On bailout, presidential debate was a disappointment

I watched last night's presidential debate hoping to learn whether either candidate favors the Bush administration's push for an immediate $700 billion bailout. To my disappointment, I didn't hear clear answers. Does either of these guys favor the Paulson plan? Got me.

The L.A. Times watched the debate and concluded: "Neither would commit without knowing the details."

The New York Times, watching the same debate, concluded: "Both expressed general support for the concept underlying Mr. Bush’s proposal, to buy as much as $700 billion in toxic securities as long as the program meets certain criteria of transparency and accountability."

I'm not sure that's true -- even though Sen. John McCain said last night he would likely vote for the bailout, I haven't heard him support the Paulson plan. He has given himself wiggle room to oppose a bailout deal built on the Paulson plan, and instead side with House Republicans in opposing the bailout.  This would allow him to campaign as the anti-bailout candidate in the final weeks of the campaign, a potentially potent appeal to ticked-off middle class voters.  Not wanting to be alone in his support of the bailout -- that is, not wanting to be the pro-bailout candidate -- Sen. Barack Obama has also hedged.

Last night was just more hedging. More dancing. Profiles in courage this was not.

I fully understand that both candidates have laid out various conditions and principles they believe are necessary in order for the Paulson the plan to be acceptable (protection for taxpayers, limts on CEO pay, oversight). For lack of a better word, I'll call these concerns "lipstick."

But what about the pig? The pig is the Paulson plan: $700 billion in taxpayer money for government purchases of distressed assets, a messy, historic, controversial, and risky use of government money. There is no question it is a big, fat, ugly pig in the eyes of many voters.

Are these guys for it or against it? And do they think it will work? And what is so special about $700 billion? Why not $525 billion? Why not $900 billion? Here's the debate transcript -- by all means, read it and let me know your thoughts.

Prior to the debate, Calculated Risk laid out its hopes for the bailout discussion, writing:

I'd like to see both Senators McCain and Obama explain the economic problem, why they see a need for the government to be involved (or not), what the purpose of the plan should be, and specifics on the plan they would propose or support.

I didn't hear either candidate address any of those questions.

As of Saturday afternoon, there is no indication the White House and the Democratic leadership are moving away from the core of the Paulson plan. This is from The New York Times' report Saturday afternoon indicating progress is being made in congressional negotiations:

Officials said the core of the proposal, put forward a week ago by Treasury Secretary Henry Paulson, remained intact: The government would purchase up to $700 billion in troubled assets from financial firms as a way to free their balance sheets of bad debts and to help restore a healthy flow of credit through the economy.

--Peter Viles

Your thoughts? Comments? E-mail story tips to Peter Viles

Photo Credit: Getty Images

Comments

[eternal summer]

this should make us feel a bit better:

http://www.youtube.com/watch?v=mbD62gNi9WE

[Giacomo]

"Profiles in courage this was not."

Maybe dial down the outrage at the candidates just a bit.

If McCain were still considering opposing the bailout in favor of an alternate plan, there could be sound tactical reasons not to show his hand right now. Maybe neither one of them wants to color the debate -- still ongoing -- by openly taking a stand. Or ...maybe neither campaign thought it was a good idea to go for a "knockout punch" this early --election day is still a ways off.

Just because they didn't want to publicly announce their positions precisely on the occasion of this debate, that doesn't make them cowards. Maybe it just means they're being politically smart, and keeping their eyes on the prize.

[E]

That certainly was a pathetic debate last night.

But then again...regardless of which side of the political fence you are on...would you really want to be the one to tell the American public in advance that they are screwed and there is nothing that can be done about it.

They'll print their way out of this.

A devalued dollar doesn't really hurt the people who are worth 8, 9 and 10 figures. It just allows them *even* greater control over the masses.

[TakeFive]

Pete V. wrote:

" It's the Paulson plan, stupid. It's a pig."

