Gut Check Time: Will Congress Stand up to Wall Street?

It's gut check time.

The attempt by Treasury Secretary Paulson to put a gun to the head of Congress and terrify them into forking over a $700 billion blank check to the Bush administration in 48 hours has failed. Now what?

Most Americans would just as soon the Masters of the Universe were allowed to sink in their own folly. They had the party; let them clean up the mess. But, looking at sinking housing values and shaken retirement accounts, most Americans know something has to get done.

Banks and investment houses carry weapons of financial mass destruction. Last week, they looked into the abyss. If nothing is done, the chances for a deep and long depression are very great. So stocks skied around the world when Paulson announced his support for a massive bailout of Wall Street. And stocks and the dollar plummeted, and oil and gold soared when it became clear on Monday that the Congress wouldn't simply salute and go along. Doing nothing is not an option.

Leaders from unions, consumer and citizen groups have weighed in, demanding strict conditions on any bailout. On Monday, Sen. Chris Dodd put forth a draft bill that called for an independent board to run the bailout, required that taxpayers get partial ownership in any firm bailed out, and mandated steps to forestall foreclosures and work out mortgages, helping to keep people in their homes. House Speaker Nancy Pelosi demands a kickstart for the real economy - extension of unemployment benefits, aid to states and localities, investment in green jobs and basic infrastructure. (But at only $50 billion, a relative pittance for the real economy compared to the sums demanded to rescue Wall Street). Rep. Barney Frank insists on limits on the compensation of executives of any firm that gets bailed out. Together, these conditions begin to make some sense out of a bad fix.

Initially, Bush and Paulson, backed by the slavish Republican leadership in Congress, resisted, calling for the bill to remain "simple and clear." Republican leaders denounced help for homeowners and Main Street as "political" and "partisan" as opposed to bailing out the Master's of the Universe which somehow is an emergency above politics.

But Paulson is a deal maker. As his testimony indicated today, he'll trade nominal oversight and a few bridges for the $700 billion. As someone who made half a billion on Wall Street, however, he's been unbending on limits on pay for his friends, on providing taxpayers with an equity stake in the firms that are helped, and on measures to force work outs of mortgages and a freeze on foreclosures. And he'll resist any detailed measures to regulate Wall Street to insure this doesn't happen again. For all the talk of bipartisan accord, this will be a face off. Democrats will have to stare him down.

With the financial markets reeling, who will blink first? Will the Democratic leadership insist on common sense? Will Paulson be able to panic Congress into folding? Will the financial firm lobbyists now swarming the Capitol like a plague of locusts be able to rent the votes they need?

The decisions will be made over the next few days. If you want to make your voice heard, go here to contact your legislator, or to get more information.

But this staggering bailout - as perilous and costly as it will be -is only a stop gap. Broader lessons need to be drawn; larger and more permanent reforms are needed. One thing should be clear: the conservative era is over. The theology of market fundamentalism has proven to be a false idol once more. As Joseph Stiglitz has argued, the collapse of Wall Street is to the market fundamentalists what the fall of the Berlin Wall was to communism. It's over. The right has proved once more that it cannot be trusted to run the government it scorns. A trillion dollar debacle in Iraq. A trillion dollar bust on Wall Street. Hundreds of billions pocketed by Big Pharma and Big Oil. It is time for a reckoning.

Comments

[antirepublocrat]

An ultra-conservative friend pretty much agrees with this lefty pinko. It's about the first time we agreed on anything political in 25 years.

The corporation should have to declare bankruptcy first, then the government steps in and assumes all liabilities. All shareholder equity is wiped out and the corporation becomes the property of the Federal Government. Obviously that wipes out all stock options as well. Make sure that's permanent. All deferred compensation and SEP retirement plans are wiped out. CEO and BOD are all fired, replacements appointed by Treasury at Civil Service rates. When the corporation's book value is high enough to repay the bailout, Treasury can sell its equity to the public in an IPO. Don't allow exercise of old stock options or warrants on the new stock.

Punitive? You're damn right! It's about time we got punitive. Now go call your Congress-critters and tell them to support this bipartisan plan.

