Someone here on pdxradio.com called me out because of my lack of knowledge about the banking industry – essentially accusing me of being a rube when it came to understanding the home mortgage business, the mortgage crisis and its impact on the US and global economy. But today the federal government announced a federal bailout of this industry by TAXPAYERS that some estimate will run a trillion dollars because of a home mortgage lending industry run amok.

Expert after expert this morning has said that this grand undoing started when lenders offered home mortgages to people who were not qualified for them. The failed miserably at assessing risk. Loans were being floated to people that had no business being approved. And today, we have a massive federal government bailout of banks who bought these bad loans. Surprise, surprise, surprise.

let's review history--Bill Clinton outlawed redlining. and opened the floodgates to people who were not qualified to get a loan. thats where it started. and the ball just kept a rollin.

Redlining was quite obviously a racist practice that needed to be ended. A person should be lent money based on prudent lending standards, not their race. The failings of this crisis transcends race.

The current crisis is largely due to lack of regulation. A similar thing happened in the 1980s that led to the S&L crisis. Without federal oversight, lending practices were too loose, people were too greedy. Too many mortgages were given to people who should never have received them - all in the name of greater profit for the lenders.

This is yet another example of why government regulation is sometimes important. Every 20 years we have to re-learn this lesson as the Feds must clean up the mess - with all of our taxpayer dollars - created by this lack of regulation. Which is worse: more regulation or huge taxpayer bailouts later?

Andrew

So, these wealthy asses get to walk then? I don't think so. We don't get to walk, and WE built that wealth they couldn't get enough of.

The lesson of trickle down economics is this: There is no reaching the point of satisfying greed. We can't give them enough to have the trickle down actually happen. Doesn't work.

Greedy bastards are greedy bastards always. There is no limit.

It's clearly time to tax the rich hard. This is not the fault of the people taking loans. The real blame lies right at the feet of the major financials and their lobby and this administration that handed them what they wanted with no questions asked.

When somebody is foolish enough to say "Government Doesn't work", remind them of the bailouts happening right now. Remind them WHY we had the regulations we put in place around the 30's. It was to prevent this shit.

There are no free markets. Look around. This is what you get when there are few rules. Governments --at least our government exists to insure we all have a shot at a decent life without this mass usury, greed, exploitation and god knows what else going on.

It's also clearly time to not engage in significant tax cuts beyond what we have going for everybody else right now. Everybody will need to pay again to build again. Maybe everybody, or at least enough of us to matter, will remember what a bitch it was this time.

These bastards wanted to undo the New Deal and put us back to the 20's. They may well have done that.

I think it's actually worse because we no longer have the manufacturing capability here, without having to re-build it and hope the skills still exist. I think those skills do, but in order to leverage them, we also are going to have to REMOVE the tax incentives that make overseas work profitable.

Unless we want to remain owned by other nations, there is no borrowing out of this, investing out of this. We must build our way out of this and that means building stuff here, growing stuff here, investing here.

IMHO, it's short sighted to just say, Clinton. Truth is, this has been going on since Reagan and we've now reached the pinnacle of a thrust to realize that New America.

Like it?

Boy, I sure don't.

Conservativism, as in the Reagan kind, has failed us horribly. That dog won't hunt for a good long time.

I don't think I even fully understand the damage this administration has done. By the time I do, perhaps a lot of it will have passed.

As of now, I really do hate these guys. It's time, it's warranted, it's just.

Selling our future to satisfy political ambitions and greed now is a high crime against the working American Public that put the fuckers there in the first place.

Lost my house, struggling with medical care, struggling at my job, which I have to have, because of health care, watching my kids wondering how it's going to go for them ain't pretty right now.

I hope everybody is beginning to understand what happens when people vote Republican.

Prior to this administration, I had a 401K that was actually gonna be worth something. I owned not one, but two homes and that second one was for my aging senior family members needing some help I was able to provide.

My buying power per hour worked is less than it was when this administration took power. And they took it too! Selected, not elected.

Rather than dig a deeper hole, I've refactored everything and own little, spend little and am now able to save a little. I'm probably gonna need it, just like you all are gonna need it.

Not even thinking about retirement yet. Too scary. Let's see how the next 8-12 years go.

Bastards. They really are just bastards.

The reason there was redlining wasent raist. it was that certin neighborhoods didnt have value in the real estate and were bad risks. also under clinton, the banks were required to make a certin percent of loans to people who didnt qualify. the reason you have qualifining standards to get a loan, is to protect the system. but in the interest of social justice the banks had to make a lot of loans to people who were bad risks. now were in a mess. those who do not learn from history are forced to relive history.

Thank God I paid my house off this week...as said by many on the Dave Ramsey show...

I'M DEBT FREEEEEEEEEEEEEEE...............

can never call his show cause he's on when I'm on the air.

great...now my wife says we have more money for her to buy more clothes...ok....thats good.

