Just heard the Dems are pushing for Americans to participate in any upside from the "Scum Bucket" thru some kind of warrants, limits on executive compensation packages for any insitution using the fund; and BK cram downs. Wonder what this Sunday's surprises will be?

/tricia

I wouldn't underestimate Paulson's ability to negotiate terms. He skinned AIG and hung that trophy on the office wall faster than Palin can skin a moose.

Let's see, the government made money on the Chrysler bailout. They made money on the Resolution Trust. The taxpayers will probably come out ahead on the AIG loan. I wouldn't bet against Paulson on this issue either. Smart, tough man. I suppose we should be grateful that Bush's first two Treasury Secty's were such failures, we wouldn't have gotten Paulson otherwise

Do I remember correctly that Dave has always been totally opposed to government regulation? Well, at least when he signed himself as 'the mortgage guy'.

Hi Chisue,
For the most part you do remember correctly, indeed.

If only our country's founding fathers could see us know eh? Crazy times.

Cheers,
Dave Donhoff
Leverage Planner
(Just some mortgage guy graduated up in financial scope.)

"If only our country's founding fathers could see us know eh?"

Since they would have had no historic reference or experience, we probably would be looking at depression #2. Not something to look forward to.

For those of you who are familiar with the S&L problems in the 80's (Triciae and others?) how does this compare? Are there any correlations we can draw and predict the future on? Or is this now a completely different beast?
Thanks for your input. I find this a very twisted mess to figure out!

One obvious difference is that the Resolution Trust Corporation took over the assets of the Savings & Loans upon their closure. The recklessness of the Savings & Loans resulted in them being put out of business.

This bailout would involve the taxpayers purchasing the assets of these institutions (nobody can determine what they're actually worth, but they're obviously not worth much) and the reckless institutions will continue on. It's privatizing the profits and socializing the losses. Okay...I'm more than a little disgusted.

Keep in mind the purported purpose of the bailout is to get lending going again. I assume the kind of lending they're talking about will have some requirement of corresponding with a borrower's ability to repay -- which is what was lacking before. So, even if the bailout succeeds, you're not talking about recovery. Limiting lending to qualified borrowers still spells huge contraction.

Also, the numbers they're telling you are just trial-balloons. It's going to be more. Much more.

"Bad credit? No credit? No down? No job? No problem!" Maybe at least the ads will disappear for a while.

This is going to be an interesting week. However, our country as we've known it has ceased to exist. And if this president had any hopes at all remaining for a "legacy" he can kiss that goodbye. When the historians write about this recession, they'll say we deserved it.

roxyl -- You could ask McCain about the S&L mess. He was right in there protecting Keating & Co. The 'Maverick' --hee hee. (Maybe in his spotted personal life.)

Not so long ago I read a good piece in The New Yorker, comparing the handling of financial disasters in Sweden and Japan. Sweden *acted*, creating teams to parse through the bad loans and investments; it was over fast. Japan...is still trying to pretend nothing happened and it's an unsettled, facesaving mess after all these years.

(with apologies to Tom Paxton)

Oh the price of gold is rising out of sight
And the dollar is in sorry shape tonight
What the dollar used to get us
Now won't buy a head of lettuce
No the economic forecast isn't right
But amidst the clouds I spot a shining ray

I can even glimpse a new and better way
And I've demised a plan of action
Worked it down to the last fraction
And I'm going into action here today

CHORUS:
I am changing my name to Chrysler
I am going down to Washington D.C.
I will tell some power broker
What they did for Iacocca
Will be perfectly acceptable to me
I am changing my name to Chrysler
I am headed for that great receiving line
So when they hand a million grand out
I'll be standing with my hand out
Yes sire I'll get mine...

-1980

Well let's see...here's one sorta similarity:

1.) During the S&L crisis Bush's brother Neil was on the Board of Silverado.
2.) During this crisis McCain's son, Andrew, sat on the Board of Directors & headed the Audit Committee of Silver State Bank (Nevada) that the FDIC closed down a couple weeks ago.

/tricia

So, yesterday I saw a bumper sticker that said something about 'comrade Obama.'

OK, I'm confused. Who exactly is president? Who's the "decider"? Did I miss the election somehow?

I wish hypocrisy were fatal. It's become an epidemic lately.

