McCain: Extend FDIC, act without Congress

posted at 10:49 am on September 30, 2008 by Ed Morrissey

John McCain talked to Fox News about the financial meltdown and Congress’ failure to pass the compromise emergency liquidity bill. McCain suggested that the Treasury act without Congress within its authority to bolster liquidity by extending FDIC insurance to a greater number of depositor accounts, and also suggested that Henry Paulson doesn’t need Congressional approval to act:

“I have talked to the President this morning and recommended an increase from $100,000 to $250,000 FDIC insurance on deposits. I also strongly recommended that we use the exchange stability fund that the Treasury has available — $250 billion — to shore up these institutions. Also, the Treasury has at its disposal about $1 trillion that they could begin without Congressional authority buying up some of these terrible mortgages and help stabilize the situation. So I’ve talked to the President. I know that we have to act. Even though we failed yesterday, even though I went back and was able to get more Republicans on board or help get more Republicans on board, we will go back to this, and I will be engaged always where I think America needs engagement.”

“We’re going to have to change enough Republican and Democrats’ minds. It was 95 Democrats that voted against it. People’s credit is at risk here — the ability to buy a car, to make your home loan payments, for small businesses to get credit. Look, this is affecting Main Street America. And we’re going to have to resolve it, and we’re going to have to act. One point two trillion dollars of American savings, pensions, IRAs, mutual funds, investments, et cetera was wiped out, and that hurts Main Street. I’ve got a plan for cutting spending, for keeping taxes low, for making sure that people can stay in their homes, and a long-term plan. In the short-term, we’ve got to take these measures I just outlined to you, and let’s go back, and let’s make Americans understand who are opposed. I was watching your program earlier. How this affects not Wall Street, but Main Street and working families of America.”

Republicans are not going to get far on the “95 Democrats voted against it,” and they’re missing an opportunity that the failure provides. In the first place, more than 130 Republicans also voted against it, more that 60% of the House Republican caucus, which provides more of a rebuke to leadership than the 40% of Democrats who bucked Nancy Pelosi. The bottom line of the rebellion isn’t a partisan split or a bad speech by Pelosi right before the vote — although that certainly didn’t help — but overwhelming opposition by voters five weeks before a national election.

The FDIC solution seems to be gaining popularity with Republicans, and that may help keep depositors from starting bank runs, but it doesn’t do much to resolve the real cancer at the heart of this financial crisis.  Congress simply cannot escape its responsibility for its deliberate issuance of junk bonds through Fannie Mae and Freddie Mac based on bad loans, and until Congress acts to provide some sort of rational floor for the MBSs it launched, American credit will have little credibility.  Until enough stability comes back into that market, the negative balance of these American-government backed bonds will continue to sink the investors who bought them, believing that the US stood behind Fannie/Freddie actions.

McCain’s statement raises another question.  Can the Treasury spend $1 trillion without Congressional approval to buy back these MBSs?  If so, then what was the point of the negotiations of the last few days, Paulson coming to Pelosi on bended knee, and the futile vote yesterday — political cover?  Somehow, I find it difficult to imagine that Treasury can indeed act on this scale without Congress.

However, I’ll say this for McCain.  He appears to be actually demonstrating some leadership on this issue.  Where is Barack Obama?


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Comment pages: 1 2

Can the Treasury spend $1 trillion without Congressional approval

I sure hope not.

lodge on September 30, 2008 at 10:52 AM

Finally!!

Cindy Munford on September 30, 2008 at 10:52 AM

If you have $200k sitting around, is it in your passbook savings account at the local bank?

doubtful.

cntrlfrk on September 30, 2008 at 10:53 AM

Obama: You’re doing a heckuva job Pelosi.

Who was the first to propose the FDIC insurance increase? I saw an article this morning from Obama saying the exact same thing.

Skywise on September 30, 2008 at 10:54 AM

Where is Barack Obama?

Yahoo News had Obama suggesting an increase of FDIC insurance posted before I came to work this morning.

DerKrieger on September 30, 2008 at 10:54 AM

Where is the FDIC going to get the money to protect our savings if the banks fail? This does no good if the money isn’t there to begin with.

bopbottle on September 30, 2008 at 10:54 AM

Extend the FDIC.

Translation:

Give the whining kiddies a lollipop.

fogw on September 30, 2008 at 10:54 AM

Why do they need political cover to do what is RIGHT?

That’s Bush’s problem and we saw how Pelosi handled it.

originalpechanga on September 30, 2008 at 10:54 AM

C’mon Ed, that’s the screencap you chose on the front page?

Abby Adams on September 30, 2008 at 10:55 AM

Where is Barack Obama?

“Bugs” Obama is doing what he does best–cowering under a rock and waiting either to swoop in and take the credit should McCain’s work bear fruit or pick at McCain’s carcass by blaming everything on him.

“Bugs” Obama: The Human Vulture

Matt Helm on September 30, 2008 at 10:55 AM

Also, a question:

IF WE HAVE $1 TRILLION to SPEND, WHY DO WE HAVE A DEFICIT in our BUDGET?

originalpechanga on September 30, 2008 at 10:55 AM

However, I’ll say this for McCain. He appears to be actually demonstrating some leadership on this issue. Where is Barack Obama?

