Lack of transparency got us in to this mess, lets not let lack of transparency keep it messy. The government needs to immediately setup an exchange, it could be ebay.gov with more in depth description fields, for all I care. However they do it, EVERY asset the government will buy or sell as part of this buyout needs to be shown and described with the price the government is willing to pay or sell the asset for.
Why ?
To keep government honest.
Not that anyone in our government would ever put their own personal self interest first and over or under pay for an asset. Nor would they ever take those assets and then sell it for less than market value in exchange for “personal considerations”.
I know it could never happen, but just to make sure it doesnt, we need to post the assets involved in the bailout and the prices paid. When the assets are sold, they need to post those prices as well
In addition, by posting the assets in an ebay like auction/sales environment, it would enable independent buyers to come in and buy the assets using private money rather than government money. The benefit of course is obvious. By adding liquidity to the process, the government could be responsible for less and sellers could get more.
This is the only way I can think of to get true transparency. Without it, i promise you that it will be IMPOSSIBLE to account for how much money was spent on the assets and how much cash was generated from the sales process and what the net cost or benefit to taxpayers is.
Without transparency, we wont have any idea how this all played out. None. Which creates the real problem of allowing it to happen again, but with the government needing the bailout.
One last note on Senator Dodd’s proposal to extract shares from companies that the government buys assets from as part of the bailout, all i can say is HELL YES. As a shareholder in the USA Treasury and USA Inc, if you want to borrow money from me or sell assets to me that you cant sell anywhere else, then I want stock/warrants or options as my vig. You got to pay to play. In the real world, if you want mezzanine financing, you pay in kind, and provide warrants. This should be no different.
if you dont like the deal, find someone else to buy the assets.
On the subject of executive compensation, if they need government bailout money, take away 100pct of exit pay and any bonuses. Let them quit if need be.
If you think you cant find someone else to take the current CEOs place,think again. No matter what number they pick for the CEOs compensation, its more than a lot of very smart people are getting paid elsewhere and those people would be more than happy to take a raise and replace the CEO who just took about his/her company
Let me put this a different way. The most powerful person in the world today is Sec Treasury Paulson. There is the very real possibility he will be replaced in January. The person replacing him will be paid a government salary of I think, no more than 400k. if they can find a replacement for him, they can find a replacement for any CEO running any company for a reasonable amount
from my mobile device
Wouldn’t it be simpler and cheaper for the government to ‘give’ each american household $1mm.
There are probably only ~300 million citizens, give them each $1mm to payoff they debt. There would have to be some oversight to make sure the money isn’t just spent and the debt not paid but it’s a lot cheaper than spending $700billion in who knows what and in the end we know that the people who really need it will not see it in time.
Comment by Tammy -
Six months away from retirement and our IRAs/401Ks are tanking. What now??
Comment by Help -
I would just like to know about all the earmarks that was attached
to the bailout
Comment by nancy warren -
As a member of Myinvestorsplace.com I am aware that I must pray and pay – but I need more viable solutions. Where do we go from here?
Looking for applicable advice and solutions.
Your help is appreciated.
Comment by joyce abraham -
It’s a mess. Now that the plan has passed, I’m hoping for the best. Whatever that is. In the meantime, I found this hilarious song about the bailout. Anything to lighten up a grim topic: Bailout song
Comment by Jody -
The speed-of-light measurement was off by a factor of nearly 100.
The technology of the era was not up the task. With new technology came new calculations for the speed of light path traveled in a vacuum one meter length is 1/299 792 458 of a second.
One day a Zen master was walking in the jungle and came across a large man eating tiger charging behind him, in a split second the made the decision to run down the path to escape the man eating tiger, suddenly he was at the end of the path which was a edge of a shear drop cliff dropping a long way to jagged rocks, so below which would be a sure death. So, the Zen master was faced with being eaten by a large man eating tiger or jumping off the cliff to sure death! The Zen master looked at the edge and notice a small vine at the edge of the cliff growing over the edge, with a split second decision he decided to use the frail vine to get over the edge of the cliff. The frail vine began to give way and the Zen master was falling to sure death to the jagged rocks below, when he notice a fresh beautiful bright red strawberry growing on the cliff right in front of him, the last thought from the Zen master was this is got to be the best tasting strawberry he has ever had. The economy would be the Man-eating tiger and the frail vine is the rescue or bailout plan. The strawberry is the pork barrel attached to the rescue or bailout plan.
Local Entrepreneur is selling Caps & T-shirt with the logo “Got $700 billion?” http://www.cafepress.com/092308
Comment by Laisseraller -
We all have a chance this election to sent a huge message to Washington.
Do not re-elect anyone who holds office. That would turn some heads.
Comment by Doug -
How long will it be before more money is required, Is this just a short term fix ?
Comment by Chris Hutcherson -
I find it interesting that we’re all outraged about executive pay but we’ll dish out hundreds or thousands to go to a pro football game. I think executives earn their pay far more than Hollywood or elite athletes.
Comment by JP Brown -
I agree with dodds, but with all our comments, how can we let the congress, the lawmakers know that we are against this policy of bailout.everybody knows now it’s not our fault that the market got in this situation! it seems sending e-mail to my senator and representative doesn’t mean a thing, just read about Reid D-nev also changed his mind from nay to yea. Wach out lawmakers or I’ll vote all the new elected candidate this coming election!!!!!
Comment by E.n.kerr -
Believe me, if Wall St cant sell this crap, we should not touch the stuff.
That bill better not pass!!!
Frank
Comment by Frank -
Why am I the only person saying this?? If something big and immediate is necessary, why don’t we forget about the limit on execs, ect and give them nothing? Why don’t we build from the bottom up?
If taxpayers are going to pay nearly $7k each on this plan, we should get the money. Let those banks sputter around and survive by US, The People,buying the homes that were forclosed on. Do you think if we gave that to the banks all that money they would give it back? Not on your life!!! These people are financial wizards. That’s why their rich and we’re about to foot the bill and fall into a recession soon anyway. The American Way?? I don’t think so. We should benefit directly so we could have homes instead of lifetime mortgages and retirement funds so we don’t have to worry about another great deal by the govt – Social Security!! Credit lines would free up because most of us wouldn’t need it and the banks would need us? Am I all alone? Wouldn’t you rather pay for your school in advance instead of QUALIFYING for a loan on the money we loaned them?? Let us make our own investments. Level the playing field. America would be rich all around. If you agree please let me know and shout it out loud. Most americans would be freed from debt and spinning their wheels. People could do what they love instead of what pays the rent. Everybody having a home in america isn’t such a long shot after all and the banks will have learned a lesson they won’t likely forget..Let’s write our own great chapter of American history. Remember: This is not a bailout plan, this is our money their gambling with. We Deserve It!!
Comment by julia -
Please do not allow the government to Buy Bad Loans ! Free market I believe in, goverment should step in to slowly let the air out of this deal so it doesn’t pop..but ultimately market needs to suck it up
Alternative:
Give institutions 30 days to identify a class of “bad Loans” The govt will guarantee these loans ( to a certain level) the govt guarantee provides an asset that can be borrowed against, at a great rate. Liquidity is provided to the system . The loan is still the institutions problems and they will work to limit their losses. Basically letting the institution “Finance” its loss over a longer time period.
