Paulson: Treasury will do what it can while we wait for Congress

posted at 5:36 pm on September 29, 2008 by Allahpundit

Try to wrap your mind around the fact that both sides of Congress acknowledge that this is a dire crisis and that something must be done — and yet the next vote won’t come until Thursday at the earliest. That’s a “sure loser,” for reasons InstaGlenn astutely articulates. To quote Michael Scherer, “This is no longer just a credit crisis. It is a credibility crisis.”

And what happens when they do reconvene? Like McArdle says, it’s not that they need 12 more votes. It’s that they need 12 more votes for a (momentarily) unpopular bill from House members facing reelection in competitive districts. How do you get those? By letting the market tank until your constituents beg for relief, I guess.

Exit quotation from Barnett: “We’re in uncharted territory here, and I don’t want to tacitly posit an economic competence that I lack. However, the many people I’ve spoken with who do understand economics and our financial system are gravely concerned – all of them. The only place you can find people who aren’t gravely concerned are on Capitol Hill and in the media, the two places in our society where people are paid to offer opinions on things they know nothing about. Suffice to say that if our banking and financial system doesn’t recover its footing, the overwhelming consensus is that we’re headed for very rough times.”

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The comment on the front page about the market losing $1.1 trillion being $400 billion more than the bailout… one minor little difference. It was paid for by all the taxpayers. The group paying was much, much smaller.

CC

CapedConservative on September 29, 2008 at 5:39 PM

Comrade Paulson has been wrong on everything so far.

lodge on September 29, 2008 at 5:40 PM

I think I need a break from all this before I hurt someone,gawd people make me nuts.

tee866 on September 29, 2008 at 5:41 PM

This is not good. The lack of concensus is going to really drive us into a depression if we are not careful.

Mr. Joe on September 29, 2008 at 5:41 PM

Dollar is stronger today.

FED could release new Dollars into the system as Loans for short term liquidity without destroying the worth of the dollar.

They don’t need Congress to do this.

Romeo13 on September 29, 2008 at 5:42 PM

It’s a sad sad day when I agree with kos on anything but look what he wrote for the love of god.

So the stock market
now decides policy for you? Wow. I’ve been fighting to reduce the influence of corporations on our government, but you’ve been looking for direct Corporate control of it.

Interesting…

by kos on Mon Sep 29, 2008 at 01:46:30 PM PDT

I think I’m gonna cry.

tee866 on September 29, 2008 at 5:43 PM

No offense, but:
Why don’t we just keep working and let the Jewish faithful catch up when they return from their New Year celebration.

right2bright on September 29, 2008 at 5:44 PM

CapedConservative on September 29, 2008 at 5:39 PM

You’re exactly right. The only people who suffered an investment loss were people with money in the market. Fortunately, those are just rich fatcats, as regular Americans do not invest their retirement savings in the stock market.

I’ve been seething about this all afternoon and getting no work done. The House GOP screwed the pooch here, big time. If you want to propose a market-based solution, then do so. (The House actually did propose a market-based improvement, namely, the investment plan, which MADE IT INTO THE BILL.) But don’t just say it’s a crisis and then not vote for the stupid bill, and then blame Nancy Pelosi being mean to you as the reason!

I’m officially out of energy to bitch about this any more, something I’m sure many here will be grateful for. So let me offer a constructive brainstorming question for you all. What, specifically, should McCain do to save his ass?

Outlander on September 29, 2008 at 5:45 PM

Romeo:

One of the reason the dollar went up earlier was that the euro tanked because of credit sector problems of their own.

I heard that there might be trouble getting payroll checks by next week.

I hope that is nonsense, because I hate to think what this country would turn into if people could not get paid.

Terrye on September 29, 2008 at 5:45 PM

Rich Lowry Just said The folks that didn’t vote for this bill, Lack Courage.
Rich is a putz.

Amadeus on September 29, 2008 at 5:45 PM

right2bright:

I kind of had the same thought myself.

Terrye on September 29, 2008 at 5:46 PM

I want a plan that works. I am not happy about the U.S. government incurring potentially hundreds of billions of dollars in debt. But the way this is going, an economic meltdown is becoming a self fulfilling prophesy. I hope I am wrong. But this does not look good.

Mr. Joe on September 29, 2008 at 5:46 PM

Why don’t we just keep working and let the Jewish faithful catch up when they return from their New Year celebration.

Jewish soldiers keep working on their holidays during a time of war. Isn’t this enough of an emergency to override their traditions? It is for Christians–they kept going on Sunday.

jgapinoy on September 29, 2008 at 5:47 PM

Why don’t we just keep working and let the Jewish faithful catch up when they return from their New Year celebration.

right2bright on September 29, 2008 at 5:44 PM

Because Democrats are racist.

Think about it.

Sir Andrew on September 29, 2008 at 5:47 PM

Look at the vultures taking photographs — “some men just want to watch the world burn” (Alfred, The Dark Knight).

