Showing posts with label Congress. Show all posts
Showing posts with label Congress. Show all posts
Sunday, January 13, 2013
Trillion Dollar Coins
The Ultimate Debt Ceiling End-Around?
Gregory J. Krieg
Jan 4, 2013
http://abcnews.go.com/blogs/politics/2013/01/trillion-dollar-coins-the-ultimate-debt-ceiling-end-around/
With President Obama having kicked off debt ceiling negotiations by vowing not to negotiate over the debt ceiling, a new option for paying off the nation’s considerable tab is gaining momentum with cheeky fiscal and monetary wonks.
It goes like this: Should Congress fail to extend the U.S. debt limit — reached again on Dec. 31 — the president could ask the Treasury to begin printing trillion dollar coins (in a process explained mostly seriously by Jim Pethokoukis on his American Enterprise Institute blog), a number of which could then be put toward fulfilling debt obligations in the event new legislation stalls in Congress.
While there are laws in place to regulate how much paper, gold, silver or copper currency can be circulated by the government, there is nothing so clearly stated when it comes to platinum. That door open, the Treasury could have the U.S. Mint melt and mold a few trillion dollars of it, then ship the goods over to the Federal Reserve for safekeeping until the time comes to pay the bills.
The more difficult part comes sometime after the decision is made to coin the platinum and before the Mint gets to work in sculpting the pieces.
At that point, the American people must decide whose face will adorn the trillion dollar trinket. The process to determine the “specs” of the coin, U.S. Mint Public Affairs Specialist Genevieve Billia warns, must be “determined by legislation,” creating the potential for another congressional impasse.
Also to note: The likeness sculpted into its side must belong to a dead person, ruling out early favorite Ikea Monkey, but boosting the candidacies of Ronald Reagan and John Maynard Keynes.
Thursday, January 5, 2012
Senate will vote next month on Protect IP copyright bill
Declan McCullagh
December 19, 2011
http://news.cnet.com/8301-31921_3-57345187-281/senate-will-vote-next-month-on-protect-ip-copyright-bill
The U.S. Senate will debate a controversial Hollywood-backed copyright bill as soon as senators return in January.
A vote on the Protect IP Act, a close cousin of the Stop Online Piracy Act, or SOPA, will be held January 24, thanks to a last-minute push by Majority Leader Harry Reid (D-Nev.) over the weekend.
Senate Majority Leader Harry Reid, who calls Protect IP "a bipartisan piece of legislation which is extremely important."
"This is a bipartisan piece of legislation which is extremely important," Reid said Saturday. "I repeat, it is bipartisan. I hope we can have a productive couple of days, pass this bill, and move on to other matters."
Both Protect IP and SOPA have earned the enmity of Silicon Valley companies, Internet engineers, venture capitalists, civil libertarians, and a growing number of Internet users because of the methods they use to make suspected piratical Web sites virtually disappear from the Internet. Harvard Law professor Laurence Tribe, author of the treatise American Constitutional Law, says this approach violates the First Amendment.
On Saturday, as the Senate was preparing to adjourn until 2012, Reid proposed that the initial debate on Protect IP would take place at 2:15 p.m. ET on January 24, one day after senators return from the holidays.
"I am pleased the majority leader has filed a motion to proceed to the Protect IP Act," Sen. Patrick Leahy (D-Vt.), Protect IP's author, said afterward. "The costs of online infringement are American jobs, harm to America's economy, and very real threats to consumers' safety. The answer cannot simply be to do nothing."
In the House of Representatives, allies of the Motion Picture Association of America and the Recording Association of America also are moving with dispatch. Even though the House is likely not to be in session then, SOPA author Lamar Smith (R-Tex.) has scheduled a vote on the legislation and related amendments for Wednesday, just in case.
"From our perspective we don't understand the rush, especially when these are dramatic policy changes with regard to the Internet," Markham Erickson, head of NetCoalition, whose members include Amazon.com, eBay, Yahoo, and Google, told CNET today. "We think they ought to be handled in a very thoughtful and careful way."
One explanation for the rush to vote is that a groundswell of opposition among Internet users has become better organized and higher-profile in the last month--meaning that if SOPA and Protect IP supporters move quickly, they may be able to send one version of the legislation or another to President Obama for his signature.
Nearly 90,000 Tumblr users telephoned Congress to register their disagreement, and another 10,000 did using Engine Advocacy's Web site. More than 1 million people have signed a petition posted by the Avaaz.org advocacy group; over 700,000 people chose to "like" the AmericanCensorship.org anti-SOPA site.
Sen. Ron Wyden, a foe of Protect IP, has threatened to filibuster it on the Senate floor. "I will be working with colleagues on both sides of the aisle over the next month to explain the basis for this widespread concern, and I intend to follow through on a commitment that I made more than a year ago, to filibuster this bill when the Senate returns in January," he said over the weekend.
Reid's motion to end debate, which would require a three-fifths supermajority of 60 senators to invoke a procedure called "cloture," is a preemptive strike against Wyden's promised filibuster.
Invoking cloture would impose a 30-hour limit on the motion to end debate. There would then be a second 30-hour period on the bill itself, and a third 30-hour period if supporters want to amend Protect IP from the version approved by a committee in May.
Obtaining 60 votes to end Wyden's filibuster curb debate, however, may not be that difficult for Hollywood's allies in the Senate: Protect IP already has 41 sponsors. (During last week's House Judiciary hearing, copyright enthusiasts outnumbered critics of the bill by margins of three-to-one or four-to-one.)
A representative for Wyden, who has offered an alternative proposal, told CNET today that her boss is undaunted:
The senator is prepared to require the Senate to take multiple cloture votes and use all time allowed under Senate rules to prevent passage of this misguided bill, even if that means taking a full week of floor time or longer. And he intends to use every minute of that floor time to let colleagues know that there is a lot more to voting for Protect IP than doing a favor for industry lobbyists.
Declan McCullagh is the chief political correspondent for CNET. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
December 19, 2011
http://news.cnet.com/8301-31921_3-57345187-281/senate-will-vote-next-month-on-protect-ip-copyright-bill
The U.S. Senate will debate a controversial Hollywood-backed copyright bill as soon as senators return in January.
A vote on the Protect IP Act, a close cousin of the Stop Online Piracy Act, or SOPA, will be held January 24, thanks to a last-minute push by Majority Leader Harry Reid (D-Nev.) over the weekend.
Senate Majority Leader Harry Reid, who calls Protect IP "a bipartisan piece of legislation which is extremely important."
"This is a bipartisan piece of legislation which is extremely important," Reid said Saturday. "I repeat, it is bipartisan. I hope we can have a productive couple of days, pass this bill, and move on to other matters."
Both Protect IP and SOPA have earned the enmity of Silicon Valley companies, Internet engineers, venture capitalists, civil libertarians, and a growing number of Internet users because of the methods they use to make suspected piratical Web sites virtually disappear from the Internet. Harvard Law professor Laurence Tribe, author of the treatise American Constitutional Law, says this approach violates the First Amendment.
On Saturday, as the Senate was preparing to adjourn until 2012, Reid proposed that the initial debate on Protect IP would take place at 2:15 p.m. ET on January 24, one day after senators return from the holidays.
"I am pleased the majority leader has filed a motion to proceed to the Protect IP Act," Sen. Patrick Leahy (D-Vt.), Protect IP's author, said afterward. "The costs of online infringement are American jobs, harm to America's economy, and very real threats to consumers' safety. The answer cannot simply be to do nothing."
In the House of Representatives, allies of the Motion Picture Association of America and the Recording Association of America also are moving with dispatch. Even though the House is likely not to be in session then, SOPA author Lamar Smith (R-Tex.) has scheduled a vote on the legislation and related amendments for Wednesday, just in case.
"From our perspective we don't understand the rush, especially when these are dramatic policy changes with regard to the Internet," Markham Erickson, head of NetCoalition, whose members include Amazon.com, eBay, Yahoo, and Google, told CNET today. "We think they ought to be handled in a very thoughtful and careful way."
One explanation for the rush to vote is that a groundswell of opposition among Internet users has become better organized and higher-profile in the last month--meaning that if SOPA and Protect IP supporters move quickly, they may be able to send one version of the legislation or another to President Obama for his signature.
Nearly 90,000 Tumblr users telephoned Congress to register their disagreement, and another 10,000 did using Engine Advocacy's Web site. More than 1 million people have signed a petition posted by the Avaaz.org advocacy group; over 700,000 people chose to "like" the AmericanCensorship.org anti-SOPA site.
Sen. Ron Wyden, a foe of Protect IP, has threatened to filibuster it on the Senate floor. "I will be working with colleagues on both sides of the aisle over the next month to explain the basis for this widespread concern, and I intend to follow through on a commitment that I made more than a year ago, to filibuster this bill when the Senate returns in January," he said over the weekend.
Reid's motion to end debate, which would require a three-fifths supermajority of 60 senators to invoke a procedure called "cloture," is a preemptive strike against Wyden's promised filibuster.
Invoking cloture would impose a 30-hour limit on the motion to end debate. There would then be a second 30-hour period on the bill itself, and a third 30-hour period if supporters want to amend Protect IP from the version approved by a committee in May.
Obtaining 60 votes to end Wyden's filibuster curb debate, however, may not be that difficult for Hollywood's allies in the Senate: Protect IP already has 41 sponsors. (During last week's House Judiciary hearing, copyright enthusiasts outnumbered critics of the bill by margins of three-to-one or four-to-one.)
A representative for Wyden, who has offered an alternative proposal, told CNET today that her boss is undaunted:
The senator is prepared to require the Senate to take multiple cloture votes and use all time allowed under Senate rules to prevent passage of this misguided bill, even if that means taking a full week of floor time or longer. And he intends to use every minute of that floor time to let colleagues know that there is a lot more to voting for Protect IP than doing a favor for industry lobbyists.
Declan McCullagh is the chief political correspondent for CNET. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
Sunday, August 21, 2011
Everybody Hates Obama (But Hate Congress Even More)
Normally this would be really bad news politically: with less than 15 months to the 2012 election, Barack Obama is less popular than ever according to Gallup, with his daily tracking poll dropping below 40 percent for the first time August 11-13.
Why this isn't too bad: Congress has an even lower approval rating, with both a CNN and CBS/NY Times polling listing them at 14 percent and a Fox News poll having them come in at 10. Both the GOP and John Boehner are nosediving to 33 percent each, while Democrats are actually rising to 47. Which means Obama's strategy to scare voters into voting for him over the crazy Republicans may still work...
Gallup: Obama job rating sinks below 40% for first time
Michael A. Memoli
August 14, 2011
http://www.latimes.com/news/politics/la-pn-obama-approval-20110814,0,2481281.story
Americans' views of Congress reach historic lows
Michael A. Memoli
August 12, 2011
http://www.latimes.com/news/politics/la-pn-congress-polls-20110812,0,4415193.story
Why this isn't too bad: Congress has an even lower approval rating, with both a CNN and CBS/NY Times polling listing them at 14 percent and a Fox News poll having them come in at 10. Both the GOP and John Boehner are nosediving to 33 percent each, while Democrats are actually rising to 47. Which means Obama's strategy to scare voters into voting for him over the crazy Republicans may still work...
Gallup: Obama job rating sinks below 40% for first time
Michael A. Memoli
August 14, 2011
http://www.latimes.com/news/politics/la-pn-obama-approval-20110814,0,2481281.story
Americans' views of Congress reach historic lows
Michael A. Memoli
August 12, 2011
http://www.latimes.com/news/politics/la-pn-congress-polls-20110812,0,4415193.story
Friday, November 19, 2010
Will Internet censorship bill be pushed through lame-duck Congress?
http://www.rawstory.com/rs/2010/11/internet-censorship-pushed-congress
Will Internet censorship bill be pushed through lame-duck Congress?
Daniel Tencer
Sunday, November 14th, 2010
A bill giving the government the power to shut down Web sites that host materials that infringe copyright is making its way quietly through the lame-duck session of Congress, raising the ire of free-speech groups and prompting a group of academics to lobby against the effort.
The Combating Online Infringement and Counterfeits Act (COICA) was introduced in Congress this fall by Sen. Patrick Leahy (D-VT). It would grant the federal government the power to block access to any Web domain that is found to host copyrighted material without permission.
Critics say the bill is both a giveaway to the movie and recording industries and a step towards widespread and unaccountable censorship of the Internet.
Opponents note that the powers given the government under the bill are very broad. Because the bill targets domain names and not specific materials, an entire Web site can be shut down. So for example, if the US determines that there are copyright-infringing materials on YouTube, it could theoretically block access to all of YouTube, whether or not particular material being accessed infringes copyright.
Activist group DemandProgress, which is running a petition against the bill, argues the powers in the bill could be used for political purposes. If the whistleblower Web site WikiLeaks is found to be hosting copyrighted material, for instance, access to WikiLeaks could be blocked for all US Internet users.
Though the bill was delayed in September after an outcry from activist groups, it now appears to be back and potentially poised for quick passage in the lame-duck session of Congress, reports DemandProgress.
A group of academics, led by Temple University law professor David Post, have signed a petition opposing COICA.
"The Act, if enacted into law, would fundamentally alter U.S. policy towards Internet speech, and would set a dangerous precedent with potentially serious consequences for free expression and global Internet freedom," Post wrote in the petition letter (PDF).
The bill is "awful on many fronts," he wrote at Volokh Conspiracy. "It would allow a court to effectively shut down a site operated out of Brazil, or France, without any adversary hearing ... or any reasoned determination that the site actually is engaged in unlawful activity."
"Even more significant and more troubling, the Act represents a retreat from the United States’ historical position as a bulwark and beacon against censorship and other threats to freedom of expression, freedom of thought, and the free exchange of information and ideas around the globe."
The Electronic Frontier Foundation has published a list of Web sites it believes are at highest risk of being shut down under the proposed law. Included in the list are file-hosting services such as Rapidshare and Mediafire, music mash-up sites like SoundCloud and MashupTown, as well as "sites that discuss and advocate for P2P technology or for piracy," such as pirate-party.us and P2PNet.
A TOOL FOR POLITICAL CENSORSHIP?
Free speech advocates argue that Internet censorship laws are inevitably used for purposes other than the ones claimed by lawmakers.
For instance, Australia in recent years set up a "firewall" around its Internet, with the intention of blacklisting child pornography Web sites. But a list of the blocked sites, leaked to Wikileaks, showed that the Australian government was censoring more than porn: The blacklist contained religious and political Web sites.
According to the Melbourne Age:
But about half of the sites on the list are not related to child porn and include a slew of online poker sites, YouTube links, regular gay and straight porn sites, Wikipedia entries, euthanasia sites, websites of fringe religions such as satanic sites, fetish sites, Christian sites, the website of a tour operator and even a Queensland dentist.
"It seems to me as if just about anything can potentially get on the list," [University of Sydney associate professor Bjorn] Landfelt said.
As predicted by some critics, the "great Aussie firewall" ended up blocking access to parts of WikiLeaks.
Will Internet censorship bill be pushed through lame-duck Congress?
Daniel Tencer
Sunday, November 14th, 2010
A bill giving the government the power to shut down Web sites that host materials that infringe copyright is making its way quietly through the lame-duck session of Congress, raising the ire of free-speech groups and prompting a group of academics to lobby against the effort.
The Combating Online Infringement and Counterfeits Act (COICA) was introduced in Congress this fall by Sen. Patrick Leahy (D-VT). It would grant the federal government the power to block access to any Web domain that is found to host copyrighted material without permission.
Critics say the bill is both a giveaway to the movie and recording industries and a step towards widespread and unaccountable censorship of the Internet.
Opponents note that the powers given the government under the bill are very broad. Because the bill targets domain names and not specific materials, an entire Web site can be shut down. So for example, if the US determines that there are copyright-infringing materials on YouTube, it could theoretically block access to all of YouTube, whether or not particular material being accessed infringes copyright.
Activist group DemandProgress, which is running a petition against the bill, argues the powers in the bill could be used for political purposes. If the whistleblower Web site WikiLeaks is found to be hosting copyrighted material, for instance, access to WikiLeaks could be blocked for all US Internet users.
Though the bill was delayed in September after an outcry from activist groups, it now appears to be back and potentially poised for quick passage in the lame-duck session of Congress, reports DemandProgress.