In no way, shape or form is McCain showing leadership here. Drop the partisan blinders and realize McCain totally bungled this up. His senatorial half measures have really shown how poorly a guy used to working in groups adjusts to a leadership roll.

He’s cost himself this election, he’s cost the republican party its credibility and he’s probably ensured that Palin will have no future in national politics.

Bang up job, jerk off.

lorien1973 on September 30, 2008 at 10:56 AM

Dave Ramsey segment on Alternative bailout plan

about the Mark to Market accounting change and extending FDIC. sounds good to me, definitely better than the ‘do nothing approach’ and making Paulson a Economic Czar

jp on September 30, 2008 at 10:57 AM

Where is Barack Obama?

He’s campaigning, because he’s not needed in DC.

jgapinoy on September 30, 2008 at 10:58 AM

Does anybody remember the Federal Reserve Board meeting they had where they decided to pump another $630 billion into the system? All I saw was the headline where they are doing it.

CC

CapedConservative on September 30, 2008 at 10:58 AM

After they do this to insure stability, they should investigate the over 200 million dollars contributed to Obama’s campaign from foreign and unreported donars. Millions of dollars are backing a candidate who has more internatuional views than the best interests of our nation. Our enemies could actually influence the selection of a president who would support their views rather than our own. Un-freaking-believable.

volsense on September 30, 2008 at 10:59 AM

IF WE HAVE $1 TRILLION to SPEND, WHY DO WE HAVE A DEFICIT in our BUDGET?

originalpechanga on September 30, 2008 at 10:55 AM

You aren’t familiar with their new monetary policy theory that includes the assumption that the money supply is infinite? (seriously)

CC

CapedConservative on September 30, 2008 at 11:00 AM

Where is Barack Obama?

Obama actually came out with the FDIC suggestion earlier this morning, BEFORE McCain.

cornfedbubba on September 30, 2008 at 11:03 AM

Yahoo News had Obama suggesting an increase of FDIC insurance posted before I came to work this morning.

As usual, Obama takes credit for McCain’s suggestion, press gleefully goes along…..

Priscilla on September 30, 2008 at 11:04 AM

cornfedbubba on September 30, 2008 at 11:03 AM

Link, please.

BacaDog on September 30, 2008 at 11:04 AM

The FDIC solution seems to be gaining popularity with Republicans, and that may help keep depositors from starting bank runs, but it doesn’t do much to resolve the real cancer at the heart of this financial crisis.

That’s not accurate. Kudlow and others for example are pushing that it is a solution. They argue using the FDIC to force the takeovers as it did with WaMu and Wachovia, and injecting additional capital on an as needed basis will solve the problem by creating stronger, better capitalized banks who can then work out the assets over time without the government having to actually buy them.

TheBigOldDog on September 30, 2008 at 11:04 AM

However, I’ll say this for McCain. He appears to be actually demonstrating some leadership on this issue. Where is Barack Obama?

Lukewarm and feckless “leadership,” to be sure. It doesn’t matter where Obama is at this point. The Drive-Bys are in the tank for him and will spin his narrative like cotton candy – which the Dem faithful and the Idjits will eat with pleasure.

Unless Mac goes on a Dem-trashing rampage and Sarah eviscerates Biden, this election is history and it may very well be Bambi who wins in a landslide.

If that is the case then I agree with lorien:

He’s cost himself this election, he’s cost the republican party its credibility and he’s probably ensured that Palin will have no future in national politics.
Bang up job, jerk off. – lorien1973 on September 30, 2008 at 10:56 AM

If McCain loses in November he will have torpedoed any chance Palin may have had for national office. She will be relegated to political obscurity in Alaska.

Rather a shame.

ManlyRash on September 30, 2008 at 11:05 AM

What really pisses me off is that I accurately predicted this clusterfuck a week ago.

ManlyRash on September 30, 2008 at 11:06 AM

“I have talked to the President this morning and recommended an increase from $100,000 to $250,000 FDIC insurance on deposits.

This is like changing the rules after the game. Not the American way. And that is even never minding that there may not even be enough FDIC insurance to cover the first $100,000. Just print some more money or beg the Chinese or Saudis to lend us more money?

MB4 on September 30, 2008 at 11:07 AM

“40% of Democrats who bucked Nancy Pelosi”

They didn’t “buck” Nancy. They had her ok to vote no. 5 major committee members who owe their position to her voted no. Her fellow reps from California voted no.

Barney Frank wants to make ‘nice’ to 12 Republicans in order to change their vote. Too bad he couldn’t make ‘nice’ to members of his own committee and get them to change their vote.

The House members are well aware of what caused this mess and the Dimocrats are trying like hell to cover their major part of this. I’m still surprised that some Republican isn’t on tape, punching Barney Frank in the face while screaming ‘you lying sack of shit!’.

GarandFan on September 30, 2008 at 11:07 AM

Congress dully disengaged is a great idea and legal.

The wackos are off the controls.

Maverick!

