Bailout Bills

[Scriblerus the Philosophe]

Thought it being a separate thread from the one discussing the market direction.
All I can really say is "Oh my god."
Here's the text from last night, sent to Congress for this morning.
Dodd's plan. More (meaning some) congressional oversight and apparently more taxpayer protection.
Paulson's bill (the first link) is basically a power grab. (all italics are mine)

Sec. 2. Purchases of Mortgage-Related Assets.
(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.
(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
...
(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;
...
Sec. 3. Considerations.
In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--
(1) providing stability or preventing disruption to the financial markets or banking system; and
(2) protecting the taxpayer.
Sec. 4. Reports to Congress.
Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.
Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.
(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.
...
(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.
...
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Sec. 9. Termination of Authority.
The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.
Sec. 10. Increase in Statutory Limit on the Public Debt.
Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.
Sec. 11. Credit Reform.
...
(1) Mortgage-Related Assets.--The term "mortgage-related assets" means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

Ok, can't challenge it, no specifications as to what 'protect the taxpayer' means (among other things), includes commercial properties, leaves it for the next guy to clean up, and securities and so on can be sold for whatever the secretary chooses. Great.
All right, we've established Cheney and his cronies* are stagnant-lake scum, Bush is a lemur (no insult mean to them, but he's not really even a monkey), and

Dodd's Bill (again, italics are mine) has it's own problems, but it's a little better.

3 (1) AUTHORITY.—The Secretary is authorized
4 to establish a program to purchase, and to make and
5 fund commitments to purchase troubled assets from
6 any financial institution, on such terms and condi7
tions as are determined by the Secretary, and in ac8
cordance with policies and procedures developed by
9 the Secretary.
Opens the door for international banks with assets owned by their American units.
Section 2.2 doesn't actually change (still says without limitation) but in sect. 2c, there's a caveat:
Quote
23 (c) LIMITATION ON AUTHORITY.—
24 (1) IN GENERAL.—The Secretary may not pur
25    chase, or make any commitment to purchase, any (to page 4)
1      troubled asset unless the Secretary receives contin
2      gent shares in the financial institution from which
3      such assets are to be purchased equal in value to the
4      purchase price of the assets to be purchased.
5 (2) SHARES TO BE RECEIVED.—
6    (A) CONTINGENT SHARES.—
7       (i) IN GENERAL.—The contingent
8        shares to be received by the Secretary
9        under paragraph (1) may, at the deter
10      mination of the Secretary, include shares
11      of the financial institution, its parent com
12      pany, its holding company, any of its sub
13      sidiaries, or any other entity which is
14      owned, controlled, or managed by such in
15      stitution.

Not sure what that's supposed to do. Decide what shares of anything they own (including the most profitable sectors, assuming they have one)? Sorts sort of like a slap on the wrist.
Yup.

9 (B) MULTIPLE CLASS OF SHARES.—If the
10 financial institution from which troubled assets
11 are to be purchased has more than 1 class of
12 shares, the contingent shares to be received by
13 the Secretary shall be that class of shares with
14 the highest trading price during the 14 business
15 days prior to the date of the purchase of such
16 assets.

Ack! Editing, as I didn't post everything I wanted to! Will double post (sorry) when properly edited...which will be tomorrow, since the intarnets ate my post and it's really late and I want sleep.

*Do we want to insult scum, even? He's more like a virulent virus. Not really a living thing until he's in a host.

[Bob in a quantum-state-of-faith]

*Do we want to insult scum, even? He's more like a virulent virus. Not really a living thing until he's in a host.

Personally, I'm not convinced Cheney is even alive in the conventional sense.... I think he died years ago when his heart failed the first time, for lack of use.

They replaced it with something else*, and re-animated his dead corpse.


* what?  I dunno.  Something they found in an ancient tomb of evil?  A loose collection of internet porn and old worn-out computer chips?  Some form of one of those internet viruses gone all corporeal, maybe? Maybe a tangled nest of dead spiders...?  certainly nothing that is alive...

[Aggie]

Looks like Congress members are starting to raise some serious questions about Paulson's plan....  good on 'em. 

