[Al_U_Card]

If it is run by people that want to make a buck more than do what is right.
If it is not subject to regulation and oversight by competent and impartial authority.
If it takes commissions and bonuses for "imaginary" profits.

I vote for it won't be long.

[PassedOut]

The FDIC was started in 1933 after 4000 banks had failed, wiping out the life savings of many families. Confidence in banking was restored, and (in my opinion) the general welfare of the nation was much enhanced.

If the taxpayers are going to be the insurers of last resort for other financial institutions, it seems to me that those businesses, like banks, should pay insurance premiums to a federal agency that would bail out the failures.

I don't see the regulatory aspect of that as particularly onerous to the businesses. Transparency would be required, of course, as it should be anyway. And the premiums would be established based on the risks being taken.

I do understand that the financial institutions that have failed, or are in big trouble now, would have had a problem quantifying their risk to federal regulators. They would have been upset by the high premiums demanded. However, that would have clipped their wings a good deal and would have been better for the country than what actually happened.

Although AIG supposedly insured many of those risky investments, their managers were caught up themselves in the profit-making euphoria of the bubble. A federal agency does not face the same temptations.

[Al_U_Card]

Exactly. They made off like bandits and John Q. takes the heat.

I am not so sure that speculation insurance (as compared to deposit insurance) will ever come about altho malpractice insurance premiums are almost as high as the lawsuits so....you never know

[kenberg]

As the price tag moves towards the trillion dollar mark I guess I am getting a bit pissed.

If the gov has to hit me and my wife with a ten or fifteen thousand dollar tax surcharge to finance this w/o sending the national debt into outer space then OK, take it. But I want something in return: I want the people who have taken on the job of leading this country to stop fucking around. There is work to be done in many areas and I want them to stop preening and start working. This applies equally to Democrats whom I usually vote for and Republicans whom I sometimes vote for.

The other morning there was a front page picture of Paulson, Bernanke and Pelosi and a story saying that Paulson and Bernanke would be bringing the Congress into the action. My first thought was God help us, do we have to?

They could start by each and every one of them listing all contributions and favors that they have been receiving from the investment bankers and then giving an accounting of just why it is that we should trust them to do anything. Congress right now has approval ratings lower than a canceled sitcom and there are reasons for that. Perhaps they can get their souls back but I wouldn't lay any heavy bets.

[Gerben42]

It gets better. Now the US governments is asking other countries to help them pay this package... I would hope the politicians here will not go weak and pay even 1 cent.

A US government decision is an internal decision and please leave us out of it. Rather make sure that the first 700 billion profit of these banks goes back directly into the US treasury rather than into the hands of some investors or managers.

[Aberlour10]

The german state-owned National Bank of Reconstruction and Development, KfW "burned" in 1 sec more than 350 000 000 Euro public money, they transfered it on accounts of Lehman Brothers already after it became known about its bankruptcy, 2 councillors of directors KfW are dismissed.

Robert

[hrothgar]

Gerben42, on Sep 21 2008, 10:11 PM, said:

It gets better. Now the US governments is asking other countries to help them pay this package... I would hope the politicians here will not go weak and pay even 1 cent.

I see absolutely nothing wrong with the US government asking - even expecting - other governments to contribute to whatever package eventually gets put in place.

I think that folks need to step back on carefully consider why a bailout is being proposed. There are no reputable claims that the Wall Street bailout is being put into place to cover speculative losses in the market. If the effects of the meltdown were limited to Wall Street I'd have no problem letting investment bank after investment bank crash and burn.

Unfortunately, what we are seeing right now is very severe short term liquidity crisis. Its one that has a very real change of rippling out from the Financial Sector and trashing the "real" economy, and thats going to effect all of us. Regardless of whether we're living in the US, Germany, or Thailand.

The bailout is an attempt to restore both liquidity and investor confidence. Sadly, it's something that's very necessary. I think that there is a lot of room to quibble about the details of how this plan gets put together. For example, I think that Paul Krugman raises some very real concerns about Paulson's plan.

However, I think that its ridiculous to argue that something like this isn't necessary.

I think that its morally repugnant (and quite short sighted) to argue that other governments don't have an interest restoring stablity to the financial markets. As I understand matters, most of the bailout packages that are being discussed are designed such that any bank is able to dump its "toxic waste". This applies to Deutsche Bank, just as much as Lehman Brothers.

