Banking Crisis

[Tunnelcat]

So McCain, who's been in bed with these guys a lot longer is less tainted and who's actually been involved in a major corruption scandal in the past? I'm choosing between the lesser time exposure to corruption guy. Unless someone better comes along, but I'm afraid not this time around. It would be nice for a really clean, smart, unconnected and dedicated person to run for president someday, but I probably won't be around to see it.

You notice something wrong with McCain? I saw him on TV at his press conference yesterday and he had one eye more closed than the other. Creepy. Almost looked like a stroke or palsy or maybe he just can't handle the stress. Just noting.

[flip]

I like Bosn's idea!!. Problem is it makes to much sense and puts the American people first. I predict this. We will go along with whatever they say, take the burden just like they have planned, smile and say thank you like the good little citizens we are

Edit: oops i just did the math too. Something like that though. A real stimulus package.

[Tunnelcat]

Well, well. McCain flies to Washington and the bailout deal gets killed. Nice going McCain. We'll see what happens to the markets and the debates.

[Will Robinson]

Well, well. McCain flies to Washington and the bailout deal gets killed. Nice going McCain. We'll see what happens to the markets and the debates.

So you are conceding McCain is the one who controls the fate of the finacial markets? And when a solution is worked out you'll be assigning him sole credit for the big uptick on all the markets...right...

[Spidey]

Maybe it needed to get killed.

If you ask me we should let those people sink.

[Capm]

same math that the ceo's used to get rich, why shouldn't it benefit us?

[Will Robinson]

Well, well. McCain flies to Washington and the bailout deal gets killed. Nice going McCain. We'll see what happens to the markets and the debates.

Never mind the story link seems to change daily and the one I was talking about is gone and I can't retrieve it so the link below isn't what I wanted to show you....

This article EDIT now won't /EDIT walk you back from tonight to when McCain showed up...

[CUDA]

You notice something wrong with McCain? I saw him on TV at his press conference yesterday and he had one eye more closed than the other. Creepy. Almost looked like a stroke or palsy or maybe he just can't handle the stress. Just noting.

Idiot you try spending 5 years getting the living hell beat out of you and see if you dont have some physical problems, OH yea the Man cant even use E-mail!!! OH WAIT it because his arms were broken multiple times and never set properly. I bet you laugh at the special Olympians and people in wheel chairs too huh, get a grip

[dissent]

some more on how we got into this mess

http://www.newsweek.com/id/161199

[Kiran]

So, how about this new, huge proposed bail-out?

Things seem to be getting worse still...

So, the question of me, as a young non-homeowner is, is now that time to buy, or do I wait for things to settle down more? (My real estate agent was trying to tell me that the market was going to take off again.... and boy do I hope it doesn't.... Normal people can hardly afford homes as it is, after the crash.)

My husband and I just bought our first house. The best thing to do is to consult with a lender about how much you can afford to buy. Once you get an estimate, give it some time to think about how you can make payments while juggling other expenses and saving up. At least with a fixed rate loan, you know the rate won't change. NEVER EVER get an adjustible rate. That's what screwed people over and got banks in trouble in the first place (sort of).

Now is a good time to buy. Everywhere it's "buyer's market". We chose to buy now because we decided we did not want to keep throwing our money away to landlords.

[Lothar]

The best thing to do is to consult with a lender about how much you can afford to buy.

Lenders have been telling people they can afford loans they never should've thought about, because the lenders were repackaging and selling off the bad loans to unsuspecting dupes. Since they weren't on the hook for it, they were just going for big commissions, without really considering what people could afford.

So make sure, if you consult with a lender, that you make it clear what you're looking for -- fixed rate, no nonsense. And then buy at least 25% below what they say you can afford, if not more. Because "what you can barely afford" and "what you can comfortably afford" are miles apart.

[Will Robinson]

I knew I would find someone had put this together eventually.
Keep in mind the democrats right now are blaming republicans for not regulating Fannie Mae and Freddy Mac. The media is letting them, and Obama, blame McCain and the republicans for not wanting to regulate these operations. The truth is the complete opposite.
I understand the lying demo's trying to win an election and cover their butts however it is amazing to me how the media is willing to not report this. Journalism is taking the year off so they can all work on Obama's campaign apparently!!

