The Suspense Is Killing Us

Joe Nocera, business columnist for the Times, insists that the search for the perfect Treasury rescue package must end and something must be done post-haste.  Fortunately, help is on the way!  Grim details from Nocera:

...by the time Treasury Secretary Henry M. Paulson Jr. made his big speech on Friday morning 9a week ago Friday), laying out some of the details of the government’s $700 billion bailout plan, a good deal of the pressure in the markets had eased. The credit-default swap spreads narrowed on Morgan Stanley and Goldman Sachs, meaning that the credit market was less worried about the possibility that they might default. 

Morgan Stanley, which had been frantically negotiating a merger with Wachovia, stopped the negotiations. Money market funds, which had been hit hard by withdrawals earlier in the week, saw an inflow of money. Other credit indicators also suggested that the credit markets were unfreezing.

Here we are a week later, and guess what? Armageddon is again approaching. All week long, the credit-default swap spreads on Morgan Stanley widened, until, by Friday, they were actually worse than they were at any time during the previous week. (And this time, the chief executive, John J. Mack, can’t blame the short-sellers for his troubles, since short-selling in financial stocks has been temporarily banned.)

On Thursday, investment-grade loans were trading lower than junk bonds, because investors were selling off their most liquid assets to raise capital. Wachovia, the nation’s fifth-largest bank holding company, suddenly appeared to be in deep trouble: “Wachovia is trading as if it’s going to fail,” Dave Klein, a manager at Credit Derivatives Research, said on Friday. Washington Mutual was seized by the government. The markets may not be as panicked as they were last week, but with every passing day, the situation is getting increasingly dangerous.

Or, to put it another way, with every passing day, Congress is fiddling while Rome is burning.

Last week, I wrote a column suggesting that the Paulson plan was unlikely to fix the enormous problems facing the financial markets and the country’s faltering economy. I am still not sure it will work — or that it is the best possible solution — but this week, I have a different, more urgent concern.

Whatever its imperfections — and despite the possibility it might not work — it needs to be approved, quickly. I’m praying that by the time the markets open on Monday, Congressional leaders will have reached a consensus on the bailout plan. We’re running out of time.

A very interesting idea that Nocera would love to see kicked around if time permitted is this:

Finally, I’ve been hearing a number of interesting ideas that could well turn out to be better than the Paulson plan. One of the most intriguing ones comes from Andrew Feldstein, the chief executive of Blue Mountain Capital Management, a hedge fund that specializes in credit instruments. He proposes that instead of buying bad assets that are crippling the balance sheets of the nation’s banks, the government should establish a “good bank” that would buy only solid assets.

By setting up such a bank — Mr. Feldstein envisions having the government put up $300 billion and taking an equity stake, so that taxpayers can profit when it is sold after the crisis passes — the government would make it possible for credit to “again flow to deserving borrowers.” Bad banks might eventually fail — but they would have a place to sell their good assets as they liquidate. Healthier institutions could once again start lending. Taxpayers would face much less risk.

Leveraged and proud!  If the problem is that the market cannot collectively de-leverage and that good assets are now being liquidated to raise cash, then a "good bank" really could be the solution.  Of course, since even investment grade prices are affected by the panic some will argue that any price above current market represents a subsidy to sellers, and so on.  But with high-quality paper the odds are much better that the price will be fair and the underlying value eventually realized.

Would a "good bank" scheme work, and why can't private capital provide it?  I would put it in the mix with a lot of other "can't hurt, might help" ideas and try them all.  I still like the "mother of all term repo" concept and the notion of buying convertible preferred in some firms.  I have a hard time believing there is exactly one right answer to this crisis. 

That said, I will humbly offer one insight from my too-many years of this and that:  Always... no, never... here we go - there are generally a number of plausible strategies available at a moment of decision.  Picking one and pursuing it with commitment will probably lead to success; waffling and switching strategies every six months generally will not.

Trying to implement four huge programs at once might not look credible.  The current Treasury plan to provide a home for wayward assets should stabilize markets quickly; if it is not working, it should be clear soon enough that we need to switch to Plan C D E.

As to the emerging plan that, it is hoped, will be announced Sunday before the Asian opening, some principles are reported by the Times.  The core is the $700 billion Paulson plan; there is no mention of installment funding in this report.

There will be stricter oversight, a fig leaf on mortgage foreclosures, a fig leaf on the House Republican insurance fantasy, and something on equity participation:

And there was general agreement on Saturday to create a mechanism for the government to receive an equity stake, in the form of warrants to buy stock, in at least some of the firms that seek help, giving taxpayers an opportunity to profit should the companies flourish in the future.