Hening on September 30, 2008 at 11:07 AM

TheBigOldDog on September 30, 2008 at 11:04 AM

Did kudlow think that was sufficient absent the Paulson plan or some modification?

phronesis on September 30, 2008 at 11:08 AM

In no way, shape or form is McCain showing leadership here. Drop the partisan blinders and realize McCain totally bungled this up. His senatorial half measures have really shown how poorly a guy used to working in groups adjusts to a leadership roll.

He’s cost himself this election, he’s cost the republican party its credibility and he’s probably ensured that Palin will have no future in national politics.

Bang up job, jerk off.

lorien1973 on September 30, 2008 at 10:56 AM

Amen. McCain needed to drop the bipartisianship nonsense two weeks ago. His stupid gimmick about pulling out his pen and letting us know their names has worn thin. From two weeks ago until the election, he should have been pointing the finger at everyone who caused this mess and recounting the timeline that led us here. But the time when he could have hung the CRA, the lending practices, Fannie Mae, and Freddie Mac, Frank, Dodd, community organizers, and Obama himself around Obama’s neck has come and gone.

McCain’s a screw-up.

BuckeyeSam on September 30, 2008 at 11:09 AM

Ed Morrissey: Where is Barack Obama?

Planing his inauguration.

MB4 on September 30, 2008 at 11:09 AM

I miss Mitt.

ctmom on September 30, 2008 at 11:09 AM

No matter what happens, it’s the Republican’s fault.

MarkTheGreat on September 30, 2008 at 11:09 AM

McCain wanted to “own” this issue. Well, congratulations, you do. And now the media is running 24/7 coverage of the collapse of the American economy (thanks in no small part to Bush) as part of an attack to destroy the Republican party once and for all.

McCain needs to repudiate Bush, say he was wrong and denounce any attempt at this boondoggle. This is OK, because he’s bucked the system before. Boom. You’re the “new” Republicans stopping corruption by talk and by walk. Y’know… the thing you said you brought Palin onto your campaign for?

Skywise on September 30, 2008 at 11:09 AM

Congress simply cannot escape its responsibility for its deliberate issuance of junk bonds through Fannie Mae and Freddie Mac based on bad loans, and until Congress acts to provide some sort of rational floor for the MBSs it launched, American credit will have little credibility.

Money quote, Ed. They haven’t fixed the problem.

You aren’t familiar with their new monetary policy theory that includes the assumption that the money supply is infinite? (seriously)

CC

CapedConservative on September 30, 2008 at 11:00 AM

that whirring sound you hear are the printing presses showing us all that money supply is indeed infinite.:)

a capella on September 30, 2008 at 11:10 AM

McCain gets handed an opportunity to fight for the 80% of American sentiment AGAINST this bailout bill and what does he do with it? He uses it to build bi-partisanship with democrats to push the bill through. Way to go, Maverick. LOL!

Now, the question is, why would he do that? What story hasn’t been told yet in the media (except by Michelle)? Why is Bush pushing this so hard? Here;’s some hints: HNMA + HAUS = ALT-A foreclosures.

This is the huge boulder under the financial crisis current. Bush and McCain want it to stay that way.

Fletch54 on September 30, 2008 at 11:10 AM

John McCain, is he running for something? His campaign has been invisible here in PA since he “suspended” a few days ago–to go do nothing in DC.

james23 on September 30, 2008 at 11:11 AM

Where is Barack? He is waiting until all is resolved so then he can say the solution was his idea “as he has consistently said.”

Oleta on September 30, 2008 at 11:12 AM

Obama actually came out with the FDIC suggestion earlier this morning, BEFORE McCain.

Well I read about this idea yesterday at NRO. Also, the same idea was part of Eric Cantor’s workup. The point being, the Republicans are at the very least coming up with proposals and ideas. What are the Democrats doing (any of them) except parroting the ideas of others or trying to infuse pork into legislation?

JonPrichard on September 30, 2008 at 11:12 AM

MB4 on September 30, 2008 at 11:07 AM

They have to stop the silent bank runs that are going on right now. Small businesses especially are pulling their working capital accounts to be safe and that’s causing a liquidity crisis at the community bank level – the changes are needed in the FDIC insurance levels just to stabilize the retail banks.

TheBigOldDog on September 30, 2008 at 11:12 AM

BO is waiting to see what works and then say “me too, uh, you know that I have been saying this all along”.

d1carter on September 30, 2008 at 11:13 AM

Obama proposed the increase to $250K a few hours ago, according to stuff on the Real Clear Politics website. McCain is a “me tooer”.

jim m on September 30, 2008 at 11:13 AM

Hussein’s already taking credit for this suggestion.

Of course, that’s how the media will report it.

madmonkphotog on September 30, 2008 at 11:13 AM

Also, a question:

IF WE HAVE $1 TRILLION to SPEND, WHY DO WE HAVE A DEFICIT in our BUDGET?

originalpechanga on September 30, 2008 at 10:55 AM

Come on now, that would be too much of a common sense question.

CP on September 30, 2008 at 11:14 AM

2 ?s

What is MBS?

What is “Mark-to-Market”?

davidk on September 30, 2008 at 11:14 AM

Ed,
Obama said to call him if they need him alright? He’s aloof so whats the big deal?