Stevethedj: The reason there was redlining wasent raist. it was that certin neighborhoods didnt have value in the real estate and were bad risks. also under clinton, the banks were required to make a certin percent of loans to people who didnt qualify. the reason you have qualifining standards to get a loan, is to protect the system. but in the interest of social justice the banks had to make a lot of loans to people who were bad risks. now were in a mess. those who do not learn from history are forced to relive history.

Wrong - banks being "forced" to loan money to people who didn't qualify is not the reason we are in this crisis. Mortgage lenders made huge profits making these loans - they had every incentive to do it. Since the housing market kept going up (until it didn't), the lenders assumed people who couldn't afford their payments could just re-finance (more profit for lenders) and/or take equity out once prices went up. No one "forced" the banks to do any of this.

Andrew

andrew--please read the community developement act.passed under clintn.

Reading it doesn't change anything, Stevethedj. What's your point? It was unchecked profit motive by the banks, not some rule by Clinton, that caused this crisis.

Andrew

This is where the underwriting standards on loans began to crumble. as a real estate invertor. i will not buy in a blited, drug and crime infested area with lots of unemployment. period. when you tell banks thay have to loan money to that area. you have higher risk of defults. hello its dollars and cents. and go ahead and don't read the act. you dont want your liberal bias to be disturbed.

Stevethedj, you're conviction that banks did not want to make these loans that got them in trouble does not square with reality. I've heard a lot of talking heads in the media - from the business journals, etc. - explain over and over again that banks wanted to make these loans because they were hugely profitable, not because they were "forced" to. I've never heard your crackpot theory that Clinton forcing them to make these loans was the root cause of the problem. Then again, the Right still tends to blame Bill Clinton for just about everything, probably even for Vietnam, Pearl Harbor, and the Great Depression if you give them enough spin, so it shouldn't surprise me you are now trying to blame the banking crisis on Clinton, too.

Sometimes reality has a liberal bias - sorry.

Andrew

Sure...

And how do you explain all those other people doing a re-fi every three years, using their houses as ATMs to compensate for their reduced buying power over time with this administration?

If that were the only problem, we wouldn't see the mass crash we are seeing right now.

The shoddy loans were expanded way past those areas. Additionally, more complex financials were deregulated that masked the higher degree of risk through aggressive loan note transfers, derivatives and such.

Again, it's short sighted to say "Clinton" did it.

Really, the major financials did it to themselves BECAUSE THEY WERE ALLOWED TO.

"because they were allowed to" It's my understanding before the community development act. banks could not use stated income loans for the average person. hello. it's stated income loans that are in the middle of this problem. that they make a big profit from. before clinton they could NOT use them.

Oh well.

Perhaps when the value of your investments drops enough to be a concern, you might reconsider your "Clinton did it" view on these things.

Houses are highly likely to fall and remain flat for some time. Our currency is worth a lot less. Dollars stored in major financial instruments are at risk and are being devalued.

Those holding stocks are holding paper now.

Most people have seen a loss on their 401K during this administration.

The market is struggling to maintain the 10K level reached early in this administration.

Pull it out man. The scope of this is way beyond "Clinton did it". This is mass greed coming home to roost and a long series of deregulations, of which Clinton was only a part, are responsible for this failure of conservative "free market" policy.

I love it when people offer heated opinions on things they really don't know much about.

First off, lenders don't create the liquidity in the market, they are a clearing house for the money. The investors provide the cash, list the underwriting demands, and it's up to the lenders to underwrite the loans to the investor's liking. So blaming the lenders is placing false blame. Blame the greedy investors for providing the cash and accepting risk far beyond what they priced it at.

If you die from alcohol poisoning, is it the liquor store's fault because you bought your fifth of Jack Daniels there?

As for the bailout, consider this. The government is buying worthless mortgages, but those mortgages are tied to real estate, which is an asset. It's not like we are buying unsecured debt! It's quite possible after all this shakes out that the taxpayers could actually make money. So before you get your panties in a wad, consider the longer term aspects of this bailout.

"let's review history--Bill Clinton outlawed redlining. and opened the floodgates to people who were not qualified to get a loan. thats where it started. and the ball just kept a rollin."

I think what you meant is more along the lines of 'Why don't you all accept my lackluster interpretation of history and agree with my unsubstantiated conclusions with no documentation (no pun intended)'

"hello. it's stated income loans that are in the middle of this problem. that they make a big profit from."

Not true. Stated income loans are ranked just under full doc loans and above all other types of loans. The Borrower's Protection Act prevented the abuse you infer. Don't confuse no doc loans with stated income loans.

What's in the center of this mess is not the instrument itself, rather it is the lack of oversight of the financial industry itself.
If you must point fingers Stevethedj, point it at the GOP Congress '94 - '06.

Real estate "invertor?" What does that do? Convert direct real estate to alternating real estate?

Scapegoating Stated Income Loans

now your starting to get it. once upon a time. banks could not loan money to people who could not repay it. they were held responsible. to "know your coustomer". to those who were not to smart on money matters. the law and reg. protected them. then when you required the banks to loan to just about anybody. you had to deregulate the rules that held the bank responsible for who they loaned money too. i'm not trying to kick old brother bill. it just happened under his watch and got worse as time went on. and yes we are in a real mess right now. it's been a long time comeing with a lot of people along the way creating the problem.

