Open thread: Senate bailoutmania! Update: Bailout passes, 75-24
posted at 7:02 pm on October 1, 2008 by Allahpundit
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The vote’s set for 7:30 ET on C-SPAN, assuming the windbaggery on the floor is finished by then. It should pass with 70+ votes, three of which will come from McCain, Obama, and Biden. Will it pass the House on Friday? All signs point to … no:
House Majority Leader Steny Hoyer said Wednesday he was “personally disappointed” that the Senate added a package of tax breaks to the bailout bill.
However, Hoyer said he had spoken to House Minority Whip Roy Blunt “four or five” times on Wednesday and expressed hope that they could come to an agreement on the bill.
Tapper delved into this a bit further earlier today:
While the Senate will pass its version of the rescue bill with more than 70 votes, according to Senate sources, Senators have taken the partisan bickering over the rescue bill and added a stalled disagreement over a separate issue — “tax extenders,” or extending various tax relief provisions that are due to expire — into the mix…
But some conservative Democrats have expressed serious concerns about the fact that extending these tax cuts is not being paid for in the budget. Adding the provision may attract House Republicans, but it could alienate these fiscally-conscious Democrats, causing them to abandon the 140 House Democrats who voted for the bill to join the 95 who voted against it…
The implication: not only will Boehner need to provide the entire 13-vote margin that the bill lost by on Monday, but also that the addition of the unpaid-for “tax extenders” could cause up to 17 Democrats who voted for the bill Monday to walk. If not more.
Will the Senate bill clear the House? Will the economy be rescued? Will your humble correspondent succeed in his reckless gambit to hold onto his retirement portfolio until the bailout passes and the market spikes, whereupon he’ll duly unload his shares before the S&P inevitably tanks? Tune in tonight for episode one!
Update: The bailout clears its first hurdle, 75-24, and an anxious blogger lowers the revolver pressed to his temple. Tomorrow night: Russian roulette, as Palin takes the stage against Biden and the House tries to choke down this fat, greasy piece of pork. If it doesn’t? Expect Pelosi to come back with a third iteration of the bill even less palatable to conservatives than this one was. Something’s going to pass soon; we might as well get the best deal we can.
Check here soon for the roll of glory reluctance!
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“Uh, that would be illegal, Posse Commitatus and all.
JonPrichard on October 1, 2008 at 10:34 PM”
You are thinking in the past.
Star20 on October 1, 2008 at 10:36 PM
Heh. Sad isn’t it?
I live in Texas just outside Dallas. The gun stores aren’t chock full right now. I’m thinking this is because Texans are already quite well armed. I did go buy a few boxes of buckshot though.
JonPrichard on October 1, 2008 at 10:37 PM
What they heck! Is the military planning for martial law? Every day it’s something else.
Army Times is widely read by servicemen right? It isn’t a tinfoil rag is it?
flyfisher on October 1, 2008 at 10:37 PM
If it’s free…go for the buffet and the booze. If not free, stay home.
ManlyRash on October 1, 2008 at 10:38 PM
You’re saying Posse Commitatus has been rolled back? Or are you suggesting Obama will eliminate it entirely?
JonPrichard on October 1, 2008 at 10:39 PM
I lived in North Dallas for a while and I loved it there. It wouldn’t take any arm twisting for me to move my family back to Texas.
flyfisher on October 1, 2008 at 10:39 PM
The latter.
ManlyRash on October 1, 2008 at 10:40 PM
I thought McCain may have won the election with his pick of Sarah Palin, but McCains’s been acting stupid lately and this may now cost him the election.
RJL on October 1, 2008 at 10:40 PM
You think that will stop Dear Leader President Obama?
bill30097 on October 1, 2008 at 10:41 PM
I wondering if I could get used to the cold of Alaska…Todd Palin President is hot! (after the succession I mean)
CCRWM on October 1, 2008 at 10:41 PM
JellyToast:
I think a lot of you guys have lost your minds. Free mental health????Maybe you need it.
This is not socialism just because a bunch of hysterics say it is.
I give up. BTW, I take it the wool thing is in reference to the tax credit, do you want to raise taxes on wool producers or something?
You know, we could lose more in a week in this disaster than this bill will cost? That is the truth.
