Here’s an update on the latest ridiculous, expensive, and dangerous bailout that’s been floating around D.C. the past week. Here’s a decent breakdown of what exactly this bailout entails.
First up, it is beginning to appear that this particular bailout may not actually be shoved through by the yes-men in congress.
While the Democratic leaders of the Senate and the House of Representatives have pledged to pass a bailout plan within days - with amendments - the Republican leaders and members of both chambers are much less enthusiastic. Whether rebellion among rank-and-file members is growing enough to threaten the passage of any bailout plan was a question hanging over negotiations Tuesday between Congress and the administration.
Of course, their reasoning on why this bailout is a bad idea is somewhat lacking:
Meanwhile, Senate Banking Committee members from both parties took turns venting their anger at the administration’s proposal and what Chairman Christopher Dodd, D-Conn., called the “economic maelstrom” that brought things to this point.
…
Dodd warned that the package “would do nothing to help even a single family save a home. It would do nothing to stop even a single CEO from dumping billions of dollars in toxic assets on the backs of taxpayers - and walking away with a bonus and a golden parachute.”He said that any plan that passed Congress must include terms to ensure at least three principles: strong oversight of the government effort to bail out troubled firms, a way to keep people facing foreclosure in their homes and terms that give taxpayers “assurance that their hard-earned money is being used correctly and responsibly.”
Great. So in the minds of the Senators, the bailout is a bad idea because it doesn’t go far enough. Outrageous. Here’s another article on that specific subject: Groups say bailout doesn’t do enough for struggling homeowners
Again, I can’t help but be cynical about how much our voices really matter when we’re up against the big-money interest in D.C., but I still would urge us all to contact our Senators and Representatives to voice our strong opinions against a bailout of any kind—from high-rolling Wall Street executives to foolishly overextended home “owners.”
Here’s how to contact our Senators:
Maria Cantwell:
Phone: (202) 224-3441
Fax: (202) 228-0514
Email Form
Patty Murray:
Phone: (202) 224-2621
Fax: (202) 224-0238
Email Form
Use the form in the upper-left of this page to find the contact info for your Representative.
Jump to the bottom to add your comment. ↓
95 responses so far ↓
1
gortnerp
// Sep 25, 2008 at 8:01 am
In September 2003, Rep. Barney Frank (D-MASS), now the Chairman of the House Financial Services Committee told the NYTimes:
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee.
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print
In doing so in Sep 2003, Rep. Frank and his cronies in Congress killed the Bush Administration’s push to significantly overhaul the regulation of the housing finance industry. It was an opportunity squandered.
I have lost confidence. How can we expect Congress and politicians to effectively save us from this crisis now? They have proven themselves inept. Let the market do what it will on its own.
Tim, I just emailed both Sen. Cantwell and Sen. Murray. I pray that they do not let this bailout move forward.
2
NotaBull
// Sep 25, 2008 at 8:11 am
The bailout is moving forward. As of this morning it appears that there are enough votes for the modified plan which includes protection for the taxpayer in the form of equity warrants in the banks we support, limits on exec pay in those banks, and strong congressional oversight.
The original plan was an abomination and classic example of the lack of oversight that got us into this mess in the first place. The real question for the current plan is whether it will actually work. There is significant disagreement in that area.
Fighting against the plan at this point in time is probably pointless as you’re in the minority if you’re not a homeowner, you have savings, and you’re not too concerned about losing your job.
3
Matthew
// Sep 25, 2008 at 8:30 am
Chris Dodd aka FRIEND OF MOZILLO. Both he and Frank are paid for by Wall St. pigmen.
What a joke this bailout is.
4
mukoh
// Sep 25, 2008 at 8:45 am
I called both of those and encouraged them to make the bailout go further
5
softwarengineer
// Sep 25, 2008 at 9:15 am
IN MY OPINION THE BAILOUT WILL NOT STOP A GREAT DEPRESSION IN AMERICA, NO WAY
If we go into a severe recession now, with no bailout and $700B we could possibly use ASAP to put our people to work in green industries, etc….this mess will untangle much faster.
If we spend the $700B on Wall Street fat cats, we might as well put the money in a big pile and light a match to it.
Welcome to a Great Depression at a theater near you, if this bailout goes through. We can’t pay balloon jumbo loans on decreasing Joe Lunchbox household incomes, its that simple.
By the way, don’t smirk if you’re the top 10-20% household incomes [$75K on up], your pink slips are being processed too.
Without a renewed industrial base in America we’re all going down with the Titanic together. The economists shafted America with their lament for uncontrolled population growth….now we pay the piper.
6
mukoh
// Sep 25, 2008 at 9:19 am
Software engineer,
Will get right to building a bunker this evening reading your posts.
7
AndyC
// Sep 25, 2008 at 9:25 am
I am not going to presume to have a level of expertise anywhere near that of Secretary Paulson or Chairman Bernanke. I am very thankful to have two very qualified individuals running these important agencies. Having watched nearly four hours of the testimony they gave on Tuesday I am confident in their ability to address this issue. I think it’s easy to use buzz words like “Wall Street Fat Cat” and “Golden Parachutes”, but I see very little alternative to the governmental takeover of assets. It is important to remember that the government will be taking on assets and that the $700B is not simply going into others pockets. The vast majority of that will be returned down the road. Should our entire financial system collapse, it will cost us a hell of a lot more than this.