Yup, just more business as ususal:
--------
Dems Want to Reward Scandal-Tarnished "Community Organizing" Group in Economic Rescue Bill

House GOP Fights to Remove ACORN Slush Fund from Economic Rescue Bill; Poison-Pill Proposal Would Ask Taxpayers to Bankroll Group Accused of Voter Fraud Nationwide

http://republicanleader.house.gov/News/Document
Single.aspx?DocumentID=103884
------

Just say no.

[JudiNV]

How can the candidates take a stand on something in flux? The bailout bill is still formulating.

[john Loeffler]

After Bush and his CROONIE Paulsen bailout their buddies on wall street and leave office, How much "PAYBACK MONEY " will they get??? What a SCAM!!!!!!

[Valley Observer]

Why would the voters (that's us) not like this? We are responsible, so we have to pay for it. Yes, all of us, not just the individuals who offered or accepted loans that couldn't be afforded. We voted in the anti-regulation folks, who let the casino happen, so for a decade or so the economy has been run by teenage boys. What should be expected when teenage boys are given lots of money and authority over the financial system? To look after themselves, of course, and have a party. One does not expect them to give the system careful management and maintenance because the entire country depends on it. Even those of us who thought deregulation was stupid share some blame because we weren't able to convince the others that voting for deregulators (Republicans for the most part) was not in their true best interest. Republicans have virtues, but their tendency to let the market do everything including things it doesn't do well or at all, is stupid. Free markets are great at matching up suppliers and consumers. For example, Iraq and Iran acquired the raw materials to make poison gas to use against each other in the free market, for the lowest price. Unfortunately, the market has only profit as the mechanism to determine whether something is worth doing in the first place, and as we have seen, that overlooks a lot of considerations -- poison gas isn't a good idea; a total economic meltdown isn't a good idea. So when the Wall St geniuses came up with the flawed risk models that made the current situation seem incredibly profitable rather than the total disaster it is (well, it was personally profitable for them, which is probably all they really cared about), there was nothing to stop them from ruining the entire country. And we let them do it. We even encouraged them to do it because we were thinking about ourselves, which is market thinking rather than system thinking -- if I take this HELOC, I can buy a BMW! Back in the Depression, Will Rogers said "We are the first nation in the history of the world to go to the poor house in an automobile." Still true.

[Valley Observer]

"Two cents: It's the Paulson plan, stupid. It's a pig. Don't tell me about the lipstick. Tell me whether this is your pig or not."

BTW, Peter, how the hell should I know? I'm not an expert on credit default swaps and that sort of stuff, and don't know the specific issues that confront all the players. What exactly does Fannie's or Wachovia's portfolio look like? Who purchased all the securities that have been derived from the mortgages, tranche by tranche? Ditto for credit cards, car loans, and on and on. Are you seriously expecting the blog readership to come up with a plan, or just vent?

As for Obama and McCain, they aren't on the relevant committtees, and the next president won't take office until January. One of them will have to deal with the situation as it is then, not now. Meanwhile, I'm happy if they repeat the general principles they support-- that tells me which way they would lean, which sectors of society they would tend to favor. There's no way they can get very far into the future details.

[eternal summer]

Peter/Anyone,

How do we find out what our reps voted for? We know that some reps (see my first post) are bringing our outrage to the floor, but what are the California/Los Angeles reps doing? How do we find out?

Thanks!!!

[Alice]

How is it that none of the candidates spoke about the stimulus package of 56 billion which included 6.6 billion for an additional 7 weeks of unemployment benefits extension and passed the House but was defeated yesterday in the Senate?

How ironic...the democrats asked for 7 louzy weeks of unemployment benefit extension - enough to keep people happy until election day and cut their benefits off right before the holidays!

Of course, Obama needed the "talking points" between now and election day. He would have gone around bragging that he and his party were instrumental in passing 7 additional weeks of unemployment benefits! WOW! Now, that the Senate Republicans killed the bill he is going to go around saying, "you see, the Republicans do not care about Main Street" - like he cares more by pushing 7 weeks of benefits - just so he can keep everybody happy until Election Day! What a hypocrite - he can care less what happens to unemployed Americans after the 7 weeks and once the election is over - he does not care id you have nothing to put on the table on Christmas Day!