A group of academics, led by Temple University law professor David Post, have signed a petition opposing COICA.
"The Act, if enacted into law, would fundamentally alter U.S. policy towards Internet speech, and would set a dangerous precedent with potentially serious consequences for free expression and global Internet freedom," Post wrote in the petition letter (PDF).
The bill is "awful on many fronts," he wrote at Volokh Conspiracy. "It would allow a court to effectively shut down a site operated out of Brazil, or France, without any adversary hearing ... or any reasoned determination that the site actually is engaged in unlawful activity."
"Even more significant and more troubling, the Act represents a retreat from the United States’ historical position as a bulwark and beacon against censorship and other threats to freedom of expression, freedom of thought, and the free exchange of information and ideas around the globe."
The Electronic Frontier Foundation has published a list of Web sites it believes are at highest risk of being shut down under the proposed law. Included in the list are file-hosting services such as Rapidshare and Mediafire, music mash-up sites like SoundCloud and MashupTown, as well as "sites that discuss and advocate for P2P technology or for piracy," such as pirate-party.us and P2PNet.
A TOOL FOR POLITICAL CENSORSHIP?
Free speech advocates argue that Internet censorship laws are inevitably used for purposes other than the ones claimed by lawmakers.
For instance, Australia in recent years set up a "firewall" around its Internet, with the intention of blacklisting child pornography Web sites. But a list of the blocked sites, leaked to Wikileaks, showed that the Australian government was censoring more than porn: The blacklist contained religious and political Web sites.
According to the Melbourne Age:
But about half of the sites on the list are not related to child porn and include a slew of online poker sites, YouTube links, regular gay and straight porn sites, Wikipedia entries, euthanasia sites, websites of fringe religions such as satanic sites, fetish sites, Christian sites, the website of a tour operator and even a Queensland dentist.
"It seems to me as if just about anything can potentially get on the list," [University of Sydney associate professor Bjorn] Landfelt said.
As predicted by some critics, the "great Aussie firewall" ended up blocking access to parts of WikiLeaks.
Is Lame Duck Congress Planning A CYA Bill For MERS Mortgage Fraud?
http://crooksandliars.com/susie-madrak/rumors-rumors-lame-duck-congress-plan
November 15, 2010
Rumors, Rumors. Is Lame Duck Congress Planning A CYA Bill For MERS Mortgage Fraud?
Susie Madrak
Rumors are popping up all over the place, and of course I'll be keeping an eye out for any actual developments regarding any legislation that offers MERS retroactive legal coverage
When Congress comes back into session next week, it may consider measures intended to bolster the legal status of a controversial bank owned electronic mortgage registration system that contains three out of every five mortgages in the country.
The system is known as MERS, the acronym for a private company called Mortgage Electronic Registry Systems. Set up by banks in the 1997, MERS is a system for tracking ownership of home loans as they move from mortgage originator through the financial pipeline to the trusts set up when mortgage securities are sold.The system has come under scrutiny by critics who charge MERS with facilitating slipshod practices. Recently, lawyers have filed lawsuits claiming that banks owe states billions of dollars for mortgage recording fees they avoided by using MERS.If courts rule against MERS, the damage could be catastrophic. Here’s how theAP tallies up the potential damage:
Assuming each mortgage it tracks had been resold, and re-recorded, just once, MERS would have saved the industry $2.4 billion in recording costs, R.K. Arnold, the firm's chief executive officer, testified in 2009. It's not unusual for a mortgage to be resold a dozen times or more.The California suit alone could cost MERS $60 billion to $120 billion in damages and penalties from unpaid recording fees.The liabilities are astronomical because, according to laws in California and many other states, penalties between $5,000 and $10,000 can be imposed each time a recording fee went unpaid. Because the suits are filed as false claims, the law stipulates that the penalties can then be tripled.
Perhaps even more devastatingly, some critics say that sloppiness at MERS — which has just 40 full-time employees — may have botched chain of title for many mortgages. They say that MERS lacks standing to bring foreclosure actions, and the botched chain of title may cast doubts on whether anyone has clear enough ownership of some mortgages to foreclose on a defaulting borrower. The problems with MERS system led JPMorgan Chase CEO Jamie Dimon to stop using MERS for foreclosures in 2008.
Now it appears that Congress may attempt to prevent any MERS meltdown from occurring. MERS is owned by all the biggest banks, and they certainly do not want it to be sunk by huge fines. Investors in mortgage-backed securities also do not want to see the value of their bonds sink because of doubts about the ownership of the underlying mortgages.So it looks like the stage may be set for Congress to pass a bill that would limit MERS exposure on the recording fee issue and perhaps retroactively legitimate mortgage transfers conducted through MERS private database.
November 15, 2010
Rumors, Rumors. Is Lame Duck Congress Planning A CYA Bill For MERS Mortgage Fraud?
Susie Madrak
Rumors are popping up all over the place, and of course I'll be keeping an eye out for any actual developments regarding any legislation that offers MERS retroactive legal coverage
When Congress comes back into session next week, it may consider measures intended to bolster the legal status of a controversial bank owned electronic mortgage registration system that contains three out of every five mortgages in the country.
The system is known as MERS, the acronym for a private company called Mortgage Electronic Registry Systems. Set up by banks in the 1997, MERS is a system for tracking ownership of home loans as they move from mortgage originator through the financial pipeline to the trusts set up when mortgage securities are sold.The system has come under scrutiny by critics who charge MERS with facilitating slipshod practices. Recently, lawyers have filed lawsuits claiming that banks owe states billions of dollars for mortgage recording fees they avoided by using MERS.If courts rule against MERS, the damage could be catastrophic. Here’s how theAP tallies up the potential damage:
Assuming each mortgage it tracks had been resold, and re-recorded, just once, MERS would have saved the industry $2.4 billion in recording costs, R.K. Arnold, the firm's chief executive officer, testified in 2009. It's not unusual for a mortgage to be resold a dozen times or more.The California suit alone could cost MERS $60 billion to $120 billion in damages and penalties from unpaid recording fees.The liabilities are astronomical because, according to laws in California and many other states, penalties between $5,000 and $10,000 can be imposed each time a recording fee went unpaid. Because the suits are filed as false claims, the law stipulates that the penalties can then be tripled.
Perhaps even more devastatingly, some critics say that sloppiness at MERS — which has just 40 full-time employees — may have botched chain of title for many mortgages. They say that MERS lacks standing to bring foreclosure actions, and the botched chain of title may cast doubts on whether anyone has clear enough ownership of some mortgages to foreclose on a defaulting borrower. The problems with MERS system led JPMorgan Chase CEO Jamie Dimon to stop using MERS for foreclosures in 2008.
Now it appears that Congress may attempt to prevent any MERS meltdown from occurring. MERS is owned by all the biggest banks, and they certainly do not want it to be sunk by huge fines. Investors in mortgage-backed securities also do not want to see the value of their bonds sink because of doubts about the ownership of the underlying mortgages.So it looks like the stage may be set for Congress to pass a bill that would limit MERS exposure on the recording fee issue and perhaps retroactively legitimate mortgage transfers conducted through MERS private database.
Thursday, July 29, 2010
GOP: No More Help for Jobless, but Rich Must Keep Tax Cuts
Wednesday 14 July 2010 David Lightman | McClatchy Newspapers
Washington - Republicans almost unanimously oppose spending $33.9 billion for extended unemployment benefits for some 2.5 million people who've lost them, because they say it would increase federal budget deficits.
At the same time, they're pushing a permanent extension of Bush administration tax cuts, especially for the wealthy, which could increase federal budget deficits by trillions of dollars over the next 10 years.
How do they justify this?
"Tax policy is dynamic. If you have the right kind of tax reform, it helps generate a more dynamic economy," said Sen. Mike Crapo, R-Idaho, a member of the Senate Finance Committee, which writes tax law. While that may be true, even the Bush Treasury Department concluded that its tax cuts increase budget deficits.
Besides, wouldn't providing $33.9 billion to extend unemployment benefits to 2.5 million people help the economy?
"There's a distinction between taxes and spending," Crapo said. "We have a huge problem with a lack of spending restraint."
In addition, noted Iowa Sen. Charles Grassley, the committee's top Republican, "This is a tax increase if you don't extend, and it's not a tax cut if you do."
Democrats howl at what they see as hypocrisy.
The GOP argument, said Sen. Tom Harkin, D-Iowa, is "that we should cut off some of the most desperate people in our economy, take away their last meager lifeline, because we're concerned about the deficit.
"Yet those very same senators are demanding that we extend hundreds of billions of dollars in tax breaks for the wealthiest Americans in our society."
The money for jobless benefits is expected to win approval early next week after weeks of Republican-led extended debate.
The next big economic-policy fight in Congress will involve the tax cuts, the 2001 and 2003 cornerstones of former President George W. Bush's economic program. Most are set to expire Dec. 31, meaning that taxes on income, capital gains, dividends and estates would go up next year and the child care credit would be cut in half, to $500 per child.
President Barack Obama would reinstate the top two pre-Bush marginal income tax rates of 36 and 39.6 percent, starting with adjusted gross incomes of more than $250,000 for joint filers and $200,000 for individuals. The current top rates are 33 and 35 percent.
Obama would retain the Bush-era rates ranging from 10 to 28 percent for those who earn less.
Congressional Democrats are weighing whether acting on taxes before the November elections would give them a political boost or instead give constituents troubled by record federal deficits more cause for concern.
"We haven't determined the timetable" for considering tax cuts, said House Majority Leader Steny Hoyer, D-Md.
Asked whether it could be done in a post-election lame-duck session, he said: "The goal was to get it done before they expire."
Conservatives contend that tax policy should be considered differently from spending. Taxes spur the economy, their thinking goes, because the more consumers spend and invest, the more businesses will hire and the more the economy will grow. Reducing tax revenue, they claim, will force spending restraint on Congress.
On the other hand, they say that extending unemployment benefits without offsetting revenue doesn't appreciably boost the economy and could weaken jobless workers' incentive to seek new employment.
Liberals, boosted by a report earlier this year from the nonpartisan Congressional Budget Office, maintain that the jobless benefits go to those who need them most and are likely to spend them quickly, and that multiplies their economic effect.
The CBO and Congress' Joint Committee on Taxation said earlier this year that extending the original Bush-era tax cuts would increase budget deficits by $2.56 trillion during this decade. Deficits under Obama's budget plan are expected to total about $9.75 trillion over the next 10 years.
Other tax experts say the government should tax the wealthy at higher rates so that some wealth can be redistributed to those who may need aid, the traditional progressive taxation principle that guides U.S. tax law.
"I believe it would be a serious mistake to make any of the tax cuts permanent now," said Leonard Burman, a professor of public affairs at Syracuse University's Maxwell School. However, he said, not all of the tax cuts should expire, since "low- and middle-income households are facing serious cash-flow constraints."
Douglas Holtz-Eakin, the chief economist for Bush's Council of Economic Advisers from 2001 to 2002, warned against letting any tax rates rise, saying "the prospect of a large tax increase would force households to undertake even more balance sheet repair."
Washington - Republicans almost unanimously oppose spending $33.9 billion for extended unemployment benefits for some 2.5 million people who've lost them, because they say it would increase federal budget deficits.
At the same time, they're pushing a permanent extension of Bush administration tax cuts, especially for the wealthy, which could increase federal budget deficits by trillions of dollars over the next 10 years.
How do they justify this?
"Tax policy is dynamic. If you have the right kind of tax reform, it helps generate a more dynamic economy," said Sen. Mike Crapo, R-Idaho, a member of the Senate Finance Committee, which writes tax law. While that may be true, even the Bush Treasury Department concluded that its tax cuts increase budget deficits.
Besides, wouldn't providing $33.9 billion to extend unemployment benefits to 2.5 million people help the economy?
"There's a distinction between taxes and spending," Crapo said. "We have a huge problem with a lack of spending restraint."
In addition, noted Iowa Sen. Charles Grassley, the committee's top Republican, "This is a tax increase if you don't extend, and it's not a tax cut if you do."
Democrats howl at what they see as hypocrisy.
The GOP argument, said Sen. Tom Harkin, D-Iowa, is "that we should cut off some of the most desperate people in our economy, take away their last meager lifeline, because we're concerned about the deficit.
"Yet those very same senators are demanding that we extend hundreds of billions of dollars in tax breaks for the wealthiest Americans in our society."
The money for jobless benefits is expected to win approval early next week after weeks of Republican-led extended debate.
The next big economic-policy fight in Congress will involve the tax cuts, the 2001 and 2003 cornerstones of former President George W. Bush's economic program. Most are set to expire Dec. 31, meaning that taxes on income, capital gains, dividends and estates would go up next year and the child care credit would be cut in half, to $500 per child.
President Barack Obama would reinstate the top two pre-Bush marginal income tax rates of 36 and 39.6 percent, starting with adjusted gross incomes of more than $250,000 for joint filers and $200,000 for individuals. The current top rates are 33 and 35 percent.
Obama would retain the Bush-era rates ranging from 10 to 28 percent for those who earn less.
Congressional Democrats are weighing whether acting on taxes before the November elections would give them a political boost or instead give constituents troubled by record federal deficits more cause for concern.
"We haven't determined the timetable" for considering tax cuts, said House Majority Leader Steny Hoyer, D-Md.
Asked whether it could be done in a post-election lame-duck session, he said: "The goal was to get it done before they expire."
Conservatives contend that tax policy should be considered differently from spending. Taxes spur the economy, their thinking goes, because the more consumers spend and invest, the more businesses will hire and the more the economy will grow. Reducing tax revenue, they claim, will force spending restraint on Congress.
On the other hand, they say that extending unemployment benefits without offsetting revenue doesn't appreciably boost the economy and could weaken jobless workers' incentive to seek new employment.
Liberals, boosted by a report earlier this year from the nonpartisan Congressional Budget Office, maintain that the jobless benefits go to those who need them most and are likely to spend them quickly, and that multiplies their economic effect.
The CBO and Congress' Joint Committee on Taxation said earlier this year that extending the original Bush-era tax cuts would increase budget deficits by $2.56 trillion during this decade. Deficits under Obama's budget plan are expected to total about $9.75 trillion over the next 10 years.
Other tax experts say the government should tax the wealthy at higher rates so that some wealth can be redistributed to those who may need aid, the traditional progressive taxation principle that guides U.S. tax law.
"I believe it would be a serious mistake to make any of the tax cuts permanent now," said Leonard Burman, a professor of public affairs at Syracuse University's Maxwell School. However, he said, not all of the tax cuts should expire, since "low- and middle-income households are facing serious cash-flow constraints."
Douglas Holtz-Eakin, the chief economist for Bush's Council of Economic Advisers from 2001 to 2002, warned against letting any tax rates rise, saying "the prospect of a large tax increase would force households to undertake even more balance sheet repair."
Monday, August 24, 2009
How To Not Provide Health Care
http://www.theonion.com/content/news/congress_deadlocked_over_how_to
Congress Deadlocked Over How To Not Provide Health Care
August 18, 2009 Issue 45•34
WASHINGTON—After months of committee meetings and hundreds of hours of heated debate, the United States Congress remained deadlocked this week over the best possible way to deny Americans health care.
"Both parties understand that the current system is broken," House Speaker Nancy Pelosi told reporters Monday. "But what we can't seem to agree upon is how to best keep it broken, while still ensuring that no elected official takes any political risk whatsoever. It’s a very complicated issue."
"Ultimately, though, it's our responsibility as lawmakers to put these differences aside and focus on refusing Americans the health care they deserve," Pelosi added.
The legislative stalemate largely stems from competing ideologies deeply rooted along party lines. Democrats want to create a government-run system for not providing health care, while Republicans say coverage is best denied by allowing private insurers to make it unaffordable for as many citizens as possible.
"We have over 40 million people without insurance in this country today, and that is unacceptable," Sen. Orrin Hatch (R-UT) said. "If we would just quit squabbling so much, we could get that number up to 50 or even 100 million. Why, there's no reason we can't work together to deny health care to everyone but the richest 1 percent of the population."
"That's what America is all about," he added.
House Minority Leader John Boehner (R-OH) said on Meet The Press that Republicans would never agree to a plan that doesn't allow citizens the choice to be denied medical care in the private sector.