8
Buceri
// Sep 25, 2008 at 9:44 am
# New home sales at 17-yr low, prices fall record amount- AP
# Jobless claims pushed to 7-year high- AP
# GE lowers profit guidance, suspends stock buybacks- AP
# August durable goods orders down sharply- Reuters
Mukoh - when you are done with those bunker plans, please post them.
Or
http://www.cabinkit.com/ckplans.htm
9
shane
// Sep 25, 2008 at 10:17 am
I share your cynicism, but it is definitely worth trying to stop. I’ve been calling, emailing and faxing since this became public. I’m amazed those clowns (Paulson, Bush and Bernanke) have any credibility at all. They have either been lying for the last year and a half or are completely incompetent.
10
Charles Dean
// Sep 25, 2008 at 10:22 am
While the bailout as written was a terrible terrible idea, the way they modify it may end up being a good idea.
Check out this NYT article about what Sweden did when facing an almost identical financial crisis in the early 90’s:
http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?_r=2&oref=slogin&oref=slogin
From what I’m reading about how the revised plan is going to look, it’s fairly similar to this.
If our country can make money off of a desperate investment, which I believe it can, the bailout may not be bad.
Something I’ve been saying for months is that I am surprised that no one is buying up these mortgage backed securities at “SCREAMING PRICES!!!” and restructuring all of the mortgages.
I mean think about it. You buy a security with let’s say 1000 mortgages and you buy it for 1/3 of the value. You then go in and redo the mortgages that are performing poorly. Say they were on a 2 year ARM that reset to 8%. You restructure the loan at say 4% fixed. They pay their mortgage and stay in their house, and the security starts performing well again. Then if you want, you can sell it back for it’s original value, or even at 75% of it’s original value, you still double your investment.
Something to think about.
11
BenRol
// Sep 25, 2008 at 10:33 am
AndyC @7:
If they’re so smart and on top of things, why didn’t they do something to stop all this months ago when they were warned by numerous legislators? (Not to mention by several regular posters on this site!) This crisis didn’t come out of nowhere and the fact that they let it get this far shows there’s more to it than what meets the eye.
Isn’t it just awfully convenient and interesting that this is happening just 40-odd days before the election? I’m not generally a conspiracy theory subscriber but I have an awfully sick feeling in my stomach that this crisis they’ve allowed to develop will end up with some sort of declaration of martial law (apparently made easier by a recent bill?) and a cancellation of the election. I hope to be laughing about that come November 5, but I put nothing past this administration with its unbelievable power grabs.
I’ve also been emailing every legislator I can opposing this sickening giveaway of my child’s future. I’ve especially been emailing the conservative Republicans to let them know that they have broad, bipartisan support to oppose the bill.
12
Captain Kirkland
// Sep 25, 2008 at 10:35 am
Devils Advocate here:
I’m a renter so it would obviously be in my interest to see prices on homes fall and pick something up on the cheap.
That said, this bailout is NECESSARY. We are a society driven by credit. Without this program, money would either 1) not be lent out, or 2) be lent out at rates of 15+. Neither of these options will allow our economy to survive. We would undoubtedly encounter a Great Depression type scenario.
For all those who knock Bush, you may be justified… but don’t throw Paulson in with him. He’s not politcally driven in the least, and they don’t let dummies run Goldman Sachs.
By the way, this bailout isn’t going to prevent a housing crash in the NW…all you renters should be patient. Market forces will take over eventually take over. It will just be a slower bleed…(but we’re dealing with a bunch of ignorant home owners that won’t lower prices to sell their home anyways)…. So in effect, it will change nothing except for allowing some americans to buy some cars or get an education.
13
LUC
// Sep 25, 2008 at 10:35 am
I had posted this in different thread, but I think it is more appropriate here:
http://www.federalreserve.gov/releases/z1/Current/z1r-4.pdf
If outstanding home mortgages are about $14 Trillion (not withstanding Fed’s table L.100 shows $10.7 Trillion) and about $5.3 Trillion relate to the GSEs which leaves $8.7 Trillion not already backed by the government, how does 5% even make a dent in the problem? Numbers do matter just not to these guys. Which yet again, provides evidence of a typical ponzi scheme. I know why they can not value the problem but will not say it which shows how disingenuous they are.
14
Charles Dean
// Sep 25, 2008 at 10:37 am
While I absolutely disagree with the plan as written by the Bushies, I think that some sort of “bailout” plan is necessary.
Check out this NYT article showing what Sweden did: http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?_r=2&oref=slogin&oref=slogin
They faced a very similar financial crisis in the early 90’s, but approached the problem much differently and ended up turning it into a money maker for the Swedish citizens.
They bailed them out by forcing them to write down their losses, then the people owned a portion of the companies that they bailed out. Once they became financially solvent again, they were sold back and made public again with money going back to the people of sweden.
While it still did cost them some money ultimately, they did recoup alot of what they did in the bailout.
Also, I think that buying some of the mortgage backed securities and reworking the mortgages for individuals could work well. I am in fact surprised the private sector hasn’t done this yet.
Think if you could buy a security with 1000 mortgages for 30% of it’s value. Of those 1000 loans, only 250 of them are performing poorly.
So you go in to those in particular and rework the mortgages quickly. Say they were on a 2 year ARM that jumped to 8%. Get them into a 30 year fixed at 4% or something affordable.
Then once all or at least the high majority of those loans are performing well again, re-sell the security. Even if it’s at 70% of the original value, you’ve still doubled your investment and you’re able to verify the stability of all of the mortgages far better.
