The Real Reason for the Rush?

One of the questions that has come up in connection with this week's scramble to pass a $700 billion bailout package for the beleaguered financial sector is: Why the rush? Why not take some time to fully explore the risks, discuss the financial, economic and political ramifications, and figure out ways to minimize the cost to taxpayers?

Although those in charge have attributed their sense of urgency to fears of an imminent seize-up in financial markets, it is conceivable that policymakers could have applied a few more of the band-aids they have been using prior to now so that the issues and prospective outcomes could be examined more fully in the harsh light of day.

Unless, of course, there is more to it than what our leaders are admitting to. In "Brad Setser: Extraordinary Times," the London Banker blog suggests the pressure for a rapid-fire solution stems from the precarious financial position of the rescuer-in-chief: the Federal Reserve.

Brad Setser has a fascinating insight to offer in his newest post, Extraordinary Times:

In the last two weeks — if I am reading the Federal Reserves’ balance sheet data correctly — the Fed has:

Increased “other loans” to the financial system by around $230 billion (from $23.56b to $262.34b);

Increased its “other assets” by about $80b (from $98.67b to $183.89b);

Increased the securities it lends out to dealers by $60b (from $117.3b to $190.5b);

That works out to the provision of something like $370b of credit to the financial system in a two week period. And that is just what I saw on a cursory glance.

The most that the IMF ever lent out to cash strapped emerging economies in a year?

$30b, in the four quarters through September 1998 (i.e. the peak of the 97-98 crisis).

The most the IMF ever lend out over two years?

$40b, in the eight quarters through June 2003 (this covered crises in Argentina, Brazil, Uruguay and Turkey)

This is a very real crisis. The Fed’s balance tells a story of extraordinary stress. I never would have expected to see the Fed lent out these kinds of sums over such a short-period.

My response:

Excellent and timely, Brad. I’ve been speculating all week that the pressure being used on the Congress to pass the Paulson Plan is the threat of Fed illiquidity. As of two weeks ago, the Fed had lent out more than $600 billion of its $800 billion balance sheet Treasuries against crap MBS collateral.

The Paulson Plan would have allowed the banks to unwind the repos putting the Treasuries back in the Fed, get cash for the crap MBS, and get more Treasuries from the issues financing the $700+ billion funding of the Plan. As a bonus, the Paulson mark-to-maturity price becomes the implicit Level 3 price for capitalisation of all the firms and banks in the system, giving them some breathing room to stay in business. Everyone wins except the poor American taxpayer.

The Fed is very close to being illiquid. That is the fear factor we are seeing at work, and the reason no one will discuss why the bailout is needed - only emphasise the urgency.

Comments

[b]

How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable

Terry Jones
Wed Sep 24, 7:19 PM ET

One of the most frequently asked questions about the subprime market meltdown and housing crisis is: How did the government get so deeply involved in the housing market?

The answer is: President Clinton wanted it that way.

Fannie Mae and Freddie Mac, even into the early 1990s, weren't the juggernauts they'd later be.

While President Carter in 1977 signed the Community Reinvestment Act, which pushed Fannie and Freddie to aggressively lend to minority communities, it was Clinton who supercharged the process. After entering office in 1993, he extensively rewrote Fannie's and Freddie's rules.

In so doing, he turned the two quasi-private, mortgage-funding firms into a semi-nationalized monopoly that dispensed cash to markets, made loans to large Democratic voting blocs and handed favors, jobs and money to political allies. This potent mix led inevitably to corruption and the Fannie-Freddie collapse.

Despite warnings of trouble at Fannie and Freddie, in 1994 Clinton unveiled his National Homeownership Strategy, which broadened the CRA in ways Congress never intended.

Addressing the National Association of Realtors that year, Clinton bluntly told the group that "more Americans should own their own homes." He meant it.

Clinton saw homeownership as a way to open the door for blacks and other minorities to enter the middle class.

Though well-intended, the problem was that Congress was about to change hands, from the Democrats to the Republicans. Rather than submit legislation that the GOP-led Congress was almost sure to reject, Clinton ordered Robert Rubin's Treasury Department to rewrite the rules in 1995.

The rewrite, as City Journal noted back in 2000, "made getting a satisfactory CRA rating harder." Banks were given strict new numerical quotas and measures for the level of "diversity" in their loan portfolios. Getting a good CRA rating was key for a bank that wanted to expand or merge with another.

Loans started being made on the basis of race, and often little else.

"Bank examiners would use federal home-loan data, broken down by neighborhood, income group and race, to rate banks on performance," wrote Howard Husock, a scholar at the Manhattan Institute.

But those rules weren't enough.

Clinton got the Department of Housing and Urban Development to double-team the issue. That would later prove disastrous.

Clinton's HUD secretary, Andrew Cuomo, "made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis," the liberal Village Voice noted. Among those decisions were changes that let Fannie and Freddie get into subprime loan markets in a big way.

Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks.

Since they could borrow at lower rates than banks due to implicit government guarantees for their debt, the government-sponsored enterprises boomed.

With incentives in place, banks poured billions of dollars of loans into poor communities, often "no doc" and "no income" loans that required no money down and no verification of income.

By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market -- a staggering exposure.

Worse still was the cronyism.

Fannie and Freddie became home to out-of-work politicians, mostly Clinton Democrats. An informal survey of their top officials shows a roughly 2-to-1 dominance of Democrats over Republicans.

Then there were the campaign donations. From 1989 to 2008, some 384 politicians got their tip jars filled by Fannie and Freddie.

Over that time, the two GSEs spent $200 million on lobbying and political activities. Their charitable foundations dropped millions more on think tanks and radical community groups.

