Sep 21 2008

Bailout: Finally, someone is pissed instead of scared

(2 pm. – promoted by ek hornbeck)

Matt Stoller from OpenLeft made my day with this.

This email is from a lawmaker and it should give you a flavor for what’s going on right now in Congress.

Paulsen and congressional Republicans, or the few that will actually vote for this (most will be unwilling to take responsibility for the consequences of their policies), have said that there can’t be any “add ons,” or addition provisions. Fuck that. I don’t really want to trigger a world wide depression (that’s not hyperbole, that’s a distinct possibility), but I’m not voting for a blank check for $700 billion for those mother fuckers.

Nancy said she wanted to include the second “stimulus” package that the Bush Administration and congressional Republicans have blocked. I don’t want to trade a $700 billion dollar giveaway to the most unsympathetic human beings on the planet for a few fucking bridges. I want reforms of the industry, and I want it to be as punitive as possible.

Henry Waxman has suggested corporate government reforms, including CEO compensation, as the price for this.  Some members have publicly suggested allowing modification of mortgages in bankruptcy, and the House Judiciary Committee staff is also very interested in that.  That’s a real possibility.  

We may strip out all the gives to industry in the predatory mortgage lending bill that the House passed last November, which hasn’t budged in the Senate, and include that in the bill.  There are other ideas on the table but they are going to be tough to work out before next week.  

I also find myself drawn to provisions that would serve no useful purpose except to insult the industry, like requiring the CEOs, CFOs and the chair of the board of any entity that sells mortgage related securities to the Treasury Department to certify that they have completed an approved course in credit counseling. That is now required of consumers filing bankruptcy to make sure they feel properly humiliated for being head over heels in debt, although most lost control of their finances because of a serious illness in the family. That would just be petty and childish, and completely in character for me.

I’m open to other ideas, and I am looking for volunteers who want to hold the sons of bitches so I can beat the crap out of them.

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26 comments

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    • dkmich on September 21, 2008 at 18:05
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    please line up to my right.  

    • Edger on September 21, 2008 at 18:11
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  3. and just hope that they add the “smart” as well.

  4. Somebody get me a trash can lid.

  5. posted by Stoller.

    Here’s the industry’s play: progressives will approach Nancy with ideas for reform, and she’ll agree to push for their proposals, and she’ll really mean it. Then industry lobbyists will go to Dennis Moore, Melissa Bean and a few other Democrats, and tell them how dire the consequences of the proposals would be, and that the members who understand how the economy works need to step up to stop Nancy and the crazy liberals from doing something rash. Then those Democrats will go to Steny and tell him how terrible Nancy’s crazy ideas would be, and how we can’t rush into something like that without much, much more thought. Maybe Barney will try to talk to Dennis or Melissa, but it will become apparent quickly that they have no idea what they’re talking about; they’re just repeating by rote what the lobbyists told them to say. Melissa may actually be dumber than Sarah Palin. Barney will realize he might as well talk to the lobbyists directly and save a step. The lobbyists will agree to something inconsequential, but certainly nothing that would really affect the industry’s conduct. Then the leadership will do the math and conclude that because the vast majority of Republicans will vote against any bill, we can’t get enough votes without the Dennis and Melissa crowd. The only way, our leadership will conclude, to get anything at all passed is to include nothing more than the inconsequential proposals that the lobbyists agreed to. Then we’ll all go along because it would be wildly irresponsible not to act when we’re staring over the brink of a complete collapse of world financial markets.

    I’d diagram it for you if I had a chalkboard. I’ve seen the play again and again, and it always goes for long yardage.

    The only defense for the play is for a significant group of Democrats to say they won’t vote for any proposal that isn’t unpalatable to industry, and mean it. It’s a pretty high stakes game of chicken, but otherwise we come out of this with nothing but a $700 billion giveaway to a crooked industry.

  6. …seems like an awful idea. So that a whole lot of people can stay in debt for the rest of their lives for things they’ll never own?  Huh.  

    Repealing the bankruptcy bill would be smarter and kinder.  Too bad that’s so far outside the possible.

    • Diane G on September 21, 2008 at 21:33
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    I have been busy doing stuff with my child this weekend.

    This is HUGE news! Can I steal this or will you consider x-posting it to the WWL????

    This is HUGE!

    Yeah, I repeat myself when floored.  

    • Edger on September 21, 2008 at 21:35
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    There Is No Fix

    That’s the truth that almost no one will face about the economic unraveling: There is no fix.  This is the fundamental reason I say that, with regard to their publicly proclaimed aims, no one knows what they’re doing.  They can’t know what they’re doing — because, while everyone insists they are trying to “fix it,” there is nothing to be done.  And yet, everyone in Washington persists in trying to “fix it” — that is, they are attempting to avoid the inevitable consequences of an economy that has significantly and for a long time gone completely off the tracks.

