What Does The Bailout Mean For You?

So, Congress finally passed the bailout bill. You know about the Treasury’s newfound $700 billion, and you’ve heard about the snipped golden parachutes, but what does the 451-page week-old shotgun savior of a bill actually mean for you?

Your 401k Should Stop Free Falling

The bill was heralded as a way to calm the markets following the 778-point mini-crash the day after the original bill failed. That plan hasn’t exactly worked. But! If the bill does eventually succeed in stabilizing the markets, everyone with a 401k, IRA, mutual fund, or plain old stocks will directly benefit.

New And Improved FDIC Insurance Limits

The FDIC has upped its insurance limits from $100,000 to $250,000. A couple can now stash half a million dollars in the bank, fully insured by the federal government. The new limits even apply to credit unions.

Technically, the FDIC insurance limits are only extended through 2009 to prevent banks from contributing added billions to the insurance fund that they need in their coffers. Congress will almost definitely make the increase permanent next year, giving banks plenty of time to save up cash to contribute to the reserve fund.

AMT Extension

The dreaded AMT—the parallel tax system designed to snag at least a few tax dollars from the wealthiest Americans—will no longer impact almost 20 million Americans. Couples are now exempt up to $69,950 (an extra $3,700!), while singles are exempt up to $44,350 (an $1,850 increase!) The benefit fades out at $150,000 and $112,500, respectively.

A true fix would have involved indexing the AMT for inflation. Maybe next time.

Other Tax Credits

These apply to smaller subsets, possibly you!

  • $8 billion in tax breaks for victims of natural disasters;
  • $5 billion for college tuition deductions;
  • $400 million to help teachers buy their own school supplies;
  • $3 billion in deductions for residents who pay state and local taxes in states that don’t have an income tax.



Renewable Tax Credits

The bailout essentially doubles as an energy policy expanding and extending for eight years several energy credits that were set to expire.

  • Homeowners can now claim a 30% tax credit for putting solar panels on their roofs without any limit;
  • The same 30% credit applies to wind turbines and geothermal heat pumps;
  • A one-year extension of breaks for energy efficient home improvements;
  • Plus, the first 250,000 buyers of plug-in electric vehicles are eligible for a $7,500 tax credit.

The energy portions of the bill also throw a lot of money at companies looking to invest in clean, renewable energy, but this is about you, not them.

The bill almost failed again in the House because members of both parties wanted to pay for the tax breaks upfront. The Senate, however, only offset the energy portions of the bill. Remember to one day thank your grandkids for the tax breaks.

Mental Parity

Health insurers are now required to treat mental health issues the same as they would any physical illness. It also prevents health insurers from making their mental health benefits any more restrictive than other covered illness.

Most importantly, without mental parity, we wouldn’t have a bailout bill at all. The Senate couldn’t introduce a new bailout bill from scratch, so they cut and paste the bailout bill into the relatively uncontroversial mental parity bill. Creative, isn’t it?

Homeowners

This is a housing bill, after all. The heart of the bill is the Troubled Asset Relief Program, or TARP. A team of mortgage specialists—possibly the people who got us into this mess but can now benefit from hindsight—will scoop up questionable mortgages held by banks. Toss out the skunk and the room won’t stink anymore, right? Presumably, the theory goes, this will allow everybody to calm down and get back to business as usual. Banks will once again lend to businesses so they can meet payroll, consumers will be able to borrow money for cars, homes, and school.

Beyond buying up securitized mortgage, the government may also buy whole mortgages on a case-by-case basis. Even if the government doesn’t own your home, the Treasury and other federal agencies have been empowered to modify loans to minimize foreclosures.

Many House members wanted to empower bankruptcy judges to rewrite predatory mortgages altogether, a proposal that was rejected by the Senate.

Homeowners who are able to reduce their mortgages won’t owe tax on the difference, as they normally would. And if you’re a renter living in foreclosed home, you can stay, so long as you stick to the terms of your lease.