Here, see some out takes from the CSPAN hearings in 2004 and tell me if it was democrats or republicans who wanted regulation.

youtube of CSPAN hearing

[Kiran]

The best thing to do is to consult with a lender about how much you can afford to buy.

Lenders have been telling people they can afford loans they never should've thought about, because the lenders were repackaging and selling off the bad loans to unsuspecting dupes. Since they weren't on the hook for it, they were just going for big commissions, without really considering what people could afford.

So make sure, if you consult with a lender, that you make it clear what you're looking for -- fixed rate, no nonsense. And then buy at least 25% below what they say you can afford, if not more. Because "what you can barely afford" and "what you can comfortably afford" are miles apart.

lenders are supposed to tell you what your limit is-even though it could be a "barely afford" thing. They don't know your spending style or how much you actually pay per month plus what the utlities are or how much groceries you buy. The buyer should be smart enough to know that the lender isn't going to know the lifestyle of the individual(s) in just days based on income to debt ratio. The buyer should take these things into consideration. They'll know what their limit is- and then they need to go down the ladder to the point where they'll be comfortable with the payments. Our lender did the estimate with the mortgage payments plus taxes a month- so we got a price range based on that. The estimated taxes will go into an escrow account so we're not going to get much of a tax suprise when the time comes.
What we also did is get the house while Dk is in the police academy. He's getting a raise when he gets out and start the job, so that's extra money coming in- talk about living comfortably. We can comfortably make payments for now and it gets better when he starts his job.
It's really about making an informed decision and being smart about it. Like Lothar said, it's better to get the idea of the price range and go down form there.

[Foil]

Lenders have been telling people they can afford loans they never should've thought about... without really considering what people could afford.

I can attest to this. When my wife and I moved a couple of years ago, we went to the lender to get an idea of range was that we could get approved for. We were shocked when it came back at a level which would more than double the monthly payment on our mortgage at the time (and we were sometimes stretching the budget).

[Duper]

Car dealers will do the same thing. I've had more than one try to do that with me. .. big name dealers too.

[Tunnelcat]

Here's an interesting little bit of information I heard on CNBC. Apparently the percentage ratio of the money that can be leveraged when getting loans, buying and trading stock, obtaining mortgages, etc. is a large part of this meltdown.

In 1980, when we bought a house, it was 6 to 1, in other words, you could get loaned six dollars for every dollar you had to spend. Back then, we were required to cough up 20% of the home value as a down payment just to get a mortgage, if you could even find a banker willing to loan to a young just starting out married couple that both had stable and good paying jobs. It was very difficult back then to get a home loan.

Fast forward to just before 2004. The leveraging ratio had climbed to 12 to 1 by then, I don't know which Administration was responsible for this rise up to that point, probably Clinton. Well, Wall Street Hedge Fund and derivative traders wanted to be able to leverage more and more money in not only stock trades, but other things like mortgage securities as well. Oooh, fast money! Home prices were going up fast back then in the housing market so they lobbied the Bush Administration to raise the leveraging ratio for the benefit of the Hedge Fund and derivative traders (I'm not an expert on what the accurate term for this is here or I would find the information on the internet). It was raised to 40 to 1 and in some instances 70 to 1 just by a Bush internal departmental fiat, not through Congress. More and more funny money was being used to trade large bundles of sub-prime mortgages in order to make wads of money for people that didn't have anything but unsecured paper for their trades. Oh, why worry, no risk! The government will just insure the banks against loss if you are a derivative trader trading all these sub-prime junk mortgages and things tank! And now here we taxpayers are, stuck with somebody else's gambling debt that Bush raised the stakes in.

[woodchip]

I don't suppose you have any links for this \"info\" you are presenting? As I heard it Bush tried at least 8 times to get more banking regulations.

