The Government Stood Firm... Was It The Right Call?

The decision not to risk taxpayer funds to save Lehman Brothers this weekend came just as the political appetite for bailouts had reached its limits in Washington. Whether Treasury Department and Federal Reserve officials made the right decision will only start coming into focus as financial markets respond in the days ahead.

Six months ago, J.P. Morgan Chase won taxpayer support -- $29 billion of it -- to buy Bear Stearns, the fifth-largest investment bank that was on the edge of collapse. This time, dealing with the fourth-largest investment bank, Treasury and Fed officials wouldn't blink.

Read the full story here

-OR-

Related:

::Wall Street Awakes To Find Two Storied Firms Falling
::How Hollywood Is Affected By The Lehman Bankruptcy

Comments

[TrooAmerican]

Tax Burden and Tax Rate in theory and Tax Rate effective paid are 3 totally different things.

Tax Burden may be that the rich pay about 70% of all taxation, however, since they have 99% of all wealth, its not so great from that perspective.

Tax Rate in theory would make you think the Rick pay a higher percentage of tax than you and I do.
However, in Effective Tax rate, after loopholes, and deductions and shady accounting practices, offshoring of business established, and offshore accounts, as well as international income and cost of goods being flukey at best, the Rich pay an effective tax rate of about 9% which is actually lower than the stated federal tax rate of a family of 4 making poverty wages before deductions.
wow.
No wonder we are a nation of debt, the people like WHiner Bill O'Really on Fox dont ACTUALLY pay their required amounts, and so our IRS is in the hole.

[akkadian]

spending upwards of 12 billion a month of borrowed money
to fund an illegal war and finance big business tax cuts might have a
little bit of impact on the situation

[leftLibertarian]

Damn straight. Let them fail. No handouts.

[Paul Peete - Huffpost Blogger]

The truth is due to the wars and the failure to tax the rich, there was no money left ,so it was the only call. Right or wrong is irrelevant at this point.

We can thank Phil "McCain's econ brain" Gramm and his wife Wendy who accomplished the deregulation of energy and mortgage industries. This led to Wall Street going in the tank with worthless CDO's, based on subprime loan packages.

The only reason Phil is in the background of McCain's campaign is that he slipped and said what all of these Neocons say in private. We are "whiners" who don't deserve respect.

We have to get all these neocon thieves out of office.

[robjh1]

Pete, I think you need to look at this a little deeper. There is more at play here than meets the eye. First of all why would the gov't allow Lehman Bro's to go under and not protect them as it had Bear Stearns? Why did they rally the support for Merrill Lynch when only rumors about a fall was only heard recently. We had known for months thats Lehman was on weak leg. I am not inclined to blame the gov't for these failures and if we do then we better run for the hills if the Democrats take office for they are all for gov't intervention.

To be honest, I think this is bigger than the government. A there should be a House hearing on this matter.

[brooklyncitizen]

Take a number on the house hearings. I'd liek to see a hearing on impeachment.

[ProudAmerican23]

Paul, I agree with Rob ("look deeper") First let me agree that: Yes the war is expensive.... But so was Hurricane Katrina, Rita, the dot.com's all collapsed, 9-11 (shook the investors), everybody jumped into the House "flipping" game (and many got left holding the bag) Idiots that signed those ARM loans (and failed to understand that "adjustable" works both ways!) and China's economy boom (with labors getting 50cents a day) using A LOT of oil and ergo driving the demand up... naturally and price followed. What I fear is the "Tax the Rich scenerio" because IF I was in the top 5% income group, it would likely mean that I can afford a full time tax accountant who would simply move my money offshore if the gov tried to tax me too hard... in fact tax that group too much and they could simply move the whole business overseas... and the IRS gets nothing.

[brooklyncitizen]

Hardly.

Over the 8 years taht Reagan was in office he reduced the tax burden from of the top 5% - from a whopping 70% to 28% while increasing the tax burden on the middle and lower class. Similarly we can incrementally reverse the tax burden.

[BlueZoo]

Let AIG and the investment banks go down in flames! Markets will reel but will survive. Bailing out these greed ridden companies, without any stipulations as to any regulatory law reviews coming forth, is just asking for it all to happen again. I'm sick of hearing the excuses of mortgage and credit crises blowbacks. It was greed that got them into this mess and they all need to be called to account for their mammouth losses. Lehman owes over $600 BILLION they cannot repay! Good grief!

[kellygrrrl]

McCain wants to Privatize Social Security

http://www.truthout.org/article/mccain-would-privatize-social-security

[arthur2008]

The rapacious, self-serving thugs responsible for the nation's economic crisis belong in prison -- those on Wall Street and those in the White House.

[hip dibler]

I thought socialism was supposed to come from the left?