If you are at risk of foreclosure, the Department of Housing and Urban Development has several tips for staying out of foreclosure:

  1. Don’t ignore the problem!
  2. Immediately call your lender and try to work out a solution.
  3. Open mail from your lender because it may contain useful information to help avoid foreclosure.
  4. Start reading up on your rights and foreclosure laws.
  5. You have options to help avoid foreclosure. Study them.
  6. Call (800) 569-4287 to find a HUD-approved housing counselor.
  7. Spend more on your mortgage, less on everything else.
  8. Sell-off assets that you don’t need, like that spare car or jewelry.
  9. Don’t pay anyone to help you avoid foreclosure. They are scammers.
  10. Watch out for anyone promising to save your home if you sign a document. You are signing away your house to scammers.

We’ve written many posts expanding on these topics, including:
4 Things To Try Before Foreclosure
Consumers Are “Unaware” That Lenders Can Help Them Avoid Foreclosure
Lenders Freeze Mortgages Rates For Some
What To Do When Rental Gets Foreclosed?
Mother Saves Family From WaMu Foreclosure With Consumerist’s Executive Contact Info
Halt Foreclosure Proceedings By Challenging Your Bank’s Claim To Your House
New Ruling Means Banks Could Have Tough Time Foreclosing
32 More Foreclosures Dismissed For Lack Of Documentation
Freddie Mac: Don’t Let Fraudsters Steal Your Home
Watch Out For Equity Stripping Scams
How To Save Your Home from Foreclosure
Beware The “Fannie Mae” Prize Draw Scam

HUD also has a new program that can help people transition from predatory mortgages to FHA-insured 30-year fixed mortgages. You qualify if:

  • Your troubled home is your primary residence and you don’t own a summer home.
  • Your mortgage was born before 2008, and you have made at least six payments.
  • You need help paying your existing mortgage.
  • As of March 2008, the mortgage costs more than 31% of your gross monthly income.
  • You haven’t been convicted of fraud in the past 10 years or lied on your mortgage application.

To read more about the program, visit HUD’s website.

Yes, This Affects You

There’s been a lot written about the bailout and whether it will work. One article in particular from the New York Times captured poignantly the potential price of apathy and inaction:

In 1929, Meyer Mishkin owned a shop in New York that sold silk shirts to workingmen. When the stock market crashed that October, he turned to his son, then a student at City College, and offered a version of this sentiment: It serves those rich scoundrels right.

A year later, as Wall Street’s problems were starting to spill into the broader economy, Mr. Mishkin’s store went out of business. He no longer had enough customers. His son had to go to work to support the family, and Mr. Mishkin never held a steady job again.

Frederic Mishkin — Meyer’s grandson and, until he stepped down a month ago, an ally of Ben Bernanke’s on the Federal Reserve Board — told me this story the other day, and its moral is obvious enough. Many people in Washington fear that the country is starting to spiral into a terrible downturn. And to their horror, they see the public, and many members of Congress, turning into modern-day Meyer Mishkins, more interested in punishing Wall Street than saving the economy.

Let’s hope this thing works.

Lesson From a Crisis: When Trust Vanishes, Worry [The New York Times]
Rescue Sweetened With Tax Incentives [The Washington Post]
Bailout Brings With It Diverse Perks [The New York Times]
Details about the Bailout Plan [Daily Kos]
Tips for Avoiding Foreclosure [HUD]
Hope For Homeowners [HUD]

(Photo: Getty)

Comments

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  1. juri squared says:

    Something important to note: the mental health parity bill only affects insurance policies that currently cover mental health, and only plans that cover 50 or more employees.

    [www.msnbc.msn.com]

    • hmk says:

      @jurijuri: I wanted to point that out. thankfully, I have *real* insurance through my husband, but the poor crazies at my office will likely still suffer since our bosses keep the employment number at 49 for a reason. Illinois (iirc) even has mental health parity here, but (again, iirc) only for companies 50+.

      a good thing, though! I welcome this portion of the bill.

      • juri squared says:

        @hmk: It must be 50+ since I live in Illinois too ;)

        Let’s just say that if my husband’s company was larger, this bill would save my household almost $1000/year. Yeeeah.

    • boobaloob says:

      @jurijuri: As a mental health professional in training, I couldn’t be more happy about this part of the bill. My supervisors have always moaned and groaned about how hard it is as a mental health practitioner (non-MD) to be reimbursed by health insurance companies; they claimed it was the hardest part of the job. Hmmm, so perhaps I really do have a viable future career! (Also, as a current consumer of mental health services, it makes paying the shrink a whole lot easier — hee.)