Or does this sound a little far fetched?
15
Charles Dean
// Sep 25, 2008 at 10:39 am
“If outstanding home mortgages are about $14 Trillion (not withstanding Fed’s table L.100 shows $10.7 Trillion) and about $5.3 Trillion relate to the GSEs which leaves $8.7 Trillion not already backed by the government, how does 5% even make a dent in the problem? ”
Even though foreclosure postings are up, they still account for far less than 5% of all of the mortgages in the country. I don’t know the most recent numbers, but I’m sure it’s in the 2-2.5% range. Most people pay their mortgage and are continuing to do so.
16
TJ_98370
// Sep 25, 2008 at 10:47 am
Mr. Shiller has a new book -
.
The Subprime Solution:
How Today’s Global Financial Crisis Happened, and What to Do about It -
Robert J. Shiller
.
Reviewer comments:
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…….’ Mr. Shiller argues that bailouts of distressed borrowers are inevitable to avoid wrecking our economy and shredding our social fabric–even though bailouts may punish the prudent (say, through higher taxes) while comforting those who gambled on real estate and lost.”–James R. Hagerty, Wall Street Journal
.
17
angrybear
// Sep 25, 2008 at 10:51 am
softwarengineer - where are you getting population growth as a reason for this crisis? I have never heard any mainstream economist say that. More population is normally a good thing for economics. If you want an example of countries with zero population growth look at Japan and France, both very stagnant economies.
18
mukoh
// Sep 25, 2008 at 10:58 am
LUC,
This is only designed to get rid of bad debt from the banks which are held to deposits of 30% per loan. As their deposits clear up they will be able to lend on new mortgages with of course stricter guidelines.
It is not designed to bail out every mortgage out there.
19
TJ_98370
// Sep 25, 2008 at 11:00 am
I should add that Mr. Shiller says that the bail outs should target the low income borrowers, something that the Dems keep on saying.
20
RenterofBelleuve
// Sep 25, 2008 at 11:07 am
Angrybear,
I agree with softwareengineer. More people means we have to compete more for the resources in our communities. More people means, more people need to rent, more people need gas, food, water and yes good jobs as well. And the countries that dumped them on us dont provide that stuff for them.
21
Interloper
// Sep 25, 2008 at 11:09 am
I agree with Charles Dean that a bailout is necessary. The fact that I will pay for it and benefit less than others is not as important as heading off a Depression.
I don’t think “let it burn” is a realistic option at this point, even if it eventually makes us “right” about home prices.
22
shane
// Sep 25, 2008 at 11:09 am
The low income borrowers can eat dog food. As much as I blame Wall Street, lets not forget all the irresponsible, broke fools who listened to their real estate agent and bought too much house.
If our “social fabric” consists of punishing the responsible in this country and rewarding the criminals and irresponsible then it is not worth saving.
23
RenterofBelleuve
// Sep 25, 2008 at 11:13 am
Owning houses is the “New Cocaine”
Its because of greed and dumb people that I will never be able to afford a house. My dollars will be worthless because of a bailout keeping inflation higher than the moon. And of course when this does crash and no matter what the government does cant stop it. Me, being a lowly renter just getting by will lose his job, be on the street while the people who were saved can keep their oversized, overpriced houses and be nice and warm at night.
This is just pathetic. People get rewarded for being dumb. America has truly fallen that low and greedy. About six months ago I saw a woman on television literally crying because she was losing her McMansion. Of course like many Americans with bloated egos she had visions of presiding all high and mighty over for Thanksgiving and Christmas showing off her house.
24
LUC
// Sep 25, 2008 at 11:16 am
mukoh,
But WILL the banks lend, to WHOM will they lend, and under what terms?
25
Charles Dean
// Sep 25, 2008 at 11:25 am
If we go into another depression, it will be much more harmful to you if you were responsible during this time than what the bailout will cost you, if the bailout is done responsibly.
26
johnny
// Sep 25, 2008 at 11:29 am
The 700bn will be spent reimbursing banks buying securities and flipping them onto the treasury for a profit.; just like we are seeing retail interest rates creep up even though the Fed held steady. So much for “overextended home owners” What about over extended investors who didn’t research the junk they were buying? Screw them. The bailout does nothing more then insulate certain people from the impending “pop” of the derivatives market. The bailout is nothing more then a boozehound’s solution to problems; he wakes up with the same problems, and a really bad hangover.
People who got in over their head with more house then they could afford are merely a symptom. Remember GWB’s speech about low income people living in nice houses, back in 2002, in order to get out of the busted dot-com bubble?
A liquidity scam for investors that lost their ass. Nice Free Market.
27
mukoh
// Sep 25, 2008 at 11:34 am
LUC,
They will lend to people with 3%+ down, verified income, verified assets, good credit score. When banks actually get the deposit requirements met they will have more to lend so will see qualifying all over the board. BECU right now doesn’t ask to verify income for example and are doing killer business.
By the way. Amen to another great depression.
Lawmakers: Financial bailout agreement reached
http://news.yahoo.com/s/ap/20080925/ap_on_bi_ge/financial_meltdown
28
LUC
// Sep 25, 2008 at 11:38 am
No way that will happen, that would be suicide for any bank in this current credit environment. BECU is not representative of traditional banks.