/sarc

justinok on September 30, 2008 at 11:15 AM

It bothers me Obama must always toss in some snark with his statements, like, others are finally doing what he already proposed, he said it all along, Bush/McCain, and any other partisan angle you can think of. Him against the evil, doubting, calculating Others. For him it’s not about the positions he takes, but it’s about him. He can’t be a statesman. Why is the world drawn to these kinds of leaders? We’re not a third world country, we’re a nation of laws, not passions. Prez Obama on Nov 4 is highly likely. It’s sick, isn’t it?

Paul-Cincy on September 30, 2008 at 11:15 AM

Did kudlow think that was sufficient absent the Paulson plan or some modification?

phronesis on September 30, 2008 at 11:08 AM

He’s prefer the plan but after watching what happened and how well the FDIC has handled it they are convinced it may be enough with just minor tweaks – e.g., suspend mark-to-market, etc.

TheBigOldDog on September 30, 2008 at 11:15 AM

Dave Ramsey segment on Alternative bailout plan

about the Mark to Market accounting change and extending FDIC. sounds good to me, definitely better than the ‘do nothing approach’ and making Paulson a Economic Czar

jp on September 30, 2008 at 10:57 AM

I heard Mike Gallagher interviewing a Congressman from Iowa about this Mark to Market accounting. He had a list of 4-5 things (none of which I understood). The M to M sounds promising though.

Mr_Magoo on September 30, 2008 at 11:16 AM

Obama wont support until their is an overwelming Majority.
Until then he Voting “Present”

Amadeus on September 30, 2008 at 11:16 AM

Who was the first to propose the FDIC insurance increase? I saw an article this morning from Obama saying the exact same thing.

Skywise on September 30, 2008 at 10:54 AM

Republican Mike Pence talked about it on Hannity last nite. It’s the Repubs idea, now the democrats are going to try and steal it.

darwin on September 30, 2008 at 11:16 AM

What is MBS?

What is “Mark-to-Market”?

davidk on September 30, 2008 at 11:14 AM

Dude! Google…

Mr_Magoo on September 30, 2008 at 11:17 AM

Hey McCain, why not tell Congress to cut capital gains taxes and corporate taxes 1st!!!!

God forbid, we actually do something, OTHER THEN hamper our economy or let the private sector actually work.

TheHat on September 30, 2008 at 11:18 AM

The problem with the current FDIC $100k limit is that many rich people were using money market accounts for safety during this turbulent market. When banks started failing, they took their money out of banks and bought T-bills. So a run on the banks has already started. The increase in FDIC is to try to stop any more money from flowing out of the banks.

huckleberryfriend on September 30, 2008 at 11:18 AM

What is beginning to bother me about the post vote spin is the constant observation that many voted against the bill because of overwhelming public opposition to its passing just weeks before an election.

It is annoying that a number of people have made that observation like its a bad thing. I see it as representation. I see it as the system doing what it is supposed to do. Citizens forcing their elected representatives to represent their views.

I am heartened that the views of the vocal public were so overwhelmingly opposed to this socialistic bail-out.

Stephen Macklin on September 30, 2008 at 11:19 AM

I don’t know if now is the right time to increase from $100,000 to $250,000 FDIC insurance on deposits.
Say a person currently has $250,000 in stocks or mutual funds. They would like to sell them and put the money in the bank. But they don’t sell because the bank only insures their desposit for $100,000.
But if the limit is raised to $250,000, people will sell even more stocks and cause the stock market to fall further.

(And where is Obama whining that this just helps the rich, not the poor?)

albill on September 30, 2008 at 11:19 AM

davidk on September 30, 2008 at 11:14 AM

Mortgage Backed Security. But, go through this presentation to get a general understanding in laymen’s terms what’s going on:

TheBigOldDog on September 30, 2008 at 11:21 AM

The FDIC solution seems to be gaining popularity with Republicans, and that may help keep depositors from starting bank runs, but it doesn’t do much to resolve the real cancer at the heart of this financial crisis.

As I remember the WaMu situation, the FDIC didn’t have enough money to cover all of WaMu’s customers in event of failure — so they preemptively seized the bank before it failed; then, rather than hanging on to the assets, and trying to sell them at a market price, they sold them to JPMorgan at 2cents on the dollar.

If they didn’t have enough money at $100,000.00 per customer, how are they going to come up with 2.5 times that amount?

Their main power seems to be the ability to seize banks for the fun and profit of their friends.

unclesmrgol on September 30, 2008 at 11:21 AM

Dude! Google…

Mr_Magoo on September 30, 2008 at 11:17 AM

Oh, so you don’t know either?

Seriously, I tried Crawler without luck.

(Now I suppose I’ll get grief for using a deficient search engine.)

davidk on September 30, 2008 at 11:21 AM

albill on September 30, 2008 at 11:19 AM

Many people have already sold their stock portfolios and bought treasury bills. It would be better for the economy if the money DID go into banks rather than treasuries.

huckleberryfriend on September 30, 2008 at 11:22 AM

So,McCain says its going to hit mainstreet,
and has some solutions,

but,

Hopey doesn’t have a clue,and says hits
going to hit Wall Street!!!!