    • Jonbo298 says:

      @jurijuri: Place I work at uses Blue Cross Blue Shield (of Nebraska) and at least until this bill passed, mental health was treated with an absurd deductible before going to the standard co-pay. The rest of the insurance policy is fine, but they screwed hard on mental health so I had to stop visiting my therapist due to it because I couldn’t support it financially.

      Thankfully though I got over my depression and very frequent suicidal thoughts but she helped alot in dealing with it. I just felt if I didn’t have to leave (my choice but its a long story) old employer that had awesome insurance to OK insurance sans mental health, I could have dealt through it better.

      At least now its going to have people get the help they need (in most cases) without having to waste away a ton of money doing so.

    • @jurijuri: Great, how useful. So now we’ll have more insurance plans that don’t cover mental health at all, to go along with the already-shrinking number of employers that offer health insurance…

      How pathetic, that in this supposedly “free” market we are completely incapable of doing anything good for the public if it hurts the wallets of the fatcats. Sickening.

  2. Shadowfire says:

    The Mental Parity part is just bizarre. Don’t get me wrong, I like it… just weird to be part of this.

    • zeroraveson says:

      @Shadowfire: Only the House is able to introduce budget bills, so for the Senate to be able to lead on, well, anything budget related, they have to dump it into something completely unrelated.

      So actually in this case, we have what is mainly a Mental Health Parity Bill, but also has the bailout stuck onto it.

    • NYGal81 says:

      @Shadowfire: Like including some kind of special tax status for wooden arrows and rum makes more sense? I’ve read up a little bit on some of the true pork associated with this bill, and it’s disgusting. However, MH Parity isn’t pork. It’s a much needed semi-reform to mental health care in America. As a psychologist in training, I don’t much care how it happened, I’m just glad it did.

  3. Ein2015 says:

    Excellent post Carey!

    One typo, you said “cut and past” instead of “cut and paste”. :)

    Now to dive into all those delicious links!

  4. ninjatoddler says:

    So whyd they bloat it up like that?

    • kyel57 says:

      @ninjatoddler: So congress would pass it.

    • cmdrsass says:

      @ninjatoddler: They’re bribes for the congressman who wouldn’t vote for it the first time, paid for with your tax dollars.

    • Sidecutter says:

      @ninjatoddler: because in our government, doing what’s right for the people (whether each particular members agrees on what’s right is another matter) is not enough. One must pander to everyone’s interests in order to get a bill passed that could do a lot of good for a lot of the citizens, essentially bribing them with pork that benefits them or a business they have an interest in (as shown by the wooden arrow shaft additions).

      This kind of piggybacking and add-in tactic is rampant in Congress. This ia also how politicians get the ability to say that their opponent in a race for office voted against some wonderful thing. The catch is, they attached that wonderful thing for the people to something so wrong and reprehensible that it was all but guaranteed that others would reject it.

      • nataku8_e30 says:

        @Sidecutter: Yeah, I wish debates and campaign ads would stop bringing up voting records – like you stated, they’re generally misleading and I think there is a decent portion of the voting population that does not understand the complexity of some of these bills.

  5. waybaker says:

    So, what does it do for people like me who were victims of predatory lending, but already lost their homes to foreclosure?

    • @waybaker: Same thing it does for 90% of everybody currently facing foreclosure: Jack-all. The bankruptcy provision was the only thing that might have actually saved some homes, so surprise!, they got rid of it.

    • Erwos says:

      @waybaker: Why should it do anything for you? You bought a house you couldn’t afford, and you lost it. That’s the way it’s supposed to be.

      • TecmoTech says:

        @Erwos:

        x2

      • ARP says:

        @Erwos: Take it easy. How do you know waybaker’s spouse didn’t die, a kid get sick, injuried himself on the job, etc. I understand your point, but not everyone bought more house than they could afford. Sometimes life happens.

        • TecmoTech says:

          @ARP:

          Even if those scenarios did occur, why is it because of predatory lending? If your spouse dies, you are most likely going to be screwed even with a 0% interest loan.

