Democrats want gubment to bail out defaulting homeowners
Here we are in this crisis. Some say over $1 trillion to bail out the financials. Now democrats want to bail out homeowners who took loans they couldn't repay. Is this a good idea too? How much will THIS cost, and what message does it send to people making poor financial decisions? Methinks China and other countries investing in our treasuries are about to cash in and walk, sending us into a depression that makes the 1930s look like boom times!
Bush team, Congress negotiate $700B bailout
Sep 21, 3:34 AM (ET)
By JULIE HIRSCHFELD DAVIS and DEB RIECHMANN
(AP) Graphic shows timeline of credit crisis events with banking and mortgage foreclosures data; Full Image
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WASHINGTON (AP) - The Bush administration asked Congress on Saturday for the power to buy $700 billion in toxic assets clogging the financial system and threatening the economy as negotiations began on the largest bailout since the Great Depression.
The rescue plan would give Washington broad authority to purchase bad mortgage-related assets from U.S. financial institutions for the next two years. It does not specify which institutions qualify or what, if anything, the government would get in return for the unprecedented infusion. Democrats are pressing to require that the plan help more strapped borrowers stay in their homes and to condition the bailout on new limits on executive compensation.
Congressional aides and administration officials are working through the weekend to fill in the details of the proposal. The White House hoped for a deal with Congress by the time markets opened Monday; top lawmakers say they would push to enact the plan as early as the coming week.
"We're going to work with Congress to get a bill done quickly," President Bush said at the White House. Without discussing specifics, he said, "This is a big package because it was a big problem."
The proposal is a mere three pages long, but it gives sweeping powers to the government to dispense gigantic sums of taxpayer dollars in a program that would be sheltered from court review.
"It's a rather brief bill with a lot of money," said Sen. Chris Dodd, D-Conn., the Banking Committee chairman. "We understand the importance of the anticipation in the markets, but we also know that what we're doing is going to have consequences for decades to come. There's not a second act to this - we've got to get this right." Lawmakers digesting the eye-popping cost and searching for specifics voiced concerns that the proposal offers no help for struggling homeowners or safeguards for taxpayers' money.
The government must stabilize the financial system "because if we don't, it will have a tremendous impact on American consumers, homeowners, taxpayers and the rest," House Speaker Nancy Pelosi, D-Calif., said in San Francisco. But, she added, "We cannot deal with this unless this bailout helps families stay in their homes."
Senate Majority Leader Harry Reid, D-Nev. said "we cannot allow ourselves to be in denial about the threat now facing the world economy. From all indications, that threat is real, and the consequences of inaction could be catastrophic. Every single American has a stake in preventing a global financial meltdown." The proposal would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue.
"The American people are furious that we're in this situation, and so am I," the House's top Republican, Ohio Rep. John A. Boehner, said in a statement. "We need to do everything possible to protect the taxpayers from the consequences of a broken Washington."
Signaling what could erupt into a brutal fight with Democrats over add-on spending, Boehner said "efforts to exploit this crisis for political leverage or partisan quid pro quo will only delay the economic stability that families, seniors, and small businesses deserve."
Bush said he worried the financial troubles "could ripple throughout" the economy and affect average citizens. "The risk of doing nothing far outweighs the risk of the package. ... Over time, we're going to get a lot of the money back."
He added, "People are beginning to doubt our system, people were losing confidence and I understand it's important to have confidence in our financial system."
Neither presidential candidate took a position on the proposal. GOP nominee John McCain said he was awaiting specifics and any changes by Congress. Democratic rival Barack Obama used the party's weekly radio address to call for help for Main Street as well as Wall Street.
His language reflected a tricky balance that politicians in both parties are trying to strike, just six weeks before Election Day: Back a plan that doles out hundreds of billions to companies that made bad bets and still identify with the plight of middle-class voters. Besides mortgage help and executive compensation limits, Democrats are considering attaching middle-class assistance to the legislation despite a request from Bush to avoid adding items that could delay action.An expansion of jobless benefits was one possibility.
Bush sidestepped questions about the chances of adding such items, saying that now was not the time for posturing. "I think most leaders would understand we need to get this done quickly, and you know, the cleaner the better," he said about legislation being drafted.
