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$700 Billion Bailout

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Dirty Secret Of The Bailout: Thirty-Two Words That None Dare Utter

A critical - and radical - component of the bailout package proposed by the Bush administration has thus far failed to garner the serious attention of anyone in the press. Section 8 (which ironically reminds one of the popular name of the portion of the 1937 Housing Act that paved the way for subsidized affordable housing ) of this legislation is just a single sentence of thirty-two words, but it represents a significant consolidation of power and an abdication of oversight authority that's so flat-out astounding that it ought to set one's hair on fire. It reads, in its entirety:

Deci
s
ion
s
by the
S
ecretary pur
s
uant to the authority of thi
s
Act are non-reviewable and committed to agency di
s
cretion, and may not be reviewed by any court of law or any admini
s
trative agency.

In short, the so-called "mother of all bailouts," which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives. All decision-making power will be consolidated into the Executive Branch - who, we remind you, will have the incentive to act upon this privilege as quickly as possible, before they leave office. The measure will run up the budget deficit by a significant amount, with no guarantee of recouping the outlay, and no fundamental means of holding those who fail to do so accountable.

 

WOW!!! Just Wow! now, THAT'S a power grab.

 

Great comment I just read:

"This is the financial equivalent of the Patriot Act. Write and email your representatives. We can't allow this gross reach of abusive power to happen again."

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The very first point of all of this is that if anyone is going to run the banking sector, it should be the Fed Bank, and not the White House. Anyone who is OK with this is fooling themselves. This is a terrible idea.

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I think I just saw SS2K agree with AHB, albeit indirectly.

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Something about this bailout always rubbed me the wrong way, but I didnt know why. Well, i guess I found what I was looking for.

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QUOTE (Athomeboy_2000 @ Sep 22, 2008 -> 01:38 PM)
Something about this bailout always rubbed me the wrong way, but I didnt know why. Well, i guess I found what I was looking for.

 

the more i read about this bailout the more i despise it and i have been anti-bailout from the start.

 

 

Edited by mr_genius

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QUOTE (lostfan @ Sep 22, 2008 -> 02:38 PM)
I think I just saw SS2K agree with AHB, albeit indirectly.

 

Getting past off of the partisian crap that gets slung back and forth here, you'll very rarely see me agree with giving the executive branch more direct power. In this case, it will be yet another government bureaucracy that will probably never go away and end up costing the taxpayers more than if the government had never been involved in the first place.

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I understand the need for a bail-out. As much as I'd like to tell every bank out there to F off, the reality is if we do that we'd really be asking for a complete financial meltdown. However, I think things need to be done to ensure that this is a one time thing and that banks can't just expect the gov to jump in anytime they do something completely stupid.

 

That said I'm not a proponent of leaving this up to the White House or anyone like that. This should be dealt with by the Fed Bank and those with key banking knowledge.

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QUOTE (Chisoxfn @ Sep 22, 2008 -> 03:01 PM)
I understand the need for a bail-out. As much as I'd like to tell every bank out there to F off, the reality is if we do that we'd really be asking for a complete financial meltdown. However, I think things need to be done to ensure that this is a one time thing and that banks can't just expect the gov to jump in anytime they do something completely stupid.

 

That said I'm not a proponent of leaving this up to the White House or anyone like that. This should be dealt with by the Fed Bank and those with key banking knowledge.

This is pretty much what I'm about.

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QUOTE (Chisoxfn @ Sep 22, 2008 -> 12:01 PM)
I understand the need for a bail-out. As much as I'd like to tell every bank out there to F off, the reality is if we do that we'd really be asking for a complete financial meltdown. However, I think things need to be done to ensure that this is a one time thing and that banks can't just expect the gov to jump in anytime they do something completely stupid.

 

That said I'm not a proponent of leaving this up to the White House or anyone like that. This should be dealt with by the Fed Bank and those with key banking knowledge.

Here's my biggest problem with that.

 

The fed and key banking institutions were just as instrumental in bringing about this mess as the Congress was. You can divide the blame 50/50 between Greenspan and Gramm, or 75/25, 90/10, whatever...the fed was just as complicit. Greenspan praised the new financial institutions and encouraged people to try these new mortgages that were so helpful in increasing homeownership around the country. What a great thing, higher homeownership stimulating the economy, all built by these new financial instruments.

 

You say you're a fan of leaving this with the people with key banking knowledge. Those same people were denying there was a housing bubble in 2006. Those same people were saying that we should be open to these new ARM's, and that these new financial instruments in the $70 trillion credit swap market were nothing at all to worry about because the people running them understood what they were doing.

 

Now that it's blown up...they've been fairly effective in dealing with the problem, but that's in no small part because they've been willing to dump trillions of dollars in public money in at a whim. Why should I trust people who were as instrumental as anyone in bringing the debacle about?

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It took me a few hours to think this all out and wrap my head around the bailout. So, here it goes (try your best to follow my ramblings)....

 

In general, I am against bigger government. but I have my exceptions. I think Social Security is important to the American society as a whole... as is universal health care. But I dont want the government running every thing in my life. But, I also favor regulations. On its base, free market capitalism is GREAT. But, it needs a check and balance system... much like the need for checks and balances in government.

