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.
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Part and Parcel of the Bailout Program.
Where is the one person saying no!!!
This is right out of the bailout proposal from the White House!
(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.)
"Trustworthy"
Paulson may be a good man but based on where we are today i think putting 700 Billion in their or his hands is a joke especially with no one to answer to except the
Executive Branch
Does anyone know where they came up with the $700 billion figure?
It didn't sound as bad as asking for 1 trillion.
If another bank were going to bail out a troubled investment bank, it would not be a gift. The angel bank would either take a substantial share of the distressed bank, or outright ownership of it. If the US government (that is, we taxpayers) bails out Wall Street, it should get no less a deal. I wouldn't mind paying 30 or 40 cents on the dollar for a desperate bank's mortgage portfolio. But it's no deal if they get to unload only the most egregious mortgages, and keep the paying ones. I want the entire portfolio or none of it. And once the taxpayers own it, they should determine who administers it - not Bush or Paulson. This has Halliburton-clone written all over it.
On the other hand, if this is simply a loan, it should be structured the way the original mortgages should have been, with the lenders (us taxpayers) receiving regular payments with interest.
congress does not even understand what 'wall street' is. they are part of wall street not above it or opposed to it. certainly in this instance in what the Treasury and Fed are trying to get the clueless in congress and the senate to understand, not only are congress and the senate part of the street, every single constituent that they represent are part and parcel of the financial system as it exists and operates in this country. who does not use credit in some way? apple computer? safeaway? wall mart? your local dry cleaner? any restaurant, auto repair shop, electricity provider? who?
and who does not use one or more of those services?
biggest barrier to this getting fixed is cluelessness. zero understanding of the interrelatedness of not only the many different pieces of the financial system as it exists but how pervasively it extends into the lives and economic well being of every single citizen in this country.
you think Warren Buffett is financially clueless?? if not, take his advice. let the Treasury and Fed do what they say needs to be done for the american people.
sensible comments by individuals understanding the symbiotic relationship between "big-bad wall street" and our everyday lives are conspicuous by their absence. Nice to see one. What is scary is the plethora of articles written by people who have no idea what they are writing about. This is not a partisan problem nor was it created in a republican vacuum.... blame can be allotted to all but that does not help. Listen to independent Michael Bloomberg if you can't get over the blue/red issue because he is independent - he takes no money as Mayor but donates it to charity and he knows more about business and the markets than any of us and stated that any delay, as we are experiencing now, will only exacerbate matters further - the credit market is tightening up and if yoy work for one of the many corporations, companies etc that require access to credit on a regular basis then you should realize that this tightening could well mean you don't get paid..... fluid credit markets keep businesses going - if this delay slows them down any further.... well watch this space.
All members of Congress should first remember,that these "oracles" coming before them with their begging bowls outstretched,are nothing more than BUSH APPOINTEES: therefore,they have previously sacrificed all rights to be believed.They should NEVER be allowed to write policy...Congress should look them down and insist on oversight,if nothing else.I am so sick of the reign of King George 43 and his neocon cronies---for 8 continuous years they have done nothing but drive us all into a ditch and then step back to see if we know how to get out of it ourselves. I hope this is all they have in store for us as an early "October Surprise," although I don't trust any of them not to pull some other disaster out of their hats in October.
The congress has no Guts, they just want to be elceted so
they will give bush and his buddies a blank check
I know that this is an insane suggestion that will be meet with laughter but I'm going to say it anyway...What if we took that 700 billion dollars and split it between all 350 million Americans? What's that, 2 billion a person? Sounds crazy right? So what if we gave each American a million dollars instead. That's a far smaller price tag and it would directly benefit every person, rich and poor alike. IF your're rich, reinvest it. If your're poor, buy a house and put your kid through college. That should solve the mortgage crisis instantly. Every one could pay off their house and bills, and Bob's your uncle, bam bad debt gone...and at a bargain too! Now I'm sure some suit will say, "No, no that's not the way it works, you silly man", but why not? Are there really 700 billion dollars of bad mortgages out there? How is that even possible? It seems like perhaps we are bailing them out of EVERY bad decision they've (Wall Street) has made. So go ahead laugh....but what would YOU do with a million bucks?
You and I are in agreement on this. If we each got a cut of the 700B we could pay off our debts and maybe have a little sum'in sum'in left over!
Actually, if you divide $700,000,000,000 by 350,000,000 (the amount of the bail out vs. the number of Americans, though a high population estimate) it comes out to about $2,000 a person.