29
LUC
// Sep 25, 2008 at 11:44 am
Latest from Bloomberg: FDIC May Need $150 Billion Bailout as Local Bank Failures Mount
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=amZxIbcjZISU
30
mukoh
// Sep 25, 2008 at 11:46 am
LUC,
You mean there are no 3% down loans out there with income verified, assets, and good credit history?
31
LUC
// Sep 25, 2008 at 11:53 am
No I didn’t say that, I pointed out that you used a credit union as an example. Most banks would not continue to make these types of loans in this credit situation, because they would not survive.
32
Jay
// Sep 25, 2008 at 11:54 am
The general public misunderstanding of this plan has been surprising to me. Just read the linked article for its “decent” breakdown of the plan. The author warns of debt service on 700 billion dollars being 30-40 billion a year, while completely ignoring that the money will be used to purchase securities that produces income. Considering the interest spread, it’s likely that the government will be generating billions of interest INCOME while holding the securities. The second point raised in the article about inflation is also suspect. The private sector has already started to hoard cash. That reduces money supply. The Fed has pumped hundreds of billions of money into the system in the last few months. Yet the hoarding has accelerated. Collapse of money supply after a period of big expansion due to easy credit? Doesn’t anyone remember the Great Depression? Finally, the moral hazard issue. That’s a valid concern, but I think that we are past that point of arguing morality. The “good” banks stand no better chance of surviving if a severe depression does hit due to inaction. (Well, they’ve got plenty of assets and capital! Haven’t people heard of something called a BANK RUN?) The bad guys deserve to fall, but what about the good banks? Collateral damage. And when the good banks fall, where can people put their money? FDIC insurance? FDIC itself is in need of a bailout. The U.S. government may be forced to default when FNM/FRE debt starts to turn bad, and that would do wonders for most of our savings.
Actually, it’s not just the general public. Even the senators and congressmen seem to have difficult time understanding the need for this plan. I listened to the House hearing with Bernanke yesterday and all but few such as Senator Sununu seemed to be only interested in advancing their political agenda and repeating populist rhetoric. Understandable, since using taxpayer money to bail out Wall Street is as anti-populist as it can get, and throwing $150 billion in a so-called stimulus package is something to be trumpeted by both parties, even though the unpopular idea has a decent chance at actually benefiting every American and the popular one is akin to borrowing money to blow at Vegas.
33
geon
// Sep 25, 2008 at 12:05 pm
BECU may be doing killer business now, but I wonder how they will do in a severe downturn in the Seattle area. I have a lot of money there, minus the 25K I took out the other day.
They were giving 100% loans like everybody else during the bubble.
34
LUC
// Sep 25, 2008 at 12:06 pm
Jay,
Your article is not linked.
35
Jay
// Sep 25, 2008 at 12:12 pm
LUC,
The article I was writing about is the one linked in the original post by Tim, which is this one.
36
Joel
// Sep 25, 2008 at 12:17 pm
The same could be said of a crack addict. He NEEDS crack. Withdrawal sucks but getting off the drug is better in the long run. Give him more crack and you delay the inevitable and probably make it much worse.
If they are so profitable why would investment banks be so eager to let them go? Hmmmmm.
37
frede
// Sep 25, 2008 at 12:27 pm
dunno what you mean by “far enough”. it sounds like placing a tight rein on a multi-billion-dollar plan — as opposed to absolutely no reins on a multi-billion-dollar plan — is what i’d call responsible government.
38
Silver9
// Sep 25, 2008 at 1:14 pm
Has there been any discussion about regulating or banning CDO’s and Credit Default Swaps? I havent heard any. The president didnt mention the larger issue of debt or how we will solve a debt crisis with more debt.
Talking solely about “home owners” makes it easy to visualize but fails to address the larger 2/3 of the problem.
This bailout makes me feel like a passenger on the Titanic watching the inevitable…
39
explorer
// Sep 25, 2008 at 1:24 pm
This is about bad paper and the end of a ponzi, with credit being held hostage. I think I can put off buying a car, getting a mortgage, and continuing to risk the “consequences.” of living within my means for a year.
This bailout does only prolong and delay the inevitable. The creditworthy will still get credit, in order for the basic system to survive. Watch how fast the bottom feeders will jump on this, and even if that’s not enough, we are beyond avoidance now anyway. Flushing this crap out of the system quickly and completely is better than having it keep coming back to clog again. It will hurt far more people in the long run, than the short run.
This is panic and fear driven. For a reason. It will be a severe shock to most upper income people who overextended and overleveraged themselves, and to those lower income people who believed they could get something for practically nothing.
I’m not saying that others who have savings and were responsible and wiser won’t be affected, no matter the results. However, those others will not suffer the fate of accountablity like those who were responsible for this will, if this is flush quickly, without bailing out anyone. Insuring the bad debts are just as bad of idea. That will make it a double whammy.
Better to rip the bandage off quickly, and maybe things will heal faster. I’m willing to take a chance on that, vs. listening to the foxes telling the chickens how to save themselves untill they are fattened up a little more.
40
Markor
// Sep 25, 2008 at 1:32 pm
Since the bailout rewards bad behavior, it makes the depression inevitable and worse. It’s a short-term salve that does more harm than good. There wasn’t a dire credit problem anyway; it was all trumped up just like the Iraq threat. I haven’t heard of any case where a person or company with good credit cannot get it. Have you?
Given that the majority of people are clearly against this bailout but it will happen anyway, we again see the need for preferential voting, so the two-party oligopoly can be ended. If only the founding fathers had thought of it!