Treasury officials met congressional staff for about two hours on Capitol Hill on Saturday. Discussions centered on how the plan would work, and Democrats proposed adding the executive compensation limits and new foreclosure-prevention measures. Details of those changes were not available Saturday. Bush and Treasury Secretary Henry Paulson conferred by phone for about 20 minutes in the afternoon, gauging how the negotiations were unfolding.
Among the key issues up for negotiation is which financial institutions would be eligible for the help. The proposed legislation doesn't make it clear, leaving open the question of whether hedge funds or pension funds could qualify.
In a fact sheet released Saturday night, Treasury said it was seeking latitude for the secretary and the Federal Reserve chairman to expand the bailout to non-U.S. companies if they determined it was necessary to stabilize markets, but the original request sent to Congress is limited to firms headquartered in the United States, according to a copy obtained by The Associated Press.
The proposal does not require that the government receive anything from banks in return for unloading their bad assets. But it would allow Treasury to designate financial institutions as "agents of the government," and mandate that they perform any "reasonable duties" that might entail.
The government could contract with private companies to manage the assets it purchased under the rescue.
Paulson says the government would in essence set up reverse auctions, putting up money for a class of distressed assets - such as loans that are delinquent but not in default - and financial institutions would compete for how little they would accept.
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Associated Press Writer Terence Chea contributed to this report from San Francisco.
RE: Democrats want gubment to bail out defaulting homeowners
Perhaps the best thing is to let the whole system collapse now, I agree. One thing is for certain, bailing out homeowners is a terrible idea because it just sends the message that nobody is accountable for their own decisions. Now I'm reading that US taxpayers may be bailing out FOREIGN banks. Also, Obama will want to bail out Detroit and the airlines after he bails out homeowners. How can these ENORMOUS debts not thrust us into a DEEP depression?
RE: Democrats want gubment to bail out defaulting homeowners
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Now I'm reading that US taxpayers may be bailing out FOREIGN banks.
US taxpayers will be bailing out foreign banks under the Bush plan.This is probably the honorable thing to do since the US is bailing out domestic banks and loan companiesthat peddledtainted mortgages all over the world. Foreign banks were left holding worthless US instruments when the derivative andhousingmarkets collapsed.
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How can these ENORMOUS debts not thrust us into a DEEP depression?
RE: Democrats want gubment to bail out defaulting homeowners
People for the most part when cheerleading for their particular political favorite exhibit a feet that Barnum and Bailey could have used "The amazing man that talks not only out of both sides of his mouth but his rear as well", but then comes that really magical time right before the election.
The time when they stop using their mouths all together and just talk out of their...
RE: Democrats want gubment to bail out defaulting homeowners
In 2000 senator Phil Gramm sneaked a 262 pageamendment into the appropriations bill that prevented federal regulatory agencies from regulating derivatives that were responsible for the meltdown:The meltdown can be traced to that amendment. Phil Gramm is also responsible for the Enron loophole that brought down that organization. Strange thing, Gramms wife was on the Enron board.
RE: Democrats want gubment to bail out defaulting homeowners
Oh no, it's that evil Phil Gramm once again who caused folks to buy more houses they couldn't afford.[:-] Funny, I was reading an article this morning blaming it on Spitzer who "eviscerated the analyst profession".
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"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
RE: Democrats want gubment to bail out defaulting homeowners
Quote:
Oh no, it's that evil Phil Gramm once again who caused folks to buy more houses they couldn't afford.
It is much more than folks buying homes that they could not afford. There were bonds and derivatives peddled all over the world based on those mortgages. Yep, scummy Phil Gramm is responsible for eliminating the federal oversighton derivatives.
RE: Democrats want gubment to bail out defaulting homeowners
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ORIGINAL: falcon
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Oh no, it's that evil Phil Gramm once again who caused folks to buy more houses they couldn't afford.
It is much more than folks buying homes that they could not afford. There were bonds and derivatives peddled all over the world based on those mortgages. Yep, scummy Phil Gramm is responsible for eliminating the federal oversighton derivatives.
Oh yeah, darn that Gramm, he packaged up this box of air and forced banks all over the world to buy it without looking at what they were putting up billions for. Man, just think of how effective he could be against Russia. Let's put him in charge and see how much of their oil profits he can sucker them out of.[:-]
__________________
John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
Democrats want gubment to bail out defaulting homeowners
