Bush gets his bailout -- what will history say?

So it looks like George W. Bush will get his bailout -- a bill allowing the Treasury Department to buy $700 billion in toxic debt from Wall Street in what could become the largest financial bailout in U.S. history.

Poised to come to the House floor on Monday, the package hammered out by congressional negotiators  late last night is a lot heftier than the three-page power grab that the administration sent to the Hill more than a week ago. As Democrats insisted, the bill, now running at more than 100 pages, includes limits on compensation for executives if their companies seek the help, oversight on the people running the deal, a more aggressive government plan to help individual homeowners from losing their homes and a stake for taxpayers in the profits if the bad mortgages turn around. As Republicans insisted, it requires financial institutions to help pay for bailing out less solvent companies. Of course everything could still collapse again, but insiders were hopeful. "I think we're there," said Treasury Secretary Henry Paulson at a post-midnight press conference flanked by House Speaker Nancy Pelosi (D-San Francisco), Senate Majority Leader Harry Reid (D-Nev.) and other congressional leaders, including Roy Blunt of Missouri, representing the House Republicans who torpedoed the last "looks like we have a deal" package.

If this deal is sealed, what will history say about a president who presided over first one of the largest increases in federal spending and then one of the largest rescues for those who benefited from the spending?

Bush's reputation as a free spender is cemented. As Veronique de Rugy of the conservative American Enterprise Institute calculates, Bush has already authorized more in discretionary spending than any recent president since the free-spending, Great Society's Lyndon Johnson.

As for the financial crisis, widely blamed on bank deregulation approved by both parties and lax supervision during the Bush administration, Ken Duberstein, former White House chief of staff under President Reagan, told CNBC's Ben Feller that the Wall Street mess could come to rival the 9/11 terror attacks as one of the key definers of Bush's presidency.

"This has the potential to move up there in the first tier," said Duberstein, now a Republican strategist. "9/11 is in there. Katrina is in there. The Iraq war. And the financial crisis."

-- Johanna Neuman and Richard Simon

Photo: Lauren Victoria Burke/Associated Press

Comments

[DaveT]

Is it just me, or am I getting tired of the line, "Wall Street affects Main Street." ?
Slogans. Oy. As for George Bush being unlucky or an idiot. Idiot is the operative word. Remember, his dad sent him to Yale. Harvard Business School. Well, every company he's presided over failed. It's fitting that he would also fail as a politician. And who's to blame? The American Public. We wanted a President that we could have a beer with. The guy next door. Well, that neighbor usually takes your pruning shears and never returns it, and blares his stereo till 4 am in the morning. And this kind of thinking still goes on. The American voter feels more comfortable with a guy/woman who is just a dumb as we are. Look, I'm no genius either, but I do want someone in the Oval Office who has an I.Q. higher than mine. Or at least higher than paramecium. I don't want to drink a beer with the President. I want him to lead. I want him surround himself with the best and smartest people available. Not cronies like Cheney, Rumsfeld and Harriet Meyers. The list goes on and on and on.

[Michael C. Teniente]

History will record the truth, while present day media continually reports partisan news.

http://www.tenientemikeopinions.org/

http://www.youtube.com/watch?v=H5tZc8oH-o

I watched the youtube video and followed their links to get this information.

If people are going to be honest then you have to acknowledge these facts. What it breaks down to is "class warfare". What is class warfare? That's when the Democrats use the ignorance of the poor to blame the Republicans for everything without providing the facts. In other words: They rely on the poor's lack of an education.

Do your research!

SIMPLY PUT…THE DEMOCRATS ARE RESPONSIBLE FOR THE ECONOMIC CRISIS

___________________________________

THE ROOTS OF THIS ECONOMIC CRISIS

The Community Reinvestment Act (CRA)

The Community Reinvestment Act (CRA) was established by Congress in 1977 (President Jimmy Carter). The Act requires that deposit-taking financial institutions offer equal access to lending, investment and services to all those in an institution's geographic assessment area-at least three to five miles from each branch. In the case of large banks with many branches, the geographic area may encompass an entire county or even a state.

Before the CRA, many bankers excluded low-income neighborhoods and people of color from their lending products, investments, and financial services - a practice known as "redlining". Community activists coined the term when they discovered that the failure of banks to make loans in some low-income neighborhoods was so geographically distinct, that it was easy to draw red lines on maps to delineate the practices.

In the 1970s, activists in Chicago and across the country brought strong pressure on banks to lend equitably to all those in their communities. Since its passage, the CRA has been used across the United States to win tens of billions of dollars in new lending, investments, and services for communities. The National Community Reinvestment Coalition tracks more than $1 trillion dollars in community reinvestment pledges nationally. These pledges are explicit investments in equitable development goals, and finance many tools in this toolkit.

Original Act

The CRA was passed by the 95th United States Congress and signed into law by President Jimmy Carter in 1977 as a result of national grassroots pressure for affordable housing, and despite considerable opposition from the mainstream banking community. Only one banker, Ron Grzywinski from ShoreBank in Chicago, testified in favor of the act. The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the federal government considers an institution's application for deposit facilities, including mergers and acquisitions after the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 repealed restrictions on interstate banking. However, until 1995 the Act was laxly enforced and banks only were required to advertise in local minority newspapers or sit on the boards of local community groups. The CRA is enforced by the financial regulators (Federal Deposit Insurance Corporation ("FDIC"), Office of the Comptroller of the Currency ("OCC"), Office of Thrift Supervision ("OTS"), and the Federal Reserve System).