Richard Romano on September 29, 2008 at 5:48 PM

I know Paulson is disappointed. His Wall Street masters expected more of him when they told Bush to let him run the treasury. He was oh so close to establishing a corporate welfare system that would guarantee Wall Street could operate as recklessly as they like and not worry about ramifications. ACORN would be happy, JP Morgan/Chase would be happy. Yeah, Paulson would have had everything tidied up really nice for his phone-a-friend Obama; when he takes over.

If I were a socialist on my knees in front of Nancy I’d be disappointed too.

grdred944 on September 29, 2008 at 5:49 PM

STFU PAULSON

Sir Andrew on September 29, 2008 at 5:49 PM

It’s a sad sad day when I agree with kos on anything but look what he wrote for the love of god.

I am also agreeing with Michael Moore of all people over this bill. This can’t be good.

Ripclawe on September 29, 2008 at 5:49 PM

This is a huge failure of leadership by the House GOP. They have screwed the pooch on this big time. This issue has gotten me so pissed I haven’t done any work in the past 2.5 hours – so I’m done ranting and raving. (Many of you will be overjoyed by that).

What, specifically, can McCain do at this point to try and save his own ass?

Outlander on September 29, 2008 at 5:49 PM

Well if there is something Paulson, a.k.a, Lurch, could do then why not do what you can first thing Monday morning? Hello! If there was something he could have done then what in the name of all that is holy did he not DO IT! Putz!

freeus on September 29, 2008 at 5:49 PM

You know what though, rough times really can bring people together. Like…..WWII.

:)

Sapwolf on September 29, 2008 at 5:50 PM

It’s a sad sad day when I agree with kos on anything

Code Pink was demonstrating against the bailout in Washington today (picture on front page at washingtonpost.com).

dtestard on September 29, 2008 at 5:50 PM

The volume in today’s trading was disproportionally low. The people giving the most EXCITABLE advice are the same ones who have the most to lose.

As a commenter on Ace’s site said, “If you have to bail out the market to keep is at its current level, it was on the wrong level to begin with.”

It’s a burp. It will pass.

natesnake on September 29, 2008 at 5:50 PM

Why don’t we just keep working and let the Jewish faithful catch up when they return from their New Year celebration.

Jewish soldiers keep working on their holidays during a time of war. Isn’t this enough of an emergency to override their traditions? It is for Christians–they kept going on Sunday.

jgapinoy on September 29, 2008 at 5:47 PM

Pssst. I heard Eric Cantor is Jewish.

/sarc

For a minute I thought I had stumbled into a DNC talking points thread.

Really, can we lay off the Jewish stuff, please?

Y-not on September 29, 2008 at 5:51 PM

Janine Pero on the legalities. F for Bush in not seeing these. Where is Mulkasey? Prosecuting folks for doing what every President has done! The Gods Must Be Crazy!

freeus on September 29, 2008 at 5:52 PM

Anyone here think they will loan it back out after we give it to them???????

Starlink on September 29, 2008 at 5:48 PM

Of course they will. Everyone wants their piece of the pie and you know damn well those holdout Dems are not changing their vote until they know community organizers back home are going to be able to toss some of that cash around like it is candy.

grdred944 on September 29, 2008 at 5:52 PM

The lefties are against this bill because it doesn’t bailout homeowners, students and isn’t laced with ACORN pork etc. This bill is too “centrist” to pass atm.

A right-wing version wouldn’t pass because of the Dem majority.

The only option left is a left-wing version.

lodge on September 29, 2008 at 5:52 PM

I honestly think it is not going to be that bad. It is horrible for the financial markets. But us little folk are still plugging along. We are still buying groceries, gas, iphones, etc.

What the market needs is fresh capital it does not have to be directly applied to the credit market. Domestic oil and gas production will give a fresh boost to the economy. Cut corpoarate taxes, make withdrawls from 403Bs for home and cars tax free and you can pump money into the economy. We have dozens of taxes that discourage the flow of capital into the market get rid of them and voila the capital you need finds the market.

Theworldisnotenough on September 29, 2008 at 5:53 PM

Gee, I wish he would have said why this only became critical in the last few days. I can only guess he didn’t have a clue that we had a problem, huh?

Star20 on September 29, 2008 at 5:54 PM

Can someone please explain this to me:

Why is every single argument for the passage of this bill grounded in an appeal to authority?

Can no one make a detailed argument for its passage based on the merits of the bill itself?

spmat on September 29, 2008 at 5:56 PM

You know what makes a bad market day better?

Waffles.

Delicious, buttery, syrup covered waffles.

natesnake on September 29, 2008 at 5:56 PM

Genuflect to me, Paulson, and while you’re down there…….

jay12 on September 29, 2008 at 5:57 PM

Delicious, buttery, syrup covered waffles.

natesnake on September 29, 2008 at 5:56 PM

Don’t tempt me. I skipped lunch.