That's vague.  Executive compensation will be addressed:

The administration has also agreed to a provision that would limit the pay of executives whose firms seek assistance, including a ban on so-called “golden parachute” retirement plans.

Firms that "seek assistance".  Paulson is worried that healthy firms will not participate in the auctions in order to avoid onerous restrictions such as this.  How was that finessed?

A Dem give-away is up in the air:

Republicans were also working to eliminate a provision sought by Senate Democrats that would direct 20 percent of any profits from the plan to help create affordable housing. The Republicans want all profits returned to the Treasury.

Sunday afternoon should be interesting.

Comments

[Thomas Collins]

Nocera may have too rosy an outlook. If this Weekely Standard article is correct, what is in store on Monday might overwhelm any rescue plan. Also, if the article is correct, while Congress fiddles and diddles with whether the rescue authority dough should come in all at once or in segments over time and subject to Congresssional veto, what really should be on the table is unlimited deposit insurance and unlimited money market fund principal protection.

LUN

[clarice]

I think someone--larwyn in an email to be exact--cited a Lowry note that ACORN was now out of the bill. It's an ill-wnd that blows no good.

[joan]

Oh. My. Goodness. He mentioned Wachovia was/is in trouble, might be failing. Is Wachovia (deemed a bank holding company in the article) the same as Wachovia, where my husband and I have fifty percent of our life's savings invested? For our old age. Which is about two or three minutes from now? Tell me it isn't so.

My husband is 71 and still commutes an hour to work every day, mainly because he loves his work and doesn't want to sit around and retire. We help financially with our two adult children (who both have good college degrees) and are saving for our granddaughter's college (I heard on the car radio this morning that in fifteen years a college education at a public university would cost over $100,000 and a private was twice that. I also thought, where have they been? Our kid's education cost almost that fifteen years ago.)

Oooh, this is all such a mess. Makes me furious. Well, I can stand to be poor, but I can't stand it if I'm poor and Barack Obama is my president. I think I'll head south across our open border and plant and sell sweet potatoes for a living.

[DebinNC]

Pelosi and Frank didn't see the need to include the 100 conservative Rep House folks until the public outcry tsunami hit them. Any delay in reaching an agreement should be laid at the door of Nancy and Barney.

[Sara (Pal2Pal)]

I posted the Lowry info in last night's pre-debate thread, where it probably got lost as it was so far off topic.

Via Rich Lowry:

An e-mail: I have a mole participating in staff-level negotiations. He says the ACORN slush fund has been taken out. The 'proxy access' provisions and government equity stake in banks --two of the more contentious issues that will be Member-level issues, to be discussed tonight. House Republicans want to limit cost of the initial tranche and add the Cantor mortgage-backed security insurance provision. Overall, sounds like they are moving toward a deal.

[clarice]

joan--I don't have any information that Wachovia is presently in any difficulty whatsoever or that your federa;;y insured savings aren't okay.

[Cecil Turner]

I see the CEO compensation stuff is still a centerpiece of the Dem plan. The WSJ had an op-ed by David Paterson (D, Gov, NY) which hews to the party line:

Another prerequisite is that any firm that accepts the protection of government investment must necessarily curb its CEO compensation policies. No one can be allowed to profit unfairly from our shared pain and sacrifice.

Not sure why this is a critical piece of the legislation (though it is unobjectionable); surely if the banks feel like wasting a couple million dollars it won't materially affect the bottom line. My concern is not that they feel the need to play class politics, but that they focus on minutiae instead of crafting a responsible package.

I still don't see why the GOP version can't work (and it would presumably be much cheaper if it did); but generally concur there's more than one way to skin the cat . . . and an 80% solution now is far preferable to a perfect one after the crash. However, counterproductive stuff like the ACORN funding thing ought to be a deal-breaker.

[joan]

Thank you, Clarice. The Wachovia accounts are part of our IRAs. It's way over the FDIC. That's what I don't understand about this mess. I kind of understand about banks bundling the mortgages, selling them on, etc. But, what I don't understand is you have IRAs and CDs and they are supposed to be invested in hundreds of individual accounts, say like someone called Blackrock or dozens of other companies . . . , how can all of that fail and disappear because four percent of the mortgages in the U.S. are bad? I've read every article and post (here and other places) and still can't understand how, when one's money is spread around in so damn many places to ensure financial security and slow but safe growth, and saving and saving and saving, and it can all come crashing down. Because of some damn Democrats like Barney Frank, Chris Dodd, Jimmy Carter, et al.

My husband was "downsized" in the 80s, and we took all of our savings and invested it, and saved some more. Now it will all be gone?

Pshash! Don't know what that spells, but fie on all of them.

