Paulson says government reversing direction on $700 billion bailout

[blinky8225]

Originally posted by: IHateMyJob2004
So, people do know that buying banks now means that you can sell them later, correct?

This. What Paulson doing now is much better than the original plan--buying toxic assets. Having a stake in the banks makes it more likely we'll be able recoup our losses. The only reason that this wasn't done before was because of idealogical reasons. Bush and Co. are very opposed to government ownership of anything. However, things have gotten so bad that he no longer has a choice to be beholden to conservative ideology.

 

[Jaskalas]

Originally posted by: SagaLore

Originally posted by: RightIsWrong
The more time I have had to digest this, the more that I wish that every major bank would have failed. Sure we would have faced an economic crisis like we have never seen before. But it might have been better than what we have now.

So what we have now is worse than the great depression?

It is certainly possible. Time will tell, but the Government is doing everything possible to make this worse.

 

[compuwiz1]

Wait til we have some real big bank failures and they go looking for bailout money again.

The question that will be asked is what happened to the last 700b we just shelled out?.......followed by a giant shit hits the fan sound. It ain't gonna be pretty folks. :shocked:

And yeah, I fully expect a couple billion gets shuffled into the someone's account who has not earned it and does not have it coming. Kind of a service fee for pulling the wool over everyones eyes and getting the money authorized.

 

[Baked]

That mofo probably loss all the money at an underground pokrer tourney.

 

[trenchfoot]

So, who's going to be responsible for not having any of this bailout dough just simply disappear like a huge chunk of it is doing in Iraq?

Who is going to be the watchdog over all those wolves in sheep's clothing that is going to be trying their hardest to hoodwink and scam as much of this free money as possible without getting caught ala Halliburton/KBR et al?

Bush has remained completely numb/dumb about that troubling scenario, and one can correctly surmize that he'll do the same when this giveaway starts mysteriously disappearing in huge chunks.

 

[BoberFett]

Originally posted by: Baked
That mofo probably loss all the money at an underground pokrer tourney.

I swear we thought it was a sure thing with those jacks over fours so we went all in. Our bad.

 

[alien42]

Originally posted by: brencat

Originally posted by: Lemon law
Pass legislation preventing foreclosure now, inject only a small amount of cash in now, and the answer may be to declare that all bets placed in the derivatives international casino are all null and void. Once we know where the remaining damage is, then and only then can we come up with a rational plan.

What are you smoking? So we should reward those too stupid to know they couldn't afford a $700k mortgage on $50k of annual income? Reward those who stretch themselves to buy that BMW and never save a penny? Comon man. Consumers are just as much to blame for trying to keep up with the Jones'. You make it sound as if 4 out of every 5 mortgage loans in the last 4 years was fraudulent and that just isn't the case.

And your comment about nullifying credit derivatives trades is impossible and a non-starter. Your word is your bond -- and the buyers of protection are licking their chops like vultures now, as they should be. But if you want total collapse and an instant Depression, by all means let's try your plan.

unemployment is rising rapidly across the country. most Americans have huge debt and if they are unable to find a job, they are unable to pay their mortgage.

 

[StageLeft]

Paulson's job was to see this problem coming years ago and to prevent little problems from becoming big problems, he utterly failed that public trust, and it baffles me why we should trust the man who broke it to fix it. Get a clue, the man who broke it should never be trusted to fix it. Fire his ass now before he gives away the store.

Yep, I asked this a while ago. You do not ask the arson of your house to help put out the flames. Paulson is already a disaster. Why he should be heading up anything right now is beyond me.

 

[brencat]

Originally posted by: alien42
unemployment is rising rapidly across the country. most Americans have huge debt and if they are unable to find a job, they are unable to pay their mortgage.

And this is my problem....how?

Sorry to sound cold and uncaring but to answer your question, in such a situation, they will NOT be able to pay their mortgage and will have to sell the house or turn in the keys to the bank. They will become renters again -- sad for said families to give up their house, but necessary to correct the credit excesses and imbalances that have existed for far too long in our economy. Burn it all down and start over from a more solid footing. It's going to be a painful 2 years and unemployment will reach 8.5% easy I predict.

