Archive for September, 2008

From a New York Times article of SEPTEMBER 11, 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.” — Barney Frank (D-MA) is the current Chairman of the House Financial Services Committee.

Read the rest of the article and what was proposed 5 years agohere.

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Opinion from The Los Angeles Times –

By Jonah Goldberg Sept. 30, 2008

On Sunday evening, Republican House Minority Leader John A. Boehner explained his considered opinion on the $700-billion Wall Street bailout plan: It’s a “crap sandwich,” he said, but he was going to eat it.

Well, it turned out he couldn’t shove it down his colleagues’ throats. The bill failed on a bipartisan basis, but it was the Republicans who failed to deliver the votes they promised. Some complained that Democratic Speaker Nancy Pelosi drove some of them to switch their votes with her needlessly partisan floor speech on the subject. Of course Pelosi’s needlessly partisan. This is news?

The Republican complaint is beyond childish. Democratic Rep. Barney Frank, a man saturated with guilt for this crisis, nonetheless was right to ridicule the GOP crybabies on Monday. “I’ll make an offer,” he added. “Give me [their] names and I will go talk uncharacteristically nicely to them and tell them what wonderful people they are and maybe they’ll now think about the country.”

Would that Frank had been imbued with such a spirit earlier. Frank, chairman of the House Financial Services Committee, has spent the last few years ridiculing Alan Greenspan, John McCain and others who sought more regulation for Fannie Mae’s market-distorting schemes — the fons et origo of this financial crisis. Now he says “the private sector got us into this mess.” His partner in crime, Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.), a chief beneficiary of Fannie Mae lobbyists’ largesse, claims this mess is the result of poor oversight — without even hinting at the fact he is in charge of oversight of banks. They sound like pimps complaining about the prevalence of STDs among prostitutes.

And let us not forget that the Democrats, with a 31-seat majority, could not get 95 of their own to vote for the bailout, largely because it didn’t provide enough taxpayer money to their left-wing special interests. Would that they thought about the country.

The one man who truly tried to treat this crisis like a crisis — McCain — was ridiculed by Senate Majority Leader Harry Reid, who implored him to come to Washington to help in the first place. And the news media, which now treat any Republican action that threatens a Barack Obama victory as inherently dishonorable, uncritically accepted the bald Democratic lie that McCain ruined a bipartisan bailout deal last Friday.

This is not to say that McCain knows what to do. Faced with an unprecedented financial crisis involving frozen global credit markets and a maelstrom of moral hazard, his standard response is to talk about wiping out earmarks and eliminating waste, fraud and abuse. Memo to Mr. McCain: Waste, fraud and abuse are the only things holding the system together at this point.

Obama is no better. The man has spent two weeks irresponsibly excoriating his opponent for saying the fundamentals of the economy are strong — a perfectly leaderly thing for McCain to have said during a panic. Then, campaigning in Colorado on Monday, the day the market plunged 777.68 points, Obama proclaimed: “We’ve got the long-term fundamentals that will really make sure this economy grows.”

Perhaps after Al Qaeda seizes Baghdad, a President Obama would finally declare, “Hey, we can win this thing!”

Meanwhile, President Bush, his popularity ratings stuck at below-freezing numbers, has decided to cling to Treasury Secretary Hank Paulson for warmth on the grounds that the vaunted former Goldman Sachs chair has the credibility to sell the solution to a problem he’s been exacerbating for 18 months. When a reporter for Forbes magazine asked a Treasury spokesman last week why Congress had to lay out $700 billion, the answer came back: “It’s not based on any particular data point.” Rather: “We just wanted to choose a really large number.”

There’s a confidence builder.

As for the reputedly free-market firebrands of the congressional GOP, with whom my sympathies generally lie, I cannot let pass without comment the fact that they controlled the legislative branch for most of the last eight years. Only now, when capitalism is in flames, does this fire brigade try to enforce the free-market fire codes without compromise.

I loathe populism. But if there ever has been a moment when reasonable men’s hands itch for the pitchfork, this must surely be it. No one is blameless. No one is pure. Two decades of crapulence by the political class has been prologue to the era of coprophagy that is now upon us. It is crap sandwiches for as far as the eye can see.