BUT I think we should reduce the amount of the bail out, distribute it to those who have defaulted on their mortgages in the past 6 months, create an agency to help refinance these mortgages, administered by Fannie and Freddy (since the gov't already basically owns them), give a tax rebate of $2500 to every home owner, and $7500 to every first time home buyer (congress already approved the incentive for first time buyers). People will not default on their mortgages, they'll stay in their homes, and the banks will still get their money, albeit indirectly. This helps actual American citizens, not just big business, and will keep the economy from collapsing much further.
Oops, bad math. Sorry, but heh, I learned it on Wall Street. Anyways, I think my point is still valid though. It was just the sheer immensity of the number that got me.
This is not really about bad mortgages. This is about credit and the continuous use of credit cards. Much of this country has been a float for a very long time. It does not matter how much money is thrown at the "housing crisis". Without people continuing to use credit cards, vast segments of business will completely disappear. The fact that a very large segment of the population is maxed out, only reveals how painful this boxed in condition has become.
VOTE Obama (get off the computer, go outside, and actually do it!)
Stop complaining and whining and get five of your friends to vote with you.
A few years ago $13 billion in cash was shipped to Iraq. 363 tons of newly minted one hundred dollar bills were shipped to a war zone and just disappeared. That would be over nine semi-trailers loaded with pallets of one hundred dollar bills,poof ,gone. Where? I bet Cheney and Rumsfield have a pretty good idea where. Yet when it comes to more medical benefits for wounded vets, remember the rat infested V.A. hospitals, or health insurance for poor kids, the Repugs go all conservaty on us. Wooo, we can't afford rthat. Housing was over-priced, supply and demand. Too many over-sized houses for too much money let the market find the right price. But as far as retirement funds go the poorest of the hoodwinked should receive the bulk of any bailout. To do this all bank accounts of all these failed financial insttutes' ceos should be seized, it's time to start confiscating all those ill-gotten golden parachutes and give that money back to the people they got it from. Then there should jail time in real blue collar jails, for these white collared gangsters. It looks like the FBI is actually starting to go after the real criminals, I hope it isn't just for show.
You are one of these people that believe "main street" is orthogonal to "wall street".
If the stock market collapses and the banks fail do you believe "main street" won't be impacted?
Honestly?
And BTW, "main street" had a big hand in this crisis and did the gov't.
Among the many changes needed to the proposed legislation is a restriction limiting the government purchase price to 50% of the face value of the securities; and a requirement that all auctions be open to all potential buyers.
JERRY
Solution ; Eliminate the Federal Reserve Banking Cartel, toss the Federal Reserve Note into the waste bucket & reinstate the Silver Certificate or another currency backed by Gold, Silver, or Energy. Audit the Fed & demand they pay BACK every dollar & ounce of Gold that has been stolen from the American Citizens since the Unconstitutional creation of the Fed in 1919 in the form of a so-called Income Tax, which in actuality isn't a tax, but the interest payment on a no-limit credit card going into Private Bank accounts. Do NOT allow the Fed to destroy the Federal Reserve Note themselves and replace it with the digital Amero, which is what is behind the bail out.
Are you crazy? JFK got killed by doing JUST that!
http://www.john-f-kennedy.net/executiveorder11110.htm
"On June 4, 1963, a little known attempt was made to strip the Federal Reserve Bank of its power to loan money to the government at interest. On that day President John F. Kennedy signed Executive Order No. 11110 that returned to the U.S. government the power to issue currency, without going through the Federal Reserve. Mr. Kennedy's order gave the Treasury the power "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury." This meant that for every ounce of silver in the U.S. Treasury's vault, the government could introduce new money into circulation. In all, Kennedy brought nearly $4.3 billion in U.S. notes into circulation. The ramifications of this bill are enormous."
By the way, the Fed was created in 1913.
The conservative era is over? This won't alter the faith of the worshipers of Free Market. The invisible hand of the Free Market is forever the answer. People won't abandon their faith over a trillion dollar debacle.
Interestingly, this is NOT a partisan issue, nor should it be.
There are as many Republicans opposing this bail-out as there are Democrats.
It is a poorly conceived plan, and unlikely to be approved.
JERRY
You're right. Many Republicans are against the blank check socialization of the risks and privatization of the profit. With no oversight, and the wealthiest of the wealthy raking in even more. Some Republicans think the American Revolution was worthwhile and we shouldn't let the Royalists win this far along as a country.
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