Did it work? Well, if measured by the goal of putting more poor people into homes, the answer would have to be yes.

From 1995 to 2005, a Harvard study shows, minorities made up 49% of the 12.5 million new homeowners.

The problem is that many of those loans have now gone bad, and minority homeownership rates are shrinking fast.

Fannie and Freddie, with their massive loan portfolios stuffed with securitized mortgage-backed paper created from subprime loans, are a failed legacy of the Clinton era.

[Independent Accountant]

I read the London Banker post earlier today. I read his blog regularly and think highly of him. I've wondered about it too.
That said, I think there is another issue here: criminal liability. If the big banks, investment and commercial, are forced to sell their junk paper at market, they would need multi-billion dollar writedowns. The immediate question: why weren't they recorded before? I think part of what's going on is Paulson is looking to keep his old cronies out of jail for securities fraud. The Paulson plan is the banksters "Get Out Of Jail Free Card" from Monopoly.

[Oct 7th]

My compliments on the post....
It really gets to the quick (or plausible one).

I'm in sales and see how the "you gotta buy at this price today" or some other hokey near term time limit rarely works to get the sale and always seems to raise antennae that something may be amiss if there is that much urgency.

My question is what would occur (consequence wise) if the Fed were to be "illiquid"?

For the US and others?

Thanks,
OCT7

[Terry]

To answer the qeustion raised by OCT17 (What would happen if the Fed were illiquid?), I believe the answer is that they just borrow from the Treasury. Indeed, the Fed can borrow as much and as often as it wants, always adding to the money supply. Could be they'd borrow $700 billion, maybe more, maybe less. The move would drive down the dollar value significantly and be sharply inflationary domestically.

[hurl]

buy the rumor, sell the news

the rumor, a savior plan to keep stocks from falling

the news, a stockholder bailout is approved, and will have little actual immediate impact other than a few hundred Dow points

do credit markets unfreeze on the news? probably not

does the bailout cause real estate prices to bottom? probably not

do lending standards loosen? probably not

then, september auto sales, earnings warnings and forcasts, unemployment on friday

in 1929, the market crashed on October 29

in 1987, the market crashed on October 19

in 2008, how long could it take once the corporate sector starts breaking the bad news on the real economy?

[Anonymous]

I am astonished that this financial catastrophe would be blamed by some on minorities buying homes. The problem was clearly not just flexibility in loaning standards, but a complete lack of any underwriting standards, along with the securitization of mortgages mislabeled as being triple A rated. That is a problem with lack of transparency, the rating agencies, and accurate accounting. As to the minority loans, it has been shown that even minorites who qualified for better terms were given adjustable rate loans with high interest resets because it was more profitable upfront for the loan broker and supposedly would be for the downstream buyer. The US financial system is corrupt and reflects the true character of the nation.

[Tobby]

I am amazed at the number of people who slept through "Money, Banking, and Credit" during their Junior year in college. The Fed can borrow from the treasury. I repeat, the Fed can borrow from the treasury. The FDIC is backed by the Fed, which can borrow from the treasury. Any published funding limits are mere accounting metrics and do not represent some impending bankruptcy.

[VoiceFromTheWilderness]

You are surprisingly willing to grant behind the scenes reasonable-ness to the administration. Significant portions of the American public do not share your sanguine assesment of their goals, methods, or abilities.

Maybe you saw the Daily Show on Wed where he showed a speech in the run-up to the War in Iraq side by side with his current 'crisis'.

There is absolutely no reason whatsoever to believe that anything this administration does is on the up and up -- none. They have lied, cheated, stolen, and lived to do so again. Crony Capitalism is the clear defining characteristic of their war in Iraq, and indeed of their response to 'disasters' altogether.

It is more than naive not to think they are doing it again, it is foolish.

[weinerdog43]

You've gotta love b's wingnut approved diatribe that poor people caused the crisis. Not Bubbles Greenspan's interest rate actions, nor banker greed. Nope. Those darn poor (read black) people who wanted to join in the 'Merkin dream of homeownership. They're the real reason. Oh, wait. Don't forget to blame Clinton.

The wingnut plan: Always blame Clinton. Never admit any responsibility. Ya gotta love it.

[John Taurus]

Where has the gold reserves of the United States gone? Are there any left?? Has it all beens stolen and shipped to Israel??

This will go down in history as the largest theft ever...billions in gold stolen from the United States by a foreign country that conquered the United States years ago....and most citizens don't have a clue that they don't have a clue...that they don't have a clue.

[licksquid]

How can they go Illiquid when they print the money?
They have liquidity up until the time the dollar is inflated to zero.

[Able Dagger]

The Zionist Gangsters (aka Russian-Israeli Mafia) have orchestrated another 911. This time it is a financial armageddon. It is interesting that some of the same people (aka Hank G. at AIG) are associated with the latest 911. People should be taking this more seriously given the connections of this mafia to Russia.

It is interesting that the congress only has a 15% approval rating, according to recent polls. The reason the approval rating is so low is because none of the politicians are discussing what they are going to do about the Zionist/Wall Street gangsters.

Also interesting that the WM CEO (Alan F.) is walking away with $20 million after a short time on the job. It seems like the gangsters like to rub their exploits in the publics faces.

[Dr. Bombay]

I've heard that the mortgages that were issued under the
Community Reinvestment Act had some of the highest
repayment rates of any of the mortgages that were
made. Can anyone verify this? Thanks..

[Ugly American]

re: b

CLAIM: This was all caused by Clinton policies.

RESPONSE: In your own post you point to policies from 2001. Bush Jr was already president in 2001. In fact, despite ever stronger warnings by Ron Paul, James Rogers, Warren Buffet & others - Bush Jr & company spent 8 years making everything worse.

