Congressional Negotiators Strike Bailout Deal

Congressional negotiators agreed in principle last night to a $700 billion bailout package. The bill is currently being transformed into draft legislation that can be voted on tonight tomorrow.

The bailout will be expanded to pension plans, local governments, and community banks. Here are the details as reported by Reuters:

  • The $700 billion in buying power would be doled out by Congress in stages. After the first $250 billion is authorized, the President could request another $100 billion. The final $350 billion could be cleared by a further act of Congress.
  • Washington will take a stake in companies helped through the program so that taxpayers can share in the profits if those companies get back on their feet.
  • A new congressional panel would have oversight power and the Treasury secretary would report regularly to lawmakers in two elements of a multi-level oversight apparatus.
  • Compensation limits would be set for the chiefs of participating firms to prevent excessive pay and “golden parachutes” for those who might tap government aid and then quit.
  • The federal government may stall foreclosure proceedings on home loans purchased under the plan.
  • Alongside the plan to buy securities outright, the Treasury Department will conceive an alternative insurance program that would underwrite troubled loans and would be paid for by participating companies.
  • If the government has taken losses five years into the program, the Treasury Department will draft a plan to tax the companies that took part to recoup taxpayer losses.

The Wall Street Journal reports the marathon negotiating session was fueled by pizza and “a platter from sandwich shop Cosi.”

Both parties will now release their Whips into the horde of election-weary members. Expect an exciting (yes, exciting) vote late tonight before the Asian markets open.

Lawmakers Reach Tentative Bailout Deal [WSJ]
PREVIOUSLY: BREAKING: Congress Has A Bailout Plan
(Photo: Associated Press)

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  1. zimzombie says:

    $700? Oh, whew. I was worried they would approve a $700 billion plan, and seriously devalue the dollar.

    Wait, it is $700 B? Nooooooo!

    • MayorBee says:

      @zimzombie: Yeah, I can seriously get behind the $700 plan. In fact, if that’s all they’re getting, I’ll even fund it myself. Makes me wonder if it was the golden parachutes that was making up the difference.

      Ugh, I still don’t understand why we can’t integrate Kuchinich’s plan into this, where we all get stock in the companies in exchange for our tax dollars, instead of the current “cash for trash” deal.

  2. purplesun says:

    I tempted to write to congress and ask if they could bail me out of my student loans. I’d be able to help the economy a lot more if I didn’t have to pay $400.00 a month.

  3. DonataAbderus says:

    Sorry purplesun, you aren’t politically connected enough to get part of this money. Anticipate PAYING about $350 per year (about $30 per month) more in taxes for this bailout for the rest of your life. This can be easily be estimated as follows: $700 billion / 100 million working people = $7000 per working person. $7000 at 5% interest costs $350 per year to borrow. Of course, once the hyperinflation induced by this bailout starts, the 5% interest rate will go way up along with your yearly share!

  4. searonson says:

    What percentage of the taxpaying American public actually approves this? We need to fire every single one of our politicians. /sigh

  5. Brontide says:

    Last I checked maybe 1% of Americans actually support bailing out the bankers. Democracy and representative politics at work.

    • papahoth says:

      @snowmoon: Irrelevant. Whether or not its the right thing to do, if it does happen to be the right thing to do, then they need to do it no matter what the American people think. Most Americans thought we should not be in WW II before Pearl Harbor. Those Americans were very wrong.

      • Brontide says:

        @papahoth: This is not pearl harbor; it’s a recession and some extra financial fallout because of greed and stupidity. These businesses need to fail and get out of the way for stronger, healthier, businesses to grow.

  6. pezhore says:

    If this isn’t an indication of how far removed politicians are from the general public, I don’t know what is. What happened to those members of Congress who have received tons of opposing view points? This single issue could potentially shake up the coming election when it becomes known who voted for and against this ludicrous bailout.

    • papahoth says:

      @pezhore: As I noted above, and Paul Krugmann has stated its not perfect but its not that bad, what the American people think about this is irrelevant. When you have Republicans and Democrats agreeing on this, you better count on it as important. If the Japanese had not attacked Pearl Harbor, the American people would have been happy to see them run over China and the western Pacific and the Germans all of Europe.