41
Bits_of_Real_Panther
// Sep 25, 2008 at 1:38 pm
“Has there been any discussion about regulating or banning CDO’s and Credit Default Swaps?”
I’d be happy with a new rule that makes people accountable for their finances with no takesbacksies
42
Scotsman
// Sep 25, 2008 at 2:00 pm
Bailout or not, the U.S. is facing serious challenges. Let’s assume the bailout passes. Then let’s look at the .gov as though it was a small business. Reducing the numbers to a more commonly used range, we get:
Total Current Annual Revenue $30,000
Total Current Annual Expenditures 42,000
Total Long Term Debt 100,000
Future Entitlement Obligations 600,000
Bailout or not, this house of cards is going down, even if taxes double and benefits are cut. If you doubt this, please tell me how our economy recovers from this mess without a table clearing depression/recession?
43
TJ_98370
// Sep 25, 2008 at 2:08 pm
A statement that doesn’t say much of anything.
.
Joint statement of Sen. Barack Obama and Sen. John McCain
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The American people are facing a moment of economic crisis. No matter how this began, we all have a responsibility to work through it and restore confidence in our economy. The jobs, savings and prosperity of the American people are at stake.
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Now is a time to come together — Democrats and Republicans — in a spirit of cooperation for the sake of the American people. The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail.
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This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe. Now is our chance to come together to prove that Washington is once again capable of leading this country.
.
44
softwarengineer
// Sep 25, 2008 at 2:45 pm
HI ANGRYBEAR, IN ANSWER TO YOUR QUESTION
Since 1990 all of the need for more housing “growth” in America has been a result of added overpopulation. I know overpopulation is the “f” word to you economics majors, but us scientist types are all in agreement (including Dr .Martin Luther King Jr):
Overpopulation is the root cause of all our economic problems.
Think about it Angrybear and if the media was so right on with their economic experts; why didn’t they avert or predict the housing bubble and this banking collapse too. Folks like Tim and I did.
Why is Bernanke and his fat Wall Street Cats pushing for more “growth” [population] as unemployment is at a 7 year high? Lower wages for the Middle Class Angrybear. That should help raise home prices, huh?
45
TJ_98370
// Sep 25, 2008 at 3:04 pm
.
Taking it to the streets……
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Bailout protesters plan day of action Thursday
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The public backlash against the Bush administration’s proposal to use tax dollars to bailout Wall Street spilled into the streets Thursday.
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“People all over the country are up in arms about this,” said David Elliot, a spokesman for grassroots advocacy group UsAction. “Our members are livid, and they’re hitting the streets.”
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TrueMajority.com, an online forum for activists, said its members had organized 251 events in more than 41 states to protest the bailout…….
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46
softwarengineer
// Sep 25, 2008 at 3:26 pm
HOT OFF THE PRESS: PAULSON FEARS ENTITY PLAN WILL FAIL (YEA!)
From ABC News a half hr ago:
“Stephanopoulos: Paulson Fears Deal May Collapse
Email
Share September 25, 2008 6:05 PM
ABC’s George Stephanopoulos Reports: Treasury Secretary Henry Paulson fears the Wall Street bailout deal is falling apart after a chaotic White House meeting, sources say.
Paulson walked into today’s the room where Democrats were caucusing during today’s meeting at the White House and pleaded with them ‘please don’t blow this up,’ Stephanopoulos reports.
House Financial services Chairman Barney Frank, D-MA, was livid, saying ‘Don’t say that to us after all we’ve been through!’
Democrats believe that House Republicans are torpedoeing the framework deal reached in the bipartisan agreement of principles released by the Senate Banking Committee today….”
47
TJ_98370
// Sep 25, 2008 at 3:29 pm
Hmmmm. So I guess Congress can count China out for loans for the bailout plan?
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China banks told to halt lending to US banks-SCMP
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BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.
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The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.
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“The decree appears to be Beijing’s first attempt to erect defences against the deepening U.S. financial meltdown after the mainland’s major lenders reported billions of U.S. dollars in exposure to the credit crisis,” the SCMP said.
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A spokesman for the CBRC had no immediate comment. (Reporting by Alan Wheatley and Langi Chiang; editing by Ken Wills)
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48
deejayoh
// Sep 25, 2008 at 3:37 pm
Mish is reporting that Shelby says “no deal” and outline of the reported “deal” is so watered down in any case that I think the markets are going really plunge tomorrow.
look out below.
49
patient
// Sep 25, 2008 at 3:46 pm
I saw Shelby’s courageous statement on CNN. He walked out from the West Wing that was full of bailout supporters including the President and VP of the USA, i.e his own parties and countries leaders and declared no deal waving a 5 page document where economic master minds from the countries most prestigous universities apparently totally dismissed the Bernanke/Paulson plan. Very brave and one of the reasons why this country is so great. Democracy still seem to be alive and working to some extent.
50
deejayoh
// Sep 25, 2008 at 4:05 pm
Sarah Palin thinks we need the bailout, for health care reform. um, yeah.
http://www.youtube.com/watch?v=npUMUASwaec
51
deejayoh
// Sep 25, 2008 at 4:36 pm
Wamu to be purchased by JP Morgan. Shotgun wedding, Treasury style.
wonder where Paulson finds all the time. Do you think he is an alien?
http://www.housingwire.com/2008/09/25/wamu-to-be-purchased/
52
patient
// Sep 25, 2008 at 4:39 pm
Reuters reports that it’s just the deposit part of WaMu?