From the U. S. Treasury – (Our emphasis in bold red.)

President George W. Bush nominated Henry M. Paulson, Jr. to be the 74th Secretary of the Treasury on June 19, 2006. The United States Senate unanimously confirmed Paulson to the position on June 28, 2006 and he was sworn into office on July 10, 2006 by Supreme Court Chief Justice John Roberts. As Treasury Secretary, Paulson is the President’s leading policy advisor on a broad range of domestic and international economic issues.

Before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs since the firm’s initial public offering in 1999. He joined Goldman Sachs Chicago Office in 1974 and rose through the ranks holding several positions including, Managing Partner of the firm’s Chicago office, Co-head of the firm’s investment Banking Division, President and Chief Operating Officer, and Co-Senior partner.

Prior to joining Goldman Sachs, Paulson was a member of the White House Domestic Council, serving as Staff Assistant to the President from 1972 to 1973, and as Staff Assistant to the Assistant Secretary of Defense at the Pentagon from 1970 to 1972.

Paulson graduated from Dartmouth in 1968, where he majored in English, was a member of Phi Beta Kappa, and an All Ivy, All East football player. He received an M.B.A. from Harvard in 1970. He and his wife, Wendy, have two children, Amanda and Merritt.

Now – this is an interesting “take” on the bail-out issue from a columnist at Bloomberg.com and why Goldman Sachs NEEDS this money (your money). It’s a tough read for those of us who did NOT make $68.5 million last year, as did Lloyd Blankfein, the CEO of Goldman Sachs…or even the $10 million or more “many otherwise ordinary human beings took home” – but well worth your time to see how these guys think. Here’s an excerpt about our boy Henry –

…One of the things they say is that, in leaving Goldman for government service, Paulson made the greatest trade of his life. Not only was he required to sell his half-billion dollars in Goldman stock near the high, but also, as Treasury Secretary, he was exempt from capital-gains taxes. By getting out of Goldman while the getting was good, the guy may have doubled his net worth.

Ask your Representative and Senators how Basel II is impacting the bail-out – and why we haven’t heard anything about it on the “news.”

From Wikipedia

Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision. The purpose of Basel II, which was initially published in June 2004, is to create an international standard that banking regulators can use when creating regulations about how much capital banks need to put aside to guard against the types of financial and operational risks banks face. Advocates of Basel II believe that such an international standard can help protect the international financial system from the types of problems that might arise should a major bank or a series of banks collapse. In practice, Basel II attempts to accomplish this by setting up rigorous risk and capital management requirements designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposes itself to through its lending and investment practices. Generally speaking, these rules mean that the greater risk to which the bank is exposed, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability.

In a stunning rebellion by rank and file members, the House of Representatives defied their party leaders Monday afternoon to reject President Bush’s colossal sweeping bailout of Wall Street.

“This is a huge cow patty with a piece of marshmallow stuck in the middle and I’m not going to eat that cow patty,” declared Rep. Paul Broun (R-Ga.) (Our emphasis.)

The Dow Jones industrial average fell 600 points, before rebounding slightly.

The measure went down 205 to 228 but party leaders were keeping the vote open to try to change enough minds to reverse the result.

The stunning vote came after three emotional hours of debate over the most sweeping government interference in the free market since President Franklin Roosevelt rewrote the American economy in the 1930s.

The bill, presented by Bush and Treasury Secretary Henry Paulson as a vital measure to save an economy heading for serious recession, was backed by Democratic and Republican leaders of both houses, as well as presidential candidates Barack Obama and John McCain.

As the debate began, Bush told lawmakers, “This is a bold bill that will keep the crisis in our financial system from spreading through our economy.”

Behind the scenes, administration officials were twisting arms, warning direly of financial crisis on Main Street if Wall Street doesn’t get help.

To win enough votes from rank-and-file Democrats and Republicans, party leaders said there was no choice but to vote for the bailout or see ordinary Americans lose their jobs and homes.

“The meltdown would begin, it is true, in a few square miles of downtown Manhattan. But before it was over, no small town in America would be untouched,” said Rep. Steny Hoyer (D-Md.), the Majority Leader.