"required the banks to loan to just about anybody."

Required?

I don't think so, Stevethedj.

The banks victimized themselves. They were set up by the mortgage brokers and the mortgage companies with whom they must compete. The lackluster greedy Republican Congress maintained an anything goes mentality on Wall Street for too long. And the Clinton administration had the choice of vetoing everything the Republican bastards put on his desk or trying to get some concessions within the legislation.

Let me simplify it for you. The neo-conservatives took over the Republican party. Neo conservatives can not run the economy, can not foster good relations abroad, can not protect the country from terror, can not do anything except line their pockets with gold. And guess what? Even the least educated hard working American has figured this out.

.....i will not buy in a blited, drug and crime infested area with lots of unemployment...

but someone will..... Lower K street in Tacoma,
Seattle Central district, area north of Renton Boeing field just in the Seattle limits.... Some areas of Portland. Try to find a LIVABLE house in those areas for under 100k.

Yet go to Toledo, Detroit, Cleveland, Youngstown, and you can buy a livable home or minor rehab for UNDER 10K. Of course the neighborhoods are AWFUL and dangerous for any race. But someone buys them and rents them out under section 8 until they become unlivable then thieves come along and strip out anything metal. If their lucky, someone burns the shell to the ground.

IMHO Clinton was not a particularly influential President. He had the Gingrich Congress with its Contract on American calling the shots. And he was busy getting hummed on.

Looks to me like the Bush Administration has just nationalized a substantial part of the finance industry.

The ranking Republican on the Senate Banking Committee says the overall cost of this humiliating rescue of a greedy, incompetent, and regulatorily neglected cabal of fatcats is half a trillion dollars worth of corporate welfare. So much for a small government.

I've asked my friends, and they all come up empty: is there anything--anything at all--that isn't being left a smoking ruins by Bush?

"is there anything--anything at all--that isn't being left a smoking ruins by Bush?"

My soul.

Big Oil Executives bank statements!

This election will be a message to the greedy Republican bastards that have ruined this country's economy, international reputation, stretched our fine military to the limit, gotten thousands of soldiers , marines and innocent civilians killed.

"It's time for them to own their failure."

"All hands on deck, weve run afloat! I heard the captain cry
explore the ship, replace the cook: let no one leave alive!
Across the straits, around the horn: how far can sailors fly?
A twisted path, our tortured course, and no one left alive"

If you die from alcohol poisoning, is it the liquor store's fault because you bought your fifth of Jack Daniels there?

Vitalogy, that is a fantastic analogy.

The job of the clerk was just one step in the process. They had to give you a phone estimate or answer questions about the product. Once you arrived at the retail shop, they had to confirm you were of age to buy the beverage, see if you were intoxicated, require payment for the bottle, and provide a pleasant shopping experience.

There are rules to ensure that he or she can only sell you spirits under a strictly defined set of circumstances. To keep you as a customer, they must not treat you differently based on race, income or background. He or she cannot charge you a higher rate or substitute an inferior product. They also cannot tamper with the contents. If they break the rules, the laws are on your side.

If a bar bought it as stock, that bottle would go through another period of storage and a number of hands. Then, based on the individual order, additional stages of mixing and blending could occur before it reached you as a customer. The establishment would also be subject to strict guidelines, rules and regulations.

You were happy to have found some good booze. After the register rang, the clerk put your bottle in a paper bag along with your gum and wished you good day. You wandered back to your car and drove home. What you did with the product was not up to them anymore. In addition, his or her window of control on the spirits was brief.

The liquor store received the bottles from a hard working fellow or lady in a truck. He or she got the cases early one morning at a warehouse. The warehouse had a whole mess of booze show up in other trucks a few days earlier when the intermodal train dropped it off.

That train may have been loaded by trucks from the distillery, but more than likely it was hauling freight that had been stored in another warehouse or series of warehouses. If you chose Ireland over Tennessee, that case of imports took a ride on a ship from overseas or a long flight in a cargo plane to get to a series of trains, trucks and warehouses. At some point, the liquor did originate in a distillery.

Now, depending on how the liquor killed you, the arc of blame could fall almost anywhere. It must first be determined that it was not your fault. Then, it could go back to the manufacturer of a bottle that flaked glass and fatally cut your throat, stomach or intestines. It could go back to a distributor, shipper or warehouse that left poisonous residue on the stock, or changed all the labels, or tampered with the contents, or accidentally damaged the bottle.

It could also have originated with the distillery. In the time that was spent brewing and aging, a wide range of mishaps or tampering could occur. From contaminated water, to a cleaning fluid or other industrial chemical fouling a whole batch, to a failure in the process that rendered the product poisonous, to a disgruntled worker expressing their anger in a blindly murderous plot, to poor storage of stock waiting for shipment.

