Bailout: For Better or Worse They Claim It's Done

[Kathianne]

http://news.yahoo.com/s/ap/financial_meltdown

Congress, White House reach financial bailout deal

By CHARLES BABINGTON and ALAN FRAM, Associated Press Writers 55 minutes ago

Congressional leaders and the Bush administration reached a tentative deal early Sunday on a landmark bailout of imperiled financial markets whose collapse could plunge the nation into a deep recession.

House Speaker Nancy Pelosi announced the $700 billion accord just after midnight but said it still has to be put on paper.

"We've still got more to do to finalize it, but I think we're there," said Treasury Secretary Henry Paulson, who also participated in the negotiations in the Capitol.

"We worked out everything," said Sen. Judd Gregg, R-N.H., the chief Senate Republican in the talks.

Congressional leaders hope to have the House vote on the measure Monday. A Senate vote would come later.

The plan calls for the Treasury Department to buy deeply distressed mortgage-backed securities and other bad debts held by banks and other investors. The money should help troubled lenders make new loans and keep credit lines open. The government would later try to sell the discounted loan packages at the best possible price.

At the insistence of House Republicans, some of the program's $700 billion would be devoted to a program that would encourage holders of distressed mortgage-backed securities to keep them and buy government insurance to cover defaults.

The legislation would place "reasonable" limits on severance packages for executives of companies that benefit from the rescue plan, said a senior administration official who was authorized to speak only on background. It would affect fired executives of financial firms, and executives of firms that go bankrupt. Some of the provisions would be retroactive and some prospective, the official said.

The proposed legislation also calls for the financial sector to help make up the difference if the government does not recoup its investment in five years, the official said, but details were unclear.

Also, the government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in financial companies' future profits.

To help struggling homeowners, the plan would require the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes.

The measure's main elements were proposed a week ago by the Bush administration, with Paulson heading efforts to push it through the Democratic-controlled Congress. Democrats insisted on greater congressional oversight, more taxpayer protections, help for homeowners facing possible foreclosure, and restrictions on executives' compensation.

To some degree, all those items were added...

[Mr. P]

http://news.yahoo.com/s/ap/financial_meltdown

The news/political shows will be interesting this morning.

[Kathianne]

The news/political shows will be interesting this morning.

Indeed. I just finished entering grades for the trimester midpoint. Going to work on lesson plans and watch.

[Kathianne]

If they got rid of some of the 'add ons' it would make it more palatable. At the same time, I fear this plan and still see a melt down:

http://online.wsj.com/article/SB1222...googlenews_wsj

* SEPTEMBER 27, 2008

Re-Seeding the Housing Mess



Taxpayers are naturally suspicious that political insiders and contributors on Wall Street are going to make out like bandits once Washington starts spending the $700 billion in the financial market rescue. But Democrats have already decided to spin off potentially billions of taxpayer dollars from the bailout fund to their own political buddies -- not on Wall Street but on nearby K Street.

The House and Senate Democratic drafts contain an indefensible and well-hidden provision. It would mandate that at least 20% of any profit realized from the sale of each troubled asset purchased under the Paulson plan be deposited in either the Housing Trust Fund or the Capital Magnet Fund. Only after these funds get their cut of the profits are "all amounts remaining . . . paid into the Treasury for reduction of the public debt."

Here's the exact, amazing language from the Democratic proposal, breaking out how the money would be divided and dispensed:

"Deposits. Not less than 20% of any profit realized on the sale of each troubled asset purchased under this Act shall be deposited as provided in paragraph (2).

"Use of Deposits. 65% shall be deposited into the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Regulatory Reform Act . . . ; and 35% shall be deposited into the Capital Magnet Fund . . .

"Remainder Deposited in the Treasury. All amounts remaining after payments under paragraph (1) shall be paid into the General Fund of the Treasury for reduction of the public debt."

What we have here essentially are a pair of government slush funds created in July as part of the Economic Recovery Act that pump tax dollars into the coffers of low-income housing advocacy groups, such as Acorn.

Acorn, one of America's most militant left-wing "community activist groups," is spending $16 million this year to register Democrats to vote in November. In the past several years, Acorn's voter registration programs have come under investigation in Ohio, Colorado, Michigan, Missouri and Washington, while several of their employees have been convicted of voter fraud.

Along with other potential recipients of these funds, including the National Council of La Raza and the Urban League, Acorn has promoted laws like the Community Reinvestment Act, which laid the foundation for the house of cards built out of subprime loans. Thus, we'd be funneling more cash to the groups that helped create the lending mess in the first place.

This isn't the first time this year that Democrats have tried to route money for fixing the housing crisis into the bank accounts of these community activist groups. The housing bill passed by Congress in July also included a tax on Fannie Mae and Freddie Mac to raise an estimated $600 million annually in grants for these lobbying groups. When Fannie and Freddie went under, the Democrats had to find a new way to fill the pipeline flowing tax dollars into the groups' coffers.

This is a crude power grab in a time of economic crisis. Congress should insist that every penny recaptured from the sale of distressed assets be dedicated to retiring the hundreds of billions of dollars in public debt that will be incurred, or passed back to taxpayers who will ultimately underwrite the cost of the bailout.

The idea that special-interest groups on the left or right should get a royalty payment for monies that are repaid to the Treasury is a violation of the public trust. We're told the White House and House Republicans are insisting that the Acorn fund be purged from the bailout bill. The Paulson plan is supposed to get us out of this problem, not start it over again.

[Mr. P]

Indeed. I just finished entering grades for the trimester midpoint. Going to work on lesson plans and watch.

You don't recycle lesson plans from year to year?

[Mr. P]

Along with other potential recipients of these funds, including the National Council of La Raza and the Urban League, Acorn has promoted laws like the Community Reinvestment Act, which laid the foundation for the house of cards built out of subprime loans. Thus, we'd be funneling more cash to the groups that helped create the lending mess in the first place.

I just heard Senator Gram say those folks have been delt with and will not receive any benefit.

[Kathianne]

You don't recycle lesson plans from year to year?

Not so much. Some carry over, but the classes change, skewing one way or another. That's why this point of the year is interesting. The 6th grade class has an avg score of 92.75, the 7th grade is about 72.10. Last year's lessons would be too slow and too shallow for this class. The 'objectives' stay the same, but the depth and pace change.

[Kathianne]

I just heard Senator Gram say they folks have been delt with and will not receive any benefit.

That's what I've been hearing too, the proof will be in the writing of the legislation. For some reason I just don't trust our elected officials.

[crin63]

We're gonna get screwed! If the Dims are on board with it were gonna get screwed. I'm opposed to anything except funding the FDIC.

Their proposal was so bad that they didn't even want to take credit for it. Otherwise they would've passed it on Friday, after all they have the votes. Don't tell me its because they care about what the Republicans want or are trying to be bi-partisan. They wanted accomplices so they can spin it to blame Republicans when it all goes bad.