      • BrianDaBrain says:

        @papahoth: Is there some reason you keep insisting that the American people should have no say as to what goes on in our country? WWII, before Pearl Harbor, was none of our business. It didn’t involve us up until that point, so we stayed out. Nothing wrong with that, especially since we had enough issues of our own going on in our own country. As to your point “When you have Republicans and Democrats agreeing on this, you better count on it as important,” I say that when you have 98% of the American people that agree that this is a bad idea, you’d better count it as important.

        If you are really in support of a government making decisions for the people that elected it, maybe you are living in the wrong country.

        • papahoth says:

          @BrianDaBrain: If the people were smart enough to make these decisions, we would have a direct democracy instead of a republic.

          • BrianDaBrain says:

            @papahoth: I’m very excited that you lead a life that tells you that the people in America are stupid. However, this country was founded on principles that dictate that the government works for the people, not for itself. Why do you think the bailout failed? The outcry was too great, and the politicians started listening.

  7. pezhore says:

    Hmm… an edit function would be pretty sweet for these comments…

    Just found this: [www.nytimes.com] look at Section 8:

    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.

    So what we’re going to give Paulson utter control with out any accountability or chance of review?

    Not cool man, not cool.

    • GearheadGeek says:

      @pezhore: Check your calendar there, pezhore… the page you linked is an article from 20 Sept, the original evil Bushie proposal. “Give us all your money and don’t even think about asking what we’re doing with it.” I’m not saying the deal the congress has hammered out is going to be perfect, but that zero-oversight clause is one of the things that caused congress to get off their fat lazy lobbyist-overfed asses and actually DO something to head off Paulson before he started writing himself checks.

  8. lincolnparadox says:

    This current version of the plan sounds reasonable. It has acceptable oversight and enough guarantees that insure repayment of the supposed “loans.”

    The cutting golden parachutes is a nice bit of icing, but it needs to be more retroactive. This crisis has been at least 5-6 years in the making. The executive who caused it are long gone and paid, already.

    Still, I would be surprised if this gets passed as it has been described. Most of the time in Congress, the just parts of legislation are snipped away at the last minute to get them passed. Just look at the PRO-IP act that passed this weekend. It gives all the power to the copyright holders and none to the “accused.”

    So much for innocent until proven guilty.

    • JeffMc says:

      @lincolnparadox: “I’d like to propose a $30 million rider in support of the perverted arts”.

    • @lincolnparadox: What part of a $700,000,000,000 gift “sounds reasonable”?!

      Could you please send me $351,988 for no particular reason via PayPal? The spending I would do with that would surely bolster the economy. I’m cool with you having to borrow the money and pay it off on your own. Surely that must be a VERY reasonable request indeed from your point of view, no?

  9. Brontide says:

    It’s irresponsible and wasteful since no economist that I have seen knows how this will actually work. Would you give $350 BILLION dollars to someone with the promise of things getting better when the market will do a good job of clearing the forest to make room for new growth.

  10. mrjimbo19 says:

    The irony of this is I remembering hearing when Paulson presented the plan initially he asked that congress create the oversight portion. Either they got lazy at 2am or they put a lot more trust in one person then anyone should. Regardless I reallllllllllyyyyyyy hope this works as I enjoy having a job and making money… if the economy tanks anymore I don’t see that happening any longer

  11. cmdrsass says:

    It’s no wonder why Congress has an even lower approval rating than Bush. The Incumbent party wins again.

  12. BerwinPhaethon says:

    I’ll vote for that cannon. Seriously, how are we ever going to get a government that actually serves its people, not lobbyists and big business?

  13. draketrumpet says:

    We’re all doomed! I wish they would just listen to the people once in a while. Do they really think they have so much foresight to know better than 90+% of Americans?

    No, I don’t think we’re doomed by a $700 billion bailout plan…I think we’re doomed by politicians who support it. If this goes through, we must elect those who did not support the plan.

  14. @draketrumpet: See that’s the worst part of it! By making sure it’s a “bipartisan” deal like this one, they can guarantee their re-election! “Who else are you going to vote for, a third party?”