How do you sell the profitbale part of a bankrupt company without first declaring bancrupcy? Seems odd.
http://www.reuters.com/article/newsOne/idUSTRE48O9RT20080925
53
patient
// Sep 25, 2008 at 4:54 pm
Seattletimes reports that FDIC has seized WaMu and broker the deal with JPM. Now it makes sense.
54
crispy&cole
// Sep 25, 2008 at 5:08 pm
WM is done…stock is now worthless.
55
crispy&cole
// Sep 25, 2008 at 5:09 pm
WM bondholders also will be wiped out…sounds like an organized BK
56
patient
// Sep 25, 2008 at 5:10 pm
Yep, goodbye WaMu.
57
crispy&cole
// Sep 25, 2008 at 5:12 pm
Where is the Shamu employee who said they were in great shape???
58
crispy&cole
// Sep 25, 2008 at 5:14 pm
*my comments were per CNBC
59
rent for now
// Sep 25, 2008 at 5:15 pm
Wow, what a shocker, who would have guessed???
60
Lake Hills Renter
// Sep 25, 2008 at 5:25 pm
Wow, my landlord works (worked?) for WaMu. I may need to invest in some moving boxes.
61
geon
// Sep 25, 2008 at 5:25 pm
FDIC to Wamu: We’re going to shut you down.
62
Lake Hills Renter
// Sep 25, 2008 at 5:27 pm
I find the timing rather too coincidental too. Nothing will make Congress pick up their dragging feet like another shocking bank failure! Act now!
63
patient
// Sep 25, 2008 at 5:39 pm
It will be interresting to see the details of this deal regarding the toxic stuff. Hopefully it’s not hugely expensive to the government and can show an alternative to massive bailouts. I.e a needed consolidation of commercial banks and IBs via bankrupcies of one or the other.
64
John
// Sep 25, 2008 at 5:41 pm
Will my local branch close or will they just change the name to Chase?
65
Scotsman
// Sep 25, 2008 at 5:41 pm
Oh Yeah! The bottom is in! What? Oops, sorry…..
Breaking- Bush won’t sign a bailout bill that includes limits on executive pay. Unbelievable. I’m ashamed to say I voted for him, twice. Oh well.
66
crispy&cole
// Sep 25, 2008 at 6:15 pm
http://www.fdic.gov/bank/individual/failed/wamu.html
67
TJ_98370
// Sep 25, 2008 at 6:34 pm
A KIRO 7 report -
Report: J.P. Morgan Chase To Buy Some Wamu Assets
.
SEATTLE — J.P. Morgan Chase has agreed to acquire the deposits and some branches of troubled Seattle-based Washington Mutual under a deal brokered by the government, the Wall Street Journal reports…….
68
Michael
// Sep 25, 2008 at 6:36 pm
Here is a list of the people who should pay.
George Bush (R) - Kills all preditory lending law. “The bankers are hailing a House bill that would preempt state regulations and set national standards for predatory lending. The catch: The federal rules would be weaker than laws now on the books in some states.”
Chris Dodd (D) and Barnie Frank (D) - The ultimate Freddie Fannie Lobby. Take huge donations. Get people into houses that they can neither afford in the name of the American Dream.
Phil Graham (R)
Commodity Futures Modernization Act of 2000. Creates completely unregulated insurance (Credit Default Swaps) that mascarads as an investment.
Gramm-Leach-Bliley Act
Repeals the set of laws left from the great depression that regulated banking including the wall between commercial and investment banking.
Who else should be added to the list?
69
Michael
// Sep 25, 2008 at 6:39 pm
This country is about to burn. They should be using the money to stockpile food, buy gold to keep army and police paid to hold social order. What happens when your bank accounts disappear.
70
geon
// Sep 25, 2008 at 6:40 pm
Barney Frank
Clintons
…add to the list.
71
Michael
// Sep 25, 2008 at 6:50 pm
I have Barney Frank and your right about the Clintons.
72
Ray Pepper
// Sep 25, 2008 at 6:59 pm
I have some Wa Mu and Indy Mac shirts, pens, key chains, and golf towels. Gotta store them away like I did with my old WBVN, EXDS, and EGGS certificates. Also my Jim McIllvaine shirt from the Sonics. That will bring big $$. In 40 years you can watch me at 82 on Antiques Road Show.
73
Ron
// Sep 25, 2008 at 7:02 pm
Someone Above mentioned BECU Credit Union..
I Have been thinking the same thing, about them… They have so MUCH BAD PAPER… Only reason there not done for probably is there in Seattle and Were Special- however When SEATTLE BECOMES NOT SPECIAL, which is happening I wouldn’t be surprised to see them go under.
I know personally several people that are in Very Risky Positions with loans at BECU.. One person Refinanced there home for almost 200,000. dollars more than any property has ever sold for on his street.
Tricky part is that this person lives on & inlet that the Tide Flows in and out and a great deal of the time there actually is a Mudhole where the water flows out because of the tide…
I figured when they did the Appraisal they were using Comps on the other side of Which is actually facing the Bay- and is of course always on the Water… however to appraise the house at 175,000. more and give that person money to go out and Buy Motorcycles/Cars ..hahahaha.. now that person is trying to sell the Property to recoup the 595,000. dollars..Oooops…
74
Ron
// Sep 25, 2008 at 7:08 pm
Time to INVEST IN GUNS…
Anyone here Buy Guns.. Should I buy cheap guns for Resale in another Year or go for higher end Guns? .. Magnum 45– hear have a lot of kick, and scare the Jitters out of anyone.