"Americans don't need some government official telling them they don't have the proper coverage to receive treatment," Boehner said. "What they need is massive insurance companies to become even more rich and powerful by withholding from average citizens the care they so desperately require. We're talking about people's health and the obscene profits associated with that, after all."
Though there remain irreconcilable points, both parties have reached some common ground in recent weeks. Senate leaders Harry Reid (D-NV) and Mitch McConnell (R-KY) point to Congress' failure to pass legislation before a July 31 deadline as proof of just how serious lawmakers are about stringing along the American people and never actually reforming the health care industry in any meaningful way.
"People should know that every day we are working without their best interests in mind," Reid said. "But the goal here is not to push through some watered-down bill that only denies health care to a few Americans here and a few Americans there. The goal is to recognize that all Americans have a God-given right to proper medical attention and then make sure there's no chance in hell that ever happens."
"No matter what we come up with," Reid continued, "rest assured that millions of citizens will remain dangerously uninsured, and the inflated health care industry will continue to bankrupt the country for decades."
Other lawmakers stressed that, while there has been some progress, the window of cooperation was closing.
"When you get into the nuts and bolts of how best not to provide people with care essential to their survival, there are many things to take into consideration," Rep. Michele Bachmann (R-MN) said. "I believe we can create a plan for Americans that allows them to not be able to go to the hospital, not get the treatment they need, and ultimately whither away and die. But we've got to act fast."
For his part, President Barack Obama claimed to be optimistic, even saying he believes that a health care denial bill will pass in both houses of Congress by the end of the year.
"We have an opportunity to do something truly historic in 2009," Obama said to a mostly silent crowd during a town hall meeting in Virginia yesterday. "I promise I will only sign a clear and comprehensive health care bill that fully denies coverage to you, your sick mother, her husband, middle-class Americans, single-parent households, the unemployed, and most importantly, anyone in need of emergency medical attention."
"This administration is committed to not providing health care," Obama added. "Not just for this generation of Americans, but for many generations to come."
Congress Deadlocked Over How To Not Provide Health Care
August 18, 2009 Issue 45•34
WASHINGTON—After months of committee meetings and hundreds of hours of heated debate, the United States Congress remained deadlocked this week over the best possible way to deny Americans health care.
"Both parties understand that the current system is broken," House Speaker Nancy Pelosi told reporters Monday. "But what we can't seem to agree upon is how to best keep it broken, while still ensuring that no elected official takes any political risk whatsoever. It’s a very complicated issue."
"Ultimately, though, it's our responsibility as lawmakers to put these differences aside and focus on refusing Americans the health care they deserve," Pelosi added.
The legislative stalemate largely stems from competing ideologies deeply rooted along party lines. Democrats want to create a government-run system for not providing health care, while Republicans say coverage is best denied by allowing private insurers to make it unaffordable for as many citizens as possible.
"We have over 40 million people without insurance in this country today, and that is unacceptable," Sen. Orrin Hatch (R-UT) said. "If we would just quit squabbling so much, we could get that number up to 50 or even 100 million. Why, there's no reason we can't work together to deny health care to everyone but the richest 1 percent of the population."
"That's what America is all about," he added.
House Minority Leader John Boehner (R-OH) said on Meet The Press that Republicans would never agree to a plan that doesn't allow citizens the choice to be denied medical care in the private sector.
"Americans don't need some government official telling them they don't have the proper coverage to receive treatment," Boehner said. "What they need is massive insurance companies to become even more rich and powerful by withholding from average citizens the care they so desperately require. We're talking about people's health and the obscene profits associated with that, after all."
Though there remain irreconcilable points, both parties have reached some common ground in recent weeks. Senate leaders Harry Reid (D-NV) and Mitch McConnell (R-KY) point to Congress' failure to pass legislation before a July 31 deadline as proof of just how serious lawmakers are about stringing along the American people and never actually reforming the health care industry in any meaningful way.
"People should know that every day we are working without their best interests in mind," Reid said. "But the goal here is not to push through some watered-down bill that only denies health care to a few Americans here and a few Americans there. The goal is to recognize that all Americans have a God-given right to proper medical attention and then make sure there's no chance in hell that ever happens."
"No matter what we come up with," Reid continued, "rest assured that millions of citizens will remain dangerously uninsured, and the inflated health care industry will continue to bankrupt the country for decades."
Other lawmakers stressed that, while there has been some progress, the window of cooperation was closing.
"When you get into the nuts and bolts of how best not to provide people with care essential to their survival, there are many things to take into consideration," Rep. Michele Bachmann (R-MN) said. "I believe we can create a plan for Americans that allows them to not be able to go to the hospital, not get the treatment they need, and ultimately whither away and die. But we've got to act fast."
For his part, President Barack Obama claimed to be optimistic, even saying he believes that a health care denial bill will pass in both houses of Congress by the end of the year.
"We have an opportunity to do something truly historic in 2009," Obama said to a mostly silent crowd during a town hall meeting in Virginia yesterday. "I promise I will only sign a clear and comprehensive health care bill that fully denies coverage to you, your sick mother, her husband, middle-class Americans, single-parent households, the unemployed, and most importantly, anyone in need of emergency medical attention."
"This administration is committed to not providing health care," Obama added. "Not just for this generation of Americans, but for many generations to come."
Thursday, March 26, 2009
Bill to tax bonuses an 'outrage' and unconstitutional
http://rawstory.com/news/2008/Paul_Bill_to_tax_bonuses_unconstitutional_0319.html
Paul: Bill to tax bonuses an 'outrage' and unconstitutional
David Edwards and Rachel Oswald
Thursday March 19, 2009
Rep. Ron Paul (R-TX) yet again went against the grain in Congress when he stood up in the House and argued against a proposal that would tax 90 percent of AIG executive bonuses, saying that it was a "disgrace," a "distraction" and an "outrage" that undermined the Constitution.
"I rise in opposition to this rule and the bill because of the problem -- because of the lack of need for this and the disgrace that this has brought upon us," Paul said. "Yesterday, for instance, the Federal Reserve met and they came out and they announced that they would create new money to the tune of $1.25 trillion."
Paul, a dark horse Republican candidate for president in 2008 who still enjoys considerable popularity with a base of hardcore supporters, noted that the value of the dollar went down significantly after that announcement by the Fed.
"Today...on emergency legislation, we're going to deal with $165 million of bonuses, which obviously shouldn't have never been given, but who's responsible for this?" Paul said. "It's the Congress and the president who signed this [$787 billion stimulus bill that allowed the bonuses to go forward]. So this is a distraction, this is an outrage."
He chided his fellow House members who were considering supporting the new tax legislation for only caring about the millions in bonuses when they should be concerned with the trillions in deficits the country is facing.
"So everybody can go home that voted for this bill, say, 'Look, I'm clamping [down] on this $165 million but I don't care about the previous $5 trillion the Fed created and the $1.25 trillion they created yesterday,'" he said. "Think of the loss of purchasing power in less than 24 hours."
Paul urged his House members to support his bill, H.R. 1207, which would change the way the Federal Reserve is audited.
"Let's quit appropriating funds in an unconstitutional manner. Let's quit bankrupting this country," Paul said. "The Fed is not even required to answer any questions. So it's about time we have an open book about the Federal Reserve and solve some of these problems."
House passes tax bill Thursday afternoon
Despite the protestations of Paul and a few others, the House voted overwhelmingly to pass the bonus tax legislation Thursday afternoon.
Roll Call reports the vote was 328-93 to impose a 90 percent tax on employee bonuses at companies that received federal bailout funds.
"While the vote was bipartisan, the GOP was split on the bill, with Minority Leader John Boehner (Ohio) voting against it and Minority Whip Eric Cantor (Va.) voting in favor of it," reported Roll Call.
CNN notes that the measure, which now heads to the Senate for consideration, would tax individuals on any bonuses received in 2009 from companies getting $5 billion or more in money from the Troubled Asset Relief Program. Those with incomes more than $250,000 would see their bonuses taxed at the 90 percent rate.
"We can't have any concept of we're getting even, but we must have a concept that we're trying to show that Congress ... cannot tolerate that," said Charlie Rangel (D-NY), chairman of the House Ways and Means Committee on Wednesday.
Said House Speaker Nancy Pelosi, "We must also protect the American taxpayer from executives who would use their companies' second chances as opportunities for private gain. Because they could not use sound judgment in the use of taxpayer funds, these AIG executives will pay the Treasury in the form of this tax."
Speaking before the House on Thursday, Boehner questioned why they were only taxing 90 percent of the bonuses.
"Why 90 percent?... We can get 100 percent back because the Treasury Secretary has the ability to get it all back. The Administration has the ability to get it all back," Boehner said. "Why don’t we just get it all back? Why are we bringing this bill to the floor today to give members political cover when in fact the Treasury Secretary has the authority, the Administration has the authority to get all of it back?"
Paul: Bill to tax bonuses an 'outrage' and unconstitutional
David Edwards and Rachel Oswald
Thursday March 19, 2009
Rep. Ron Paul (R-TX) yet again went against the grain in Congress when he stood up in the House and argued against a proposal that would tax 90 percent of AIG executive bonuses, saying that it was a "disgrace," a "distraction" and an "outrage" that undermined the Constitution.
"I rise in opposition to this rule and the bill because of the problem -- because of the lack of need for this and the disgrace that this has brought upon us," Paul said. "Yesterday, for instance, the Federal Reserve met and they came out and they announced that they would create new money to the tune of $1.25 trillion."
Paul, a dark horse Republican candidate for president in 2008 who still enjoys considerable popularity with a base of hardcore supporters, noted that the value of the dollar went down significantly after that announcement by the Fed.
"Today...on emergency legislation, we're going to deal with $165 million of bonuses, which obviously shouldn't have never been given, but who's responsible for this?" Paul said. "It's the Congress and the president who signed this [$787 billion stimulus bill that allowed the bonuses to go forward]. So this is a distraction, this is an outrage."
He chided his fellow House members who were considering supporting the new tax legislation for only caring about the millions in bonuses when they should be concerned with the trillions in deficits the country is facing.
"So everybody can go home that voted for this bill, say, 'Look, I'm clamping [down] on this $165 million but I don't care about the previous $5 trillion the Fed created and the $1.25 trillion they created yesterday,'" he said. "Think of the loss of purchasing power in less than 24 hours."
Paul urged his House members to support his bill, H.R. 1207, which would change the way the Federal Reserve is audited.
"Let's quit appropriating funds in an unconstitutional manner. Let's quit bankrupting this country," Paul said. "The Fed is not even required to answer any questions. So it's about time we have an open book about the Federal Reserve and solve some of these problems."
House passes tax bill Thursday afternoon
Despite the protestations of Paul and a few others, the House voted overwhelmingly to pass the bonus tax legislation Thursday afternoon.
Roll Call reports the vote was 328-93 to impose a 90 percent tax on employee bonuses at companies that received federal bailout funds.
"While the vote was bipartisan, the GOP was split on the bill, with Minority Leader John Boehner (Ohio) voting against it and Minority Whip Eric Cantor (Va.) voting in favor of it," reported Roll Call.
CNN notes that the measure, which now heads to the Senate for consideration, would tax individuals on any bonuses received in 2009 from companies getting $5 billion or more in money from the Troubled Asset Relief Program. Those with incomes more than $250,000 would see their bonuses taxed at the 90 percent rate.
"We can't have any concept of we're getting even, but we must have a concept that we're trying to show that Congress ... cannot tolerate that," said Charlie Rangel (D-NY), chairman of the House Ways and Means Committee on Wednesday.
Said House Speaker Nancy Pelosi, "We must also protect the American taxpayer from executives who would use their companies' second chances as opportunities for private gain. Because they could not use sound judgment in the use of taxpayer funds, these AIG executives will pay the Treasury in the form of this tax."
Speaking before the House on Thursday, Boehner questioned why they were only taxing 90 percent of the bonuses.
"Why 90 percent?... We can get 100 percent back because the Treasury Secretary has the ability to get it all back. The Administration has the ability to get it all back," Boehner said. "Why don’t we just get it all back? Why are we bringing this bill to the floor today to give members political cover when in fact the Treasury Secretary has the authority, the Administration has the authority to get all of it back?"
Outcry Builds in Washington
http://www.nytimes.com/2009/03/19/business/19bailout.html
March 19, 2009
Outcry Builds in Washington for Recovery of A.I.G. Bonuses
By JACKIE CALMES and LOUISE STORY
WASHINGTON — The bonuses that the American International Group awarded last week were paid to 418 employees and included $33.6 million for 52 people who have left the failed insurance conglomerate, according to the office of the New York attorney general.
Those payouts are expected to come under intense scrutiny Wednesday as Edward Liddy, the chief executive of A.I.G, testifies before Congress amid mounting public outrage about the bonuses, which were paid out after nearly $200 billion in taxpayer funds were pumped into the company.
The company paid the bonuses, including more than $1 million each to 73 people, to almost all of the employees in the financial products unit responsible for creating the exotic derivatives that caused A.I.G.’s near collapse and started the government rescue to avoid a global financial crisis.
The information adds to the firestorm confronting the Obama administration and Congress since the weekend disclosure that A.I.G., almost 80 percent owned by the government, paid out $165 million in bonuses.
Even before the New York attorney general, Andrew M. Cuomo, divulged the new data on bonus payments in a letter to Representative Barney Frank, the Massachusetts Democrat and chairman of the Financial Services Committee, the White House and Congress separately were rushing to get out in front of the mounting public furor. Officials and lawmakers condemned A.I.G., pointed fingers at each other and promised speedy action to recoup the taxpayers’ money.
Mr. Liddy, who took over as A.I.G. chief executive after the bailout for a salary of $1 a year, is scheduled to testify Wednesday morning before a subcommittee of the House Financial Services Committee.
New York’s efforts against A.I.G. have overshadowed those of the Treasury secretary, Timothy F. Geithner, the official who is responsible for the financial bailout, along with the Federal Reserve. The White House and Treasury have been besieged by questions about why Mr. Geithner did not know sooner about the bonus payments due this month, and whether he could have done more to stop them, prompting White House officials to assert President Obama’s continued confidence in Mr. Geithner.
“He more than has the president’s complete confidence,” said Rahm Emanuel, the White House chief of staff. As angry as the president is at the news about A.I.G., which he learned Thursday, Mr. Emanuel said, “his main priority is getting the financial system stabilized, and he believes this is a big distraction in that effort.”
The House speaker, Nancy Pelosi, on Tuesday asked three committee chairmen, including Mr. Frank, to come up with legislation to recoup the bonus money, and suggested the House might pass a measure as early as this week.
But the reaction of another of the chairmen, Representative Charles B. Rangel of the tax-writing Ways and Means Committee, underscored the legal and political complexities facing Democrats as they scramble for a solution. Mr. Rangel, a Democrat from New York, objected to one of the most popular ideas being floated — a confiscatory income tax on the recipients. The tax code is not “a political weapon,” he told reporters.
A.I.G. has refused to identify the current and former employees on privacy grounds, including one who received $6.4 million, but Mr. Cuomo is seeking to obtain and publicize their names.
The employees took salaries of $1 in exchange for receiving the bonuses, which were supposed to keep them from leaving A.I.G., according to Mr. Cuomo’s office. That, he suggested, undercuts A.I.G.’s claims that it could not renegotiate the bonus contracts agreed to early in 2008, and that the payments were “retention” bonuses.
“The only justification they had for this was, well, we needed to keep these people, but there are 50 people who left anyway or who they decided they didn’t need to keep,” Mr. Cuomo said in an interview.
A spokeswoman for A.I.G., Christina Pretto, declined to confirm the number of people reported to have received retention bonuses before leaving the financial products unit. She said it was common knowledge that A.I.G. was eliminating jobs in that division.
Late Tuesday, Mr. Geithner and White House officials sent a letter to Congress seeking quick action on legislation to give the government more power to intervene and wind down companies like A.I.G., which are huge players in the financial system, but are not regulated the way banks are.
The administration had planned to seek such regulatory powers as part of a broad revamping of financial regulations, but it is expediting this piece in response to the A.I.G. uproar.
In the letter, Mr. Geithner confirmed that the government would subtract $165 million — the amount of the bonuses — from the latest $30 billion loan to A.I.G. that would bring the total loans to $200 billion, from the original $85 billion.