The mechanics of the failure are the same as the huge S&L failure under Bush's dad due to corporate junk bonds. You'll even find many of the same families involved.

The real problem is lenders are allowed to transfer the risk of their bad loans to others (pension funds, etc). And make no mistake, that's is where the toxic waste got dumped because people investing their own money wouldn't buy it.

Anytime an entire class can pass their risk to others it will be abused.

[V]

Good article, insightful comment as also. Always good to hear from our friends in the U.K.
I'll get to the point. Anyone remember the 1995 $500
Billion bailout? (it almost identical).
Well, Henry Paulson was the architect of THAT little
nightmare also. ( he was CEO of Goldman-Sachs from 2000-2006. He then somehow landed this job...Hmmm.
Again, his conditions are "no oversight, reviews and NO legal charges for any of his cronies!
Moreover, this was the "Keating 5" Scandal"
.....of the 5 senators who were caught.....yep,
John Mcain. How curious
Instead of a bailout, I hope they just get bail, heh.

[MJI]

Thomas Jefferson was concise in his early warning to the American nation, "If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."

[FRN4U]

Get rid of the FEDERAL RESERVE.

[Dan]

The banks say that we can clean up this mess with $700 billion. Right now the banks are borrowing $188 billion a day from the FED. That's the numbers for this week. Last week, it was $48 billion. What does this imply for bank solvency? Monday morning is going to be exciting.

[LAStevens]

"The Fed can borrow from the treasury."

NOT at their discretion.

[Jean-Claude]

We're hit on all sides with political correctness ... this has destroyed our nation. It's the end of meritocracy. Of course, it was the idiot white liberals who caused this. The comment in this link about the minority communities, "investment" and political favors says it all.

Of course we must realize that many decent, Christian minorities work hard and got caught up in this nightmare. Can you really blame them per se? My how things have changed, today even poor people have lots of toys, fancy cars and of course, have you ever asked why poor people seem to be so darned fat? The poor have always been abused since they built the Pyramids, perhaps it is the method of control that has changed?

That said, greedy white men ran the machine at the top ... from Clinton to the Fed. They are the lowest form of oxygen stealing parasites. Capitalism without God is just as bad as Marxism and Communism without God.

It's just disgusting. The whole society is controlled by seemingly anti-human, Satanic elites. They have divided and conquered.

All normal people, those who are left, be they white, black, Asian, Hispanic, Muslim, Jewish, Christian, gay, not gay ... whatever ... need to stand together.

Another Boston Tea Party anyone?

[Pepper]

I would also suggest this is a part of the "globalization" agenda.... I saw it today for the first time in a news article quoting Paulson, as a cure for what is ailing us. Also remember Paulson wants to use the money to bail out foreign banks as well.

Just another step toward globalization....Obama and McCain both have CFR advisors on their staff, with Obama having the most (6) which includes the sociopath, Zbig...who wants to invade Russia and steal all its natural resources as written in his book back in 1997. Zbig made it clear that a democracy (elections) is "inimical to Empire building". So he suggests we do something about that.... well, that is going on as we speak. This link reads like a blueprint for global fascism, where corporations and bankers "govern regions" of the planet...These same guys currently in the process of scamming us and stealing...

http://www.cfr.org/publication/9903/sovereignty and_globalisation.html

While they are doing what ever it is they are doing.... they are also stealing by borrowing money from German banks the day before the announcement of the insolvency, keeping the $350 million Euros they borrowed, then placing the brand new debt into the bail out for the taxpayers to pay.

Believe it or not, that is a crime, its fraud. Lehman bros and possibly AGI (AIG) also was involved. It was in the German papers that the bank in germany involved had two bank directors who cooperated in that huge theft and the bank was considering prosecuting them..

Nice, huh??? If I tried to borrow a $100,000 one night, then the next day file bankcruptcy, I will be in jail so fast it would make my head swim... and here we are getting ready to hand the thieved the keys to the treasury room.... Amazing.

[milidude]

these criminal bankers were hedging their portfolios with derivatives AND THAT IS THE EXACT REASON WE ARE IN THIS MESS, DUE TO THEIR GREED, ARROGANCE, AND CRIMINAL ACTS. if nobody notices, the whole mortgage default market(1-200 billion) could be paid off in 1 quarter if we stopped this goddam war and used that money to help mom and pop on main street as well as the homeowners living in the neighborhood.these derivatives bundled as triple aaa investments were actually valued only on and in these banking criminals computers and were nothing more than a bet on when and if a particular investment would go bad and then bets(options) were made and sold thru the investment houses. the problem with this is EVERYONE INCLUDING MUNICIPALITIES ALONG WITH THE MAINSTREAM INVESTMENT FUNDS HOPPED ON-BOARD. this is exactly why we are in trouble and the only way to clean out an infection which is what our government and wallstreet has become. the elitest bankers dont give a dam about you or me, because we are goyim(sheep) to them and unless and until they are excised from the wound to our country and then antiseptic put on them until they are terminated, only then will our country and its wound begin to heal. these people worship none other than lucifer and their goal is to destroy life and our world as we know it. wake up and let the revolution begin.

[CaraJane]

Wall Street is Main Streets siamese twin with a drug problem. The time has come when we need to say to them its 3am no more cocaine. Really a bailout would just enable the addict.

[John]

Let the FED fail. Abolish the FED. Pass Ron Paul's bill to abolish the FED and re-enact JFK's Executive Order printing US dollars via the Treasury rather than via the debt of the corporate banker owned FED.

That's what the urgency is. The FED has been gaming the US since 1913 and MIGHT just fall if enough congressmen and women have BALLS.