But you don’t care. You are convinced it is all lie.
Yeah sure, and 9/11 was an inside job.
Now, I have to go to bed so that I can get up and go the job I hope I still have 6 months from now.
Terrye on October 1, 2008 at 10:41 PM
Jon,
Posse Dommitatus does not apply to The One.
Star20 on October 1, 2008 at 10:42 PM
It’s obvious what’s going on here. They are setting up Republicans to make a collosal mistake so they can knock them down. Take a look at AP’s coverage. They’re claiming that people suddenly support the bailout which contradicts their own poll.
This will turn into a disaster and Republicans will be blamed for not listening to the people. And rightly so.
Stocks are already falling.
Dr B on October 1, 2008 at 10:42 PM
Looks like good stuff there in that article. We just need to pass a new Quartering Act, and we’ll finally realise the true state of nirvana our country has struggled to achieve lo these past two and a quarter centuries.
BryanS on October 1, 2008 at 10:42 PM
Sue on October 1, 2008 at 10:35 PM
No they didn’t and that’s the worst thing about this abomination. The houses just aren’t worth what we all thought they were, this stupid bill will simply prolong the pain of that reckoning and cost us dearly in the meantime.
WTF am I doing even voting for these federal gasbag politicians any more, all they do is screw me.
Bishop on October 1, 2008 at 10:42 PM
OMG.. they loaded it up with Global warming stuff? and other things? WTF? Are these people retarded?
Chakra Hammer on October 1, 2008 at 10:42 PM
It’s free, by invite only. But I’m sure “Donations are appreciated.”
IrishEi on October 1, 2008 at 10:42 PM
I live in Heber Springs, Arkansas. Almost everyone here has a gun, most have more than one. I work with a man who is also a Nam vet. Last week he bought two guns, a hand cannon and a shotgun. He told me he hasn’t fired a shot since ‘71.
Stayright on October 1, 2008 at 10:43 PM
Hmm. I wonder what it would take to push this country into an actual civil war? The election of Lincoln was a real tipping point the first time. I wonder if the election of Obama would be similar (how ironic eh?). What would it take for the entire middle and south of the country to just finally take up arms as well regulated militias?
JonPrichard on October 1, 2008 at 10:45 PM
Manly Rash,
How serious is the threat of secession, on a scale of 1 to 10, with 10 being “Let’s start designing our red state flag?”
Star20 on October 1, 2008 at 10:45 PM
A “hand cannon” and he hasn’t fired a shot since before I was born? Hmmmm…
I wouldn’t want to be at the range when he sights that sucker in.. >:D
Chakra Hammer on October 1, 2008 at 10:46 PM
OMG.. they loaded it up with Global warming stuff? and other things? WTF? Are these people retarded?
Chakra Hammer on October 1, 2008 at 10:42 PM
Yes, yes, I don’t know, emphatically yes.
Bishop on October 1, 2008 at 10:47 PM
Stayright,
Wow. The aftermath of Katrina is what got me to think about getting a gun. I’ve seen too much, but I have to protect my family.
Star20 on October 1, 2008 at 10:47 PM
8
Oh yeah, forgot. Apparently neither do the laws of physics, rationality or even the sage advice of Miss Manners.
JonPrichard on October 1, 2008 at 10:47 PM
If We make a flag It needs to look COOL!
Chakra Hammer on October 1, 2008 at 10:48 PM
The arrows are metaphors for the phallic devices that have just been rammed into our nether regions – without low tax KY jelly.
lorien1973 on October 1, 2008 at 10:48 PM
Chakra Hammer,
I haven’t been in combat since March of ‘69. Being able to aim a gun is one thing. Being able to kill is another.
Star20 on October 1, 2008 at 10:48 PM
How serious is the threat of secession, on a scale of 1 to 10, with 10 being “Let’s start designing our red state flag?” – Star20 on October 1, 2008 at 10:45 PM
At this point? I’d say 2 or 3.
If Obama is elected? Jumps to 5 or 6.
If he begins to govern like a socialist? Jumps to 8.
At that point the red states will probably call for a Second Continental Congress. If Der Ein makes a move to suppress it, the needle jumps to ten as the shooting starts.