Mr. Geithner reiterated the Treasury position that lawyers inside and out of government had agreed that “it would be legally difficult to prevent these contractually mandated payments.”
That position was being questioned at the Capitol. Congressional Republicans, eager to implicate Democrats, initially blamed Senator Christopher J. Dodd, the Connecticut Democrat who heads the banking committee, for adding to the economic recovery package an amendment that cracked down on bonuses at companies getting bailout money, but that exempted bonuses protected by contracts, like A.I.G.’s.
Mr. Dodd, in turn, responded Tuesday with a statement saying that the exemption actually had been inserted at the insistence of Treasury during Congress’s final legislative negotiations.
While the administration has been mostly on the defensive, the competing expressions of outrage in Congress throughout Tuesday belied the fact that a few less-prominent Democrats had tried to draw attention to the A.I.G. retention bonuses since last November. Except for their condemnations last December, response has been sparse on A.I.G.’s disbursement of an initial $55 million in retention payments.
While House leaders were calling for immediate legislation to recoup payments, Senate Democrats sent a letter to Mr. Liddy demanding that A.I.G. renegotiate the employees’ compensation contracts and return the bonuses. The Senate majority leader, Harry Reid, and other Democratic leaders proposed new taxes, some as high as 91 percent, on the bonuses. But some of the A.I.G. employees are thought to be foreigners based in offices abroad, and not liable for United States taxes.
Congressional Republicans, despite the Bush administration’s role in setting the terms of the A.I.G. bailout six months ago, blamed the Obama administration for lax oversight. Senator Richard Shelby, a Republican of Alabama, seemed to hint that Mr. Geithner should resign.
“This is just another example of where he seems to be out of the loop,” Mr. Shelby said. “Treasury should have let the American people know about this."
David Axelrod, senior adviser to the president, dismissed such talk, citing the financial mess that Mr. Geithner had inherited. “He has been confronted with a situation and challenges that are unparalleled in modern history, and to put it all on his shoulders is not fair and not right,” Mr. Axelrod said. “He’s a brilliant and committed guy with a great deal of experience in this area, and we’re standing with him.”
Jackie Calmes reported from Washington, and Louise Story from New York. Edmund L. Andrews and David M. Herszenhorn contributed reporting from Washington.
March 19, 2009
Outcry Builds in Washington for Recovery of A.I.G. Bonuses
By JACKIE CALMES and LOUISE STORY
WASHINGTON — The bonuses that the American International Group awarded last week were paid to 418 employees and included $33.6 million for 52 people who have left the failed insurance conglomerate, according to the office of the New York attorney general.
Those payouts are expected to come under intense scrutiny Wednesday as Edward Liddy, the chief executive of A.I.G, testifies before Congress amid mounting public outrage about the bonuses, which were paid out after nearly $200 billion in taxpayer funds were pumped into the company.
The company paid the bonuses, including more than $1 million each to 73 people, to almost all of the employees in the financial products unit responsible for creating the exotic derivatives that caused A.I.G.’s near collapse and started the government rescue to avoid a global financial crisis.
The information adds to the firestorm confronting the Obama administration and Congress since the weekend disclosure that A.I.G., almost 80 percent owned by the government, paid out $165 million in bonuses.
Even before the New York attorney general, Andrew M. Cuomo, divulged the new data on bonus payments in a letter to Representative Barney Frank, the Massachusetts Democrat and chairman of the Financial Services Committee, the White House and Congress separately were rushing to get out in front of the mounting public furor. Officials and lawmakers condemned A.I.G., pointed fingers at each other and promised speedy action to recoup the taxpayers’ money.
Mr. Liddy, who took over as A.I.G. chief executive after the bailout for a salary of $1 a year, is scheduled to testify Wednesday morning before a subcommittee of the House Financial Services Committee.
New York’s efforts against A.I.G. have overshadowed those of the Treasury secretary, Timothy F. Geithner, the official who is responsible for the financial bailout, along with the Federal Reserve. The White House and Treasury have been besieged by questions about why Mr. Geithner did not know sooner about the bonus payments due this month, and whether he could have done more to stop them, prompting White House officials to assert President Obama’s continued confidence in Mr. Geithner.
“He more than has the president’s complete confidence,” said Rahm Emanuel, the White House chief of staff. As angry as the president is at the news about A.I.G., which he learned Thursday, Mr. Emanuel said, “his main priority is getting the financial system stabilized, and he believes this is a big distraction in that effort.”
The House speaker, Nancy Pelosi, on Tuesday asked three committee chairmen, including Mr. Frank, to come up with legislation to recoup the bonus money, and suggested the House might pass a measure as early as this week.
But the reaction of another of the chairmen, Representative Charles B. Rangel of the tax-writing Ways and Means Committee, underscored the legal and political complexities facing Democrats as they scramble for a solution. Mr. Rangel, a Democrat from New York, objected to one of the most popular ideas being floated — a confiscatory income tax on the recipients. The tax code is not “a political weapon,” he told reporters.
A.I.G. has refused to identify the current and former employees on privacy grounds, including one who received $6.4 million, but Mr. Cuomo is seeking to obtain and publicize their names.
The employees took salaries of $1 in exchange for receiving the bonuses, which were supposed to keep them from leaving A.I.G., according to Mr. Cuomo’s office. That, he suggested, undercuts A.I.G.’s claims that it could not renegotiate the bonus contracts agreed to early in 2008, and that the payments were “retention” bonuses.
“The only justification they had for this was, well, we needed to keep these people, but there are 50 people who left anyway or who they decided they didn’t need to keep,” Mr. Cuomo said in an interview.
A spokeswoman for A.I.G., Christina Pretto, declined to confirm the number of people reported to have received retention bonuses before leaving the financial products unit. She said it was common knowledge that A.I.G. was eliminating jobs in that division.
Late Tuesday, Mr. Geithner and White House officials sent a letter to Congress seeking quick action on legislation to give the government more power to intervene and wind down companies like A.I.G., which are huge players in the financial system, but are not regulated the way banks are.
The administration had planned to seek such regulatory powers as part of a broad revamping of financial regulations, but it is expediting this piece in response to the A.I.G. uproar.
In the letter, Mr. Geithner confirmed that the government would subtract $165 million — the amount of the bonuses — from the latest $30 billion loan to A.I.G. that would bring the total loans to $200 billion, from the original $85 billion.
Mr. Geithner reiterated the Treasury position that lawyers inside and out of government had agreed that “it would be legally difficult to prevent these contractually mandated payments.”
That position was being questioned at the Capitol. Congressional Republicans, eager to implicate Democrats, initially blamed Senator Christopher J. Dodd, the Connecticut Democrat who heads the banking committee, for adding to the economic recovery package an amendment that cracked down on bonuses at companies getting bailout money, but that exempted bonuses protected by contracts, like A.I.G.’s.
Mr. Dodd, in turn, responded Tuesday with a statement saying that the exemption actually had been inserted at the insistence of Treasury during Congress’s final legislative negotiations.
While the administration has been mostly on the defensive, the competing expressions of outrage in Congress throughout Tuesday belied the fact that a few less-prominent Democrats had tried to draw attention to the A.I.G. retention bonuses since last November. Except for their condemnations last December, response has been sparse on A.I.G.’s disbursement of an initial $55 million in retention payments.
While House leaders were calling for immediate legislation to recoup payments, Senate Democrats sent a letter to Mr. Liddy demanding that A.I.G. renegotiate the employees’ compensation contracts and return the bonuses. The Senate majority leader, Harry Reid, and other Democratic leaders proposed new taxes, some as high as 91 percent, on the bonuses. But some of the A.I.G. employees are thought to be foreigners based in offices abroad, and not liable for United States taxes.
Congressional Republicans, despite the Bush administration’s role in setting the terms of the A.I.G. bailout six months ago, blamed the Obama administration for lax oversight. Senator Richard Shelby, a Republican of Alabama, seemed to hint that Mr. Geithner should resign.
“This is just another example of where he seems to be out of the loop,” Mr. Shelby said. “Treasury should have let the American people know about this."
David Axelrod, senior adviser to the president, dismissed such talk, citing the financial mess that Mr. Geithner had inherited. “He has been confronted with a situation and challenges that are unparalleled in modern history, and to put it all on his shoulders is not fair and not right,” Mr. Axelrod said. “He’s a brilliant and committed guy with a great deal of experience in this area, and we’re standing with him.”
Jackie Calmes reported from Washington, and Louise Story from New York. Edmund L. Andrews and David M. Herszenhorn contributed reporting from Washington.
Thursday, February 19, 2009
Obama planning ambitious road ahead
http://www.cnn.com/2009/POLITICS/02/13/obama.whats.next/
Obama planning ambitious road ahead
Story Highlights
White House aides say they're planning an ambitious agenda for the rest of February
Big messes to address are the crises in housing and banking
Administration wants to lay groundwork for health care and entitlement reforms
Nominations for either commerce and HHS secretary are unlikely next week
By Ed Henry
CNN Senior White House Correspondent
2-13-9
WASHINGTON (CNN) -- Fresh off victory on President Obama's signature $787 billion economic recovery plan, several top White House aides say they're planning an ambitious agenda for the rest of February.
The Senate had waited for the return of Democrat Sherrod Brown, who was returning from his mother's wake in his home state of Ohio, to close the voting late Friday.
For the rest of the month, the White House agenda will focus on addressing the housing crisis, cleaning up the banking mess and laying the groundwork for reform of the health care system and entitlement programs like Medicare.
Obama's economic stimulus plan, which top aides say will be signed into law as early as Monday at the White House, received no Republican votes in the House and just three in the Senate despite his heavy emphasis on drawing bipartisan support. There have also been several Cabinet miscues in the early days, but top White House aides are confident the president has gotten off to a strong start.
"Does the road to change have some bumps? Sure," said one senior White House aide. "But we're feeling good."
Several White House aides noted that in addition to the stimulus win, the president has signed into law an equal pay act and legislation expanding a children's' health insurance program for an extra 4 million kids.
"There's an enormity to what's happened so far," said one of the White House aides. "It's hard work, but it's worth it. We're sprinting."
Aides say they plan to pick up the pace next week with a stimulus signing ceremony as early as Monday, though it could slide to Tuesday morning depending on how quickly Congressional leaders wrap up the legislative details.
Then Obama starts his first trip out West as president because White House aides say they believe Obama himself is their best salesman on the big agenda items coming. He will hold an economic event in Denver, Colorado, on Tuesday followed by the long-awaited unveiling, in Phoenix, Arizona, of his plan to deal with the foreclosure crisis on Wednesday.
White House aides are holding back on details of the housing plan as top officials continue to weigh the best approach. Top Democrats like House Financial Services Chairman Barney Frank have been pressing the White House for details, but White House Press Secretary Robert Gibbs said Friday the goal is to get it right rather than rush it out.
"It's not intended to be measured by one day's market scorekeeping, but instead to ensure that the 10,000 Americans each day that have their homes foreclosed on, and the millions more that are barely getting by, are protected," Gibbs said.
Several White House aides say it is unlikely the president will reveal his choice for either commerce secretary or health and human services secretary next week. As for which pick will be unveiled first, one aide said it depends on "whenever the next cake is baked" -- meaning the White House is so eager to get both nominations behind them that they will move forward on either one when the president makes up his mind on the picks.
The following week, the president will host what the White House is billing as a "fiscal responsibility" summit on February 23. The goal of the summit is to begin weighing the impact of massive federal programs like Social Security and Medicare just days before the president plans to unveil his first annual budget to Congressional leaders.
Then on February 24, the president will deliver his first speech to a joint session of Congress. Top aides say that while other topics like foreign policy could be addressed briefly, the speech will be heavily focused on the economy and the domestic agenda.
The president is expected to start taking on a role in selling the administration's plans for fixing the financial regulatory system during the speech and in his travels, according to top aides. Treasury Secretary Timothy Geithner began rolling out a plan to bail out more banks and bring more accountability to the existing government bailout program known as TARP, but that unveiling received harsh reviews on Capitol Hill and on Wall Street.
Barack Obama • Medicare • Social Security Administration • Health Care Policy
Obama planning ambitious road ahead
Story Highlights
White House aides say they're planning an ambitious agenda for the rest of February
Big messes to address are the crises in housing and banking
Administration wants to lay groundwork for health care and entitlement reforms
Nominations for either commerce and HHS secretary are unlikely next week
By Ed Henry
CNN Senior White House Correspondent
2-13-9
WASHINGTON (CNN) -- Fresh off victory on President Obama's signature $787 billion economic recovery plan, several top White House aides say they're planning an ambitious agenda for the rest of February.
The Senate had waited for the return of Democrat Sherrod Brown, who was returning from his mother's wake in his home state of Ohio, to close the voting late Friday.
For the rest of the month, the White House agenda will focus on addressing the housing crisis, cleaning up the banking mess and laying the groundwork for reform of the health care system and entitlement programs like Medicare.
Obama's economic stimulus plan, which top aides say will be signed into law as early as Monday at the White House, received no Republican votes in the House and just three in the Senate despite his heavy emphasis on drawing bipartisan support. There have also been several Cabinet miscues in the early days, but top White House aides are confident the president has gotten off to a strong start.
"Does the road to change have some bumps? Sure," said one senior White House aide. "But we're feeling good."
Several White House aides noted that in addition to the stimulus win, the president has signed into law an equal pay act and legislation expanding a children's' health insurance program for an extra 4 million kids.
"There's an enormity to what's happened so far," said one of the White House aides. "It's hard work, but it's worth it. We're sprinting."
Aides say they plan to pick up the pace next week with a stimulus signing ceremony as early as Monday, though it could slide to Tuesday morning depending on how quickly Congressional leaders wrap up the legislative details.
Then Obama starts his first trip out West as president because White House aides say they believe Obama himself is their best salesman on the big agenda items coming. He will hold an economic event in Denver, Colorado, on Tuesday followed by the long-awaited unveiling, in Phoenix, Arizona, of his plan to deal with the foreclosure crisis on Wednesday.
White House aides are holding back on details of the housing plan as top officials continue to weigh the best approach. Top Democrats like House Financial Services Chairman Barney Frank have been pressing the White House for details, but White House Press Secretary Robert Gibbs said Friday the goal is to get it right rather than rush it out.
"It's not intended to be measured by one day's market scorekeeping, but instead to ensure that the 10,000 Americans each day that have their homes foreclosed on, and the millions more that are barely getting by, are protected," Gibbs said.
Several White House aides say it is unlikely the president will reveal his choice for either commerce secretary or health and human services secretary next week. As for which pick will be unveiled first, one aide said it depends on "whenever the next cake is baked" -- meaning the White House is so eager to get both nominations behind them that they will move forward on either one when the president makes up his mind on the picks.
The following week, the president will host what the White House is billing as a "fiscal responsibility" summit on February 23. The goal of the summit is to begin weighing the impact of massive federal programs like Social Security and Medicare just days before the president plans to unveil his first annual budget to Congressional leaders.
Then on February 24, the president will deliver his first speech to a joint session of Congress. Top aides say that while other topics like foreign policy could be addressed briefly, the speech will be heavily focused on the economy and the domestic agenda.
The president is expected to start taking on a role in selling the administration's plans for fixing the financial regulatory system during the speech and in his travels, according to top aides. Treasury Secretary Timothy Geithner began rolling out a plan to bail out more banks and bring more accountability to the existing government bailout program known as TARP, but that unveiling received harsh reviews on Capitol Hill and on Wall Street.
Barack Obama • Medicare • Social Security Administration • Health Care Policy
Monday, November 3, 2008
The 2009 budget deficit could be close to $2 trillion
"The 2009 budget deficit could be close to $2 trillion..."
http://www.bloomberg.com/apps/news?pid=20601109&sid=anUDEEEP1_M0
Cost of U.S. Crisis Action Grows, Along With Debt
By Matthew Benjamin
Oct. 10 (Bloomberg) -- The global financial crisis is turning into a bigger drain on the U.S. federal budget than experts estimated two weeks ago, ballooning the deficit toward $2 trillion.
Bailouts of American International Group, Fannie Mae and Freddie Mac likely will be more expensive than expected. States are turning to Washington for fiscal help. The Federal Reserve said this week it will begin buying commercial paper, the short- term loans companies used to conduct day-to-day business, further increasing costs. And analysts now say the $700 billion bank- rescue plan passed by Congress last week may have to be significantly larger.