 

[mshan]

http://www.cnbc.com/id/27696791

 

[Atreus21]

Even Rush knew that.

I guess this comes as no surprise.

 

[First]

To be surprised about this is to essentially admit you didn't read the language of the bill. At all. Fed has full discretion and that has been transparent from day 1.

 

[Chunkee]

I cannot believe that there is one person on here that is surprised by this? I mean really? Did you think humanitarian initiatives were behind this? Did you think philanthropy provoked this? Jesus, it is worse than I thought. Wake up Sheeple! Please be aware of historical content and your immediate surroundings. It is your wallet they are hitting; and I am most certain most of your are not someone's brother or cousin who will be profiting from this or one of the Executive VPs or CEOs of the companies that shafted everyone, AFTER, they got there deposit in THEIR accounts. Jesus help us!

 

[Nemesis 1]

This is actually the smartest thing Bush has ever done . There is a new president. Bush should not do what clinton done and push things threw in the last Hour. Let Obama solve the problem he and the other Dems . created.

Nice move bush don't let door hit ya in ass on way out.

 

[DealMonkey]

Why oh why does this remind me of Bremmer unloading cargo planes full of pallets in Iraq stacked high with American dollars and then slopping the contractors (and Iraqis who needed to be bribed to restore their country) like pigs at the trough with our taxpayer dollars?

The similarity is eery.

 

[Nemesis 1]

Originally posted by: Lemon law
My only comment is that congress has dumped a 700 billion dollar blank check on Paulson, it was not wise to do so, and now it time to take it away if no plan exists. Pass legislation preventing foreclosure now, inject only a small amount of cash in now, and the answer may be to declare that all bets placed in the derivatives international casino are all null and void. Once we know where the remaining damage is, then and only then can we come up with a rational plan.

Paulson's job was to see this problem coming years ago and to prevent little problems from becoming big problems, he utterly failed that public trust, and it baffles me why we should trust the man who broke it to fix it. Get a clue, the man who broke it should never be trusted to fix it. Fire his ass now before he gives away the store.

Could ya hold off on that pass legislation preventing foreclosers. Everthing I have is paid for. Let me run out and buy million dollar home . Than pass that legislation.

You do know it was the Dems who broke it right .

So your ans . Is Unfairness lol.

 

[1prophet]

Originally posted by: Evan
To be surprised about this is to essentially admit you didn't read the language of the bill. At all. Fed has full discretion and that has been transparent from day 1.

The actual name of the bill is The Emergency Economic Stabilization Act of 2008

The Emergency Economic Stabilization Act of 2008, commonly referred to as a bailout of the U.S. financial system, is a law authorizing the United States Secretary of the Treasury to spend up to US$700 billion to purchase distressed assets, especially mortgage-backed securities, and although this wasn't reported in the media or known to many congressmen, make capital injections into banks. The bailed-out banks could be U.S. banks or foreign banks, and they don't even have to be banks, if the Fed arbitrarily decides there are exigent circumstances such as in the case of American Express. The Act was proposed by U.S. President George W. Bush and Treasury Secretary Henry Paulson during the global financial crisis of 2008.

The original proposal was three pages, as submitted to the United States House of Representatives. The purpose of the plan was to purchase bad assets, reduce uncertainty regarding the worth of the remaining assets, and restore confidence in the credit markets. The text of the proposed law was expanded to 110 pages and was put forward as an amendment to H.R. 3997.[1] The amendment was rejected via a vote of the House of Representatives on September 29, 2008, by a margin of 228-205.[2]

It was pushed through on the premise that it would be used to purchase bad assets

Mortgage asset purchases
A key part of the proposal is the federal government's plan to buy up to US$700 billion of illiquid mortgage backed securities (MBS) with the intent to increase the liquidity of the secondary mortgage markets and reduce potential losses encountered by financial institutions owning the securities. The draft proposal of the plan was received favorably by investors in the stock market.[21][31]