But dozens of congressmen defied their leaders to vote against a bill that no one said they liked. (Our emphasis.)

Broun questioned why more government money should be thrown after the $200 billion given to Fannie Mae and Freddie Mac, the $85 billion used to save AIG and $30 to save Bear Stearns.

“This is the same old story. We’re just going further down the road,” he said.

Rep. Jeb Hensarling (R-Tex.) warned America was on a “slippery slope toward socialism.”

Illustrating the urgency of the matter, Wachovia sold itself to Citigroup this morning, another huge bank failure that means most of America’s deposits are now in the hands of just three banks: Citigroup, JP Morgan Chase and Bank of America.

In the last two weeks, Wall Street titans have fallen like dominos, from Lehman Brothers to Merrill Lynch to AIG to Washington Mutual.

The credit crisis was spreading across the world yesterday.
In London, regulators swooped in with a $280 billion seizure of mortgage lender Bradford & Bingley, sending UK stocks to a three-year low.

The sprawling Belgian-Dutch financial group Fortis also needed a bailout from Benelux

Washington’s big bailout aims to unfreeze short-term lending between banks and corporations by buying up the widespread housing-related bad debts that are paralyzing financial companies.

$700,000,000,000 to save the butts of people who intentionally cheated for profit – and a bill to provide long-term health care to 9/11 First Responders who are ill. These people tried to SAVE LIVES and are dying as a result. Priorities need to be reassessed.

BY OREN YANIV
DAILY NEWS STAFF WRITER

Congress Sunday shelved a $10.9 billion bill to provide health care and compensation for Ground Zero workers, at least in part due to opposition from Mayor Bloomberg.

The House of Representatives failed to vote on the bill after City Hall objected to a provision that would have required the city to pay 10% of the cost of a long-term Sept. 11 health program.

The total cost would have been $5.1 billion for a 10-year program that would have provided health care to those sick from working amid toxic World Trade Center debris. The city’s share was to be $500 million.

The bill also would have reopened the Sept. 11 Victim Compensation Fund, adding an estimated $6 billion for those who became sick after working amid the debris.

John Feal, a 9/11 responder and founder of the FealGood Foundation, went to Washington in a failed push for the bill.

“The mayor pretty much squashed the bill on us,” a disappointed Feal said last night. “We should do right by these people who are sick and dying.”

Reps. Carolyn Maloney (D-Manhattan), Jerrold Nadler (D-Manhattan), Vito Fossella (R-S.I.) and Pete King (R-L.I.) said the New York delegation would reintroduce another bipartisan bill next year.

“We will work together to meet the sizable need to care for those who lived and worked in the immediate area around Ground Zero – not to mention those who helped in the immediate aftermath,” the lawmakers said in a statement.

Supporters had hoped the House would vote on the package over the weekend, but time and support ran out amid intense congressional negotiations over the $700 billion financial bailout package.

The Senate would likely not have had time to pass the bill anyway, but backers said House passage would have helped move the measure forward.

Bloomberg spokesman Jason Post said the Sept. 11 health bill was “a step backward” and said “it put an undue burden on city taxpayers.” He noted the bill would raise fivefold the city’s annual tab for 9/11 programs.

Other city officials said the feds should pay the full cost as a matter of principle because Sept. 11 was an attack on America.

Denis Hughes, president of the New York State AFL-CIO, countered that the bill was doomed by “shortsighted” thinking at City Hall.

“What really sunk this was the mayor’s opposition,” Hughes said. “I think they miscalculated.”

Do YOU have time to read the Bill that will change the financial landscape? Here it is.

***UPDATE – Apparently when he said “we”, he meant, “we, the Congress” are under a form of in-house martial rule, through Monday. Here is the ruling – To report the martial law rule waiving a requirement of Clause 6(a) of Rule XIII with respect to consideration of any resolution reported from the Rules Committee, through the legislative day of September 29, 2008. It does not apply to any specific measure, but rather grants blanket authority. Committee on Rules.

These are being shown on MTV – be aware, they are disturbing!

