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Subject: $700Billion, Bail Out draft proposal as it stands today.....
RockyMTNClimber    9/22/2008 5:49:10 PM
ht***tp://www.nytimes.com/2008/09/21/business/21draftcnd.html?_r=1&oref=slogin LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY TO PURCHASE MORTGAGE-RELATED ASSETS Section 1. Short Title. This Act may be cited as ____________________. Sec. 2. Purchases of Mortgage-Related Assets. (a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States. (b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation: (1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties; (2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts; (3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them; (4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and (5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act. Sec. 3. Considerations. In exercising the authorities granted in this Act, the Secretary shall take into consideration means for-- (1) providing stability or preventing disruption to the financial markets or banking system; and (2) protecting the taxpayer. Sec. 4. Reports to Congress. Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3. Sec. 5. Rights; Management; Sale of Mortgage-Related Assets. (a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act. (b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom. (c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act. (d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9. Sec. 6. Maximum Amount of Authorized Purchases. The Secretary?s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time Sec. 7. Funding. For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure. Sec. 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency. Sec. 9. Termination of Authority. The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act. Sec. 10. Increase in Statutory Limit on the Public Debt. Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000. Sec. 11. Credit Reform. The costs of purchase
 
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eldnah       9/25/2008 10:24:49 AM

 

The President proposes - Congress disposes.<Softwar 

 

Fair enough. Congress controls the purse strings and W needs to work within that structure to achieve change. Still, W found his leadership skills aplenty to invade Iraq in 2003. While Iraq certainly had it coming (violating UN Security Council resolutions as well as the provisions of their Gulf War I surrender), they weren't going anywhere and we didn't find enough WMD's to justify what we did. In face of this he still was able to use his leadership to finish the conflict on his terms and win a second term in office to boot. Bully for him. When he believes in something he seems to be able to find a way to make something happen. His problems with FannieMae/FreddieMac simply were not important enough to spend his time on. Ultimately, this was a greater clear and present danger than Iraq and Saddam Hussein ever was.

I agree with much of what you said but in reality Bush was powerless to push through changes with the FMs because he never controlled Congress. The people and in particular the MSM, who knew better but chose to ignore Democratic obstructionism, often blamed the Republican Congress but there never was one because having a 55 to 45 majority in Senate never gave control. You need 60 votes to stop a filibuster and invoke cloture. The reason he could not pick off a few Democratic votes was that reform struck the very core of the Democratic parties base, the minorities who benefited from the regulatory largess. That is why many Democrats are demanding "Protection"  of  defaulting homeowners as part of any deal because minorities make up almost half of the defaults. Any losses the public i.e. taxpayers suffers will just be another form of income redistribution which is a tenet of the Dems beliefs which they will not voice. Hopefully enough Democrats will see the recklessness of their behavior but I doubt it because getting re-elected is more important to almost every politician than the good of the country. 


 

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Wicked Chinchilla       9/25/2008 10:38:47 AM
The Democrats, with their very philosophy, are generally the ones pushing home ownership, assistance, help, etc.  What anyones views on that are theier views and is immaterial to the current situation at hand.  The sub-prime loans and such that had relaxed standards and were pushed through definitely had primarily Democratic assistance.  Those now bad-loans however were merely the trigger to the crisis.  Putting all the blame on the mortgage industry is analagous to equating the detonator as the part of the bomb most responsible for killing you.  Its simply part of the system. 
 
What made this crisis much bigger than trouble for mortgage companies with defaulters is what happened to these loans on the creditor side.  Sub-Prime loans were packaged together with good loans and sold as investments with a credit rating equal to a T-Bill.  Now, obviously that is a credit rating they did not deserve.  That is what has tanked the economy.  Example: A $100,000 home loan was leveraged for $1,000,000 after being packaged and sold on the market.  When that 100,000 goes in default whoever is holding the promise for 1,000,000 wants to get what they can for their investment and cashes out.  BOOM, welcome to the write down and the credit crisis. 
 
