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Legislators say principles of US bailout deal reached (Roundup)
Sep 25, 2008, 18:53 GMT
U.S. Senator and Chairman of the Senate Banking Committee Christopher Dodd. EPA/SHAWN THEW
Washington - The principles of a 700-billion-dollar deal to bail the country out of its financial crisis have been agreed on in a bipartisan move, legislators from the special finance committees handling the issue said Thursday.
Christopher Dodd, a Democrat from Connecticut and chair of the Senate banking committee, could not say exactly when the bill would pass, but said he expected action 'within the next few days.'
'We've reached a fundamental agreement on a set of principles,' Dodd said.
The office of Senate Minority Leader John Boehner said the Republican leadership had not signed off on anything.
'There's no agreement as of now,' an official in Boehner's office told Deutsche Presse-Agentur dpa.
The official urged patience until after a White House meeting with US President George W Bush, the two presidential candidates, Democrat Barack Obama, 44, and Republican John McCain, 72, and Congressional leaders.
Announcement of any agreement would likely 'wait until after the meeting with the president,' the official said.
The meeting over the mammoth and controversial bill, which Bush says must pass within the next days if the country is to be spared a 'long and painful recession,' is slated for 2000 GMT Thursday.
The bill aims to unjam the growing credit freeze by taking bad mortgage debts and related securities off the hands of hundreds of financial firms which have put a clamp on the money flow necessary to keep the economy going.
White House spokesman Tony Fratto said news of agreement among the committee specialists was a 'good sign that progress is being made,' according to CNN. But he added that the Bush administration still needed to review the details.
Dodd said that the next step would be to meet with the Treasury Department, which would administer the programme, and 'go over these principles which we've agreed on among ourselves and obviously go back to our respective caucuses to talk with them as well.'
Senator Bob Bennett, a Republican from Utah, said he expected the plan to 'pass the House, pass the Senate, be signed by the president, and bring a sense of certainty to this crisis that is sill roiling in the market.'
Bennett and Dodd were joined by Representative Barney Frank, a Democrat from Massachusetts who chairs the House financial services committee, and the ranking Republican on the panel, Representative Spencer Bachus.
Notably absent from the group was Senator Richard Shelby, the ranking Republican on Dodd's committee and a leading critic of the proposal. He has declared he would not support the mammoth intrusion into capital markets unless other alternatives had been considered.
Dodd said the final plan would 'send a message to the markets.'
'We're very confident that we can act expeditiously,' Dodd said.
Dodd refused to give details, but said that legislators had modified the original proposal from the White House to include concerns about the issues of effective oversight, preserving home ownership and limiting executive compensation in companies that benefit from selling their bad mortgage assets to the government.
The request for taxpayers to fix the financial mess on Wall Street has provoked anger and outrage not only in the public, but also among government officials.
Secretary of Treasury Henry Paulson, who testified for two days before the two committees in support of the proposal, has said he found it 'embarrassing' for America to be in this position.
Frank said the barebones bill submitted late last week by the White House now included 'collectively a number of things that will make people legitimately feel better about the overall vote.'
'We are on track, I believe, to pass this. The market should be calmed down,' Frank said.
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This is going to cost each US citizen (Man, Woman and Child) an extra $2,500 plus interest.
Bush has spent this much time on something other than his private war with Iraq. I thought just last month he was musing about how strong and solid the US economy is and 'Don't fret America'. I think he just likes to wait to the last minute for the effect factor.
i no longer trust or have any faith in the government sorry to say.
i had to put my retirement into an ira as ordered by geo h. bush now its all going away thanks for nothing bush sr.
What is worse is that the loans to cover this will be picked up as bonds largely held by overseas countries (China, Japan etc) and the interest payments will put the US even further in hock to these countries.
What a wonderful achievement from 8 years of Republican mis-management
The mainstream media have gone over the line and are now straight out propagandists for the Obama campaign. While they have been liberal and blinkered in their worldview for decades, in 2007-08 for the first time, the major media are consciously covering for one candidate for president and consciously knifing the other. This is no longer journalism — it is simply propaganda. (The American left-wing version of the Volkischer Beobachter cannot be far behind.) And as a result, we are less than seven weeks away from possibly electing a president who has not been thoroughly and even half way honestly presented to the country by our watchdogs — the press.
The image of Barack Obama that the press has presented is not a fair approximation of the real man. They have consciously ignored whole years in his life, and showed a lack of curiosity about such gaps that bespeaks a lack of journalistic instinct. Thus, the public image of Mr. Obama is of a 'Man who never was.' [...]