[CUDA]

if memory serves and I could be wrong, it was Barney Frank (D-Mass) chairman of the House Financial Services Committee that actually forced that issue along with Senator Chris Dodd (D-Conn) Chairman of the Senate Banking Committee that forced that change. Not the white house

[dissent]

Keep in mind the democrats right now are blaming republicans for not regulating Fannie Mae and Freddy Mac. The media is letting them, and Obama, blame McCain and the republicans for not wanting to regulate these operations. The truth is the complete opposite.

Damn straight Will. Though I’ll say up front that this whole debacle probably crosses party lines plenty.

It seems to get going in part with the Community Reinvestment Act of 1977 (CRA). Before the libs in the crowd start howling that the current mess is a non sequitur from the CRA, let’s follow the argument a bit and see if it holds at least some water.

The CRA was passed by the 95th United States Congress and signed into law by President Jimmy Carter in 1977 as a result of national grassroots pressure for affordable housing, and despite considerable opposition from the mainstream banking community.[2] The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the federal government considers an institution's application for deposit facilities, including mergers and acquisitions after the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 repealed restrictions on interstate banking.

Critics of blaming the CRA have made the claim that CRA is irrelevant to the current financial services mess, for example Robert Gordon writing in the American Prospect

The revisionists say the problem wasn't too little regulation; but too much, via CRA. The law was enacted in response to both intentional redlining and structural barriers to credit for low-income communities. CRA applies only to banks and thrifts that are federally insured; it's conceived as a quid pro quo for that privilege, among others. This means the law doesn't apply to independent mortgage companies (or payday lenders, check-cashers, etc.)
The law imposes on the covered depositories an affirmative duty to lend throughout the areas from which they take deposits, including poor neighborhoods. The law has teeth because regulators' ratings of banks' CRA performance become public and inform important decisions, notably merger approvals. Studies by the Federal Reserve and Harvard's Joint Center for Housing Studies, among others, have shown that CRA increased lending and homeownership in poor communities without undermining banks' profitability.

I have several issues with Gordon’s comment:
1) "intentional" redlining, "structural barriers to credit"? Does he refer to the fact that banks intentionally make more loans to borrowers of lower credit risk that they do to borrowers of higher risk? Why is this a surprise to anyone who has taken even a rudimentary course in economics. Yeah, lower risks get bet on more easily, because most people are resistant to exposure to higher risk (unless they feel that market risk might be ameliorated by some other considerations (more on this later)). Intentional redlining is intended as a pejorative (implying racism as the only motive), when another motive could simply be a reduced desire to take higher risk when handing out a loan.

2) “only to banks and thrifts that are federally insured”. Ok, that may be all fine and good, but the problem seems now to be that these mortgages and loans have not stayed with the original underwriter, but have now been sliced and diced and cooked into a strange brew of mortgage backed securities and subsequent credit default swaps (cue article I linked in a previous post, namely http://www.newsweek.com/id/161199 ) which don’t seem to be easily accounted for

3) “without undermining banks profitability”. Yeah, studies would show that banks profitability was unaffected, because they sold their soon to be bad loans to somebody else who subsequently filleted and cooked them and sold them again

Then there is the shifting regulatory environment surrounding the CRA -

In early 1993 President Bill Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities.[5] The new rules went into effect on January 31, 1995 and featured: requiring strictly numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.[3][4]

For that last item, the term “community activist” might spring to mind.

Like Gordon, Ellen Seidman also makes the case that CRA had no effect on the current crisis.

First, the timing is all wrong. CRA was enacted in 1977, its companion disclosure statute, the Home Mortgage Disclosure Act (HMDA) in 1975. While many of us warned against bad subprime lending before the turn of the millennium, the massive breakdown of underwriting and extension of risky products far down the income scale-without bothering to even check on income-was primarily a post-2003 phenomenon. To blame a statute enacted in 1977 for something that happened 25 years later takes a fair amount of chutzpah.

But is Seidman simply ignoring or overly discounting the changing regulatory face of CRA and its share of the impact on mortgage lending?