``I always assumed they would be asking for more money along the way if it was necessary, and it looks like it's going to be necessary,'' said Stan Collender, a former analyst for the House and Senate budget committees, now at Qorvis Communications in Washington. ``At the moment, there's nothing happening here that's positive for the budget. Nothing.''
The 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in 1983, according to David Greenlaw, Morgan Stanley's chief economist. Two weeks ago, budget analysts said the measures might push deficit to as much as $1.5 trillion.
Yields to Rise
That means a lot more borrowing by Treasury, which will push up interest rates, said Greenlaw. ``The Treasury's going to be ramping up supply dramatically over the course of coming months to meet this enormous federal budget obligation,'' Greenlaw told Bloomberg this week. ``The supply will trigger some elevation in yields.''
Treasuries have fallen the past four days even as stocks sank, a sign investors are preparing for bigger U.S. government borrowing. Benchmark 10-year note yields rose to 3.82 percent at 7:49 a.m. in New York, from a close of 3.45 percent Oct. 6.
Payments the government allocated to keep vital companies solvent are beginning to look insufficient.
AIG, the giant insurance company that was taken over by the government in mid-September, said this week it may access $37.8 billion from the Federal Reserve Bank of New York, in addition to the $85 billion the government already loaned it to stave off bankruptcy.
``You're in for a dime, you're in for a dollar on this one,'' said David Havens, a credit analyst at UBS AG.
The financial health and earnings prospects of Fannie Mae and Freddie Mac -- seized by the government on Sept. 7 to prevent them from failing -- worsened in the second and third quarters, the companies' government regulator said this week.
Price Declines
The companies and regulators are recalculating the value of all of their assets to factor in price erosion. That may mean the government will have to spend more to keep the firms solvent.
Earlier this week the Fed announced it will create a special fund to buy commercial paper, the credit that businesses use to finance payrolls and other ongoing expenses. The Treasury will deposit money into the Fed's New York district bank to help set up the new unit. A Fed official said Treasury funding for the program could be ``substantial.''
California, Alabama and Massachusetts are urging the Fed and Treasury to include their securities in rescue plans designed for banks and businesses. The $2.66 trillion U.S. market for state and city bonds has been all but frozen since Lehman Brothers Holdings Inc., weighed down by losses in mortgage-backed bonds, declared history's largest bankruptcy on Sept. 15.
California has said it needs to sell as much as $7 billion in notes to maintain its schools, health system and other public services. The Bush administration said it is reviewing the states' financial positions.
Plan for Banks
Meanwhile, Treasury Secretary Henry Paulson indicated two days ago that he is considering buying stakes in a wide range of banks in coming weeks to help recapitalize them.
Such a move is allowed under the $700 billion bailout package Congress passed last week. Edmund Phelps, winner of the 2006 Nobel Prize for economics and a professor at Columbia University, said such action is necessary -- and will likely turn out to increase the measure's cost. Spending beyond the amount set in last week's bill would require further Congressional approval.
``We have to recapitalize the banks,'' Phelps told Bloomberg Television this week. ``I don't imagine that there's enough money in the first Paulson plan to be able to do all that needs to be done in that direction.''
The additional borrowing could push the national debt well past 70 percent of GDP, the highest since the immediate aftermath of World War II, when the U.S. was still paying off war debt.
Debt Limit
Gross U.S. debt, which includes debt held by the public and by government agencies, this year reached about $9.6 trillion, or about 68 percent of gross domestic product. The rescue legislation increased the government's debt limit to more than $11.3 trillion from $10.6 trillion.
On top of all that, budget watchdogs say the sheer size of the interventions is making Washington more profligate than usual. To attract votes in Congress, leaders added several costly items to the $700 billion rescue, including extensions of some tax credits and tax breaks for makers of wooden arrows and stock- car racetrack owners.
Under normal circumstances, there would have been more resistance to such expenses, said Robert Bixby, executive director of the Concord Coalition, a non-partisan budget watchdog.
The rescue legislation ``creates a mask for all sorts of fiscal irresponsibility,'' said Bixby. ``It covers up a multitude of sins.''
To contact the reporters on this story: Matthew Benjamin at mbenjamin2@bloomberg.net
http://www.bloomberg.com/apps/news?pid=20601109&sid=anUDEEEP1_M0
Cost of U.S. Crisis Action Grows, Along With Debt
By Matthew Benjamin
Oct. 10 (Bloomberg) -- The global financial crisis is turning into a bigger drain on the U.S. federal budget than experts estimated two weeks ago, ballooning the deficit toward $2 trillion.
Bailouts of American International Group, Fannie Mae and Freddie Mac likely will be more expensive than expected. States are turning to Washington for fiscal help. The Federal Reserve said this week it will begin buying commercial paper, the short- term loans companies used to conduct day-to-day business, further increasing costs. And analysts now say the $700 billion bank- rescue plan passed by Congress last week may have to be significantly larger.
``I always assumed they would be asking for more money along the way if it was necessary, and it looks like it's going to be necessary,'' said Stan Collender, a former analyst for the House and Senate budget committees, now at Qorvis Communications in Washington. ``At the moment, there's nothing happening here that's positive for the budget. Nothing.''
The 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in 1983, according to David Greenlaw, Morgan Stanley's chief economist. Two weeks ago, budget analysts said the measures might push deficit to as much as $1.5 trillion.
Yields to Rise
That means a lot more borrowing by Treasury, which will push up interest rates, said Greenlaw. ``The Treasury's going to be ramping up supply dramatically over the course of coming months to meet this enormous federal budget obligation,'' Greenlaw told Bloomberg this week. ``The supply will trigger some elevation in yields.''
Treasuries have fallen the past four days even as stocks sank, a sign investors are preparing for bigger U.S. government borrowing. Benchmark 10-year note yields rose to 3.82 percent at 7:49 a.m. in New York, from a close of 3.45 percent Oct. 6.
Payments the government allocated to keep vital companies solvent are beginning to look insufficient.
AIG, the giant insurance company that was taken over by the government in mid-September, said this week it may access $37.8 billion from the Federal Reserve Bank of New York, in addition to the $85 billion the government already loaned it to stave off bankruptcy.
``You're in for a dime, you're in for a dollar on this one,'' said David Havens, a credit analyst at UBS AG.
The financial health and earnings prospects of Fannie Mae and Freddie Mac -- seized by the government on Sept. 7 to prevent them from failing -- worsened in the second and third quarters, the companies' government regulator said this week.
Price Declines
The companies and regulators are recalculating the value of all of their assets to factor in price erosion. That may mean the government will have to spend more to keep the firms solvent.
Earlier this week the Fed announced it will create a special fund to buy commercial paper, the credit that businesses use to finance payrolls and other ongoing expenses. The Treasury will deposit money into the Fed's New York district bank to help set up the new unit. A Fed official said Treasury funding for the program could be ``substantial.''
California, Alabama and Massachusetts are urging the Fed and Treasury to include their securities in rescue plans designed for banks and businesses. The $2.66 trillion U.S. market for state and city bonds has been all but frozen since Lehman Brothers Holdings Inc., weighed down by losses in mortgage-backed bonds, declared history's largest bankruptcy on Sept. 15.
California has said it needs to sell as much as $7 billion in notes to maintain its schools, health system and other public services. The Bush administration said it is reviewing the states' financial positions.
Plan for Banks
Meanwhile, Treasury Secretary Henry Paulson indicated two days ago that he is considering buying stakes in a wide range of banks in coming weeks to help recapitalize them.
Such a move is allowed under the $700 billion bailout package Congress passed last week. Edmund Phelps, winner of the 2006 Nobel Prize for economics and a professor at Columbia University, said such action is necessary -- and will likely turn out to increase the measure's cost. Spending beyond the amount set in last week's bill would require further Congressional approval.
``We have to recapitalize the banks,'' Phelps told Bloomberg Television this week. ``I don't imagine that there's enough money in the first Paulson plan to be able to do all that needs to be done in that direction.''
The additional borrowing could push the national debt well past 70 percent of GDP, the highest since the immediate aftermath of World War II, when the U.S. was still paying off war debt.
Debt Limit
Gross U.S. debt, which includes debt held by the public and by government agencies, this year reached about $9.6 trillion, or about 68 percent of gross domestic product. The rescue legislation increased the government's debt limit to more than $11.3 trillion from $10.6 trillion.
On top of all that, budget watchdogs say the sheer size of the interventions is making Washington more profligate than usual. To attract votes in Congress, leaders added several costly items to the $700 billion rescue, including extensions of some tax credits and tax breaks for makers of wooden arrows and stock- car racetrack owners.
Under normal circumstances, there would have been more resistance to such expenses, said Robert Bixby, executive director of the Concord Coalition, a non-partisan budget watchdog.
The rescue legislation ``creates a mask for all sorts of fiscal irresponsibility,'' said Bixby. ``It covers up a multitude of sins.''
To contact the reporters on this story: Matthew Benjamin at mbenjamin2@bloomberg.net
Wednesday, October 15, 2008
Let's Keep People In Their Homes
http://online.wsj.com/article/SB122230767702474045.html
OPINION SEPTEMBER 25, 2008
Let's Keep People In Their Homes
By HILLARY RODHAM CLINTON
There is a broad consensus that Congress must act to stave off deeper turmoil on Wall Street. Irrespective of the final agreement yet to be reached, there are several principles that must be part of a broader reform effort that begins this week and continues in the coming months.
This is not just a financial crisis; it's an economic crisis. Therefore, the solutions we pursue cannot simply stabilize the markets. We must also deal with the interconnected economic challenges that set the stage for this crisis -- and reverse the failed policies that allowed a potential crisis to become a real one.
First, we must address the skyrocketing rates of mortgage defaults and foreclosures that have buffeted the economy and ignited the credit crisis. Two million homeowners carry mortgages worth more than their homes. They hold $3 trillion in mortgage debt. Nearly three million adjustable-rate mortgages are scheduled for a rate increase in the next two years. Another wave of foreclosures looms.
I've proposed a new Home Owners' Loan Corporation (HOLC), to launch a national effort to help homeowners refinance their mortgages. The original HOLC, launched in 1933, bought mortgages from failed banks and modified the terms so families could make affordable payments while keeping their homes. The original HOLC returned a profit to the Treasury and saved one million homes. We can save roughly three times that many today. We should also put in place a temporary moratorium on foreclosures and freeze rate hikes in adjustable-rate mortgages. We've got to stem the tide of failing mortgages and give the markets time to recover.
The time for ideological, partisan arguments against these actions is over. For years, the calls to provide borrowers an affordable opportunity to avoid foreclosure as a means of preventing wider turmoil were dismissed as government intrusion into the private marketplace. My proposals over the past two years were derided as too much, too soon. Now we are forced to reckon with too little, too late.
As a result, the home-mortgage crisis slowly eroded the value of debt instruments upon which Wall Street firms were depending. That is how this house of borrowed cards began to fall. If we do not take action to address the crisis facing borrowers, we'll never solve the crisis facing lenders. These problems go hand in hand. And if we are going to take on the mortgage debt of storied Wall Street giants, we ought to extend the same help to struggling, middle-class families.
Second, American taxpayers should have a voice and a stake in the resolution of this market crisis. If the Treasury proposal is enacted in its current form, the American government would assume enough financial risk to become the majority shareholder in the companies rescued by taxpayer dollars.
The American people are bearing the risk and therefore deserve to reap the rewards of a shared equity model. And mortgage securities bought by taxpayers must be valued accurately at prices disclosed in real time, with checks and reporting requirements to prevent abuse.
Third, taxpayers are being asked to bear an unparalleled degree of financial risk. We cannot allow taxpayers to take on this burden so that Wall Street and the Bush administration can hit the "reset button." This historic intervention demands a historic shift in priorities: an end to the broken culture on Wall Street, and the broken economic policies in Washington.
Corporations that will benefit must be held accountable, not only to large shareholders but also to the American people, who are rightly tired of business as usual: short-term profit at the expense of long-term viability; lax oversight and regulation; obscene bonuses and golden parachutes regardless of performance; reckless risk-taking that has placed the markets in jeopardy; rewards for foreclosing on middle-class families and selling mortgages designed to fail; and outsourcing good jobs to serve short-term stock prices instead of America's long-term economic health.
This is a sink-or-swim moment for America. We cannot simply catch our breath. We've got to swim for the shores. We must address the conditions that set the stage for the turmoil unfolding on Wall Street, or we will find ourselves lurching from crisis to crisis. Just as Wall Street must once again look further than the quarterly report, our nation must as well.
Mrs. Clinton, a Democrat, is a senator from New York.
OPINION SEPTEMBER 25, 2008
Let's Keep People In Their Homes
By HILLARY RODHAM CLINTON
There is a broad consensus that Congress must act to stave off deeper turmoil on Wall Street. Irrespective of the final agreement yet to be reached, there are several principles that must be part of a broader reform effort that begins this week and continues in the coming months.
This is not just a financial crisis; it's an economic crisis. Therefore, the solutions we pursue cannot simply stabilize the markets. We must also deal with the interconnected economic challenges that set the stage for this crisis -- and reverse the failed policies that allowed a potential crisis to become a real one.
First, we must address the skyrocketing rates of mortgage defaults and foreclosures that have buffeted the economy and ignited the credit crisis. Two million homeowners carry mortgages worth more than their homes. They hold $3 trillion in mortgage debt. Nearly three million adjustable-rate mortgages are scheduled for a rate increase in the next two years. Another wave of foreclosures looms.
I've proposed a new Home Owners' Loan Corporation (HOLC), to launch a national effort to help homeowners refinance their mortgages. The original HOLC, launched in 1933, bought mortgages from failed banks and modified the terms so families could make affordable payments while keeping their homes. The original HOLC returned a profit to the Treasury and saved one million homes. We can save roughly three times that many today. We should also put in place a temporary moratorium on foreclosures and freeze rate hikes in adjustable-rate mortgages. We've got to stem the tide of failing mortgages and give the markets time to recover.
The time for ideological, partisan arguments against these actions is over. For years, the calls to provide borrowers an affordable opportunity to avoid foreclosure as a means of preventing wider turmoil were dismissed as government intrusion into the private marketplace. My proposals over the past two years were derided as too much, too soon. Now we are forced to reckon with too little, too late.
As a result, the home-mortgage crisis slowly eroded the value of debt instruments upon which Wall Street firms were depending. That is how this house of borrowed cards began to fall. If we do not take action to address the crisis facing borrowers, we'll never solve the crisis facing lenders. These problems go hand in hand. And if we are going to take on the mortgage debt of storied Wall Street giants, we ought to extend the same help to struggling, middle-class families.
Second, American taxpayers should have a voice and a stake in the resolution of this market crisis. If the Treasury proposal is enacted in its current form, the American government would assume enough financial risk to become the majority shareholder in the companies rescued by taxpayer dollars.
The American people are bearing the risk and therefore deserve to reap the rewards of a shared equity model. And mortgage securities bought by taxpayers must be valued accurately at prices disclosed in real time, with checks and reporting requirements to prevent abuse.
Third, taxpayers are being asked to bear an unparalleled degree of financial risk. We cannot allow taxpayers to take on this burden so that Wall Street and the Bush administration can hit the "reset button." This historic intervention demands a historic shift in priorities: an end to the broken culture on Wall Street, and the broken economic policies in Washington.
Corporations that will benefit must be held accountable, not only to large shareholders but also to the American people, who are rightly tired of business as usual: short-term profit at the expense of long-term viability; lax oversight and regulation; obscene bonuses and golden parachutes regardless of performance; reckless risk-taking that has placed the markets in jeopardy; rewards for foreclosing on middle-class families and selling mortgages designed to fail; and outsourcing good jobs to serve short-term stock prices instead of America's long-term economic health.
This is a sink-or-swim moment for America. We cannot simply catch our breath. We've got to swim for the shores. We must address the conditions that set the stage for the turmoil unfolding on Wall Street, or we will find ourselves lurching from crisis to crisis. Just as Wall Street must once again look further than the quarterly report, our nation must as well.
Mrs. Clinton, a Democrat, is a senator from New York.