[Timma]

Screw corporate socialism. Take the half trillion dollar figure wherever the hell it came from and divvy it up to every tax paying citizen - kind of like King George's tax rebate intended to placate the masses and bolster KMart and Wally World. Even the best case scenario folk aren't being particularly rosy. If McCain gets in the USA will have become a tyranny in the real sense of the word.

And another thing - If you're a Joe six-pack and you think McCAin reprersents you, you're either stupid as your caricature suggests, or you need to listen up.

VOTE OBAMA

[PigLipstick]

Economist Lyndon LaRouche predicted this collapse 15 months ago. He also has a plan to minimize the effects of this mess and it will not cost the taxpayers billions of dollars.

This plan has been praised by many members of Congress as well as several state officials who are facing bad economic times because of the millions of home forclosures that will significantly reduce local and state government revenues from disappearing property taxes. Hillary and Bill clinton are also supporting Lyndon LaRouches plan that will put elements of the banking system and home owners facing foreclosure into bankruptcy and eccentially freeze everthing in place until the Real Estate market settles down and reflects stablized market values. Then renegotiate these loans to keep the home owners in their houses while keeping local banks operational.

Go to Lyndon LaRouche's website http://www.larouchepac.com/hbpaa) and read about his Home Owner's and Bank Protection Act. It keeps people in their homes, keeps honest banks open to keep the economy functioning, and saves the taxpayer's money while cutting the Wall Street speculators free to moan there losses.

[matoosoferrara]

Pale-faced liberals who support obama have a few new problems. joe biden seems to have mad-cow desease and obama won't go to work and help out with the bail-out fiasco. meanwhile, we find that obama and biden both voted twice for the bridge to nowhere that they mocked the female candidate about.
polls are going to go south on obama!
http://www.examiner.com/x-852-Atlanta-Civics-Examiner

[Timekeeper10]

Shocking that he did not vote "present"

[damejacqueline]

Stop lying!

[u2cancounterpoint]

I heard it somewhere that a bad government only wants to stay in power long enough to steal the country blind and then either get immunity or go into exile with the cash. Don't bail out these financial institutions. If you have to spend government money, use it to help the people that have gone broke not the company’s that that sent them there!!! If anyone saw this coming it was the companies that have filed chapter 11. They dropped the ball, it was tossed to them they spread their hand and watched it hit the ground. It’s big money playing the game, playing on our fears in the hope of getting a big paycheck before the end of Republican rule. It the same old story, hurry up and vote for the good of the nation or all hell with break loose. It’s that cry of “Wolf,” just another hurry up and vote that will get us in trouble all over again. It appears the government is proposing to risk billions upon billions of dollars, so I think its fair that I risk sounding redundant, if you have to spend government money, use it to help the people that have gone broke not the company’s that that sent them there!!!

[sharonrj123]

I am so against the bailout but I am very happy now there are investigations into the corruption and greed. I hope the first to go is Christopher Dodd Chairman of the Banking for his greed and contributions from Fannie/Freddie, Barney Frank they all took money and now they are going to reap what they have sown. These corrupt senators have been having a big old time but THE PARTY IS OVER and I will be first in line to watch them walk these corrupt government officals out in handcuffs. Is it not a surprise that the lobbyist are on the hill to get their 770 billion hand out.

I say let it fall. It is time for this government to call their special interest and lobbyist have them bail them out. I want to see alot of jail time for these crooks

[daddysboy]

Are you really calling out two Democrat party members of congress and tying the current problems to them knowing that the ENTIRE republican party has been clamoring for deregulation for the last thirty years or more? REALLY? This is the government that the neoCONs and the republican party have built and it is proving to be trash. The GIGO effect applies here in spades.