Sir Andrew on September 29, 2008 at 5:58 PM

You know what makes a bad market day better?

Waffles.

Delicious, buttery, syrup covered waffles.

natesnake on September 29, 2008 at 5:56 PM

Thank you for that post! Best one all day!

I prefer mine with chicken.

Y-not on September 29, 2008 at 5:58 PM

Really, can we lay off the Jewish stuff, please?

Y-not on September 29, 2008 at 5:51 PM

I don’t care what their religion is–& I love & support Israel–I want them working on this mess w/o a holiday until it’s fixed!

jgapinoy on September 29, 2008 at 5:59 PM

FED could release new Dollars into the system as Loans for short term liquidity without destroying the worth of the dollar.

They don’t need Congress to do this.

Romeo13 on September 29, 2008 at 5:42 PM

They dumped in $480B just before the bailout failed. http://biz.yahoo.com/ap/080929/fed_credit_crisis.html

The dollar is doing well because other economies are even worse.

pedestrian on September 29, 2008 at 5:59 PM

I don’t care what their religion is–& I love & support Israel–I want them working on this mess w/o a holiday until it’s fixed!

jgapinoy on September 29, 2008 at 5:59 PM

Damn straight!

JiangxiDad on September 29, 2008 at 6:02 PM

When Hank fixes his left pinky, then I’ll believe he can begin to handle this. Arrogant choad.

Valiant on September 29, 2008 at 6:02 PM

You know what though, rough times really can bring people together. Like…..WWII.

:)

Sapwolf on September 29, 2008 at 5:50 PM

Or, like the Civil War.

trailboss on September 29, 2008 at 6:02 PM

You know, although I am confident that the average reader of Hot Air is more intelligent than the average reader of of KOS, I am not sure the average poster at Hot Air is more intelligent than the average poster at KOS.

The republican president, the republican congressional leaders, the republican appointed Fed leaders, business giants such as Jack Welch, Warren Buffete, Mitt Romney, Steve Forbes, and etc are ALL telling you that the financial system is going to freeze up and that this is a once in a century disaster…and despite all that we have a 2-1 majority of republicans voting against the plan and saying because their feewings were hurty wurty and now the market is in free fall.

And we have fools on this forum talking about a $700 billion tax payer cost to bail out wall street which basically is the same as raising a flag that says “Hi, I am stupid, I cant read or understand basic finance”.

HA HA HA HA HA!!!

I got the cash to wait it out but republicans have been exposed as being mini democrats….just a different flavor…just as HORRIBLE at leadership. But then again, we nominated Bob Dole and Maverick and Sarah Palin, so our party is OBVIOUSLY as full of fools as the other party.

Roger Waters on September 29, 2008 at 6:03 PM

I think that the rescue is not necessary. Let the losers lose. The free market will do all the adjustment that is necessary. Why should the taxpayers bear the cost? Houses will be cheap and new buyers will get them at the market value.

scrubjay on September 29, 2008 at 6:04 PM

Can someone please explain this to me:

Why is every single argument for the passage of this bill grounded in an appeal to authority?

Can no one make a detailed argument for its passage based on the merits of the bill itself?

spmat on September 29, 2008 at 5:56 PM

Because no matter what kind of condiments you put on this thing, it’s still a shit-sandwich.

Dagnar on September 29, 2008 at 6:04 PM

If ACORN comes back into the bill, and passes with Democrat support, then Pelosi will have the last laugh. No?

RBMN on September 29, 2008 at 6:04 PM

Jewish holidays aside… I’m not sure what it would take to get those Republicans and some Democrats to end opposition to the bill. The market will go down further without some sort of plan to cushion the liquidity crisis. The plan was not a bail out. It was a line of credit on perfectly viable assets. This crisis is evolving away from a liquidity crisis and will morph into an insolvency crisis unless something is done.

Members of Congress need to tell their constituents why the plan is not a giveaway and why it is in their interest that the bill pass rather than merely look at the weight of calls they receive. The American economy is too important and blowing it up because they didn’t like what Nancy said will really drive the brand into history. The voters will forget that their reps did what they asked for when the economy as a whole is wiped out over this.

Central banks need to act quickly to avoid panic. This vote hampers that effort not just for the US, but for markets everywhere.

lexhamfox on September 29, 2008 at 6:05 PM

You know, although I am confident that the average reader of Hot Air is more intelligent than the average reader of of KOS, I am not sure the average poster at Hot Air is more intelligent than the average poster at KOS.

Any word on how the average Hot Air troll compares to the average KOS troll?

Ars Moriendi on September 29, 2008 at 6:07 PM

Why hasn’t this jackass been fired yet? (I know…I know…rhetorical question)

Harpazo on September 29, 2008 at 6:08 PM

thanks for proving my point, Arse Moriendi

Roger Waters on September 29, 2008 at 6:08 PM

The only place you can find people who aren’t gravely concerned are on Capitol Hill and in the media, the two places in our society where people are paid to offer opinions on things they know nothing about.