Long History for Proposal by McCain on Mortgages
http://www.nytimes.com/2008/10/08/us/politics/08mortgage.html
October 8, 2008
Long History for Proposal by McCain on Mortgages
By JACKIE CALMES
WASHINGTON — Scrambling to repair his image on economic issues, Senator John McCain proposed during Tuesday night’s debate a $300 billion plan authorizing the treasury secretary to buy the mortgages of homeowners in financial trouble and replace them with more affordable loans.
The campaign of Senator Barack Obama quickly countered by saying that the financial rescue plan that President Bush signed into law last week already gave the treasury secretary such power. And, his advisers noted, Mr. Obama recommended such a step in a news conference nearly two weeks ago.
The Obama camp is correct that the new $700 billion bailout of the financial system gives the Treasury the authority to buy troubled mortgages. But the law leaves unclear how the authority is to be used, according to a person who was privy to the recent legislative negotiations between the White House and Congress and who is not affiliated with either campaign.
The mortgage renewal idea actually originated with Senator Hillary Rodham Clinton, said Charlie Black, a senior adviser to Mr. McCain. And Mrs. Clinton, who proposed the idea in a recent newspaper column, borrowed it from a Depression-era New Deal agency, the Home Owner’s Loan Corporation.
As Mr. McCain’s campaign described his program, it would be available to mortgagors for whom the property is their primary residence, who can prove they were creditworthy when the original loan was made and who made a down payment. “Lenders in these cases must recognize the loss that they’ve already suffered,” a McCain campaign summary said.
Under the plan, it added, the Treasury would buy unaffordable mortgages directly from mortgage servicers and, in a reflection of the properties’ diminished values, renegotiate “manageable, fixed-rate mortgages that will keep families in their homes.” Mr. McCain proposes that the roughly $300 billion cost would be covered by the $700 billion bailout law.
That $700 billion total, however, was intended to give the Treasury the means to buy and hold troubled assets from financial institutions that might otherwise fail, so that those assets can be sold when markets recover and the assets regain value. But the McCain summary said that “by stabilizing mortgages, it will likely be possible to avoid some purposes previously assumed needed in that bill.”
Mr. McCain made his proposal near the start of Tuesday night’s debate, and after polls in recent days showed him falling behind Mr. Obama, partly on questions of which candidate would better deal with the economic crisis.
“Is it expensive?” he said of the proposal. “Yes. But we all know, my friends, until we stabilize home values in America, we’re never going to start turning around and creating jobs and fixing our economy.”
While the Obama campaign’s reaction indicated that the candidates were in agreement, the mortgage proposal raises a number of administrative questions, given the millions who might seek help. It also raises fairness issues, given the many homeowners who are scrimping in order to continue paying off mortgages based on former market values far higher than their properties’ current worth.
October 8, 2008
Long History for Proposal by McCain on Mortgages
By JACKIE CALMES
WASHINGTON — Scrambling to repair his image on economic issues, Senator John McCain proposed during Tuesday night’s debate a $300 billion plan authorizing the treasury secretary to buy the mortgages of homeowners in financial trouble and replace them with more affordable loans.
The campaign of Senator Barack Obama quickly countered by saying that the financial rescue plan that President Bush signed into law last week already gave the treasury secretary such power. And, his advisers noted, Mr. Obama recommended such a step in a news conference nearly two weeks ago.
The Obama camp is correct that the new $700 billion bailout of the financial system gives the Treasury the authority to buy troubled mortgages. But the law leaves unclear how the authority is to be used, according to a person who was privy to the recent legislative negotiations between the White House and Congress and who is not affiliated with either campaign.
The mortgage renewal idea actually originated with Senator Hillary Rodham Clinton, said Charlie Black, a senior adviser to Mr. McCain. And Mrs. Clinton, who proposed the idea in a recent newspaper column, borrowed it from a Depression-era New Deal agency, the Home Owner’s Loan Corporation.
As Mr. McCain’s campaign described his program, it would be available to mortgagors for whom the property is their primary residence, who can prove they were creditworthy when the original loan was made and who made a down payment. “Lenders in these cases must recognize the loss that they’ve already suffered,” a McCain campaign summary said.
Under the plan, it added, the Treasury would buy unaffordable mortgages directly from mortgage servicers and, in a reflection of the properties’ diminished values, renegotiate “manageable, fixed-rate mortgages that will keep families in their homes.” Mr. McCain proposes that the roughly $300 billion cost would be covered by the $700 billion bailout law.
That $700 billion total, however, was intended to give the Treasury the means to buy and hold troubled assets from financial institutions that might otherwise fail, so that those assets can be sold when markets recover and the assets regain value. But the McCain summary said that “by stabilizing mortgages, it will likely be possible to avoid some purposes previously assumed needed in that bill.”
Mr. McCain made his proposal near the start of Tuesday night’s debate, and after polls in recent days showed him falling behind Mr. Obama, partly on questions of which candidate would better deal with the economic crisis.
“Is it expensive?” he said of the proposal. “Yes. But we all know, my friends, until we stabilize home values in America, we’re never going to start turning around and creating jobs and fixing our economy.”
While the Obama campaign’s reaction indicated that the candidates were in agreement, the mortgage proposal raises a number of administrative questions, given the millions who might seek help. It also raises fairness issues, given the many homeowners who are scrimping in order to continue paying off mortgages based on former market values far higher than their properties’ current worth.
Washington Bailout a Bust. Depression to Follow.
Washington Bailout a Bust. Depression to Follow.
RHINEBECK, NY 9 October 2008 -- Once again, Washington has proven that anything it touches is doomed to failure. Unable to win wars, repair levees, fix voting machines or rebuild its Twin Towers, the colossal $700 billion bailout package passed last week by Congress proved to be an instant bust.
As we predicted in our 26 September 2008 Trend Alert® Put the Bailout on the Ballot -- "The bailout plan will only bail out CEOs and preferred stakeholders of failing financial firms while sinking the American people deeper in debt."
With not one major success to their credit and a long history of unmitigated disasters to pin their reputations on, the Wall Street rescue package did nothing to solve the credit crisis as those in Congress who rammed it through had promised.
"Without immediate action ... America could slip into financial panic and a distressing scenario would unfold," said President Bush, urging quick passage of the bill. In a fearsome tone reminiscent of the nation's rush to war with Iraq, Bush warned that quick passage was "essential to the financial security of every American."
"Think about it," said Barack Obama promoting its immediate passage. "If your neighbor's house is burning you're not going to spend a whole lot of time saying well that guy was always irresponsible ... his house could end up affecting your house. And that's the situation we're in right now," he said on the campaign trail while also taking time to arm-twist the congressional Black Caucus to support the bailout plan.
Weighing in with his brand of fear, the self-professed economically uneducated John McCain warned, "... the direct consequences of inaction will be far more damaging to the economic security of American families, and the fault will all be ours."
One after another, the leaders of both houses in both parties pushed for passage of the bailout bill that was pushed on them by the Treasury Czar and the Wall Street Gang. (See DC Heist: Wall Street Gang Hijacks Washington, Trend Alert®, 22 September 2008.)
"Supporting this legislation is the only way to make the best of a crisis and return our country to a path of economic stability, prosperity and growth," championed Democratic majority leader Harry Reid, who had admitted several days earlier that "no one knows what to do."
"This isn't about a bailout of Wall Street, it's a buy-in, so that we can turn our economy around," declared Democratic House leader Pelosi. Her Republican counterpart Boehner urged "every member whose conscience will allow them to support this," giving assurances, as did the others, that the $700 billion taxpayer-funded package would stop financial panic from spreading.
But even before the ink dried on the pork-infused bill that fattened greedy congressmen and lined financial insiders' pockets, the news of its passage sunk the Dow 157 points on the day.
When the overseas markets opened Monday, they reacted to the bailout by registering one of their worst market crashes in decades. And with each passing day, the economic news just kept getting worse, and with each passing day the Federal Reserve just kept throwing good money after bad.
Beyond the $1 trillion subprime problem that's been erroneously targeted as the prime culprit behind the credit crisis are more serious financial catastrophes that are barely reported, mostly overlooked and can't be remedied. The Fed can't print enough money to paper over the $531.2 trillion in derivatives and credit swaps, the trillions in the overbuilt commercial real estate market ready to collapse, the multi-trillions in leveraged buyouts going bust, and other "exotic" financial instruments that have turned toxic.
Trendpost: The Panic of '08 is "On." Yet, the instant the Dow crashed 678 points today, Bloomberg Radio brought on an expert who declared "most of the crash is behind us" and said the market plunge presented "a good buying opportunity." We see things differently. Yesterday's lowering of interest rates and the continual Fed action to flood the markets with money will lead to an era of hyper-inflation, the likes of which no living American has ever seen.
Gold prices shot up some $24 after being down over $20 earlier in the day. We continue to forecast gold $2000. And once again, we urge you to take precautionary measures in view of a worsening global market meltdown.
Gerald Celente
Founder/Director, The Trends Research Institute
Publisher, The Trends Journal
E-mail: gcelente@trendsresearch.com
Website: www.trendsresearch.com
Telephone: 845.876.6700 - Ext. 4
Trends Research P.O. Box 660 Rhinebeck, NY 12572
RHINEBECK, NY 9 October 2008 -- Once again, Washington has proven that anything it touches is doomed to failure. Unable to win wars, repair levees, fix voting machines or rebuild its Twin Towers, the colossal $700 billion bailout package passed last week by Congress proved to be an instant bust.
As we predicted in our 26 September 2008 Trend Alert® Put the Bailout on the Ballot -- "The bailout plan will only bail out CEOs and preferred stakeholders of failing financial firms while sinking the American people deeper in debt."
With not one major success to their credit and a long history of unmitigated disasters to pin their reputations on, the Wall Street rescue package did nothing to solve the credit crisis as those in Congress who rammed it through had promised.
"Without immediate action ... America could slip into financial panic and a distressing scenario would unfold," said President Bush, urging quick passage of the bill. In a fearsome tone reminiscent of the nation's rush to war with Iraq, Bush warned that quick passage was "essential to the financial security of every American."
"Think about it," said Barack Obama promoting its immediate passage. "If your neighbor's house is burning you're not going to spend a whole lot of time saying well that guy was always irresponsible ... his house could end up affecting your house. And that's the situation we're in right now," he said on the campaign trail while also taking time to arm-twist the congressional Black Caucus to support the bailout plan.
Weighing in with his brand of fear, the self-professed economically uneducated John McCain warned, "... the direct consequences of inaction will be far more damaging to the economic security of American families, and the fault will all be ours."
One after another, the leaders of both houses in both parties pushed for passage of the bailout bill that was pushed on them by the Treasury Czar and the Wall Street Gang. (See DC Heist: Wall Street Gang Hijacks Washington, Trend Alert®, 22 September 2008.)
"Supporting this legislation is the only way to make the best of a crisis and return our country to a path of economic stability, prosperity and growth," championed Democratic majority leader Harry Reid, who had admitted several days earlier that "no one knows what to do."
"This isn't about a bailout of Wall Street, it's a buy-in, so that we can turn our economy around," declared Democratic House leader Pelosi. Her Republican counterpart Boehner urged "every member whose conscience will allow them to support this," giving assurances, as did the others, that the $700 billion taxpayer-funded package would stop financial panic from spreading.
But even before the ink dried on the pork-infused bill that fattened greedy congressmen and lined financial insiders' pockets, the news of its passage sunk the Dow 157 points on the day.
When the overseas markets opened Monday, they reacted to the bailout by registering one of their worst market crashes in decades. And with each passing day, the economic news just kept getting worse, and with each passing day the Federal Reserve just kept throwing good money after bad.
Beyond the $1 trillion subprime problem that's been erroneously targeted as the prime culprit behind the credit crisis are more serious financial catastrophes that are barely reported, mostly overlooked and can't be remedied. The Fed can't print enough money to paper over the $531.2 trillion in derivatives and credit swaps, the trillions in the overbuilt commercial real estate market ready to collapse, the multi-trillions in leveraged buyouts going bust, and other "exotic" financial instruments that have turned toxic.
Trendpost: The Panic of '08 is "On." Yet, the instant the Dow crashed 678 points today, Bloomberg Radio brought on an expert who declared "most of the crash is behind us" and said the market plunge presented "a good buying opportunity." We see things differently. Yesterday's lowering of interest rates and the continual Fed action to flood the markets with money will lead to an era of hyper-inflation, the likes of which no living American has ever seen.
Gold prices shot up some $24 after being down over $20 earlier in the day. We continue to forecast gold $2000. And once again, we urge you to take precautionary measures in view of a worsening global market meltdown.
Gerald Celente
Founder/Director, The Trends Research Institute
Publisher, The Trends Journal
E-mail: gcelente@trendsresearch.com
Website: www.trendsresearch.com
Telephone: 845.876.6700 - Ext. 4
Trends Research P.O. Box 660 Rhinebeck, NY 12572
Wednesday, October 8, 2008
We’re going to have martial law in the United States
http://wsws.org/articles/2008/oct2008/sher-o03.shtml
US congressman: “If we don’t pass this bill, we’re going to have martial law in the United States”
By Tom Eley
3 October 2008
In the wake of Monday’s vote in the US House of Representatives rejecting the $700 billion bailout package for the American financial industry, prominent voices in the US and international media have responded by denouncing the lower house of Congress and complaining that the American political system is too susceptible to popular opinion and insufficiently obedient to the will of the corporate and political elite.
The yearning for more authoritarian forms of rule was expressed by, among others, Michael Gerson, the former chief speechwriter for George W. Bush. In a column in the Washington Post, he complained, “[I]t is now clear that American political elites have lost the ability to quickly respond to a national challenge by imposing their collective will.” The Times of London, part of Rupert Murdoch’s media empire, was even more blunt, headlining a column, “Congress is the Best Advert for Dictatorship.”
Socialist Equality Party (SEP) vice presidential candidate Bill Van Auken authored an article on the World Socialist Web Site Wednesday (“The Wall Street bailout and the threat of dictatorship”) explaining the connection between the appearance of such openly anti-democratic polemics in the mainstream media and the bill to bail out Wall Street that is being pushed through Congress.
Van Auken wrote, “The furor over the vote in the House serves as a warning that capitalism in crisis will inevitably move toward new forms of rule capable of defending the economic dictatorship of finance capital by means of an open political dictatorship against the working class.”
The next day, the Los Angeles Times, in an article on the Senate passage of the bailout measure, noted in passing a statement by Democratic Rep. Brad Sherman from the San Fernando Valley in Southern California which underscores the authoritarian atmosphere surrounding the proceedings in Congress.
Sherman, who voted against the bailout bill on Monday, said, “The one thing that’s been proven is the absolute fear-mongering that’s being used to drive us is false.” He continued, “I’ve seen members turn to each other and say if we don’t pass this bill, we’re going to have martial law in the United States.”
The Los Angeles Times offered no comment on this astounding statement.
The World Socialist Web Site has long warned that the growing concentration of wealth and widening social inequality in the US are ultimately incompatible with democratic forms of rule. These deeply anti-democratic tendencies are being accelerated by the eruption of the financial crisis and the response of the American ruling elite and both of its political parties.
As Van Auken wrote:
“The crisis is being utilized to effect an ever more immense concentration of economic power that is incompatible with political democracy. Three banking behemoths—Citigroup, Bank of America and JPMorgan Chase—are gobbling up their failing competitors and now control fully a third of US bank deposits... These intense social antagonisms cannot be contained within America’s existing political set-up.”
US congressman: “If we don’t pass this bill, we’re going to have martial law in the United States”
By Tom Eley
3 October 2008
In the wake of Monday’s vote in the US House of Representatives rejecting the $700 billion bailout package for the American financial industry, prominent voices in the US and international media have responded by denouncing the lower house of Congress and complaining that the American political system is too susceptible to popular opinion and insufficiently obedient to the will of the corporate and political elite.
The yearning for more authoritarian forms of rule was expressed by, among others, Michael Gerson, the former chief speechwriter for George W. Bush. In a column in the Washington Post, he complained, “[I]t is now clear that American political elites have lost the ability to quickly respond to a national challenge by imposing their collective will.” The Times of London, part of Rupert Murdoch’s media empire, was even more blunt, headlining a column, “Congress is the Best Advert for Dictatorship.”