[Charlie (Colorado)]

Cecil, I don't think there's anything about the R plan for MBS insurance that's bad EXCEPT THAT IT DOESN'T ADDRESS THE PROBLEM.

The problem is the credit lockup.

The problem is the credit lockup.

The problem is the credit lockup.

If that problem isn't solved before checks start to bounce, the insurance will be lipstick on the corpse.

[Charlie (Colorado)]

Joan, IRAs are insured to a higher level than regular deposit loans.

[clarice]

joan--I bet there will be a deal announced late Sunday even if the vote won't take place until Wed and there will be private or public action taken to protect Wachovia..Now, don't fret for no reason about something you can't do anything about right now anyway.

[Cecil Turner]

I also saw that the SEC is criticizing itself on oversight:

Also Friday, the S.E.C.’s inspector general released a report strongly criticizing the agency’s performance in monitoring Bear Stearns before it collapsed in March. Christopher Cox, the commission chairman, said he agreed that the oversight program was “fundamentally flawed from the beginning.”

Maybe George Will would like a do-over on that one?["Off with his head!"]

I am somewhat amused by the "voluntary supervision" aspect of the program in question. It didn't work? Inconceivable!

[Jane]

I think ACORN is still in - and the 2 republican negotiators got ambushed at the negotiations. There were supposed to be 2 democrats. Instead Schumer, Rangel, Emmanual, Frank, Dodd and 2 others showed up.

All the bad guys. Something is going on.

[Jane]

Also there is a re-insurer after the FDIC that my bank has, which goes beyond the 100k, so check into that.

SOme democrat on FOX just defended the ACORN piece saying that was exactly where taxpayers want their money to go to.

[Cecil Turner]

The problem is the credit lockup.

Concur, but as Tom points out, a large part of that is psychological. A perception that the problem was going to be addressed effectively held this off for a week. If the "insurance" program is perceived as effective (which I admit being unequipped to evaluate), then ISTM it could work. Or at least I haven't been convinced it couldn't.

The point is probably moot at this juncture, however, because as an add-on option it's mostly window-dressing in the current proposal.

[clarice]

Looks like it.

[Jane]

Big Belgium bank, Fortis is failing.

[Charlie (Colorado)]

Looks like what?

[Charlie (Colorado)]

BRUSSELS — The financial group Fortis said Friday that it was replacing its chief executive as its shares fell more than 20 percent amid concerns about its liquidity.

Fortis said that Filip Dierckx, 52, who leads the banking unit, would succeed Herman Verwilst. Mr. Verwilst took over in July after the chief executive, Jean-Paul Votron, came under pressure for shouldering a large bill from the acquisition of a part of the Dutch bank ABN Amro just as the subprime mortgage market started to falter.

“Given his vast experience and knowledge of the company, we’re happy that Filip has accepted this challenging task,” the chairman, Maurice Lippens, said in a statement.

Fortis has been plagued by speculation about its liquidity problems, despite assurances from bank officials and politicians.

Earlier Friday, Mr. Verwilst pledged that Fortis would not go bankrupt and said it could sell more noncore assets than previously foreseen to bolster its balance sheet.

[joan]

Thank you guys, I didn't think I would let this mess get to me, but I think it is. Reading about Fortis (?) Bank maybe failing and sending worldwide shock waves, and seeing these huge problems in our banking system, and then hearing people like Harry Reid and Nancy Pelosi and Barney Frank (knowing they set that meeting up yesterday so that Barack Hussein Obama appeared to "lead" it) go on television and talk like they have the golden touch and can lead us into a wonderful future except for the Republicans and/or Conservatives just makes me want to drink. And, I don't drink. Or smoke a cigarette, and I haven't smoked since I was in jr. high (for a short time) or punch someone. Think I'll go have a Coke and eat some chocolate.

[clarice]

" Something is going on." Charlie I was agreeing with Janre--if her report of a triple team up on ACORN is right--some dirty deed is up.

[Pagar]

All one needs to know about ACORN and this housing/economic mess is in another great Article by Clarice @ the American Thinker Site.

LUN

Ambush is exactly the right word with that gaggle of Democrats at the negotiations, as opposed to two Republicans.

[Charlie (Colorado)]

Reuters:

• Fortis is sitting on a funding base of more than 300 billion euros ($439 billion) from its deposits, and with central bank support can obtain short-term financing despite frozen money markets in Europe.
• The main risk to Fortis would be a large-scale withdrawal of deposits, analysts say, which so far has not happened. Withdrawals since the beginning of the year have totalled 3 percent, Fortis said, which translates into about 5 billion euros.

[Charlie (Colorado)]

I know what you mean, Joan. I'm generally the one who is telling other people not to freak out, but the combination of sleazy corrupt Democrats and doctrinaire "we've only fallen 50 stories, so far I feel fine" Republicans has been a little rough.