At the same time the idiots in Congress are negotiating a 700 billion bailout for Wall Street! Where was Mr. Obama on this last night? How is it that he is not blasting his own party for having the audacity to ask for only 7 weeks of additional unemployment benefits - in essence cutting people from unemployment just aftet hte election and just befor the holidays?! And why is it that he was not able to reach across the isle as he brags that he can do to make sure the stimulus package covered the millions of unemployed or at least make sure that even the 7 weeks passed in the Senata?!

Clinton and McCain are both right - Obama talks just for the shake of hearing himself talk. He has apparently done nothing to make sure that the stimulus package and the extension of unemployment benefits passed. All he cares is Wall Street - that is where his stocks are - DO NOT LET HIM FOOL YOU!!

Shame on the democrats for nickeling and diming when it comes to unempolyed Americans and shame on the Republican Administration and 8 Senate Republicans who blocked the bill altogether yesterday.

[amir]

Some kind of bailout will be passed. This is not a question of justice. The system is about to fail. We had one great depression, no need for another.

The worst part about it is that the bailout won't help. We are knee deep in debt, trillions of it: housing, car loans, credit cards, overextended banks. My hope it that some banks will hold and people won't panic, but the pain will remain for years.

I predicted at least 50% drop in LA prices from the top. I think I was very optimistic. It's 50% if we're lucky.

The seven good years are over, now start the seven bad years.

[NO MORE LAWYERS]

At least McCain said he'd vote for it

Obama as usual took no stand, and did his lawyer wordplay to dance around an answer.

Vote McCain - he's not a lawyer. America needs less lawyers in power. Vote Clinton 2012. It does take a Clinton to fix the economy.

[sfvrealestate]

So, Peter, what would your plan (assuming you think one is needed) look like?

[Patmac]

Last night, I was surprised to see McCain cowering. He was utterly unable to look Obama in the eye. Oddly, he somehow managed to look both angry and ashamed. (No wonder he doesn’t want to go face to face with with an enemy. They would walk all over him, behaving as he does like a scared and embittered child.) Only one person displayed Presidential Dignity and Authority: Obama.

[Tired of the LATIMES]

I thought the debate showed McCain had a lot more to offer as POUS than Obama.
\
Having said that it is becoming more and more obvious this paper continues to be slanted in its coverage, very similiar to CNN, Matthews, all of those other knuckle head media wannabes.

You lose yet another subscriber. Keep it up!!

[buz]

Agree that the debaters failed to explain their position on the bailout. Hopefully they will in round two or three.

[Tasrill]

Wall Street and the credit giants wanted less regulation. So they got less regulation. We have been in the most free market for such things for years now. It is just what they wanted and what pro free market people want. From the money flowing we had a huge boom in the housing market and lots of credit flowing.

And now what do we have? The people who pushed for the free market the most begging and demanding the government step in and help them out. I for one say that it doesn't work that way. The government didn't get involved when they made millions and billions and they won't get involved when it is being lost. That is how a free market works.

Keep the government's hands off our money weather it is good times or bad. The market doesn't balances itself when the government bails someone out or props up a failing company. Free market means you have ups and you have downs. And if you believe in market forces then an outside force will only have negative effects.

[LA-renter]

sfvrealestate: "So, Peter, what would your plan (assuming you think one is needed) look like?"

Yeah, what would Peter do?

[eternal summer]

hi peter,

here is the letter i just received from Feinstein regarding the bailout-feel free to edit the post-it's long!

Dear Mrs. Summer:

Thank you for your letter expressing concern about Congress' consideration of a plan to meet our Nation's credit crisis with financial help from the Federal Government. This is a difficult situation for which there are no perfect solutions, and I would like to share my thoughts and concerns about this issue with you.

On September 19, 2008, Secretary of the Treasury Henry M. Paulson, Jr. announced a legislative proposal to use $700 billion to purchase illiquid mortgage-related assets from ailing financial institutions. Secretary Paulson's three-page proposal was a non-starter, and without critical changes it has no chance of approval from Congress.

