| Sep 20 @ 4:42 AM |
Congress, administration craft financial rescue...
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legacy1
Posts: 516
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And who say's we are not in trouble?
Congress, administration craft financial rescue By JULIE HIRSCHFELD DAVIS, Associated Press Writer
50 minutes ago
Faltering financial institutions whose toxic assets have brought markets to the brink of catastrophe could unload their bad debt on the government, and in turn the taxpayer, under a half-trillion dollar bailout being crafted by the Bush administration and Congress.
Top Republicans and Democrats and their aides planned to work through the weekend with administration officials to hammer out the proposal — the most sweeping government intervention to rescue failing financial institutions since the Great Depression. They hoped the bill could pass the House and Senate as early as next week.
The administration is asking Congress for far-reaching new powers to take over troubled mortgages from banks and other companies, including purchasing sour mortgage-backed securities.
President Bush on Friday acknowledged risks to taxpayers, but he declared, "The risk of not acting would be far higher."
Congressional leaders and presidential candidates in both parties said they would put aside partisan differences and work together on a package that was vital to the economy.
Democrats are insisting the package include mortgage help to let struggling homeowners avoid foreclosures.
They're also considering attaching additional middle-class assistance to the legislation, despite a request from Bush to avoid adding controversial items that could delay action. An expansion of jobless benefits was one possibility.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke briefed lawmakers by conference call Friday, painting a grave picture of an economy on the edge of a major recession and telling them that action was urgent and imperative.
In a session with House Democrats, they described a plan where 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 for the investments, said Rep. Brad Sherman, D-Calif., who participated in the call.
"You give them good cash; they give you the worst of the worst," said Sherman, a critic of the plan, which he complained that Bush and his economic advisers were trying to panic lawmakers into rubber-stamping.
Lawmakers still had not seen details of the proposal by late Friday, and Republicans and Democrats were raising key questions. For instance, there was no indication of what the government would get in return from financial companies for the federal assistance.
Paulson said the new troubled-asset relief program must be large enough to have the necessary impact while protecting taxpayers as much as possible.
"I am convinced that this bold approach will cost American families far less than the alternative — a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion," Paulson said. "The financial security of all Americans ... depends on our ability to restore our financial institutions to a sound footing."
Administration officials hoped the rescue plan could be finalized this weekend, to lend calm to Monday morning's market openings, said Keith Hennessey, the director of the president's economic council. The goal is to have something passed by Congress by the end of next week, when lawmakers recess for the elections.
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| Sep 20 @ 4:50 AM |
Congress, administration craft financial rescue... |
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lefthandedluckie
Posts: 5,081
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This is proof there has to be oversight! There will have to be legislation drawn up and safe-guards put into place with very stiff penalties after this! 
I would not lift a finger myself to help in this matter! Because it is always the same republicans will in a few years say there is too much restraint on Wall Street! But, when it has been lifted you can see what happens!
I also say put the ones that are responsible for this in jail! If the investigation takes years do it and put these idiots in jail! And Bush being the first one through the door! 
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| Sep 20 @ 4:53 AM |
Congress, administration craft financial rescue...
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Novalite
Posts: 3,093
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They should have listened to McCain back in 2005 and voted for his oversight bill rather than do what the second largest campaign recipient from Fanny Mae did (Obama) to placate themselves.
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| Sep 20 @ 6:23 AM |
Congress, administration craft financial rescue... |
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Gman762
Posts: 3,291
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Obama got a HUGE campaign contribution from Fanny Mae...seems to me there should be a huge investigation too 
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| Sep 20 @ 6:26 AM |
Congress, administration craft financial rescue...
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Novalite
Posts: 3,093
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Ya. And find out what the heck is wrong with duck while they're at it.
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| Sep 20 @ 9:47 AM |
Congress, administration craft financial rescue... |
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Gallows_Humor
Posts: 8,063
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this new bailout has nothing to do with fannie mae/ freddie mac or obama/ bush..
Hint..google ...wa mu...
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| Sep 20 @ 10:00 AM |
Congress, administration craft financial rescue...
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vinnytmd
Posts: 6,004
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gh - the plan is generic. It will buy mortgage and credit assets at a discount from all levels of the credit stream. It is not nearly as bad as it seems as once again in the long run it may cost little.
Time will tell.
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| Sep 20 @ 10:20 AM |
Congress, administration craft financial rescue... |
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Gallows_Humor
Posts: 8,063
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^^^ the whitewashed version...^^. it will allow banks to sell off "bad loans" at a discount before they go into default... ( keeping banks solvent) Loans no one in their right mind would buy...) ( yeah.. the government is the buyer here...) the winner is the artifical propping up of property values... ( and property taxes)
it really means that "a free market" would no longer exist..
in the old days value was set by a willing and able buyer and seller ...
if this goes through..it will be ( from now on ) set by committiee 
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| Sep 20 @ 10:36 AM |
Congress, administration craft financial rescue...