Anywhere along the line, someone could have put a monkey wrench in the works. At the end of day, the person who buys and consumes the whiskey is responsible to make sure it is palatable. It is also up to them to decide whether it will provide one shot late in the evening over the course of time, or be quaffed quickly by a party of friends, or chugged in despondent grief alone in the den.

Not one person -- from you, to the store, to the trucks, trains and warehouses, all the way back to the distillery -- could fail to perform to the best of their ability or exceed the bounds of common sense without potentially doing harm. Nobody could break the rules without consequences either to an individual, individuals, corporate entities or the entire industry. There are many regulations to ensure that dispensing liquor is done in a responsible manner and millions of people abide by them every day.

A dead drinker due to tampering or poisoning makes people stop buying products from that company. Depending on the circumstances, the consequences of that death can be far reaching. It could result in massive fines, bankruptcy and prison time. The whole industry could suffer losses. A negligent dead drunk does not warrant that reaction because they were the root cause. It is all a matter of regulation and responsibility.

When someone dies and alcohol is involved, investigators can assess whether or not it was self-inflicted. District attorneys can prosecute someone for a criminal act. Regulators can find the root of the problem and stop it before it hurts anyone else. Transparency and responsibility are part of the entire process because it is conducted under strict oversight. No member of the distilled spirits industry expects the government or taxpayers to save them if they fail or kill somebody. Nor do they encourage customers to ask for a bailout.

All industries need rules and common sense. Gears are turning. Blades are cutting. Hammers are swinging. Trucks are rolling. Cause and effect is everywhere. All successful blue collar people get this concept. Many white collar people get it too. They see it happen all around them every day. If you fail at what you do, other people are at risk. Safety, satisfaction and diverse customers are all held in high regard.

In any industry, it only takes a lack of rules and unfettered greed to create a bad situation. One person -- or a handful of people -- in a careless environment will cause great harm sooner or later. When your job is in a largely unregulated lulu-land of computer generated numbers that represent paper and not people, being out of touch is almost natural. If the insular mooks in the financial industry were required to mine coal for a year, or hell, work in a liquor store, this kind of disconnected mindset would never happen again.

This whole crisis makes me think of the Mafia and how it likes to put its money to work as investors in various business ventures. The obvious difference is Mafia bagmen do a better job choosing clients and assessing risk than mortgage bankers.

The people who did the worst job of assessing risk are the ones that signed on the dotted line.

I believe in the concept of personal responsibility and I don't expect any business in a capitalistic society to be looking out for my best interests.

As you see in the news, freddie and fannie are being taken over by the federal goverment. lets follow the money. Frank Raines was clintons budget dir. he ran fannie and made off with only fifty million dollars, he gave up 24 million in future payments to escape criminal charges. Jamie Golelick only made twenty six million dallars for his work with fannie and he was with the clinton justice dept. Jim Johnson made millions working for freddie and was one of obamas vp search committee persons.obama was a senator for years. yet he just discovered this chrisis this last week.where has he been except for taking campagin contributions.where is his great leadership we hear him talk about? where was his oversight??? there was massive fraud in risk assessing so big shots could make bonuses. don't you just love goverment. now freddie and fannie pruchesed a lot of the bad loans. if there is no market for loans, the banks can only make as many as the market will bear.

Sounds to me like the U.S. Government will now be running this entire sector of our lives. Can anyone name other countries where the government is involved to this extent?

North Korea.

Yes! It's officially called the "Democratic People's Republic of Korea".

Can anyone name another country?

I heard Britain took over a large bank there earlier this year, and nobody blinked or questioned it.

The problem with the lending situation was 'if we don't give them a loan, someone else will.' A while back, The Tribune ran an article about a woman who obviously didn't have the money to take out the home loan that she did, while trying to say that the mortgage company and the closing co. were the villains because they ordered her to sign some paperwork 10 minutes before the place closed which changed her loan to a negative equity loan where the payments didn't even cover the interest being assessed.

The problem with the current situation is half the populace blaming the other half.

No joke... China Investment Corp. might buy Morgan Stanley:
Article Link

That's the country who really owns us right now.

Well its like this ' Fellow Dr. Johnny Fever radio Babies "...I will be as concise as possible.

As we post, this weekend, the FEDS and key Wall Street CEOs are gettin' together to create the latest and greatest and biggest of all time ' BAD BANK'. The bad bank will house all of the high risk bad assed trepadacious poorly secured loans that these Wall Street Investment banks and their CEOs either created or bought the bad paper wrapped up in a pretty package of some 'good loan paper' from another idiotic bank all neat and tidy you see. It was a pretty thing..cause the bad paper was overlooked for a long long time, until the rotting corpses and their stench gave it away about last January or so. We(they) knew it was comming....just like Freddy Kruger !

Now, back to the ranch...we now OWN the Bad Bank. We dont own the Wall Street banks...just their BAD PAPER now soon to be housed in the BAD BANK. The exception to this is AIG. First of the week the FED bailed out AIG with 85 billion. They didnt do the BAD BANK thing there, they just aquired a 79.9% equity asset of AIG...so essentially they NATIONALIZED AIG...duh ! America never nationalizes private companies ! Well we did that Tuesday. And nobody wants to do it again ...no one in their right friggin' mind or unless they are related to Fidel Castro or Hugo Chavez.