[jsarets]

Socialism is when workers are equal shareholders in the national economy, their prosperity tied to the rise and fall of domestic production. In our system of corporatism, workers are leased by producers and only share in the rise and fall of production to the extent necessary to protect the producers.

[fnygy]

Bingo! I dig you the most, jsarets!

[TheIndependenceParty]

Amen! The taxpayers of America should share in the fruits of our investment. We created Fannie Mae and Freddie Mac and in buying back should receive the dividends of our investment in the future! Bear Sterns bailed out, ... Give us our shares! Lehman Brothers gets stiffed, ... because the cash drawer is empty! Tough! AIG? Borrow from yourself! Tough love for badly run enterprises.

Privatize Social Security? No thanks, Senator McCain!

Going forward, if industry owners need our help, ... you know, us Americans? Going forward, we'd be glad to lend you the money to reorganize. Give us seats on your boards, dump ANY lobbyists that you hired, and give taxpayers shares in the outcome of your business!

Glad to help, ... Capitalism is a wonderful process, when all can play who are paying the price! Today it seems it is every taxpaying American Worker!

And to any boneheaded Old-Time Capitalist, like Alan Greenspan, who believes that "ownership" should not be extended to the level of small investors, ... taxpayers, I offer two words, ... SHOVE IT!

[iambusto]

well you got it now. Fannie and Freddie are the property of the taxpayers. Now in order to provide relief to the taxpayers who bought all those condos, we can legislate that none of those need to pay their mortgage.

we must ask for mortgage relief for all people who are in jeopardy

[Ohg]

They don't have any idea what to do - the Republicans may be masters of spin but they are horrible administrators. ..........­..........­.
http://thefiresidepost.com/2008/09/15/mccain-contradicts-himself/

[JenMI]

Economic pundits..."Right to bail out Freddie and Fannie, right to say no to Lehman."
Maybe so, but where I come from you don't reward failure. When someone doesn't show up and do the work you fire them. So why are we, the taxpayers, paying 17 million to the CEOs of Fannie and Freddie? Why would we reward Republicans, by keeping them in power, after the last 8 years of dismal failure on all fronts?
Obama has it right..."They think you're stupid."

[MadeinAmericaProud]

Bring all the jobs back to American with quality control of the products, I do not have a problems supporting these agency. However, these people didn't give s.h. $. t if I lived or died when they were ripping off from the greed created by deregulation and no SEC oversight.

The tree house wall st people were living in has fallen to the ground because they did NOT maintain the living tree they were in. America middle class people are the living trees. killing off the tress is not a very bright idea. Tree rots and fall over. We the people have fallen over.

the only thing gowning are the young Americans standing up protesting saying ENOUGH! ! !

[iambusto]

See you liberals are never happy.

When govt. bailed out bear stearns through JPM, you were mad (and i was very mad).

When FNM and FRE were nationalized you were mad (I wasnt because i felt that govt had the guarantee on those entities).

When LEH is allowed to fail, you are mad again (i am not, that shouldve happend and govt did the right thing).

When BAC takes over MER you are mad (what for? one company buying another, whats to hate).

If Govt bails out AIG you will be mad (and i will be too).

see liberals are always mad over everything, we republicans get mad time to time :)

[UnknownSoldier]

Getting Close to 30 Years of ReagaNOMICS can we finally put it to rest now Repubs. It is like COMMUNISM, looks great on paper, but DOES NOT WORK in practice.

at the end of Reagan second term we had the Savings and Loan mess, at the end of Bush second term we have another Banking Mess.


REAGANOMICS, TRICKLE DOWN, supply side, or whatever you want to call it DOES NOT WORK.

ENOUGH!!!

[biggorilla]

Companies don't have the right to be "too big to fail", it's a moral hazard waiting to happen.

And conservatives are told what to be mad about...lipstick anyone?

[hip dibler]

here's the difference between you and us 'liberals'.

we know things are bad. we know were getting screwed.

that's it.

you were probably looking for something a little longer but that's all.

now will you please get your act together?

[cabbile]

It's hard to imagine how you 'liberals' know anything with your heads so far up your @sses.

[randyvt]

Why do simple human beings who do bad work get rewarded with multimillion dollar golden parachutes? If they are under contract, why doesn't the contract provide for protection for the business and the shareholders? Whether it's an insurance company, or investment firm, or FreddieMac, if you don't do a good job, you should be sent packing without such largesse.

I have an Ivy League education, and a graduate degree. Yet I must have missed something . . .

[UnknownSoldier]

BBC = Billionaire Boys Club, look it up. you may find some interesting parallels

[Palintology]

http://img154.imageshack.us/img154/3631/mccain01vl7.jpg

[Spesabsquemetu]

Why doesn't John McCain want to talk about TAX RATES today?