[sbw]

Joan, your information is too vague to answer because you might be talking of Wachovia stock, Wachovia deposits, Wachovia CDs, or a Wachovia managed account.

Clarice is correct to advise that since nothing can be done today, put your worries on the shelf.

And remember, it is most often the case that it is unwise to sell in a panic.

[Ann]

I haven't caught up on the threads since last night's debate,
but has anyone noticed they are calling this "THE BUSH BAILOUT"

I want them all in jail.

[AdrianS]

UPDATE TO MR. PHILLIP BERG’S LAWSUIT AGAINST BARACK OBAMA BASED ON OBAMA’S INELIGIBILITY ON HIS CANDIDACY AS REGARDS THE REQUIREMENTS OF NATURAL BORN CITIZENSHIP ACCORDING TO THE CONSTITUTION OF THE UNITED STATES OF AMERICA.

Partial excerpt from an email I sent Mr. Berg:

“I trust the judge did not originally dismiss your lawsuit because it does indeed have merit. We, as Americans, in order to fulfill the intent and directive of our Constitution are bound by patriotic duty to determine the legal status of any citizen running for the Presidency of the United States; such determination of status having to do with a requirement that said citizen must be a natural born citizen. Mr. Obama should be required to present pertinent evidence that would allow a judge or qualified public official to determine if he is, or is not, a natural born citizen. It is a legal requirement.”

Mr. Berg sent this copy of Mr. Obama’s and the DNC’s response.

Update: http://www.nextgenerationcorp.com/NextGenBlog/?p=66

It appears that Mr. Obama is trying to stall the matter. The outstanding issue is Mr. Obama’s birth certificate (Certificate of Live Birth). It appears that so far he has obfuscated this issue as well by providing, or having his agents provide, a false certificate of birth for publication.

But to Mr. Obama’s determent, the people of the United States of America demand that he (Mr. Obama) remove himself from eligibility to run for any political office for which he is not qualified and/or for which he (Mr. Obama) will not publicly present authoritative qualification for his candidacy as required by the Constitution of the United States of America.

God bless.

[joan]

They belong in jail.

And, just think, the majority of them are millionaires -- and I'll bet their money is safe.

Oh, re my info being vague, I could just see my husband ripping me if I went into too much detail, it was just that "Wachovia" name that made me sick.

Well, as I said, I'm off to watch football, drink Cokes and eat dark chocolate.

[Charlie (Colorado)]

The point is probably moot at this juncture, however, because as an add-on option it's mostly window-dressing in the current proposal.

To a great extent, yeah. It's not that it isn't good and shouldn't be used; it's that someone still has to start buying the illiquid stuff for the market to start being liquid.

The easiest way to be sure someone is buying the stuff is for someone to buy the stuff, and the government is the only thing with the right to print new money, if needed, to do so.

[Gmax]

On the question on IRA insurance, you have the following coverage, per the FDIC:

All deposits that an individual has in any of the types of retirement plans listed above at the same insured bank are added together and the total is insured up to $250,000. For example, if an individual has an IRA and a self-directed Keogh account at the same bank, the deposits in both accounts would be added together and insured up to $250,000.

You and your husband would each have $250,000.

I believe Wachovia has purchased additional deposit coverage, you might inquire with your local branch on Monday.

[Pagar]

Ann, I agree with you. A good place to start would be that group of Democrat politicians in that room, but of course they'll all claim immunity.

Someone mentioned the other day, I believe it may have been M. Simon that a coup was taking place. Based on what we're seeing, I think it has succeeded.

[Charlie (Colorado)]

Wall Street Journal today:

We also have to marvel at Newt Gingrich's ability to pirouette as a fiscal conservative hero now that he's a TV pundit. When he had responsibility as Speaker of the House, he acquiesced to the Clinton Treasury's plan to use the U.S. Exchange Stabilization Fund to bail out holders of Mexican debt. We also recall his lobbying for the Medicare prescription drug benefit.

The U.S. banking system continues to be under enormous stress, and if managed well the Paulson plan offers a decent prospect of preventing it from further infecting the economy. It might save taxpayers money in the long run. Yes, some bankers will remain in business when they wouldn't otherwise, but Schadenfreude is not a policy and revenge against what's left of Wall Street isn't worth the potential harm to innocents on Main Street.

[clarice]

Pagar, I think it overwrought to say there's a coup taking place or that it has succeeded. We are seeing what we've seen for about 15 years or so--Dems acting irresponsibily for their own party advantage and Republicans standing around like babies watching someone steal their candy.