In 1994 the Riegle-Neal Interstate Banking and Branching Efficiency Act loosened up the regulatory barriers to bank mergers. Consequently, said Bernanke, "As public scrutiny of bank merger and acquisition activity escalated, advocacy groups [like ACORN] increasingly used the public comment process to protest bank applications on CRA grounds." In other words, there was a burst of additional legalized extortion perpetrated by the Fed and its pet "activist organizations" beginning in the mid-1990s. As a result, says Bernanke, "banks began to devote more resources to their CRA programs." What an understatement.
Also in 1995, the US Treasury Department created the multibillion-dollar "Community Development Financial Institutions" fund to "provide banks with access [i.e., taxpayers' dollars] to new opportunities to finance community economic development" as "encouraged" by the CRA, said the Fed chairman.
The government also "streamlined" the regulatory requirements for CRA loans in 1995, allowing — and indeed pressuring — banks to make such loans without the benefit of many traditional credit-worthiness criteria, such as the size of the mortgage payment relative to income, savings history, and even income verification! Instead, the Fed told banks that participation in a credit-counseling program, many of which are federally funded, could be used as "proof" of a low-income applicant's ability to make his mortgage payments. In other words, federal bank regulators required banks to make bad loans based on nonexistent credit standards.

(from this story).


Certainly it wasn’t just the CRA. From a WSJ article

Fed Chairmen Alan Greenspan and Ben Bernanke prefer to blame "a global savings glut" that began when the Cold War ended. But Communism was dead for more than a decade before the housing mania took off. The savings glut was in large part a creation of the Fed, which flooded the world with too many dollars that often found their way back into housing markets in the U.S., the U.K. and elsewhere.

- Fannie Mae and Freddie Mac. Created by government, and able to borrow at rates lower than fully private corporations because of the implied backing from taxpayers, these firms turbocharged the credit mania. They channeled far more liquidity into the market than would have been the case otherwise, especially from the Chinese, who thought (rightly) that they were investing in mortgage securities that were as safe as Treasurys but with a higher yield.

My head is spinning. If someone can write a comprehensive history of this at some time in the future, I’ll hope we will have learned something from it. But I think it is hard to argue that congressional meddling in the housing market, on several levels, including the CRA, is deeply involved in this whole mess.

[dissent]

youtube of CSPAN hearing

LOL.

Maxine Waters -"Fannie Mae under the outstanding leadership of Franklin Raines"


wow, I wish I could get a bonus that was way more than my salary.

[Ford Prefect]

I wonder if this whole mess would be so wide spread if the problem was limited to organizations that made loans to bad credit risks. As dissent points out once a loan or mortgage was made the liability was then passed around, sliced up and disguised a dozen ways. I think that this will be found to be the real culprit for the huge mess we are in now. If Fanny and Freddie were stuck with the consequences of their own lending practices and various other financial institutions as well then the problem would have come to light a long time ago and the damage would be contained to those that made the bad loans. With this ridiculous Gordian knot of financial incest that makes up the business world we get parasites sucking money out every time a loan gets packaged and traded and made into weird derivatives whose purpose is to disguise risk, sucker the unwary and line the pockets of those that dream up the schemes.

[Will Robinson]

Let Fannie and Freddie etc. collapse and use the feds money and legislation to stimulate the market and insure the little guys credit access without subsidizing the executive level thieves who did this to us in the process. There are a number of plans out there that address the root of problem instead of bailing out the failed organizations and putting pork and party favors in the bill to get the congress to go along!

The bailout plan has gone from bad to bad + more monkey-business-as-usual.

[Ford Prefect]

I think it is also worth noting that The Economist http://www.economist.com/ has been calling the U.S. housing market a \"bubble\" market for about 3 years. Surely someone in the Federal Reserve or Treasury reads the leading economic magazine in the world and at least mentions these concerns to the regulators that are responsible for the U.S. financial markets. This whole collapse was forecast in articles I read long ago. Seems silly to try to place blame on administrations of 25 years ago or even 10 years ago. This bull market has been a concern for about 5 years, things do not go up forever and it's the responsibility of the bureaucrats and number crunchers who inform the regulators who then advise the administration to recommend action when they see a risk that needs to be addressed.