Bankers don’t want this because they want a clean slate so they are heros next year and will get a bonus. This way they will basically be breking even for some time until they suck up their losses
Benefits:
-Regulators look at this asset as now good ,boosting the stability of te bank
-Cheaper money for bank to earn back the losses
-For mortgages that they put in the group BANK must convert to FIXED at low rate ( why not US govt guarantees it ( With no Fees to owner..maybe a little put on the mortgage)
-Management won’t get their bonuses until losses sucked up
-Sorry but the investors in the institutions lose out ( but the reality is that their institution was sunk anyway if it survives..they actually may get something
-Govt guaranteed loans “Trump” other securred creditors. ALL bank assets go to fix the problems no selling off he good stuff at bargain basemen prices
So What’s wrong with this proposal
Mad in Maple Grove
Comment by tommy -
It is time to stop the madness. We are not a people who fear. We do not need Uncle Handout to solve every percieved crisis that the American people have. we are strong. We will get through this. The people responsible for this mess will pay. We will come out of this stronge and more unified as a group. And we will continue to demand that government stay out of our business and demand our rights as citizens be restored. Our government needs to back off and let things be. The Bush aministration “cry wolf” govenment needs to go away!
Comment by Mike -
Necessary Caveat To Fix Financial Crisis
The current $700 billion plan to BUY the toxic loans will not neccesarily provide immediate liquidity. Financial institutions are afraid to make loans to other institutions or buy commercial paper and other assets. Instead they are sitting on their damaged reserve balances. That is the crisis…and the proposed bailout doesn’t directly address that. Banks may continue to sit on OUR money.
The government should provide the needed liquidity….BUT THE BANKS MUST BE FORCED TO LEND THE GOVERNMENT PROVIDED LIQUIDITY. Whether the government provides loans or buys their stupid “toxic” loans, financial institution getting assistance must agree to lend at least 50% of the money within 60 days and the balance within 90 days and keep that money loaned to US businesses and US homebuyers for the duration of the government loans. Make that part of the deal or this bailout is likely a waste of our money.
Banks profit by lending, and lending is what is ESSENTIAL to facilitate business and homebuying. With restoration of lending our financial system and country will quickly recover.
Comment by T.V. Friesen -
This is a classic example “boy who cried wolf.”
After 2 false ones, this one is real but no one believes anymore.
We all thought Iran was going to be it, but instead it’s
Wall Street. The problem is, as in the parable, right when
no one believed the boy any more, the last wolf was real.
We’re doomed.
Comment by Jennifer Lane -
Hey I have an idea! Why don’t we spend 700 billion to pay all of the
outstanding mortgages. You get to keep your house. The Banks get paid
and we all live happily ever after!!!
Comment by Chuck -
I can’t believe people want this bail out like they think they will
get something from it. The news media is brain washing people again
and the sheeple are furious because they wanted this to pass. Well
let me tell you the facts. The media isn’t telling you that congress
and the senate were getting 20,000 calls a day and hundreds of emails
300-1 against the bail out. The media isn’t telling you that 200+
economist from major universities were against the bail out. They are
not telling you the federal reserve silently while all this crap has
been going has been giving the banks 186 billion a day which it printed up
out of thin air to stay afloat. The media isn’t telling You the real
reason We are in this crisis which is run away debt. The media isn’t
telling you that the country is almost 100 trillion in the hole in
debt and can’t afford to bail out anyone much less the banks. The
media isn’t telling you that this reckless spending of money is destroying
the value of the dollar which in turn causes the price of goods to go
up. The media isn’t telling you that since bush has been in office
the dollar lost over 40% of its value which means You’re salary is
down 40+% meaning you are only buying about 60k worth of goods. The
media isn’t telling You that next years inflation will be more like
30% meaning prices will double every three years unless money creation
isn’t stopped right now. The media is telling you that we will be in
a depression and the only choice We have is an inflationary or a
deflationary depression. One we loose our jobs and prices keep rising
and the other we loose our jobs and prices fall. You need to learn how
money is created and what true inflation is which is the most important
thing right now. As it is now all the nations wealth flows into the
hands of a few people as we get poorer and poorer. The FED is a
privately owned corporation which has the sole duty to supply all of
our money. The people whenever they go to a bank for a house loan fill
out the application. The banks go to the FED and get a loan at 2% interest
and then the FEDS create numbers and put it into the banks account.
That is how it is folks our money supply is not backed by gold because
if it was We would not loose our purchasing power…..
Here is a quote from Thomas Jefferson and He is so right
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)
Here is the definition of inflation.
In economics, inflation or price inflation refers to a general rise in the level of prices of goods and services over a period of time.[1] The term “inflation” originally referred to increases in the money supply (monetary inflation); however, debates regarding cause and effect have led to its primary use today in describing price inflation.[2] Inflation can also be described as a decline in the real value of money—a loss of purchasing power.[3] When the general level of prices rises, each unit of currency buys fewer goods and services. Price inflation is usually measured by calculating the inflation rate, which is the percentage change in a price index, such as the consumer price index.[4]
Inflation causes certain adverse effects in the economy. For example, uncertainty about future inflation may discourage investment and saving. Inflation also shifts income from those on fixed incomes to those with variable incomes. Fixed nominal payments (e.g. rents and wages) are eroded if they are not inflation-adjusted. High inflation may cause hoarding by households as they buy consumer durables as stores of wealth.
Economists generally agree that high rates of inflation and hyperinflation are caused by high growth rates of the money supply.[5] Views on the factors that determine moderate rates of inflation are more varied: changes in inflation are sometimes attributed to fluctuations in real demand for goods and services or in available supplies (i.e. changes in scarcity) and sometimes to changes in the money supply (i.e. the amount of units of currency). However, there is general consensus that in the long run, inflation is caused by money supply increasing faster than the growth rate of the economy.[6][7]
Most central banks (who control money supply) are tasked with keeping inflation at a low level. There are a number of methods that have been suggested to control it. Inflation can be affected to a significant extent through setting interest rates and through other central bank actions (that is, through monetary policy). Others advocate fighting inflation by fixing the exchange rate between the currency and some other reference currency, such as the Euro, U.S. dollar or gold (see fixed exchange rate). Another method attempted in the past has been wage and price controls (incomes policies).
Comment by james -
I am no genius on economy, but a limit on profits would be good. There is no reason why a company should need to make billions in profits. If one company is hoarding billions of dollars each quarter wouldn’t that eventually affect the economy? If you had an ongoing war that costs millions of dollars a day would that not eventually take its toll on the economy? The past 8 years have seemed more like a business plan than a government plan.
Comment by Ryan -
Lets not forget one thing…this isn’t a quote “Wall Street” bailout, this is a full blown let the Bankers off free bailout!! The powerful banking cartel got us in this mess, now they want out for free, on your dime!! Remember this also, the Bankers engineered the Great Depression, because they got rich by seizing properties, jacking up rates to borrow.
What happens if your late on a credit card payment 2-3 times? your interest rate goes from 8-9% to 20-30%!! Ask em for a bailout on the criminal interest rates charged and see what happens. There used to be usery laws in place to protect consumers from criminal bankers! No more…it was de-regulated out from Reganonimcs.
I say…!*@% the bankers and let em burn in hell where they belong!