If non US banks are going to be able to enjoy the benefits of this type of fund, than its right and proper that non US governments contribute to to its creation and maintenance.

One of the primary reasons that the Great Depression was so severe was the extreme impact on international trade. All sorts of countries (including the US) started errecting all sorts of protectionist measures. I'd hate to see us making the same sorts of mistakes now by failing to view this as a global crisis.

[Al_U_Card]

Hi Richard

I agree with all of your statement but I have one question. Since this "lending" subterfuge created the liquidity crisis, would not a cash infusion reverse it? Not making more credit available (loans at interest) but just making more money available. So the Federal Reserve gets out of the "loaning to get out of a borrowing hole" and the US government gets back into the "printing money to make money available" business. (Put some in the hands of taxpayers and make the rest available for infrastructure renewal and new business development.)

I realize that inflation might rear its ugly head but we have survived high inflation before and no banks or financial systems crumbled during those times. Seems to me that we are curing the burn by applying a flame.

I appreciate your reasoned approach to the situation, as always.

[Aberlour10]

hrothgar, on Sep 22 2008, 07:55 AM, said:

Gerben42, on Sep 21 2008, 10:11 PM, said:

It gets better. Now the US governments is asking other countries to help them pay this package... I would hope the politicians here will not go weak and pay even 1 cent.

I see absolutely nothing wrong with the US government asking - even expecting - other governments to contribute to whatever package eventually gets put in place.

The german goverment has strictly refused financial support for such activities today.

Billions of €-tax money has already been lost there due to this financial crises in last months, so all politicans are afraid in which way these losses will affect on important elections this and next year.

Robert

[hrothgar]

Aberlour10, on Sep 22 2008, 06:59 PM, said:

hrothgar, on Sep 22 2008, 07:55 AM, said:

Gerben42, on Sep 21 2008, 10:11 PM, said:

It gets better. Now the US governments is asking other countries to help them pay this package... I would hope the politicians here will not go weak and pay even 1 cent.

I see absolutely nothing wrong with the US government asking - even expecting - other governments to contribute to whatever package eventually gets put in place.

The german goverment has strictly refused financial support for such activities today.

Billions of €-tax money has already been lost there due to this financial crises in last months, so all politicans are afraid in which way these losses will affect on important elections this and next year.

Robert

The following is a day old, however, it has some good perspective on some on the issues involved

http://www.nytimes.com/2008/09/22/business...tDUJMmr57PDwkIw

[pclayton]

A few things I'm not clear about:

1. Is the Treasury purchasing the mortgages (or, mortgage-backed securities) at 100% of their value?

2. Investment banks stand to get a huge influx of new cash in exchange for this toxic debt. Are there any conditions that this capital has to be made available for new loans, or do people expect this capital to say on the sidelines for now?

[hrothgar]

pclayton, on Sep 22 2008, 07:25 PM, said:

A few things I'm not clear about:

1. Is the Treasury purchasing the mortgages (or, mortgage-backed securities) at 100% of their value?

2. Investment banks stand to get a huge influx of new cash in exchange for this toxic debt. Are there any conditions that this capital has to be made available for new loans, or do people expect this capital to say on the sidelines for now?

Who knows???? (As I mentioned in an earlier post, the Devil is in the details. Paulson seems to be saying "Give me $700 Billion. Trust me, it will all turn out OK". A number of other folks are insisting that some accountability gets built into the system. For example:

Krugman is arguing that things need to be spelled out in a lot more detail
Barney Frank is arguing that any bank that accepts cash needs to agree to some pretty stringent regulation governing (amongst other things) executive compensation.

In answer to your specific questions:

1. As I understand matters, the Treasury would be purchasing waste at 100% of the face value. Unfortunately, one of the key issues right now is that no one is quite sure what the toxic waste is worth. The market for waste is VERY thin. No one is willing to pruchase the stuff. All of the assets need to be valued at the price of the last trade, which destroyed the balance sheets of anyone holding it.

A number of folks are suggesting that the Treasury might - eventually - be able to make a decent profit on this transaction. (They are essentially saying that the market overshot on the way down, the book value of the waste is too low, and that this is a good buying opportunity)

The Wall Street Journal had some good commentary over the past couple days about making sure that the whatever process the Treasury used to dispose of the waste has lots of transparency built in. As I recall, they recommended establishing an auction based system to sell off random blocks of the stuff which seems quite reasonable.