[Dedman]

This plan made a lot of sense to me as an alternative to going 700 Billion in debt.

http://a1611.g.akamai.net/f/1611/26335/ ... se_fix.pdf

[Sergeant Thorne]

Years of bad decisions and stupid mistakes have created an economic nightmare in this country, ...

I believe that a problem cannot truly be solved without first having been unequivocally understood. They've lost me at the first sentence...

[Will Robinson]

Years of bad decisions and stupid mistakes have created an economic nightmare in this country, ...

I believe that a problem cannot truly be solved without first having been unequivocally understood. They've lost me at the first sentence...

Do you think the statement is wrong or do you mean that they should detail all the stupid mistakes and bad decisions before you'll read their proposal?

Your declaration that they lost you leaves me lost

[Jesus Freak]

Is there such a thing as too conservative for your own good?

... same goes for too liberal, of course.

Update: revised bailout passed in senate. Waiting on the House...

[Tunnelcat]

I don't suppose you have any links for this "info" you are presenting? As I heard it Bush tried at least 8 times to get more banking regulations.

It took a lot of searching to find this, but I was successful. Some people use different terms like leverage rates or dept-to-equity ratio. Like I say, I'm not a financial expert and yes, it WAS an SEC rule change in 2004.

http://www.nysun.com/business/ex-sec-of ... -up/86130/

[Dedman]

Update: revised bailout passed in senate. Waiting on the House...

Read the revised plan. It's a stone cold joke. Same crap, more pork. Here's one of the more commical sections.

TITLE V--ADDITIONAL TAX RELIEF AND OTHER TAX
PROVISIONS
Subtitle A--General Provisions
Sec. 503. Exemption from excise tax for certain wooden arrows designed for
use by children.

Someone please explain to me what the hell that has to do with unfreezing the capitol markets.

Correcting a financial problem should not involve going deeper into debt. The first step in getting out of a hole is to stop digging.

Any legislator who votes for this bill should be ashamed of themselves and deserves to lose their job!

[Tunnelcat]

I agree, it looks like more of the same deregulation that caused this mess in the first place. Idiots, on both sides. They don't get it. They have to keep adding 'pork' to their bills. Even Obama and McCain voted 'yes', shameful. At least my Democratic Senator, Ron Wyden, voted against it. I can't say the same for the Republican Gordon Smith. Wyden even came out and complained that this bill wasn't going fix the problem and that it was being rushed to vote without any forethought to the consequences.

I think some of these guys were looking at the poling and saw the change in people's attitude toward the bailout after the Monday market crash. That's the only reason I can think for the the passage of this bill, err, piece of c##p!

[Ferno]

well.. don't just sit there dedman. call or fax your congressman and tear a strip off them.

[Sergeant Thorne]

Do you think the statement is wrong or do you mean that they should detail all the stupid mistakes and bad decisions before you'll read their proposal?

Your declaration that they lost you leaves me lost

Sorry.

I'm fairly convinced that this whole housing problem is the direct result of Leftist schemes, whether malicious or characteristically naive. It's not all just greedy banks. There was government involvement (I'm going to look more into that, and I'll get you some specific info). In light of that, "stupid mistakes" and "bad decisions" is just kind of skimming over or generalizing the problem--spreading the blame on a bunch of nameless people, identified by nothing except the fact that they were "mistaken". Now maybe I'm just reading too far into this, but if it was a liberal/Leftist scheme, then at best that first sentence sounds blatantly ignorant, and at worst it sounds like a liberal trying to soften/rewrite history and at the same time offer a Leftist solution to what was really a Leftist problem (equivalent to trying to put a fire out with kerosine).

Does the idea of making it so anybody can "buy" a home sound woolly-headed to anyone but me? I mean, I would love for everyone to be able to get their own home, but there are reasons why some people can't. The biggest reason, if I'm not mistaken, is that houses are expensive. But they didn't make houses cheaper, did they? If this were done by banks alone, then I wouldn't see any problem with chalking it all up to greed, predatory lending, and stupidity (even that sounds a lot more harsh than that first sentence) but it's bigger than just the banks.