ManlyRash on October 1, 2008 at 10:50 PM
Thats true, however I have never been in “combat” but if someone is shooting at me, I will return fire and I can hit what i’m shooting at, be it with a firearm or with a bow.
Chakra Hammer on October 1, 2008 at 10:51 PM
I hear you and dread that the day should come when I am forced to do that.
ManlyRash on October 1, 2008 at 10:51 PM
The only economically viable states are the gulf states. And those are barely viable.
lorien1973 on October 1, 2008 at 10:52 PM
Hmm. I wonder what it would take to push this country into an actual civil war? … What would it take for the entire middle and south of the country to just finally take up arms as well regulated militias?
JonPrichard on October 1, 2008 at 10:45 PM
With the size, organization and power of the US military, a civil war is only possible with different factions of the military joining each side. If that happens, the hierarchical chain of command with a civilian commander in chief is broken and you end up with a military government like we saw for much of the 70’s and 80’s in South America.
neuquenguy on October 1, 2008 at 10:52 PM
Who do you think provides the credit? Banks. And when banks are top heavy with bad debt, they don’t loan money because they fear a run on the bank.
A responsible bank doesn’t put itself in that situation. Ergo, the banks that have been playing games with the depositors money are the same ones you want to give 700 billion dollars to. They have already proven they cannot be trusted to be fiscally responsible and you want to give them $700 billion?
You aren’t convincing ANYONE.
csdeven on October 1, 2008 at 10:52 PM
You got me there. I was always on automatic weapons. 30 cal., 50 cal., 20MM. EVENTUALLY, I ALWAYS hit was I was aiming at.
Star20 on October 1, 2008 at 10:52 PM
I’m tempted to recommend the Stars and Bars – just to piss them off.
ManlyRash on October 1, 2008 at 10:53 PM
Honestly,, I have no clue here,,,
I thought this was such a crisis that the market was suppose to crash LAST THURSDAY OR FRIDAY!!!!
No one still talks about how JP Morgan bought up WaMu
WAMU WAS SUPPOSE TO BE THE BIGGEST BANK FAILURE IN HISTORY AND A SIGN OF THE NEED TO THIS STUPID BAILOUT.
but,, what happened?? Gosh, rainbows and butterflies,, of all things,, JP Morgan just came in and bought them up.
Gosh,, go figure!
So,, here is Wed evening,, markets are,, no bailout as of yet,, and no sky falling as of yet. But,, they all said the sky would fall,, yet,, it hasn’t yet,,,
but,, I have to wonder how much the markets might ,, well, maybe just a little, BE EFFECTED BY EVERYONE IN THE GOVERNMENT SCREAMING THE SKY IS FALLING!
No,, no,, the markets would never be affected by something like the ENTIRE UNITED STATES GOVERNMENT SAYING HELLFIRE WILL FALL FROM THE SKY AND DEVOUR OUR ENTIRE ECONOMY UNLESS THIS BAILOUT IS PASSED YESTERDAY!
No,, I trust Barney Frank. When he Dodd smiles I feel a warm glow.
JellyToast on October 1, 2008 at 10:55 PM
These times are very strange. There’s just something in the air. Two years ago I wrote a novel called Well of Towers. There’s a lot of politics folded into the plot, part of which is open rebellion and nearly civil war. I didn’t get everything right but there are some eerily prescient and scary thoughts.
JonPrichard on October 1, 2008 at 10:55 PM
I ran a business for many, any years. You are wise to conserve your cash and forgo the luxuries that a successful business can provide. Don’t rely on anyone except yourself to grow your business. Then you are in control and not a lending institution.
csdeven on October 1, 2008 at 10:55 PM
Trust me, its a lot harder to hit yer target when its shooting back… some people can do it… some people never get the knack…
Romeo13 on October 1, 2008 at 10:56 PM
I’ve wondered that as well. All I know is that I see and hear extreme frustration in West Tennessee and North Mississippi. The gap between the blue and red states seems wider than ever. Obama’s skin color isn’t his problem here, it’s his near/actual marxism, his preacher, his terrorist friends, taxes, etc. People here love freedom and they are very patriotic, but they know something is wrong in the USA. The Scots-Irish who settled much of the South still hold sway and they retain their historic stubborn independent streak, and many are nearing the limit of their tolerance for big government. The fuel issue still has real legs here. People realize they are paying near $4 a gallon because of enviro-nazi’s in places like Vermont and Oregon and they have about had enough.
flyfisher on October 1, 2008 at 10:56 PM
I disagree. The plains states are the breadbasket of America and they also have quite a bit of oil sitting underneath them. The Gulf states also have access to lots of oil, as does Alaska. Sure, it would be rough going…but that was also the case in 1776.