And, sorry to say, ideologues who think the “free market” will sort this all out and that the American people will gladly endure a major economic downturn and continue to read their Ayn Rand and vote Republican.

SteveMG on September 29, 2008 at 6:09 PM

I don’t care what their religion is–& I love & support Israel–I want them working on this mess w/o a holiday until it’s fixed!

jgapinoy on September 29, 2008 at 5:59 PM

Yes, it is a little crazy that there is a national crisis affecting people of all religious beliefs and congressional action is being slowed down.

dedalus on September 29, 2008 at 6:09 PM

Congress today voted to let taxpayers keep $700B of their own money. That is the best plan I have heard so far. I hope they stay home for a lot longer than just two days.

pedestrian on September 29, 2008 at 6:09 PM

FYI — a pre-vote press release from Rep. McCotter’s office:

WASHINGTON, D.C. – Republican House Policy Chairman, Representative Thaddeus McCotter (R-MI), the first Republican member of Congress to publicly oppose Wall Street’s trillion dollar bailout, remains adamantly opposed to the legislation despite the Paulson bailout’s cosmetic changes:

“We are faced with the first financial panic of the global economy. Thus, the Congressional action taken today will set a precedent affecting the prosperity of Americans for decades to come. The proposed $700 billion dollar Wall Street bailout bill is not a Republican solution; it is not a Democratic solution; it is not an
American solution. The proposed $700 billion dollar Wall Street Bailout is a socialist solution – one that, by threatening hardworking Americans’ prosperity, unconscionably ransoms hardworking Americans’ money and reduces their liberty. As such, it is a generational threat to Americans’ liberty and prosperity.

Congress cannot re-inflate the bubble to save the American economy.”

Harpazo on September 29, 2008 at 6:10 PM

I don’t care what their religion is–& I love & support Israel–I want them working on this mess w/o a holiday until it’s fixed!

jgapinoy on September 29, 2008 at 5:59 PM

Any Jewish people who are not working right now are do so because they are observing a holy day, not a holiday.

Comparisons to the holy days for the mainstream Christian denominations are a bit of a stretch. Even Good Friday, which is the biggest Catholic holy day next to Easter, only requires that observant Catholics maintain silence for a few hours, not that they not work.

I don’t think it is relevant to focus on whether or not a handful of observant Jews are working right now. Frankly, if they are praying, it will probably be of at least as much help to the country, or more.

Y-not on September 29, 2008 at 6:10 PM

We have idiots as leaders of Congress…Does that surprise us? Shouldn’t, these are the same people who got us into this mess in the first place. Americans have put up with a lot, maybe when the pain reaches our houses we will say enough.

d1carter on September 29, 2008 at 6:11 PM

This really is a credibility crisis, and I’m almost thankful that there’s a crisis to (possibly) make us earnest.

The only way everyone can afford a home is if we all have great job (free market solution) or if we pool our money together to cover those without jobs (communism). The CRA has tried to force the second option onto America. We had to be shown the facts of life. This crisis did precisely that. But if we’re ready to go back to the media/communist vomit as soon as we think the immediate crisis is over, then America is dead. Period.

America can survive a market problem. We can’t survive media and politicians that lie to us in order to break the American way. Somehow the media needs to know that if they try to break America, they will instead be broken by America. How do we tell the media and politicians that we don’t trust a word they say – especially when our lives depend on it?

justincase on September 29, 2008 at 6:11 PM

No offense, but:
Why don’t we just keep working and let the Jewish faithful catch up when they return from their New Year celebration.

right2bright on September 29, 2008 at 5:44 PM

To mny golf games scheduled already?

Murphy9 on September 29, 2008 at 6:12 PM

The experts in washington have been warning for ten days that we need a bail out bill or the markets will crash. In effect, they are telling us that they will hold wall street hostage until congress passes a bail out bill.

That didn’t work. Now they are telling us, the public, that they will hold our paycheck hostage if congress doesn’t pass a bail out bill..

Hot news flash. If we don’t get our paychecks next friday, there will be a lynch mob in washington the following monday.

rockhauler on September 29, 2008 at 6:12 PM

The volume in today’s trading was disproportionally low. The people giving the most EXCITABLE advice are the same ones who have the most to lose.

As a commenter on Ace’s site said, “If you have to bail out the market to keep is at its current level, it was on the wrong level to begin with.”

It’s a burp. It will pass.

natesnake on September 29, 2008 at 5:50 PM

I’m hoping that you’re right. It fits what I perceive is the problem in the market. Without this bill passing, everyone is afraid to BUY stocks. There will always be sellers. If there are no buyers, the price will plummet like a Norwegian Blue.