[Will Robinson]

Sorry.

I'm fairly convinced that this whole housing problem is the direct result of Leftist schemes, whether malicious or characteristically naive. It's not all just greedy banks. There was government involvement (I'm going to look more into that, and I'll get you some specific info). In light of that, "stupid mistakes" and "bad decisions" is just kind of skimming over or generalizing the problem--spreading the blame on a bunch of nameless people, identified by nothing except the fact that they were "mistaken". Now maybe I'm just reading too far into this, but if it was a liberal/Leftist scheme, then at best that first sentence sounds blatantly ignorant, and at worst it sounds like a liberal trying to soften/rewrite history and at the same time offer a Leftist solution to what was really a Leftist problem (equivalent to trying to put a fire out with kerosine).

Does the idea of making it so anybody can "buy" a home sound woolly-headed to anyone but me? I mean, I would love for everyone to be able to get their own home, but there are reasons why some people can't. The biggest reason, if I'm not mistaken, is that houses are expensive. But they didn't make houses cheaper, did they? If this were done by banks alone, then I wouldn't see any problem with chalking it all up to greed, predatory lending, and stupidity (even that sounds a lot more harsh than that first sentence) but it's bigger than just the banks.

You have good reason to put blame on liberal policy creating the mechanism for backing bad loans to people who can't really afford the house but will vote liberal...that is a legitimate concern.
Where you went 180 degrees from the reality is assuming that solution is more liberal handiwork!
It is the product of applying common sense and some sound conservative principles to address the potential credit crunch but not reward those liberals and the dumbasses at the institutions that went for the profit instead of putting the brakes on a runaway train.

Basically it solves the problem much better than the current plan, it doesn't allow the guilty to profit from it, or other sharks to come feed on a trillion dollar band aid and it costs the tax payer a whole lot less money!

Dave Ramsey who is promoting it is a very conservative guy who preaches live within your means and don't live with any debt at all if you can help it. The ideas in that solution are not all his but they are all good ones.

[Dedman]

well.. don't just sit there dedman. call or fax your congressman and tear a strip off them.

Who says I have been just sitting here. I have written both my senators and my cangressman many times this week. I told the three of them not to pass it. When one of my senators told me he voted for it yesterday (I'll post that reply if you want, it's amusing reading) I ripped him a new one and told him I was going to do everything in my power to make sure he doesn't get re-elected.

[Sergeant Thorne]

I can be such an idiot. Do I at least get a booby prize for pulling several paragraphs out of 4 words?

Edit: Heck yeah, Dedman. Post it!

[Dedman]

His message to me

Dear Mr. Tharp :



Thank you for contacting me regarding the turmoil in our financial markets and the actions taken by the United States Treasury as they pertain to several leading financial institutions. It is good to hear from you.



This is the most serious and critical domestic issue I have dealt with in my 14 years in Congress. We have been betrayed by many people and by abuse of the system. Now we have two significant choices to make - do nothing or take action.



I strongly believe that doing nothing will destroy the financial security of millions of Americans and possibly lead us into a depression. I just as strongly believe the bill as now negotiated will arrest the crisis and begin to turn our economy around.



The bill that I voted for is not a bailout. H.R. 1424, \"The Emergency Economic Stabilization Act,\" is crafted to address the crisis; restore security for the American taxpayer; and return our nation to the strongest economic power in the world. And in the process this bill enables us to root out and punish those who cheated us all.



I know that my vote in favor of this package was not the politically popular thing to do, but this is not a popularity contest. This is about the future of our country and the future that my children and grandchildren will inherit. I have absolutely no doubt in my mind or my heart that my vote in support of this measure was the right thing for our economy, for Georgians, and for our country.



My first reaction was one of anger and frustration. How could this happen in the strongest economy in the world? How could the best financial system in the world fail? After calming down, I realized the seriousness of the situation and the consequences of Congress failing to act.



The Treasury Department submitted a proposal to Congress requesting authority to purchase troubled assets from financial institutions. This program was intended to address the root cause of the market stresses by removing these assets from the financial system.