    Those stealing, bailout-slinging sons of bitches.

  15. Trai_Dep says:

    This is horrible. What would be worse is the alternative.
    While people cite the plan’s unpopularity, I’d respond with, What percentage think Palin’s competent to run the country? Sometimes polling the public isn’t the best policy. Especially when, as judging from the comments above, it includes the sort of people above that bleat that the Treasury secretary will have unilateral, unreviewable jurisdiction, citing a week-old NYT story, the minority, but still present, support that using insurance instead was a solid alternative or that there’s a chunk of Americans that think McCain saved the day on this one. In short, the public is an ass.

    But no one’s happy about this. It sucks that we had to spend $7,000,000,000. I’d have liked to see those Free Market Uber Alles people have to pay four times as much as sensible people favoring reasonable regulation. I’d like to see Phil Gramm in jail. I’d like to see Heritage Foundation and Cato Institute members tarred, feathered and run out of the country on a rail.

    It’s a shame that it cost so much to disprove a theory foisted upon us by fat cats that regulation and oversight is a four-letter word, and that the most fearful words ever uttered were, We’re from the Government and we’re here to help.
    We could have learned from our European allies and instead came up with Freedom Fries while driving our economy off the cliff. Good job!

    • Trai_Dep says:

      @Trai_Dep: Lest we forget who was on which side of this, according to The Time’s coverage on this,

      Among the last sticking points was an unexpected and bitter fight over how to pay for any losses that taxpayers may experience after distressed debt has been purchased and resold.
      Democrats had pushed for a fee on securities transactions, essentially a tax on financial firms, saying it was fitting that they contribute to the cost.

      Which, duh.
      It’s telling that the other side of the aisle felt that Wall Street should be able to push the cost onto the taxpayer and let the i-bankers skate away cost-free for reducing our economy to smoking ruin.

      The only way they could resolve this was to push deciding this provision over to the next election and have the next President decide. So, if you don’t want Treasury Secretary Gramm to decide this one, I’d think the decision’s pretty clear this year…

  16. u1itn0w2day says:

    I guess controling the money printing presses helps out.It will give new meaning to the term ‘hot off the presses’ when everyone gets in line for theirs .

  17. thompson says:

    While I’m not too keen on the bailout package, those saying that only 1% of americans favor it need to check their numbers. Gallup has “Take no action” at 11%, and “Pass different plan from Bush Proposal” at 56%

  18. ShortBus says:

    People keep mentioning over-and-over how “this plan is better than the alternative.” No one ever seems to explain what that alternative is? What’s the worst that could happen if the federal government simply said “Sorry. Suck it up”?

    Sure, the stock market will take a massive dive, and all that, but how is that going to affect us little people? I mean, this seems like a repeat of the S&L crisis of the 80’s. We bailed everyone out then too and then that lesson was quickly forgotten as congress plowed ahead with regulation in the early 90’s.

  19. bohemian says:

    This whole thing just stinks. Not a single alternative plan has been proposed. The changes are not being explained to the people and there is no promise for better regulation or pursuing the crooks that did this for prosecution.

    Every greedy CEO who made this happen and got filthy rich in the process should be currently in fear of losing every asset they have or the plan is a failure right out of the gate. The govt. will seize the asset of a coke dealer but not these crooks?

  20. smarty says:

    Where is a copy of the current proposal? I’d like to see who’s getting the earmarks.

  21. princess_peach says:

    the problem is… it is not that simple. this bail-out really isn’t bailing out the bankers. what it is doing, is ensuring that banks continue to loan money. if they stop loaning money, it doesn’t only mean unemployment on wall street. it means that every small business in america will close. it means that consumers will no longer have access to things we take for granted like credit cards.

    i am very upset that as a tax payer i have to fund this, but i just dont see any alternative.