Socialist Equality Party (SEP) vice presidential candidate Bill Van Auken authored an article on the World Socialist Web Site Wednesday (“The Wall Street bailout and the threat of dictatorship”) explaining the connection between the appearance of such openly anti-democratic polemics in the mainstream media and the bill to bail out Wall Street that is being pushed through Congress.
Van Auken wrote, “The furor over the vote in the House serves as a warning that capitalism in crisis will inevitably move toward new forms of rule capable of defending the economic dictatorship of finance capital by means of an open political dictatorship against the working class.”
The next day, the Los Angeles Times, in an article on the Senate passage of the bailout measure, noted in passing a statement by Democratic Rep. Brad Sherman from the San Fernando Valley in Southern California which underscores the authoritarian atmosphere surrounding the proceedings in Congress.
Sherman, who voted against the bailout bill on Monday, said, “The one thing that’s been proven is the absolute fear-mongering that’s being used to drive us is false.” He continued, “I’ve seen members turn to each other and say if we don’t pass this bill, we’re going to have martial law in the United States.”
The Los Angeles Times offered no comment on this astounding statement.
The World Socialist Web Site has long warned that the growing concentration of wealth and widening social inequality in the US are ultimately incompatible with democratic forms of rule. These deeply anti-democratic tendencies are being accelerated by the eruption of the financial crisis and the response of the American ruling elite and both of its political parties.
As Van Auken wrote:
“The crisis is being utilized to effect an ever more immense concentration of economic power that is incompatible with political democracy. Three banking behemoths—Citigroup, Bank of America and JPMorgan Chase—are gobbling up their failing competitors and now control fully a third of US bank deposits... These intense social antagonisms cannot be contained within America’s existing political set-up.”
The Shadow of the Pitchfork
http://www.chris-floyd.com/component/content/article/3/1618-the-shadow-of-the-pitchfork-elite-panic-attack-as-bailout-goes-bust.html
The Shadow of the Pitchfork: Elite Panic Attack as Bailout Goes Bust
Written by Chris Floyd
9-29-8
The vote by the House of Representatives to defeat the Wall Street bailout plan is the first act of political courage that the Congress of the United States has mounted in the last seven years. The fact that it was due largely to right-wing Republicans afraid of going down with the sinking ship of the witless leader they have followed blindly throughout his reign is a delicious irony -- but the whys and wherefores of the vote are not important. What matters is that one of America's moribund institutions has flickered to life long enough to derail a disastrous action that would have shoved the nation even deeper into the pit of corruption and ruin where it has been mired for so long.
The New York Times called the House vote "a catastrophic political defeat for President Bush, who had put the full weight of the White House behind the measure." But this is manifestly untrue. As everyone but the nation's media -- and the Democratic Party -- knows, George W. Bush has no "political weight" to use, or lose. Yes, he still retains the authoritarian powers that the spineless Democrats have given him with scarcely a whimper of protest (and often with boundless enthusiasm); but as a political force -- i.e., someone whose opinions and statements can sway popular opinion -- he has been a dead and rotting carcass for a long time. He is the most unpopular president in American history; and I can report from first-hand, eyewitness knowledge that he is thoroughly despised by some of the most rock-ribbed, Bible-believing, flag-waving, down-home, John Wayne-loving Heartland types that you can imagine. Even his own party -- a party fashioned in his own image, the Frankensteinian melding of willfully ignorant religious primitivism and rapaciously greedy crony capitalism that he has embodied in his twerpish person -- kept him away from their convention this year.
Nothing -- absolutely nothing -- could be politically safer than opposing George W. Bush. And yet the entire Democratic leadership, Barack Obama included, lined up to support a cockamamie plan proposed by this scorned and shriveled figure, a plan that was transparently nothing more than an audacious raid on the Treasury by Big Money hoods and yet another authoritarian power grab by a gang of murderous, torturing, warmongering toadies. This was the plan and these were the people that the Democrats decided to fight for.
What's more, the Democrats stood shoulder to shoulder with the president on what is apparently the only issue that can now stir Americans to genuine anger and widespread protest: a direct threat to their bank accounts. Wars of aggression like the Nazis used to wage; elaborate tortures like the KGB used to practice; concentration camps, lawbreaking leaders, diminishment of liberty, the slaughter of a million innocent people in a land destroyed by an illegal and pointless invasion -- all of that stuff is pretty much OK, easily swallowable, worth no more than a shrug or perhaps a frowny "tsk tsk" before going on to the sports pages or flipping over to another channel. But put out an open ploy to steal their money and give it to the filthy rich -- and baby, it's pitchfork time! Yet here, as the public face of just such a ploy, is where the Democrats chose to make their stand.
So Monday's rejection of the bailout plan is not a catastrophic political defeat for George W. Bush; he has no political standing, no political future. But it is a vast and humiliating defeat for the Democratic leadership, across the board, who, as Democrat Lloyd Dogget of Texas said “never seriously considered any alternative” to the administration’s plan, and had only barely modified what they were given. He criticized the plan for handing over sweeping new powers to an administration that he said was to blame for allowing the crisis to develop in the first place.
Now the Democratic elites have had their collective head handed to them on a platter. It is a dish most richly deserved. And although it is almost possible to believe that they will learn anything from this episode, there is now a chance -- a chance -- that we can at least have a discussion of alternatives to the Bush scheme.
I still believe it is unlikely any genuinely effective program -- one that could manage and mitigate the now-unavoidable effects of the Wall Street/Washington-induced disaster -- will ever get enacted. After all, the Democrats are largely owned by the same corrupt and greedy elites now seeking a handout. And it seems reasonable to assume that the Bipartisan Bailout Bunch will eventually find some kind of sugar to tempt away the two dozen votes they need for their next "compromise" on the Bush-Paulson plan.
Then again, who knows? There are obviously a lot of very powerful and privileged people sweating more bullets tonight than they have sweated in many and many a year. They have roused the drowsy beast of popular anger at last, and no one can say what might happen next. Probably nothing -- or rather, more of the same, in some form or another. But still, it is good to see the icy beads of panic dotting the brows of elites who have inflicted and/or countenanced so much death, destruction, terror and degradation in the past few years. Today they have suffered a very rare defeat in the relentless, remorseless class war they have been waging against us for decades. And that is something to celebrate -- at least for one night.
The Shadow of the Pitchfork: Elite Panic Attack as Bailout Goes Bust
Written by Chris Floyd
9-29-8
The vote by the House of Representatives to defeat the Wall Street bailout plan is the first act of political courage that the Congress of the United States has mounted in the last seven years. The fact that it was due largely to right-wing Republicans afraid of going down with the sinking ship of the witless leader they have followed blindly throughout his reign is a delicious irony -- but the whys and wherefores of the vote are not important. What matters is that one of America's moribund institutions has flickered to life long enough to derail a disastrous action that would have shoved the nation even deeper into the pit of corruption and ruin where it has been mired for so long.
The New York Times called the House vote "a catastrophic political defeat for President Bush, who had put the full weight of the White House behind the measure." But this is manifestly untrue. As everyone but the nation's media -- and the Democratic Party -- knows, George W. Bush has no "political weight" to use, or lose. Yes, he still retains the authoritarian powers that the spineless Democrats have given him with scarcely a whimper of protest (and often with boundless enthusiasm); but as a political force -- i.e., someone whose opinions and statements can sway popular opinion -- he has been a dead and rotting carcass for a long time. He is the most unpopular president in American history; and I can report from first-hand, eyewitness knowledge that he is thoroughly despised by some of the most rock-ribbed, Bible-believing, flag-waving, down-home, John Wayne-loving Heartland types that you can imagine. Even his own party -- a party fashioned in his own image, the Frankensteinian melding of willfully ignorant religious primitivism and rapaciously greedy crony capitalism that he has embodied in his twerpish person -- kept him away from their convention this year.
Nothing -- absolutely nothing -- could be politically safer than opposing George W. Bush. And yet the entire Democratic leadership, Barack Obama included, lined up to support a cockamamie plan proposed by this scorned and shriveled figure, a plan that was transparently nothing more than an audacious raid on the Treasury by Big Money hoods and yet another authoritarian power grab by a gang of murderous, torturing, warmongering toadies. This was the plan and these were the people that the Democrats decided to fight for.
What's more, the Democrats stood shoulder to shoulder with the president on what is apparently the only issue that can now stir Americans to genuine anger and widespread protest: a direct threat to their bank accounts. Wars of aggression like the Nazis used to wage; elaborate tortures like the KGB used to practice; concentration camps, lawbreaking leaders, diminishment of liberty, the slaughter of a million innocent people in a land destroyed by an illegal and pointless invasion -- all of that stuff is pretty much OK, easily swallowable, worth no more than a shrug or perhaps a frowny "tsk tsk" before going on to the sports pages or flipping over to another channel. But put out an open ploy to steal their money and give it to the filthy rich -- and baby, it's pitchfork time! Yet here, as the public face of just such a ploy, is where the Democrats chose to make their stand.
So Monday's rejection of the bailout plan is not a catastrophic political defeat for George W. Bush; he has no political standing, no political future. But it is a vast and humiliating defeat for the Democratic leadership, across the board, who, as Democrat Lloyd Dogget of Texas said “never seriously considered any alternative” to the administration’s plan, and had only barely modified what they were given. He criticized the plan for handing over sweeping new powers to an administration that he said was to blame for allowing the crisis to develop in the first place.
Now the Democratic elites have had their collective head handed to them on a platter. It is a dish most richly deserved. And although it is almost possible to believe that they will learn anything from this episode, there is now a chance -- a chance -- that we can at least have a discussion of alternatives to the Bush scheme.
I still believe it is unlikely any genuinely effective program -- one that could manage and mitigate the now-unavoidable effects of the Wall Street/Washington-induced disaster -- will ever get enacted. After all, the Democrats are largely owned by the same corrupt and greedy elites now seeking a handout. And it seems reasonable to assume that the Bipartisan Bailout Bunch will eventually find some kind of sugar to tempt away the two dozen votes they need for their next "compromise" on the Bush-Paulson plan.
Then again, who knows? There are obviously a lot of very powerful and privileged people sweating more bullets tonight than they have sweated in many and many a year. They have roused the drowsy beast of popular anger at last, and no one can say what might happen next. Probably nothing -- or rather, more of the same, in some form or another. But still, it is good to see the icy beads of panic dotting the brows of elites who have inflicted and/or countenanced so much death, destruction, terror and degradation in the past few years. Today they have suffered a very rare defeat in the relentless, remorseless class war they have been waging against us for decades. And that is something to celebrate -- at least for one night.
Stopping a Financial Crisis, the Swedish Way
http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html
September 23, 2008
Stopping a Financial Crisis, the Swedish Way
By CARTER DOUGHERTY
A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?
It does to Sweden. The country was so far in the hole in 1992 — after years of imprudent regulation, short-sighted economic policy and the end of its property boom — that its banking system was, for all practical purposes, insolvent.
But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.
Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.
That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.
“If I go into a bank,” said Bo Lundgren, who was Sweden’s deputy minister of finance at the time, “I’d rather get equity so that there is some upside for the taxpayer.”
Sweden spent 4 percent of its gross domestic product, or 65 billion kronor, the equivalent of $11.7 billion at the time, or $18.3 billion in today’s dollars, to rescue ailing banks. That is slightly less, proportionate to the national economy, than the $700 billion, or roughly 5 percent of gross domestic product, that the Bush administration estimates its own move will cost in the United States.
But the final cost to Sweden ended up being less than 2 percent of its G.D.P. Some officials say they believe it was closer to zero, depending on how certain rates of return are calculated.
The tumultuous events of the last few weeks have produced a lot of tight-lipped nods in Stockholm. Mr. Lundgren even made the rounds in New York in early September, explaining what the country did in the early 1990s.
A few American commentators have proposed that the United States government extract equity from banks as a price for their rescue. But it does not seem to be under serious consideration yet in the Bush administration or Congress.
The reason is not quite clear. The government has already swapped its sovereign guarantee for equity in Fannie Mae and Freddie Mac, the mortgage finance institutions, and the American International Group, the global insurance giant.
Putting taxpayers on the hook without anything in return could be a mistake, said Urban Backstrom, a senior Swedish finance ministry official at the time. “The public will not support a plan if you leave the former shareholders with anything,” he said.
The Swedish crisis had strikingly similar origins to the American one, and its neighbors, Norway and Finland, were hobbled to the point of needing a government bailout to escape the morass as well.
Financial deregulation in the 1980s fed a frenzy of real estate lending by Sweden’s banks, which did not worry enough about whether the value of their collateral might evaporate in tougher times.
Property prices imploded. The bubble deflated fast in 1991 and 1992. A vain effort to defend Sweden’s currency, the krona, caused overnight interest rates to spike at one point to 500 percent. The Swedish economy contracted for two consecutive years after a long expansion, and unemployment, at 3 percent in 1990, quadrupled in three years.
After a series of bank failures and ad hoc solutions, the moment of truth arrived in September 1992, when the government of Prime Minister Carl Bildt decided it was time to clear the decks.
Standing shoulder-to-shoulder with the opposition center-left, Mr. Bildt’s conservative government announced that the Swedish state would guarantee all bank deposits and creditors of the nation’s 114 banks. Sweden formed a new agency to supervise institutions that needed recapitalization, and another that sold off the assets, mainly real estate, that the banks held as collateral.
Sweden told its banks to write down their losses promptly before coming to the state for recapitalization. Facing its own problem later in the decade, Japan made the mistake of dragging this process out, delaying a solution for years.
Then came the imperative to bleed shareholders first. Mr. Lundgren recalls a conversation with Peter Wallenberg, at the time chairman of SEB, Sweden’s largest bank. Mr. Wallenberg, the scion of the country’s most famous family and steward of large chunks of its economy, heard that there would be no sacred cows.
The Wallenbergs turned around and arranged a recapitalization on their own, obviating the need for a bailout. SEB turned a profit the following year, 1993.
“For every krona we put into the bank, we wanted the same influence,” Mr. Lundgren said. “That ensured that we did not have to go into certain banks at all.”
By the end of the crisis, the Swedish government had seized a vast portion of the banking sector, and the agency had mostly fulfilled its hard-nosed mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again.
More money may yet come into official coffers. The government still owns 19.9 percent of Nordea, a Stockholm bank that was fully nationalized and is now a highly regarded giant in Scandinavia and the Baltic Sea region.
The politics of Sweden’s crisis management were similarly tough-minded, though much quieter.
Soon after the plan was announced, the Swedish government found that international confidence returned more quickly than expected, easing pressure on its currency and bringing money back into the country. The center-left opposition, while wary that the government might yet let the banks off the hook, made its points about penalizing shareholders privately.
“The only thing that held back an avalanche was the hope that the system was holding,” said Leif Pagrotzky, a senior member of the opposition at the time. “In public we stuck together 100 percent, but we fought behind the scenes.”
September 23, 2008
Stopping a Financial Crisis, the Swedish Way
By CARTER DOUGHERTY
A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?
It does to Sweden. The country was so far in the hole in 1992 — after years of imprudent regulation, short-sighted economic policy and the end of its property boom — that its banking system was, for all practical purposes, insolvent.
But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.
Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.
That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.
“If I go into a bank,” said Bo Lundgren, who was Sweden’s deputy minister of finance at the time, “I’d rather get equity so that there is some upside for the taxpayer.”
Sweden spent 4 percent of its gross domestic product, or 65 billion kronor, the equivalent of $11.7 billion at the time, or $18.3 billion in today’s dollars, to rescue ailing banks. That is slightly less, proportionate to the national economy, than the $700 billion, or roughly 5 percent of gross domestic product, that the Bush administration estimates its own move will cost in the United States.
But the final cost to Sweden ended up being less than 2 percent of its G.D.P. Some officials say they believe it was closer to zero, depending on how certain rates of return are calculated.
The tumultuous events of the last few weeks have produced a lot of tight-lipped nods in Stockholm. Mr. Lundgren even made the rounds in New York in early September, explaining what the country did in the early 1990s.
A few American commentators have proposed that the United States government extract equity from banks as a price for their rescue. But it does not seem to be under serious consideration yet in the Bush administration or Congress.
The reason is not quite clear. The government has already swapped its sovereign guarantee for equity in Fannie Mae and Freddie Mac, the mortgage finance institutions, and the American International Group, the global insurance giant.