[clarice]

*irreesponsibly*

[clarice]

*irresponsibly*

[Charlie (Colorado)]

On the other hand, Rich Lowry (who seems to be well connected, even if it is often something of a fool) has:
So it looks like a deal is shaping up

• Treasury purchases plus mbs insurance (cantor)


• Strong oversight/taxpayer protection


• Limits on executive comp


• No liberal add-ons (acorn, bankruptcy judges, proxy access)


• Govt equity stake likely to be scaled back or dropped. No staff-level enthusiam for it.


• Limit on amount of first tranche of money (less than $700 billion)

This deal gets 100 house gop votes

[Ranger]

I think the Ds are being really stupid about this whole thing. They think they have a gun to the head of the house Rs. What they really have is a gun to their own head and they are daring Rs to make them pull the trigger (just like in Blazing Saddles). At this point I think the house Rs would get on borad if the Ds would strip out all the give aways to lefty causes and add the insurance part as a discretionary option. The insurance option won't be used because no one at Tresury likes it, but it give the Rs enough cover to vote yes. If the Ds don't clean up the bill they will be forced to vote on it along strict party line, and even then it may not pass. When that happens, the Ds will have just handed the house back to the Rs, who will use the giveaway to ACORN to beat every moderate and conservative D bloody for the next 5 weeks.

[Charlie (Colorado)]

We are seeing what we've seen for about 15 years or so--Dems acting irresponsibily for their own party advantage and Republicans standing around like babies watching someone steal their candy.

Word.

[Ranger]

Treasury purchases plus mbs insurance (cantor)

Strong oversight/taxpayer protection

Limits on executive comp

No liberal add-ons (acorn, bankruptcy judges, proxy access)

Govt equity stake likely to be scaled back or dropped. No staff-level enthusiam for it.

Limit on amount of first tranche of money (less than $700 billion)

This deal gets 100 house gop votes

Posted by: Charlie (Colorado) | September 27, 2008 at 04:47 PM

I can live with all of that if it gets done soon enough.

[Charlie (Colorado)]

You know what, folks? I think I'm going to go back to reading comic books for a while.

[centralcal]

I am not confident that Lowry or his emailer have it correct. Boehner posted this warning about ACORN">http://republicanleader.house.gov/News/DocumentSingle.aspx?DocumentID=103884">ACORN

[Charlie (Colorado)]

I think that's just a sign the slimeballs haven't given up yet. I'm reasonably sure that not even Dodd and Schumer are stupid enough to push this into a freeze-up knowing that Boehner et al will immediately say that the only sticking point was the ACORN slush fund.

[centralcal]

FoxNews - Blackberry's have been confiscated; 9 Dems and 2 Repubs in meeting; Shumer is said to be freaking out.

[Jane]

Mike Pence says he doesn't know if Acorn is still part of the deal - on Fox, and he is nailing ACORN.

[Tom Maguire]

The Wachovia accounts are part of our IRAs. It's way over the FDIC.

I wouldn't give it another minutes thought. The feds will surely rescue *all* depositors regardless of the FDCI limit, as they did with WaMu:

Customers of WaMu, based in Seattle, are unlikely to be affected, although shareholders and some bondholders will be wiped out. WaMu account holders are guaranteed by the Federal Deposit Insurance Corporation up to $100,000, and additional deposits will be backed by JPMorgan Chase.

Someone will buy Wachovia, equity holders and maybe some senior debt will be thumped, and depositors will be A-OK. Seriously.

[DrJ]

Charlie,

If that's the deal that comes down, I could live with that. The only downside is exec compensation. There will be some creative accounting/options and so forth on the CEO end, but that would happen anyway.

[matt]

Volokh is reporting in their reading of Dodd's version, the giveaways are even worse than ACORN. There are apparently a couple of huge loopholes that allow funding of pet projects with part of the money.

These people just don't get it, do they? They have spent us into the poor house, allowed a bunch of crooks and thieves to get away with billions through unaccountability, and now have the country teetering on the edge of the abyss.

Is it going to take crowds of sans culottes with pitchforks and torches outside the Capitol before they get the message?

[DrJ]

Charlie,

If that's the deal that comes down, I could live with that. The only downside is exec compensation. There will be some creative accounting/options and so forth on the CEO end, but that would happen anyway.

[Tom Maguire]

FWFW, the "FDCI" limit is the same as the FDIC" limit. Hmm.

Lim Lindgren at the Volokhs makes a great point about the Acorn slush fund - with the current language, the profit is calculated asset sale by asset sale. So if Treausy buys two bonds for $1 billion each and later sells one for $1.2 billion and the other for $800 million, the net profit to the taxpayer is zero.

However, Acorn gets 20% of the $200 million profit on the $1.2 billion sale.