  22. I loathe the bailout plan on principle, but I can understand the necessity of such a plan to mitigate a financial disaster. However, I would be happy to send a pink slip to every bugger in Washington after this is all over, not for the bailout, but for the blinkered way in which financial policy and regulation was managed right up until the shit hit the fan. Perhaps sacking a large portion of our Congress might send a message to the next breed of lobbyist-fed hacks that the American tax payer is not content to carry water for their enablers and pay the price for their mistakes? I would imagine some of the irresponsible borrowers/lenders/I-bankers/etc. who caused this mess and who are now homeless/jobless/etc. have been chastened by this fiasco, having learned some life lessons that our Congress could benefit from as well.

  23. B says:

    A sandwich platter from Corsi? We’re lucky the sandwiches weren’t from PotBelly, or the platter would have cost more than the bailout.

  24. redkamel says:

    …and the people who feel the effect of the economic screwup get nothing, while those who bought, traded, and plied bad debt knowingly get all the money

    and if they didnt know it was bad debt they’re not worth their salt.

  25. INsano says:

    I get nauseated every time I see “limits will keep pay from being excessive.” Are we really so infantile as to be satisfied by an open-ended promise like that? It’s math, give me a number-not “X”. When they give us a number, then we can talk about that number. When they give us “X” we know it’s something that will be decided later, out of the public eye, away from the media, and nothing will change. I hope, my fellow Americans, that you are all still not buying this crap.

  26. Streyeder says:

    *headdesk*

    God forbid they listen to the only man who has been right for the past decade concerning monetary policy. Oh the power of stupidity in large numbers…

  27. I think this whole bailout thing is just another battle in the larger-scale Class Warfare we’re apparently involved in… sigh…yeah, I gots theories, conspiracy type theories… [happilybitter.wordpress.com]

  28. blazenbu says:

    You know something is wrong with the “bailout” when Nancy Pelosi doesn’t want government oversight and the Republicans do. Seriously, have you read Pelosi’s financial holdings? She just saved herself. Don’t bother to try to call her office- they only ‘talk’ to members in her district, others are rudely told to leave a message on the ‘machine’. The best government money can buy. Thanks, Nancy.

    • ARP says:

      @blazenbu: I call BS on this whole thing. So this whole thing is Pelosi’s fault?

      Can you please provide evidence that Pelosi is opposed to oversight? A link to a legitimate news site would be fine.

      Republicans want oversight? So, why did the first draft of the bill offered by the Bush administration say exactly the opposite? FYI- Bush is a republican (as much as you try to deny it now).

      Please provide a link that says Republicans (and ONLY republicans) wanted oversight.

      Until you provide this information, you’re basically engagin in Rovian politics of saying your opponent is guilty of thigs you’re doing.

      • Trai_Dep says:

        Add to that:
        ALL Congressional offices shunt non-constituents to a low-priority queue. It’s why they have “representative” in “House of Representatives”.
        And, on a more human note, could you imagine the sigh of relief when Pelosi’s staffer was able to place this OMG – You Dems Hate oversight!” call to the f̶r̶u̶i̶t̶c̶a̶k̶e̶ non-constituent pile. After a hearty, rueful laugh.

        • blazenbu says:

          @Trai_Dep: Pelosi’s staff, as Speaker of the House works for ALL of the citizens NOT just her San Francisco constituents. If she didn’t want to hear from all citizens should of NEVER became Speaker of the House of Representatives. Like it or not, she is third in the line of succession and works for all. Her and all government works for all US citizens, we pay their salary, and they should hear from any and all. Yes, I am laughing at how stupid your post was. This is the toughest time since the depression and you hurl names-fruitcake. The economy is not a “low-priority queue.” Time to grow up.

      • blazenbu says:

        @ARP: Now that the bill has been defeated, I rest my case. If you’re going to reply, please learn proper grammar and spelling. By the way, I’ve always been an independent, not a ‘Bushie’ or a Republican. Thanks, in essence, for calling my Karl Rove. To that, you remind me of Michael Moore.

        • ARP says:

          @blazenbu: I apologize for my spelling and misuse of punctuation. I typed a bit too hastily.

          Since we’re being all formal and sh*t:

          1) I actually didn’t make any grammar errors (e.g. your you’re, etc.). I made punctuation and spelling errors. But you knew that, right?

          2) You know that when using quotes to indicate a common phrase or title, you should use full quotes. Your use indicates that you’re using a quote within a quote.

