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Re: Bush Asks Congress for $700 Billion Bailout
WASHINGTON - The Bush administration is asking Congress to let the government buy $700 billion in toxic mortgages in the largest financial bailout since the Great Depression, according to a draft of the plan obtained Saturday by The Associated Press.
The plan would give the government broad power to buy the bad debt of any U.S. financial institution for the next two years. It would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue. The proposal does not specify what the government would get in return from financial companies for the federal assistance.
'We're going to work with Congress to get a bill done quickly,' President Bush said at the White House. Without discussing details of the plan, he said, 'This is a big package because it was a big problem.'
The White House and congressional leaders are hoping the legislation, which is still being developed, could pass as early as next week.
Administration officials and members of Congress were to negotiate through the weekend. The plan is designed to let faltering financial institutions unload their distressed mortgage-related assets on the government, and in turn the taxpayer, in a bid to avoid dire economic consequences.
Bush said he worried the financial troubles 'could ripple throughout' the economy and affect average citizens. 'The risk of doing nothing far outweighs the risk of the package, and over time we're going to get a lot of the money back.'
He added, 'People are beginning to doubt our system, people were losing confidence, and I understand it's important to have confidence in our financial system.'
'In my judgment, based upon the advice of a lot of people who know how markets work, this problem wasn't going to be contained to just the financial community,' the president said. He said he was concerned about 'Main Street' and that what happens on 'Wall Street' affects 'Main Street.'
Sen. Chuck Schumer, D-N.Y., called the proposal 'a good foundation,' but raised concerns it 'includes no visible protection for taxpayers or homeowners.'
Democrats are insisting the rescue include mortgage help to let struggling homeowners avoid foreclosures. They also are also considering attaching additional middle-class assistance to the legislation despite a request from Bush to avoid adding controversial items that could delay action. An expansion of jobless benefits was one possibility.
Asked about the chances of adding such items, Bush sidestepped the question, saying only that now was not the time for political posturing. 'The cleaner the better,' he said about legislation he hopes Congress sends back to him at the White House.
If passed by Congress, the plan would give the Treasury secretary broad power to buy and sell the mortgage-related investments without any additional involvement by lawmakers. The proposal, however, would require that the congressional committees with oversight on budget, tax and financial services issues be briefed within three months of the government's first use of the rescue power, and every six months after that.
While the proposal contains no requirement that the government receive anything from banks in return for unloading their bad assets, it would allow the Treasury Department to designate financial institutions as 'agents of the government,' and mandate that they perform any 'reasonable duties' that might entail.
In a briefing to lawmakers Friday, Paulson and Federal Reserve Chairman Ben Bernanke painted a grave picture of an economy on the edge of a major recession and telling them that action was urgent and imperative.
In a session with House Democrats, they described a plan where the government would in essence set up reverse auctions, putting up money for a class of distressed assets '” such as loans that are delinquent but not in default '” and financial institutions would compete for how little they would accept for the investments, said Rep. Brad Sherman, D-Calif., who participated in the conference call.
'You give them good cash; they give you the worst of the worst,' Sherman said. A critic of the plan, he complained that Bush and his economic advisers were trying to panic lawmakers into rubber-stamping it.
Paulson said the new troubled-asset relief program must be large enough to have the necessary impact while protecting taxpayers as much as possible.
'I am convinced that this bold approach will cost American families far less than the alternative '” a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion,' Paulson said. 'The financial security of all Americans ... depends on our ability to restore our financial institutions to a sound footing.'
Administration officials hoped the rescue plan could be finalized this weekend, to lend calm to Monday morning's market openings, said Keith Hennessey, the director of the president's economic council. The goal is to have something passed by Congress by the end of next week, when lawmakers recess for the elections.
Re: Bush Asks Congress for $700 Billion Bailout
These companies took high risk investments. They knew the risk when the issued the loans. Now that their risks are turning to failure, they turn to taxpayers to bail them out.
This is another example of our government looking for a shorterm solution with no thought of the longterm effects of either choice.
I belive that these firms should be allowed to fail. Why should the taxpayers have to bail them out when they couldn't even manage their own firm? The greatest thing about our economy is its ability to pick itself up. The failures of these businesses will give our government, and public, a much needed wakeup call. Our current system isn't cutting it.
The only thing the government should be thinking about right now is how to improve things in the long run. This means some regulations are neccessary to make sure this same kind of poor management doesn't affect the market like this again.
Another great aspect of our free market economy- when one business fails, there are 10 more waiting to take its place. When government interferes with this, the system fails. The free market system is not to blame here, it is poor leadership in both the government and the firms that is to blame.