The bill encouraged mortgage lending through two government sponsored enterprises ("GSEs"). The Federal National Mortgage Association, commonly known as Fannie Mae, enables mortgage companies, savings and loans, commercial banks, credit unions, and state and local housing finance agencies to lend to home buyers. The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, buys mortgages on the secondary market and sell them as mortgage-backed securities on the open market. It also charged the Federal Reserve System to implement the CRA through ensuring banks and savings and loans met their CRA obligations.

Clinton Administration Changes of 1995

In early 1993 President Bill Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities. The new rules January 31, 1995 and featured: requiring strictly numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to target to groups to collect a fee from the banks.

The new rules, during a time when many banks were merging and needed to pass the CRA review process to do so, substantially increased the number and aggregate amount of loans to low- and moderate-income borrowers for home loans, some of which were ‘risky mortgages.’ Banks set up CRA departments, a CRA consultant industry was created and new financial-services firms helped banks invest in packaged portfolios of CRA loans to ensure compliance. Established and new community groups began marketing such mortgages. The Senate Banking Committee estimated that as of 2000, as a result of CRA, such groups had received $9.5 billion in services and salaries. As of that time such groups also had received tens of billions of dollars in multi-year commitments from banks, including ACORN Housing $760 million; Boston-based Neighborhood Assistance Corporation of America $3 billion; a New Jersey Citizen Action-led coalition $13 billion; the Massachusetts Affordable Housing Alliance $220 million. The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent.

Related rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market. Due to massive financial losses, on September 7, 2008 the Federal Housing Finance Agency (FHFA) put Fannie Mae and Freddie Mac under the conservatorship of the FHFA.

Bush Administration Changes of 2005

In 2002 there was an interagency review of the effectiveness of the 1995 regulatory changes to the Community Reinvestment Act and new proposals were considered. In 2003, the Bush Administration recommended that a new Department of the Treasury agency should supervise the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac. Congressional support was approximately split along Party lines and the proposal eventually failed.

The new CRA regulations proposed in early 2005 were put into effect in July and September of 2005. They included new definitions for "small" and "intermediate small" banks which were subject to less restrictions than formally. The regulations were opposed by a contingent of Democrats.

The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities
Howard Husock

The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being. (That's Class Warfare)

BOTTOM LINE?

It's the Democrats who started this mess and now they're blaming the Republicans? Is that the change that Mr. Obama is preaching!

THE DEMOCRATS ARE LYING!

mike t.

[DaveT]

Thank you to the writer who pointed out Bush's insistence of privatizing Social Security. I've been working hard since I was 16. I'm now 50. With my 401K in jeopardy with this Wall Street debacle, all I need is another Wall Street Meltdown of Social Security. Bush relies on the private sector to solve the world's problems. Well, the geniuses on Wall Street couldn't seem to fix the leak in the dam. Caused by themselves by the way. With greed comes blindness. Or stupidity. All the MBAs in the country seem to have done nothing to mitigate the problem.

[John]

Have you seen the YouTube video (which keeps getting pulled down) with Oprah's colorist suggesting that Obama would look more experienced at the debates with "just a bit of gray around the edges?"

Look at photos of Obama during the past few weeks, and judge for yourself.

And let's make sure that this headline is corrected:

Bush to Bail out Chris Dodd's failed policies.

Congress has always controlled the checkbook, not the President.

[Rebecca C.]

Personally, this whole thing sickens me. In the end, it is the hardworking, ever struggling, everyday American taxpayer that will suffer because of this mess! $700 billion taxpayer dollars going to bail out these "big wigs" sitting high on the hog with no worries to speak of. Top execs of these failed companies making millions all at the cost of those of us who actually have to work for a living in the hopes of making ends meet each month just to pay the ridiculous taxes each year, for what? So those execs can sit in their cozy multi-million dollar homes while we "little people" lose our homes? I am disgusted by the turn of events with our economy-our country! Personally, I think that those execs who think they are above reproach should put in their not-so-hard earned money to bail out their own institutions. Why should we have to do it? Two years ago, we had to pay $50K in taxes - it was a nightmare and we feared losing our home and everything we owned because of it. And just to think where those types of monies will be going now. $50K may not seem like a lot to some, but to us, it was everything!! It just seems to me that the rich keep getting richer and the poor keep getting poorer. This whole "bail out" thing is a travesty and it is sad to think that those of us who work hard for what we have are ultimately the ones paying the price, no matter what the decision is!!! I wonder what the government would think if all of the hardworking blue collar everyday Americans just said "enough is enough" and decided not to pay their taxes this year! Just a thought! Where does it end and when do we all stand up and say, "We've had it!" The greed has got to stop!!

[Leonard J. Douglas]

Looks to me as if Uncle Sam is just bailing out good old American greed. with the Tax Payer's Money. When will it end? Guess the answer to that is when we go bust.

[i.m.small]

THE GREAT BAILOUT

Obama is--we know--a reader,
And also--it may be--a leader;
But it is very hard to lead
A nation so consumed with greed.

It turns the Christ upon his head:
Meekness and poverty stay dead
Within an economic system
Bailing out theft, but never wisdom.

The "least of these" my brother is,
But no one wants to hear of this,
"Spreading the wealth" the Christian way
Becomes a sin; the poor the prey.

It was the age--O don´t you doubt--
To be known as the Great Bail-Out,
As Wealth bailed from the common good
But left the poor to drink the flood.

.