Hope they manage to keep this in the interests of the American public, to whatever degree possible.

[Swatopluk]

*Do we want to insult scum, even? He's more like a virulent virus. Not really a living thing until he's in a host.

Personally, I'm not convinced Cheney is even alive in the conventional sense.... I think he died years ago when his heart failed the first time, for lack of use.

They replaced it with something else*, and re-animated his dead corpse.


* what?  I dunno.  Something they found in an ancient tomb of evil?  A loose collection of internet porn and old worn-out computer chips?  Some form of one of those internet viruses gone all corporeal, maybe? Maybe a tangled nest of dead spiders...?  certainly nothing that is alive...

The Cold Heart as in the fairy tale of Wilhelm Hauff
http://books.google.de/books?id=zZ2drxxCzasC&pg=PA184&lpg=PA184&dq=wilhelm+hauff+%22the+cold+heart%22&source=web&ots=ejl5BnFH0u&sig=yjcpv4CIqO7xvK48F1lctYkqI14&hl=de&sa=X&oi=book_result&resnum=1&ct=result
For a synopsis look here
http://www.gymnasium-neuenbuerg.de/?q=node/135

[Scriblerus the Philosophe]

Almost done analyzing the Dodd bill. Looks pretty damn good so far, at least in comparison to Paulson's 'rescue plan.'

Dodd: Transparent, legal recourse if there's reason for it, limitations, assistance for homeowners, demands a systematic approach, excludes commercial properties, (still vague bout tax payer protections), any profits go to protecting homeowners [65%], capital magnet funds [35%] and the remainder goes to the Treasury. There's some decent putative measures against the guilty firms (basically the Treasury gets to decide where the shares/assets come from, anywhere in a firm's system regardless of failure or success of that group of assets) and incentives to executives are limited (yes!) and there's an incredible amount of oversight as well as internal watch-dogs. I'll post the sections later, if you all want.

Paulson: none of the above. 

[Sibling Zono (anon1mat0)]

I'm thinking on a letter to my congressman to not only demand more regulation in financial markets but criminalize the behaviors of the CEOs that got us in this mess, making sure they get at least 10 years of jail with no parole.

Perhaps making a nice letter, buying a domain and do the grassroots thing. Whaddaya think?

[Scriblerus the Philosophe]

Sounds like a plan, Zone. Gimme the link, if you do it, so I can throw that at various people.

[Sibling Zono (anon1mat0)]

It will take me a bit (both the letter and the site), in fact I accept ideas. 

Edit: how about makethebankerspay.org as a domain?

[Aggie]

Misread that to include the word 'spay'.

I think in most cases the right word would be 'neuter'.

[Sibling Zono (anon1mat0)]

Better without the S then (makethebankerpay.org)?

[beagle]

I'm thinking on a letter to my congressman to not only demand more regulation in financial markets but criminalize the behaviors of the CEOs that got us in this mess, making sure they get at least 10 years of jail with no parole.

Perhaps making a nice letter, buying a domain and do the grassroots thing. Whaddaya think?

Congresspersons of both parties helped with the mess, in the repeal of Glass-Steagall in the late 90s, after LTCM had already shown what derivative failures could do to a financial institution and how it could lock up the market.

[Aggie]

Article from NPR entitled "Why Congress Objects To The Bailout":
http://www.npr.org/templates/story/story.php?storyId=94950330

Jon Macey, a professor and deputy dean of Yale Law School, says the bill contains the largest transfer of power from Congress to the administration that he has ever seen. Macey says Congress is handing over more power than it did in granting the executive branch leeway in the Patriot Act, more than when authorizing combat through the War Powers clause. He says the move amounts to a sidelining of Congress.

[pieces o nine]

How about: forecloseonthebankers.org

[Sibling Chatty]

I say let Buffet and THAT class of investors salvage the salvageable, and let the crap ones fail.

Buffet's started.

http://news.yahoo.com/s/nm/20080923/bs_nm/us_goldmansachs_buffett5

Screw the rest. FDIC protects the small and medium guy, others can take the hit, because if they're unprotected they're probably also liable for something.