Im serious about buying some guns…. I personally think it could get that bad, Maybe.. Heck- “I dont know for sure whats going to happen.. even if it doesnt From everyone I have so far spoke to “Guns hold there Value- so it seems like a fool-proof way of also keeping my savings.. its has to better than keeping so much of my money in savings.
75
Pegasus
// Sep 25, 2008 at 7:11 pm
Don’t forget to add Senators Murray and Cantwell to your people to blame. The two worthless Bobsey Twins have ignored and not responded to anyone who gave them accurate info about what was going on in the financial markets. They have been too busy to pay attention to the largest financial crimes in history. They have also done nothing to increase wages or jobs in Washington State. In fact they have been counter-productive driving out corporations, deals for Washington until they are gone. Remember this when you get a chance to vote these two losers out of office do it. Time to take out the trash.
76
Sniglet
// Sep 25, 2008 at 7:20 pm
Here are people to add to the list of who should pay:
- All the individuals who bought more house than they could afford.
- All the people who chose high yield money market or mutual funds in their 401Ks
- All the people who decided to spend, or go in debt, rather than save.
- All the people who put their money in banks or institutions because they liked the service, convenience, or interest rates rather than because they were conservative and prudent.
In short, I think the average American is even MORE responsible for allowing this credit bubble to grow. All these people should PAY by losing their savings, homes, and pensions. It is only when individuals are forced to pay for their bad decisions that the lesson of the need to save, and not over-extend, can be learned.
77
TJ_98370
// Sep 25, 2008 at 7:31 pm
Calculated Risk:
Paulson Plan and JPMorgan WaMu
.
“If money isn’t loosened up, this sucker could go down.”
President Bush, Sept 25, 2008
78
david losh
// Sep 25, 2008 at 7:49 pm
You are so wrong.
What happened today is your savings at work.
You are to blame.
The consumers are the heroes.
You should pay.
Shame on you.
79
mukoh
// Sep 25, 2008 at 7:56 pm
Nice. WAMU gets wiped for pennies on the dollar to JP Chase.
Gotta love my 72% gain realized last week on this stock.
So Chase is going to have a lot more branches here now, hopefully they replace the Wamu Cash machines which are outdated.
80
mukoh
// Sep 25, 2008 at 7:59 pm
Ron,
Judging BECUs credit rating from a couple of loans that you personally know of “friends” is fairly funny. That institution stands less to fail then most.
81
Ron
// Sep 25, 2008 at 8:18 pm
I would Mukoh- think maybe the same thing..
However those Several Loans are from Boeing Workers and couple of Friends outside Boeing.. Just that BECU is seems to come in first when I talk to friends of a place locally that people went too to get these shady loans…
82
TJ_98370
// Sep 25, 2008 at 8:29 pm
.
Am I the only one on this blog that feels that this country is proceeding thru events of historical economic significance right now, i.e., the sh*t is really hitting the fan? I’m not ready to build a bunker and buy guns, ammo, and overstock on canned goods, but Holy Sh*t !!!! I really, really do not like what I am reading / hearing.
.
83
Thomas B.
// Sep 25, 2008 at 8:36 pm
@79
Not to quibble with your post, but there are about 1.7 Billion outstanding shares and the price of the buyout was $1.9 Billion, which would make the price per share $1.11. I’m just being technical.
84
Scotsman
// Sep 25, 2008 at 8:43 pm
Thomas- not really, they didn’t get it all. They bought assets, not the whole of the enterprise.
Projections on the value of WAMU’s mortgages seem optimistic. Time well tell if they overpaid.
T.J.- These are indeed historic times. Tomorrow and Monday should be interesting to say the least! Not to mention the election has been turned upside down.
85
mikal
// Sep 25, 2008 at 8:51 pm
How would you like to be the head of that company that invested in WAMU with all the money some months back. That guy must be hurling all over the place.
86
JW
// Sep 25, 2008 at 8:51 pm
Well, at first I was worried that WaMu would negatively impact area prices, but maybe not… the new CEO might be ready to bid on a Four Seasons shell unit with this deal!
“Mr. Fishman, who has been on the job for less than three weeks, is eligible for $11.6 million in cash severance and will get to keep his $7.5 million signing bonus, according to an analysis by James F. Reda and Associates.”
http://www.nytimes.com/2008/09/26/business/26wamu.html?hp
87
mukoh
// Sep 25, 2008 at 9:08 pm
Scotsman,
$1.9 Billion for $180 Billion in loans? Seems like its not bad if the bail out gets approved. Sell the bad ones for premium to sap tax payers.
88
SeattleMoose
// Sep 25, 2008 at 9:15 pm
Thank you for the emails. For what it is worth, I have begged both of them NOT to vote for the bailout.
One small angry voice…….
89
TJ_98370
// Sep 25, 2008 at 9:39 pm
JW -
JP Morgan would be on the hook for Mr. Fishman’s “golden parachute”, right?
90
mukoh
// Sep 25, 2008 at 11:52 pm
TJ
It would come out of WMs cash. Not from JP Chase. Last check they had 3B+.