I’m willing to wait it out. I honestly don’t think the sky is falling. If the bailout package will reverse all this in a day, then why does it have to be today. I haven’t heard a good answer on why doing this carefully is worse than doing it quickly.

connertown on September 29, 2008 at 6:12 PM

thanks for proving my point, Arse Moriendi

Roger Waters on September 29, 2008 at 6:08 PM

I see what you did there, Arse Moriendi, hehe. You’re so clever.

Ars Moriendi on September 29, 2008 at 6:15 PM

This is a week that we will remembered for years to come…no matter the outcome. Pain is something that stays with you for a long time.

d1carter on September 29, 2008 at 6:15 PM

If ACORN comes back into the bill, and passes with Democrat support, then Pelosi will have the last laugh. No?

RBMN on September 29, 2008 at 6:04 PM

That has to be the plan all along. The hateful speeches delivered on the floor today were just some mean spirited politicking for the MSM which they control.

Nitwit Nancy may be many things but I find it hard to believe on further thought that she did not know she didn’t have the votes. In fact I would not be surprised if she sand bagged the whole vote to begin with. That is to say as the votes were being cast, or just prior knowing the count, she had some of her own members vote against to secure a loss.

Now they go back to the table and lard this thing up after bitch slapping all the repubs for the next few days.

The repubs already look like crybabies complaining about the aforementioned speeches.

patrick neid on September 29, 2008 at 6:15 PM

I believed last week that a bailout was necessary to stave off the impending failures of WaMu and Wachovia, which would have exhausted the FDIC fund and caused a major bank panic.

Well, guess what. Those two banks were sold in an orderly fashion without mass numbers of pink slips and without a hit to the FDIC. We’ve gone a whole week now since the takeover of AIG and the failure of Lehman. There aren’t any other giant shoes left to drop here.

rockmom on September 29, 2008 at 6:16 PM

Dollar is stronger today.

FED could release new Dollars into the system as Loans for short term liquidity without destroying the worth of the dollar.

They don’t need Congress to do this.

True enough, and the Fed did pump extra dollars into the system today.

http://www.foxnews.com/story/0,2933,429725,00.html

If the Fed is doing its job, even if Congress balks completely on a bailout, it could save the day on its own by creating enough money to keep the banks afloat until the bad mortgages can be written off, and banks can make some money on good mortgages (to solvent borrowers).

The mechanism is complicated, and I’m not sure I understand it completely, but there is a catch: more dollars floating around means more inflation. But that would be a small price to pay for avoiding a collapse of the entire financial system, if that is really at stake here. Higher inflation could mean an economic slowdown in the short term, as people pay higher prices for necessities and postpone purchases of luxuries, but in an inflationary economy, those who have fixed-rate mortgages would see their payments become cheaper relative to other things they buy.

The bailout bill proposed by Congress would have put the burden on taxpayers–about half the population, and disproportionately upon the wealthy. Without the bailout, if the Fed props up the banks by creating money, the burden of the resulting inflation is borne by the entire population. That might in fact be a fairer way of resolving the problem, although it’s not clear that all those voting against the bailout bill thought of it that way.

Steve Z on September 29, 2008 at 6:16 PM

That didn’t work. Now they are telling us, the public, that they will hold our paycheck hostage if congress doesn’t pass a bail out bill..

I’ve heard the thing about companies maybe not being able to make their payrolls in a few posts now, and I’ve got a question:

Assuming companies are in business to make a profit, shouldn’t they have enough cash on hand to pay their employees? To me, getting a loan to take care of your payroll would be analogous to me taking out a loan to pay my household utilities…..

Dagnar on September 29, 2008 at 6:17 PM

And, sorry to say, ideologues who think the “free market” will sort this all out and that the American people will gladly endure a major economic downturn and continue to read their Ayn Rand and vote Republican.

SteveMG on September 29, 2008 at 6:09 PM

I happen to think it would be nice to let the “free market” take a crack at it, given how it was the “Government-regulated market” that got us into it.

And don’t give me any BS about how “this is a failure of the free market and/or capitalism”. The main institutions that perpetrated this crisis have had the federal government’s fingers in them, in some shape or form, for the better part of the last half-century. This crisis has been a long time coming, thanks in large part to the actions of those on Capitol Hill who were/are “paid to offer opinions on things they know nothing about”.

(Sidenote: is anyone else LIVID when they see that Chris Dodd and Barney Frank are major players in this bill?)

I don’t know if a truly free-market capitalism is the solution here, but it certainly hasn’t been tried yet.

Harpazo on September 29, 2008 at 6:19 PM

so our party is OBVIOUSLY as full of fools as the other party.