 

This has always been a favorite of mine: "A person is smart. People are dumb, panicky dangerous animals and you know it." (Men in Black) I have agreed with that quote since the day I first heard it. I want to maybe re-imagine that quote: "A person is generous. People are greedy, ruthless dangerous animals and you know it." I know that I, myself, wouldn't run a muck with greed because it goes against every fiber of my being. I'm just too much of a "nice guy" to knowingly rip off innocent people.

 

But when it comes to these big businesses, I am highly cynical and distrusting. This especially rings true these big banking systems that make money of giving you money. I truly feel they need significant regulations and checks. But a bailout will do NOTHING if significant checks are not in place.

 

I know there are those who wholly dislike and outright despise regulation, but I think this recent crisis proves a person my be trustworthy and honorable, but too often people are not.

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QUOTE (Balta1701 @ Sep 22, 2008 -> 03:07 PM)
Here's my biggest problem with that.

 

The fed and key banking institutions were just as instrumental in bringing about this mess as the Congress was. You can divide the blame 50/50 between Greenspan and Gramm, or 75/25, 90/10, whatever...the fed was just as complicit. Greenspan praised the new financial institutions and encouraged people to try these new mortgages that were so helpful in increasing homeownership around the country. What a great thing, higher homeownership stimulating the economy, all built by these new financial instruments.

 

You say you're a fan of leaving this with the people with key banking knowledge. Those same people were denying there was a housing bubble in 2006. Those same people were saying that we should be open to these new ARM's, and that these new financial instruments in the $70 trillion credit swap market were nothing at all to worry about because the people running them understood what they were doing.

 

Now that it's blown up...they've been fairly effective in dealing with the problem, but that's in no small part because they've been willing to dump trillions of dollars in public money in at a whim. Why should I trust people who were as instrumental as anyone in bringing the debacle about?

 

The irony is that many of these changes were sold as Democrats as ways of increasing poor and minority home ownership rates. It was supposed to be another way of bringing people into the middle class and freeing them from the vicious circles of things like rent and poverty in general.

 

The two lowest quinttiles, by and large, have been the biggest victims and losers in all of this, because they were the ones getting the mortgages they couldn't afford, as much as anyone else was. Guess what, there are some people that just can't afford a mortgage, no matter how you dress it up.

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QUOTE (southsider2k5 @ Sep 22, 2008 -> 05:02 PM)
The irony is that many of these changes were sold as Democrats as ways of increasing poor and minority home ownership rates. It was supposed to be another way of bringing people into the middle class and freeing them from the vicious circles of things like rent and poverty in general.

 

The two lowest quinttiles, by and large, have been the biggest victims and losers in all of this, because they were the ones getting the mortgages they couldn't afford, as much as anyone else was. Guess what, there are some people that just can't afford a mortgage, no matter how you dress it up.

So then here's an alternative.

 

We're dumping $1 trillion or $2 trillion or something like that in to the economy. The U.S. has a $12 trillion mortgage market, IIRC. If the problem is bad mortgage debt, why not take the $1 or $2 trillion and instead of handing it over to banks, use it to pay off a chunk of the mortgages for the people who are falling behind? IF the loans are paid off, if the loans don't go bad, then the people on wall street don't win because the profit from those loans was processed a long time ago, but they also don't lose because the loans are paid off.

 

 

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QUOTE (Balta1701 @ Sep 22, 2008 -> 07:17 PM)
So then here's an alternative.

 

We're dumping $1 trillion or $2 trillion or something like that in to the economy. The U.S. has a $12 trillion mortgage market, IIRC. If the problem is bad mortgage debt, why not take the $1 or $2 trillion and instead of handing it over to banks, use it to pay off a chunk of the mortgages for the people who are falling behind? IF the loans are paid off, if the loans don't go bad, then the people on wall street don't win because the profit from those loans was processed a long time ago, but they also don't lose because the loans are paid off.

 

I'm sorry, but why should Joe Taxpayer pay for these peoples' houses? If they can't afford a home, you, me, and everyone else on Soxtalk shouldn't be forced to buy it for them, to the tune of $5,000 of debt for every single taxpayer.

 

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QUOTE (Balta1701 @ Sep 22, 2008 -> 07:17 PM)
So then here's an alternative.

 

We're dumping $1 trillion or $2 trillion or something like that in to the economy. The U.S. has a $12 trillion mortgage market, IIRC. If the problem is bad mortgage debt, why not take the $1 or $2 trillion and instead of handing it over to banks, use it to pay off a chunk of the mortgages for the people who are falling behind? IF the loans are paid off, if the loans don't go bad, then the people on wall street don't win because the profit from those loans was processed a long time ago, but they also don't lose because the loans are paid off.

 

If you are willing to pay for my house, just send me a check. We'll cut out the middle man.

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QUOTE (Balta1701 @ Sep 22, 2008 -> 08:17 PM)
So then here's an alternative.