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vinnytmd
Posts: 6,004
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GH - these loans for the most part are backed by property. The treasury will do a version of the RTC to liquidate assets as they did during the S&L disaster.
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| Sep 20 @ 10:38 AM |
Congress, administration craft financial rescue... |
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KatiefromStafford
Posts: 2,266
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this will allow the lenders to pass of bad debts to free up money for more borrowers to get into loans they can not afford and another round will kick off in a year or so.. anyone else see a cycle being built here?
unless controls are put in to prevent the same kinds of loans from being made again.. this could become endless with the taxpaper picking up the tab
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| Sep 20 @ 10:39 AM |
Congress, administration craft financial rescue...
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Gallows_Humor
Posts: 8,063
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^^^ a very good point^^^
GH - these loans for the most part are backed by property
no shit sherlock.... (you are out of your element here...)
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| Sep 20 @ 10:41 AM |
Congress, administration craft financial rescue... |
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vinnytmd
Posts: 6,004
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katie, stop the ignorant doom and gloom. Banks will not be lending money for unconventional mortgages.
I predict that they people that will be hurt the worst will be College students whose families left themselves ill prepared to pay tuition. These unsecured school loans will dry up fast.
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| Sep 20 @ 10:43 AM |
Congress, administration craft financial rescue...
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KatiefromStafford
Posts: 2,266
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they already have
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| Sep 20 @ 10:47 AM |
Congress, administration craft financial rescue... |
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vinnytmd
Posts: 6,004
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no shit sherlock.... (you are out of your element here...)
Well genius, I guess you were in a drug fog in the mid 80's when the RTC liquidated property for the S&L. The Treasury will do the same under this plan. Anyone with 10 fingers can figure out that the Fed is buying paper that is backed by collateral at a discount. When they liquidate the assets they will recoup money. If real estate values stabilize they will do OK.
I think that their plan is smart and will work out for the best.
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| Sep 20 @ 10:50 AM |
Congress, administration craft financial rescue...
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KatiefromStafford
Posts: 2,266
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big if
not saying it would not be a good thing, my company invests in the markets for my retirement, but.. ah whatever
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| Sep 20 @ 11:02 AM |
Congress, administration craft financial rescue... |
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Gallows_Humor
Posts: 8,063
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I guess you were in a drug fog in the mid 80's when the RTC liquidated property for the S&L.....
apples and oranges... rethink this as you are off base... they seized property that had value on the open market...and some investors  lucked out in buying this property below market value..
today we are talking about buying and selling "paper".. not property
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| Sep 20 @ 11:07 AM |
Congress, administration craft financial rescue...
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vinnytmd
Posts: 6,004
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gh - I guess you are still in a stupor. The paper they are buying are mostly MORTGAGES!
If they default they will have - PROPERTY TO SELL.
No one seized property. When the S&L went out the Feds were left with the collateral for the bad loans. Just like today.
Go read the WSJ
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| Sep 20 @ 11:32 AM |
Congress, administration craft financial rescue... |
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Gallows_Humor
Posts: 8,063
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research why the S&L's went under...hint .. the government changed the rules on them in mid stream... one day it was ok for them to partner with contractors on projects..and call these projects assets.. the next day they were classified as "loans" ...it threw their "ratios" all out of wack and they could not recover...
(but the properties still had value...at current market prices...)
now.. do you really think the government is going to " forclose" on defaulting home loans.. or will they rewrite these loans to the "owners..."
as it stands now.. lenders have to forclose once an owner defaults..or face serious repercussions...
the "government" will do whatever they want..when a homeowner defaults..
(and remember that default sales ( at a discount) lower everyones property values...)
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| Sep 20 @ 11:37 AM |
Congress, administration craft financial rescue...
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vinnytmd
Posts: 6,004
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gh, what are you babbling about? When people default they have no equity and cannot afford the house.
How and why would they refi? Additionally many loans are balloons or some other sub prime product. With the drop in values these people cannot refi either.
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| Sep 20 @ 11:42 AM |
Congress, administration craft financial rescue... |
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KatiefromStafford
Posts: 2,266
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there is discussion about whether the bailout will help homeowners or only help the lenders threatened by their own predatory practices..
seems to be leaning towards the latter, save the ones who created the situation and take over the houses of the borrowers so they can sell them again, hopefully without the same results
never been sure about this, will apartment rents skyrocket now? i would think they would, all those displaced families have to go somewhere...
So the apartment owners will profit by the crisis too.. ah the American way..
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