That is so badly thought through it can't survive, *if noticed*. But will a bunch of lawyers pick up on it?

[DrJ]

Typhuspad lives!

[Neo]

Shocking Video Unearthed Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis

[matt]

at present, they have @ 26 hours before it hits the fan when Tokyo opens. Fortis now has the Europeans attention, and I'm sure there are several other majors right behind them. The British have their own slow motion melt down going at the moment. Society Gen lost a fortune on those bad trades and can't be in great shape, so if people start pulling their money out, the whole thing gets out of control fast.

[Jane]

Someone (Clarice hint hint) should do a piece that explains why ACORN is so important to the democrats - because they are out there to manipulate every citizen's vote.

[Charlie (Colorado)]

Well, McCain's at his post in Washington, Obama is campaigning in Chicago, and Bill Burton is explaining how it is that the bill doesn't need Obama's full attention, he can just call.

[clarice]

TM-I saw that, too.
Jane. If I write more about ACORN people will think I'm a squirrel. Outside of the IT hardly anyone knows about it. When I explained it to my husband the other day he could not believe the Dems were trying to pull this off.

It is effin unbelievable. Does ACORN have videos of these guys cavorting in the altogether with minors?

[Cecil Turner]

However, Acorn gets 20% of the $200 million profit on the $1.2 billion sale.

Yeah, I saw that immediately and assumed everyone else did, too. With the inherent pricing uncertainty going on in this mess, that 20% of each winner looks to be a sizeable chunk of change. It ought to be a deal-killer (and because it can't stand scrutiny, you'd think it'd have come out before now).

[clarice]

CC:"Blackberrys have been confiscated"? Man, that's serious--those clowns have to figure out stuff w/o their staff? Have to be away from their pals in the media?

What's next? Cutting off food?

[Jane]

Neo, is that same video Simon posted earlier?

[centralcal]

Re; Blackberrys - Probably don't want any leaks about what is truly going on.

I figure they are waterboarding Gregg and Blunt right now.

[Jane]

I think the ACORN/Voter fraud/Obama connection could lose Obama this election. But we have to get it out there.

The dems through their greed could throw the election. (I like that title)

I just don't write that well.

Charlie? Simon? TM?

[sbw]

I have written two editorials that express great concern about ACORN-FANNIE MAE-Democrat congressional leadership-Obama

[RichatUF]

Charlie-

I think that's just a sign the slimeballs haven't given up yet. I'm reasonably sure that not even Dodd and Schumer are stupid enough to push this into a freeze-up

I wish I shared your confidence. I'm under the impression no one in DC really cares all that much. And that it will turn out for the Dem's benefit regardless of what passes.

[Gmax]

Wouldn't you just pay to see Chuckie Schumer go postal on some of these moonbats when behind closed doors?

The view of the Statue of Liberty will be awesome without any need for Wall Street. Of course where the folks on Manhattan work and make enough to afford the cost of living on Manhattan might get real interesting too. My guess on why Schumer is in full froth.

[Elliott]

Should Megyn Kelly replace Alexander Britton when he leaves Special Report?

[Patrick R. Sullivan]

This by Bruce Bartlett is what McCain have said last night in answer to the first question:

The basic problem is that the financial sector faces systemic risk in a way that no other industry does: By its nature, it is a house of cards that can collapse at a moment's notice.

....there's an inherent mismatch between a bank's assets and its liabilities - it can't cash in all its assets quickly, even though it is in theory obliged to pay most liabilities on demand.

....It would take a considerable amount of time for any bank to call in its loans or sell them to raise the funds necessary to pay off every depositor.

If a bank finds itself in such a situation and has to sell a lot of its assets quickly, any potential buyer will certainly offer much less than the assets are worth....

That "fire sale" situation will drive down the value of those assets - increasing the risk of bankruptcy even when a bank has been managed responsibly.

A secondary problem can then develop - because other banks hold similar assets. When one bank starts unloading at fire-sale prices, this drives down the market price - imposing losses on everyone holding such assets.

Under mark-to-market accounting rules, banks must recognize these losses immediately - even when their intention is to hold a bond or mortgage to maturity and (likely) be paid the full face value of the asset.

What prevents this house of cards from falling is confidence: People don't feel compelled to hold all their money in cash under their mattress and the system functions smoothly.

But, should confidence be shaken, the risks are very great indeed.

[MayBee]

Jan- as I understand it, both CITI and WellsFargo are looking at buying Wachovia.

[Gmax]

Just found this. Glad the Republicans are hanging tough. Hard to believe that they dont have an honest counterparty in their negotiations. Wait what am I saying, its the Democrats! That explains it all. And in other news while Nero fiddles, Brussels and London are on fire.