Comment by Bankers Are Criminals -
here you go folks, read about goldman sachs… When things go bad
people need to go back in time and read a bit. Spread this article
to everyone you know.
http://www.boston.com/business/articles/2006/12/12/good_deal_average_goldman_sachs_employee_makes_622000/?p1=MEWell_Pos2
Comment by joe -
Well lets see. Person proposing the package is an ex-GS banker, worth $500 mill earned $40 mill a year when he took up the current job. Would not take a mental giant to figure which side that guy is on. Then his boss – lesser said the better about that guy.
There was major opposition to curbing any executive pay at the banks by “Hank”. He has no idea how he came up with the $700 bill number per his own admittance. Does not want to tell what he will do with it. Not clear at what price is the treasure going to buy the assets at. He is going to hire the same folks to manage the bail out – hire the crooks to mind the bank. Does not even mildly wish to use the money to support main street – so no mortgage relief. So while you are losing your home Mr Main street guy how about folking over that last dollar in your pocket to help the poor banker who made $40 mill in bonus last year (life must be tough).
Does not know if after all this its going to do anything. Sure it will put money back in the hands of crooks who created the mess so that they can plunder more of the economy, break it up and auction it off to investors overseas (who are flush with US balance of trade debt).
Binladen – forget him. We have terrorists minding our markets.
Comment by Desi -
Re the “Bail Out” – why not use the money to help the home owners who are not able to pay their mortgages. The goal is to reduce the bad debts – find away to allow people to pay their debts.
One simple thing would be to offer mortgage subsidies to homeowners in default, instead of giving the money to Wall Street – they’ve not been responsible yet. And, the loans would then no longer be “toxic”.
Comment by John -
PLEASE! Let’s make sure this doesn’t get passed, now or ever. Wall Street needs to pay for their decisions. It may effect us to some degree but we will survive. If we let this pass, an amazingly dangerous precedent be set we will be under the power of the wealthy indefinitely. They took Lehman, and Fannie and Freddie and Washington Mutual and Indymac and Wachovia and ??? Has it been beneficial to you? NO! Have your shares in those companies gone to near zero? YES! Now we’re being pressured into making a rushed decision. $700,000,000,000.00 — can you even imagine what a large number that is?! How much is that per person? Give us that money and we will make the US economy work. Let your voice be heard!
Comment by Dan J. -
Hey they did something right for once, they killed that bill!!!
Comment by Frank -
If you take 839 billion (700B bail-out + 85B AIG + 29B Bear Stearns +25B Fanny & Fred) and give that money to each tax payer in the United States we can pay our mortgages, even buy a new car, economic recovery.
Comment by Savemainstreet -
Pingback: mark cuban for president « alex alexander
I am not in favor of this bill, it represents another huge step toward socialism….but if it passes with all the earmarks mentioned I will never support anyone who votes for this bill…
Comment by Robert Lunsford -
This ain’t Monopoly money. Imagine, a $1-trillion dollar bailout without ever any admission of wrongdoing or malfeasance. Many of the fat cats who circulate from board to board and from job to job, also happen to be members of the Trilateral Commission and or the Bilderberg Group. When someone takes your money and steals your car, it leaves an impression. When they’re committed globalists, it makes a lasting impression. Many elected officials even belong to the cabals. When Bill Clinton eased banking restrictions, he dished out $8-billion dollars for community reinvestment loans. When the financing schemes fell through, as is their wont whenever 30-million Mexican nationals buy inflated properties and default, it left banks in the lurch. Hillary Clinton counted on the loan giveaways to buy votes. Interestingly enough, had Hillary secured the nomination; she, instead of Barack Obama would preside over the bailout. So, where is that $8-bilion plus dollars? The Global Initiative people (code speak for car thieves) took my money; they stole my car. If you and I did half the things these people have done, we’d be serving consecutive life terms. Let the bubble burst. Gentlemen, I want my money back: http://theseedsof9-11.com
Comment by Peggy McGilligan -
To give you an idea of what CEO entitlements would be in this sordid tale of “Two Cities” – Wall Street and Main Street is as follows:-
Beleaguered bank Washington Mutual’s report in NEW YORK (CNNMoney.com) states that Washington Mutual Chief Executive Alan Fishman could walk away with more than $13 million in salary, bonuses and severance – Total $18 million after less than three weeks on the job, according to the terms of his employment agreement. That racks up to a salary of $928,571 per day. Kerry K. Killinger got a payout of $22 million.
When Fishman took up his post at WaMu, stock prices had fallen 70% into penny stock territory but was still able to walk away with a “PACKET”…
Merrill Lynch – CEO Stanley O’Neal PAYOUT: $161.5 MILLION
COUNTRYWIDE FINANCIAL – CEO ANGELO MOZILO PAYOUT: $121.5 MILLION
CITIGROUP – CEO CHARLES PRICE PAYOUT: $68 MILLION
AMERICAN INSURANCE GROUP (AIG)
ROBERT WILLUMSTAD PAYOUT $7 MILLION
MARTIN SULLIVAN PAYOUT $47 MILLION
MAURICE (HANK) GREENBURG 12% STAKE WORTH $3 BILLION
LEHMAN BROTHERS CEO RICHARD FULD PAYOUT:$22 MILLION
FANNIE MAE/ FREDDY MAC CEO’S DANIEL MUDD & RICHARD SYRON WAS SET TO RECEIVE IN PAYOUTS: $21.7 MILLION AND $31.2 MILLION RESPECTIVELY. The government says they weren’t paid – GO FIGURE!!!
BEAR STEARNS CEO JIMMY CAYNE PAYOUT: $61.3 MILLION PLUS $4.6 MILLION IN JP MORGAN STOCK…
INDYMAC BANK CEO MICHAEL PERRY PAYOUT $37.49 MILLION
AND WACHOVIA BANK CEO KEN THOMPSON PAYOUT: $8.7 MILLION
Other CEO’s to follow in his vein will follow hard and fast as the 700 billion con becomes ratified on Capitol Hill…
I hope the American people will VOTE out the dead-weight come November 4th…
Comment by dreamstarworld -
Will we never learn?
Any lame brain that can balance a checkbook knows that you can’t
spend what you don’t have. And when you lose your job,
or as a country, JOBS as in overseas, you start cutting back.
You don’t look for new and inventive ways to spend money.
Like on wars, nation building, or rebuilding someone that you just
beat up!
Just as in the days after 911 and the push for the patriot act or
in the run up to the war in Iraq, we are hearing of the dire
consequences of thinking instead of acting by virtue of fear.
Seven Hundred BILLION dollars for a bail out, for a bunch of crooks
who think nothing of sending our jobs overseas or finding innovative
ways to cheat us out of our insurance policies.
To put seven hundred billion dollars in perspective;
That money represents the contribution of three dollars and
twenty-eight cents for each man, women and child in the United States.
That’s everyone, babies, children, pregnant, disabled, unemployed,
incarcerated and the infirm.
Put another way, it is as if the U.S. government were asking for
fifteen cents from every living human being on the planet.
Sorry, but there is something fundamentally wrong with this sum of
money being GIVEN to a bunch of crooks who will use it to pull the
same crap on us again and again.
How about a new proposal.
Instead of giving this money to business, so that they can buy even
more government.
How abot we pull the plug on the war in Iraq that has cost taxpayers
about five trillion dollars…..so far.
How about we give 700 billion to the people.