          It isn’t constructive, but nobody wants to put any of the responsibility on the borrower. Erwos speaks the truth and sometimes the truth hurts.

      • Consumerist-Moderator-Roz says:

        @Erwos: This comment is pretty insensitive, and not helpful. Waybaker’s in a difficult situation, and grinding his/her face in it is only going to invite angry replies. I don’t think that’s constructive.

  6. Tank says:

    that’s great, we’re just gonna pull a tarp over the whole thing and hope that solves it. tarps are good.

  7. CandaceErmoo says:

    this is most of the nice happy pork that added and also the benefits, but what about the down side? Where did this money come from? What will it do to inflation, which really is a tax on the American people? If inflation goes up, it’s the same as raising the taxes…I would like to see a who separate article on the bad things that will come with this.

  8. The AMT is the bane of my existence. Couples up to 69k and singles to 44k WTF? The federal tax system really nails those of us that live in CA and many east coast states.

    There is nothing on the list in the article that does shiat for me. I have a 401k but not much in it and I am only 31 so I have a while for retirement and the market would recover either way. My other retirement money is unaffected by this fiasco. I don’t have 100k in any account so that’s not need and I diversify my money anyway. I make too much money to be saved from the AMT and I still rent and if I wanted to buy a house now I can’t thanks to people who could not fulfill their obligations.

    Perhaps the Mental Parity part will help someday but not now and I don’t see it being needed but you never know. For me this is just another transfer payment. Another bill that I get and get no benefit from. Way to live up to that 18% approval rate congress.

    • petermv says:

      @The_Red_Monkey:
      The really tough part about AMT is that I am a US citizen but live and work in the UK. Because of AMT I still have to pay US taxes because they base your earnings on world wide income even though I do not live in the US and the exchange rate makes it look like I earn a fortune.

  9. Kishi says:

    Frederic Mishkin – Meyer’s grandson and, until he stepped down a month ago, an ally of Ben Bernanke’s on the Federal Reserve Board – told me this story the other day, and its moral is obvious enough.

    Yeah, that those bastards are going to pull us down with them.

  10. 2Wheelsor4: The Moto-Stig says:

    To quote Billy Connolly on this:

    “Good ideas go in, and then the f***ing bash them about until they come out a shadow of their former selves”

    I think there should be rewards for those who have actually made efforts to continue paying their mortgages on time, I mean call me crazy for rewarding people actually being responsible and doing the right thing.

    • qwopzxnm says:

      @2wheelsor4?:

      I completely agree. I live in CA and bought in mid-2006 knowing I would probably have to sit out a downturn in the market. I don’t think any of us could have predicted the implosion that happened and those who did are now very wealthy (as they should be).

      I qualified for every single stipulation of the the previous subprime bailout sponsored by the government except for one small thing, I paid my bills and wasn’t behind on either of my mortgages. Because of that I was disqualified.

      Now that bailout has a lot of strings attached including the fact the government gets a piece of any equity you make by selling your home, and your credit card transactions go through the IRS so I don’t even know if it was something I would have done. But knowing that the only reason I didn’t have a choice was because I paid my bills was amazing to me.

      Reward those who actually read their loan documents and made a fiscally responsible decision for their individual situation.

      • Toof_75_75 says:

        @qwopzxnm:
        You’ve just hit on the big topic for the Obama campaign. You are smart and make smart, informed decisions…Therefore, you don’t need help. Other people are dumb and make poor, fiscally irresponsible decisions…therefore, they need help. If the government didn’t get help the dumb people, it wouldn’t be fair to them. Barack Obama’s “Fairness” policies, for the epic loss…

        • Toof_75_75 says:

          @Toof_75_75:
          I don’t know how the word “get” got in there…pretend it isn’t.

        • papahoth says:

          @Toof_75_75: yea we measure the value of a society by how much it helps those that need help. how about that? societies that worry about those that are only on the top eventually fail. name one where we look back at say, “hey what a great place to be in past history.” even ronnie had to have mommie change his diapers in his old age. that must have been a real site.