House Republican leaders on Saturday rejected the latest bailout proposal by Democratic congressional leaders, saying it is too costly to taxpayers and loaded with "pork" for business, unions and liberal groups.

"We want a deal. We just want a good deal," a House Republican leadership aide said.

House Minority Leader John A. Boehner (R-Ohio) called a news conference Saturday afternoon to announce: "We will not agree to a bill that bails out Wall Street at the expense of American taxpayers. We need to act quickly and protect American taxpayers first and foremost. This is not about faceless executives on Wall Street, but about families, seniors, small businesses, and taxpayers.

"Republicans are committed to continuing discussions to solve this crisis in a timely manner. We expect our proposals to be given the consideration they deserve. Our focus is on crafting a bill that serves the interests of American taxpayers — not Wall Street and special interests."

[Patrick R. Sullivan]

I think the ACORN/Voter fraud/Obama connection could lose Obama this election. But we have to get it out there.

And McCain failed to get it out last night when he had a perfect opportunity.

[Chris]

Joan,
I'm making an assumption that at least a chunk of your assets in Wachovia are invested in securities (stocks, bonds, mutuals etc). If that is the case you are protected by SIPC up to (I believe) at least 1.5 mil there.

*Not investment advice! Just my two cents which may be worth less than a penny, come Monday.

[Jane]

And McCain failed to get it out last night when he had a perfect opportunity.

Yeah, but there are other opportunities. I assume McCain didn't want to blow any chance of a bailout bill.

[MayBee]

Have you all seen who showed up to negotiate today (I've been out-- maybe I missed this):

Republicans, who had wanted a five-person meeting with Blunt, Frank, Gregg, Dodd and Paulson, also saw the table fill with other Democrats inserting themselves into the process, including House Caucus chair Rahm Emanuel, D-Ill., Sen. Chuck Schumer, D-N.Y., Sen. Kent Conrad, D-N.D., Sen. Max Baucus, D-Mont., and Sen. Jack Reed, D-R.I.

Also making a quick stop in? Charlie Rangel

via Jake Tapper

[jc]

here is some input I found interesting from a banker that did not screw this up.

http://tinyurl.com/4psnk5

[Ranger]

I'm not surprised that McCain passed on talking about ACORN and the bail out at the debate. He has two more to bring it up after a deal is reached. He did set it up though by making a big deal about earmarks. During the final debate on the economy he can hammer Obama about Fannie Mae and the Dems in congress for being willing to risk an economic melt down to give millions of taxpayer money to ACORN rather than retiring debt.

[tina]

The ACORN/Voter Fraud thing may be a good topic for Palin to bring up on Thursday night. I'm sure the game plan is for her to attack Obama and the dems from start to finish. Last night's debate was foreign policy, with a little economic crisis sprinkled in at the beginning. There are still two more debates on the horizons between Obama and McCain one of which is town hall style which is McCain's favorite.

I'm looking forward to Thursday's debate and will state up front I'm a little nervous given the Couric/Palin interview where Sarah didn't do too well.

[clarice]

tina, Demosthenes wouldn't have donw better under that framework and with that questioner.

[centralcal]

I for one am tired of the meme that Palin hasn't done well in her interviews.

Both the Gibson and Couric interviews were edited and not necessarily in a way that is a fair and full representation of her remarks.

Nothing she has said has risen to the levels of absurdity that Biden spouts hourly. Enough already.

[MayBee]

Acorn fed pork is truly, truly delicious.

[M. Simon]

Clarice,

Video Makes Hot Air

It is not on the front page but the note with it says it has gone viral.

[PeterUK]

Congress in a race against time to halt the economic crisis.

[clarice]

GREAT!! It is outstanding.

[bgates]

I assume McCain didn't want to blow any chance of a bailout bill.
I don't follow that. Why not pressure the Damnocrats on their grotesque attempt to loot this rescue plan? What's the point of saying after the fact, "The Democrats made this bill hundreds of billions of dollars more expensive by directing huge amounts of taxpayer money to criminal organizations devoted to committing fraud and electing Democrats (while we Republicans quietly watched)?"

[tina]

Well, I admit I didn't see the whole unedited version of her interview, and I don't doubt for one minute that CBS edited it to make Sarah look bad. But we know the media at large are after her and who knows what Gwen Ifil will do on Thursday night.

I did detect some sarcasm from Sarah in response to Katie's stupid question about McCain's legislative record on reform. Her "I'll get them to you" comment was shere Palin sarcasm, imho, although the media has presented it as stupidity on her part.

The debates are not going to make one hill of beans difference to me. I'm committed to McCain/Palin but the only way she will change the message is to perform well or well enough to shut up the media, at least to a degree. And it doesn't help when the folks at NRO/Corner attack her and give that additional ammunition to the media.