So, by Thursday we knew that Morgan Stanley was on the block and almost down for the count. M.S is the second biggest Wall Street investment bank. Merill Lynch got out and made a sweet enough deal with Bank of America but Lehman got screwed over and deserved it anyhow...oh well anyhow..The wizards at the FED and Congress knew that this was gettin' way out of control and we couldnt NATIONALIZE EVERY FRIGGIN' BANK ON WALL STREET or any other friggin' bank off of Wall Street such as the dumbassed WAMU, Latte drinkin' hyperadrenal bug eyed sunzabeaches of Seattle , Wa ! So , they came up with the " Bad Bank" concept, which isnt new BTW. They used something of this sort after the Stock crash of 87, you know...the S and L crisis, remember that anybody? I do ! So now....

The US taxpayers own the ' Bad Bank ":..In the bad bank is crap loan paper. However, not totally worthless. Some of the sewage loans have securities tied to them, real estate , strings of solvent companies who have money and can be taken to task for pay back maybe some bankrupt companies that have some recoverable assets.. etc etc... ad nauseum.. blah blah blah...and so...we OWN this crap now...so now we need a sharp director of the Bad Bank and a board of directors to suit the leader for the Bad Bank to RECOVER as much of our 1 Trillion dollar investment ! IMO if we can recover 1/3 of our Trillion we will be doing well ! And it will take at least a year or two. Its a little like going to the store and buying a package of used toilet paper. You just try to find a clean part of it to wipe your self with it and make the best of a bad situation.

And we thought the broadcast radio business was a pain in the ass !

And another thing about this mess.

I have been tracking this for days now...and certain business Gurus I happen to respect were pointing out yesterday and again today about how all these wizards in Congress and Wall Street and in the ' FED ' are hammering out RULES and REGS for this " Bad Bank" and the dissemintation and distribution of said 700 billion dollars all IN ONE FRIGGIN' WEEKEND !

" DANGER DANGER Will Robinson"...setting up such a massive bureaucracy in ONE WEEKEND is really pushing the envelope in the opinion of many many economists and other experts in the know ...The FED and President Bush have said that this all has to be done real fast, by open of business Monday, because waiting just another week could be dangerous relative to a severe market crash here and a serious sell off on the other world markets.

Being a conspiracy buff sometimes, I am trying to think out of the box on how all this load of crap happening now would help the Republicans win the election developing as the proverbial " October Surprise " ...I cant for the life of me see how this happening NOW benefits John McCain at all ...LOL..So this must be just " Providence " or circumstance or just plain dumb luck for Obama.

Providence.

The Republicans are f*cked. They deserve it.

"I love it when people offer heated opinions on things they really don't know much about". -- Vitalogy

What do we need to know – that this mess is going to cost TAXPAYERS a $1 trillion dollars (see today's Oregonian -- the headline says it all). What more do we need to know? Investors and their mortgage banker patsies have engaged in the greatest financial undoing since the Great Depression. Too bad we can’t throw these scumbags in jail.

Anybody else find it hard to take djsteve seriously when he can't write, spell or punctuate?

The more I think about this, the more angry I get.

In the end, all the risk was transferred to the federal government, meaning us. All the profit, in the form of lower risk notes, remains in private hands.

Isn't that the biggest wealth transfer ever?

Facist bastards.

And what about that free market crap? This takeover / bailout is probably the biggest government intervention ever seen. In a really free market, a bunch of people would be broke ass and in jail.

As it is now, I see CEO's gambling our future away big time. If they lose, then it just goes into the risk pool --meaning we pay for the losses.

What have we bought with our future people?

Actually, what has this REPUBLICAN administration bought for us?

REPUBLICANS can no longer say they are for small government. How big is it now folks? The biggest, most costly, and delivering the least services.

Bet it's gonna be said that we can't afford serious health care reform now. Bet you all a cookie on that. Bet it's gonna be said that we can't afford to build infrastructure, jobs, and lots of other stuff we really should be doing to generate some wealth.

Edit: At the end of the day, this feels like the ultimate "let's make government not work" so things can be changed for the worse effort. The New Deal worked and it worked very well.

Now it's essentially gone.

It isn't gone because it can't work. It's gone because greedy mofos don't want it to work as it marginalizes their entitlements they believe are necessary.

This could go down as the new norm. Entitled people gambling with our futures with us always carrying their losses. Hear any talk of regulations in this thing? Even a hint of "hey, that went badly, let's insure we go forward in a solid way." Nope.

Just prop it up, put the problem off and let the gambling with our futures continue.

The really scary bit is I think this happened off schedule. Had it been propped up just a bit longer, perhaps the GOP would win another Presidental election. Then it falls and they've got 4 to 8 years to leverage it and completely, totally redefine America.

Now, it's early, so they structure it (and they is just powerful people) so that a transformational President is so hobbled as to marginalize the potential for good change.