          • Toof_75_75 says:

            @papahoth:
            I’m not talking about a society helping people in need, I’m talking about a government that thinks it needs to help every person who makes poor decisions and worse, help them with money taken from people who made smart decisions. There need to be times where people receive a negative reinforcement for their poor decisions. I don’t understand why we just pretend this is all the fault of the “greedy fat cats” but ignore that there were people taking out loans they ABSOLUTELY COULD NOT AFFORD. Those people need to lose their homes.

            As far as taking care of the needy, that needs to be done by charities, churches and communities, not bureaucrats. This welfare state that has been created only breeds more of the same.

            • @undefined: It’s hard not to feel like the NON-prodigal son about this, all, “Hey, I was responsible, why are they killing the fatted tax calf for that irresponsible shithead?” But the quote from the Times is to the point — this is a situation where punishing people who made dumb decisions will end up punishing us ALL. The “negative reinforcement” should come in the form of more stringent regulations, better oversight, and more criminal penalties on a forward-going basis. But punishing those who are suffering, even from their own stupidity or short-sightedness, in the current situation is going to lead to all of us taking a bath in the shit.

              It’s a case of cutting off your nose to spite your face. Vengeance might feel good now, but are you willing to endanger your own financial security so you can act on your feelings of moral superiority? Try to just enjoy the moral superiority for its own sake.

            • papahoth says:

              @Toof_75_75: did these poor decision makers put a gun to the lenders head and say “give me the money for a loan that i have no chance of paying?” i am curious. where they forced to lend to them? and don’t give me any of that wing-nut crap that’s out here that they were forced to lend to the poor. 60 Minutes last night put had on multiple experts setting the record straight on how this happened. I guarantee you that the two foreclosed townhouses down the street that sold for over $300K were not sold to the poor.

          • TecmoTech says:

            @papahoth:

            Your view of “those in need” is skewed. Most of the people being foreclosed surely aren’t paupers.

            Most have to give up their 3000+ square foot home and slum it in a 2 bedroom apartment for a while. Boo freakin’ hoo.

  11. The FDIC increase was beyond pointless, really.

    • AD8BC says:

      @obamaramallama: Absolutely. Split your money up among banks and you can have every dime insured….

      Well, until bank after bank gobbles each other up and we are left with just Watchcityfargochase bank.

      Hmmm, conspiracy theory, anyone? The gummint is gonna take over all the banks and we are left with just one?

      I’m kidding (I hope)

    • @obamaramallama: Hey now, that’s there to help all those struggling “Main Street” homeowners who have more than a hundred grand in the bank, dontcha know.

  12. UlaniMosquito says:

    “And if you’re a renter living in foreclosed home, you can stay, so long as you stick to the terms of your lease.” Hmm, does that mean the bank can’t kick them out? Gee great! Did they include a provision that says banks have to start paying the monthly Condo/HOA maintenance fees as soon as the foreclosure procedure starts? Because if they didn’t that just means that the people living in the foreclosed condos can stay using condo services even thought the original unit owners stopped paying their monthly maintenance fees because they are on foreclosure anyway and have nothing to lose. I know that in the end the Condo Association finally gets the money they are owed but in the meantime there is not enough money to cover the monthly bills. All of us normal hardworking people who are living within our means will have to start paying higher fees just to cover the cost of these moochers! Looks like in the end the good guy always gets screwed.

  13. ClutchDude says:

    Back when my grandfather was a kid(early 1920’s), he witnessed his father burn an entire field of crop.

    When my grandfather asked why he burned the field, my great-grandfather replied, “Because the vegetation that is there is not needed anymore. By burning it away, I’m saving the effort of working on it and not wasting time on something that will not feed us. When the field has fallowed again, I will plow and it will give us an even richer field.”

    I never bothered checking if this actually happened but I think the moral is clear. Then again, Ol’ Granpappy may have gone insane, which I’m sure a “Mental Parity” bill might have been nice.

    • quail says:

      @ClutchDude: Farmers burn fields on a regular basis. Certain crops almost need it done every few years.

    • MrEvil says:

      @ClutchDude: One of the best wheat harvests my dad and I have had on our farm came out of the field we burned off twice. Once burned off we went straight to the field with the drill and saved half the fuel.

  14. TonyEuryale says:

    The borrower must agree to share with FHA both the equity created at the beginning of this new mortgage and any future appreciation in the value of the home.