Putting all the blame on dead-beat home owners dumbs down the extent, severity, and reality of what actually occured.  This is why one cant simply push the glame towards the Democrats for pushing home loans for those less than able to generally get one (that and Bush's "ownership society.")  Deregulation allowed the problem to spread and everyone was a part of that.  That is also why I think these bailouts are complete and utter BS.  True, the loans never should have been made, but the next level of failure was when they banks holding the money deliberately hid bad-loans in packages.  It is the investment banks that were responsible for taking this hand-grenade and turning it into the MOAB, but they are the ones we are going to hand $700 Billion to. 
 
 
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Softwar    Wicked Chinchilla reply   9/25/2008 10:41:00 AM
Here is some data for you to digest - I will work on a more complete listing for you.....  BTW I included references.

In Just Four Years, Obama Has Received More Money From Fannie Mae And Freddie Mac Than Any Other Member Of Congress In The Past Two Decades (Since 1989) Except Senate Banking Committee Chairman Sen. Chris Dodd. (Lindsay Renick Mayer, "Fannie Mae And Freddie Mac Invest In Lawmakers," Center For Responsive Politics' "Capital Eye" Blog, www.opensecrets.org, 9/11/08)

In Just Four Years, Obama Has Received More Money From Lehman Brothers Than Any Other Member Of Congress In The Past Two Decades (Since 1989) Except Sen. Hillary Clinton. (Lindsay Renick Mayer, "Brothers Grim: Is Lehman Next?" Center For Responsive Politics' "Capital Eye" Blog, www.opensecrets.org, 9/12/08)

Top Executives At Lehman Brothers Are Obama Bundlers:

Ted Janulis, Head Of Mortgage Capital At Lehman Brothers Until His Retirement In September 2008, Is A Bundler For Obama's Presidential Campaign Committed To Raising $50,000 To $100,000. (Obama For America Website, www.barackobama.com, Accessed 5/19/08)

John Rhea, A Managing Director And Co-Head Of Global Consumer And Retail Investment Banking For Lehman Brothers, Is A Bundler For Obama's Presidential Campaign Committed To Raising $50,000 To $100,000. (Obama For America Website, www.barackobama.com, Accessed 5/15/08)

"[N]adja Fidelia, Who Is Also A Managing Director At Lehman Brothers, Has Raised At Least $50,000 For Mr. Obama..." (Timothy Williams, "Obama Takes His Campaign to Harlem," New York Times, 11/30/07)

Fomer Fannie Mae CEO Jim Johnson Remains A Bundler For Obama's Presidential Campaign And Has Committed To Raising $100,000 To $200,000. (Obama For America Website, www.barackobama.com, Accessed 5/19/08)

Former Commerce Secretary William Daley Serves As An Obama Advisor For Economic Policy. "At his stop in New Mexico, Obama sought to keep the focus almost exclusively on the economy, appearing with a panel of experts that included William Daley, brother of Chicago Mayor Richard Daley and a former U.S. commerce secretary." (John McCormick and Jill Zuckman, "Rivals Spend Day As Frequent Fliers," Chicago Tribune, 2/2/08)

Former Fannie Mae CEO Jim Johnson Recruited Former Sec. Daley As A Lobbyist For Fannie Mae. "Fannie's government relations operations dramatically expanded in the mid-1990s, when then-CEO Johnson recruited Washington A-listers Robert Zoellick, who served in the Reagan and Bush administrations; Lawrence M. Small, former secretary of the Smithsonian Institution; and William M. Daley, commerce secretary in the Clinton administration." (Lisa Lerer, "Fannie, Freddie Spent $200M To Buy Influence," The Politico, 7/16/08)

From 2002 Through 2005, Daley Was A Registered Lobbyist For Fannie Mae. (U.S. Senate Office Of Public Records Website, soprweb.senate.gov, Accessed 7/27/08)