From FT.com (Financial Times)

By Bertrand Benoit in Berlin

Published: September 25 2008 11:55 | Last updated: September 25 2008 20:28

The US will lose its role as a global financial “superpower” in the wake of the financial crisis, Peer Steinbrück, the German finance minister, said on Thursday, blaming Washington for failing to take the regulatory steps that might have averted the crisis.

“The US will lose its status as the superpower of the world financial system. This world will become multi­polar” with the emergence of stronger, better capitalised centres in Asia and Europe, Mr Steinbrück told the German parliament. “The world will never be the same again.”

His were the most out­spoken comments by a senior European government figure since Wall Street fell into chaos two weeks ago.

He later told journalists: “When we look back 10 years from now, we will see 2008 as a fundamental rupture. I am not saying the dollar will lose its reserve currency status, but it will become relative.”

The minister, who has spearheaded German efforts to rein in financial markets in the past two years, attacked the US government for opposing stricter regulations even after the subprime crisis had broken out last summer.

The US notion that markets should remain as free as possible from regulatory shackles “was as simplistic as it was dangerous”, he said.

But Mr Steinbrück had warm words for the US’s crisis management in the past fortnight, including the government’s planned $700bn rescue package for the financial sector. Washington, he said, had earned credit for acting not just in the US interest but also in the interest of other nations.

Yet he repeated Germany’s refusal to mount a similar rescue operation using taxpayers’ money to acquire toxic assets. “This crisis originated in the US and is mainly hitting the US,” he said. In Europe and Germany, such a package would be “neither sensible nor ­necessary”.

The US, Mr Steinbrück said, had failed in its oversight of investment banks, adding that the crisis was an indictment of the US two-tier banking system and its “weak, divided financial oversight”.

He blamed Washington for refusing to consider proposals Berlin had made as it chaired the Group of Eight industrial nations last year. These proposals, he said, “elicited mockery at best or were seen as a typical example of Germans’ penchant for over-regulation”.

His comments followed calls this week by Nicolas Sarkozy, the French president and current holder of the European Union presidency, for an emergency G8 meeting on the crisis.

Mr Steinbrück’s proposals include a ban on “purely speculative short selling”; a crackdown on variable pay for bank managers, which had encouraged reckless risk-taking; a ban on banks securitising more than 80 per cent of the debt they hold; international standards making bank managers personally responsible for the consequences of their trades; and increased co-operation between European super­visors.

Following a meeting with Christine Lagarde, his French counterpart, in Berlin, he said France and Germany would set up a working group of treasury, central bank and supervisory authority officials that would consider tougher regulation of short selling.

By Megan McGinley

While Secretary of State (***As we proof-read this article, this mistake got past us. We know, as does the author, that Henry Paulson is Secretary of the Treasury. Condolezza Rice is Secretary of State. Sorry for the upset and inconvenience this seems to have caused many of you. It does amaze us that the uproar is over this mistake and NOT the $700,000,000,000.***) Hank Paulson pushes for the government to issue a $700 billion bailout, most of us in the media are still trying to comprehend just what that sum translates into.

For a better perspective on just how massive this bailout really is, check out Zephyr Teachout’s post yesterday on techPresident:

It is $140 billion more than has been spent on the Iraq war since the invasion.

It is $120 billion more than that spent on Social Security benefits.

It is almost 3 billion nonrefundable bus fares from Durham to San Francisco, leaving tomorrow.

It is nine times the amount spent on education in 2007.

It could pay for 2,000 McDonalds apple pies for every single American.

That’s a lot of pie. Here are some more numbers that we came up with to help you wrap your head around how much money $700 billion really is:

– It would reimburse banks, home owners, and local governments for nearly 9 million foreclosures
– It could prevent over 200 million foreclosures
– It could buy 8.6 billion monthly Metrocards
– The government could rebuild Katrina-ravished New Orleans and Gulf Coast … three and a half times
– Roughly 538 Yankee Stadiums could be built
– 5.4 million students could be sent to a public university
– It equals nearly 520 times the amount of Amtrak’s current operating budget
– It is $14 billion more than the U.S. spent during the Vietnam War