[Johnny Cache]

I'm not wild about the notion of the government "bailing out" any entity, public or private unless and until you can show me that in the U.S. Constitution.
Thank you, that is all.

[David Merkel, Alephblog.com]

I'm less well known than Dr. Setser, but I posted much the same on Friday:

http://alephblog.com/2008/09/26/entering-the-endgame-for-monetary-policy/

[Black Star Ranch]

....I don't think it much matters WHO caused the start of this mess at this late date. BOTH sides have dirt on their hands AND, both sides seem to want to prolong the "feeding of the dead elephant", regardless of the majority of citizen contact to the contrary. It's real simple: If it passes, you vote the bastards out, and it prolongs the game a few months. If it isn't passed, the house of cards will soon fall and then it's time for most to get serious about learning to grow a garden. This is what we've positioned ourselves for over the last 18-years and I say lets "let the games begin" - just keep your head down, your powder dry, and learn to do a few things that might come in handy! And, good luck.

[shekelgrabber]

This time real ovens!

[DAVE-Y]

Somebody suggested another Boston Tea Party. Too good for the diabolical greed we've seen exposed to the air for the first time. They have come close, possibly succeeded in destroying America as we've known her since WW2 and now they have the balls to demand even more money just to stay afloat. The same CEO's who made hundreds of millions in "bonuses" have now been put in charge of the life boats. It is amazing how dumb the American public has become and how they seem ready to acquiesce to this latest robbery.

Tea party? I think it's time to bring back the GUILLOTINE !!!

[Dennis]

The situation is actually very simple. Money is created today only by someone signing a promissory note to a member bank of the Federal Reserve system (credit cards are simply a convenient way to make such promissory notes). The note promises that the signer will make regular payments of interest and principal to an institution that created the money ex nihilo by working his ass off, basically, for so many years as an indentured servant. This is the flim-flam at the heart of the economy. We have given the power (in 1913) to create the medium of exchange, the lifeblood of a division of labor economy, OUT OF NOTHING BUT INTEREST-BEARING DEBT, to a private corporation of banks, which Congress may not even audit and whose ultimate owners are hidden. Cui bono, fellow sheep? Not you and I, that's for sure. Your Congressman (unless you're from Ron Paul's District in Texas) doesn't have the integrity or humility to submit to a period of study to actually come to this basic understanding, which you the reader now have, in the space of one paragraph.

Adold Hitler (not exactly a hero of mine), in two years, pulled Germany out of the Great Depression by issuing a limited amount of debt-free notes printed by the German treasury, and rather than enter into deals with the international banking community which was squeezing Germany dry with reparations payments under the Treaty of Versailles, instituted barter arrangements with neighboring countries to foster trade. These German Treasury notes were not borrowed into existence at interest but issued by the government, just as our silver certificates were not that long ago, and they circulated into the German economy initially as state-sponsored infrastructure commissions, and as a result a spectacular infractructure was created in Germany within two years, as the rest of the world struggled in its dealings with a private banking system to get back on its feet. The private banks had issued too much credit at interest and sparked a massive malinvestment in the Twenties, a malinvestment such as we seeing today in the housing market.

The moral of the story is simply this: as Thomas Jefferson warned 200 years ago, never giver power to issue money to a private banking cartel, because---how can I put this delicately?---they will fuck you over.

[Austrian Banker]

It seems the only weapons of mass destruction, which are impending launch on the unsuspecting American people, are all located within Washington DC. If, by some fluke, the rescue package falls through and the Fed dies, I congratulate you all. If not, then be prepared for some really hard and awful times.

BTW, what do Rumsfeld, Paulson, Bernanke all have in common? They were all appointed by that great president of yours, George Bush. By that account, I don't think anyone can take the current posturing, fear mongering, rush work to destroy the capitalist system with $700 billion being sucked out of the real economy and handed over to a bunch of autocrats, seriously.

[Phicrappazappa]

When purchasing a home with under 20% down, which should include 100% of the loans being whined about, mortgage insurance is required. This protects the banks and underwriters from defaults, does it not? Where are the belly-up mortgage insurers?

[Leibniz08]

An interesting article to consider~

DUPED MCCAIN FALLS INTO WALL STREET BAILOUT TRAP SET BY PAULSON OF GOLDMAN SACHS

By Webster G. Tarpley

Washington DC, Sept. 27 -- In the wake of McCain’s decision to express support for Wall Street’s widely execrated $.7 trillion bailout in yesterday’s presidential debate, questions are multiplying as to what in God’s name the Arizona senator thinks he is doing. If he wants to choose victory, McCain has one clear shot left: condemn the bailout as the biggest earmark in world history, and the biggest piece of corrupt corporate welfare to ever come down the pike. The bailout is the mother of all pork, and it is dedicated exclusively to the needs of the sociopathic Wall Street parasites, the hyenas, jackals, lamprey, and raptors who have been busting unions, gouging wages, downsizing factories, demolishing the social safety net, driving up the price of oil, and outdoing each other over recent years in destroying American jobs in favor of runaway shops and sweatshops in the third world. If McCain were to oppose the bailout, he would enjoy the support of the two thirds of the American people who decisively oppose the stupid, criminal, and futile bailout monstrosity. By opposing the bailout, McCain (or any other prominent politician) would emerge as a genuine national leader. Since Obama is a total creature of Wall Street, he will always be forced to support the demands of the financiers who are his owners. By attacking the bailout, McCain could pin Barky into the role of defending Bush, Paulson, Pelosi, Dodd, Frank, and the finance vultures, and with this McCain would probably win the election. If McCain supports the bailout, all his talk about “country first,” mavericks, earmarks, reform, fighting corruption, corporate welfare, and so forth will be exposed as a hollow sham.