This proposal would have given a blank check to an economic czar who would have been empowered to spend it without administrative oversight, legal requirements, or legislative review. Decisions made by the Treasury Secretary would be non-reviewable by any court, agency, or Congress. The proposal also lacked a requirement for regular reports to Congress on the status of the program. This was simply untenable.

Since this announcement, my offices have received thousands of comments from Californians like you concerned about how this action will affect them. Yet, I believe prudent action must be taken. The bill should include the following principles: a phase-in of funding; oversight, accountability and transparency; a mechanism allowing the Secretary of the Treasury to modify mortgages to prevent additional foreclosures; and a precise cap on executive compensation.

The current credit crisis affects all Americans. If action is not taken to stem the crisis, Americans risk losing their homes, jobs, personal savings, life insurance and more. Banks will cease to lend to businesses and homeowners, and credit will be increasingly difficult to come by for average Americans. I strongly believe that the consequences of failing to act now would be greater than not acting at all.

Attached please find a statement I recently made on the floor of the Senate expressing my feelings on this issue. Please know that I will keep your thoughts in mind as this situation unfolds.

Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.

U.S. Senator Dianne Feinstein

Floor Statement on the Economic

Rescue Proposal

September 26, 2008

"Mr. President, to date I have received from Californians more than 50,000 calls and letters, the great bulk of them in opposition to any form of meeting this crisis with financial help from the Federal Government. I wanted to come to the floor to very simply state how I see this and some of the principles that I hope will be forthcoming in this draft. Before I do so, I wish to pay particular commendation to Senator Dodd, Senator Schumer, Senator Bennett, and others who have been working so hard on this issue. I have tried to keep in touch -- I am not a negotiator; I am not on the committee -- but California is the biggest State, the largest economic engine, and people are really concerned.

We face the most significant economic crisis in 75 years right now. Swift and comprehensive action is crucial to the overall health of our economy. None of us wants to be in this position, and there are no good options here. Nobody likes the idea of spending massive sums of Government money to rescue major corporations from their bad financial decisions. But no one also should be fooled into thinking this problem only belongs to the banks and that it is a good idea to let them fail. The pain felt by Wall Street one day is felt there, and then 2,3,4 weeks down the pike, it is felt on Main Street.

The turbulence in our financial sector has already resulted in thousands of layoffs in the banking and finance sectors, and that number will skyrocket if there is a full collapse. The shock waves of failure will extend far beyond the banking and finance sectors. A shrinking pool of credit would affect the home loans, credit card limits, auto loans, and insurance policies of average Americans. I am receiving calls from people who tell me they want to buy a house, but they can't get the credit or the mortgage to do so. Why? Because that market of credit is drying up more rapidly one day after the other. It would have a major impact on State and local governments which would lose tens of millions of dollars, if not hundreds of millions of dollars.

Hurricane Ike shut down refineries on the gulf coast 2 weeks ago, and now, today, people are waiting hours in lines for gasoline in the South. Similarly, the collapse of the financial sector would have severe consequences for Americans all across the economic spectrum: for the person who owns the grocery store, the laundry, the bank, the insurance company. Then, if the worst happens, layoffs. And even more than that, somebody shows up for work and finds their business has closed because the owner of that business can't get credit to buy the goods he hopes to sell that week or that month. Wages and employment rates have already fallen even as the cost of basic necessities has skyrocketed. Our Nation is facing the highest unemployment rate in 5 years, at 6.1 percent. Over 605,000 jobs have been lost nationwide this year. My own State of California, a state of 38 million people, has the third highest unemployment rate in the Nation at 7.7 percent. That is 1.4 million people out of work today. One and a half million people -- that is bigger than some States. We have 1.5 million people out of work, and one-half million have had their unemployment insurance expire and have nothing today.

Congress is faced with a situation where we have to act and we have to do two things. We have to provide some reform in the system of regulation and oversight that is supposed to protect our economy. We also have to find a permanent and effective solution to keep liquidity and credit functioning so that markets can recover and make profit. The situation, I believe, is grave, and timely, prudent action is needed.