Roger Waters on September 29, 2008 at 6:03 PM

When you say “our” you mean the democratic party right?
Because I have never heard anything but a troll post the way you state.
Let me see, your next post would be something like this:
“I have never voted democrat in my life, but this year the Republicans have forced me to do what I thought I would never do. The dems are just too smart and the Republicans are just too stupid.”
I got that right, didn’t I?
Here let me help you with your retort…Well you got the last sentence right.
See how easy it is when you have such a simple mind as a liberal…

right2bright on September 29, 2008 at 6:19 PM

thanks for proving my point, Arse Moriendi

Roger Waters on September 29, 2008 at 6:08 PM

I see what you did there, Arse Moriendi, hehe. You’re so clever.

Ars Moriendi on September 29, 2008 at 6:15 PM

Yes, our friend Roger is demonstrating the true mark of superior intellect and debating ability: Name-calling

Dagnar on September 29, 2008 at 6:20 PM

To mny golf games scheduled already?

Murphy9 on September 29, 2008 at 6:12 PM

Maybe they can’t take or give graft money on these holidays…we will have to ask Franks.

right2bright on September 29, 2008 at 6:22 PM

Roger Waters on September 29, 2008 at 6:03 PM

No one cares what you think, because you’re a talking-points mouthpiece troll who yaps and barks at Republicans and conservates regardless of what they do

You have the credibility of Bill Clinton and the imagination of Monica Lewinsky

Janos Hunyadi on September 29, 2008 at 6:24 PM

Those two banks were sold in an orderly fashion without mass numbers of pink slips and without a hit to the FDIC. We’ve gone a whole week now since the takeover of AIG and the failure of Lehman. There aren’t any other giant shoes left to drop here.

rockmom on September 29, 2008 at 6:16 PM

Does the Wachovia deal go through w/o a bill from congress? I heard that there was a contingency and that a definitive agreement hadn’t been signed as of mid-morning.

More banks will fail in the next few weeks. Businesses that need credit to increase inventory for the holiday season won’t be able to, though there may not be much retail activity this holiday season.

dedalus on September 29, 2008 at 6:25 PM

John and Ken are interviewing a congressman, great info about the bailout.

http://www.kfi.com

Theworldisnotenough on September 29, 2008 at 6:25 PM

spmat on September 29, 2008 at 5:56 PM

Stop trying to bring actual logic into a political discussion. That baby went out with the bathwater when schools decided that feeling good was a lot more important than learning.

Y-not on September 29, 2008 at 6:10 PM

That’s not entirely fair. For many observant Christians, holidays are indeed holy days and in quite a few Christian sects, there are prohibitions from working on holy days as well as on the Sabbath in general.

It’s not fair to compare how an observant Jew views sabbaths and holy days to how the average Christian does.

In this case, I think the main point is that this is either an emergency that needs to be handled now. Or, it can wait a few days, in which case, people need to dial down the “crisis” rhetoric a lot.

JadeNYU on September 29, 2008 at 6:27 PM

Assuming companies are in business to make a profit, shouldn’t they have enough cash on hand to pay their employees? To me, getting a loan to take care of your payroll would be analogous to me taking out a loan to pay my household utilities…..

Dagnar on September 29, 2008 at 6:17 PM

Some businesses take loans against receivables and others deal with seasonality with their products where they spend money at one time of year and then generate income in another part of the year.

dedalus on September 29, 2008 at 6:28 PM

Does the Wachovia deal go through w/o a bill from congress? I heard that there was a contingency and that a definitive agreement hadn’t been signed as of mid-morning.

More banks will fail in the next few weeks. Businesses that need credit to increase inventory for the holiday season won’t be able to, though there may not be much retail activity this holiday season.

dedalus on September 29, 2008 at 6:25 PM

Not to my knowledge. The FDIC is assuming some of Wachovia’s nonperforming assets and taking warrants. Maybe this requires authorization, but I doubt it.

The FDIC is quietly creating the model for fixing this whole mess, if Congress will just go home and the candidates and media will STFU. I’m starting to think this is all a power grab by Paulson because he doesn’t want Sheila Bair to get all the credit.

rockmom on September 29, 2008 at 6:30 PM

rockmom on September 29, 2008 at 6:30 PM

The FDIC isn’t fixing a thing. Bank failures are accelerating, not decelerating. The FDIC has about 45B on reserves and when that’s finished the taxpayer will pay. The taxpayer is going to pay one way or the other. bailout or depression. That’s the choice.

phronesis on September 29, 2008 at 6:34 PM

Terrye on September 29, 2008 at 5:45 PM

Key is that there has not been a SINGLE dollar destroyed. The money to run the system is still out there, it is just not being loaned like it was before.

What would be interesting is to see WHO STOPPED loaning money first.

Romeo13 on September 29, 2008 at 6:34 PM

Key is that there has not been a SINGLE dollar destroyed. The money to run the system is still out there, it is just not being loaned like it was before.

What would be interesting is to see WHO STOPPED loaning money first.

Romeo13 on September 29, 2008 at 6:34 PM

WRONG. Banks essentially create money when they lend. The stop loaning, it is money supply destruction.

phronesis on September 29, 2008 at 6:36 PM

JadeNYU on September 29, 2008 at 6:27 PM

True crises do not result in hysteria-rhetoric among the leadership. In a true crisis, the leaders try to be as positive as possible but also realistic.