Before Heading Fannie Mae, Johnson Was A Registered Foreign Agent For Lehman Brothers:

In The 1980s, Johnson Worked For Shearson Lehman Brothers. "In the early 1980s Johnson had already started his own Washington consulting company, Public Strategies, with his Carter administration colleague Richard Holbrooke. And now he followed Holbrooke to Wall Street as an investment banker at Shearson Lehman Brothers." (Lloyd Grove, "The Big Chair," The Washington Post, 3/27/98)

 
 
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RockyMTNClimber    Eldnah reply   9/25/2008 10:48:44 AM
I agree with much of what you said but in reality Bush was powerless to push through changes with the FMs because he never controlled Congress. The people and in particular the MSM, who knew better but chose to ignore Democratic obstructionism, often blamed the Republican Congress but there never was one because having a 55 to 45 majority in Senate never gave control. You need 60 votes to stop a filibuster and invoke cloture. The reason he could not pick off a few Democratic votes was that reform struck the very core of the Democratic parties base, the minorities who benefited from the regulatory largess. That is why many Democrats are demanding "Protection"  of  defaulting homeowners as part of any deal because minorities make up almost half of the defaults. Any losses the public i.e. taxpayers suffers will just be another form of income redistribution which is a tenet of the Dems beliefs which they will not voice. Hopefully enough Democrats will see the recklessness of their behavior but I doubt it because getting re-elected is more important to almost every politician than the good of the country.<Eldnah

I have already responded to most of these points in my last post and in my conversation with Softwar, whom I have great respect for and rarely disagree with. The only item I think is worth reiterating is for everyone to parse the actual legislation (quoted in total above) and tell me where private property rights are protected. Where is the executive authority checked by the legislative branch or the courts? Review this and tell me where Barry Hussein's Marxist tendencies will be curtailed? The fact that the Bush Admin had some idea this was developing and didn't make the required changes is unexcusedable. Remember W has executive authority here he can use. The reasons he didn't are political. This President has the moxie to step up last night and threaten US if we don't give him $1.5-2 Trillion right now but he didn't have the moxie to do what was needed 7 years ago, or, 6 years ago, or 5 years ago......
 
I work with Bovines all day. I know what that smell is.....
 
 
Check Six
 
Rocky
 
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RockyMTNClimber    Eldnah reply   9/25/2008 10:58:26 AM
Deregulation allowed the problem to spread and everyone was a part of that.<Wicked Chinchilla
 
Government interference in the free market is exactly what caused these events. Don't blame deregulation since there was none. If FannieMae/FreddieMac had used their own original underwriting standards none of this would have happened. Federal legislation mandated that they abandon prudent business practices and guaranteed to make them whole with the full faith and credit of US taxpayers if it went south.
 
Don't buy the Dereg B.S. being sold by the left. They need that to cover their corrupt fannies.
 
Check Six
 
Rocky
 
 
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RockyMTNClimber    oops, that was for W.C. not Eldnah   9/25/2008 10:59:50 AM
 
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Softwar    I Agree With the Rock   9/25/2008 11:06:12 AM

The fact that the Bush Admin had some idea this was developing and didn't make the required changes is unexcusedable. Remember W has executive authority here he can use. The reasons he didn't are political. This President has the moxie to step up last night and threaten US if we don't give him $1.5-2 Trillion right now but he didn't have the moxie to do what was needed 7 years ago, or, 6 years ago, or 5 years ago......

 


It took me some time to get his gist (I am a bit hard headed)... but the point here is that while it may not be "Bush's fault" that this happened - it certainly is his fault for not taking action in a timely manner. 
 
The fiscal policy of the Bush admin. has been a sore point for me on more than one occassion - one does not have to look any farther than the China thread to see my problem with his economics.  The same goes for the big spending bills submitted year after year.
Rocky's point is simple - The Buck Stops Here.  And simply saying the problem is "above my pay grade" is not a qualification for the Oval office.
 
