BREAKING: Congress Has A Bailout Plan
CNN says that a deal has been reached -- sort of. A bipartisan counterproposal to Bush's $700 billion bailout plan has been drafted. The plan calls for caps on executive pay, and provides oversight on the Treasury's actions.
CNN says:
Both parties and both houses agreed Thursday to a set of principles on revisions to the rescue plan, which calls for the Treasury Department to buy up bad mortgage securities from banks in an effort to get them to lend again.
The proposal will help homeowners, curb executive pay packages at participating firms and provide oversight of Treasury's actions, said Sen. Christopher Dodd, D-Conn., a key architect of the congressional effort. He did not provide details but said lawmakers will sit down with Treasury officials to discuss it.
"We've reached a fundamental agreement on a set of principles, one, for taxpayers, which is tremendously important," Dodd said.
Americans should "legitimately feel better about the overall approach," said Rep. Barney Frank, D-Mass., who heads the House Financial Services Committee.
CNN also noted that the stock market was up over 300 points on news that a bailout may be forthcoming.
Congress has a plan [CNN]
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Comments:
Does this mean the debate is back on?
Go go gadget stock rally...
I still don't see how this helps people stay in their homes. People stil can't afford the mortgage. Unless the deal helps people magically make more money, there will still be forclosures.
I guess the government is going into the real estate business.
Oh please let this be totally different that what Paulson wanted.
Anything that will fit on 3 pages probably isn't going to fix that much for that many.
Come on S&P!! I've been gaming this be-jesus out of my 401k this week.
I know what it is: we all get screwed!
As long as Section 8 was reworded not to give Fuhrer Paulson unchecked powers, then all we'll have to worry about is how to fund the $700 billion...
@TecmoTech: Theoretically it will give lenders enough money so those that are being foreclosed upon will be able to borrow again since the requirments won't be as stringent. Kinda like a train in a tunnel that has had a cave-in. Rather than backing up and picking a route without a cave-in, they are trying to add more track between the train and the 'problem' to let them clear it out of the way before the train gets there.
I hope nobody was expecting the government to NOT reach a bailout deal fairly quickly. This is ridiculous.
I like how we can't afford the "tax increase" to have a socialized healthcare system, or that socialism is bad when we're talking about things that would directly benefit citizens (e.g. healthcare, of course), but when Wall Street comes to the government and says "OH SHIT WE GOT GREEDY AND NOW WE MIGHT LOSE MONEY BECAUSE OF IT BAWWWW" we're all expected to write a $700,000,000,000 check for them. Healthcare costs remain ridiculous and providers deny coverage at will while people die (or people die just because healthcare is fucking expensive), but at least ultra-rich bankers and investors don't have to worry about anything!
@TecmoTech: I wouldn't be surprised if there are more changes in the pipeline. I'd like to see the government step in and help those with ARM's set to adjust in upcoming years refi into more manageable loans.
Link:
Still not getting the whole story...
"The deal will help homeowners, curb executive pay packages at participating firms and provide oversight of Treasury's actions"
What about non-homeowners? What does curb executive pay packages mean? They should not get anything and be thrown right into jail do not pass go do not collect $5 million dollars.
Yeah but borrowing again doesn't do anything. Joe Walmart, who took out an ARM on a 300,000 house STILL can't afford it, no matter how you arrange the numbers.
Living in Reno and Las Vegas the past three years, I can't help but look at the average HOUSEHOLD income (around 50k) and the average home price (300k). This doesn't add up and it never can.
This bail out doesn't fix this.
Rats; I hope hoping I'd get to see an Obama-versus-nobody debate on Friday.
Dammit. This is NOT exciting news. Although it most certainly is relevant.
Curb? I agree...they should not get anything. However, I disagree that they should be thrown in jail only to suck up more of our tax dollars. No, they should have a bunch of their assets repossessed to help pay, and then go back to work starting from the bottom up again.
There is no such thing as a more manageable loan when you borrow more than you can ever afford to pay.
How is it that nobody is seeing this gigantic issue here?
Why isn't it being released?
This is suspicious to me. I want to see it and read it. I want to know what dollar figures we're dealing with and what "priciples" they're talking about.
@TecmoTech: You're only looking at the extremes. There are people who have ARM's at 5% that are fine making their payments. That situation may change for them if their rates reset to 7 or 8%. These people can be helped so they can continue to pay their mortgage.
@summerbee: Tune in friday. You may still see it.
I'm personally hoping Ron Paul crashes the party and exposes both for their political BS.
I like your analogy...but maybe it should be expressed like this...
"I can see the light! I can see light! It's so wonderful and big and round and bright! We're saved! ... Oh crap... that's not just a light! TRA!!..." [BBBLLLLAAAAAMMMMM!!!] [CRUNCH!] [Chugga chugga chugga chugga choo choo!]
Originally it was stated that AIG 'must' be bailed out because they were too big and it could create a worldwide economic collapse.