Me thinks this is perplexing,to say the
least!!

canopfor on September 30, 2008 at 11:25 AM

They have to stop the silent bank runs that are going on right now. Small businesses especially are pulling their working capital accounts to be safe and that’s causing a liquidity crisis at the community bank level – the changes are needed in the FDIC insurance levels just to stabilize the retail banks.

TheBigOldDog on September 30, 2008 at 11:12 AM

I doubt that raising the $100,000 to $250,000 is going to increase trust as there isn’t even enough FDIC insurance to pay the $100,000. I don’t think that saying “Hey, we we’ll just print more money” and debase the dollar even more is going to increase trust.

MB4 on September 30, 2008 at 11:26 AM

He’s cost himself this election, he’s cost the republican party its credibility and he’s probably ensured that Palin will have no future in national politics.

Bang up job, jerk off.

lorien1973 on September 30, 2008 at 10:56 AM

Oh, and NOW you want McCain to criticize GW Bush?

Where were you when McCain bashed Bush and Rumsfeld in 2004 and 2005? Saying that was proof of what a horrible guy he was, for daring to criticize Bush?

How about a few months ago when McCain visited LA with Gov Jindal, and (correctly) said that the Bush administration civilian response to Katrina was incompetent?

How about when McCain criticized Chris Cox?

Were you one of the people calling McCain a traitor for those criticisms?

But you now expect him to take your advice and go on a full on crusade against Bush/Paulson/Pelosi?

Yeah, you want him to win.

Just like you have for the past two months when you have said every time any issue gets attention, that it’s going to be the one that makes McCain lose.

Just like the “concerned Christian conservative’ that you are, I suppose.

funky chicken on September 30, 2008 at 11:27 AM

This could be a good long-term strategy. McCain has already admitted that macro-economics is not his strongest point, and didn’t say anything about FDIC or a $1 trillion Treasury rainy-day fund last Thursday when he first went to Washington. He has been talking to GOP House members these past few days and getting an education about these things, probably from GOP House members who have been getting an earful from their districts AGAINST the bailout.

Perhaps Republicans will be able to either work out a better compromise with enough Democrats to pass the bill, or put enough pressure on the President and Treasury Secretary to adopt a Fed / FDIC plan completely through the Executive Branch, and the markets and banks could be reassured WITHOUT a taxpayer-funded bailout.

If so, (and this is a big IF), McCain can come through this looking like a DOER while Obama is a talker–out campaigning but not talking to Congress while all this is going on. Then he can run ads saying that Fannie and Freddie got us into this mess with Democrat support, McCain tried to reform it in 2005, and when the crisis hit, McCain was working with the Congress and the President to get something done, while Obama was out blaming Bush and doing nothing.

Ir’s a big gamble, but it could win the election for him if he gets it done.

Steve Z on September 30, 2008 at 11:28 AM

Here in St. Louis, the Fox News Channel interviewed some people on the street and they were against the bailout. They also interviewed a couple of professors at Washington University who said that it was necessary and the Republicans were bad, bad people who didn’t realize the seriousness of the situation.

They also reported that new home sales were up here and so were car loans but that the loan requirements have been tightened. Which makes sense to me. Local banks are doing just fine which includes such biggies as U.S. Bank and Bank of America and were loaning money. No runs on banks here!

Vince on September 30, 2008 at 11:28 AM

Mortgage Backed Security. But, go through this presentation to get a general understanding in laymen’s terms what’s going on:

TheBigOldDog on September 30, 2008 at 11:21 AM

Thanks–and thanks.

davidk on September 30, 2008 at 11:28 AM

Ed,
Did you know that the treasury bought over $200 billion of debt from Wachovia and that Citigroup only assumed $40 billion. Where did Treasury get the approval for that $200 billion? This is till at taxpayer expense. If he can do it on a whim like that, then why this bruhaha about needing a bill for $700 billion?

paulsur on September 30, 2008 at 11:30 AM

Don’t despair about the 2008 Presidential election. Two weeks ago, before this financial “crisis,” McCain-Palin was statrting to build a lead. Everything can change again in a matter of weeks.

Right now, the important thing is to get the financial “crisis” over. Obama has not played a constructive role and would not know how, whereas McCain tried while Democrats played cynical politics. In time, that difference will be seen.

All that is happening now is that at a time of economic “crisis” and uncertainty and of disenchantment with George Bush, many Americans are leaning to vote Democrat without regard to how socialist Obama is. End the “crisis,” and a different electoral dynamic will play.

Phil Byler on September 30, 2008 at 11:32 AM

I doubt that raising the $100,000 to $250,000 is going to increase trust as there isn’t even enough FDIC insurance to pay the $100,000. I don’t think that saying “Hey, we we’ll just print more money” and debase the dollar even more is going to increase trust.

MB4 on September 30, 2008 at 11:26 AM

I will help becuase there was an unintended consequence of the extension of insurance to Money Market funds the other day. All of a sudden, riskier MM funds received unlimited protection so money flew out of deposit accounts into MM accounts at places like Fidelity for example….

TheBigOldDog on September 30, 2008 at 11:32 AM

As I remember the WaMu situation, the FDIC didn’t have enough money to cover all of WaMu’s customers in event of failure — so they preemptively seized the bank before it failed; then, rather than hanging on to the assets, and trying to sell them at a market price, they sold them to JPMorgan at 2cents on the dollar.