Maybe it will “trickle up” to business the way that other plans
were supposed to “trickle down” to the people from tax breaks that
have already been given business in the recent past.
The people of the United States could use the money to pay down debt, which will allow them to become more competitive and solvent. Insn’t that the bull we are
hearing from big business in the military-industrial crowd.
Maybe everyone doesn’t need a bailout, so don’t give it to them.
Base it on income, for those that do need help they can buy medical,
dental or vision insurance. Maybe not as good as the insurance that
big business executives or big government has, but maybe it will be
almost enough. The people could use it to pay off their mortgages so
at least they won’t have to worry about a roof over their heads
while they’re trying to figure out how to buy gasoline to get to
work, pay for water, heat, groceries and prescriptions.
Maybe we should think about a government for the people,
by the people again, instead of government by the politicians,
and for big business.
I think we should throw every damn one of them out of office.
Tar and feather them, and ride them out of the country on a rail!
Comment by David -
This once great republic founded on the basis of a constitution that guaranteed freedom has been destroy’d. Our country has been sold out. We have been sold out. The passing of the massive bailout bill to wallstreet at the expense of the taxpayers is nothing more then treason and theft by our own government. Our elected officials have heard the outrage of the people and are passing this bill by being blackmailed and strong-armed that if they do not that this economy will fall into depression. These banks should be allow’d to fail, for thier own bad decisions and greed. We should re-build, as we always do. Writing a blank check to the treasury and the federal reserve is not the answer. This bailout will not improve the economy. It will only further line the pockets of the same people who created this mess. The very same people telling us we must pay them to fix. Our liberties are being erroded in the name of terror, the Patriot Act, and others, and now our economy is being destroy’d, nationalized and socialized, using the very same tactics. It is time for the American people to wake up and take a good look around. The time for peaceful civil dis-obedience is now. We the people run the wheels of the machine, we can bring it to its knees. To send a message of ressistance to a government that has become corrupt beyond our wildest dreams. The constitution tells us that when a government comes to what it has, that we have a duty to rise up and root out the evils and restore it. This is a crucial point in history. Will we continue to be silent good sheep or will we say ENOUGH!!!
Beginning October 1st, the US military is placing a full active duty combat brigade on US soil. For “home scenerios, civil unrest or terrorist attacks”, so the say. Clearly, this is not telling the whole story and is illegal under the US constitution. Those who make peaceful resolutions impossible, make violent revolution inevitable. If we continue to sit idle and do nothing in the face of tyranny we are just as guilty for the evils that come as the result. Our time to make some serious choices is now. We are not democrats or republicans, liberals, or conservatives. We are Americans. We are human beings. We are not sheep and cattle at the hands of the elite who choose to control this world. We must think about our children and our grandchildren and the world we wish for them to inherit. This is bigger then any one of us.
United we stand!!!
Your choice, peace, or annihilation
Comment by Comcerned American -
I just read a news story were House Leader Nancy Pelosi told Democrats that they will make a concession in the bailout deal for Republicans regarding not letting any part of the emergency legislation help homeowners in bankruptcy by letting judges rewrite mortgages.
I work in a small Bankruptcy firm in Reno, NV we file about 300 cases a year. This year alone our little office has dumped, conservatively 43,000,000.00 million dollars worth of bad mortgages back to the banks, with about 15,000.000.00 million more ready to be filed. I’m figuring these numbers at value of these homes in todays market not what they owed on them, those numbers would be far more staggering.
Judges don’t rewrite contracts. They can oversee lenders making an effort to re-affirm the mortgages by fixing interest rates and cramming down loans to value plus 10%. Get rid of unsecured 2nd mortgages. That will help main street.
If republicans don’t agree with this in the legislation THERE SHOULD NOT BE A DEAL. If you don’t have main streets best interest at heart, then maybe we should go back to the old days where you only paid cash for things & not credit. Let nature take its course(or the Market) If this bill does get passed without helping main street, I’m packing up my family of 7 kids, 2 grandkids and withdrawing my retirement and money in banks getting the hell out of America. 2008 will be the last year our family pays taxes in the USA.
These people are supposed to be protecting American citizens NOT WALL STREET! I truly believe that this $770 Billion dollar deal is just putting a band-aid on a hemorrhage. A temporary fix for the rich to get richer and main street to suffer!!! If they don’t build it from the bottom up, start at main street and let it trickle up It will never help average American’s that are struggling
Comment by Linda -
I agree there are alot of “ethical” folks who are very smart and would jump at the chance to get a couple mil a year to run one of these companies. We keep hearing they can’t cut compensation because we will end up with “second rate” leadership of these companies. Excuse me but if these guys that have caused this mess are considered “first rate” I’ll take second rate any day.
Enough is enough-congress is on the take and all the earmarks are the evidence. Is Acorn still in there? Acorn lobbied (aka provided campaign funds) senators and house reps to make loans to these people who couldn’t afford these loans to begin with. The last I heard congress earmarked 20% of the bailout money to go to Acorn to manage???!!!!
What?!??!! The hole is only getting deeper.
Comment by Ally -
Can someone please explain why we keep hearing the talking heads say that 90% of the people in this country are paying their mortgage and only 10% are in trouble yet we find ourselves in this total meltdown? Does anyone have an explanation?
Comment by Ally -
These guys are rubbing their hands …they can’t wait to spend our hard earned 700 billion dollars on things that wont fix the problem.
Comment by americasbestpoliticalblogger -
I agree… they need to show exactly what this bailout entails… Why don’t they make the negotiations public… why do they need to talk about this in secret? Put it on CSPAN… lets hear the truth!
Comment by americasbestpoliticalblogger -
I like the idea of government transparency. But I’m much more enamored with the idea of less government in general. With that in mind, here’s an alternate approach:
Instead of relying on the false assumption that the government is the only entity capable of bailing out teetering banks, and before giving the government unprecedented and likely permanent powers yet again during the Bush administration, let’s give the capitalist approach a fair shot. If private investors were to finance the bailout, the risk and potential profit would be borne by entrepreneurial volunteers, not forced from the pockets of every taxpayer in America. The difficulty is that no one investor can fix the entire problem since $700 billion is too much to invest in a something this risky. But if many investors contribute a relatively small amount, the net result would be enough cash for the bailout and a stimulated economy, which would increase the chances of the investors turning a profit. And where do those investors’ profits go? Right back into banks so they can lend it to other people, softening our current credit crunch.
The government could certainly facilitate this unified investment by coordinating the effort. No one wants to be the first to jump in the pool because there’s a good chance no one will follow. Set up a savings account for investors to contribute to by a certain date. If by that date enough capital has not been accumulated, return the money to the investors with interest (and be glad that your taxes didn’t finance such an apparently risky investment). However, if the critical amount has been achieved, use the money to buy the banks’ bad assets. The end result is all the benefits of the original $700 billion bailout proposal, but without the unacceptable negative effects.
—————————————————————-
Elect Ron Paul, abolish the Federal Reserve – stop printing more money and devaluing our assets.
Comment by Ian -
Comments:
Why should my hard earned money go toward a CEOs retirement?
Define “execessive executive compensation” would 50mm be excessive, 40mm, 10mm?
I had to close my business down due to the economy,, I want my executive compensation too!!!
Why is executive compensation even being discussed?