I did not support the original proposal submitted by the Administration because it did not address the critical needs of the American taxpayer, community banks, retirees, and small businesses and it concentrated too much power in a small group to administer the plan.



As the conversations in Washington and across the nation continued over how to address the challenge before us and as the details of the problems in our financial sector were revealed daily, I became convinced that something had to be done and done soon.



Moreover, when the House rejected the plan, the economy suffered a $1.2 trillion dollar blow in the stock market, which only made more apparent the impact this credit crunch is having on Main Street . Specifically, in some cases, Georgia community banks are unable to make auto loans.



Below are details of the legislation:



TAXPAYERS ARE PROTECTED. In its current form, the legislation before the Senate protects taxpayers in many ways. Accountability, safeguards, and oversight measures are numerous. There will be transparency, public reports, and triggers to end the program if, for some reason, it is not effective or end the program early if it is more successful. Moreover, I worked to negotiate a mechanism to stop all transfers of taxpayer funds if necessary. That said , I believe this legislation will be effective.



NOT A BLANK CHECK. I opposed the President's initial request to simply give a blank check to Secretary Paulson. I also opposed the second version submitted by the President and Congressional Democrats that would have given taxpayer money to liberal groups such as ACORN. Let me be clear - this current bill, the bill in the Senate, is not a blank check for anyone. First, it allows the release of $250 billion to purchase these toxic loans. Then, Congress can release another $100 billion but only with Presidential involvement and certification that it is necessary. And only if absolutely necessary and again with Presidential certification and Congressional approval, the remaining $350 billion could be released. However, I do not believe the entire $700 billion authorized will be necessary or used.



NO GOLDEN PARACHUTES. CEOs and other executive officers who drove their companies into the ground will not be able to walk away with millions leaving taxpayers holding the bill. Those companies that choose to participate in the program will be subject to strict compensation limits.



NO NEW GOVERNMENT SPENDING. The language is clear - all revenue generated through the repayment of any assets purchased and any sold must be used to pay down the national debt. No money will go to pork projects, new government spending, or liberal groups such as ACORN.



HELP FOR MAIN STREET . As this crisis continues, community banks are being affected more and more. Car loans and home loans, even to those with good credit, are drying up. People are losing their retirement savings. Small businesses are now having difficulty getting loans to make payroll or grow their business to create new jobs. If we allow this to continue, jobs will be lost, more retirement accounts will be impacted, and credit will get even tighter.



PUNISH CRIMINALS. The Federal Government is actively investigating cases of fraud and abuse. Where wrongdoing is found, the perpetrators, including, if implicated, members of Congress will be brought to justice. We have already seen subpoenas issued for records at Fannie Mae and Freddie Mac. This bill demands cooperation with the Federal Bureau of Investigation (FBI) and I expect we will see more subpoenas and criminal prosecution.



ADDRESS THE UNDERLYING CAUSE WHILE WE TREAT THE SYMPTOMS. We are seeing the symptoms now - lack of trust in the banking industry, daily tightening of the credit markets, losses in personal retirement accounts - and while this legislation addresses those issues, it also goes further to treat the cancer that got us here. This legislation authorizes the Securities and Exchange Commission (SEC) to modify the 'mark to market' accounting procedures that magnified this crisis by forcing banks to mark down the value of assets they had no intention of selling in the near future. This mark down of value caused a corresponding loss of value to the institutions. The SEC has already begun the process to modify this procedure.



RETURN TRUST IN THE BANKS. By increasing the Federal Deposit Insurance Corporation (FDIC) protection on bank accounts from the current $100,000 to $250,000, taxpayers and bank customers can once again trust that their money is safe in the bank of their choice.



DEBT REPAYMENT. Toxic loans will be purchased at a discount and 100% of the monies repaid to the government will go to reduce the debt we incur in this process. While we shouldn't expect full repayment, it is possible that all of the money expended will be repaid.



PROTECT OUR NATIONAL SECURITY. If we do not act and this crisis spreads like a cancer to every segment of our economy, it will destroy not only taxpayer savings but it will erode our ability to fund our military, supply our troops with the resources they need, and protect our homeland.



