THE BAILOUT Parts B & C – Congress Wants More Money & They Haven’t Even Voted Yet

Well the Spin is already starting –

The Pundits are admitting that this plan simply won’t work ….. without more cash –

The Pundits are now saying the Bailout Plan will need to be “supplemented” with additional cash (100’s of Billions) to “Recapitalize the Banks” and then funding will be required to provide “mortgage assistance” to that group of troubled homeowners who might get assistance under the “bailout plan” – the Bailout will only assist 1/2 the homeowners in the Country – those who have a mortgage with a bank or institution participating in the bailout (healthy banks and institutions won’t be participating) ……..

This remonds me of an old saying – “In for a penny, in for a pound” (As in the British pound – Guess I should change the saying to “in for a penny, in for a dollar”). The point being, they’ll be back to us in less than a month for more money – telling us “you don’t want to waste your first ‘investment’ of a trillion dollars do you?”.  

There isn’t just one more shoe to drop – there are at least two ….. and we haven’t even been given a preliminary price for these new shoes.

Remember – there is no guarantee that the first portion of the  “Bailout” will work.

Contact your Congressperson and tell them to Vote NO today. 

Contact Your Senators Here:  Click on your Senators, Select the Contact Folder and then  click on the email address.

Contact Congresspeople: You’ll need your zip  code

VIDEO: The Bailout & Fannie Mae – FOLLOW THE MONEY

VIDEO: Small Banks Are Still Lending – Credit On Main Street – So Says Banking Association

See The Video Here: Select “Small Banks Still Lending” Video:|small%20banks

This is a second video on Small Bank lending – This Banker notes his bank is lending – but he supports the Bailout – Then why all the scare tactics.

FDIC Deposit Increase – Just Another Tax Increase, Says Bill Isaac – Former FDIC Chairman

The FDIC’s “Insurance Fund” Myth

By: Vernon Hill   Thursday, September 11, 2008 10:02 AM

When FDIC head Shelia Bair says her agency might have to bolster the FDIC’s insurance fund with Treasury borrowings to pay for the new spate of bank failures, a lot of us, this 40-year banking veteran included, assumed there’s an actual FDIC fund in need of bolstering.We were wrong. As a former FDIC chairman, Bill Isaac, points out here, the FDIC Insurance Fund is an accounting fiction. It takes in premiums from banks, then turns those premiums over to the Treasury, which adds the money to the government’s general coffers for “spending . . . on missiles, school lunches, water projects, and the like.”

The insurance premiums aren’t really premiums at all, therefore. They’re a tax by another name.

Actually, it’s worse than that. The FDIC, persisting in the myth that its fund really is an insurance pool, now proposes to raise the “premiums” it charges banks to make up for the “fund’s” coming shortfall. The financially weakest banks will be hit with the biggest tax hikes.

Which makes absolutely no sense. You don’t need me to tell you the banking industry is on the ropes. The last thing it needs (or the economy needs, for that matter) is an expense hike that will inhibit banks’ ability to rebuild capital, extend new loans, or both. If the FDIC wants to raise its bank tax once the industry has recovered, I suppose that’s fine. But to raise taxes on the industry now is perhaps the dumbest thing the agency can possibly do. At the margin, the FDIC will be helping bring about more of the failures it says it wants to prevent.

But this is the government we’re talking about, so logic goes out the window. First, the FDIC insists its mythical bank insurance fund exists, when it really doesn’t. Then the agency does what it can to run the imaginary fund’s finances straight into the ground. Your tax dollars (sorry, “premiums”) at work. . . .

The US FDIC Insurance Increase – Ireland Announces Insurance on All Deposits

LA Times

Bailout fever: Ireland guarantees all bank deposits, debts

The biggest surprise: The Irish government guaranteed all deposits and debts of the country’s major banks, one day after the Irish stock market plummeted 13%, nearly twice the decline of the Dow Jones industrials.

“We have to create confidence,” Finance Minister Brian Lenihan said on RTE Radio, according to Bloomberg News. “We can’t bail out a particular bank. That wouldn’t be right. What we have decided to do is give a general guarantee that the banks can lend in security and safety.”

mcauleysworldweblog: Irish Banks have received a rush of American cash in recent weeks as Americans have transferred money to Irish Banks. There are commentators who suggest the move by the Irish Government is aimed at keeping the American funds in Irish Banks. The Irish economy has been booming for 10 years. The Irish Government has a pro-growth, low tax, business environment. Business taxes in Ireland are approximately 11%. 