ManlyRash on October 1, 2008 at 10:56 PM
Now the EU wants to kick in 500 BILLION to support EU banks… What, did they buy our mortgages too?! They couldn’t have been THAT leveraged on our credit system… and Sarbanes Oxley doesn’t apply to the EU…
This isn’t a subprime mortgage issue… wtf are they not telling us?
Skywise on October 1, 2008 at 10:56 PM
I’m sure people have already thought about all this..
Chakra Hammer on October 1, 2008 at 10:57 PM
I’m trying to write a novel – noting political.It’s bitch, isn’t it? Like giving birth.
ManlyRash on October 1, 2008 at 10:58 PM
Quite making me LMAO. This is supposed to be a serious discussion!
JonPrichard on October 1, 2008 at 10:58 PM
BTW, why is McCain pandering to gays? He’s not going to get anymore gay votes than what he’s getting already. Just drop it.
Anyone organizing an Obama Resistance League? We may have to live in the wilderness, and eat nuts and berries. Half-serious.
indythinker on October 1, 2008 at 10:58 PM
well.. lets hope it doesn’t come it.. so I don’t have to find out..
Chakra Hammer on October 1, 2008 at 10:59 PM
The middle officer corp opinions would fit right in here as would 80-90% of the troops. There have been incidents (unreported) in Iraq and Afghanistan with MSM reporters and Libtard politicians. Central Command recommends that Dem politicians not go outside the Green Zone. When some ask about military escort they are told that would not be safe either. The military knows who is on their side and who hates them. ::eats::
bill30097 on October 1, 2008 at 11:00 PM
The crisis has now spread so it is a world banking crisis. It would have been somewhat contained to the US had the House voted wisely on Monday.
If you don’t understand financial matters, and oppose the bill, please stop telephoning your legislators. Thanks.
indythinker on October 1, 2008 at 11:00 PM
I live in a household that has at least 5 guns if not more. And I’m thinking of getting another one. I come from a family of gun owners.
Long live Texas!
atxcowgirl on October 1, 2008 at 11:00 PM
well.. lets hope it doesn’t come to it.. so I don’t have to find out..
Chakra Hammer on October 1, 2008 at 11:00 PM
+1
phronesis on October 1, 2008 at 11:01 PM
Give that man a Kewpy doll…
http://en.wikipedia.org/wiki/Fractional-reserve_banking
Look at the charts at the bottom, Fractional lending has become a house of cards, and not just for us. We now have about 15 times more currency out there, than the Feds actualy created. They are using debt to secure debt… so any downturn makes the whole thing fall apart…
Thats what we are now seeing.
Romeo13 on October 1, 2008 at 11:01 PM
“Now the EU wants to kick in 500 BILLION to support EU banks… What, did they buy our mortgages too?! They couldn’t have been THAT leveraged on our credit system… and Sarbanes Oxley doesn’t apply to the EU…
This isn’t a subprime mortgage issue… wtf are they not telling us?
Skywise on October 1, 2008 at 10:56 PM”
This could be GREAT news! If the EU is in deep because of our Fannie/Freddie/Frank/Dodd/ACORN crap, the heat could help force the truth of the whole damn stinking mess to emerge!!
Star20 on October 1, 2008 at 11:02 PM
flyfisher on October 1, 2008 at 10:56 PM
All the semi-serious discussion of national reaction aside, what you talk about could be a huge resonator in 2010 if Odumbo wins.
Both houses and the Oval Office in democrat hands, with nothing of substance getting done and we’re all told to wear an extra sweater and ride a unicycle to work, would bode ill for the DFL.
Tell you what, if truckers and the like start striking like they did in Spain over fuel prices, you will get an up-close view of democrat intransigence in action, and the reaction from America against them will be fierce.