Comment by Anon -
Separation of church and state. Separation of corporation and state. Easy for CEO’s to make millions-easy for corporations to lose billions. Only the strong, fiscally responsible, will survive. Not every day will be late 1990’s stock market, not every day will be 2005 real estate market. Sometimes, this nation might need to take a step back, to reassess priorities, and make us think twice about decisions we are about to make. This bailout is enabling our nation’s financial infrastructure in the short term and not taking into account the long term impact.
Comment by Alex -
This $700-billion bailout needs principles to conform to the average American worker. People are loosing their jobs, this bailout plan might not hold in our economy. I wish I could explain to the president/presidential nominees of several options they need to grasp from my prospective on returning the workforce back to the American people in an agreement for corporation/company bailout! It is critical that these politicians have to make an agreement to ship back employment opportunities to the average American worker if the CEO’s want to save their corporation(s)/company(s)! I have a proposal with other principles in place. I believe it should be herd by the President! The major news-channels have been contact about a proposal. In addition, both Georgia State’s Senators, 12th District Congressman, Sen. Barack Obama, and Sen. John McCain have been contacted.
Sincerely,
Shawn J. Mushtaq
B.A. Political Science ‘10
GCSU- 2008 Senatorial Nominee – 2008 “Make It Happen” campaign
http://www.myspace.com/ShawnMushtaq
P.S. “If people do not have jobs, then how are they going buy the products & services these companies provide?”
Comment by Shawn J. Mushtaq -
Who is going to bail us out? I have worked in the finacial industry for 25 years, starting out as a Bank Teller and working my way up to a Vice President. I have been out of work for 6 months and I am collecting 1/5 of the salary I made on unemployment I have been pounding the pavement daily without success of employment. I am afraid of not having a home soon if I do not obtain employment and am unable to pay my mortgage. This is the first time I have collected unemployment and it is devastating to me to be in this position. These are really hard for me right now and a lot of Americans but we are now expected to foot the bill for a 700 billion bail out because there were greedy mortgage companies and banks. I am a product of “restructuring” in the banking industry praying to find a job soon!
Comment by Irene -
Yep – posted this same argument. This is NOT a good idea without some huge collateral in return. The US is already in debt way too far, and I do not see this helping at all.
Comment by hamellr -
I believe it is neccesary for the Government to set up
a website for the individual investor
to bid to purchase these failed assests.The government can also bi there themselves so to make this a less of an involvement from the government and more of a free enterprise.
I agree that we the american taxpayer needs a stake in those companies we are helping bail out.
I think that our guide should be something like Warren Buffet
got in his investment in Goldman Sachs. I also think that all of the
Executives staying-should forgo any bonuses or incentive pay that
were part of their previous agreement AND any executives leaving should only receive
like most regular americans a two to six week severance package. I especially want the government to insure the investment of the private investor with the private investor paying a premium to the fed for this service.
Comment by ER Coggins -
Pingback: Will the Bailout save America or send us into the abyss | this point of view
Never give a sucker an even break. -Henry Paulson
No seriously this is a suckers bet, and Hank the Tank is making it with our money. Any further input would be greatly appreciated.
Comment by Donald Othings -
Use the 700 billion to pay down every U.S. citizens mortgage by at least %50.
This would make the mortgage backed securities good and put money back into the ecnomy.Bail the people out, not the banks.
Comment by maureen -
I think we should look into all the inflated accounts of the CEO’s of the these companies, and put them on hold until this all is resolved. Just like any smart crook, they will move their assets, if they haven’t already. You have good ol boys looking out for good ol boys so deep in this gov’t. They don’t seem to be to worried about getting caught with their hands in the cookie jar. As a blue collar worker for American Airlines, I am way too familiar with this scenario, only on a smaller scale. I think the comment on taxing the under performing CEO’s on their bonuses is Genius!
Comment by Meagan -
I like the idea. If we can’t stop the morons from doing it we can at least bmake someone accountable. Does anyone think the press is stupid and don’t ask good questions? Who cares what republican’s or democrats think. How does this get the average joe or small business more or better or better credit?
Comment by Teddy -
Umm 700 billion to save the financial system … sounds cheap and like a good investemtn.
Americans do realize that in the last 10 years you’ve spent 5 *trillion* on “defense”.
If you can afford 500K “smart bombs” that don’t work and probably help
to rouse the population of your enemies to hate America and to support their despotic leaders, then you can afford 700bn to bail out a few banks.
Or ok don’t do it … but be prepared for your banking system to be bought
by foreign companies: that’s globalization and it’s probably time the US learned
about it firsthand.
Comment by Truthier Than Thou -
BAIL ME OUT…………….CALL YOUR CONGRESSMEN AND TELL THEM TO VOTE NO
FOR THE BAILOUT OR YOU WONT VOTE FOR THEM
Comment by scott -
Pingback: Google Trends: Henry Paulson | In Paulson We Trust
10 minutes ago Senator McCain announced suspending his campaign and encouraging postponing the debateHuraah for you Senator… Though I am a republican, I presently lean to support Senator Obama. However, I have noted to a number of friends… “The first presidential candidate to make the move to suspend and go back to Washington, has the greatest chance of being elected. Let me just say, Thank You Senator McCain for taking this initiative!!!
Comment by Pat Gaffney -
Good thoughts mark! One thing i am trying to figure out is that $700 billion fund is going to be used to buy bad asset but from just wall street / big banks with a global impact. it is hard to believe that any bank in the country would not have bad assets and nothing is going to happen to them. there is no bail out for small banks or individual investors. Most of the bail out is going to go for Goldman Sachs which needs that money to pay higher bonuses to its super smart folks who created his mess to begin with. last year goldman paid out $20 billion to employees in bonuses. i think this money should be the seed amount for the bail out fund. Talking of bail out, no one blinked when Lehman was going under water and when it is time for Goldman Sachs looks like Henry Paulson is returning the favour.
Well it is just a thought !!!
Comment by Vinit -
Mark: I am in no way an economic expert, but as to the 700b bailout, I learned a lesson some time ago, that if you can’t afford it don’t buy it. If you asked me for a $100 dollar loan and I did not have the cash, I couldn’t loan it to you, so why did the banks make loans that they could not afford to make. Appears to me that if the need capital they should take some costs cutting measures to make their firms profitable…such as only paying CEOs and Excs their due worth, not exorbitant salaries they cannot afford. An old addage comes to mind “When your outgo exceeds your Income, thats when your upkeep becomes your downfall.”
Why not infuse the $700B into purchasing foreclosed homes at a fair asking price and make those homes available to families now on rental subsidy programs, then fininace those home to people needing housing at terms they could afford, Including people receiving rental assistance and those w have faced forclosure. In this way the money would be directly placed into the fininancial institutions, and the taxpayers would have a real investment in the problem. The mony expended now in rental assistance would go a long way to pay off the investment and give immediate relief to not only those needing affordable housing and also immediate return on the taxpayers investment.
The Immediate result:
1. The Money emmediately flows into the economy (back to the lenders who caused the mess)
2. The Government (Taxpayers would have a guaranteed Equity int the solution)
3.The Billions now being spent for rental subsidies would come back in the form of mortgage payments ( recouping some of the original investment)
4 Affordable housing for those in need.
5. And Lastly creating the same capital the present proposal intends, with out buying $700B of worthless paper.
Too Simple I guess.