Just last night, the sixth largest bank in America -- Washington Mutual-- was seized by government regulators and most of its assets will be sold to JPMorgan Chase. This follows on the heels of bankruptcies and takeovers of Bear Stearns, Lehman Brothers, AIG, Fannie Mae, and Freddie Mac. If nothing is done, the crisis will continue to spread and one by one the dominos will fall.

Now, this isn't just about Wall Street. Because we are this credit society, the financial troubles facing major economic institutions will ricochet throughout this Nation and affect everyone. So I believe the need for action is clear. But that doesn't mean Congress should simply be a rubberstamp for an unprecedented and unbridled program.

My constituents by the thousands have made their views clear. I believe they are responding to the original 3-page proposal by the Secretary of the Treasury. It is clear by now that that 3-page proposal is a nonstarter. It is dead on arrival and that is good. Secretary Paulson's proposal asked Congress to write a $700 billion check to an economic czar who would have been empowered to spend it without any administrative oversight, legal requirements, or legislative review. Decisions made by the Treasury Secretary would be nonreviewable by any court or agency, and the fate of our entire economy would be committed to the sole discretion of one man alone -- the man we know today, and the man whom we don't know after January.

Additionally, the lack of governance or oversight in this plan was matched by the lack of a requirement for regular reports to Congress. This proposal stipulated that the economic czar, newly created, would report to Congress after the first three months with reports once every 6 months after that. This was untenable. Six months is an eternity when you are spending billions a week. The Treasury Secretary asked Congress to approve this massive program without delay or interference. It is hard to think of any other time in our history when Congress has been asked for so much money and so much power to be concentrated in the hands of one person. It is a nonstarter.

Yesterday, shortly before we met for the Democratic Policy Committee lunch, we were told there had been a bipartisan agreement on principles of a possible solution, and many of us rejoiced. We know that our Members, both Republican and Democrat, have been working hard to try to produce something that was positive. Then, all of a sudden, it changed. One Presidential candidate parachuted into town which proved to be enormously destructive to the process. Now, negotiations are back on the table, and as I say, we have just received a draft bill of certain principles.

I would like to outline quickly those principles that I think are important. First is a phase-in. No one wants to put $700 billion immediately at the discretion of one person or even a group of a very few people, no matter how bright, how skilled, how informed they might be on banking or finance principles. The funding should come in phases and Congress should have the opportunity to make its voice heard if the program isn't working or needs to be adjusted.

The second point: Oversight, accountability, and governance. The Treasury Secretary should not and must not have unbridled authority to determine winners and losers, essentially choosing which struggling financial institution will survive and which will not. The original plan placed all authority in the hands of this one man, and this is why I say it was DOA -- dead on arrival -- at the Congress. We must assure that controls are in place to watch taxpayer dollars and make sure they are well-spent fixing the problem, and that oversight by a governance committee and the Banking Committees are strong, and that they give the best opportunity for the American people to recover their investment and, yes, even eventually make a profit from that investment. That can be done and it has been done in the past.

I believe that frequent reporting to Congress is critical. Transparency, sunlight on this, is critical. So Congress should receive regular, timely briefings, perhaps weekly for the first quarter, on a program of this magnitude. A proposal should mandate frequent reporting and the public should be ensured of transparency to the maximum extent possible.

I also believe that within the first quarter -- and this, to me, is key -- a comprehensive legislative proposal for reform must be put forward. We must reform those speculative practices that impact price function of markets. We must deal with the unregulated practices that have furthered this crisis. Look. I represent a State that was cost $40 billion in the Enron episode during 1999 and 2000 by speculation, by manipulation, and by fraud. There still is inadequate regulation of energy commodities sold on the futures market. And that is just one point in all of this. We must prevent these things from happening. The only way to do it is to improve the transparency of all markets. No hidden deals. Swaps, in my view, should be ended. The London loophole should be ended.

We have to outline rules for increasing regulation of the mortgage-backed securities market, along with comprehensive oversight of the mortgage industry and lending practices for both prime and subprime lending.