Read About The Myth Of The FDIC Insurance Fund Here: By Bill Isaac, Former FDIC Chairman –

Taxpayer Alert – The Bailout – What Happens In January


Steve |

I am total agreeing with you in all respects, except for one. There is more ‘debt’ that is not being disclosed from the ‘financial intuitions.’ The anticipated $850 Billion Dollars is just the icing on the cake. I speculate that it will cost the tax payers more to the tune of $1.8-2.5 Trillion Dollars.
Thanks for the insight, looking forward to your blog after the vote.

From Analysis Of Senate Bailout Bill – To Be Considered By House On Thursday, 2008/10/01 at 11:27 PM

mcauleysworld |

Steve – I agree –
If you want my estimate of where the “total” might go once the banks can start dumping their bad debt on the public – on Joe Taxpayer – my guess is $7 Trillon – there is $14 Trillion in “late” loans around the world.

Then we have an added unkown – The Liberal Democratic Congress. Did anyone else see Rep Maxine Waters (One of the infamous Fannie Defenders) on Fox Business News last night – Live from the Capital – Representative Waters plans on getting involved further – after the first of the year – when “we have a Democratic President and Congress”. Her plan – forgive the mortgages of her constituents and let them keep their Houses for free”. Free for her Constituents – The Working taxpayer will be picking up the tab.

From Analysis Of Senate Bailout Bill – To Be Considered By House On Thursday, 2008/10/02 at 6:00 AM


Contact Your Senators Here:  Click on your Senators, Select the Contact Folder and then  click on the email address.

Contact Congresspeople: You’ll need your zip  code

Analysis Of Senate Bailout Bill – To Be Considered By House On Thursday

The voting on the Senate Version of the Bailout Bill has not started 08:56 PM (est) – but it is expected to be passed and sent to the House where an up or down vote will be required. The last word is that the House will not be given an opportunity to amend or change the bill.

After reviewing all 451 pages of the bill – I’m very surprised – minimal changes were made to the Bill that the House of Representatives defeated two days ago. Very minimal. The additional 331 pages concern completely unrelated items.

The Senate included these unrelated bills in this package to provide “cover” for those Congresspeople  who intend to vote for the passage of the Bailout, but are looking for an excuse to justify their vote. You can expect to hear this spin tomorrow, “Oh I didn’t really support the Bailout, I was voting for – fill in the blank – instead”.

The following items have been included for passage with the “Bailout Bill” when there was no impending emergency that required the items to be passed in the late evening of October 1st,  2008:

Pages 113 –  165  ENERGY SECTION: Energy Tax Credits, Steel Industry Fuel Credits, Carbon Mitigation Credits, Coal Gasification Credits, Black Lung Funding.

Why are these items attached to the “Bailout”, so a Congressperson can tell their irate Constituent, I didn’t really vote for the “Bailout”, I voted for Energy Tax Credits or Black Lung Funding – Of course we know better.

Page 254 – Information Authorization for Covered Securities to Brokers – I’ll bet you had no idea that this was a topic that required immediate attention. I’ll bet that 80 of 100 Senators didn’t know this was an emergency either.

Pages 261 -266  Temporary Relief from the Alternative Minimum Tax. I’d like to see the Alternative Minimum Tax eliminated, however, this section should not be attached to this bill. I can hear the Congressperson now – I was really against the Bailout – but I was voting to end the Alternative Minimum Tax – for a time. If your Congressperson says this, ask them why they didn’t pass this legislation in September?

Page 279 – Rum Excise Tax Relief for Peurto Rico – Ok, truth be told, I’m all for tax relief on adult beverages – but did it really need to be attached to the “Bailout”.

Page 280 – Funding for Mine Rescue Training

Page 288 – Depreciation of Business Property on Indian Reservations (The actual Bill language – I thought our Native Americans were Native Americans and not Indians).

Page 289 – Railroad Track Maintenance

Page 290 – Cost Recovery for Motor Sport Racing Tracks

Page 295 – Duty Suspension on Wool Products

Page 297 – Child Tax Credit Extension – We all favor this – How many Congress people will hide behind this one. The question to ask is this – Couldn’t you vote this through on Thursday and not attach it to this stinker of a Bill. It will be represented and passed if the House Votes the Bailout Bill down again on Thursday Night.