    …

    The system is at the breaking point, and despite Wall Street’s elation from the proposed $1 trillion dollar bailout to remove toxic mortgage-backed debt from banks’ balance sheets, the market is still correcting in what has become a vicious downward cycle. This cycle will persist until the bad debts are accounted for and written off or until the exhausted dollar-system collapses altogether. Either way, the volatility and violent dislocations will continue for the foreseeable future.

    Most people don’t understand what happened on Thursday, but the build-up of bad news on the Lehman default and the $85 billion government takeover of AIG, triggered a run on the money markets and a freeze in interbank lending. The overnight LIBOR rate (London Interbank Offered Rate) more than doubled to 6.44 per cent. Bank of America reported overnight borrowing rates in excess of 6 per cent. Longer-term LIBOR rates also rose sharply. On Wednesday, jittery investors removed their money from money markets and flooded short-term US Treasurys for the assurance of a government guarantee on their savings even though interest rates had turned negative which means that their balance would actually shrink at the date of maturity. This is unprecedented, but it does help to illustrate how raw fear can drive the market.

    The TED spread (the TED Spread measures market stress by revealing the reluctance of banks to lend to each other) widened and the credit markets froze in place. Borrowing three-month dollars on the interbank market and the U.S. Treasury’s three-month borrowing costs widened five full percentage points. That’s huge. The banking system shut down.

    What does it mean? It means the Federal Reserve has lost control of the system. The market is driving interest rates now, and the market is terrified. End of story.

    …

    The problems cannot be resolved by shifting the debts of the banks onto the taxpayer. That’s an illusion. By adding another $1 or $2 trillion dollars to the National Debt, Paulson is just ensuring that interest rates will go up, real estate will crash, unemployment will soar, and foreign central banks will abandon the dollar. In truth, there is no fix for a deleveraging market anymore than there is a fix for gravity. The belief that massive debts and insolvency can be erased by increasing liquidity just shows a fundamental misunderstanding of economics. That’s why Henry Paulson is the worst possible person to be orchestrating the so called rescue project. Paulson comes from a business culture which rewards deception, personal acquisitiveness, and extreme risk-taking. Paulson is to finance capitalism what Rumsfeld is to military strategy. His leadership, and the congress’ pathetic abdication of responsibility, assures disaster.

    …

    Keeping insolvent banks on life support is not a rescue plan; it’s insanity.

    • pfiore8 on September 21, 2008 at 22:16
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    if i’ve learned nothing in these last almost eight years, it is to be cautious and cynical and careful.

    while i love the idea that e-mail maybe, in fact, be from one of our very own lawmakers in Washington, i find it hard to believe.

    this is so serious that if there are those who believe this, then need to step forward and in public.

    because really and truly . . . i don’t trust anyone in our government. and without a name on this mail, i would suspect the motives for sending it…

    i do not trust republicans. not democrats. not members of the supreme court or the executive branch. regardless of party.

    so i urge caution when these kinds of e-mails go around.

    this is not the time for being off the record. put your fucking name to your words, whoever you are, and stop jerking us around.

    dkmich, i hope you understand what i mean. nothing against you or your essay. i understand the absolute need to believe there’s somebody out there…  

    • robodd on September 21, 2008 at 22:23
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    puts a name and takes a stand on what is said

  11. including the saner half of the economists. Sadly I am hearing from Congress the likes of Boner and of course Nancy and Co. that something must be done NOW and no doubt the idiots (crooked rich) of both parties will give the Kings man what he needs, actually what he wants.

    After this Administrations literally putting money on flat beds and absconding with it in Iraq (Paul Bremers billions) why would they allow this. They want to stick some sops on to the bill but will hand the money over to the culprits who stole it in the first place.

    Why don’t the Democrats tell the truth Free Market failed. Perhaps it’s because they too are responsible for this. Glass-Seagall’s last gasp was brought to us by the deregulating, globalizing, New World Order Clinton’s. Congress has never met a corporation they didn’t embrace the bigger the better. Just as long as the money keeps flowing their way. There are laws about this The Sherman Act which is in laymans terms is trust busting.

    Me I want my taxes to go to the people outside this mess who will work to both keep it from collapsing and address the real trouble, gutting the firewalls in place that protected us from sharks. Much like Katrina the money will go to the worst and most crooked entities the ones who took us here. As Krugman said NO DEAL!    

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