Senator Martinez of Florida and I had a part in the earlier housing bill, which included our legislation entitled the SAFE Mortgage Licensing Act. We found that the market was rife with fraud. We found there was one company that hired hairdressers and others who sold mortgages in their spare time. We found there were unscrupulous mortgage brokers out there unlicensed, preying upon people, walking off with tens of thousands of dollars of cash. This has to end. It has to be controlled. It has to be regulated.

So I believe the crisis of 2008 stems from the failure of Federal regulators to rein in this Wild West mentality of those Wall Street executives who led those firms and who thought that nothing was out of bounds. Every quick scheme was worth the time, and worth a try. Congress cannot ignore this as the root cause of the crisis. It was inherent in the subprime marketplace, and it has now spread to the prime mortgage marketplace.

It is also critical that accurate assessments of the value of these illiquid mortgage-related assets be performed to limit the taxpayers' exposure to risk and structure purchases to ensure the greatest possible return on investment.

Taxpayer money must be shielded at all costs from risk to the greatest extent possible.

Reciprocity is not a bad concept if you can carry it out. The Government must not simply act as a repository for risky investments that have gone bad. An economic rescue effort that serves taxpayers well must allow them to benefit from the potential profits of rescued entities. So a model -- and it may well be in these new principles -- must be developed to ensure the taxpayers are not only the first paid back but have an opportunity to share in future profits through warrants and/or stocks.

As to executive compensation limits, simply put, Californians are frosted by the absence of controls on executive compensation. Virtually all of the 50,000 phone calls and letters mentioned this one way or another. There must be limits. I am told that the reason the Treasury Secretary does not want limits on executive compensation is because he believes that an executive then will not bring his company in to partake in any program that is set up. Here is my response to that: We can put that executive on his boat, take that boat out in the ocean, and set it on fire. If that is how he feels, that is what should happen, or his company doesn't come in. But to say that the Federal Government is going to be responsible for tens of millions of dollars of executive salaries, golden parachutes, whether they are a matter of contract right or not, is not acceptable to the average person whose taxpayer dollars are used in this bailout. That is just fact.

The one proposal that was made by one of the Presidential candidates that I agree with is that there should be a limit of $400,000 on executive compensation. If they don't like it, too bad, don't participate in the program. As I have talked with people on Wall Street and otherwise, they don't believe it is true that an executive, if his pay is tailored down, will not bring a company in that needs help. I hope that is true. I believe there should be precise limits set on executive pay.

Finally, as to tangible benefits for Main Street in the form of mortgage relief, there have been more than 500,000 foreclosures in my home State of California so far this year. In the second quarter of this year, foreclosures were up 300 percent over the second quarter of 2007. More than 800,000 are predicted before this year is over.

I have a city in California where one out of every 25 homes is in foreclosure. This is new housing in subdivisions. As you look at it, you will see garage doors kicked in. You will see houses vandalized. You will see the grass and grounds dry. You will see the street sprinkled with "For Sale" signs, and nobody buys because the market has become so depressed.

This crisis has roots in the subprime housing boom that went bust, and it would be unconscionable for us to simply bailout Wall Street while leaving these homeowners to fend for themselves.

Everything I have been told, and I have talked to people in this business, here is what they tell me: It is more cost-effective to renegotiate a subprime loan and keep a family in a house than it is to foreclose and run the risks of what happens to that home on a depressed market as credit is drying up, as vandals loot it, as landscaping dries up, as more homes in the area become foreclosed upon; the way to go is to renegotiate these mortgages with the exiting homeowner wherever possible. I feel very strongly that should be the case.

I don't know what I or any of us will do if we authorize this kind of expenditure and we find down the pike in my State that the rest of the year, 800,000 to 1 million Americans are being thrown out of their homes despite this form of rescue effort. Think of what it means, Mr. President, in your State. You vote for this, any other Senator votes for it, and these foreclosures continue to take place and individual families continue to be thrown out of their homes. It is not a tenable situation.