McCain’s foolish behavior can perhaps be explained by looking at the machinations of the devious Treasury Secretary Hanky-Panky Paulson of Goldman Sachs, a member of the ruling principals’ committee and Wall Street’s point man in the biggest Treasury heist in history. Paulson was the prime mover in McCain’s erratic behavior over the past week, most notably his ploy in suspending his campaign and coming back to Washington to join the bailout talks. It is now clear that McCain came back to Washington because he was invited to do so by Paulson. As veteran newscaster Bob Schieffer of CBS News has reported, “… the way McCain got involved in this in the first place, the Treasury Secretary was briefing Republicans in the House yesterday, the Republican conference, asked how many were ready to support the bailout plan. Only four of them held up their hands. Paulson then called, according to my sources, Senator Lindsey Graham, who is very close to John McCain, and told him: you've got to get the people in the McCain campaign, you've got to convince John McCain to give these Republicans some political cover. If you don't do that, this whole bailout plan is going to fail. So that's how, McCain, apparently, became involved.” This was the siren song of Paulson – perhaps suggesting to McCain that he could posture as the savior of the country if he successfully rammed through the bailout. Perhaps Paulson even promised that Wall Street would shift its support from its current darling Barky to McCain if he secured passage of the big bucks.

In reality, it is evident that this invitation from Paulson was a trap. Paulson sought to kill two birds with one stone: first, to play McCain against the right-wing House Republicans and their Senate allies like Shelby, DeMint, and Sessions, who do not want to be seen voting to subsidize Wall Street. McCain might be able to suppress some of this opposition, which would help Paulson. Second, reasoned Paulson, using McCain in this way would lock him onto a suicidal course, with the media whores controlled by the Goldman Sachs – JP Morgan Chase axis of usury mercilessly attacking McCain for obstructing the alleged deal that in fact had never been reached.

And McCain fell into the trap. He met with the House GOP rejection front, and then attended the Thursday afternoon White House meeting which turned into an acrimonious shouting match. The media whores blamed McCain for the failure, even though the Perfect Master was also in the room. What ever happened to Barky’s magic, his fabled ability to reach out across the aisle and bring everyone together? It was nowhere to be seen, and Barky played the role of a weak, passive, and feckless figure, even where the interests of his bosses are in question. Then came the Friday debate, where McCain punted, mumbling nonsense about wanting bipartisan cooperation, and hoping to support the final bailout bill. The American people do not want bipartisan cooperation in the service of Wall Street; they want an authentic spokesperson for the overwhelming majority that condemns the bailout.

McCain is surrounded by very bad advisors. On the foreign policy side, we see Russophobe Ian Brzezinski and a gang of unemployed neocons, who have been trying to brainwash Gov. Palin into accepting their lunatic world view, severely disorienting and discrediting her in the process. On the economic side, McCain has Meg Whitman, Carly Fiorina, Mitt Romney, and other monetarists and asset-strippers. A key role in getting McCain to roll over for Wall Street may have been played by the very shifty Mayor Giuliani, who expressed his satisfaction of Fox News that neither candidate had “demagogued” the issue. By this he meant that neither one had taken a principled stand against Wall Street theft and blackmail.

Barky’s supporters among the pseudo-radical labor skates, foundation-funded Astroturf groups, and storm trooper countergangs like ACORN are now active in organizing protests against the bailout. Their line is to support Barky AND oppose the bailout – even though Barky is the keystone of support for Wall Street’s demands. The average left liberal lemming is too deluded to notice the contradiction, and this allows the foundation-funded countergangs to create a border guard operation to protect Barky’s left flank from those who are really interested in fighting Wall Street.

McCain is now drifting towards defeat – a defeat which he could still avoid. Let McCain repudiate the bailout and vote against it, and Barky’s edifice of lies and deceptions will crumble. Physical courage is cheap; moral courage is much rarer. We must all hope that McCain can muster the gumption to speak for the people against Wall Street. Otherwise, we are heading into the long night of a postmodern fascist era under the Wall Street puppet Obama.

Webster G. Tarpley is the author of Obama - The Postmodern Coup: The Making of Manchurian Candidate and Barack H. Obama: The Unauthorized Biography.

[Richard Hill]

I have to agree with John Taurus. The Fed is a cartel of private banks and bankers and they indeed PRINT the money, they reign supreme, how can they possibly go belly up or bust? Even if the dollar was to be deliberately devalued by THEM and others to zero they would still have their fingers in and on other pies. It is all premeditated and another stepping stone on the road to microchipping and total control.

[Austrian Banker]

I very much doubt McCain wants to win.Why else choose a pageant non-entity in politics as running mate, why dither around, why succumb to utter stupidity by going to congress when he is meant to be electioneering?

He doesn't want the job. Obama at the helm as the entire economy dies.

Can someone spell civil unrest, civil war?

2012! Here we go!

[S.Balu]

I Do NOT understand why US taxpayers are so UPSET!
Is it a PREVILEDGE of US PRESIDENT to give a FARWELL GIFT of
"To bend down and and assume the position"?
PLease also explain if McCain is allowed to thrown in freebee of Vaselen?

[Thomas Shawn]

And there's one particular Senator who has been #1 on the FannieMae/Fredie Mac payroll: Senator Obama.

What we are witnessing is a toxic coctail of all the maladies described above from Democrats and Republicans. The cheap loans and social engineering, the lax regulatory environment, the neutralized oversight.

Its been obvious that this nation has been unable to stop this, there's no road blocks to Financial Armageddon.