2. Lots of debate on this one. Some folks are arguing that the money should be injected higher (or lower) in the food chain

[Gerben42]

Quote

Who knows???? (As I mentioned in an earlier post, the Devil is in the details. Paulson seems to be saying "Give me $700 Billion. Trust me, it will all turn out OK". A number of other folks are insisting that some accountability gets built into the system. For example:

It feels kinda sick that some banks get that much money rather than the people who need it most. Imagine what good $2000 per citizen would bring to many families.

[pclayton]

Gerben42, on Sep 22 2008, 08:49 AM, said:

Quote

Who knows???? (As I mentioned in an earlier post, the Devil is in the details. Paulson seems to be saying "Give me $700 Billion. Trust me, it will all turn out OK". A number of other folks are insisting that some accountability gets built into the system. For example:

It feels kinda sick that some banks get that much money rather than the people who need it most. Imagine what good $2000 per citizen would bring to many families.

Not much more than a memory, I'm afraid. I'll bet you 8 out of 10 can't even remember what they did with the stimulus checks we received in June.

[mike777]

Not sure I understand this whole rescue package.

It seems the government spends 700 billion on bad mortgages. Merrill Lynch recently sold them at 22 cents on the dollar. I guess that means 2.8 trillion to 3.5 trillion face value at that price.

Not sure what a bad mortgage is but I assume that means people not paying on it.


As a result does the government foreclose on 3 trillion bucks worth of homes in an election year or do the people get to keep their homes mortgage free?

[Al_U_Card]

I heard that it is their intention to only foreclose on those that bought on "spec" ....the "real" home-owners will be given the means to maintain their homes.

Yeah right.

So the reasonable, solvent homeowners continue to pay their bills while the profligate wastrels get better terms????? The glut on the market from the "spec" houses will keep prices way down for a long time to come, further punishing the sensible and further benefitting the ne'erdowells.

AND they don't want to divulge too much info, just give the money and shut up (like good little tax-payers always do....right King Georges III )?

Boston tea party? What was that?! (700 billion of taxation without representations..)

[kenberg]

With no doubt whatsoever there is a lot about this that is sickening. I don't much feel like paying off someone's mortgage that should never been given and I sure as hell don't feel like helping some banker hold onto his yacht. Still, I accept that there is a real crisis and we must act. I hope "we" includes Europeans, Canadians, Japanese, and so on. I understand that some of the usual bandits will once again make out like bandits. I favor preventing that where possible but I don't favor letting resentment paralyze us.

Lamenting greed is pointless, and for that matter lamenting stupidity is pointless. Attempting to build structures that keep the fallout from greed and stupidity from sinking the rest of us is the game and those who have the responsibility for doing this have not exactly distinguished themselves.

"Spic and span little man, where were you when the ***** hit the fan?" We might ask this of those who seek our votes this fall.

[Al_U_Card]

I guess the last question will then be: "Who is(are) the Judas goat?

Will no one accept blame or be punished (except the faithful taxpayer) for these transgressions? Who must pay the price? How should they be punished? How can we define the nature of the deed? (As we must to avoid its future occurance.)

Surely the billion dollar profits of the banks can be garnisheed? (They would have no compunctions about doing the same to you or me for profiting from misdeeds and defaulting on our obligations.) Might we just make an attempt at changing the status quo so that they are unable to come forth with another even more devious device?

A PRICE MUST BE EXACTED. IF NOT, THEN WE, THE SHEOPLE, DESERVE TO BE REPEATEDLY FLEECED.

[mike777]

"A PRICE MUST BE EXACTED. IF NOT, THEN WE, THE SHEOPLE, DESERVE TO BE REPEATEDLY FLEECED. "





Not sure what new regulations everyone is calling for so I guess I will try and jump start the discussion.




1) If a ceo makes a bad loan they go to jail.
2) if a ceo makes a subprime loan they go to jail.
3) if a ceo makes a bad investment they go to jail
4) A ceo can have a little leverage on the books but too much leverage and they go to jail and whoever loaned them the money for too much leverage goes to jail.
5) anyone who speculates or gambles/shortsells/etc with anything borrowed and those who lent money to gamble or speculate goes to jail.

[PassedOut]

mike777, on Sep 22 2008, 03:41 PM, said:

...they go to jail.

Jails cost money too. Maybe the "price" should be other than jail.