As the old saying goes, fuck 'em and feed 'em fish heads. Go back at least 15 years and take away ALL their ill-gotten gains. Wah for them. Wah for those that trusted them.

A bail-out will only press the crash into the next administration. Let Gates buy out a decent bank and have Microsoft Bank of America, or whatever...a no dead trees bank. Buffet's got his, he can afford another.

WaMu?? Tough, you bunch of wankers. Die a nice death, and I hope they take your Mercedes AND your Lexus as they foreclose on your house!!

[beagle]

I think Paulson has bigger fish to fry. He's desperately trying to retain America's AAA credit rating (against formidable odds) and have at least one World class American bank left at the end of the rescue. All the time not spooking the Chinese.

FDIC protects the small and medium guy

Only if the Chinese keep buying Treasury Bonds...

[Sibling Chatty]

Or if the war profiteers are gotten, and the criminals that caused this mess get penalized.

They made it a necessity to sell out this country to the Chinese, I think they need to lose it all while we try to get it back.

[Scriblerus the Philosophe]

The sidelining of Congress would only be two year (two year too long, but still), particularly if Dodd's version is passed.

While I like the idea of letting the bankers get completely stripped of all personal assets, letting the banks die has it's own problems. Assuming they croak, a hell of a lot of people are going to loose money. FDIC insures only those accounts that have $100k or more, leaving everybody else to loose their savings and whatever they have in checking, if it's under that amount. That's hundreds of millions lost.

UPDATE: They want to include auto loans. That's ridiculous. Cars don't cost as much as a house and are far less important than having some sort of roof over your family's head.

[Griffin NoName]

UPDATE: They want to include auto loans. That's ridiculous. Cars don't cost as much as a house and are far less important than having some sort of roof over your family's head.

They're not about cars !  It means lending money to oneself. Brilliant idea.

[Aggie]

I

While I like the idea of letting the bankers get completely stripped of all personal assets, letting the banks die has it's own problems. Assuming they croak, a hell of a lot of people are going to loose money. FDIC insures only those accounts that have $100k or more, leaving everybody else to loose their savings and whatever they have in checking, if it's under that amount. That's hundreds of millions lost.

UPDATE: They want to include auto loans. That's ridiculous. Cars don't cost as much as a house and are far less important than having some sort of roof over your family's head.

I think I'd be quietly slipping money out of my account if my bank was looking feeble.  If you happen to have anything in Washington Mutual at the moment, RUN!

Agree on car loans, WTF?  You can live sans-vehicle in many places, and you can buy a beater with a couple of months car payments in nearly all. While I do fully understand the necessity of _a_ vehicle of some sort in a big country,losing a new car will not make or break most of those with the ability to originally afford the payments on said new car. I have no pity on those unable to make payment on their Hummer because oil is up and their McMansion got repossessed.

Then again, that car roof may be the only roof over some people's heads at the moment.

[Griffin NoName]

I recommend pre-fabs on wheels. 

we are about to have a pre-fab post-WWII estate made into a National Heritage site. Some of my cousins lived there in one; I visited as a ?5 year old and thought it was fab (!!)  so I am delighted.

[Bob in a quantum-state-of-faith]

The sidelining of Congress would only be two year (two year too long, but still), particularly if Dodd's version is passed.

While I like the idea of letting the bankers get completely stripped of all personal assets, letting the banks die has it's own problems. Assuming they croak, a hell of a lot of people are going to loose money. FDIC insures only those accounts that have $100k or more, leaving everybody else to loose their savings and whatever they have in checking, if it's under that amount. That's hundreds of millions lost.

UPDATE: They want to include auto loans. That's ridiculous. Cars don't cost as much as a house and are far less important than having some sort of roof over your family's head.

Ummm, for banks, you have that exactly backwards:   it's UP TO 100k is insured, over that--you're on your own.  So the little guys are protected, and anyone smart enough to spread his >100k money into multiple accounts.

That 100k max is per account.