"Anybody else find it hard to take djsteve seriously when he can't write, spell or punctuate?"

We all communicate differently. At least you're able to understand his posts and respond to them whether you agree or disagree with his points. Steve may not win anyone's punctuation contest but he is expressing his views and people are responding. That's communication.

Absolutely.

Also, it isn't known that he CAN'T do that. All we know is that he currently isn't doing that.

It is a message board. Perhaps taking seriously is better done in context?

I agree with you Chris.

However, in Stevethedj's case, he opened the door for this kind of criticism when he stated that 'a college degree is a worthless piece of paper'. Fair play I say.

For everyone else, go ahead and do the best you can. We're not here to criticize.

Another issue that nobody's talking about...
what if after all this "bailout," it still doesn't work?!
And, say, four months from now, we're back in the same situation we were in last weekend!
(And, four months from now, the idiots and partisan dumbbells will be saying "I didn't vote for that president, it's not my problem.")

Seriously.

There is a very significant chance it won't work because we are not addressing some core problems:

1. lack of regulation and accountability

2. failure to generate wealth here in the USA.

We can't spend or borrow our way out of this massive debt.

Andy, There are plenty of Greedy, self serving Democrat bastards as well.

as for us getting to carry the bad loan paper, fine, but some wall street investment and mortgage people BETTER be going to jail, and not just token low level scapegoats either!

Fraud,
Theft,
Racketeering,
Imbezzlement,
tax evasion,
(your crime here)

Now, because of extreme economic restructuring after October 1st 2001, the federal Govenment of the U of SA will no longer be able to fund ANY overseas activities, including but not limited to: military actions, grants, loans, aid, or other types of disbursments, either in cash, equipment, or commodities. Also ANY purchases of physical properties, and infrastructures, located within the recognized borders of this country by foreign governments or firms will be subject to a 15 percent buyers fee. 25 percent if the properties are removed for use in overseas areas. Also the seller of such items will pay a 15 percent sellers fee in addition to having the gross proceeds taxed at the rate of 50 percent We regret this inconvienence.

Sincerely,

Uncle Sam

Here is the bailout text

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY

TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

This Act may be cited as __________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

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.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.

(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

Did you all see the limit on public debt raised to 11 TRILLION DOLLARS?

11 TRILLION FUCKING DOLLARS?

Also these three points from a great Kos diary:

1. the broad reading of the Secretary's power: so long as s/he claims to be acting pursuant to this statute, there is no limit nor review of their authority.

2. It appears that entering into crony-capitalist, no-bid contracts a la Iraq and New Orleans, are part of the authority.

3. The Secretary's power is unreviewable, not by the legislature, not by any administrative agency, and not by the Courts.

And Congress is supposed to pass this?

There is no oversight on this people. NONE.

Know what?

I'll bet another cookie that it would be CHEAPER to just pay TAXPAYER debt directly, retain individual ownership of stuff and let the companies work on paying back their losses to US, instead of giving them a free WALK where they lose NOTHING and we GET SCREWED for a GOOD LONG TIME.

It's official. I hate this administration. I really, truly do.

Finally, I'll bet my last cookie that this is how they stay in power. Exclusive, unfettered control of the money means hobbling future Presidents for as long as they like, with NO ACCOUNTABILITY from those Presidents, or the people they serve.

Rather than take on this, pay off the mortgages, keep home values high, let AIG wither away and others more responsible step in to clean up and do new business and let that be a lesson on what dangers deregulation has.

Instead we are all gonna get fucked huge, so they don't actually have to be accountable for their actions.

Did I mention I hate these guys? Thought our Government is supposed to serve us for the COMMON good. Seems to me, we are getting HOSED for the CORPORATE GOOD, and that's not the COMMON GOOD.

11 TRILLION DOLLARS people.

Think about the implications of that, and China making statements today about the need to build a financial system no longer dependent on the United States.

11 TRILLION DOLLARS and we don't MAKE ANYTHING ANYMORE.

How are we supposed to get out of that debt? What does that debt mean for our soverign status as a free nation?

Can one be free if their future is owned by corporations and other nations?

No.

Ownership society?

Yeah, they own us.

Make phone calls people. This bill is no good. There are no provisions for restoring the removal of regulations that got us here.

It contains a blank check with no review possible.

We take all the losses, they keep all the wealth.

This can be used for no-bid contracts where major private interests can be handed the authority to gamble with most any investment we hold.

This is like 9/11 and the Patriot Act. It's no good. It's a power grab, and there is a very strong case for it being a contrived situation, not just "market forces" we "must deal with".

I'm calling, faxing, writing and talking to people this weekend. You really should do the same.

Interesting that the 700 billion dollars in this act is roughly what we've spent on the Iraq war so far. Two thousand dollars for every man, woman, and child in America, according to the New York Times.

Bill Maher was right last night...Bush really did have one more unbelievably enormous disaster in him.

And that's 700 billion AT ANY ONE TIME.

Seriously flawed language. With no review and no real checks on spending authority, ANY ONE TIME means multiple blank checks, each 700 billion a pop.