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eldnah       9/25/2008 11:10:39 AM

I agree with much of what you said but in reality Bush was powerless to push through changes with the FMs because he never controlled Congress. The people and in particular the MSM, who knew better but chose to ignore Democratic obstructionism, often blamed the Republican Congress but there never was one because having a 55 to 45 majority in Senate never gave control. You need 60 votes to stop a filibuster and invoke cloture. The reason he could not pick off a few Democratic votes was that reform struck the very core of the Democratic parties base, the minorities who benefited from the regulatory largess. That is why many Democrats are demanding "Protection"  of  defaulting homeowners as part of any deal because minorities make up almost half of the defaults. Any losses the public i.e. taxpayers suffers will just be another form of income redistribution which is a tenet of the Dems beliefs which they will not voice. Hopefully enough Democrats will see the recklessness of their behavior but I doubt it because getting re-elected is more important to almost every politician than the good of the country.<Eldnah



I have already responded to most of these points in my last post and in my conversation with Softwar, whom I have great respect for and rarely disagree with. The only item I think is worth reiterating is for everyone to parse the actual legislation (quoted in total above) and tell me where private property rights are protected. Where is the executive authority checked by the legislative branch or the courts? Review this and tell me where Barry Hussein's Marxist tendencies will be curtailed? The fact that the Bush Admin had some idea this was developing and didn't make the required changes is unexcusedable. Remember W has executive authority here he can use. The reasons he didn't are political. This President has the moxie to step up last night and threaten US if we don't give him $1.5-2 Trillion right now but he didn't have the moxie to do what was needed 7 years ago, or, 6 years ago, or 5 years ago......

 

I work with Bovines all day. I know what that smell is.....

 

 

Check Six

 

Rocky


Help me out. What specifically could Bush have done without the passage of specific legislation by Congress? I understood executive orders were fairly well constrained in economic matters vis-a-vis national security but I am not an attorney nor have read constitutional law on this point.
 
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Wicked Chinchilla       9/25/2008 11:11:49 AM
I agree, the companies shouldnt have made the loans in the first place.  However, I myself do not trust companies.  The reason why Glass-Steagal act was written was to prevent another major crash that started the Great Depression.  In quick short summary it prevented banks from being involved in investments as well as personal (not sure if this is the official word, but it gets the point across) banking. 
 
The crash on Wall Stree in the 30's spread to Main Street because the banks were in both places.  This act prevented that from occuring again.  The repeal of it in 1999 made the present crisis possible.
 
In an ideal world I would trust companies to hold to their standards.  This is not an ideal world and I am extremely cynical especially when greed is involved.  The companies could have said no to congress pushing loans on them.  They did not.  That is why I think even if the senators and representatives backing more suspicious loans were not actively pushing them this situation would have happened eventually. 
 
My view on the problem differs from yours as you place the most important factor on the loans and I place it on the investments.  Each to his own opinion, but I strongly feel that, after looking at history, we simply set ourselves up for another great crisis when we got rid of that legislation.  It was simply housing that popped first. 
 
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RockyMTNClimber       9/25/2008 11:34:50 AM
Help me out. What specifically could Bush have done without the passage of specific legislation by Congress? I understood executive orders were fairly well constrained in economic matters vis-a-vis national security but I am not an attorney nor have read constitutional law on this point.<Eldnah

As I said above, I have already discussed these points more than once on my earlier posts and if I can't compel you to see my view so be it. The best way to state the case without opening it all up again is simply this: when he truly believed in a cause W was able to influence the US public, the US Congress, and usually, even the MSM that his view was the right thing to do for the right reasons. This simply was never a priority and ultimately we are paying the price for his accepting failure.
 
Or maybe you could tell Softwar why the buck shouldn't stop on the President's desk.
 
Check Six
 
Rocky
 
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