On September 29, 2008 the original “Bailout Bill” was defeated in the House of Representatives. After adding an amazing amount of additional spending the revised “bailout bill” passed four days later.
http://www.thestreet.com/story/10440683/1/sweetened-bailout-bill-sails-through-house.html
The Bailout was passed without “Congressional Hearings” because it was said that a “dire emergency” confronted the Nation and that Congress needed to purchase the “illiquid assets from the financial system” or as they were later called “The Toxic Mortgages” that may destroy the economy.
Now forgotten is the fact that a group of 400 internationally respected Economists warned the “Bailout” wouldn’t work.
https://mcauleysworld.wordpress.com/2008/09/29/200-world-reknown-economists-speakout-against-bailout/ http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm http://www.npr.org/templates/story/story.php?storyId=95215972
These economists warned that an entirely different approach was needed to truly free up the credit markets. ‘At this point I cannot identify a single good reason to do the bailout,’ said Dean Baker, co-director of the Centre for Economic and Policy Research. ‘Much of the country’s political and economic leadership has been running around raising the prospect of the Great Depression and a breakdown in the banking system,’ Baker said. ‘These stories are absolutely not true,’ he added. http://ipsnorthamerica.net/news.php?idnews=1729
Current “Bailout” activities maybe having the same affect as “pouring gasoline on a fire”.
What few American’s know, not all Banks supported the Bailout, “Nine of the largest U.S. banks were essentially arm-twisted last week into signing on for the first $125 billion in capital infusions.” http://news.yahoo.com/s/nm/20081024/bs_nm/us_financial_usa_banks
Note that “Capital Infusions” were forced on these Banks, the Banks did not sell “toxic mortgage debts” to the FED as advertised.
The Bailout has failed. Between October 4, 2008 and November 12, 2008 the Stock market has dropped 2000 of the 5000 points lost since November 2007. Forty percent of the economic dive has occurred in the 5 weeks since the “Bailout” was approved. (From 13,300 on 12/7/07 to 8,300 on 11/12/08)
http://www.mahalo.com/Dow_Jones_Industrial_Average http://www.nyse.tv/stocks/archive/2007_11_01_archive.htm http://money.cnn.com/data/premarket/ (DJIA 8313 at 7:15 Am 11/13/08)
http://cyberlaw.stanford.edu/node/5882
You might recall a promise by Congress that the ‘Bailout” spending would be posted on-line, providing the Taxpaying Public complete transparency and the ability to track where our tax dollars were being spent. Not only have we not received “complete transparency”, but the American public is being denied even the most basic information on where the money is being spent.
http://www.openthegovernment.org/article/articleview/342/1/115/?TopicID=
One article noted, “The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.”
http://josh-of-arc.newsvine.com/_news/2008/11/12/2104122-fed-loans-2-trillion-but-wont-say-to-who
In other words, the Congress and the Administration are not implementing any of the “protections” they promised the public for their tax dollars.
BLOOMBERG.COM describes it this way, “Fed Defies Transparency Aim in Refusal to Disclose”, The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return. http://www.bloomberg.com/apps/news?pid=20601087&sid=ahdVHk_Ccoeg&refer=home
In addition, few in the American Public realize the “Bailout” money is being used to pay for items never approved by Congress and vehemently opposed by nearly all of the American public during the pre-vote debate. A recent article titled, “Bail-Outrage: Misuse of Funds, Lack of Transparency a National Disgrace”, noted, “Many Americans are understandably outraged by the bailout fever that has gripped Washington this year. But even those who believe the bailouts are a “necessary evil” would have a hard time defending some of the bailout-related items that have come to light in recent days, including:
- Financial institutions using TARP bailout money to pay executive bonuses. The firms, of course, say it’s “different” money and bonuses are key to retaining top employees. But if you need to come to the government for a handout, shouldn’t your executives forgo a bonus? Or shouldn’t the government make canceling bonuses a condition of getting aid, as is the case in Europe?
- The Fed refusing to reveal who received almost $2 trillion in non-TARP loans, or what collateral it has accepted from “emergency” loans made to struggling firms, as Bloomberg reports.
- The Treasury Department providing a tax break to banks involved in acquisitions that could amount to $140 billion. The Washington Post reveals the change to the tax code was issued on Sept. 30, while Congress was debating the $700 billion TARP bill.