I hope, if anybody is listening at all, that in the negotiating team, they will make a real effort to mandate in some way that subprime foreclosures be renegotiated, that families, wherever possible, who have an ability to pay, have that ability to pay met with a renegotiated loan. I have done this now in cases with families who were taken advantage of. We called the CEO of the bank, and the bank has seen that the loan was renegotiated, in one case in Los Angeles down to 2 percent. That is better than foreclosing and running the uncertainty of the sale of the asset in a very depressed housing market.

These are my thoughts. Again, it is easy to come to the floor and give your thoughts. It is much more difficult to sit at that negotiating table.

I once again thank those Senators on both sides of the aisle who really understand the nature of this crisis -- that it isn't only Wall Street, that it does involve Main Street, and if there is a serious crash, it will hurt tens of millions of Americans, many of them in irreparable ways. So we must do what we must do, and we must do it prudently and carefully.

I yield the floor. I suggest the absence of quorum."

Sincerely yours,

Dianne Feinstein
United States Senator

[wired]

Leaders Nancy Pelosi and Harry Reid had the power as leaders to do something about America’s national financial crisis over their last couple of years in Congress. Bush is responsible for signing bills into law, but Pelosi and Reid have the responsibility to set the country's legislative agenda and provide leadership to pass financial institution laws and banking regulations, but they both ignored the looming loan crisis until the very last minute. They failed our nation big time and should resign.

The senators and House leaders on the senate and house banking committee's should also resign because they failed to take action, when they were fully aware the country would eventually face a liquidity and banking crisis. They failed the nation along with the rest of the senate and house that relies on their banking committee to hold hearings, write banking laws and provide legislative oversight of our banking institutions.

The leadership in the White House - Bush, Senate - Harry Reid, House - Nancy Pelosi, and both Democrats and Republican's on the banking committees have failed to provide leadership and foresight to protect and regulate our nations financial system and institutions. Over the years Greenspan warned them that the increasing national debt was unsustainable that could lead to a national financial crisis if other countries lose confidence in our financial system and stop buying our national debt.

Congress just continues to overspend the nations money, give political favors to financial company's that give them political contributions, and add billions of dollars of earmarks for unneeded pork projects and possible fraud.

Did Congress and Bush really think they could run up the national debt forever and the rest of the world would continue to finance all of the nation's debt with a falling dollar? What about worthless American housing loan securities that they bought that are now becoming worthless? No! Now the world is slowly stopping to buy our debt and our nation may go bankrupt. Our only solution is to print more money to make up the difference, only leading to a lower dollar. This in turn may require the fed to increase interest rates to a premium to eventually attract more foreigners to buy more of our risky national debt due to a declining dollar at the expense of our own economy.

Bush, Pelosi and Reid had the legislative and executive power to prevent this nation’s financial crisis but they simply ignored it until the nations financial institutions practically crashed.

Now all American's will suffer, but they will now just continue to blame each other or the other political party, when they were all to blame.

Bush, Reid and Pelosi should all leave office because they over time allowed the nations financial crisis to evolve and continue to get worse until it practically crashed, all on their watch as national leaders. There is a reason that both Bush and Congress have low national approval ratings, it is because they as leaders they have failed to make American better over the years. If either Obama or McCain is elected both leaders in congress should step down so congress can start fresh with new House and Senate leadership so congress once again can gain the confidence and approval of the American public.

The "time of change is now" and we need national leaders to put the "country first" over party politics’ and corporate political donations influences that have led the country to the biggest country's financial crisis since the great depression.

Right now Obama and McCain should both be very involved with what congress is doing with the bailout because it is going to greatly impact their potential presidency in a few months and one of them will need to fix this country’s financial mess as president.

[smrr]

Peter. Definitely seeing you the most personally riled over this bailout then you've been during the entire blogistory here. Have not seen you outraged before. BTW have you noticed how they defend the bailout by saying retirement plans will be at risk, people wont be able to get loans for education, cars and homes...

They say that like it's a bad thing. Education should not require going into hock, nor should your car, and tougher loans will stop people from being debt-slaves to inflated housing prices, and the 401Ks - we'll just move your money out of stock funds and into cash funds as the market resets. It seems to me, that their intention is to try to artificially support inflated prices for all these things.