[Thomas Shawn]

"PLease also explain if McCain is allowed to thrown in freebee of Vaselen(e)"

Not sure about that, but Congress is already maneuvering to fund a Marxist/Leninist organization called ACORN with the returns of the $700B.

When there's one party rule and the government owns all the houses it "Welcome to the Soviet States of America."

[Shelly Thomsen]

I want to see bodies flying out of skyscrapers before I give em a cent.

After a few splatters on Wall Street, lets talk about who borrowed WHAT, WHEN, and WHAT FOR.

We'll find speculators who bought up whole condominiums with teaser rates - using the same rules that enabled minorities to buy their first house - then flipping the properties before the higher rates went into effect.

It has been a long game of musical chairs. And then the music stopped.

Let's look at the dollar for dollar impact of teaser rates... I think we'll find the speculators abused the system and poor people got blamed.

The di

[Shelly Thomsen]

I want to see bodies flying out of skyscrapers before I give em a cent.

After a few splatters on Wall Street, lets talk about who borrowed WHAT, WHEN, and WHAT FOR.

We'll find speculators who bought up whole condominiums with teaser rates - using the same rules that enabled minorities to buy their first house - then flipping the properties before the higher rates went into effect.

It has been a long game of musical chairs. And then the music stopped.

Let's look at the dollar for dollar impact of teaser rates... I think we'll find the speculators abused the system and poor people got blamed.

The di

[Blissex]

«I've heard that the mortgages that were issued under the Community Reinvestment Act had some of the highest repayment rates of any of the mortgages that were made. Can anyone verify this?» http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf Note also that the CRA required to lend back to minorities no more than the deposits collected from them. That is, it was designed to prevent raising deposits in minority areas to fund lending in white areas, not to mandate the viceversa.

[nancy]

May I make a suggestion to the taxpayers of the USA.
You all are welcome to come in in Canada

[nancy]

by the way it is Vaseline

Just wondering if anybody knew that a $634 Billion spending package to supposedly keep govt' doing business & all the other things they don't tell us about. This, as I understand it, is over & above the $700 Billion for the bailout.

[The Grizz]

And that is also in addition to the $300 Billion they previously approved for the credit, housing and all the current mess going on that was supposed to fix it then....

[Steve in TN]

The Federal Reserve is the problem. We've been drained by the Bush war and we need more money from the Fed, but they're busted to. China has stopped loaning money so basically we're up the proverbial creep without a loan. The economy is a swirling in the crapper. Take the hit and adjust to real life, real food, etc. and let the effin' chips fall where they may. Not bailout. It's just a huge swindle and delays the inevitable collaspe dur to Wall Street/investment bankers greed and no one on th ehill giving a wit to bust the nads of the robber barons and corporate governance. I hope they all fail and sacrifice their sorry butts to the train.

[Steve in TN]

So, after this bailout, in six months they want another couple trillion to save me/US. Just like Bush said. The cost of the Iraq war would only cost US 300 million. It's time to call their bluff. and abolish the Feral Reserve. I don't need no stinkin' bailout. The rich do.

[Steve in TN]

The New American
Revolution Break The Bank
By Joan Veon
9-27-8

THIS IS A CALL TO ARMS-NOT WITH GUNS AND BULLETS - BUT WITH THE TELPEHONE, WITH EMAILS, WITH YOUR SACRED HONOR AND PERSONAL ASSETS.

In 1913, at 11:45 p.m., on the eve of Christmas, a group of powerful men came together to form a private corporation, designed to control the monetary system of our country. They moved with a calculated craftiness and deceit to pass legislation that would enslave every American as a debtor to their corporation.

To give you an idea as to where our country is with debt, as of September 2008, the U.S. federal debt totaled approximately $9.7T, or $31,700 per person. However when the unfunded liabilities such as Social Security, Medicare, and other social programs are added in, our total debt grows to $59.1T or $516,348 per household. In 2005, the total personal debt, consisting of mortgages and consumer loans was estimated at $11.4T, with total U.S. household assets, including real estate, totaling $62.5T. (Wikipedia, United States public debt). This leaves approximately a $3T difference between our liabilities and our assets.

Why it is Americans can't forgive themselves the interest on the debt? We don't owe it to "we the people," we owe it to the Federal Reserve and to foreign governments in the form of U.S. Treasury bills, notes, and bonds. Currently the top four foreign owners of our debt include: Japan at $592.2B, China at $502B, United Kingdom at $251.4B, and oil exporters at $153.9B. Other countries include Brazil, Caribbean Banking Centers, Luxembourg, Hong Kong, Russia, Norway, Germany, Taiwan, and Switzerland.

We are told that there are a number of reasons for the financial crisis we are in today. One is the passage of the Home Ownership Equity Protection Act of 1994, whereby the Federal Reserve was given authority to issue regulations and interest rates over mortgages and home equity lending. As a result, its enactment led to a sharp increase in home equity lending accompanied by a sharp boost in the subprime mortgage market, from 80,000 subprime loans in 1993 to 790,000 by 1998. Another is the passage of the 1999 Gramm-Leach-Bliley Act, removing all the protection put in place following the 1929 stock market crash, which allowed foreign banks, brokerage firms, and insurance companies to buy American owned banks, brokerage firms and insurance companies. Additionally, this increased a risk to our economic system by easing regulations on monetary policy. The 45-year low interest rates in 2001-2002 to stimulate the economy following 9/11 exacerbated the stress on our economy.

In short, we have been set up! Laws were designed and passed to specifically get us into this position! We are the sheep, but our shepherd is not Moses, King David or the Great Shepherd. Now many of the career-congressmen who supported passage of the above laws are the same people who will push through legislation so they can recess to go home and campaign for re-election. Their misplaced priorities have created the emotionally charged environment under the threat to "get it done, now" by the Federal Reserve's transfer agent, Treasury Secretary, Hank Paulson, investment banker extraordinaire.