Comment by Curtis Bratcher -
We should not bail out these financial crooks!!
They should be allowed to borrow the money they need, and pay interest. the government should give these errant companies a loan to get their businesses in order. THEY made the mess, and they need to be responsible for getting themselves out of it. They can sell their financial institurtions to any buyers. Companies have been offering to buy them!! AIG was given three offers!! they refused them all, and just waited for the government bail out!!
Also, all the people with failed mortgages, should be able to get their loans at 2% directly at Fanny Mae or Freddy Mac ( now in the hands of the govt!). Why should the enept backs be able to borrow at 2% and not the individuals?
Comment by Linda a -
REGARDING OUR ECONOMY …
What’s the rush? There always seems to be time to fix things, but never enough time to do it right the first time around. Remember … “an ounce of prevention is worth a pound of cure”. The consequences of whatever is decided will dramatically affect Americans for decades … so, why not take the proper time and steps to properly explore all alternatives. Newt suggested taking a step back and creating a plan B … perhaps calling upon the people who advised Ronald Reagan, and turned the economy around back then. Besides, we should let the FBI investigation play out, before we decide to make a permanent decision. Like all good carpenters … going back to Jesus … I say: “Measure twice, cut once”.
Comment by Howard -
Bravo Mark. I couldn’t agree with this post more. It’s time some of
the CEO’s start taking responsibility for their actions.
Comment by Performance Shop CT -
2.5 million foreclosures (projected) means $280,000 per foreclosure. They are going to buy every bad mortgage?
Comment by zip -
Mark, I wish you had used your bully pulpit, and maybe you will, to point out the obvious. I’m comparing the NBA to the people pulling the strings in DC. If you believe that they’ve mucked it as bad as NBA refs always have, please come out and say so. I will always believe that it cost the Mavs the Miami series, and it may cost you again. But I think you have it in you to state the obvious. Rep
Comment by Drew -
Hey Mark, I’m no financial whiz by any means but I know that these companies knew exactly what was going to happen when they started to lend money they knew that could not be payed back. They would be bailed out just as the airlines did years ago. It was a perfect crime. Fannie and Mac were major contributors to our leaders on capitol hill which guarenteed to keep the wolves at bay. You will see some people go to jail, it will take years and most unfortunately will walk. Its a crime to bail them out also. Its fascism by definition. Social communism as one so called law maker worded it. Anyone that supports bailing these criminals out repercussion are as guilty as they are. Thanks for the thoughts.
Comment by Frankie from Lawnside -
Although I agree that we are wasting tons of money, I think we NEED
to have a presidential debate THIS Friday!
That being said, I do agree that there should be a debate that either
a) only focuses on the economy or b) heavily focuses on the economy.
In addition, we have a problem: It’s one thing if we’re all trying to
solve a problem and get prosperity to the finish line before
recession (and potentially depression) beats prosperity in this “race
to the future,” as some would call it. The issue is that we have
different definition of prosperity, different finish lines, different
goals.
Some would argue that the most important goal is to have the
unemployment rate reach a level lower than it’s been for the past
three to five years. Others would have us believe that it’s having
the DJI, PSI 20, and S&P 500 grow by a net of [insert amount here,
maybe 300 points, maybe more or less] by January 2009. And yet
others would have us believe that the standard of living–and those
able to live under definitions that meet such a standard of living–
are higher than they have been for a few years.
These goals no not necessarily re-enforce each other, so we have to
decide: what really is our priority? The problem is, the economy is,
by definition, not that simple. There are other factors, too,
such as individuals trying to shun the “hyper-consumer” lifestyle
and those who are more concerned about the environmental effects
of oil than their impacts on working families’ abilities to get to
work in areas with little or no public transportation.
In any case, my solution has always been to add new markets.
For example, legalize and regulate and tax prostitution. Do
the same with marijuana. Not only would this increase tax revenue,
but it would cut spending needed for police officers, prisons
and the DEA. If this were done, police could spend more time
getting the really bad guys, prisons could spend more of its
resources on the really bad guys, and the DEA can jail the
drug lords and not those on the streets desperately trying
to make a living in order to feed their kids.
Just a thought.
Comment by the-cuban-responder -
No reason to stop here. All Gov spending should be as transparent.
Gov contracts should not be issued in private…ever.
Comment by David -
The Fiasco of Political Idiocy
Once again a Senate hearing is not a listening or learning tool but an ego driven expenditure for tax payers. What truth was learned today…more than we already knew? How much time was wasted on Senator’s proclaiming themselves? How many questions were left unanswered or never given? Is not this financial mess as much to blame on Congress as any administration? Where are the “leaders” since the conventions of each party? Surely not in Washington? No… What kind of senior leadership has either presidential candidate shown us in these last few days? Oh… it’s more important to campaign than be there in Washington to meditate a healthy solution to this dilemma? Oh yes… need to get ready for the debate? Really… seems like the National Interest Debate is taking place in Washington… Why hasn’t either candidate found it important to be there????? Mmmmmmm… guess there really isn’t much of a leader in either of them… is there? Are we in more trouble than we can imagine?
Solution: 1) Cancel Friday’s debate. 2) Rearrange campaign schedule and 3) Get To Washington to manage, organize and maintain a healthy debate to resolve the present crisis. Most importantly on this latter issue is ban all special interest and lobbyist from the proceedings.
In other words… Someone in this mess please show true leadership!!!!!
Sincerely,
Patrick Gaffney
Comment by Pat Gaffney -
p.s. YES about your CEO exit pay package comment! What about pay
caps and/or merit-based pay? Interesting concepts–
what do people think about pay caps and/or merit-based pay?
I mean, corporations that are public are–well– PUBLIC, so therefore,
Congress should be allowed to do at least a little in this regard
(in my opinion, but I want to hear opposing views and their
justifications).
p.p.s. I don’t really have a website, but you can email me at
danielbaron@brandeis.edu to contact me.
Comment by the-cuban-responder -
As a CT resident, I’m happy to see you approve of Dodd’s proposal.
I also agree with you that a bailout does not necessarily mean
anything goes; there are still rules, and the government–while
changing things up– should nonetheless try to maintain a certain
level of consistency in the markets.
I want to know, however, what we should do to prevent this mess from
happening again. Obviously regulation is an important factor,
but so is education. A few non-profits are focusing on savings,
and even credit card companies are creating special infrastructiures
which automatically place an amount (equal to a certain percentage of
each purchase amount) to a savings account.
But really, back to education. The government can post things on its
website all it wants to, and that’s a good first step. A second step
I’ve started to hear is that of PSAs. What’s the third step?
I say reach out to youngsters in schools, as early as the 5th grade.
Budget. Budget. Budget.
I wish rappers could start bragging about their investment and
savings strategies. (Remember Chapelle Show’s gangsta mutual fund
skit? Yeah, something like that!)
We need more outreach, more PRO-activeness from NGOS and the
government itself.
Comment by the-cuban-responder -
Thanks for helping lead us through this madness, Mark. We need it.
Comment by RobbHand -
Pingback: th@talldude
WHAT’S THE BIG RUSH???
The consequences of a bailout
will affect us negatively for decades.
Why not follow Newt’s advice, and
take the time to explore other options.
Bring in the experts who helped Reagan
turn our economy around. Measure twice,
cut once !!!
Comment by Howard -
There should be no bail out, let them be accountable with the what they did.