I do not hear leaders of any other countries demanding we do anything.
Why can't we do a small pilot program, (small is in let's say $30 billion instead of $700 billion). If the assumptions are correct, the bailout program will prove itself. If not, we don't continue and have reduced the additional debt load on the American taxpayers.
Why should we give carte blanche for the newest 'theory' on how to fix things, since the last theory (deregulation of Wall St. will create and economic boom), turned out to be dead wrong.
We can invest $700 billion overnight to buy back bad loans, the processing will take years to go through all that money. So with a pilot program of less dollars, it is more than enough for the first 6 months of processing of the bad debts. We can reasses at that time.
I just hope there are some regulations involved in all this.
And is it now completely obvious that John McCain wasn't needed in DC at 9 p.m. on Friday night?
@SkokieGuy: The way I understood it, this wouldn't be an overnight things. We're earmarking $700B that will be doled out in smaller portions. Then again I'm citing my local NPR station.
Maybe if they start mining and discover a gold vein way up there. Help us get back on the gold standard, lol.
It doesn't help people stay in THEIR homes, but the BANK'S homes. If they can't afford the payments, they have no legitimate claim as to why they should be there.
@TecmoTech: You're right. It's more of a life-raft for the lenders, not the borrowers, on those dirty loans. The government can't do anything--or refuses to do anything--about the borrowers that are headed to foreclosure. However, they don't want a house-of-cards collapse once the banks that use those loans as securities... well, lose that security. The bailout is intended as a roundabout way of buttressing the inevitable collapse.
That's the intention. Whether it will work or not, and whether it could have equally devastating consequences or not, is something they're not considering or not communicating yet.
@bbbco: Well I was just going to let them rot but hey maybe our new currency could be moon rocks? But then years from now we will have tide issues because we mined the moon too much!
Bah nothing works except print more money!
Sooooooo glad I'm not an American right now.
@5thAveCocaine: Hah, I was going to ask the same thing myself. Although the New York Times is saying today that McCain has done no debate prep, so it remains to be seen if a new obstacle will suddenly spring up.
Thanks HIV 2.
And we all know that the actual details will be released last-minute and the bailout approved on Friday, so all the lawmakers leave on-time for their vacations.
Certainly the collapse of the entire US economic system, (if you listen to the scare tactics) is not important enough to warrant lawmakers putting in a little extra work.
You heard it here first, the bailout plan will create an equity stake in the bailed out loans. So, the principle on the loan will be lowered to what people can afford to pay with the gov accepting an equity share in the remainder of the value.
I am ok with this compromise. I'd rather see the companies have to pay back the money we loan them, though.
We are so screwed.
You know, I never thought I would agree with Newt Gingrich, but he said last night that we should LOAN the money to these f'ed up companies @ 2% above prime, not give it to them and HOPE that we MIGHT make some money back in a few years when the g-men unload this crapball
@TecmoTech: I agree,will the current mortgage users who started this whole mess start making more money.
And even if the mortgage is reduced what happens when 'their' house needs repairs,gets and tax or insurance increase or any other financial 'emergency' .
And will the ceo pay cap include bonuses and incentives or just base pay?
This is political pandering to main street.
Part of the whole capitalism thing is the freedom to do well and make money, but coupled with that is the freedom to do poorly and lose it too.
What a deal-lose billions, get the government to pay your bad debt off. And with money not voluntarily submitted with business, but with involuntarily submitted money via taxes.
Housing prices will DRASTICALLY drop now. I guarantee it Namath style.
I'm glad I waited.
I wish I had a few bucks to spare to play in the market this week...up and down and up...coulda made some bank from all this...
If dodd says it's ok, either it must be decent or he finally bailed on his stance that the people matter... i hope for the former!
@HIV 2 Elway Resurrected: the problem is: how do you go about doing that? FHAsecure does NOTHING to solve the problem b/c many "troubled homeowners" would never qualify for conventional loan programs. either their debt-to-income ratio is too high or they have zero or (in today's market) negative equity in their homes or maybe they've recently had a "life-changing event" such as job loss that's compounded the issue.
like you said - there are a lot of people that are making their payments just fine until the reset hits. if you want to stop the tide of foreclosures, you have to somehow allow these folks to continue making their payments at the rate they can afford w/o requiring refi standards that they simply don't qualify for.
or do nothing. but imho, if you're going to do nothing for the homeowners, you shouldn't be doing anything for the lenders either.
Well the Wootoff ended last night so they had to find something to do!
@mac-phisto: Freeze rates? Don't let ARM's adjust? I don't know. You do anything to help those in ARM's people in fixed are going to scream. Something needs to be done or we're going to be right back where we are now in the near future.
I held off buying a house in this dismal market and did not take money pushed at me by greedy lenders/shady mortgage brokers. For my fiscal responsibility and restraint I am rewarded with having to bail out the slime, so either way, they're getting my money. It's like asking if you'd rather be hit in the nuts or punched in the face.
Ahh piss.