[u2cancounterpoint]

I heard it somewhere that a bad government only wants to stay in power long enough to steal the country blind and then either get immunity or go into exile with the cash. Don't bail out these financial institutions. If you have to spend government money, use it to help the people that have gone broke not the company’s that that sent them there!!! If anyone saw this coming it was the companies that have filed chapter 11. They dropped the ball, it was tossed to them they spread their hand and watched it hit the ground. It’s big money playing the game, playing on our fears in the hope of getting a big paycheck before the end of Republican rule. It's the same old story, hurry up and vote for the good of the nation or all hell with break loose. It’s that cry of “Wolf,” just another hurry up and vote that will get us in trouble all over again. It appears the government is proposing to risk billions upon billions of dollars, so I think its fair that I risk sounding redundant, if you have to spend government money, use it to help the people that have gone broke not the company’s that that sent them there!!!

[MichelLLB]

Gee, it's awful only to think about it.
How is it possible that such a plan is in front of the Congress?
So, I would suggest that we prepare to immigrate up North to Canada or to make a revolution which could start by Vermont making secession (Vermont was an independent state from 1777 until 1791 and this idea is still alive: http://www.vermontrepublic.org/).

[Timekeeper10]

Good idea, take your friends with you.

[sharonrj123]

That is what I would like to know. It is these corrupt, greedy idiots who call themselves our government. They made this mess and now they want to fix it. If they were that smart they would have never let it get to this point. It is funny how they are so in touch with special interest and lobbyist but now that this do nothing congress has run this country into the ground they now remember the tax payers.
What low lifes

[hu.man]

I heard Obama is supporting this bail out claptrap. Is this true? That the mainline of the opposition to this nonsense are conservatives. What gives?

[almo]

Part 3 of 3 parts
It makes you wonder if the majority of these high salaried people on Wall Street and in the US Government are really concerned much beyond themselves.
Economists are suppose to be in the know.
Certainly, they use a lot of fancy names to identify the economy and all the economic trends (percentage this and percentage that) (points up and points down) and a lot of other specialized information that the general public cannot even begin to comprehend.
If, those who caused this situation and use these fancy names, would have adequately understood, would this situation ever have developed?
Consider record keeping procedures.
What happened to all the records that would qualify as full discloser of where all their money came from (and from whom) and where it all went (and to whom)?
What about all the world's wonderful computer systems that keep track of everything?
There must be programs, in use somewhere, storing all the wonderful computer data that is suppose to keep track and reveal where all their cash came from and where it went.
Without even thinking about the staggering amount involved to any great degree, it is should be apparent, Wall Street certainly could not qualify in any way, by any stretch of the imagination. Neither 700 million. nor any lesser amount.
I'm Mad as Hell and I'm not going to take it anymore !

[almo]

Part 2 of 3 parts
Similarly, if by chance, I wanted to secure some kind of a loan or mortgage. My eligibility would be researched to no end; and my livelihood would be investigated inside and out, upside and down, and by whatever means they would dream up, to insure that I qualify.
Our Money
It has been discussed in many ways, they want our money so that they can be allowed to extend us more credit.
They want to have access to our money, so they can lend it back to us and thereby have us pay them interest on our own money they have just taken from us. Shouldn't we be getting interest on our money, that the want from us, first?
Where is the logic in any of this?
Does any of this seem to make any sense at all ?
Haven't they screwed up royally with the money they already have?.
It seems to me they really want to use our money to pay their bills.
Shouldn't this be called fleece and lace?
They fleece our pockets and lace their own.
Let them use some of their high salaries to pay their own bills.

I'm Mad as Hell and I'm not going to take it anymore !

Traditionally, the majority of honest hard working Americans are not looking for a handout, but, want to legitimately earn and pay for what they secure for themselves and their families.

[almo]

Part 1 of 3 parts
I'm Mad as Hell and I'm not going to take it anymore !
Here is another old expression: "one man's trash is another man's treasure".
As opposed to the Wall Street crowd that wants to give us their trash but they want our treasure.
More than likely Wall Street trash will still be trash. If it was worth anything, they would be keeping it.
If they can't take care of their cash, how can they take care of ours?
Considering that our Government is stupidly (no other word seems to fit) contemplating giving, what they call, a bailout of over 700 Billion dollars.(it will be more like a giveaway or a handout).
First of all, the US Government is not a bank. Moreover, the US citizens are not giving our Government permission, to use our money, in this manner as a loan, or in whatever clever way they find to characterize it.
Eligibility
My understanding is, that Congress has only received is a 3 page document, which states the reasons why Wall Street needs our money. and the tough circumstances they themselves have created; plus the possible scenarios that will occur if they can't have our money.
How will we ever be able to keep track of what happens to our money?
Who do they (Wall Street conglomerates etc...) think they are? Apparently. they have already demonstrated to be poor money handlers!