[sbw]

Clarice: Demosthenes wouldn't have done better

Demosthenes! That's it! Barney Frank has a mouth full of pebbles!

[M. Simon]

pagar,

Yes. I'm the coup guy. Roundly denounced except by Kim who is a science guy. i.e. used to looking at slim evidence and trying to figure out if there is a rule governing.

[joan]

"Chris: I'm making an assumption that at least a chunk of your assets in Wachovia are invested in securities (stocks, bonds, mutuals etc). If that is the case you are protected by SIPC up to (I believe) at least 1.5 mil there."

Well, how lovely. Thank you, Chris.

I'm now going to google SIPC.

[M. Simon]

I don't think most of you are getting the mood of the country. TCO poised that well.

So let me give you a historical example:

Millions for defense, but not one cent for tribute!

[Charlie (Colorado)]

Barney Frank has a mouth full of pebbles!

Hell, an entire head full.

[Charlie (Colorado)]

I don't think most of you are getting the mood of the country. TCO poised that well.

You know what, Simon? I don't give one good flying goddamn about the "mood" of the country.

We can worry about their mood when we get the goddamn gun muzzle out of their mouths.

[sbw]

Charlie, double that comment in spades.

A poll about what the country thinks presumes that popularity means something is worthwhile.

That CNN would keep a running tally during the debate -- if what I read is correct -- is the final indication that CNN has no clue of what news is. Their business is entertainment.

[M. Simon]

neo,

That video has gone viral. I had a link to it here yesterday.

So good news on that clarice.

Republican report on bail out - correct url - Dems Want to Reward Scandal-Tarnished "Community Organizing" Group in Economic Rescue Bill

[M. Simon]

centracal,

My 07:05 corrects your link.

[M. Simon]

Jane,

Give me an outline of what you want and I'll write it up.

Simon

[Extraneus]

So now we have the video, showing many corrupt Democrats precipitating the current situation, over a period of years. A situation which many had forseen and tried to prevent, but were blocked from doing so by these same Democrats.

Then, in June of an election year, we have Schumer, a scheming scumbag if there ever was one, sending a letter to IndyMac that many believe caused a deposit run and their failure.

And now these same culprits are all fighting tooth and nail to include potentially huge funds for ACORN, a demonstrably corrupt organization for whom their nominee used to work?

It has the feel of something devious and ingenious.

[Chris]

Joan,
No problemo. Hope you sleep a little easier. Of course, SIPC doesn't protect you from market risk. Just there in the case of financial institution failure.

[centralcal]

M. Simon - correct away, I am a dummy at this stuff. Did I link something?

[centralcal]

Oh - guess I did at 4:55 p.m. I was trying out the Firefox tools. You're telling me I screwed it up? I am not surprised in the least. grin

[M. Simon]

A poll about what the country thinks presumes that popularity means something is worthwhile.

Charlie, sbw,

Have you forgotten that there is an election coming up? Popularity means a lot.

The mood is: Samson. I'm going to die and take the evil one's down with me. Which I believe is in the end heroic. The 300.

Now you may not like it, but this is the reality based community here: deal with it.

If the banking system goes down the assets will remain. The sound banks are awash in money. My brother is a banker and he says that his bank (a private one) has no liquidity problem.

[jc]

At last word, Dems are now demanding that union members sit on bank boards and banks get taxed for any shortfall -- my guess is the shortfall is to be calculated after ACORN gets their cut.

I think it is time for the White House to walk and tell everybody why. Screw it, we are better off with a Depression than a government run by thugs.

[JM Hanes]

Jane:

"I think ACORN is still in - and the 2 republican negotiators got ambushed at the negotiations. There were supposed to be 2 democrats. Instead Schumer, Rangel, Emmanual, Frank, Dodd and 2 others showed up. All the bad guys. Something is going on."

Now that all our resident financial brains have sorted through what's at stake, somebody who knows more than I do needs to start looking more closely at this posse.

There's a money flow here somewhere that we're missing. It's got to be more than sweetheart loans, and what we know about recipients of FM Foundation largesse. When Chuck Schumer gets himself on national t.v. to tell McCain to get outta town, I'd say Mr. Smooth as Snake Oil himself is in some kind of panic. Is that recent squall over Schumer's putative role in that Indy bank (?) failure related to what's going on now?

At the very least, I'd like to see an ad, or a billboard sized poster:

Picture: Schumer, Rangel, Emmanual, Frank, Dodd
Caption: Would You Buy a Used Car from These Guys?

[M. Simon]

centracal,

Yeah. 4:55. You have to clear out anything in the box before you put your link in.