Bishop on October 1, 2008 at 11:03 PM
And this is what I don’t get about the Obama phenomenon. Most people in the US aren’t socialists, don’t want socialism and wouldn’t vote for it any other time. Is Obama actually the anti-christ? What explains this?
JonPrichard on October 1, 2008 at 11:03 PM
Don’t laugh. A lot of people in my neck of the woods still have the Stars and Bars rolled up in their closet or in their garage. Drive around the country and it won’t take long to find one flying proud. And all of those people who have one can expound on the merits of states rights.
Where is John C. Calhoun when you need him?
flyfisher on October 1, 2008 at 11:03 PM
Chakra,
Romeo is right. You have to keep up a field of fire that is so intense, the other guy can’t pop his head up to fire back. I would have thought McCain would have learned that.
Star20 on October 1, 2008 at 11:04 PM
If you don’t understand financial matters, and oppose the bill, please stop telephoning your legislators. Thanks.
indythinker on October 1, 2008 at 11:00 PM
As the current bill is different from the one they had on Monday and that bill was different from the one hastily thrown together by Paulson, I’d say our legislators don’t understand financial matters either.
So thanks, but I don’t trust the fools who created this mess to be smart enough to get us out of it.
Bishop on October 1, 2008 at 11:07 PM
Well, since I am a financial analyst, and I oppose the bill, I guess I can make the call.
Vashta.Nerada on October 1, 2008 at 11:08 PM
Please, perhaps you would care to take the floor and explain the cause?
The EU does not run on the same credit system as the US. IT doesn’t even adhere to the same laws and unless the EU was heavily tied to Fannie May (which I doubt) our mortgage crisis shouldn’t be affecting them.
It’s obvious now that the mortgage crisis is a symptom, not a cause and that it’s the liquidity markets being dried up causing it because of… ??
Skywise on October 1, 2008 at 11:09 PM
csdeven on October 1, 2008 at 10:55 PM
BryanS on October 1, 2008 at 11:09 PM
My daughter in law works for a title company. She hasn’t closed on a conventional mortgage in St. Louis in a MONTH. They are only closing FHA, VA, and gov’t loans.
One of the guys I go to school with works for his dad who owns an auto dealership. They can only get credit for people with SPOTLESS credit.
I have been waiting for my student loan (bank not govt) for about 14 days now. The disbursement usually happens 3 days after I click “give me money, please” because I have a master promissory note on file. The bank doesn’t know when I will get the funds, they have no ETA, even though they tell me “don’t worry, business as usual, we apologize for the delay.”
The credit crunch is REAL. It is not BS.
Pretty soon my daughter in law might not have enough closings to justify her FT employment, and she could lose her health insurance as a result. My friend’s dad sold fewer cars in Sep by more than 25%. I hope to be able to get my loan for tuition.
I don’t know if the bailout will work. PLEASE PLEASE Bush and Cox change that d*mn mark to market rule and free $200 billion to get things moving. But if nothing is done, then we are REALLY screwed.
Now I’m open for someone to tell me why I’m wrong, what don’t I get?
JustTruth101 on October 1, 2008 at 11:10 PM
McCain was a Pilot… different rules up there.
Romeo13 on October 1, 2008 at 11:11 PM
FASB relaxed mark to market yesterday.
Vashta.Nerada on October 1, 2008 at 11:12 PM
That’s good news, I hadn’t heard they did that. Thanks for the update.
JustTruth101 on October 1, 2008 at 11:13 PM
A prediction…………….
…………… this is not over.
Seven Percent Solution on October 1, 2008 at 11:13 PM
This MBA from Carnegie Mellon with Distinction says you are full of crap
bill30097 on October 1, 2008 at 11:13 PM
Can,, is it at all possible,, that someone overseas is manipulating this as well?? Many people working together??
Lots of money is coming into Obama campaign from overseas. So,, he has someone that is wealthy and taking the time to get these contributions to him.
This thing is very very strange. Timing is very interesting.
And many of the players are,, well,, not trustworthy.