[Timekeeper10]

It is not that hard. People bought houses they could not afford, hoping the value of the property would rise. Lenders loaned money to bad credit risks. The left thought it was good because poor folks and bad credit risks folks were able to get houses. (Social welfare by credit) Others speculated on houses that were way above their means hoping to sell them for even higher. (Greed) The right thought it was a good thing because the economy was sound, construction and other indicators were up. (More Greed) Homeowners, lawmakers and financial institutions all had a part in this. None of you left wing types were complaining when low interest rates were allowing low income people with bad credit scores the opportunity to realize home ownership, but listen to you all now. Think about it, were you speaking up back then? No you thought it was a good thing. there is enough blame to go around for homeowners that borrow more they can afford, Regualtors like barney and Chris, Bush administration officials and financial institutions that are allowed to write their own rules..

[daddysboy]

The Democrat party, the party of HOPE was sure that those folks that were able to get into home ownership would realize their potential and gain some social status. It is sickening to me to hear all this blaming of individuals. Don't blame folks that didn't know better, blame folks that KNEW EVERYTHING and did it anyway to secure a PROFIT. The same folks that want to CONTINUE to secure profits despite the prospects of hundreds of thousands of American's lives going down the toilet.

[tj211]

I'm not sure on how I feel about this one. The Bush administration has had eight years of bullying Congress and forcing bad legislation down the throats of the American people. Bailing out financial institutions who have led their own companies astray should not be the responsibility of the American taxpayer. The companies should bear the brunt of their own collective failures, minus a governmental lifeline. But, every time I walk down my own block of the city I see another home going into foreclosure, that is a constant reminder of how Wall Street has made it so hard for the people on Main Street. McBush's decision to suspend his presidential campaign is nothing more than politics. Nothing will come out of it. His claim of "trying to show leadership" rings hollow, especially when you realize he has already shown for eight years that he cannot lead. Siding with Bush 90-95% of the time is a clear demonstration of a severe lack of leadership. It is this lack of leadership under Republican watch that has us in this mess. I would have loved to hear how he was going to get this nation out of this mess. Something needs to be done. What, I really don't know.

[sharonrj123]

It was not Bush who did this it started way before Bush. It started with Clinton and went from there. I suppose that Christopher Dodd, Barney Frank are not responsible eventhough Dodd was chairman of banking and received hundres of thousands of dollars from Fannie and Freddie. So did Franks So stop watching MSNBC and drooling over Oberman and think for youself. This congress was a do nothing congress and now they want to help their cronies again.

No Way

[bobalu49]

I'm not Keith Olbermann, but here's my Special Comment:

A: Instead of asking us to bail out Wall Street,
B: Paulson, Bush, Cheney, and Bernanke should be handing in their letters of resignation
C: for having failed to do their job and driven this country to bankruptcy with their bankrupt philosophy and failed policies.

President Pelosi, before we consider bailing out Wall Street, here are some non-negotiable demands:
1. $5 billion a year for universal health care for all Americans
2. No cap on Social Security payroll taxes - no matter how big your paycheck, you pay the same percentage as the minimum wage earner pays.
3. Restore the FDR New Deal Income Tax rates - rich folks should pay their fair share of the tax burden.

These guys have given us a raw deal for 8 years - it's time for a Fair Deal!

[IhaveaDREAMwhitegirl]

Congress, don't do anything till after the elections are over. Call this non-emergency Bluff!

Obama call their bluff!

