no investigation, no paperwork.' Then again, so does 'The jury finds you guilty of the charge of fraud, Mr. Paulson.'

[Metatwaddle]

Obama has two former CEOs of Fannie Mae James Johnson and Franklin Raines in his inner political circle advising him on stuff.

No, not really. Johnson stepped down in from the VP vetting committee in early June, before Fannie bailouts were a twinkle in Henry Paulson's eye. Raines actually wrote a statement saying that he had not advised the Obama campaign. According to the WaPo fact checker, Obama's campaign did call Raines a couple of times, but the discussions were about general economic issues, not mortgages or foreclosures.

[CmdrWilkens]

The thing that gets me right now is this quote from the White House:

With respect to executive pay, again, I'm not going to get into specific, point-by-point details on what our views are on that, other than the Secretary of Treasury said it would make more difficult to make this plan work and effective if you provide disincentives for companies and firms out there who are holding mortgage-backed securities and other securities from participating in the program. You have to remember, these are not all weak or troubled firms that own mortgage-backed securities. A lot of them are very successful banks and investment houses that have done very well, have been responsible, are holding performing assets that have value. They were not necessarily irresponsible players, and so you have to be careful about how you deal with them.

Emphasis mine. This is a plan that has been cooking for MONTHS (the Paulson plan) and its a feature that it is designed to give money to non-fialing banks and lenders. Seriously? If the bank can cover its own ass and isn't willing to accept a shitload of extra oversight and executive pay cuts then let them go. If the bank has to chose between pay cuts with regulation or insolvency well then the damn well will choose oversight. Isn't that what we should be trying for?

[Patrick Degan]

The thing that gets me right now is this quote from the White House:

With respect to executive pay, again, I'm not going to get into specific, point-by-point details on what our views are on that, other than the Secretary of Treasury said it would make more difficult to make this plan work and effective if you provide disincentives for companies and firms out there who are holding mortgage-backed securities and other securities from participating in the program. You have to remember, these are not all weak or troubled firms that own mortgage-backed securities. A lot of them are very successful banks and investment houses that have done very well, have been responsible, are holding performing assets that have value. They were not necessarily irresponsible players, and so you have to be careful about how you deal with them.

Emphasis mine. This is a plan that has been cooking for MONTHS (the Paulson plan) and its a feature that it is designed to give money to non-fialing banks and lenders. Seriously? If the bank can cover its own ass and isn't willing to accept a shitload of extra oversight and executive pay cuts then let them go. If the bank has to chose between pay cuts with regulation or insolvency well then the damn well will choose oversight. Isn't that what we should be trying for?

My my, they're not even bothering to hide their attempted theft of a trillion dollars from the commonwealth, are they?

[Darth Wong]

Well well well, it seems that despite their talk, Republicans actually do believe in blindly trusting experts, so long as those experts have close ties to major corporations and obvious conflicts of interest.

Clearly, that's Obama's problem. He's an "elitist, but not the good kind of elitist which is allowed to be elitist and say things like "don't ask questions, just trust us because we know better than you". I guess it's OK when a message like that comes from an old white guy instead of an uppity negro.

[Admiral Valdemar]

The FBI are investigating all the investment banks and associated parties. Looks like someone up there still believes in the Constitution.