I heard the "bailout" referred to as the "no banker left behind Act" LOL.

The determination of "bailout or not" will depend on the price we pay for the assets. If we get them at $0.90 / $1 then it is a huge bailout. If we get them at $0.22 / $1 then it isn't too bad.

My problem w/ the whole thing is that they don't want any "strings" attached to the bill. They just want their bailout money. How about we give them the money on the condition that no one can ever do a mortgage over 80% LTV. That would prevent this from ever happening agian. Plus it would have a side benefit of creating affordable housing.

chrisdoc wrote:
"How about we give them the money on the condition that no one can ever do a mortgage over 80% LTV."

Thank you! THANK YOU!
NOBODY has any business buying a house with less than a 20% down payment. This USED TO BE the norm. It prevented dumb kids (people in their early 20s) from getting into the housing market, where they firmly don't belong. It's a shame that so many doting parents now are buying homes for their contraceptive failures err, adult kids.

lanam -- Thanks! We can use some smiles about now.

I am totally not amused by the bailout. This is the language that has been inserted into the package.

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.

In other words, no oversight. How dangerous is that?

"In other words, no oversight. How dangerous is that?"
----
We need more government to oversee the damage they have already done?

These were never real "loans". That was a pretext. It was a socialist givaway program from day one when Congress mandated these types of "can't lose" loans well over a decade ago to people who could never pay them back. Low cost housing was code for "free" housing. They knew the taxpayer was the ultimate insurer. Why bother with due diligence?

In my darkest hours this weekend I decided that the "deciders" (as their friend Shrub calls it) at each corporation that accepts bail-out money will be limited in salary to a paltry million or two, will lose their voting rights (so that they cannot elect their friends), will lose their rights to contribute financially or in an advisory way to political candidates (so they cannot elect their friends), and will pay back some profits. Lets leave them with nice pre-paid college plans for their kids, and enough in their retirement funds to allow them to earn the national average retirement amount. Maybe $10K for each child's wedding, too. The rest can fund our bailouts.

I also considered giving these unemployed investment bankers jobs fixing potholes, as this service is much more meaningful to most of us taxpayers than their previous work was.

I think a trip behind the 'woodshed' is in order for those corrupt subprime players who would use the treasury for their personal kitty.

Vote out those idiot politicians who are letting them play casino with taxpayer money.

My only problem with our punishment plans is whom do we punish? Just officers in each company? That leaves out an awful lot of people who got rich off of speculating that the little guy would lose the house and they could sell it again at a profit.

Do these investment banks have "partners", like law firms, a level of job classification above which we can say, "this person benefited from the evil game played on the taxpayers?"

Then there are all the people who invested in the iffy securities. How do we identify them? My own pension is likely tied up with it at some level - I, too have decided not to look.

We will never identify exactly who was responsible for this fiasco, between deregulating politicians, appointed officials, and all the investment bankers, misleading loan officers, mortgage lenders, assessors. Pretty soon it starts to look like the answer to the question of who has responsibility for this mess is "Everyone and anybody with a dime in the market and anybody who was foolish enough to buy a house they can't afford." That leaves almost nobody untouched with guilt.

Societal Greed. Refusal to remember consequences. Working class and middle class voters who insist on voting against their own economic interests because someday they could get rich, too. Human nature.

I still want to put somebody in the stocks so we can pelt them with tomatoes, though!

Interesting OpEd piece:

Socialism comes to the rescue on Wall Street
John Farmer NJ Star Ledger Tuesday, September 23, 2008

American capitalism was rescued last week by -- who'd have believe it? -- socialism.

Free-market fundamentalists will spin what happened as something else. "Temporary government intervention in the market" or "just another federal loan program." And there's the ever-popular "bailout," a neutral term implying we do it all the time and it absolves everyone of any blame.

None dare call it socialism. But that's surely what it is.

Washington has nationalized AIG, the insurance giant, and Fannie Mae and Freddie Mac as much as Moscow under Vladimir Putin has nationalized big-winner industries like oil.

But with this defense: The Russians nationalized profit and privatized losses. We privatize profit and nationalize losses. And that's the worst sort of socialism.

At the same time, we're told that this "bailout" it good for all of us little people and that we must not point the finger of blame. We're all in this together, the argument goes. It's an argument especially favored by Republicans. But it's too patently self-serving.