They certainly don’t make idiot statements like “THE SKY IS FALLING AND NO ONE KNOWS WHAT TO DO!”

Any “crisis” that Nancy Pelosi and Harry Reid could actually help lead us out of is on the level of “Oh noes! We ran out of ketchup!”

I am VERY wary of politicians who do nothing when things are fine but then rush to be involved when a crisis looms. Such know that the populus’s fear during a crisis will allow them to expand their personal power. Such persons are only to be trusted with the muzzle of one’s 2nd Amendment Rights pressed against their teeth.

Harpazo on September 29, 2008 at 6:37 PM

The FDIC is quietly creating the model for fixing this whole mess, if Congress will just go home and the candidates and media will STFU. I’m starting to think this is all a power grab by Paulson because he doesn’t want Sheila Bair to get all the credit.

rockmom on September 29, 2008 at 6:30 PM

If the FDIC increased its deposit insurance level above $100,000, it would help reduce the bank failures where the problem is deposits walking out the door.

The idea of a Paulson power grab seems odd given that he’s likely out of the Treasury job in a few months, effectively sooner if Obama wins and quickly names a successor.

dedalus on September 29, 2008 at 6:38 PM

WRONG. Banks essentially create money when they lend. The stop loaning, it is money supply destruction.

phronesis on September 29, 2008 at 6:36 PM

HUH? Banks CREATE money? Banks loan money THEY have on the books, they don’t CREATE money to loan.

FED Bank? Yep, they create Reserve Notes, which put cash into the system, but other banks do NOT create money by loaning, they move it around… or, is it your contention that they are not inline with that pesky little document, the Constitution?

Romeo13 on September 29, 2008 at 6:40 PM

So…. Paulson will do what he can do while he waits for Congress?

Well, Hank, let this be a lesson. Even though you’re a liberal Democrat with deep ties to Wall St (always supporting the Dems to forgive your misdeeds…wink, wink) the next time you get down on your knees before a politician make sure it’s in front of someone like Barney Frank who will appreciate your efforts. Nancy just laughed and left the house.

/fool

Cody1991 on September 29, 2008 at 6:43 PM

The idea of a Paulson power grab seems odd given that he’s likely out of the Treasury job in a few months, effectively sooner if Obama wins and quickly names a successor.

dedalus on September 29, 2008 at 6:38 PM

Its my contention that Paulson is, for some reason, consolidating American Banks. If you look at his actions, he could have saved banks he did not… he seized them then sold their assets for pennies on the dollar to other larger institutions, vice loaning them the liquidity they needed to overcome the governments failed regulatory rules.

He has even stated that he will only buy the bogus loans from “some” institutions… which I think means the big 4 or 5. Those institutions, with the debt off their books will be able to get loan money from other sources. Banks who are not bailed will not be able to survive… and will get up by the big 4 or 5 using the loans those larger banks will be able to get from international sources.

Why he is donig this, I can’t fathom, but this seems to be the end result of his stated intentions, and already performed actions.

Romeo13 on September 29, 2008 at 6:46 PM

You’re exactly right. The only people who suffered an investment loss were people with money in the market. Fortunately, those are just rich fatcats, as regular Americans do not invest their retirement savings in the stock market.

Outlander on September 29, 2008 at 5:45 PM

Uh, own any mutual funds? Is your 401(k) fund-based? Do you have an ESOP as part of your company pension plan?

It’s really hard not to be in the stock market these days, unless you’ve gone really conservative in your old age and are looking for 1% APR gains.

That said, all ships rise and sink almost equally, except some of the smaller ships get swamped in heavy seas. The billionaires will ride this out, because they have completely diversified — they could still lose half of their money and not care — there’s more where that came from even at 1%. You or I lose half, and…

unclesmrgol on September 29, 2008 at 6:47 PM

Yes, banks create money through fractional-reserve lending.

http://en.wikipedia.org/wiki/Money_creation

phronesis on September 29, 2008 at 6:48 PM

And btw, that’s econ 101.

phronesis on September 29, 2008 at 6:50 PM

Romeo, give it up dude. You cant fix stupid.

“right2bright on September 29, 2008 at 6:19 PM”

Hey not2bright, I dont have to PROVE anything to you. You think I am a democrat…go for it. Besides, I have been here about a year and I havent seen a single intelligent post from you in all that time. It was all this Mormon bashing and talking stupid…and you are STILL talking stupid. Stick to the Mormon bashing…it is easier than trying to figure out college-level financial concepts.

Roger Waters on September 29, 2008 at 6:51 PM

The comment on the front page about the market losing $1.1 trillion being $400 billion more than the bailout… one minor little difference. It was paid for by all the taxpayers. The group paying was much, much smaller.