The bailouts are bad enough. But this kind of chicanery and lack of transparency makes me recall a line from another time when fear and deceit dominated Washington: Have they no shame, at long last?
http://www.dailyherald.com/story/?id=249779
The only relief seen by the American public has come from private efforts made by the Mortgage Companies. An example is the recent announcements made by Citigroup, “Citigroup to Modify Terms for U.S. Mortgages” as reported by the Wall Street Journal. http://online.wsj.com/article/SB122636776229916053.html
Citigroup’s actions are unrelated to any bailout activity. Why is Citigroup doing this? Because it makes good business sense for Citigroup, that is why. “The push by the New York Company’s Citi-Mortgage unit marks the latest effort by a financial institution to help ailing homeowners, which also can help lenders reduce loan losses.” [In other words, Citigroup doesn’t lose money when homeowners can stay in their homes and make payments]. “The company ultimately expects to reach 500,000 customers whose mortgages it owns. Roughly 130,000 of those borrowers are likely to see a reduction in their monthly loan payments, Citi-Mortgage said.” Citigroup’s efforts have been matched by J.P. Morgan Chase & Bank of America. http://online.wsj.com/article/SB122636776229916053.html
This is being done without the sale of “toxic debt” or “cash infusions”, it is being done by having the bank simply renegotiate its outstanding mortgages – it costs the taxpayer nothing.
Contrary to what the public has been told, a very significant portion of Citigroup’s “bad mortgages” involve investment properties and not family residences. “Citi-Mortgage also is halting foreclosures for about 16,000 borrowers who are behind on their loan payments but are working with the company on a loan modification. About 10,000 of those borrowers live in their homes and are likely to get their mortgage terms reworked, while about 6,000 are investors, according to the company.” [Almost 40% of the mortgages in foreclosure are investment properties]. http://online.wsj.com/article/SB122636776229916053.html
“Treasury Secretary Henry Paulson said Wednesday the $700 billion government rescue program will not be used to purchase troubled assets as originally planned …. He announced a new goal for the program to support financial markets, which supply consumer credit in such areas as credit card debt, auto loans and student loans……. The administration decided that using billions of dollars to buy troubled assets of financial institutions at the current time was “not the most effective way” to use the $700 billion bailout package, he said. ……. The announcement marked a major shift for the Administration which had talked only about purchasing troubled assets as it lobbied Congress to pass the massive bailout bill.” http://news.yahoo.com/s/ap/financial_meltdown
The Author of this article is showing their political bias when the fail to mention the roll of the Democratic Congress in this mess.
The Democratic Congress is “leading the charge” for making the modifications.
The fact that the original legislation only allowed for, “H. R. 1424 As Amended; A bill to provide authority for the Federal Government to purchase and insure certain types of troubled assets” is not being discussed. The current change in direction was not authorized by the “Bailout Vote”.
The Washington Post was just one of the publications to confirm these facts, “Urgently shifting course ……. abandoning the centerpiece of its massive $700 billion economic rescue plan and exploring new ways to shore up not only banks but credit-card, auto-loan and other huge nonbank businesses. Democrats are pressing hard to include a multibillion-dollar bailout for faltering automakers, too, over Administration objections. Unimpressed by any of the talk on Wednesday, Wall Street dove ever lower.” http://washingtontimes.com/news/2008/nov/12/paulson-says-troubled-assets-will-not-be-purchased/
So now the “Bailout” money will go to pay bonuses not just for Wall Street Executives but for overpaid UAW & Auto Industry Executives too. Whether “credit card”, “auto loans” or “student loans” should be included in the “original bailout” was discussed by Congress and the Senate just 5 weeks ago. After consideration, the Congress and the Senate rejected proposals to include those items, after being added to the Administrations original “Bailout Proposal” by Democrats in Congress, the items were deleted in an attempt to obtain the necessary Republican support in the House. The items were added back in by the Democratic Senate. They were not authorized in the original legislation.
The proposed bailouts to what the Wall Street Journal refers to as “The Old American Industry” will cost taxpayers $375,000 per employee. A $75 Billion Dollar “Bailout” of the “Old” American auto industry will not save it. Chrysler LLC is not even a publicly owned company. It is a privately owned company. So how do we know who will really get the money the Government is being asked to give to Chrysler?
Given all the falsehoods about the first “Bailout” package, how can anyone be sure that the money will get to where they say they will spend it.
As to GM, Duetsche Bank stated a “bailout” would be needed to avert a collapse of GM and that even if GM received “bailout funds” and “… GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,” analyst Rod Lache said in a research note, essentially calling the company’s shares worthless with a price target of $0, reduced from $4.”
As to Chrysler, it has been reported that, “In the Chrysler-like approach, potentially 98% of the company’s equity would be transferred to the UAW, VEBA, existing GM debt holders and the government,” Barclays’ analysts noted. VEBA is short for Voluntary Employees Beneficiary Association, a trust set up for managing health-care benefits to be overseen by the United Auto Workers of America. That would leave little for shareholders.” http://www.marketwatch.com/news/story/Deutsche-Bank-cuts-GM-sell/story.aspx?guid={CAFEF63F-017D-42E2-874A-14146A6D20A5}
Without private investment, how many more “cash infusions” will taxpayers be asked to make to reward bad business management?