Unless you know the chicanery of how the Federal Reserve Act was passed in 1913, unless you understand the central banking system that runs almost all the countries of the world and their history of manipulation, deceit, deception, and distortion, you will not be able to hear, see, and understand what is happening under your nose. In July, Congress gave Hank Paulson a blank check, with his promised that he would not use it unless he needed to. Congress went home for summer recess and Paulson found a reason to use it; rescue Fannie and Freddie to the tune of $5.3T.

What do you think is going to happen when they get the new Resolution Trust Corporation and their hands on the purse of America? We will have several days of peace in the market and then the pattern will start all over again because the next project is to pass the Treasury's Blueprint For A Modernized Financial Regulatory System, The Blueprint is designed to transfer to the Federal Reserve, power over all savings and loans, credit unions, thrifts, state chartered banks, the entire insurance industry, mortgage industry, the U.S. Payment and Settlement System, and to make the Federal Reserve the Market Stability Regulator. Following this current round of volatility, we can expect more peaceful days in the market then, bang! The attack will shift to the personal savings, 401Ks, pension plans, and commercial mortgages. This is a complete restructuring of the American economy around the Federal Reserve. At this point, congress will be rendered powerless because they chose to "get it done fast" and voted away ALL of their power. As we go to press, the futures at 12 midnight are down 179 points-all because Congress did not agree on a bill on Thursday.

Let me give you an example of unbridled power. It is called "Market based Democracy." It was at a Group of Seven Finance Ministers meeting in Florida that then Treasury Secretary John Snow used the phrase "market based democracy." After doing a fair amount of research, I realized that Wall Street had transferred all tangibles into the bond, stock, commodities, or currency market. There is not one investment or asset that we own that cannot change in value due to markets, trends, or the power of the market. If you remember the Asian Currency Crisis, the currencies of five Asian countries fell to horrendous lows when they refused to sign on to the World Trade Organization Financial Services Agreement. To punish them, their currencies were sold. So much for thinking your savings and purchasing power were safe. The banks have made out like bandits. They have not retained ANY risk for the loans they make. If they make a mortgage, they can sell it on the secondary mortgage market and then that mortgage can be packaged into tranches and sold to investors worldwide; if you have an auto loan or credit card debt, it too can be sold to investors in the form of bonds; if you have certificates of deposit, they can be sold to money market funds or through brokerage firms, etc. What I am pointing out is that the system is already in place whereby the value of any asset can drop substantially and without warning because of market-based democracy. We have no control whatsoever.

Once the Federal Reserve is given unbridled power over all the valuables of America, like a pirate they will seize whatever they can, for whatever reason and we will have absolutely no recourse-that is unless YOU ARE WILLING TO STAKE YOUR SACRED FORTUNE FOR THE FREEDOM OF YOUR CHILDREN AND GRANDCHILDREN AND FOR THE PEOPLE AROUND THE WORLD WHO HAVE STOPPED LOOKING AT AMERICA FOR ANSWERS WHEN WE ARE THE PRIME REASON FOR THE PROBLEMS IN THE WORLD.

I PROPOSE THAT YOU DEMAND OF YOUR CONGRESSMEN AND SENATORS NOT TO VOTE FOR THE PROPOSED "BAILOUT" FOR FANNIE AND FREDDIE. LET THEM GO BELLY UP, LET THE STOCK MARKET DROP TO 3 FROM 11,000; LET THE TREASURIES GO BUST AS GOVERNMENTS AROUND THE WORLD GO BELLY UP FROM JAPAN, TO CHINA, TO THE UNITED KINGDOM, TO THE CARRIBEAN BANK CENTERS AND BRAZIL.


LET US BREAK THE HOLD AND BONDAGE THAT THE FEDERAL RESERVE HAS ON AMERICA! LET US DO WHAT WILSON, ROOSEVELT, TRUMAN, EISENHOWER, KENNEDY, JOHNSON, NIXON, FORD, CARTER, REAGAN, BUSH l, CLINTON, AND BUSH II have not done. LET US CALL FOR THE BREAKING OF THE FEDERAL RESERVE BY SAYING NO. We then absolve ourselves of the $51.9T which is owed to the Federal Reserve. What freedom. We will be dirt poor but we will have overcome a noose around the neck of every American citizen. This is really OUR MOMENT OF OPPORTUNITY TO SET AMERICA FREE FROM BONDAGE!!! Lastly, vote out your current Congressman or Senator if they vote for the proposed bailout.


If we fail in convincing our lawmakers, then after the Blueprint is passed we can expect a new currency, the Amero and a 50% devaluation of the dollar as it is merged with Canada, Mexico and other countries in this hemisphere. If that is not enough, the coming tax on services to pay for all the bailouts will add to our misery. Will you be able to afford or stay in your home then? It will be too late. Now is the time to BREAK THE BANK!

© 2008 Joan Veon - All Rights Reserved

Instead of the $85 BILLION bailout of AIG, how about giving that $85 Billion to Americans in a "We Deserve It" dividend. To make the math simple, let's assume there are 200 million bona fide U.S. citizens, aged 18+. Our population is about 301 million counting every man, woman and child…so, 200 million might be a fair stab at adults 18 and up. Now, divide 200 million, 18+ adults into $85 billion - that equals $425,000.00 each! The plan is to give that $425,000 to every adult as a "We Deserve It" dividend.