91
Jay
// Sep 26, 2008 at 3:17 am
What’s up with House Republicans? Their alternative is an insurance plan funded by banks AND tax cut on dividends and capital gains? Ridiculous. And this is because they cannot accept spending taxpayer money to buy distressed assets from Wall Street firms. So instead they are offering to insure the mortgages? I’m sorry, but wha? So the taxpayers will be on the hook for billions of losses for nothing? Sure, they say it will be paid for by insurance premium from the Wall Street firms. Ok, but aren’t they strapped for cash? So to be effective, we can’t really charge them much for insuring the mortgages, and basically it will have to be funded with taxpayer money over and over if the default rates gets worse and in the end we won’t really get any of our money back. Oh, and they had to include tax cut plan (on dividends and capital gains no less.. cause CDS writers probably had a fantastic year) because the U.S. government has excess revenue coming in these days. Besides, just consider the ramifications of government insuring mortgage debt. Yeah, that will make lenders assess risk correctly. I can’t believe the lack of intelligence in House Republicans, and I am very much disappointed in McCain. I hope they get tons of backlash from this. They sorely deserve it.
92
SoCalXplant
// Sep 26, 2008 at 3:33 am
Pointing fingers at greedy Wall Street and/or “dumb” poor people is a waste of time and those who do so only make it obvious that they have yet to learn from past mistakes. Human beings will ALWAYS behave like human beings; those who are naturally greedy will continue to be so; those who are ignorant tend to remain so. And those of you who continue to deny responsibility for their situations will continue to paint themselves as victims.
The people responsible for this crisis are any and all people who supported the policy of MASSIVE DEREGULATION that’s been going on in this country since the Reagan administration. Mostly, that’s been REPUBLICANS, but the Clinton administration did not do much, if anything, to stem the tide when they had a chance.
Without regulatory safeguards backed up by stern enforcement, the powers of greed were finally unleashed on Wall Street, and they exploited every loophole they could to attain maximum personal profit. These same people exploited the ignorance of the “poor and dumb” to create more wealth for themselves in much the same way McCain and his minions are right now using “smoke and mirrors” to fool much of the electorate into believing that his non-stop lies are “straight talk” and that he’s actually putting “Country First.”
The bailout is clearly a negative impact on the economy. Unfortunately, the alternative is so very much WORSE! Stop being fooled by this insipid right-wing propaganda. They DO NOT CARE about you or your jobs or life savings. They care only about staying in POWER, and clearly are not ashamed to try just about anything to keep it.
De-regulation has had its chance. IT FAILED!! Wake up and grow up and stop whining about whose fault it is. It’s YOUR fault for continuing to support this failed policy by continuing to vote BOOBS and MORONS into office. The right had its chance and BLEW IT! How easily you all forget that at the end of the last Democratic presidency, this country had A SURPLUS!! The national debt was around $5 trillion, and we were starting to PAY IT DOWN! Now after eight years of a “C” student who can’t even pronounce the world “nuclear,” lo and behold, we are on the brink of an $11 trillion debt and have a $500 billion deficit!
Will it really matter if some woman you don’t know gets an abortion when YOUR job gets outsourced? Will you really care if gays get married or if protesters burn the flag when your entire life savings gets wiped out in a DEPRESSION? Will you regret to your dying day voting yet another babbling dittohead into the oval office when your son or daughter is killed in a war that did nothing for this country but allow the oil companies to open up shop again in Iraq?
You ppl are arguing about the greedy and the dumb, when you should be WAKING UP to how much you’ve been PLAYED by your governments THAT YOU VOTE INTO OFFICE!! They poll constantly to find out exactly what pushes your buttons, then they tell you just what you want to hear to keep them in power in order to make profits for their rich friends, and future profits for themselves.
They are PLAYING YOU so well like a fiddle that many of you are actually planning on keeping the same party in power that has put you in this mess in the first place; AND has you blaming the other party FOR THEIR MISTAKES!! You are chumps of the greatest magnitude.
America USED TO throw out the incumbent party when things went sour during their watch. THAT’S what kept the parties relatively honest… and I do mean RELATIVELY. Only now they’ve got you so hypnotized with their talking points that you will swallow anything they shovel. They are corn-holing all of you without even giving you a reach-around, and you simply smile and beg for more.
If the Republicans end up tanking this bailout bill and we end up in an actual depression because of their politicizing the crisis, I swear I will spit on every "golly" right-winger I ever meet for the rest of my life. You people and your self-righteous ideology have brought this once-great country to the brink of ruin, and you STILL don’t have enough integrity to admit you were wrong, apologize for your mistakes, and give the other guys a go at fixing it.
You all need to get out! Go up to Alaska and wait for the end times with Sister Sarah and the rest of the kooks. You’re all so twisted, you’ve even turned the word “elite” into a bad thing, for crying out loud! ELITE means the BEST of the BEST! So how ridiculous is it to use that word to SMEAR the opposition? I say, consider the source.
The only way to atone for supporting failed policies is to SHIFT YOUR SUPPORT to give new ideas a chance.
Rant over. I sincerely hope you all have both the money and the credit to even purchase a home again at the end of this crisis. Think about it.
syl
93
Jay
// Sep 26, 2008 at 4:19 am
Joel @ 36,
Because they still have to mark down their value and take a loss if their marketable value has significantly fallen (It doesn’t matter if it’s still generating cash flow), and the market for these securities collapsed due to fear. By unloading these assets, they can get rid of uncertainty on their balance sheet. The buyer of these assets would be assuming risk obviously, but if he gets them at a good discount and if future default rates stay largely within his prediction, the probabilities of profit is actually quite good.
Here is a Bloomberg article that compares the Paulson plan to a carry-trade.
94
LUC