If they didn’t have enough money at $100,000.00 per customer, how are they going to come up with 2.5 times that amount?

Their main power seems to be the ability to seize banks for the fun and profit of their friends.

unclesmrgol on September 30, 2008 at 11:21 AM

My dad told me that WaMu was destined to fail because they were by far the most aggressive, starting back in the 1990s, in pursuing subprime clients. He said that they started building branches in “the ghetto” and giving loans to “bums” … they hid their losses because apparently they still had lots of dupes using their bank and keeping the house of cards standing.

2 cents on the dollar may have been all WaMu was worth….perhaps we shoud be grateful JP Morgan/Chase was willing to take even that risk

funky chicken on September 30, 2008 at 11:32 AM

Republicans are once again losing the perception war. The truth really doesn’t matter much these days.

This seems like a politically viable solution as it focuses on a perception of spending taxpayer money to protect taxpayers, rather than all those greedy fat cats on Wall St.

If McCain can manage to relocate his testicular fortitude, speak directly to the people and try hard not to look like an erratic old man, this might just work.

I wish I felt more optimistic.

Dorvillian on September 30, 2008 at 11:32 AM

Dude! Google…

Mr_Magoo on September 30, 2008 at 11:17 AM

Oh, so you don’t know either?

davidk on September 30, 2008 at 11:21 AM

Sorry davidk. That was rude of me. No excuses.

I actually heard a Congressman from Iowa talk about Mark to Market. Here is a Forbes article.

Mark to Market article

Mr_Magoo on September 30, 2008 at 11:33 AM

Taking Mr. Magoo advice, I came up with

In accounting and finance, mark to market is the act of assigning a value to a position held in a financial instrument based on the current market price for the instrument or similar instruments. For example, the final value of a futures contract that expires in 9 months will not be known until it expires. If it is marked to market, for accounting purposes it is assigned the value that it would fetch in the open market currently.

–Wikipedia

Umm. *scratching head* OK.

(I guess that is why I drove the litte bus.)

davidk on September 30, 2008 at 11:33 AM

The greater point here is that everything Obama has as the basis of his entire campaign has been completely wiped out. All the programs he has promised cannot be funded. The empty suit is truly now the empty suit. He has absolutely nothing to offer.

Connie on September 30, 2008 at 11:35 AM

Starlink on September 30, 2008 at 11:32 AM

Overnight libor hit an all time high last night. the credit market is weakening further. Stocks are up in large part because there is renewed hope of a bailout plan.

phronesis on September 30, 2008 at 11:35 AM

As I remember the WaMu situation, the FDIC didn’t have enough money to cover all of WaMu’s customers in event of failure — so they preemptively seized the bank before it failed; then, rather than hanging on to the assets, and trying to sell them at a market price, they sold them to JPMorgan at 2cents on the dollar.

If they didn’t have enough money at $100,000.00 per customer, how are they going to come up with 2.5 times that amount?

Their main power seems to be the ability to seize banks for the fun and profit of their friends.

unclesmrgol on September 30, 2008 at 11:21 AM

The FDIC has credit lines to the Treasury and can draw whatever they need but the majority of there capital comes from the financial institutions themselves in the form of insurance premiums on the deposits.

What you have to realize is, the more capital flies out of deposits the greater the likelihood the FDIC has to step in. They have to find a way to keep depositors and the way to do that is give people the security blanket they need to feel safe.

TheBigOldDog on September 30, 2008 at 11:36 AM

Just like the “concerned Christian conservative’ that you are, I suppose.

funky chicken on September 30, 2008 at 11:27 AM

You keep repeating this claim. I’m a concerned agnostic conservative. Please get it right next time you throw around while accusations. Okay?

And I’ve been harping on McCain for about 3 weeks now for not attacking and whining about media coverage, lipsticked pigs, etc. That’s what I’ve been harping on. His bone headed tactics.

I was castigated last week for saying that McCain was stupid to suspend his campaign. And I said he may as well not even bother to restart it.

Know what? I was right.

I was also right in how to handle Palin. I’ve been saying -forever- that she should have started with friendly interviews (hannity, rush, levin, ingraham, cavuto etc) to get used to the questions and how to think quickly. Then move into less and less friendly environs. Look what McCain did. He threw her to the wolves and she got torn apart.

Congrats, jerk off. Palin had a great future potential. Wasted. Because McCain is a moron. Because of mismanagement.

And I’ve donated about $1500 to this campaign this cycle. And I’m gonna get a huge tax increase come January thanks to his bungling. Nice job, jerk off.

lorien1973 on September 30, 2008 at 11:36 AM

Rush Limbaugh has nursed an extreme personal antipathy toward John McCain for at least a decade.

McCain really shouldn’t take any advice from that guy. Talk about risk of a poison pill. McCain can just keep listening to his friend Steve Forbes and keep trying to work toward a sensible solution.