    This seems kinda sketch, can anyone explain that condition in more detail?

  15. veronykah says:

    $3 billion in deductions for residents who pay state and local taxes in states that don’t have an income tax.
    So if you DON’T pay income tax in your state you also get a tax break for paying state and local taxes? WTF? Why? So I can live in LA and continue to pay state, local, and income taxes and get nothing? Awesome!
    $5 billion for college tuition deductions;
    Does this mean we get MORE to deduct on the interest from student loans?
    Can someone elaborate on this one?

    • chrylis says:

      @veronykah: Some states finance their governments through income taxes, others through sales taxes only. The essence of this provision is that people who live in sales-tax-only states (such as Texas) should be able to deduct their state-government taxes just like residents of income-tax states, since they’re essentially the same, just collected at different times.

      • quail says:

        @chrylis: Keeping track of what was paid out in sales tax would be a nightmare for someone who does itemized deductions. I’ll bet that they’ll have a standardized deduction that most people will take.

        • lowercase says:

          @quail: Correct.

          This was part of the tax code until a year or two ago but wasn’t renewed. There was a standard deduction you could take unless you wanted to itemize. Unless you bought a big ticket item (car, etc), it wasn’t worth the hassle to itemize. But it definitely made a difference in my tax bill and I’m happy to see it come back.

          • Mayor McRib says:

            @lowercase:
            Not entirely true lowercase. As a Texas resident I have been getting a standardized sales tax deduction for the last four years. When you buy a Car or Boat you get the deduction of the sales tax for the vehicle on top of your standard deduction. I have bought 2 cars and have applied them to this method and saved around $300 extra each time. Your tax software has it built in already, and your tax person should know about it.

  16. Heartless says:

    Sooo..in other words, those that don’t have a state income tax gets another great break, but those of us so unfortunate to live in a state that has sales tax ANS an income tax, gets the screws. And income wise I’m right above that for the AMT. yay! way to go for a good for nothing congress! great accomplishment making most of us feel so left out with a nice bill to go with it.

    • Canino says:

      @Heartless: States that have income tax usually have a much smaller sales tax rate. Texas has no income tax, but sales tax is 8.25% in most places. It would (theoretically) be lower if there were a state income tax, but then the state would get less income from the huge number of “undocumented workers”.

    • Shadowman615 says:

      @Heartless:

      Sooo..in other words, those that don’t have a state income tax gets another great break, but those of us so unfortunate to live in a state that has sales tax ANS an income tax, gets the screws.

      No, if you have a state income tax, you already get a tax break for that. Now residents of other states get a similar break.

  17. arilvdc says:

    Where I live, sales tax is 8.25% and there’s a measure on the November ballot to raise it another .5%. We also pay state income tax…so its not going to help us at all. are we the exception to the rule, or is this common?

  18. Bunklung says:

    1929 was 1929 and not 2008, but I’m not totally discounting this story.

    I think this gets worse before it gets any better. Congress will be back at the problem really soon. Housing prices need to tank whether they like it or not. Affordability needs to strike. The regulation pendulum is swinging back.

  19. sleze69 says:

    You failed to point out that because $850,000,000,000 is being printed out of no where, the value of the dollar is going to drop. Exports will increase in cost, most notably oil prices.

    Good luck to the readers who have oil heat this winter.

  20. moore850 says:

    Also, there’s a bike commuter tax credit that employers can pass down, worth something like $240 tax-free per year for upkeep on a bike/related expenses if you use it to regularly commute.

  21. hi says:

    Does it bother anyone that congress member were threatened with martial law if they didn’t pass the bill? Wake up people it’s real.


    + Watch video

  22. Mr_D says:

    1. Something must be done.
    2. This is something.
    3. Therefore, this must be done.

  23. Ghede says:

    Ok, now how does the 700 billion price tag affect me?

  24. NotChoinski says:

    I know raising the FDIC limit was touted to ‘restore confidence’. But what about the other effect nobody talks avbout – allowing a depositor to increase their deposit 150%? What effect would that have?

    • 2Wheelsor4: The Moto-Stig says:

      Raising the FDIC limit was really a moot point, and I think, is to protect more of people’s wealth.