I'm not sure...either way it's a hideous grab..but here's the language..

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.

I think that means the most that can be outstanding is 700 bill, which this secretary is not allowed to exceed, but I could be wrong.

And of course this doesn't factor in the economic impact of much higher taxes and credit costs on business and individuals, with a resulting depressive effect on spending, leading to factory shutdowns and layoffs and God knows how many more foreclosures..

This whole thing makes me yearn for the days of lesser thieves, like Nixon and Agnew.

You are right.

That does make it not so horrible. still, with no review, a lot of things can be done to redefine or make things not be "outstanding".

Hey People ! Watch who you blame for this !

In 1999 Bill Clinton was the President who signed the Legislation that repealed the Glass-Steagall act enacted during the Great Depression. Wall Street lobbyists had been trying to get that thing repealed for over 40 years. Finally about 1997 Banking lobbyists teamed up with some big Insurance Co. lobbyists ( AIG?) and strong armed Alan Greenspan, then head of the Fed, and other key members of Congress and the President to repeal it.

Repeal allowed this friggin' mess now. Glass - Steagall divided Wall Street into two arenas. Investment Banks and Commercial Banks. No longer was it allowed for a single bank to leverage its 'mom and pop' savings acct assets or any other private assets as collateral against buying or selling stocks. This was one key factor in the great Crash and subsequent depression of 1929 ! The other key factor was "buying on margin" which we now again do , but call it something different these days. Repeal of G.S.in 1999 set up all the key elements of what happened in 1929 to happen in 2008. The difference this time is simply that the Fed has come to the rescue of every investment and commercial bank that has 'bad paper'. That didnt happen in 29'.

Eventhough Alan Greenspan went along with the new legislation and repeal of the old , he warned that this could all easily get out of hand with the US govt eventually forced to buy out the entire damned banking system. Well , what are we doing this weekend? Precisely that ! Paul Volker, who was Greenspan's predecessor , categorically refused to support any changes in Glass-Steagall. He said that eventhough the G.S. act was ancient in some respects , but it was sound legislation and protected private savings and promoted rational stock trading. Well, the overwhelming team of lobbyists claimed that in a world economy G.S was a dinosaur because it tied the hands of Wall Street to compete with other world banks who were under no such legislation limiting collateral. So eventually the world banking lobbyists , which were really Wall Street lobbyists, won out. And here we are. And note that much of the rest of the world banks reside in governments that are Socialist to one degree or another and whose governments have tended for many decades now to underwrite their banking systems to one degree or another ! So here we are now , essentially, doing the same thing. And by repealing Glass-Steagall, opened up the way toward the US monetary system being more transparent with the rest of the socialist world monetary system, IMO.

I blame the Bush Administration for for some lax oversights via the SEC. However, it is true that what we are seeing right now resulted from NOTHING currently illegal. And that is the sad effect of repeal of G.S in 1999. There were plenty of warnings from key people back in the 90s when repeal fever was running rampant. There were plenty of predictions of what we are experiencing right now.

Check the history on that one. The repeal was sponsored by none other than Phil Gramm...up until recently John McCain's economics guru...and was signed by Clinton because the heavily Republican Congress passed it by a veto-proof majority.

http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act

By the way...Bush gave us another gem...in his Friday speech, he said...and this is an exact quote..."Anyone engaging in illegal financial transactions will be caught and persecuted." Not just prosecuted. Persecuted.

High time, I say.

True, veto proof in the end. Yeah and Gramm ( a guy whom I have never liked Republican or not) was a mover and shaker in repeal. And if you look above I used the term ' Strong armed "...nevertheless.......

.... had the Democrats raised other issues and hammered them harder besides just privacy concerns, Gramm Leach Bliley would have looked different enough now to perhaps have teeth enough to prosecute...or persecute ..LOL..the jerks that did this in the first place ! The ammendments being considered now, should have been put in the new bill from the get go.

Repeal of G.S was a mistake, period. And anyone who had their fingerprints on it made a big mistake. And then we had subsequent people who abused the new legislation and we need to know who those people are too.

100% agreed. And Clinton certainly wasn't blameless. He didn't veto it. History would have credited him with taking a stand, but he didn't. He'd been thoroughly gelded by the Starr Report by then, and was running out the clock.

And another thing. Had Clinton not been 'eating Pizza' with Monica Lewinsky he would have had a lot more political clout in 1999. No fire storms over impeachment and the whole scandal. The Democrats would have been wielding more clout in general and had a better balance perhaps on the repeal issue.

Good commentary both of you.

I don't think Clinton is blameless. Really, I place the blame farther back on the neo-conservative, PNAC movers and shakers who pushed for this to happen over a very long and sustained time.

Clinton was just a cog, populist cog in a much larger machine.

He deregulated telecommunications too. Another mistake.

Kennewickman, totally agreed on Clinton marginalizing himself with Lewinski. He cost a lot of people, most notably his wife, Hilary, with that affair.

When I step back and just look at the ideological drives behind this, I still see the core Nixon crowd, Reagan and the Republicans generally pushing for this vision we are living in right now.