JellyToast on October 1, 2008 at 11:13 PM
I have a lot of thoughts, but they are just theories. I could gripe about our feckless candidates, and I have. I could gripe about the media, and I always do. But what keeps me up at night is the idea that maybe God has given our country over to a grand delusion. Some people saw through Obama the moment they first heard him speak. Others were utterly hooked. It reminds me of the Bill Clinton phenomenon, only much worse. I have a black friend who I am really good friends with. She is someone I can talk openly with about matters of race. Over the years we have discussed, even argued over, many heady subjects. But Obama is completely off limits. He “reminds her of Jesus.”
This country’s reaction to Obama is just so disheartening. I cannot believe that my country is willing to risk their freedom and treasure on a man like Obama.
flyfisher on October 1, 2008 at 11:14 PM
Senator Cornyn:
After writing to you last week, i am very disappointed to see you have decided upon yourself not to represent your constituency tonight. The will of the poeple has overwhelmingly been expressed against this pig bill. yet you voted for it. Not only that, but on your website, you blame Wallstreet for this financial debacle.
It is a shame that you can not stand strong as you did on immigration. It is even more of a shame that you can not accept responsibility that you deserve here. Congress created these GSEs and then did nothing to reign in thier abuses. You and the other members of the senate sat and watched as they destroyed this nation finacially, and then you had the gall to offer them $700 billion doallrs of our money. Shame on you sir. You no longer deserve my respect or my vote.
Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps:
Common Sense Plan.
I. INSURANCE
A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.
B. In order for a company to accept the government-backed insurance, they must do two things:
1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.
a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while
working with the borrower—again limiting foreclosures and ruined lives.
2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.
C. This backstop will cost less than $50 billion—a small fraction of the current proposal.
II. MARK TO MARKET
A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.
B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.
III. CAPITAL GAINS TAX
A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.
B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to
stand up, speak out, and fix this mess.
paulsur on October 1, 2008 at 11:14 PM
Bill, what is the solution? (not being a smart alec, I’m only a software developer, and the most I know about finance is how to balance my checkbook…and that the credit crunch is real from the anecdotal evidence I’m getting from my friends…)
JustTruth101 on October 1, 2008 at 11:14 PM
You’ve probably more right than not.
Don’t rule out Soros.
Marybeth on October 1, 2008 at 11:16 PM
They posted a VERY nice Lakota crossbow over at Powerline.
JonPrichard on October 1, 2008 at 11:16 PM
All fantastic ideas…do you think it could have passed with a democratic majority?
JustTruth101 on October 1, 2008 at 11:17 PM
I am too and I support the bill. I think most in the industry do. I know from your posts that you understand the issues, but a lot of people don’t and that hasn’t stopped them from opining.
phronesis on October 1, 2008 at 11:17 PM
This bailout for Big Business is absolutely disgusting.
Log on October 1, 2008 at 11:17 PM
Let the manipulation of balance sheets commence! Actually, I think they were pretty measured in their “clarification” Basically they stated that companies do not have to mark their assets down to the price from one-off fire sales from failing companies.
But mark-to-market I think is the right accounting rule. Without it, it’s simply too easy for public companies to cook the books with bogus asset valuations.
BryanS on October 1, 2008 at 11:18 PM
The House did vote wisely Monday and hopefully will repeat and not vote stupidly as the Seanate did.
Adopt the Common Sense plan instead:
I. INSURANCE
A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.
B. In order for a company to accept the government-backed insurance, they must do two things:
1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.
a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while
working with the borrower—again limiting foreclosures and ruined lives.
2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.
C. This backstop will cost less than $50 billion—a small fraction of the current proposal.
II. MARK TO MARKET
A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.
B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.
III. CAPITAL GAINS TAX
A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.
B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to
stand up, speak out, and fix this mess.
paulsur on October 1, 2008 at 11:18 PM
Sure………. go to any Home Depot, Sears, Target, WallMart, etc., and when you check out and the cashier says….”Do you want to sign up for our credit card?”…. answer “yes” or “no” depending upon if you pay your bills or not.
……………. get back to us on what happens.
If not, why don’t you just try your local Credit Union, they are taking customers by the truck load, as long as you have been paying your bills.
Oh……. by the way…. JustTruth101, have you been paying your bills? If yes, then no problem, if no………… then why are you crying for me to pay them for you?