          3) It should be, “…for calling me Karl Rove,” not, “…for calling my Karl Rove.”

          4) I didn’t call you Karl Rove. I said you engaged in Rovian politics. So, my comments were directed to your actions. You, on the other hand, made an attempted ad hominem attack by stating I reminded you of Michael Moore. That, of course, is against the rules of civilized debate.

  29. Hoodooz says:

    I’ve written numerous emails to congress objecting to the bail out – but now I’m conflicted. Bush has made so many bad decisions and lied so often it’s only a natural reaction for me to be skeptical of anything that he says or does.

    I hate the idea of paying extra because some rich jerks gamed the system. But if I lose my job because the economy truly tanks – which will make it all the harder to find a new one too – then I can easily become bankrupted too.

    The truth is, and explains why the Dem’s were faster to line up behind the bail out than the Republicans, is that the chain reaction to the current bank failures is far more serious than most people can fathom; and those of us living closer to the edge, which is the vast majority of most of us, stand to lose the most. The rich have options we just don’t.

    Our family income puts us in the median household income ($37,956 – $66,354) bracket of the approximately 138 million U.S. taxpayers. If we were to split the bill amongst ourselves evenly, it would work out to roughly $5100.00 each. A figure I’d be willing to pay to possibly avert a depression economy – for those of you who’s parents and or grandparents didn’t share their experiences of those dark years, you may want to start studying up on it – and its stark realities.

    But given my tax bracket, that’s not what it would really cost me, and probably you, anyway. I’m not in a panic, but I’m also not willing to take the chance on the prevailing “wisdom of the masses” that we shouldn’t do the bail out. The nations top economists aren’t being very helpful now about it – they’re all over the map on what to do, and simply urge “be careful”. An example: [freakonomics.blogs.nytimes.com]

    It would truly be ironic, if after 8 years of feeding us BS and screwing up, Bush actually got it right on something truly pivotal to the American people – but we didn’t go along.

  30. DadCooks says:

    This latest bailout plan is so full of loopholes that the only thing for certain is we will be paying and paying…

    To quote a current presidential candidate, “…you can put lipstick on a pig, but you still have a pig…”

  31. Norcross says:

    hearing many people’s response to this bailout plan has been refreshing, but also underscores the lack of economics education taught in schools.

    fact of the matter is that there isn’t any decent way to get out of this, but i’ll take a bad breakup (the bailout) over a messy divorce (massive financial bank failure) any day. allowing the large banks, which essentially is the US monetary system, to ‘fail’ isn’t an option, period. no one wants to really admit it, but we as a people allowed the banking and finance industry to grow to the size it is, buy purchasing everything under the sun on credit. furthermore, allowing these banks to fail will guarantee that NO ONE will receive credit anymore. not for homes, not for cars, not for TVs, nothing. neither will business owners be able to make payroll, lease equipment, or grow their businesses.

    the rich are already rich, and this won’t hurt them. cutting off the ‘golden parachutes’, which aren’t nearly as big an issues as they are perceived to be, will go a long way to making the average citizen feel a bit better about it, but not much else.

    my only real hope for this whole thing is that the entire system is overhauled and rebuilt from the ground up. if it takes the tax dollars that I have no real authority over to do it, so be it.

  32. hankrearden says:

    I call “BS!”

    I will not pay taxes for someone else’s business failure OR pay for their ridiculous “compensation” packages.

    Hello America? Anyone in there? Remember when we weren’t hopelessly socialist?

    So if myself or one of my colleagues gets sued by patients or our practice collapses, who do we go whine to? Maybe someone will give us a multimillion dollar retirement package too.

    What a crock of socialist bullshit.

    • Trai_Dep says:

      @hankrearden: I find it richly giggleicious that a doctor, of all people (recipient of lush educational subsidies, low-interest loans & debt holidays while pursuing your education followed by expansive business write-offs paired with blatant, consumer-hostile market manipulation in the medical field after it), owing so much to “socialist” favors turns all Miltie Freedman once he’s gotten his…

  33. Bunklung says:

    We lose no matter what plan they institute:

    If we get taxed more for the bailout, we spend less. We spend less, the economy tanks more.