Putting taxpayers on the hook without anything in return could be a mistake, said Urban Backstrom, a senior Swedish finance ministry official at the time. “The public will not support a plan if you leave the former shareholders with anything,” he said.
The Swedish crisis had strikingly similar origins to the American one, and its neighbors, Norway and Finland, were hobbled to the point of needing a government bailout to escape the morass as well.
Financial deregulation in the 1980s fed a frenzy of real estate lending by Sweden’s banks, which did not worry enough about whether the value of their collateral might evaporate in tougher times.
Property prices imploded. The bubble deflated fast in 1991 and 1992. A vain effort to defend Sweden’s currency, the krona, caused overnight interest rates to spike at one point to 500 percent. The Swedish economy contracted for two consecutive years after a long expansion, and unemployment, at 3 percent in 1990, quadrupled in three years.
After a series of bank failures and ad hoc solutions, the moment of truth arrived in September 1992, when the government of Prime Minister Carl Bildt decided it was time to clear the decks.
Standing shoulder-to-shoulder with the opposition center-left, Mr. Bildt’s conservative government announced that the Swedish state would guarantee all bank deposits and creditors of the nation’s 114 banks. Sweden formed a new agency to supervise institutions that needed recapitalization, and another that sold off the assets, mainly real estate, that the banks held as collateral.
Sweden told its banks to write down their losses promptly before coming to the state for recapitalization. Facing its own problem later in the decade, Japan made the mistake of dragging this process out, delaying a solution for years.
Then came the imperative to bleed shareholders first. Mr. Lundgren recalls a conversation with Peter Wallenberg, at the time chairman of SEB, Sweden’s largest bank. Mr. Wallenberg, the scion of the country’s most famous family and steward of large chunks of its economy, heard that there would be no sacred cows.
The Wallenbergs turned around and arranged a recapitalization on their own, obviating the need for a bailout. SEB turned a profit the following year, 1993.
“For every krona we put into the bank, we wanted the same influence,” Mr. Lundgren said. “That ensured that we did not have to go into certain banks at all.”
By the end of the crisis, the Swedish government had seized a vast portion of the banking sector, and the agency had mostly fulfilled its hard-nosed mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again.
More money may yet come into official coffers. The government still owns 19.9 percent of Nordea, a Stockholm bank that was fully nationalized and is now a highly regarded giant in Scandinavia and the Baltic Sea region.
The politics of Sweden’s crisis management were similarly tough-minded, though much quieter.
Soon after the plan was announced, the Swedish government found that international confidence returned more quickly than expected, easing pressure on its currency and bringing money back into the country. The center-left opposition, while wary that the government might yet let the banks off the hook, made its points about penalizing shareholders privately.
“The only thing that held back an avalanche was the hope that the system was holding,” said Leif Pagrotzky, a senior member of the opposition at the time. “In public we stuck together 100 percent, but we fought behind the scenes.”
Paulson cannot be allowed a blank cheque
http://www.ft.com/cms/s/0/9973c5b0-8a6d-11dd-a76a-0000779fd18c.html
Paulson cannot be allowed a blank cheque
By George Soros
September 24 2008
Hank Paulson’s $700bn rescue package has run into difficulty on Capitol Hill. Rightly so: it was ill-conceived. Congress would be abdicating its responsibility if it gave the Treasury secretary a blank cheque. The bill submitted to Congress even had language in it that would exempt the secretary’s decisions from review by any court or administrative agency – the ultimate fulfillment of the Bush administration’s dream of a unitary executive.
Mr Paulson’s record does not inspire the confidence necessary to give him discretion over $700bn. His actions last week brought on the crisis that makes rescue necessary. On Monday he allowed Lehman Brothers to fail and refused to make government funds available to save AIG. By Tuesday he had to reverse himself and provide an $85bn loan to AIG on punitive terms. The demise of Lehman disrupted the commercial paper market. A large money market fund “broke the buck” and investment banks that relied on the commercial paper market had difficulty financing their operations. By Thursday a run on money market funds was in full swing and we came as close to a meltdown as at any time since the 1930s. Mr Paulson reversed again and proposed a systemic rescue.
Mr Paulson had got a blank cheque from Congress once before. That was to deal with Fannie Mae and Freddie Mac. His solution landed the housing market in the worst of all worlds: their managements knew that if the blank cheques were filled out they would lose their jobs, so they retrenched and made mortgages more expensive and less available. Within a few weeks the market forced Mr Paulson’s hand and he had to take them over.
Mr Paulson’s proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information. The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up with the dregs. The proposal is also rife with latent conflict of interest issues. Unless the Treasury overpays for the securities, the scheme would not bring relief. But if the scheme is used to bail out insolvent banks, what will the taxpayers get in return?
Barack Obama has outlined four conditions that ought to be imposed: an upside for the taxpayers as well as a downside; a bipartisan board to oversee the process; help for the homeowners as well as the holders of the mortgages; and some limits on the compensation of those who benefit from taxpayers’ money. These are the right principles. They could be applied more effectively by capitalising the institutions that are burdened by distressed securities directly rather than by relieving them of the distressed securities.
The injection of government funds would be much less problematic if it were applied to the equity rather than the balance sheet. $700bn in preferred stock with warrants may be sufficient to make up the hole created by the bursting of the housing bubble. By contrast, the addition of $700bn on the demand side of an $11,000bn market may not be sufficient to arrest the decline of housing prices.
Something also needs to be done on the supply side. To prevent housing prices from overshooting on the downside, the number of foreclosures has to be kept to a minimum. The terms of mortgages need to be adjusted to the homeowners’ ability to pay.
The rescue package leaves this task undone. Making the necessary modifications is a delicate task rendered more difficult by the fact that many mortgages have been sliced up and repackaged in the form of collateralised debt obligations. The holders of the various slices have conflicting interests. It would take too long to work out the conflicts to include a mortgage modification scheme in the rescue package. The package can, however, prepare the ground by modifying bankruptcy law as it relates to principal residences.
Now that the crisis has been unleashed a large-scale rescue package is probably indispensable to bring it under control. Rebuilding the depleted balance sheets of the banking system is the right way to go. Not every bank deserves to be saved, but the experts at the Federal Reserve, with proper supervision, can be counted on to make the right judgments. Managements that are reluctant to accept the consequences of past mistakes could be penalised by depriving them of the Fed’s credit facilities. Making government funds available should also encourage the private sector to participate in recapitalising the banking sector and bringing the financial crisis to a close.
The writer is chairman of Soros Fund Management
Paulson cannot be allowed a blank cheque
By George Soros
September 24 2008
Hank Paulson’s $700bn rescue package has run into difficulty on Capitol Hill. Rightly so: it was ill-conceived. Congress would be abdicating its responsibility if it gave the Treasury secretary a blank cheque. The bill submitted to Congress even had language in it that would exempt the secretary’s decisions from review by any court or administrative agency – the ultimate fulfillment of the Bush administration’s dream of a unitary executive.
Mr Paulson’s record does not inspire the confidence necessary to give him discretion over $700bn. His actions last week brought on the crisis that makes rescue necessary. On Monday he allowed Lehman Brothers to fail and refused to make government funds available to save AIG. By Tuesday he had to reverse himself and provide an $85bn loan to AIG on punitive terms. The demise of Lehman disrupted the commercial paper market. A large money market fund “broke the buck” and investment banks that relied on the commercial paper market had difficulty financing their operations. By Thursday a run on money market funds was in full swing and we came as close to a meltdown as at any time since the 1930s. Mr Paulson reversed again and proposed a systemic rescue.
Mr Paulson had got a blank cheque from Congress once before. That was to deal with Fannie Mae and Freddie Mac. His solution landed the housing market in the worst of all worlds: their managements knew that if the blank cheques were filled out they would lose their jobs, so they retrenched and made mortgages more expensive and less available. Within a few weeks the market forced Mr Paulson’s hand and he had to take them over.
Mr Paulson’s proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information. The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up with the dregs. The proposal is also rife with latent conflict of interest issues. Unless the Treasury overpays for the securities, the scheme would not bring relief. But if the scheme is used to bail out insolvent banks, what will the taxpayers get in return?
Barack Obama has outlined four conditions that ought to be imposed: an upside for the taxpayers as well as a downside; a bipartisan board to oversee the process; help for the homeowners as well as the holders of the mortgages; and some limits on the compensation of those who benefit from taxpayers’ money. These are the right principles. They could be applied more effectively by capitalising the institutions that are burdened by distressed securities directly rather than by relieving them of the distressed securities.
The injection of government funds would be much less problematic if it were applied to the equity rather than the balance sheet. $700bn in preferred stock with warrants may be sufficient to make up the hole created by the bursting of the housing bubble. By contrast, the addition of $700bn on the demand side of an $11,000bn market may not be sufficient to arrest the decline of housing prices.
Something also needs to be done on the supply side. To prevent housing prices from overshooting on the downside, the number of foreclosures has to be kept to a minimum. The terms of mortgages need to be adjusted to the homeowners’ ability to pay.
The rescue package leaves this task undone. Making the necessary modifications is a delicate task rendered more difficult by the fact that many mortgages have been sliced up and repackaged in the form of collateralised debt obligations. The holders of the various slices have conflicting interests. It would take too long to work out the conflicts to include a mortgage modification scheme in the rescue package. The package can, however, prepare the ground by modifying bankruptcy law as it relates to principal residences.
Now that the crisis has been unleashed a large-scale rescue package is probably indispensable to bring it under control. Rebuilding the depleted balance sheets of the banking system is the right way to go. Not every bank deserves to be saved, but the experts at the Federal Reserve, with proper supervision, can be counted on to make the right judgments. Managements that are reluctant to accept the consequences of past mistakes could be penalised by depriving them of the Fed’s credit facilities. Making government funds available should also encourage the private sector to participate in recapitalising the banking sector and bringing the financial crisis to a close.
The writer is chairman of Soros Fund Management
Thursday, September 25, 2008
Bailout CEOs who refuse pay cuts unpatriotic
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN2340224020080923
Bailout CEOs who refuse pay cuts unpatriotic - Frank
Tue Sep 23, 2008
NEW YORK - Wall Street titans who refuse to take a pay cut to join a proposed $700-billion U.S. financial system bailout were "selfish and unpatriotic", a senior Democrat said on Tuesday.
House Financial Services Committee chairman Barney Frank said he doubted the legislation would pass the Democrat-controlled Congress without including limits on compensation for executives of firms offloading bad assets.
The financial crisis has become the No. 1 issue in campaigning for the Nov. 4 U.S. presidential election, and with many members of Congress also vying to retain their seats, lawmakers are reluctant to merely rubber stamp the Bush administration's plan.
The Massachusetts Democrat was responding to Treasury Secretary Henry Paulson's assertion that limits on compensation could discourage companies from joining what would be the largest government bailout in U.S. history.
"What he is saying here is, this program that they think is very important, we need it to get the economy out of the doldrums, but if it is going to nick them of a couple of million of the millions that they already have, they are going to boycott it," Frank told CNBC.
"I hope they are not that selfish and unpatriotic," he said. "This is going to be a hard sell to a lot of elected officials even with this."
Paulson last week called for the creation of a massive government war chest to take illiquid assets off the books of banks and other firms in the hope of unclogging credit markets choking on mortgage-related debt.
"The question is does he want this package passed or not," said Frank.
Democrats, who control both chambers of Congress, want more taxpayer protections, help for home owners facing foreclosure, limits on compensation for executives of firms offloading bad assets and greater oversight of the program, which would give the Treasury secretary nearly unfettered powers.
"You can't have these situations where if the investment pays off, the CEO makes money, but if it doesn't pay off he goes home and has a nice dinner and makes no penalty," Frank said. "People who have gotten themselves into some trouble and need federal help, they have no right to expect that there won't be some compensation numbers," he added. (Reporting by Jason Szep; Editing by Tim Dobbyn)
Bailout CEOs who refuse pay cuts unpatriotic - Frank
Tue Sep 23, 2008
NEW YORK - Wall Street titans who refuse to take a pay cut to join a proposed $700-billion U.S. financial system bailout were "selfish and unpatriotic", a senior Democrat said on Tuesday.
House Financial Services Committee chairman Barney Frank said he doubted the legislation would pass the Democrat-controlled Congress without including limits on compensation for executives of firms offloading bad assets.
The financial crisis has become the No. 1 issue in campaigning for the Nov. 4 U.S. presidential election, and with many members of Congress also vying to retain their seats, lawmakers are reluctant to merely rubber stamp the Bush administration's plan.
The Massachusetts Democrat was responding to Treasury Secretary Henry Paulson's assertion that limits on compensation could discourage companies from joining what would be the largest government bailout in U.S. history.
"What he is saying here is, this program that they think is very important, we need it to get the economy out of the doldrums, but if it is going to nick them of a couple of million of the millions that they already have, they are going to boycott it," Frank told CNBC.
"I hope they are not that selfish and unpatriotic," he said. "This is going to be a hard sell to a lot of elected officials even with this."
Paulson last week called for the creation of a massive government war chest to take illiquid assets off the books of banks and other firms in the hope of unclogging credit markets choking on mortgage-related debt.
"The question is does he want this package passed or not," said Frank.
Democrats, who control both chambers of Congress, want more taxpayer protections, help for home owners facing foreclosure, limits on compensation for executives of firms offloading bad assets and greater oversight of the program, which would give the Treasury secretary nearly unfettered powers.
"You can't have these situations where if the investment pays off, the CEO makes money, but if it doesn't pay off he goes home and has a nice dinner and makes no penalty," Frank said. "People who have gotten themselves into some trouble and need federal help, they have no right to expect that there won't be some compensation numbers," he added. (Reporting by Jason Szep; Editing by Tim Dobbyn)
Phones 'ringing off the hook' against bailout
http://latimesblogs.latimes.com/laland/2008/09/ohio-senator-ph.html
Ohio senator: Phones 'ringing off the hook' against bailout
A key quote in this morning's Senate hearing about the Paulson bailout is worth repeating. This comes from Ohio Sen. Sherrod Brown, a Democrat:
"Like my colleagues, my phones have been ringing off the hook. The sentiment from Ohioans about this proposal is universally negative."
Not "overwhelmingly negative." Not "deeply suspicious." Not "extremely upset." Universally negative.
I'll state the obvious: Members of Congress aren't generally in the habit of passing historic and spectacularly unpopular legislation five weeks before election day. Republicans in Congress hate this bill, and I'm unconvinced the Democrats in Congress will take a bullet, figuratively, for the most unpopular president since the final days of Nixon. (Trivia: Henry Paulson worked in the Nixon administration.)
Watching the Paulson-Bernanke hearing on CNBC, this struck me as news: the suggestion by Sen. Charles Schumer (D-N.Y.) that instead of granting one giant bailout, Congress might instead break it into smaller pieces, giving the administration permission to begin buying securities, but with an initial budget of far less than $700 billion. In other words, let the Treasury go out and buy $50 billion or so worth of mortgage securities and see how it works before granting the authority to spend a trillion dollars or so.
Posted by Peter Viles on September 23, 2008 in bailout
Ohio senator: Phones 'ringing off the hook' against bailout
A key quote in this morning's Senate hearing about the Paulson bailout is worth repeating. This comes from Ohio Sen. Sherrod Brown, a Democrat:
"Like my colleagues, my phones have been ringing off the hook. The sentiment from Ohioans about this proposal is universally negative."
Not "overwhelmingly negative." Not "deeply suspicious." Not "extremely upset." Universally negative.
I'll state the obvious: Members of Congress aren't generally in the habit of passing historic and spectacularly unpopular legislation five weeks before election day. Republicans in Congress hate this bill, and I'm unconvinced the Democrats in Congress will take a bullet, figuratively, for the most unpopular president since the final days of Nixon. (Trivia: Henry Paulson worked in the Nixon administration.)
Watching the Paulson-Bernanke hearing on CNBC, this struck me as news: the suggestion by Sen. Charles Schumer (D-N.Y.) that instead of granting one giant bailout, Congress might instead break it into smaller pieces, giving the administration permission to begin buying securities, but with an initial budget of far less than $700 billion. In other words, let the Treasury go out and buy $50 billion or so worth of mortgage securities and see how it works before granting the authority to spend a trillion dollars or so.
Posted by Peter Viles on September 23, 2008 in bailout
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