[Star2000dancer]

No free 700 billion check! They took our healthcare, our jobs, they sold everything we own. My disability checking account, exempt funds, jas been froze 4 times. They count your jewelry, tv, you car, garnish you wages. Dental is painful, poor or non existent. I got 1 ten dollar check for my birthday, & when I cashed it, it bacame non exempt. My account got froze, all my bills bounced & the bank charged me $100.

I no longer have a lawyer, I had to watch my mom die,when I hit ice & took down 3 telephone poles, I was in such shock I could barely think. The ambulance came, gave me a beathalizer & the cops dropped me off home. No car, no doctor. 5 days later I sorta woke up & went to ER. They said nothing was wrong.,got xrays which do'nt show torn rotator cuffs. They threw me out of the chair & said go get a job. I could'nt even funtion. I still am not 100%. I want everyone of these crooks that put us here to lose everything they own, get judgement , their wages garnished & or put them all in jail. And every bonus they ever got put towards this bill. You broke it, you fix it!

[Star2000dancer]

WE THE PEOPLE MUST STOP THIS BILL. LET THE PEOPLE EHO BROKE THE SYSTEM, FIX IT OUT OF THEIR OWN POCKETS. AFTER ALL, IF YOU MAKE ENOUGH MONEY YOU DO'NT EVEN PAY TAXES. WE NEED TO TAKE EVERYTHING THEY OWN LIKE THEY DID TO US.

LET THEM EAT CAKE.!! NO MORE BAIL OUTS, & HOW CONVIENENT, JUST AS BUSH IS SPRINTING OUT OF OFFICE. ANOTHER TERROR/FEAR ALERT.

[GhiaccioPronto]

Wake up; America!

In Mega-Banks We Trust

Friday, October 22, 1999 should go down in history as the day that big money in politics won its biggest victory ever. That was the day that White House and Senate negotiators worked out a final, late-night deal engineering the repeal of a critical Depression-era law, the Glass- Steagal Act, that for six decades has kept the banking, securities and insurance businesses separate from each other....

Now, despite promises otherwise, the U.S. Treasury and the taxpayers will be in the position of bailing out speculators in the event that their risky plays in the securities business threaten the solvency of the soon-to-be-formed mega-banks.....

Key players are top recipients from the financial sector. Senator Gramm $2.07 million from 1993-98; Senator Charles Schumer (D-NY), $1.71 million; Senator Chris Dodd (D-CT) $1.38 million.

http://library.publicampaign.org/ouch/1999/10/ouch-33-mega-banks-we-trust

Kucinich

"This bailout will not bring real jobs back to America. .... The major product of this financial economy is now debt. Industrial capitalism has been destroyed."

http://kucinich.us/index.php?option=com_content&task=view&id=2442&Itemid=1

"stampede in the wrong direction". ..

Congress...repealed the Glass-Steagall Act. I warned then that a ‘financial swamp’ would result from the casino-like prospect of merging banking with the speculative activity of real estate and securities.

http://dorgan.senate.gov/newsroom/record.cfm?id=303365

[sharonrj123]

Thank you finally hearing someone talk about this. Only thing you did not say that President Bill Clinton signed it into law which started this mess. Which allowed the banking industry and wall street to merge again which caused the 1929 crash

[quest44]

I don't agree with you Robert !
Something doesn't have to be done at least not in the way of a bail out even with strings attached ! Why ? Because it is not going to help the Average American its only going to help the institutions and their CEO's .
If Bush ,Paulson and Bernenke thought this bail out plan was going to work then there would be no need to call up the army and station them in the US in case of civil unrest ! They know that even with this bail out American citizens will suffer just as they did in the great depression. So tell me why should tax payers throw good money after bad and put their children and grandchildren in debt for many years to come to benefit Wall Street ? They will line their pockets and walk out the door unscathed while the rest of us wonder where our next meal will come from. No if we have to suffer a depression let them feel the heat too !

[sharonrj123]

I believe that it is time that the American people begin to confront our government and let them know they did not ask us if they could do it. It is our money and they have no rights to just do what they want which they have done while we have sit back and let it happen. I think it is time for another tea party. TAXATION WITHOUT REPRESENTATION SHOULD BE EVERY AMERICAN SCREAM