The mainstream media ruthlessly and endlessly repeats any McCain gaffes, while ignoring Obama gaffes. You have to go to weird little Internet sites to see all the stammering and stuttering that Mr. Obama needs before getting out a sentence fragment or two. But all you see on the networks is an eventual one or two clear sentences from Mr. Obama. Nor do you see Mr. Obama's ludicrous gaffe that Iran is a tiny country and no threat to us. Nor his 57 American states gaffe. Nor his forgetting, if he ever knew, that Russia has a veto in the United Nations. Nor his whining and puerile 'come on' when he is being challenged. This is the kind of editing one would expect from Goebbels' disciples, not Cronkite's.
More appalling, NBC's 'Saturday Night Live' suggested that Gov. Sarah Palin's husband had sex with his own daughters. That scene was written with the assistance of Al Franken, Democratic Party candidate for Senate in Minnesota. Talk about incest.
But worse than all the unfair and distorted reporting and image projecting, is the shocking gaps in Mr. Obama's life that are not reported at all. The major media simply has not reported on Mr. Obama's two years at Columbia University in New York, where, among other things, he lived a mere quarter mile from former terrorist Bill Ayers— after which they both ended up as neighbors and associates in Chicago. Mr. Obama denies more than a passing relationship with Mr. Ayers. Should the media be curious? In only two weeks the media has focused on all the colleges Mrs. Palin has attended, her husband's driving habits 20 years ago and the close criticism of Mrs. Palin's mayoral political opponents. But in two years they haven't bothered to see how close Mr. Obama was with the terrorist Ayers.
Nor have the media paid any serious attention to Mr. Obama's rise in Chicago politics — how did honest Obama rise in the famously sordid Chicago political machine with the full support of Boss Daley? Despite the great — and unflattering details on Mr. Obama's Chicago years presented in David Freddoso's new book, the mainstream media continues to ignore both the facts and the book. It took a British publication, the Economist, to give Mr. Freddoso's book a review with fair comment.
The public image of Mr. Obama as an idealistic, post-race, post-partisan, well-spoken and honest young man with the wisdom and courage befitting a great national leader is a confection spun by a willing conspiracy of Mr. Obama, his publicist David Axelrod and most of the senior editors, producers and reporters of the national media.
Perhaps that is why the National Journal's respected correspondent Stuart Taylor has written that 'the media can no longer be trusted to provide accurate and fair campaign reporting and analysis.' That conspiracy has not only photo-shopped out all of Mr. Obama's imperfections (and dirtied up his opponent Mr. McCain's image), but it has put most of his questionable history down the memory hole.
The public will be voting based on the idealized image of the man who never was. If he wins, however, we will be governed by the sunken, cynical man Mr. Obama really is. One can only hope that the senior journalists will be judged as harshly for their professional misconduct as Wall Street's leaders currently are for their failings.
HOW did America wind up in its worst financial crisis in decades? Sen. Barack Obama explained it this way last week: 'When sub-prime-mortgage lending took a reckless and unsustainable turn, a patchwork of regulators systematically and deliberately eliminated the regulations protecting the American people.'
That's exactly backward. Mortgage lending took that 'reckless and unsustainable turn' because of regulation - regulation driven by liberals and progressives, not free-market 'deregulators.' Pushed hard by politicians and 'community activists', the regulators systematically and deliberately altered financially sound lending practices.
The mortgage market was humming along just fine when, in the late 1980s, progressives decided that it needed to be 'fixed.' Their complaint: Some ethnic groups got approved for mortgages at lower rates than others.
In reality, mortgage lenders were simply being prudent - taking care to provide mortgages to those who could best afford to make the payments.
The shift began in 1989, when Congress amended the Home Mortgage Disclosure Act to force banks to collect racial data on mortgage applicants. By 1991, critics were using that data to paint lenders as racist by showing that minority applicants were approved at far lower rates. Banks were 'Shamed By Publicity,' as one 1993 New York Times headline put it.
In fact, they found a racial disparity only by ignoring relevant data on applicants' ability to make mortgage payments - such as their assets and credit history.
But the political pressure was intense - with few in politics or media eager to speak the truth. And then, in 1992, came a study from four researchers at the Boston Fed, which seemed to bear out the critics' contentions.
That study was, in fact, based on quite flawed data - but the authors' political, media and academic protectors stifled most serious criticism, smearing the reputation of one whistleblower and allowing the Boston authors to avoid answering serious academic challenges (mine included) to their work. Other studies with different conclusions were ignored.