It you can't point the finger of blame at those "masters of the universe" who turned Wall Street wealth into Confederate currency, then, by extension, you can't fault the Bush administration, which squandered a $250 billion surplus, spilt American blood and treasure in an unnecessary war in Iraq and closed its eyes to the rape of capitalism by Wall Street free-market fundamentalists.

What we're witnessing is an end to the era of unregulated capitalism that began with Ronald Reagan and was carried to its absurdist extreme under George W. Bush and his radical Republicans. It's over. And Wall Street will never be the same.

So has the hour of 1930s-type socialism finally returned? Not quite. But only because it has never really left us. It just changed. Instead of socialism for the little guy, the American version for almost 40 years has been socialism for Big Business.

You doubt that? How about subsidies for farmers who don't even farm? Or tax subsidies for American exporters, some of the biggest winners in the great economic scam known as globalization? Or $14 billion in tax subsidies for an oil industry choking on obscene profits? Or the GOP's tax cuts for wealth individuals? And how about the $50 billion that the colossally incompetent U.S. auto industry wants the taxpayer to pony up?

Wall Street's lust for federal lucre -- never mind the Street's pious protestations against government intervention -- borders on the indecent. Not content with the up to $700 billion in federal help already promised, the gluttons on Wall Street want even more at-risk institutions on the welfare rolls -- "the definition of Financial Institution (in the bailout bill) should be as broad as possible," according the Financial Services Roundtable, a shill for the industry.

But it doesn't end there. While having its hand out to the American people for help, these same Wall Street miscreants -- "malefactors of great wealth," Teddy Roosevelt called them -- refuse to accept limits on CEO compensation or on the multimillion-dollar retirement packages given CEOs who've trashed their companies.

And what about those stockholders? They'll suffer, Wall Street's apologists contend. Gimme a break. Sure, small and middle-income investors and IRAs, 401(k)s and pensions will suffer. But the big guys -- those wealthy enough to have diversified portfolios -- will weather this storm nicely and, in fact, do quite well, when Wall Street eventually recovers.

Meanwhile, Wall Street has an ally in this fight for CEO riches. It's the Republican Party in Washington. No surprise there. The GOP under Bush has become a wholly owned subsidiary of corporate America.

It's not the Republican Party of my youth, which, under Robert Taft and Dwight Eisenhower, insisted on a decent level of regulation of the capital markets. The modern Republican Party is run by Texas oil oligarchs, Western state ranch and mining interests and a deep South white aristocracy still nostalgic for segregation.

They fancy themselves rugged individualists. But actually they're the biggest hogs at the federal trough; unlike the liberal states of the Northeast and Midwest, they take far more out of the federal treasury than they ever put in -- Sarah Palin's Alaska being one of the biggest hogs, with or without lipstick.

None of this should be read as an endorsement of socialism. It doesn't work -- at least not for long. Eventually it consumes more resources than it creates. The best example is the collapse into near bankruptcy of Great Britain in the postwar period under a series of socialist Labor governments -- rescued only by Margaret Thatcher's imposition of free-market discipline.

But, lest we forget, Thatcher's free-market fundamentalism ultimately failed when it became more an ideology, even a theology (like Wall Street Journal economics), than a real-life politics that real-life people could comprehend.

The upshot is this: Socialism sounds good, but it's a scam. But unregulated capitalism is just as bad. It invariably implodes over greed. A mixed economy, blending the best of socialist concern for the powerless and a free-market economics that accommodates innovation and enterprise, works best in a huge nation like America.

What we have reached is not a socialist era. Not even a socialist hour. But surely Wall Street's collapse has brought us a socialist moment.

John Farmer may be reached at jfarmer@starledger.com. To comment on his column, go to NJVoices.com.

HAH... I will "dare call it Socialism" and it stinks.

The right hates the fact it is destroying the natural market balances, the left hates it because its helping the so-called "rich"...

Business owners hate it, market traders hate it, the mature & responsible hate it....

Who is in favor of it? Those who need their employers (the voters) to believe that they (the servants) are actually worth keeping in place.

Its simply raw, systemic, overriding corruption at the grandest scale.

We'll pay for it, all of us (including our kids' unborn grandkids.)

Dave Donhoff
Leverage Planner