Seven Percent Solution on October 1, 2008 at 11:18 PM
Yes, but that is their right. I know that if the bill fails there will be a severe recession, but even if I lose my job, at least the country will be better off in the long run. If FASB goes further on their MTM ruling as promised, it won’t hurt too bad. The folks that caused this mess cannot be allowed to benefit from it, and I mean the government.
Vashta.Nerada on October 1, 2008 at 11:19 PM
Allah, Ace has an explanation about the “additions” to the bailout/rescue bill… turns out they are not additions to the bailout, the bailout is an addition to an already-passed bill…
Y-not on October 1, 2008 at 11:19 PM
I hear THAT! We’ll see in a few weeks I guess. Either way there’s going to be a lot of dissension.
JonPrichard on October 1, 2008 at 11:19 PM
Is there any chance that the US Armed Forces will actually defend the Constitution and take out congress and the one? They have fought and bled for freedom to see our “leaders” piss it away. Pray that they see what is happening.
rgranger on October 1, 2008 at 11:20 PM
Somewhere in between is the right answer. Marking down entire portfolios to 30/100 based on a few sales is what is drying up liquidity.
Vashta.Nerada on October 1, 2008 at 11:21 PM
Wow, sausage making at it’s best.
BryanS on October 1, 2008 at 11:21 PM
I owned a title company for several years and I still have lawyer friends in that business. Well, they say they are. Like your daughter’s firm, they aren’t doing any deals. I’ve got one buddy who spent better than a million on a new office building in 2006. Within six months of moving into his new building he had to let all of his staff go, including his receptionist. He now sits in a ginormous office, mostly staring at the walls and drinking Scotch. He’s taking the occasional DUI or divorce client who happens to call, but few of those folks call a real estate attorney.
flyfisher on October 1, 2008 at 11:21 PM
I played with 81’s and 4 duces.
Old Hippie Vet on October 1, 2008 at 11:21 PM
Correct me if my understanding of their ruling is wrong–I only read a story about it, not their actual announcement–but isn’t that mark down to 30% based on just a few sales precisely what they said you could ignore, basing the valuation on other metrics?
BryanS on October 1, 2008 at 11:24 PM
That’s my understanding, which would do a whole lot to improve liquidity. They refocused their meeting today to concentrate on modifications/clarifications of that, and are expected to announce any new information tomorrow or next.
Vashta.Nerada on October 1, 2008 at 11:26 PM
I can’t believe one of my Sens. voted against it.
Debbie Stabenow — my hat to you.
lansing quaker on October 1, 2008 at 11:26 PM
Sure, I understand and agree with that as part of OUR problem… but the EU runs on a different currency with different reserve laws. The EU and the US have butted heads so much economoically that the EU can’t own that much of US assets or liabilities.
Skywise on October 1, 2008 at 11:26 PM
“The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is their natural manure.”
Thomas Jefferson, 1787
Time to “water the tree”.
djtnt on October 1, 2008 at 11:26 PM
“This bailout for Big Business is absolutely disgusting.
Log on October 1, 2008 at 11:17 PM”
I don’t look at it as a bailout of Big Business. It is a bailout of the Democrats (and some Republicans) who played with Big Business.
Star20 on October 1, 2008 at 11:27 PM
2.75 rockets: just remembering the sound of them leaving the pod makes a tingle run up my leg, as Chris Matthews would say
Janos Hunyadi on October 1, 2008 at 11:27 PM
Yeah, that’s good. And makes so much sense. At least Jane Fonda would be shot as a useful idiot….some solace there.
ex-Democrat on October 1, 2008 at 11:28 PM
Old Hippie,
I understand the 81mm mortars. What are the 4 duces?
Star20 on October 1, 2008 at 11:28 PM
LOL
Old Hippie Vet on October 1, 2008 at 11:29 PM
I believe that UK and other Euro banks bought plenty of swaps and other MBS from the US market, to boost their returns. That would explain Northern Rock and other banks over there also in trouble.
Vashta.Nerada on October 1, 2008 at 11:29 PM
Janos,
2.75 rockets. Huey’s and Cobra’s?
Star20 on October 1, 2008 at 11:29 PM
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