I think it’s hilarious that the most strident GW Bush supporters, like Limbaugh and Ingraham are now the ones screaming for McCain TO DO SOMETHING!!11!! But if McCain does anything, those same people will be the first to turn on him and scream that he’s just attacking poor GW Bush.

funky chicken on September 30, 2008 at 11:37 AM

Marked to Market= You hold an investment that matures in 30 years(a mortgage for instance) You value it at its maturity date or as if it will get paid for. If you sell it now, what is it worth. If you have to “mark” the value to it’s actual value now, you get what the asset is actually worth should bad things happen and you have to sell right now.

Vince on September 30, 2008 at 11:37 AM

Starlink on September 30, 2008 at 11:32 AM

I know. Just when we think he is shaping up to be what we need as a condidiate, he purposely does the opposite of what is expected just to be “Mavericky”.

I’m also tired of them trying to mold Palin into a Maverick. One is quite enough thank you.

Mr_Magoo on September 30, 2008 at 11:39 AM

I will help becuase there was an unintended consequence of the extension of insurance to Money Market funds the other day. All of a sudden, riskier MM funds received unlimited protection so money flew out of deposit accounts into MM accounts at places like Fidelity for example….

TheBigOldDog on September 30, 2008 at 11:32 AM

Sounds like Whack a Mole to me and without much Real money to whack the mole with. Every time they do something to try to make one thing better they make something else worse. The U.S. Government just doesn’t have enough real money to be whacking all over tarnation.

MB4 on September 30, 2008 at 11:40 AM

Sorry davidk. That was rude of me. No excuses.

I actually heard a Congressman from Iowa talk about Mark to Market. Here is a Forbes article.

Mark to Market article

Mr_Magoo on September 30, 2008 at 11:33 AM

I assure you, no offense was taken.

Thanks for the article.

People who are very smart are taking opposite positions. ? I can only try to decide which one involves the least Government involvement. Was it Franklin who said that giving up freedom for security will net neither?

davidk on September 30, 2008 at 11:42 AM

All of a sudden, riskier MM funds received unlimited protection so money flew out of deposit accounts into MM accounts at places like Fidelity for example….

TheBigOldDog on September 30, 2008 at 11:32 AM

Actually I saw something someplace that said that the MM protection was as of just MM deposits as of something like Sep 19 rings a bell, but I’m not sure. Just saw something like that at a glance.

MB4 on September 30, 2008 at 11:43 AM

Good pitch. He needs to capitalize on it. Republicans need to ask where Obama’s plan is.

Star20 on September 30, 2008 at 11:43 AM

The bottom line of the rebellion isn’t a partisan split or a bad speech by Pelosi right before the vote — although that certainly didn’t help — but overwhelming opposition by voters five weeks before a national election.

Ed Morrissey

There are, conceivably, good reasons to vote against a bailout in a national emergency — if you think it’ll do more economic harm than good, if you think it accrues too much unchecked power to the executive — but being honked off at Nancy is not one of them.

Allahpundit

Once again, we see above that Allah jumped the gun to defend and side-with the Democrats and point the finger of blame at Republicans. If you have read HotAir for long, you come to expect this from Allah, I think its a shame.

Allah did the same thing here:

it’s pretty clear she doesn’t know what he means by the Bush Doctrine and can’t answer the Pakistan question in anything but platitudes about stopping Islamic extremism.

Allahpundit

As it turned out, so called “Bush Doctrine” is a fabrication of the media, nobody knows what the “Bush Doctrine” is, including Bush or even those who “claim” to know.

And again here:

The only thing I dislike more than defending The One is defending him over and over again on the same charge. This is a perennial accusation against him, dating first from his Senate race with Alan Keyes, then recycled last year by Romney, and now coopted by Maverick for a little culture-war magic. David Brody at CBN wrote a useful post the last time it came up: Essentially, “comprehensive” sex education for young kids would go no further than teaching them what constitutes inappropriate touching by adults. To watch this, you’d think Barry wants to give them coloring books titled, “Why Does It Burn When I Pee?”

Allahpundit

Once again Allah was quick to tell us the Republicans were wrong and in this case he and David Brody from CNN were right. The part of the quote in italics by Brody turned out to be DEAD WRONG. But at least on the above post Allah more or less admitted later that he was wrong with this follow up. All I’m saying Allah is you need to do your research before pointing the finger of blame at the Republicans, you have a bad habit of skipping that step.

Maxx on September 30, 2008 at 11:44 AM

where are you guys getting all of your information regarding McCain and Palin. Someone started this BS that “they” are trying to mold her into McCains image and everyone takes that as gospel. Could everyone just settle down until after the debate on Thursday? Some of you people are taking a stand now and won’t have the courage to back off when the debate turns out to be a winner for her. People, real people will judge her on this debate. This is it. If she looks bad I will admit I’m wrong but I am optimistic….. damn it!

Vince on September 30, 2008 at 11:45 AM

MB4 on September 30, 2008 at 11:40 AM

Yep. Bear hunting with a willow switch.

a capella on September 30, 2008 at 11:46 AM

I get the upping of the $250,000 FDIC thing. McCain just said that some small businesses may have that much or more in their business accounts and need the insurance upped so they do not lose their money.