This plan can be described as a risky investment, as opposed to an expense. The MBS within the scope of the purchase program have rights to the cash flows from the underlying mortgages. As such, the initial outflow of government funds to purchase the MBS would be offset by ongoing cash inflows represented by the monthly mortgage payments. Further, the government eventually may be able to sell the assets, though whether at a gain or loss will remain to be seen. While incremental borrowing to obtain the funds necessary to purchase the MBS may add to the United States public debt, the net effect will be considerably less as the incremental debt will be offset to a large extent by the MBS assets.[32][33]

A key challenge would be valuing the purchase price of the MBS, which is a complex exercise subject to a multitude of variables related to the housing market and the credit quality of the underlying mortgages.[34] The ability of the government to offset the purchase price (through mortgage collections over the long-run) depends on the valuation assigned to the MBS at the time of purchase. For example, Merrill Lynch wrote down the value of its MBS to approximately 22 cents on the dollar in Q2 2008.[35] Whether the government is ultimately able to resell the assets above the purchase price or will continue to merely collect the mortgage payments is an open item.

In April 2008, the State Foreclosure Prevention Working Group reported that the pace of foreclosures exceeded the capacity of homeowner rescue programs, such as the Hope Now Alliance, in the first quarter of 2008,[36] in part because a myriad of investors and complex MBS contracts must be consulted as part of the refinancing process.

What you have now is a bait and switch using legalese and fine print like a typical car dealer, the only good thing is you can go after the car dealer when they do that.

 

[RightIsWrong]

Originally posted by: brencat

Originally posted by: alien42
unemployment is rising rapidly across the country. most Americans have huge debt and if they are unable to find a job, they are unable to pay their mortgage.

And this is my problem....how?

Sorry to sound cold and uncaring but to answer your question, in such a situation, they will NOT be able to pay their mortgage and will have to sell the house or turn in the keys to the bank. They will become renters again -- sad for said families to give up their house, but necessary to correct the credit excesses and imbalances that have existed for far too long in our economy. Burn it all down and start over from a more solid footing. It's going to be a painful 2 years and unemployment will reach 8.5% easy I predict.

It becomes your problem when a fair amount of foreclosures and/or short sales happen in your neighborhood and you start to realize that those are your new comps and they just put you upside down on your own mortgage vs. home value.

It becomes your problem when all of the newly unemployed can no longer pay their credit card bills and the economy slows down even more and whatever job you do currently have is now threatened.

It becomes your problem when the megacorps start releasing poorer and poorer earnings statements and their stock prices drop as a result and they start laying off more and more of their workforce you might feel slightly different.

To put your head in the sand and proclaim that you are immune is pretty idiotic.

 

[Nemesis 1]

There is alot to be said for your snowball effect I agree.

I have made some good $$ last couple of years Shorting. But I am setting here . looking at Intel approach $10 a share and I am not even excited . THATS BAD,

 

[IceBergSLiM]

good move. There is no point in artificially propping up property values.

 

[brencat]

Originally posted by: RightIsWrong
It becomes your problem when a fair amount of foreclosures and/or short sales happen in your neighborhood and you start to realize that those are your new comps and they just put you upside down on your own mortgage vs. home value.

It becomes your problem when all of the newly unemployed can no longer pay their credit card bills and the economy slows down even more and whatever job you do currently have is now threatened.

It becomes your problem when the megacorps start releasing poorer and poorer earnings statements and their stock prices drop as a result and they start laying off more and more of their workforce you might feel slightly different.

To put your head in the sand and proclaim that you are immune is pretty idiotic.

Actually, I'm a Wall St professional currently out of work -- in the interest of full disclosure. I was not a big shwinger either so my severance will not last forever, nor will my savings.

But my attitude has still not changed whatsoever. I know the challenges, and I accept that sh!t happens in life and it's no one's problem but my own. Will I be happy if I lose my house? Of course not, but I'll do what I have to do. My loan-to-value is only about 55% so I'm not too worried about comps around me taking my house down below mortgage value.

In short, I used my brain -- purchased smart, and am a saver, and as such may be able to weather this economic storm. Point being...more people need to think about the unthinkable, as I always did, as opposed to going through life living for today.