      I seriously doubt, that if you have more money in the bank than is covered by the FDIC, paying your mortgage isn’t really a problem, and if you were smart, you wouldn’t keep all your eggs in one basket. Though, that in itself is becoming a moot since all banks are quickly becoming part of 3 or 4 really big ones.

      Also, woo hoo for devaluing currency and driving up inflation. The pokey few dollars I make are rapidly buying less and less.

      • Erwos says:

        @2wheelsor4?: The smart money is still on deflation, pal. Commodities are still falling (albeit gently), bonds are priced high, and the stock market is falling like a stone. Some people are going to lose their shirts when they read the news, think inflation, and dump their money into the market.

        It’s easy to see $700b and think “OMG INFLATION”. But you’ve got to put this in the context of all the money/value that’s been lost, too.

    • Snarkysnake says:

      @NotChoinski:

      “allowing a depositor to increase their deposit 150%? What effect would that have?”

      Well,we only have history as our guide.In 1980, a human sack o’ shit named Fernand St. Germain (R- Asshole) convinced congress to pass another increase in FDIC insurance – from $40,000 per to $100 K. The effect was to give crooked S&L owners,directors and various other unsavory insiders access to more than double the amount of money that they could embezzle,loan themselves and waste on see through buildings built by their cronies.This led to Bailout I -S&L’s in Crisis.

      See,crooked insiders now had much bigger building blocks to play with because the first $100,000 was “on the house” ,so to speak.That is,covered by you and I if the S&L failed. Now. Here we are about 28 years later and we are doing the same thing with commercial banks and TRUSTING them not to act like drunk sailors with the money.Just like the “self regulation” that they practice with credit card fees,overdraft fees and other ways that they milk customers dry.

      Print and keep this posting : It won’t be too long until the banks (Bank of America , Citi, Chase etc..)come running to the governmnet with dire warnings that they need “assistance” ,a “rescue” or what have you. The moral hazard that we have set up with this deal will be more of the same sqared…

  25. HogwartsAlum says:

    -I pay my mortgage every month.
    -My income is barely above the federal poverty level (yaaaay! I’m above it now!!!!).
    -I try my best to pay my bills on time.
    -I have no credit card debt (no credit card), only student loans and a car loan.
    I have no savings.

    Is anything going to change for me? I’m still scratching my head.

  26. sir_eccles says:

    A lot of people are missing the point on the FDIC limit increasing to $250k.

    Not one single bank in this country has enough liquidity to survive even a small run on their deposits. For example Wachovia suffered from a whispering campaign which lead to a “silent run” where depositors went through their accounts making sure they were all below the $100k limit with a bit of space to spare. Almost brought them to their knees. The new limit is more realistic.

  27. What bothers me most is that

    a) All of the things that got done which are good things are unrelated to this bill’s actual content (“earmarks” if you will), like mental health parity (which also got the teeth taken out of it somehow).

    and

    b) Nothing that was changed in this version does a damn thing to effect the ACTUAL problems this bill causes, like dumping a stupid amount of new money into the banking system without imposing ANY regulation to prevent this whole thing happening again!!

  28. no.no.notorious says:

    good…now everyone could stop bitching about ‘OMG bush (and congress, but people would rather think it’s all bush’s fault) is using our tax money to bail out a bank!!!!’

    no, it’s actually to benefit us. thanks consumerist for clearing the air

  29. qcgallus says:

    It may be beneficial to us, but an Emergency Economic package need not contain mental health parity clauses, wooden arrow clauses, and school supply clauses. I like them all (except number 1) but that’s now what this is! 3 pages to 110? If anyone would like to, here’s the text:

    [www.huffingtonpost.com]

    O anything of nothing first create!
    heavy lightness, serious vanity
    misshapen chaos of well seeming forms!
    feather of lead, bright smoke, cold fire
    Sick health, Still waking sleep!
    This love feel I, that feel no love in this.

  30. qcgallus says:

    And by “now” I mean “not”

  31. whydidnt says:

    Uggh, this bill is a great example of why our government is billions of dollars in debt. It is currently impossible for congress to pass even ONE spending bill without tacking on billions and billions of dollars of unrelated spending/credits. We can debate whether the bailout makes sense or not, but the fact remains, anytime congress spends money, every congressman from every state is standing there with his hand out.