    If we don’t get taxed more for the bailout, the government prints more money, inflation jumps.

    If we bailout these companies, there is still no guarantee they will loan money to themselves. Risk is now a factor in loaning money WHICH IS HOW THE MARKET SHOULD BEHAVE.

    Frankly, we have been running on fumes for the last 5 years. We need a recession to bring things back to market value.

    The economy expanded for years on credit, not on wage increases. We spent money we didn’t have. They loaned money to everyone, it was cheap. They ignored the risk. The Fed Reserve had ZERO influence with rate changes.

    The government can’t keep lending up artificially with this bailout. We need a correction. Affordability of houses is coming (it just needs to crash more) and high lending standards (both consumer and investment banking) are here to stay. It’s going to happen. Brace for it.

    RIP investment banking, hello fed reserve, and FDIC bank lending. Bye bye housing prices.

  34. madanthony says:

    My biggest objection is actually to the “government may halt foreclosures of home loans purchased under the plan.”.

    It seems like a completely meritless transfer of wealth. If you happen to be lucky enough to live in a house whose mortgage is in one of the securities that the government buys, then you get free rent. If your house isn’t in that batch – or if you, you know, actually pay your bills – you get nothing.

    Part of the way that the bailout has been sold is that they are simply buying securities at market rate, and that they might even make a profit. Well, the way to make a profit, or at least break even, is to kick deadbeats out of their houses and resell them as quickly as possible, not to give them free rent as a reward for buying more house than they could afford, and quite possibly lying on their mortgage apps.

    • u1itn0w2day says:

      @madanthony: Can’t agree more. Halt foreclosures???

      One thing I heard was that people ‘behind’ on their mortgages might get more time.Again,are you going to bail these ‘homeowners’ out when they fall behind on their taxes,repairs or insurance? .Are you going to retroactively recind the bankruptcies of those who have already completed the bankruptcy process?

      YES the banks/financial institutions are just as guilty.But that being said I am tired of hearing ‘stop foreclosures to get home values back up’-BACK UP TO WHAT-hyper inflated artificially created house values created by house flipping which included sub prime loans???

      Selling a house for profit is not a constitutional guarantee.Houses are a place to live.If YOU decide to turn it into a commodity to be traded or sold for personal gain that is ON YOU.

  35. chauncy that billups says:

    I really wonder if people would support this plan if it were introduced two months from now, after the market has dropped 4,000 points, hundreds of banks have failed due to unreasonable runs, the FDIC is unable to reimburse peoples’ deposit and savings accounts because they simply have no more funds, and the credit market is essentially dead. I’m usually very conservative, but I don’t really have a problem with this plan. If warren buffett thinks it’s vital, then it’s vital, as far as I’m concerned. Sure, he has a lot to lose if Goldman Sachs fails, but I have a lot more to lose if my savings is wiped out.

  36. papahoth says:

    I see much its so bad, the American people are against, blah, blah, blah, but what I have not seen is a valid argument as to why this should not be done, just a bunch of “it helps the rich.” OK bright guys and girls, take it apart point by point and the tell us what should be done instead. Or STFU and GTFO.

    • grumpygirl says:

      @papahoth:

      Karl Denniger’s solution will work, if only Congress has the political courage to insist upon it.

      1) Force all off-balance sheet “assets” back onto the balance sheet, and force the valuation models and identification of individual assets out of Level 3 and into 10Qs and 10Ks.

      2) Force all OTC derivatives onto a regulated exchange similar to that used by listed options in the equity markets. This permanently defuses the derivatives time bomb. Give market participants 90 days; any that are not listed in 90 days are declared void; let the participants sue each other if they can’t prove capital adequacy.

      3) Force leverage by all institutions to no more than 12:1. The SEC intentionally dropped broker/dealer leverage limits in 2004; prior to that date 12:1 was the limit. Every firm that has failed had double or more the leverage of that former 12:1 limit. Enact this with a six month time limit and require 1/6th of the excess taken down monthly.