PAGE 298 – Film and TV Production Tax Credits – Limits taxes to the first $15 Million of production costs. (On a $100 Million Dollar Movie – The last $85 Million are tax free. No wonder Hollywood is far left – it pays for them to be there). 

Page 300 – Excise Tax Break for Wooden Arrows used by Children.

Page 301 – Exxon Valdez Llitigation Income Averaging.

Page 310 – 334 Domenici Mental Health Bill – This bill has been debated for 10 years. I will not discuss the merits of the proposal, however, the cost to the American Public might exceed a trillion dollars. After 10 years of debate this bill should have been brought up independent of any other bill. Senator Domenici, the sponsor, is retiring at the end of this term.  

Page 334 – Secure Rural Schools

Page 364 – Special Projects Federal Land

Page 394  – Hurricane Ike Relief

Page 442 – Spending Reductions and Revenue Raisers to Support Tax Relief – I love this Sections name. It reminds me of an earlier life. We called them K-Rats, I believe they are called Meals Ready To Eat now. Now you get three lies, for the price of one. (Actually, MRE’s are much better than Krats ever were).

Now as to the “improvements to the Bailout Bill” that the House defeated. The changes are nothing more than window dressing.

1). Mark to Market – whether you like it or don’t like it – there is no mandated change. There is no specific rule change in this law. The language is identical to the defeated House BIll.

2). FDIC Increase in insured deposit limit from $100,000 to $250,000 – A purely cosmetic change. The “Bailout Supporters” claim it calms the markets. It may calm someone who doesn’t understand that individuals have either placed their money in separate accounts or used one of the “services” that have been available for 3 or 4 years to distribute funds between different banks so that all of a depositors money has always been insured. As far as helping liquidity – the change is irrelevant.

This provision may actually be a tax increase in disguise: Read the Myth of the FDIC Fund, By Bill Isaac, Former FDIC Chairman Here:

3). Additional oversight – minimal changes.

4). Executive Compensation (pg 30) is essentially unchanged – covers current but not past CEO’s and Executives. Only covers Executives from Companies who participate in the asset sale to the Government. Political claims that this provision covers all Wall Street Executives is false. Most Wall Street Executives won’t be involved in the Program.

Golder Parachutes are eliminated – in participating Companies – for 2 years (that 2 year limitation is found on page 112, 82 pages away from the main section on Executive Compensation). Gee, my bet is that no one is going to qualify for a Golden Parachute in the next two years – but I wouldn’t be surprised if someone’s Parachute opened in two years and one day.    

5) Mortgage Relief – Assistance – Modification: No Change here. The language is unchanged. The Government picks the winners and losers. While not completely defined – the Bailout only provides help to those homeowners who have a mortgage with a failed bank or lending institution. If the bank that holds your mortgage is not participating in the bailout – this plan provides no help.  

6). Fixing what got us here. Suspending the operations of the Communirty Reinvestmant Authority (The CRA is the agency that fostered the development of NINJA & LIAR Loans) removing the Boston Federal Reserve Manual on Mortgage Underwritng Reform from use (The Manual that set the standards for the worst of the sub-prime loans – the Manual that was used to coerce Banks into making these loans) or implementing  the 2003-2004 suggested Accounting and Oversight Reforms for Fannie and Freddie are not even discussed in the Senate Bill.  

The Bailout Supporters claim the “Bailout” will create easier credit (easy money) and improve the economy. They also claim that the “Bailout” will help liquidity. I wonder where that liquidity or money will flow to – the same scams that caused this problem in the first place?

The Senate Bill fails to reduce the burden on Taxpayors – there is no increased use of Insurance or Loan Programs. 

For those of you who are familiar with Dave Ramsey’s Suggested “Fix” – they have failed to adopt any of his suggestions.  

My estimate is that the current “Bailout Program” has an initial “buy-in” cost of $850 Billion Dollars – just for the “Bailout” (Not including Mental Health – etc). Not all of this tax payor cash is to be paid out up front. Of course there is no guarantee that the Government won’t be back for more once we start down this road.


Contact Your Senators Here:  Click on your Senators, Select the Contact Folder and then  click on the email address.

Contact Congresspeople: You’ll need your zip  code

I reviewed a copy of the Senate Bailout Bill through the FOX Business Channel Web Site:

Tommorows Post: What is wrong with tighter Credit? – Credit Availablity In America Today.

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