It’s not capitalism, it was socialism:planned against the middle class.
End the Fed. Transparency is what they what you to talk about as a diversion.
These people only know you when they need something, so now is the time to get
sound money, or they will play their central planning control economy scheme against us all
forever… who wouldn’t? It easier to steal from the masses via Federal Reserve
than it is to create real value for society… The looters won’t stop themselves.
They will play the game till we are all their slaves in ruin or trapped for life with their slave currency…. this is just the first step.
In Liberty
CL
Comment by CL -
Just thought to note that Mark’s suggestion might be an antidote to Bill Saporito’s recent lament in Time Magazine: “How We Became the United States of France”
http://www.time.com/time/nation/article/0,8599,1843168,00.html
Comment by Patrick -
Mark… I agree 100% with taking an equity position with every dime that is used to bailout these companies. On the downside the company goes completely under and the US tax payer loses its investment. Which is exactly what will happen if the US Tax payers cut a blank check and start taking on all these bad mortgages with no equity, so I say we take an equity stake equal to what we put into the company and reap any rewards when and if the company turns around. But the US Tax payer should only take an equity stake if we are passive or mostly passive owners. We should not socialize our financial system, and run them as another branch of the government.
There is one other thing I think this bail out should include is a clause like this:
“Any CEO, CFO, or Board Member who leaves or is fired from a company that is has posted losses over the past 6-8 quarters will be taxed on any severance package at a 80-95% rate, for any cash, stock, bonds, or services.”
It is outrageous that these guys are rewarded for doing badly.
Comment by Josh T -
I couldn’t agree more with blabrmouth. While it seems less catastrophic in the short term to have the government bail out the problem, them taking ownership simply transfers risk. Albeit this may be a much cheaper risk or have a higher probability of turning a profit, but the fact remains that it puts the government (taxpayers footing the bill) at risk.
Like most people, I already buy into mutual funds, 401k’s, etc. While it’s tough to see the values drop, I don’t need my tax money buying more and continuing to leverage and not hedge. Cut losses and don’t ride a bad trade. I have close friends at the banks and it’s sad to see them loose their job, but it’s the only way to solve the situation without putting more people (everyone who pays taxes) at risk, regardless of how little that risk is assumed to be.
Look out for the black swan.
Comment by gale -
Liberals and a liberal congress spawned this entire situation by enacting the Community Reinvestment Act which coerced banks to give loans to unqualified borrowers (otherwise known as NINJA’s…
No income, no job, no assets). This was the genesis of the sub-prime loan market. If banks did not have the government-required amount of CRA loans, they had to pay higher interest rates to access funds from the government. Clinton really shot fuel onto the fire by allowing securitization of these loan pools through Fannie and Freddie. The rest is history.
Comment by Toby -
Man, i do wish someone that mattered would LISTEN/HEED/FOLLOW what you posted here. There is no REAL accountability in our government. Accountablity along party lines is petty and rarely anything more than status quo BS.
Thanks for some good thought Captain Cuban.
Comment by bryan paynter -
You are absolutely right Mark, but this thing is very messy. If you
require companies to put up their shares as collateral, the sahres
will plunge, because shareholder value will be diluted. Alo baased
on history government will be left with the worse investments,
on thir hands, because there is a demand for good parts,
and investors arew willing to pay for that.
Comment by Tim -
Government ownership is different from private ownership, as the former moves in the direction of nationalization. Politics will then get in the way of business, and every business with government ownership will become corrupt. There’s no doubt about that.
A far more reasonable approach is to simply allow failing businesses to fail. When people learn to not just depend on one bank to manage their money, the effect of a bank failing won’t be so huge. There’s only one way for people to learn that lesson, and it’s to let banks fail.
The reason these banks are failing in the first place is because of government interference in the market. Government pressure to issue risky subprime loans created a massive black hole of credit that allowed the lending market to look like it was growing on paper. The rest is history.
Keep the government out of the market. It’s that simple.
Comment by de -
Pingback: The Blabrmouth Maifesto — BlabrMouth.com
Paulson did not take the job for the cash – it’s the culmination of
his career to be in his position. How many hundred million was he
worth before he took it?
Why do others go down the political path? Promises of riches to come.
Being a cabinet minister in the UK is a guarantee of future wealth.
Exec pay is not a strict meritocracy or, rather, there are many
intangibles that determine pay. Politics and friends may stop the
smarter outsider but they also ensure a harmonious board.
Plotting exec pay gains with the financial industry bubble probably
delivers a nice correlation i.e. it is admittedly due a correction
but not as much as you suggest!
Comment by Colin Bruce -
Pingback: Mark Cuban to Government: Show Us How the $700 Billion Will Be Spent - Consumerism Commentary: A Personal Finance Blog
You need to be in the next cabinet. Treasury Sec would be a kick.
Think Dick Gregory in Putney Swope.
Comment by Steve -
Mark, you’re right on the money. It’s time the government come clean and
show us the money…or at least where it’s going and who’s going to be responsible for it.
The government needs to stop protecting all the overpaid, greedy CEO’s
and make them pay back some of what they’ve fleeced from their company,
employees and us the taxpayers.
I’m all for an transparent type of system to sell off the billions of dollars worth of
assets the government is going to takeover but they must eliminate the red
tape involved in doing business with the government and make the transactions simple in order to actually sell the assets.
Now, I’m off to find some investors to partner with…
Comment by David Ward -
Brilliant. Will you please be our president? I’m writing your name on my ballet. Seriously why can’t this country have proven sucess be a requirement for running for president?
Comment by michael -
Pingback: Blogbody » Blog Archive » $700B Bailout: my letter to Congress
Excellent point Mark. My real estate mentor made all his money in
the 70’s real estate recession. Much like today oil ground the
country to a halt and real estate plunged. President Carter ordered lots of FHA and government government owned real estate to be sold and guess what? Exactly your
point.
Many properties were sold with to people with government insider
approval. Even though, they held “open” auctions…
they simply didn’t notify anyone of the
auction until 12 hours before. He essentially was locked out of
buying certain properties.
Who can buy a $10-20m property
portfolio with 12 hours notice? The insiders and the their friends.
Great catch!
Comment by Kenneth Ezra -
If you listened to Hank Paulson on the Sunday political sitcoms, you undoubtedly heard him not explaining why “we” need to spend hundreds of billions of dollars in mortgage-backed junk securities.
.
He may as well have said “We don’t want the smoking gun to be a mushroom cloud”, because it’s the same fear-based scam they ran on Congress to buy a war back in 2003.
.
Granted, there’s a serious mess in the financial markets, but what moron would give billions to the criminals that caused the mess in the first place. And what – or who – are they trying to save anyway?
.
While you heard Paulson talking about “mainstream companies”, American workers pensions, and even farmers, what he was decidedly quiet about was sovereign wealth funds and foreign banks in China, Japan, Europe, the Middle East and Russia.
.
To get an idea of just who’s getting bailed out one need only take a glance at the list of foreign billionaire stockholders at Bear Stearns, which received a $29 billion guarantee from the Treasury Department.
.
Or consider the fact that a majority of the stock in AIG, ($85B bailout) is held by foreign investors. Worse yet, look at the $200B nationalization bailout of Fannie Mae and Freddie Mac. Their top bond holder is none other than the Chinese government.
.