As Ron Paul and Schiff will say -- and they are alone on this it seems - Krugman & Roubini are pro-bailout so long as an equity stake is taken - we need price discovery / asset price correction. The bailout just delays this from happening and waters down the dollar. The DOW is as much a bubble as housing as is education -- and regular working folks shouldn't be dropping 40K on a four door sedan.

Instead, we'll get the bailout and its accompanying inflation and healthcare and food will go through the roof and our savings will be eaten away.

I've got EU ciitizenship and have been looking at Jobserve UK, I'm so disgusted. I don't know why I should be paying tens of thousands of dollars a year in taxes to prop up the price of other people's assets.t Good thing I'm a premier league fan.

[smrr]

Amir,
Does buying worthless assets stop the presses on a depression or recession? Seems to me prices need to correct no matter what you do. Ron Paul says - and I don't know if he's correct on this - that we tried the same strategy in the great depression and instead of having a tough 2 years, we had a tough decade. Why would asset price correction destroy us? It just means tougher medicine rather than slower medicine. These assets need to be written off, banks need to fail, so that the survivors can start to build back up from their true valuation. We can buy these worthess securities, but housing is going to continue to go down as will solvency of the owners of housing based derivatives. It will just happen slower. Until that debt is all written off, and banks start to recaptialize based on real investment, not government bailout crack cocaine, we aren't going to have a turnaround. Just thinking out loud - but am interested in your response.

[MyLessThanPrimeBeef]

I think if the bazooka didn't work, you can definitely forget about that surgical scalpel.

Right now is the time for real men and women to stand up and take charege, instead of passing the buck to the children. Remember the children. The children.

My fellow Spartans, this is our Thermopylae.

We have to be ready and willing to make the necessary sacrifice so the children can have their freedom...their financial freedom. We should stop further enslaving ourselves and our descendants, through the Treasury, to the rest of the world. The bailout is nothing but a disguised rearguard action to buy time for the beneficiaries to extricate their ensnared wealth so they can be re-deployed to the next ruling economies.

So, those of us still holding out, we few, we happy few, we band of brothers and sisters, for he or she who stands with me today, shall we be brothers and sisters. And ladies and gentelmen all over America now abed, shall think themselves accursed they are not with us, and hold their manhood and womanhood cheap whiles any speaks.

[David Martorano]

I just read that there may be a deal. I am strongly opposed to any deal or bailout for wall street. I would ask that there is a graphical presentation to the public explaining how this “crisis” will be averted by the monies requested, and why it’s necessary that all the monies be guaranteed up front.

Furthermore, I object to how this is being done on a weekend, in the middle of the night, it stinks of corruption.

Finally, I object to the concept of a salary cap of $2,000,000 for executives. It is offensive. Medicare caps my compensation at 120,000 and that’s for doing a great job (I don’t actually accept medicare, but I hope you see my point). What you are saying is that people with less education and who are destroying their companies are worth 20 times as much. How can you justify this?!? People who work at companies getting bailed out should get paid poorly, not well.

If there is one ounce of pork in this bill I will spend every penny we can (we have a lot of pennies) to make sure as many people as possible who got it in are not re-elected in November. Your jobs are on the line. Things I heard about today include ACORN

Has anyone considered inflation and how this will affect inflation? I haven’t heard anything about that, just a lot of talk about how ATM’s won’t work and there will be no money. How did you people spend the last year debating the crap you talked about and decide to take this up only after our poorly qualified president pointed out the problems?

Believe me, this bill can wait. The market may go down, but if you guys rush it through, you will be the ones working on Main St.

Sincerely,
David Martorano, MD

more at a http://www.psychgenius.com

[Steve]

Why do people waste their time watching this garbage, all this is more of the campaign. It is this simple, if you like the current status: a war going no where at $1M an hour, an economy that is the worse since the depression and CEOs walking with millions of stock holders money then vote for McCain. If you want something different, yet no guarantees, vote for Obama. Ask yourself can get any worse then with the Texas illiterate in office now. It is that simple