It's a departure from New Deal type politics and that's really the loss here, from my point of view.

How to go forward though?

I'm seriously concerned about the quality of potential solutions. The corrupt movers and shakers driving these events are still in power and trying to make sure their influence extends past this administration.

We simply don't matter, and we really should.

Maybe I'm just not up to speed on this bill they're passing. Isn't this all being put on the backs of the next generation? (I'm not hearing anyone talk about this.) Will our children be able to handle all the debt we're ringing up? What are the RAMifications of this package FOR THEM?

Yeah, the silence is notable isn't it?

Not only is it being put onto the backs of the next generation, it's gonna be put on our backs too.

Just treading water on the interest on this crap will require US, working here right now, to double down and produce more just to maintain parity.

The impact globally has triggered statements from other nations about not depending on us for financials. We've already seen the petrodollar weakened. Oil is now traded in Euros, and that weakened the dollar.

Now, this means the dollar will be weaker still because it's gonna be associated with risk. A government buyout, not backed by some seriously good wealth generation, is still risk. It's just risk all in one place.

Add Iraq to that and we are bleeding money faster than we can produce it!

Nations that see that happen for any length of time see their currency devalued.

Should that happen, your nest egg that you are planning to use right now can just evaporate away in the form of the dollar being worth less than it is right now.

It's already down a lot. We are below Canada --at least we were the last time I checked. Used to be the Canadian dollar was worth about .7 of our dollars. Now it's 1 to 1 or so.

That's a 30 percent cut in the value of any of our savings and on our buying power per hour worked. That impact hits us right now, today.

This is really scary shit man.

There is a lot of 'stuff' going on here.

I have been reading all weekend on various internet sources and watching many of the satelitte/cable channels. I happen to have the time spend on it this weekend. It is mind boggling. You get into reading about the history that got us here and get all wrapped up in it, and just when you think you got it figured out, some other aspect comes into all of it that you forgot about or didnt know in the first place.

Yes our kids and Grand kids and gr grandkids are going to be paying for all this too. But if there is any bright spot in all this , I heard it tonight on one of the Wall Street shows. They were saying that just like the govt did with AIG, got a fat equity arrangement, which ticked off the principals and stock holders of said organization ! Essentially the Govt screwed over AIG in the form of a 'Fat' piece of the action which they ( WE ) are liable to get back eventually. But we had to nationalize the company to do it and that doesnt sit well with American Economic philosophy. So no more of that arrangement.

So the current wisdom from the " wizards ' out there is the after the FED sets up this dirty Bank with 700 billion in cash to buy crapy mortgage securities, we offer these investment banks like Morgan Stanley, WAMU , Goldman-Sach..et al..say...40 or 50 cents on the dollar is all you get or 50% of the fair market value for these crappy securities as they themselves have identified them. With shrewd no nonsense hardnosed take it or leave it attitude we buy only the worst of their paper. If the govt takes that attitude the banks will retain MORE of the paper they would have sluffed off on US paying all at fair market prices. They will retain paper they think is borderline if they are only getting half of fair market and the banks can really , with more effort , peddle or fix or recover liquid assets to cover the other notes. If this comes about , us taxpayers will have less of this to deal with and might actually come out peddling the bad paper that we got cheap to begin with. So in essence we are going to be selective and hardnosed about what we buy and for how much. Just like you haggle at a garage sale.

The cost of government bail outs...so the banks get to pay some for their malpheasance. Now there is a concept for you ! The possible downside to this is that the banks get pissed off about not getting 'fair market value' and wind up writing down the other more lucrative 'bad paper' and sluff it off , making investors pay the tab. Well, the govt knowing this might happen, stops that in its tracks by threatening Wall Street with more regulations and more detailed oversight. Another problem in all this, is that no one , even the banks themselves, know what many of these risky securities are really worth. So the idea is that the FEDS will come in with a low ball offer , pretty much take it or leave it, buy it on the cheap and take the chance that the taxpayer comes out at least 'even' on their investment.

We are actually at war with ourselves here. We have Wall Street vs Main Street with the FEDS being the referee !

That's an interesting and encouraging dynamic.

The idea that there will be some incentive for the banks to go do some hard work on that paper is aligned in a direction that's at least not flat out socializing the losses.

Gonna be an interesting and scary week next week.

I still don't like the idea that this power to deal runs unchecked. Or the proposal that it run unchecked. Perhaps that's necessary to prevent financial lobbies from circumventing the thing.

Would love to see a case for that made public.

So then AIG is the stick?

Step up, do the work and go deal on that bad paper, or end up owned? Nationalized?

Interesting indeed!

Yes, your right . That came up in the Wall Street Wizards show I was watching. One of the pundits pointed out that the Federal Reserve was NEVER intended to operate in any manner , shape or fashion like a clearing house or holding company. This action may require the " FED " to hire private sector consultants to supervise aspects of this government mortgage securities " Aquisition and Fire Sale" . Well, consultants might just be like Foxes in the Hen House , if we dont watch out here !!