NO TIME FOR POLITICAL FINGER POINTING. There is plenty of blame to go around but now is not the time to throw stones, now is the time to address this crisis and get our economy moving again.



FOR THE COUNTRY; NOT POLITICAL POPULARITY. This is not a popularity contest, this is a crisis. And since this crisis began, I have had numerous conversations with economists, community bankers, small business owners, and taxpayers. I have weighed the costs of inaction versus the costs of unpopular action. I support this bill because it is good for the country, it is the right thing to do today for taxpayers and tomorrow for my children and grandchildren, and it is necessary to get our economy moving again.



Strong capital markets are vital to a prosperous U.S. economy and given the renewed focus of our regulators and market participants, I remain confident in our financial markets and our overall economy.



However, history warns us against inaction by hard lessons learned. Delaying to act would be a repeat of the mistakes of the 1920s, when thousands of banks failed before significant confidence was restored to our financial markets.



If you would like to receive timely email alerts regarding the latest congressional actions and my weekly e-newsletter, please sign up via my web site at: www.chambliss.senate.gov . Please let me know whenever I may be of assistance.

My response

Senator Chambliss,



It saddens and angers me to learn that you voted for H.R. 1424. I expressly told you that I did not support that bill. And because I didn't support it, you should not have supported it.



This bill is so full of \"pork\" that has absolutely nothing to do with the stated goal of the bill, that you should be ashamed of yourself. Putting this Nation deeper into debt is not sound fiscal policy.



I believe you and your like minded colleagues, who feel the government belongs to them and not its citizens are what is wrong with our Nation today.



Due to your inability to follow your constituent's wishes, I am going to do everything in my power to fire you and send you home.



Regards,

[Sergeant Thorne]

\"do nothing or take action\"

My bull****-o-meter is burying the needle. Was \"do nothing\" ever considered to be an option? Ron Paul was the only one I've heard espouse that kind of sentiment, and he seemed to appreciate the gravity of it.

I read the whole of that proposal that Dedman linked. There are some aspects that I don't understand (I'll read it over a few more times), but one question comes to mind: what would these changes do to the rest of the housing market? Just a curiosity. I'm not suggesting that any effect would necessarily be bad. It sounds really good.

[Tunnelcat]

Woodchip, I did more research and found out that the change with the 'debt to equity ratio' was to the 'net capital rule 15c3-1' in 2004, mainly due to lobbying efforts from the major brokerage firms. If you do a Google search for this little puppy, just TRY to read and understand all the lawyer and accountant speak at the SEC's website, I guarantee that your eyes will glaze over. I can see how the Bushies pulled the wool over the average person's eyes with this one.

Read the last line in this article. It was written in April, 2004 and is VERY prophetic!

http://securities.stanford.edu/news-arc ... wbaugh.htm

I'm going to guess that this little 'rescue' or 'bailout' or whatever these bird brains want to call it is only a bandage on the market's arterial hemorrhage. The credit crisis is only going to get worse. By the end of December, the last fiscal quarter, there's a probability that things are going to REALLY tank in the markets globally. I seriously hope I'm wrong with this one though. Depressing.

[Will Robinson]

Deadman, call him and tell him we read this line from his letter and decided that it would be best if someone that stupid would volunteer to stop breeding because he's really dragging down the gene pool's ability to produce intelligent life on our planet!

The Treasury Department submitted a proposal to Congress requesting authority to purchase troubled assets from financial institutions. This program was intended to address the root cause of the market stresses by removing these assets from the financial system.

Remind him to look up root cause and then effect and learn the difference...ask him to do it on his way to the clinic for his vasectomy...

[Will Robinson]

...I can see how the Bushies pulled the wool over the average person's eyes with this one....

I can see how the demorats must be so proud of you for your ability to only see the evil in legislation that can be blamed on republicans...
Unfortunately for those of us who share this planet your selective outrage doesn't allow you to be part of the solution, you will only be useful to those who founded and perpetuate the problem.