    I’m sure they had to add the tax credit for states without income tax to get reps from Texas, Florida, etc. to vote for this bill. Why the hell don’t we elect people who will vote on these things based upon their individual merit?

    Until we get TRUE change in the legislative system (sorry neither Obama or McCain goes there) we will continue to watch our government piss billions and billions, if not trillions of dollars down the drain simply to server unnecessary special interests!

    • Toof_75_75 says:

      @whydidnt:
      All valid points…I really hope the people who voted this POS in lose their positions by virtue of being voted out of office when re-election time comes around for them. Silly me, here I thought these politicians were supposed to be doing the will of the people and representing the wishes of the people…I guess they know better what we need than we do…we’re just lowly civilians…

    • smartmuffin says:

      @whydidnt: Wasn’t it just a few days ago where McCain made the main focus of the economic portion of the debate all the unnecessary pork barrel spending he supposedly hates so much?

      I’m a republican, but that’s pretty ridiculous. He should have been railing against this bill in this form, not supporting it.

  32. vladthepaler says:

    Crap. “We can’t pass a bill to spend 700 billion dollars we don’t have, but maybe if we lower taxes…” HOW DO YOU EVER EXPECT TO PAY THIS MONEY BACK???

    Perhaps if we sell all the idiots who passed this thing into slavery, that would be a good start.

  33. coolkiwilivin says:

    This is a nightmare. Every congressman who got an earmark in order to vote for this monstrosity sho should be hung up. This is nature of Washington. Good people go in and many come out bad. As Pro Obama is the Gawker family, let’s all commend John McCain for NOT taking earmarks and taking in Pork for the people of Arizona. Things will not change until the people of this country stand up and say no more to congressman who take from others to bring back to their districts and the democrats realize that government is not the answer. That also goes for the republicans who’ve forgotten their way and are huge piggy spenders.

  34. Triborough says:

    Remind me what the hell “mental parity” has to do with fixing the economy? Wait, it has just about the same as wooden arrows and auto racing tracks. Oink!

  35. chrisexv6 says:

    Actually I think part of the reason the mental parity thing was added may have been to point out nay votes if the bill didnt pass.

    “How dare you not pass a bill that included improvements for mental health care”. Then again, if someone came out and said that, would anyone say “WTF, I thought this was a bailout bill”? I doubt it, considering how much Pork was added to it already.

    And I hope the government is watching how well their bailout is working so far today.

    • NYGal81 says:

      @chrisexv6: Is it possible it might take more than A DAY to fix????? I’m not happy with a 500 point drop at opening either, but lets get serious about the timetable here. Anyone thinking this would lead to an immediate and complete turnaround in the economy in ONE DAY might want to realize that it often takes some time to fix a system-level problem. Considering this system is “the whole fucking world,” it might take a minute. You think?

      • smartmuffin says:

        @NYGal81: Considering how the stock market is a confidence game, this is pretty serious.

        Nobody is saying that the Dow should instantly be back at it’s all-time high. But for it to continue to go down in significant numbers DESPITE the passage of what is generally regarded as a necessary pro-economy bill spells bad times ahead.

  36. Anonymous says:

    “The FDIC has upped its insurance limits from $100,000 to $250,000. A couple can now stash half a million dollars in the bank, fully insured by the federal government. The new limits even apply to credit unions.”

    Thats a quarter of a million dollars….

  37. Brazell says:

    This post is proof enough that the bailout bill is a fraud. Nearly everything that “means something for you,” is a pet project that will not recover the economy in anyway.

  38. jwhitlow says:

    I think this article is offers some good information on the subject: [www.star-telegram.com] I especially like this paragraph:

    “Moreover, while the $700 billion price tag on the proposed bailout outraged the public, most people don’t realize that both Lehman Brothers and AIG were heavily involved in the oil futures market. Had they been left to fail on their own and been forced to unwind their positions in the oil market, most believe, that would have dropped the price back to $65 a barrel or less. And had that happened, U.S. corporations and consumers would have saved almost $300 billion annually in costs for overpriced oil.”