These are not minor omissions.
.
Even more troublesome is the fact that on July 15, 3008 Mr Paulson testified as follows:
.
“Let me stress that there are no immediate plans to access either the proposed liquidity or the proposed capital backstop.”
.
Yet here we are, less than six weeks later and he has already issued more than $300B in guarantees and nationalized the two largest mortgage companies in the nation.
.
In light of the massive discrepancy between his words and his actions, it certainly seems appropriate for taxpayers to ask about Mr. Paulson grasp of the situation.
.
Whether he was being dishonest or simply was unaware of the scale of the problem, it raises grave concerns about his ability to unilaterally handle the situation.
.
And one only becomes more suspicious when just two years ago Mr. Paulson himself received $18.7M in bonuses from the same Wall Street he is now bailing out.
.
The sentiment is also represented in his currently proposed legislation, which intentionally puts the stability of financial markets above the protection of citizens, stating “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.”
.
So if the stability of financial institutions comes before the protection of citizens, and the stability of financial institutions requires the protection of sovereign wealth funds and foreign banks, it seems clear that citizens of the United States of America have lost control of their government.
.
If any control of government is going to be regained, Congress must immediately reject this course of action and attack the underlying problem by assisting citizens in securing stable home loans.
.
Absorbing reckless financial institutions and funding their foreclosure activities will only create more devastated neighborhoods that cause greater declines in housing values, which in turn will create more trapped citizens that see foreclosure as their only alternative.
.
Comment by Karen Hurtz -
Cubes,
I agree 100%.
My only comment is about your privatized social security comment. If those privatized funds were only allowed to be invested in diversified funds such as Total Market Indicies (VTI) know one would have lost a dollar as I haven’t. A Random Walk Down Wall Street, right? No?
Comment by Hunter -
Hello Mr. Cuban,
I love hearing your thoughts. I feel like, as a young businessman who wants to make something of myself in this world, I can learn so much from you. Keep the blog going. I’ll keep reading!
Comment by Todd Hoskins -
Pingback: The Paulson Plan is becoming the Dodd Plan | Michael Gracie
Just a small note: the Secretary of the Treasury currently makes $191,300 dollars a year.
http://www.ustreas.gov/education/faq/treasury/officials.shtml#q2
Comment by anon -
Dead on Mark. There may even be a way to offer these assets to the less fortunate and still cover our investment. You can’t tell me that HUD didn’t sell properties in the late 80’s for more than they paid. I know, because I sold a lot of them. I understand that the cash outlay is only a portion of the cost, but it would be nice to see the government run this thing with at least a plan to try to break even. Another concern I have is: how long are these foreclosed homes going to sit vacant waiting for a disposal plan? This could get very ugly, very fast.
Let the bidding begin.
Comment by Adamundo -
Thank God for Sen Dodd. It would be unconscionable for our government to bailout these corporations without getting any equity in return for the American taxpayer, when they so clearly deserve it. Someone is going to make money off this, it would be nice if it was American taxpayers, as opposed to bottom-feeders currently speculating on financial stocks.
Comment by Jay -
Did you crank this article out on your sidekick?! Nice work.
I have similar thoughts to transparency when it comes to credit. Colleges sell our information but do not disclose how much they get paid. For example, when Ohio State University gets a stadium sponsorship from a credit card bank, they do not disclose how much they are getting paid.
Great job on the blog post.
Comment by Larry Chiang -
Mark, great post, great idea, and of course they should have to account for every expenditure of taxpayer money spent.
Now back to reality: There will be no transparency and it will happen again.
Yours, Mr. Positive.
Comment by Steve -
It seems so simple, how do we make it happen? I can see the website now, should be no reason in the world why every dime is not accounted for. make sure the site also shows the administrative costs, interest income and costs.
Comment by Shawn Shepherd -
Hey Mark. Great on the comments. I hope that you run for governor
of Dallas. You have interesting views about the government.
Comment by Mark E Flowers -
Something to think about:
700,000,000,000 billion dollars
100,000,000 households in the US.
This means the bailout is effectively a $7,000 tax on every
household.
Comment by anon -
We need more clear-thinking people like you, Mark. Thanks for
keeping up the commentary.
Hypothetically, if you were asked by Secretary Paulson to do so,
would you be willing to take on the role of managing a program
that establishes and runs the exchange you’re talking about here,
or any other role in making this bailout work right?
Comment by Richard Schwartz -
Pingback: In Which Mark Cuban Proposes the Sarah Palin Approach to Get Us Out of Our Current Financial Mess « I’m Not Going to Do This Every Day
Mark, once again, you are dead on with your assessments. My fear is that this “bailout” may help in the short run, but not the long. I think that will depend on how the gov’t handles these CEO’s, as you’ve mentioned, and how they respond to helping the American people (not just the corporations).
In addition to all of this, they need to use money to help Americans educate themselves on finances, budgeting, investing, home ownership, smart spending, and living within their means. Debt spending by the average American, “creative” financial management by corporations, “Interest-only” home loans, tax cuts, increased Gov’t spending, oil dependency, and our government’s inaction to help prevent some of these things in the past (in fear of ruffling feathers) has put us in this situation. I don’t think this “bailout” is a smart move based on our Government’s inaction the past decade. I just don’t think a politician will do that, because the majority of Americans want a “quick” solution; and to stand up and say “We need to own this” is political suicide. We need to treat this situation like the Great Depression; and “quick” solutions and bailouts were not what helped us through that time. This isn’t a short-term problem, and no short-term answers are going to help our nation through it.
Comment by Nate -
Mark,
I like your ideas. This would provide us with a much more efficient, honest, and less wasteful government. But I don’t support bailouts. I think individuals, corporations, and banks alike should all be responsible for their own investments, mistakes, and decisions. Yes, I realize that this would result in economic catastrophe, but continuing to fuel bailouts, trillions of dollars of debt, imperialistic foreign policies, and thousands of services will only delay the catastrophe to come. The sooner we deal with this issue of incredible debt, the lesser the catastrophe will be. We can continue to put a larger and larger amount of debt on each successive generation of Americans, or we can face up to our problems, and bring back the old American values of personal responsibility and accountability.
Comment by Joel -
Pingback: Unlikely Words » Alternate Bailout Proposals
What always bothered me was the fact that executives don’t have to
risk anything. When someone starts a business, they are risking
absolute failure. They may go hungry for a time being. When someone
steps in and makes tens of millions while losing shareholder equity…
that should be criminal.
Great idea about keeping it transparent.
Comment by david freer -
Mark: “The most powerful person in the world today is Sec Treasury Paulson”
My dad has taken to calling it “the Paulson Administration”.
Good thoughts on this. I’m in agreement with the executive compensation part. I think one of the things we are now able to prove is that the amount of money an executive is paid has nothing to do with how good of a job they do.
Comment by Matt Nelsen -
Dead on Mark. Transparency, is key. I witnessed what happened in Russia in the ’90’s, where pretty close to *all* Russian assets & resources were stolen. We as citizens/shareholders, *need* to know where our money is, or believe me it will happen here too.
Comment by Nathan -
YES! Take away all exec pay if they are bailed out. Consider charging them for the help!
Comment by Mark Olsen -
Cannot agree more. Maybe we can put this to referendum? It seems like a significant outlay for a gift to the wealthy.
Comment by vijtable -