McCain latest chat in IA was good with the Sonic example, but the dude is going to have to get jazzed over some of this. He sounded like he was sleepy. He was okay on Fox this morning, but it was still not enough. However, Laura Ingraham just said on her radio show that we cannot become emotionally attached to wanting McCain to be the Conservative WE WANT because that is not who he is. I think we began thinking with the naming of Palin that perhaps we had won him over, or at the minimum there was hope he had seen the light. So, to me our frustration with what he is not doing is understandable because we are Conservatives, and Mac is not. We are trying to put a round peg in a square hole.

However, perhaps we need to put some pressure on the GOP or Congressional members to do what the McCain camp will not in going out there and calling things the way they really are. Rudy, Mitt, Newt, et al could go out there and do what McCain will not as well as those in Congress who are Conservatives. I suggest we contact some of these folks and let them know what we think about the lack of attacks on Obama, Pelosi, Dodd, Frank and Reid. And of course ACORN, Fannie Mae, Freddie Mac and all that is that mess.

freeus on September 30, 2008 at 11:46 AM

Vince on September 30, 2008 at 11:37 AM

Thanks, your comment helped. I’m starting to piece it together now.

davidk on September 30, 2008 at 11:47 AM

[Test. My posts are disappearing!]

MrLynn on September 30, 2008 at 11:47 AM

Where is Barack Obama?

On the phone staying apprised of the situation via Paulson, BFFE.

Actually, his puppet masters put him down & out into hypnotic trance while drilling him with the teleprompter, to impress into his psyche the correct “message” for his next appearance. How effective are his down & out sessions?

maverick muse on September 30, 2008 at 11:49 AM

MB4 on September 30, 2008 at 11:40 AM

No question. It’s like hugging a balloon.

TheBigOldDog on September 30, 2008 at 11:52 AM

freeus @ 11:46 AM

Amen, amen, amen. Where are all of the conservative pundits and politicians? I know that our side dosen’t like to lie or get hysterical but we need the troopes to get aggressive and negative on these worms. Fox ought to say the heck with fair and balanced keeping Obama out of office is important!

Vince on September 30, 2008 at 11:53 AM

From the dead thread, a description of the “properties” owned by WaMu, and now by Morgan/Chase:

Simple question. If demand for credit is so high, and we’re now out of credit, why aren’t interest rates rising?

Oh wait – it’s because they think we’ll hand them $700 billion dollars.

Buying property sight unseen is a stupid idea. Buying property that nobody else wants to buy is an even stupider idea. I live near Detriot – these houses are in horrible condition! The copper pipes and kitchen cabinets are stripped out, the roofs have holes in them….they’re not worth .70 on the dollar in any market, and certainly not this one.

Mike Rogers from Michigan has a much better plan! Darryl Issa seems closely aligned too! There are better options than handing Bush’s cronies another blank check.

angelat0763 on September 30, 2008 at 11:32 AM

Again, 2 cents on the dollar may be too much.

funky chicken on September 30, 2008 at 11:53 AM

Seems like increasing the FDIC insurance would be a good thing. Mark to Market needs to be done away with…for a while. Lets get the market stablized. Then we can do away with Fannie Mae and Freddie Mac….but we have to win the election to do that…

PierreLegrand on September 30, 2008 at 11:53 AM

Connie on September 30, 2008 at 11:35 AM

In the debate, when asked what he would cut, he refused to answer directly. But, it doesn’t seem to matter if the polls are anywhere near accurate.

a capella on September 30, 2008 at 11:53 AM

I don’t mind raising the FDIC limit. It should have been adjusted for inflation a long time ago, actually.

Buying these properties, sight unseen, is retarded. Absolutely retarded.

Let the holding companies go banktupt and then take the loans in receivership as a creditor.

Banks shouldn’t get special treatment.

As I said in another thread, a lot of these houses are literally qualified to be condemned, because the previous owners literally gutted them on the way out. Buying them for 70% of the original loan value is a terrible, terrible mistake. It will be another version of public housing.

angelat0763 on September 30, 2008 at 11:55 AM

funky chicken on September 30, 2008 at 11:53 AM

Are you a Soprano’s fan? They incorporated that into their schemes in one of the last seasons years ago, That’s when you know the end is near – when the scams makes it into pop culture… The different gangs were fighting over the crooked appraisers. They recruited a Black preacher (Sharpton type) and a Black business man into the scheme. They got inflated loans on crack houses, when in and stripped them of the copper, etc. and walked away from them…

TheBigOldDog on September 30, 2008 at 11:59 AM

funky chicken on September 30, 2008 at 11:37 AM

Rush may not be a huge McCain fan but he would never steer him wrong because of it. He will always come at a subject from a conservative philospy basis. I realize that he may not be correct but I think it is unfair to say that he would purposely give advice to scuttle the country or insure an Obama presidency. Besides he REALLY likes Gov. Palin.

Cindy Munford on September 30, 2008 at 11:59 AM

but we have to win the election to do that…

PierreLegrand on September 30, 2008 at 11:53 AM

That’s getting more and more out of sight. Obama is up 6 and 8 in the two main tracking polls and just a couple of weeks ago McCain was up by a few in the same polls. Obama is even up in Virginia which Bush won by about 8 percent in 2000 and 2004.

The Fat Lady may not have sung yet, put she is coming on stage and she is giving McCain a very dirty look.

MB4 on September 30, 2008 at 12:04 PM

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