CC

CapedConservative on September 29, 2008 at 5:39 PM

Actually, as over 50% of US households are stockholders, and only 50% of people pay income taxes, taxpayers did bear the burden of the losses today…

phreshone on September 29, 2008 at 6:53 PM

‘You’re exactly right. The only people who suffered an investment loss were people with money in the market. Fortunately, those are just rich fatcats, as regular Americans do not invest their retirement savings in the stock market.

Outlander on September 29, 2008 at 5:45 PM”

HA HA HA HA HA HA!!!!

Dear God what an idiot. 75% of Americans have part of their 401-k’s in equitys (the stock market). Hopefully, you are in high school. I would hate to think an adult could be that uninformed.

Like I said: Dems and Repubs…not much difference at the grass roots level in IQ’s.

Roger Waters on September 29, 2008 at 6:53 PM

Actually, as over 50% of US households are stockholders, and only 50% of people pay income taxes, taxpayers did bear the burden of the losses today…

phreshone on September 29, 2008 at 6:53 PM

exactly.

phronesis on September 29, 2008 at 6:55 PM

exactly

Roger Waters on September 29, 2008 at 6:57 PM

Its my contention that Paulson is, for some reason, consolidating American Banks

American and foreign banks, and insurance companies are FAILING.

This is not a stock market issue, it is a CREDIT market issue. If Paulson doesn’t “reboot” the fixed-income markets, the capitalist economy cannot function. Period. End of Discussion. Find a soup line.

You mother’s and grandmother’s savings…. bye.

phreshone on September 29, 2008 at 6:59 PM

Why he is donig this, I can’t fathom, but this seems to be the end result of his stated intentions, and already performed actions.

Romeo13 on September 29, 2008 at 6:46 PM

In general, the big banks historically have been more conservative and employed stricter lending standards. The subprime explosion was largely done by Countrywide and monoline subprime lenders like Ameriquest, New Century, and RFC, and the investment banks that helped them securitize all those bad loans, like Merrill and Lehman (and Fannie and Freddie). It’s no accident that all those companies are gone. If the 4 big banks end up being the big winners in all of this, they deserve to be. Bank of America has not made a subprime loan since 2000. Wells Fargo never made a pay-option ARM loan. Chase was also very conservative in its lending standards. I’m not sure how Citi has escaped all of this, but apparently it has.

At some point when rationality returns to the market, there will be spinoffs of these big banks and also more growth of the regional banks like Citizens Bank and SunTruat.

rockmom on September 29, 2008 at 7:00 PM

Outlander on September 29, 2008 at 5:45 PM

The GOP didn’t screw anybody. The Dems hold the majority in the House and the Senate. If either group had a leader they could have passed this with or without the GOP. Something like 94 Democrats voted no and refused to have their arms twisted to change their votes.

AubieJon on September 29, 2008 at 7:07 PM

“This is no longer just a credit crisis. It is a credibility crisis.”

It was from the moment Paulson announced that the sky is falling.

Trouble is, it was bound to fall, and the greedy bustards in DC had to grind out the last dime they could — before they went running around like Chicken Littles, pretending this wasn’t inevitable.

Wall Street? Hey, greed is their profession, and if DC is going to hand them limitless opportunity on a plate, why not take it to the limit?

Credibility — for anyone in government — is now less than zero.

Nichevo on September 29, 2008 at 7:11 PM

I believe there are still snakes in the grass and they need to be dealt with before we move on. As long as B. Frank and C. Dodd are involved, there is a conflict of interest. They were a part of the problem to begin with, they don’t need to be part of the solution. While some may say this is their mess, they should clean it up, I believe they are incapable of cleaning it up. The new bill needs to account for every single dollar spent, line by line. If there is misappropriations let their heads roll.

mindhacker on September 29, 2008 at 7:13 PM

If the 4 big banks end up being the big winners in all of this, they deserve to be. Bank of America has not made a subprime loan since 2000. Wells Fargo never made a pay-option ARM loan. Chase was also very conservative in its lending standards. I’m not sure how Citi has escaped all of this, but apparently it has.

The big banks have entire teams from the OCC on site, monitoring their portfolios, and force the banks to take reserves against lower quality credits. Over the past 7 years, anything remotely risky (corporate loan or mortgage) has been syndicated to hedge funds, CLO’s and Insurance companies.

Now that syndications no longer have AAA credit ratings, the market for them have cratered, there are no buyers for the paper, (in fact the credit ratings model on which the collaterallized funds are based is forcing sales to maintain ratings) and investors such as AIG, Lehman, Bear Stearns, etc. were stuck with the illiquid paper w/ no way to finance continuing operations, and were forced to liquidate positions at major losses.

By stabilizing the market, Paulson is trying to provide some form of market for financial institutions who are on the edge.

phreshone on September 29, 2008 at 7:14 PM

The perfect is the enemy of the good.

phreshone on September 29, 2008 at 7:18 PM

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