 

We're dumping $1 trillion or $2 trillion or something like that in to the economy. The U.S. has a $12 trillion mortgage market, IIRC. If the problem is bad mortgage debt, why not take the $1 or $2 trillion and instead of handing it over to banks, use it to pay off a chunk of the mortgages for the people who are falling behind? IF the loans are paid off, if the loans don't go bad, then the people on wall street don't win because the profit from those loans was processed a long time ago, but they also don't lose because the loans are paid off.

 

 

Punish me, and you, and everyone else on Soxtalk cause we can pay our mortgages...? Uhh.. no thank you.

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QUOTE (StrangeSox @ Sep 23, 2008 -> 06:03 AM)
I'm sorry, but why should Joe Taxpayer pay for these peoples' houses? If they can't afford a home, you, me, and everyone else on Soxtalk shouldn't be forced to buy it for them, to the tune of $5,000 of debt for every single taxpayer.

 

Interesting question. Just what is Joe Taxpayer paying for in this bailout? Seems like we're giving the money to the folks that made the bad loan, so they get a nice check and they get to keep the loan. America, what a country.

 

I think Balta left out the conclusion, at the end the homeowners will owe the government. Have the government hold the paper.

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QUOTE (Texsox @ Sep 23, 2008 -> 06:37 AM)
Interesting question. Just what is Joe Taxpayer paying for in this bailout? Seems like we're giving the money to the folks that made the bad loan, so they get a nice check and they get to keep the loan. America, what a country.

 

I think Balta left out the conclusion, at the end the homeowners will owe the government. Have the government hold the paper.

 

You hit in on the head. In this case we at least own the assets and get something out of it. In his case, we are giving away homes. You think home prices are falling now, trying giving some houses away.

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QUOTE (southsider2k5 @ Sep 23, 2008 -> 07:11 AM)
You hit in on the head. In this case we at least own the assets and get something out of it. In his case, we are giving away homes. You think home prices are falling now, trying giving some houses away.

 

And to be clear, this is like buying a horse and getting to keep the manure while someone else goes riding.

 

I don't like the government in the mortgage business, but if we're writing the check, I want the asset. Worse case it winds up Sect 8 housing (do we still have that program?) Hell, give them to returning Vets to live in.

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QUOTE (southsider2k5 @ Sep 22, 2008 -> 09:02 PM)
The irony is that many of these changes were sold as Democrats as ways of increasing poor and minority home ownership rates. It was supposed to be another way of bringing people into the middle class and freeing them from the vicious circles of things like rent and poverty in general.

 

The two lowest quinttiles, by and large, have been the biggest victims and losers in all of this, because they were the ones getting the mortgages they couldn't afford, as much as anyone else was. Guess what, there are some people that just can't afford a mortgage, no matter how you dress it up.

I'd like to see examples of Democrats trying to "sell" these sorts of mortgage arrangements. Who, what "changes", and over whose opposition?

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QUOTE (jackie hayes @ Sep 23, 2008 -> 08:19 AM)
I'd like to see examples of Democrats trying to "sell" these sorts of mortgage arrangements. Who, what "changes", and over whose opposition?

 

There was no opposition. The Repubs got deregulation, the Dems got minority/poor home ownership. It was "win-win".

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Thinking about this, I was wondering who would be best at holding this paper after the bailout and believe it is the government. Any money paid on these mortgages should be paid back for the bailout. The government has the best chance at collecting. While the people who defaulted are still in the home, I would be in favor of

 

  • Withholding all income tax refunds
  • A portion of any unemployment, Social Security, Disability, Public Aid etc. check be withheld (it would go towards housing anyway)
  • Lottery or similar winnings (but what the hell are they playing the lottery for anyway)
  • Wage garnishment
  • Almost any other payment the government can find.

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QUOTE (StrangeSox @ Sep 23, 2008 -> 08:03 AM)
I'm sorry, but why should Joe Taxpayer pay for these peoples' houses? If they can't afford a home, you, me, and everyone else on Soxtalk shouldn't be forced to buy it for them, to the tune of $5,000 of debt for every single taxpayer.

Balta's point is that dear Joe will be paying for something he shouldn't be paying for, one way or another. Someone's getting an undeserved handout.

 

I think the real reason we don't do something like this is that it would have larger indirect costs (distorts the housing market immediately, creates expectations for future rescues, tough to regulate/administer, some justice concerns). There may be some measure of mortgage relief, if the rescue includes the provision allowing judges to change mortgage terms during bankruptcy proceedings, but that approach mitigates some of those concerns (individualized approach, plus, more importantly, that reworking only comes with the cost of declaring bankruptcy).

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QUOTE (southsider2k5 @ Sep 23, 2008 -> 10:20 AM)
There was no opposition. The Repubs got deregulation, the Dems got minority/poor home ownership. It was "win-win".

There certainly was opposition to these mortgages. The administration preempted local and state efforts (made largely in Democratic strongholds) to regulate them. And there were a couple early critics who suggested federal regulation. But the only ones I know of were Democrats.

 

If you mean that some Democrats cheered them on, fine. I imagine there were some. But to say that this was a general position held by Dems is just wrong.

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