The very next year, the Boston Fed announced new requirements for banks - rules that have now turned out to be monumentally catastrophic: Adopt 'relaxed lending standards' or risk being labeled as racists, and face serious penalties under the federal Community Reinvestment Act.
Gone (as 'arbitrary' and 'outdated') were traditional lending requirements such as requiring a down payment or limiting mortgage payments to 28 percent of income. (Of course, the loosened lending standards weren't limited to poor and minority applicants - that would be discriminatory.)
The new standards performed as intended: Home- ownership rates, stagnant for 25 years, began a rapid 10-year ascent in 1995, with many new homeowners being lower-income and/or minority families.
The large rise in demand for houses, however, fed a run-up in prices starting in 1997 - the infamous housing bubble. And rising prices hid the great vulnerability of these loans to defaults and foreclosures, because refinancing or selling at a profit was the easy alternative.
Soon, these loans began to be sold in the secondary market. Fannie Mae and Freddie Mac were enthusiastic proponents of relaxed lending standards and purchased large swaths of these loans.
Time after time, Fannie and Freddie trumped criticism by pointing to how they were helping broaden homeownership. Because of the subject's racial overtones, they beat back calls for reform even after financial irregularities were found.
Rating agencies such as Standard & Poor's had no experience with such loans - and imprudently used the misleading bubble-induced performance to incorrectly judge the likely performance of financial instruments based on such loans.
In 2002, the 'reformers' declared victory. In a Fannie report, four academic supporters of relaxed standards crowed how these changes were 'fundamentally altering the terms upon which mortgage credit had been offered in the United States from the 1960s through the 1980s . . . These changes in lending herald what we refer to as mortgage innovation.'
Lucky us.
Now that the popped bubble has left us swimming in foreclosures, the supporters of loosened credit standards seem shy about taking credit for their 'mortgage innovations.' Instead, they blame subprime lenders for becoming 'predatory' - when they were simply taking the Boston Fed rules to their logical conclusion while broadening the mortgage market.
Investors holding mortgage-based assets now want out. Perhaps they deserve a $700 billion refund - since they were sold a bill of goods by 'progressive' politicians, academics and government officials who, in the hope of remaking society, insisted that loans based on relaxed underwriting standards were sound.
Stan Liebowitz is the Ashbel Smith professor of economics at the Business School at the University of Texas at Dallas.
'We've reached a fundamental agreement on a set of principles,' Dodd said.
Definition of 'principles': a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.
Truth and foundation of capitalism:
WELFARE AND CON GAME FOR THE RICH AND GREEDY
..we're the Americans.
We don't scare easy.
..if we do this right, we'll end up coming out ahead on this. I'd have to see it to believe it, but it is possible it won't cost the US taxpayer a dime. In fact, the projection is for a 1.3 trillion gain and as high as 2 trillion.
Jesus...
This proves that SP4 is a certified lunatic.
images.quickblogcast.com/35238-32833/Contrasts.jpg
Ordered the FBI to investigate the failing institutions their executives for FRAUD. Our system is broken. It no longer works in 2008. Unless we can admit that we won't make any progress. To me lobbying is the biggest form of corruption. Corporate executives employ lobbyists to bribe and persuade members of congress and senate. Business is not the only one doing this. Political interest groups do the same. One such group is the jewish lobby who successfully lobbied for the illegal invasion and occupation of Iraq. The jewish lobby is responsible for us being in Iraq right now. THIS HAS GOT TO STOP. The business lobby....the political interest lobby....this all HAS TO BE MADE I-L-L-E-G-A-L. Lobbying is immoral, it is unethical, it creates greed and in the case of war....is the cause for murder. Lobbying MUST be made illegal!!!! Lobbyists, and those hiring lobbyists (business and political interest groups) as well as congressmen and senators who are bought and influenced by the process of lobbying MUST be prosecuted to the fullest extend of the law.
and picked up a Crack pipe. He is seriously scewed in the head.
Senator McSame playing politics blew the deal. What an idiot, A quote from one his oldest friends:
'Even the House's Republican leader, John Boehner of Ohio, passed up a chance to praise McCain's leadership powers shortly before the two met in the Capitol at midday Thursday. Asked by reporters if McCain could help win House Republican votes for the proposed package, Boehner shrugged and said, 'Who knows?'
SP4: Typical sucker for the con artist. Always a looser.
Example:
Read up on the last Savings and Loan Crisis. That was a small one. This latest con game is much bigger. The con artist learned how to think bigger than before. Once a scam works, then multiply it by ten and rake in the dough.
One in 10 US mortgage holders is now 90 days or more in arrears, and one in four US families with a sub-prime mortgage is in serious arrears.