Of course, it would NOT be tax free. So, let's assume a tax rate of 30%. Everyone would pay $127,500.00 in taxes. That sends $25.5 billion right back to
Uncle Sam! It also means that every adult 18+ has $297,500.00 in their pocket. (A husband and wife would have $595,000.00)

What would you do with $297,500.00 to $595,000.00?

* Pay off your mortgage – housing crisis solved.
* Repay college loans
* Put away money for college
* Save in a bank – create money to loan to entrepreneurs.
* Buy a new car – create jobs .
* Invest in the market – capital drives growth.
* Pay for your parent's medical insurance – health care improves.

As for AIG – liquidate it.

* Sell off its parts.
* Let American General go back to being American General.
* Sell off the real estate.
* Let the private sector bargain hunters cut it up and clean it up.

And remember, this plan actually only costs $59.5 billion - because $25.5 billion is returned instantly in taxes to Uncle Sam.
I need someone to tell me why this plan wouldn’t work better than theirs, and this isn’t even brining up the other $700 Billion bailout….

[Al]

$85 billion divided by 200 million people is $425. It might have a bit less impact than you're hoping for.

[MIKE]

Many people believe the United States has a dictator. And they would be right. That dictator is the Constitution of the United States. The Constitution dictates the laws of this Land. And no matter what, the Constitution wins, hands down. Or at least that's how it is supposed to work.
In Marbury vs Madison, 5 U.S. 137 (1803) - 5 U.S. 137 (cranch), Supreme Court Justice Marshall stated; "The government of the United States has been emphatically termed a government of laws and not of men. It will certainly cease to deserve this high appellation, if the laws furnish no remedy for the violation of a vested legal right."
He goes on to say; "To what purpose are powers limited, and to what purpose is that limitation committed to writing, if these limits may at any time, be passed by those intended to be restrained?"
Furthermore, he states; "Certainly all those who have framed written constitutions contemplate them as forming the fundamental and paramount law of the nation, and consequently the theory of every such government must be, that an act of the legislature repugnant to the constitution is void."
And finally he states; "Thus, the particular phraseology of the constitution of the United States confirms and strengthens the principle, supposed to be essential to all written constitutions, that a law repugnant to the constitution is void, and that courts, as well as other departments, are bound by that instrument."
Not only do we have the Constitution as a dictator, we have another dictator, it is Our Free Market Economy, or at least, like the Constitution, it is supposed to be in control of our economy.
If it truly is a free market economy, then let it be a FREE MARKET ECONOMY. Let them fall or rise as the FREE MARKET dictates. Imagine being hire to do a job, and just when something happens that will let you show them what your made of, some one pushes you aside and says, `you didn't really think we were going to let you be in control did you?'
"The government of the United States has been emphatically termed a government of laws and not of men. It will certainly cease to deserve this high appellation, if the laws furnish no remedy for the violation of a vested legal right."
I think Justice Marshall would agree, there have been many violated and many more to be violated by our present economic condition. Yes, it is a condition, not a crisis. And it will correct itself if the Free Market Economy is allowed to do its job, and have the control that is its right.
Because the Free Market has been violated, the people have been violated. But most importantly, The Constitution has been violated and there are those would continue to violate It, if we do not stand up and say those famous words; "We're mad as hell, and we're not going to take it anymore."
Please remember that The Constitution of the United States is the most sacred of all documents through out history, because, for the first time in human history, a government was founded on the principle that the rights and powers of the individual precede and exceed the right and powers of government itself. Never before and never again will such a government exist. It is an endangered species, and we have an obligation protect and defend the Constitution from all enemies, foreign and domestic!

[Nick]

This has little to do with race and loans...Stop the bull

What you dont know is....
With All Eyes on the Bailout, The House just Passed Trillion-Dollar Defense Bill!!

This Bill is a lie and the Media that directly benefits from this Bill (ABC NBC< FOX)is trying to sell people on the lie...

The Trillion dollars lost is the government looting its citizens!!

Your ill informed..

The corporations should clean up their own mess..

This will destroy the dollar and the American Economy.

The reason....

While Bill Clinton looted the social security and banks as far back destroyed our economy with the S&L loan scandal...The realty economic break came with the funding of the War...

We were defeated economically by our own corporations Haliburton Lellogt and Brown etc..

Even now we spend billions for this war with of the books analysis sugesting Billion dollars every hour..

[Scott]

Hey, if you want to get the Clinton administration off the hook, site some facts. As for the 8 years of Bush (and McCain), Bush sought to increase/change regulations over a Freddy Mac and Fannie Mae in 2003. He was stopped by the Dems. McCain tried to pass a bill in 2005 to reregulate those institutions -- once again stopped by the Dems.

From the facts that I see and have read the Terry Jones comment is right on the money. However, you can't just blame Clinton. You would need to blame the modern Democratic congress, the media, and even the weak-willed Republicans for too little too late. (Ooops, I almost forgot to blame the American people for believing in a free lunch -- Again! We are like Charlie Brown trying to kick that "free lunch" football that Lucy keeps holding out. Alas, flat on our butts everytime.)

This is a classic distortion of the market brought on by government intervention. I really have to admire the chutzpah of the media to caste it as "the logical fruits of an unbridaled market". The question is who buys sub-prime loans without Uncle Sam co-signing? Answer: nobody. What is causing the crisis? Sub-prime defaults. Ergo, the conclusion that government intervention caused this crisis.

Btw... I'm not blaming the poor. They too need to act in their own self interest (and did!). Hmmm... interesting question for the media... can the market handle the unbridaled greed of the poor? They knew they probably wouldn't be able to repay that loan if they had problems; yet, they took it anyways. On that line of reasoning the media could blame the poor, but I won't.

We are in trouble!!! Get ready.