[Sibling Zono (anon1mat0)]

I say let Buffet and THAT class of investors salvage the salvageable, and let the crap ones fail.

Buffet's started.

http://news.yahoo.com/s/nm/20080923/bs_nm/us_goldmansachs_buffett5

Screw the rest. FDIC protects the small and medium guy, others can take the hit, because if they're unprotected they're probably also liable for something.

As the old saying goes, fuck 'em and feed 'em fish heads. Go back at least 15 years and take away ALL their ill-gotten gains. Wah for them. Wah for those that trusted them.

A bail-out will only press the crash into the next administration. Let Gates buy out a decent bank and have Microsoft Bank of America, or whatever...a no dead trees bank. Buffet's got his, he can afford another.

WaMu?? Tough, you bunch of wankers. Die a nice death, and I hope they take your Mercedes AND your Lexus as they foreclose on your house!!

The guys not covered by FDIC are not the problem. Normally I wouldn't care but the problem is that regular businesses don't expand without credit, that goes from the mom & pop stores to the fat cats. Very few businesses keep lots of cash around (because normally it's stupid to have your money standing still) and the ones that do usually have it in different forms of investments. The moment the banks fail, there is no credit and half the corporations on the planet may fail simply because their cash flow depends on that credit. IOW letting the banks fail is a one way ticket to a catastrophic recession. Even the economies where the proper safeguards were in place will be affected.

[Bob in a quantum-state-of-faith]

The guys not covered by FDIC are not the problem. Normally I wouldn't care but the problem is that regular businesses don't expand without credit, that goes from the mom & pop stores to the fat cats. Very few businesses keep lots of cash around (because normally it's stupid to have your money standing still) and the ones that do usually have it in different forms of investments. The moment the banks fail, there is no credit and half the corporations on the planet may fail simply because their cash flow depends on that credit. IOW letting the banks fail is a one way ticket to a catastrophic recession. Even the economies where the proper safeguards were in place will be affected.

Exactly. That was the serious problem that the proposed insurance on Mutual Funds would've exposed:  once Mutual Funds were FDIC-equivalent insured, who would use a bank anymore?   Except for a working checking account, most of your funds would be put into a flexible Mutual Funds account, not a savings, passbook, CD, etc. 

Without those large inflows of cash, banks would fail: money in the checking accounts is only a fraction of their cash-inflow.

Without deposits to offset their loans, they legally cannot make those loans (within limits, obviously).

Without business loans, many businesses would quickly stagnate and die.

Fortunately, the "bankers union" recognized the danger, and contacted the feds with regards to the Mutual Funds insurance, and it was quickly ammended:  ONLY the pre-existing at risk Mutual funds would be protected.  Newly opened, or newly transferred accounts/balances would not be insured.

You'd THINK that those idiots that Bushya put into place would've seen that.... oh. Wait.  Nevermind about that last line...

[Aggie]

Any hint of what Bush is going to say tonight?

I'm guessing it's a plea to the public to back the bill, as I doubt there are any results to report.

[Bob in a quantum-state-of-faith]

Any hint of what Bush is going to say tonight?

I'm guessing it's a plea to the public to back the bill, as I doubt there are any results to report.

I have exactly as much idea as Bush himself does....which is nada.

He will read whatever they prepare for him, and comprehend it not at all.

I assiduously avoid listening to him if I am able.  I'd much rather read the summaries later.

[Scriblerus the Philosophe]

Thank you for the correction, Bob. Must have misread it.

The summaries will also probably be more enlightening than anything the Simian Shrubbery has to say.

[Aggie]

I assiduously avoid listening to him if I am able.  I'd much rather read the summaries later.

The Google Finance forum rats are wagering that the market will drop simply by the act of him opening his mouth.

[Scriblerus the Philosophe]

Oooh, this is bad. Very, very bad.

China banks told to halt lending to US banks-SCMP.

BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

[Bob in a quantum-state-of-faith]

Oooh, this is bad. Very, very bad.

China banks told to halt lending to US banks-SCMP.

BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

Here it comes....the sound of the other shoe dropping.

Thanks Reagon/Bush/Bush....!