      Once 1-3 are put in place then send in the OTS and OCC examiners and look at every financial institution in the United States. All who are insolvent and unable to raise private capital immediately are forced through receivership where the debt is converted to equity and existing equity is wiped out. With the CDS monster caged the systemic risk is removed, the bondholders provide the cushion for recapitalization (as it should be) and the restructured firm emerges with no debt while the former bondholders are now the owners (of the equity) in the resulting firm.

      With a clean balance sheet the restructured firms remain in business and open the next morning able to raise and attract capital.

      For the few firms that have an insufficient debtholder capital cushion to successfully complete this process, they are liquidated instead. There will be few of these and in fact each of those firms is a regulatory failure, as we should have never permitted a firm to become so far “underwater” that the bondholder’s capital is insufficient to capitalize a restructuring.

      Finally, drop the shorting restrictions. Liquidity in the market right now stinks and this is a big part of why. Start prosecuting aggressively the rumors and other manipulation that leads to stocks both rising and falling.

      This plan of Karl Denniger’s will work, it will instantaneously stabilize the credit markets as balance sheets will be transparent, the CDS monster will be permanently de-fanged, leverage will be returned to reasonable levels and the forcibly restructured firms will have no debt on their balance sheets and be able to immediately access the capital markets.

      Best of all, it will require exactly zero taxpayer dollars.

      • papahoth says:

        @grumpygirl: These are all great things, but “Start prosecuting aggressively the rumors and other manipulation that leads to stocks both rising and falling” is much easier in concept than reality. We have freedom of speech issues for one thing. But these things should have been done and should be done, but I am not convinced, nor have you provided evidence, that “it will instantaneously stabilize the credit markets as balance sheets will be transparent.”

  37. vdragonmpc says:

    Why didnt the banks try lowering the adjustable rate mortgages to a normal rate? Wouldnt that have helped instead of being a bunch of hardass bullies?

    Its like jacking up the rate to 28% on a credit card encourages the debtor to pay… A lot of times they just say to hell with it and bankrupt.

    One of the biggest helps would be to forgive CONSUMER debt like Student loans and possibly some rate adjustments like forced rate reduction. Even with the rates being low the actual APR for many loans was still very high ‘to make up for risk’.

    Hasnt anybody noticed that the credit companies Equifax, Experian and Trans Union are extremely active now? They are selling all kinds of packages but are answerable to no one with no regulation or any oversight. They ruin people and there is no way to fight them. Did you know anyone can add stuff to your report and you can only challenge it?

    Shoot these politicians into the sun or something worse. This should not be approved.

  38. grapedog says:

    the problem for me lies in the fact that the worst banks are going to get the most money. the banks that did NOT drag their feet, and got busy writing off the bad loans as a loss(the correct thing to do) are going to receive very little help. The banks that DID drag their feet, and kept making bad loans are going to get the biggest chunks of the cash back.

    Also, why is the government responsible for renegotiating loans? Why are the banks themselves not renegotiating the loans in the hopes of getting a few more bad loans turned into good loans.

    Lastly, as has been said before, where were the alternative plans? We have thousands of economists in this country…and most of them have said this is not the solution. But a closed door meeting between all the people that caused this to happen in the first place was the only way to get it done? The head of the SEC was the person who was supposed to be monitoring these businesses to begin with, and now he’s going to be on the committee to determine who, what, where, why and how this money is distributed.

    Unacceptable…any of my congress members that vote yes to this bill, will NOT get my vote when they come up for re-election.

  39. grumpygirl says:

    Well, here we go.. The Treasury claimed there
    would be 3 million job losses “in weeks” but they intend to wait 2 weeks or perhaps more before they start making purchases. How odd.

    Wachovia is down SIXTY PERCENT this morning premarket.

    All of the G7 nations have told us where to stick this bill, with Canada being the latest to make an announcement yesterday afternoon.

    Supporters of this bill are being gamed AND THE MARKET FIGURED IT OUT ALREADY. IT IS TANKING – NOT STABILIZING.

    We are planning to squander $700 billion of taxpayer money we will need for ordinary Americans (people like us) in the coming months. Too bad for us.

  40. cerbie says:

    I get the need, but this still gives me the heebee jeebees. Not exactly how I envisioned us finally tip-toeing into proper socialism, you know?