Sounds like McCain is blowing it big time in Washington and Palin is blowing it big time whenever she opens her mouth. It would appear she only had one speech in her - the bridge to nowhere crap, and the plane on ebay along with hockey mom married to the first dude. Ask her a question, and you'll get mumble jumble that she probably doesn't even understand. She was a one-trick pony.
And while the politicians still argue, another bank hits the dust this morning.
While the usual numbskulls here on M&C tirade each other over McCaian vs Obama, more and more US taxpayers and their families, have lost their homes and ARE NOW LIVING IN A TRAILER OR IN THE BACK OF THEIR CAR.
Sheeest! Some people can't see the woods for the trees.
For once even Bush understands some facts and recognises who, and which party, is to blame -
(From New York Times) -
“If money isn’t loosened up, this sucker could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room.
China has just told all their domestic banks to stop lending money to the US through the Interbank , until this financial mess is cleared up.
..when I want concise financial insight, I come to the tinfoil hat crowd on M&C. One article says that reid said maCain said nothing of substance and another says Dodd claims MCCain sunk the deal. Then they say that the dems run Congress but that republicans are blocking the legislation.
If this is true, wouldn't that mean the dems don't have enough dems behind this to run it through?
It is a Republicant's problem, and if the Republicant's cannot support the bailout, let the cards fall as they may. Lets make sure that all the world knows how great of a job the Bush administration has done the last 8 years. Remember what that great American said 'stupid is as stupid does'.
1999 NY Times Article Revealed True Cause of Current Fannie Mae Crises
By P.J. Gladnick
This is probably an article that the New York Times wishes it didn't have in its archives because it reveals the true culprits behind the current Fannie Mae meltdown. You will find 'uncomfortable' truths in this September 30, 1999 article by Steven A. Holmes starting with the title, 'Fannie Mae Eases Credit To Aid Mortgage Lending,' that you won't find in current editions of the New York Times:
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
Get that? Pressure by the Clinton Administration to expand mortgage loans by lowering its credit requirements.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
That would be the same Franklin Raines whom the Washington Post identified as a mortgage and housing adviser for the Obama campaign until that newspaper told us not to rely on its own reporting. We return you now to the article that the New York Times wishes didn't exist:
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
Oops! And that is exactly what has happened nine years later. And who were the 'killjoys' at the time warning against Fannie Mae easing the credit requirements? That answer is also provided in the NY Times article:
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
@ SP4 yesSep 26th, 2008 - 18:04:35
It is a Republicant's problem, and if the Republicant's cannot support the bailout, let the cards fall as they may.
sp4 yes, it's now the GOP's problem, after the dems greenlighted all of this mess, and yes, let it fall where it may...
Lets make sure that all the world knows how great of a job the Bush administration has done the last 8 years.
sp4 - none of this is certainly his fault - read below
Remember what that great American said 'stupid is as stupid does'.
sp4 - I hate to burst your bubble but Tom Hanks was only playing a role...Forest Gump is, like your politics, imaginary...
Read boy..
This was preventable.Sep 21st, 2008 - 01:59:13
John McCain predicted Fannie Mae and Freddie Mac crises, pushed 2005 legislation to prevent trouble:
The 'FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005' would have headed this off but it was killed in the Committee on Banking, Housing, and Urban Affairs by Chris Dodd who recieved the most money from Fannie Mae and Freddie Mac.
President Bush sought to rein in Fannie and Freddie in 2003.
The Democratic response to Bush in 2003:
“These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
“I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.
As a dying 3rd rate power with crumbling infrastructure, overcrowded schools with high school children who cant find Canada on the map. As a country rife with corporate corruption and voting fraud. As a bully 'bullying' smaller countries. As an insecure military power intent on adventure and eventual self-destruction. As a country with a financial crisis that seems to be unending and an economy that is collapsing. As a country with a president that NEVER had a clue, and who let an insane vice-president, former gung-ho defence secretary and jew deputy defence secretary run his foreign policies.
...a globe full of hand - out - for - assistance, hate-mongering, bigoted, prejudiced, ignorant, provincial, wealth leveling bunch of sheep, dependant on their socialized and/or marxist masters to mete out the very marrow of their lives, and always with a lopsided set of principles pointed at America the core of which they cannot even seem to scratch the surface of, let alone live up to, themselves.
We have a saying in America:
'No one is building a raft to go to Cuba'.
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synopsis of bailout plan.Sep 25th, 2008 - 19:15:03
The CEO's are bailing out of this crashing situation.
The taxpayers are getting hooped up the backside once more.
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