According to the U.S. Bureau of Economic Analysis motor vehicles, bodies, trailers, and parts represented less than 1% of the country’s entire gross domestic production in 2007. One half of that total is attributable to the “New Auto Industry” that isn’t asking for a “Bailout” nor is the “New Auto Industry” part of “Bailout” discussions.
We are talking about Billions in bailouts for the “Old Auto Industry” that is responsible for less than 1/2 a percent of the Country’s Gross National Production. That is simply a bad bet for American consumers and the taxpaying public.
How many billions more will Congress throw at a problem they don’t know how to fix. Isn’t it time to stop “throwing good money after bad”.
Is it time for the American taxpayer to say NO. Contact your Congressperson and Senator and demand that they schedule the hearings we should have had in the first place. CONGRESS IS NOT KEEPING THEIR PROMISES ABOUT THE BAILOUT. WHAT THEY ARE DOING IS NOT WORKING. WHAT THEY ARE DOING IS MAKING THINGS WORSE WHILE RUNNING UP YOUR TAX BILL.
Contact Your Congressperson & Senators here: http://www.congress.org/congressorg/home
One Click Access –you only need your “Zip Code” in the “Find Your Officials Tab”
Why isn’t the bailout working? Because the Government has done nothing to correct what caused the financial collapse. What caused the financial collapse? A change in lending rules that gave money to people who could not pay it back. The loans (car, credit card and home mortgages) were then packaged and sold as securities in America and around the world. Mortgages were written at 140% of the “inflated value” of the homes. Individuals were encouraged to “roll over” credit card debt, auto and student loans into their “mortgages”. Now that the “pyramid scheme” has collapsed the Government has done nothing to prevent it from happening again. NINJA & LIAR Loans are still the “law of the land”. Why won’t banks loan, why won’t investors buy the securities? They don’t want to get stuck with another group of “bad loans” or “bad investments”. The bailouts are simply rewarding the bad actors and preventing the tough but necessary changes we need to get the Country back on the right track.
WHERE WILL THESE BAILOUTS END – CONSIDER THIS:
AIG’S NEW BAILOUT – November 10, 2008
The U.S. government reached a deal Sunday night to scrap its original $123 billion bailout of American International Group Inc. and replace it with a new $150 billion package, according to people familiar with the matter. Under the terms ironed out late Sunday, the government would give AIG more money, including $40 billion from the U.S. Treasury’s $700 billion Troubled Asset Relief Program. The $150 billion in government aid consists of a $60 billion loan, a $40 billion preferred-stock investment and $50 billion in capital.
http://online.wsj.com/article/SB122627437470412029.html
This is a 20% increase after only 5 weeks.
WHERE WILL THIS ALL END – CONSIDER THIS
AIG’S NEW BAILOUT – November 10, 2008
The U.S. government reached a deal Sunday night to scrap its original $123 billion bailout of American International Group Inc. and replace it with a new $150 billion package, according to people familiar with the matter. Under the terms ironed out late Sunday, the government would give AIG more money, including $40 billion from the U.S. Treasury’s $700 billion Troubled Asset Relief Program. The $150 billion in government aid consists of a $60 billion loan, a $40 billion preferred-stock investment and $50 billion in capital.
http://online.wsj.com/article/SB122627437470412029.html
AND THIS
City Council: Detroit needs $10-billion bailout
The Detroit City Council passed a resolution today calling for a $10-billion bailout for the city of Detroit. Council President Pro Tem JoAnn Watson sponsored the resolution to use the money for public service employment, to fund mass transit plans and to place a moratorium on home foreclosures for two years. The resolution specifically requests the council meet with Mayor Ken Cockrel Jr., Gov. Jennifer Granholm, the state’s congressional delegation, U.S. House Speaker Nancy Pelosi and officials from President George W. Bush’s office and President-Elect Barack Obama’s transition team.
Mayors want part of auto bailout
The mayors of four large Metro Detroit communities on Monday called for a share of the federal bailout sought by Detroit’s Big Three automakers to help redevelop shuttered facilities and factories.
The mayors of Warren, Sterling Heights, Livonia and Dearborn met at the Sterling Heights Public Library for about an hour to discuss the proposal. The mayors were joined by representatives from Gov. Jennifer Granholm’s office, Michigan’s congressional delegation, the Michigan Economic Development Corp., the Southeast Michigan Council of Governments and the Michigan Municipal League.
Filed under: Auto Industry, Auto Industry Bailout, Bailout, Bailout Bill Analysis, Bailout Bill VOTE, Bailout Opposition, Bailout Transparency, Bailout Transparency Lost, Banking, Banking Crisis, Financial Crisis, Tax Payer Rip Off, Tax Payer Rip Offs, Taxes | Tagged: Bailout Back-Track, Bailout Double Talk, Bailout Lies, Bailout Money To Bank Executives, Bailouts, Congree Reneges On Bailout Promises, Economy, Financial Crisis, No Bailout Transparency, No Taxpayer Protections, Taxpayer Ripoffs | Leave a comment »
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