Re: Bush Asks Congress for $700 Billion Bailout
^ Agreed, however these aren't the types of companies that are easily bought out. $80 billion, is Microsoft even worth that much?? Nobody bought Lehman Bros did they? For good reason. And alot of these companies have 50,000+ employees who could get laid off (Merril Lynch, Smith Barney, Prudential etc). Also, a continual collapse of these corporations leads to people withdrawing their money from the market & banks, leaving them with less cash & more debt, and later more bankruptcies of companies (Chapter 11's). Then more layoffs, higher unemployment, less spending, even more layoffs in fields like retail, sales & advertising since companies earning less etc. Sure, in a free market it would balance out eventually, but at what point? A depression with unemployment at 20+%??
I'm not saying this had to be done, or whether it's the right thing or the wrong thing to do, but I think some of those people do know alot more about it all & it's implications than you & me. I don't this this situation is an isolated bailout as much as it is an urgent prevention of an ultimate economic collapse. Who knows how bad the alternative could get. I don't know what industry you're in but it's possible in 6 months you & I could have been out of work.
It is due to failed oversight though, and fat cat CEO's & their companies need to be monitored in a better capacity than what's currently in place. For alot of industries, but especially financial, banking & lending.
Re: Bush Asks Congress for $700 Billion Bailout
The plan would give the government broad power to buy the bad debt of any U.S. financial institution
the plan would give the Treasury secretary broad power to buy and sell the mortgage-related investments without any additional involvement by lawmakers.
it would allow the Treasury Department to designate financial institutions as 'agents of the government,' and mandate that they perform any 'reasonable duties' that might entail.
From democracy to fascism.
he complained that Bush and his economic advisers were trying to panic lawmakers into rubber-stamping it.
He has no reason to try and make you panic. You rubber stamp everything Bush sends your way. This wont be any different. We're not fools.
Re: Bush Asks Congress for $700 Billion Bailout
The plan would give the government broad power to buy the bad debt of any U.S. financial institution
the plan would give the Treasury secretary broad power to buy and sell the mortgage-related investments without any additional involvement by lawmakers.
it would allow the Treasury Department to designate financial institutions as 'agents of the government,' and mandate that they perform any 'reasonable duties' that might entail.
From democracy to fascism.
he complained that Bush and his economic advisers were trying to panic lawmakers into rubber-stamping it.
He has no reason to try and make you panic. You rubber stamp everything Bush sends your way. This wont be any different. We're not fools.
Blame the amateurs that ran those companies.
The free market days are DONE. The government needs to control IT ALL as far as i'm concerned.
Re: Bush Asks Congress for $700 Billion Bailout
The free market days are DONE. The government needs to control IT ALL as far as i'm concerned.
Yes they are done and we're not going back, but I don't like the thought of everything being controlled by the government.
Maybe the country does need Obama in this era. He'll usher in the fascism even quicker.
We fought against these types of ideals in WWII and are now embracing them.
I wonder if Bush sees the irony of the US bankrupting itself to "spread democracy" and while that endeavor was underway, we actually destroyed democracy ourselves.
Re: Bush Asks Congress for $700 Billion Bailout
PaSnow, i didn't mean that the companies would be bought out. The companies will surely fail, but there are many more firms like them that can assume their role, hopefully better than they did.
I'm not a fan of fascism. I don't want to live in a fascist country. If Obama sends us there, i'm voting McCain. I don't believe in universal healthcare.
This whole idea of the US 'spreading democracy' is a joke, and completley ironic.
Re: Bush Asks Congress for $700 Billion Bailout
This whole idea of the US 'spreading democracy' is a joke, and completley ironic.
Yeah, it's 'spreading democracy' alright... but included in this bill is extra funding to teach our kids Chinese & Russian just in case. 
Re: Bush Asks Congress for $700 Billion Bailout
Axlin08 wrote:The free market days are DONE. The government needs to control IT ALL as far as i'm concerned.
Yes they are done and we're not going back, but I don't like the thought of everything being controlled by the government.
Maybe the country does need Obama in this era. He'll usher in the fascism even quicker.
We fought against these types of ideals in WWII and are now embracing them.
I wonder if Bush sees the irony of the US bankrupting itself to "spread democracy" and while that endeavor was underway, we actually destroyed democracy ourselves.
I'm a small government guy myself, but I think the Democrats are stone cold right on this one.
Just because amateurs, who have sabotaged this country, does not mean it's an isolated incident. To protect ourselves, government HAS to step in in keep an eye on this stuff, so we don't have anymore $700bil bailouts.
Maybe one day we can loosen the straps a little, but not for a long time. The banks made this bed. Not Bush, Not Obama, not me or you.
- Randall Flagg
- Rep: 139
Re: Bush Asks Congress for $700 Billion Bailout
When the government has the authority to seize any assesst it deems valuable and thus a risk, we can wave good-bye to freedom. So we're going to nationalize health care and let the government control our economy. Does this seem absolutely absurd and against the very grain of what made America great to anyone else?
These realities only enforce my desire even more to run for office once I get done with the Army. Someone has to stand up for freedom and individual rights.
