Some early Bailout Info: Myths vs Reality

[JustRalph]

A source close to House Republicans has put out a Myth vs Fact rundown of the bailout compromise, announced early this morning. This may answer some questions that have come up in the comments over the last few days:

From the Hot Air Website

Myth: Windfall for ACORN.

Fact: The Frank-Dodd proposal created an affordable housing slush fund and directed 20 percent of net benefits from the program to be directed to ACORN-type organizations. The proposed compromise does not include any affordable housing slush fund and directs all net benefits back to the Treasury to pay down the national debt.

Myth: Tax increase on financial industry.

Fact: The proposed compromise imposes NO tax on the financial services industry. The proposed compromise simply requires a proposal from the Administration to recoup any losses after five years.
Fact: The proposed compromise includes tax cuts for struggling community banks.

Myth: Blank check for $700 billion with little accountability.

Fact: In general, the Treasury Secretary is limited to purchasing up to $250 billion outstanding at any one time. If the Treasury needs to use another $100 billion, the President must certify this action and report to Congress. Further spending requires Congressional action.

Myth: Treasury plan is the only option available.

Fact: Treasury is given multiple options to deal with the current economic crisis, including insurance, public/private auctions, loan guarantees, and direct support to financial institutions.

Fact: Further, Treasury is MANDATED to create an insurance program (Section 102) that protects the taxpayers and requires companies that wish to participate in this program to have some skin in the game by paying risk-based premiums.

Myth: The taxpayer is not adequately protected.

Fact: The proposed compromise includes strong taxpayer protections. Treasury’s proposal had minimal oversight to protect taxpayer dollars. The proposed compromise enhanced the oversight structure by creating a Financial Stability Oversight Board, a Special Inspector General, and a Congressional Oversight Panel.
All AIG-type deals require mandatory equity interest in order to provide taxpayers with potential future benefits. All auctions require a percentage of equity interest based on participation in the program.
Requires the Secretary to develop regulations/guidelines necessary to prohibit or, in specific cases, manage any conflicts of interest with respect to contractors, advisors, and asset managers.

Myth: The taxpayer does not benefit from Treasury bailouts.

Fact: The proposed compromise (Section 113) requires mandatory equity interest in scenarios like AIG. The proposed compromise also allows Treasury to take an equity interest in the program generally.

Myth: Treasury will never use the insurance option.

Fact: Treasury is mandated (Section 102) to establish an insurance program and set risk-based premiums. This will protect taxpayers by requiring the beneficiaries of the insurance program to pay risk-based premiums. Treasury further shall collect premiums mandatory equity interest in scenarios like AIG. The proposed compromise also allows Treasury to take an equity interest in the program generally.

[Tom]

Fact - the government SUCKS and cannot be trusted at all on anything.
Fact - Bush is a dipstick who cannot be believed no matter what he says.
Fact - Not one of the four horsemen ( and women) running are fit to serve as president.
Fact - Obama looks like one of the zombies in Dawn of the Dead

[ArlJim78]

now folks on mainstreet can get involved in the bailout.


http://www.buymyshitpile.com/

[sammy the sage]

Fact...COW already OUT of the F'G barn :rolleyes:

150B refund...which must be REPAID by YOU & I :mad:

1st 200B white-collar bail-out...which must be REPAID by YOU & I :(

AIG 85B...bail-out...which must be REPAID by YOU & I :faint:

25B...auto loan...when one or more declares bankruptcy...which must be REPAID by YOU & I :bang:

Oversea's % to foreign gov't's money borrowed/deals made...WHO KNOWS the ACTUAL f'g COST here :confused:

THOSE are the REAL fact's... :kiss:

[Tom]

It's not a bail out, it's a sell out.
It's a puppet show. All the little bought and paid for puppets are dancing as Wall Street pulls their strings.

[lamboguy]

the problem is that we are in a world wide economy these days. if it wasn't that way i would have a very simple solution for america. that would be that when you walk into the stores and everything you see has MADE IN USA on it.
in certain parts of the world, mainly AFRICA and SOUTH AMERICA the people in power control their populations with food and medicine. this is warfare.

[russowen77]

Too bad. I liked capitalism. Going to be strange living in a socialist country now.

[JustRalph]

Too bad. I liked capitalism. Going to be strange living in a socialist country now.

yeah, but just think of all the free cheese!

[ddog]

fact:

we don't need this bail-bs, loans for solid purposes are still being made, smaller and community banks are doing fine, well run banks are doing fine.

this bailout crap IS and will be gamed like nothing else before it.

it's a cash cow for the same clowns who brought you this whole mtg fiasco in the first place.


a total welfare for the bankster and lawyer and down on their luck wallstreeter types who now get a new fat cash cow to slaughter.


disgracefull.

why people don't march on dc is beyond me.

[Tom]

yeah, but just think of all the free cheese!

As our total diet?!

[Marshall Bennett]

The whole idea of a massive bail out makes me want to puke but honestly I see no other way out . Sooner or later the taxpayers will suffer most and borrowing is the fuel by which our banking institutions thrive and without it this economy is headed nowhere but the gutter . Really low interest rates are a gateway to trouble , I'd rather see modest rates , even higher rates , than to have to go through this crap ever again . Its like , bend over and take your medicine America ... or rot !!

[nomadpat]

It's not a bail out, it's a sell out.
It's a puppet show. All the little bought and paid for puppets are dancing as Wall Street pulls their strings.

Agreed Tom. The tail wags the dog.

[Tom]

Myth - our elected officials will diligently read and analyze the content of the sell out bill before voting on it. :lol:

Fact - Many will voter on it, sight unseen, even if they do not agree with it because their party leaders tell them too.

Myth - This is the last bail out/sell out.

Fact - it will top out well over a trillion dollars at least

Fact - unlike any good business deal, their is no time line for results, no deliverables assigned to anyone and no real oversight by elected officials, only political hank appointees with vested interests that do not consider what is good for America

Fact - Obama doesn't know what a deliverable is

[riskman]

Fact - the government SUCKS and cannot be trusted at all on anything.
Fact - Bush is a dipstick who cannot be believed no matter what he says.
Fact - Not one of the four horsemen ( and women) running are fit to serve as president.
Fact - Obama looks like one of the zombies in Dawn of the Dead


Fact:all of the above facts are in fact a fact!

[Tom]

This just in......House voted it DOWN.
Republicans 2-1 opposed it.

Nancy Pelosi's insulting, partisan speech just before the vote a factor? :lol:

[russowen77]

Thank the Lord they voted this sucker down this time. They are going to try for another vote but at least this gives me a little hope.

I don't even eat much cheese. :)

[ArlJim78]

YEEEESSSSSS!!!!!

they flushed the crap sandwich bill.

[Marshall Bennett]

Perhaps after a few more of these failed sessions , after the Dow has dropped out of sight , after your 401 isn't worth the paper its written on , they'll figure it all out . As for Pelosi , she wouldn't know the mechanics of an economy if it jumped up and bit her on the lip . Maybe that would shut her up .

[riskman]

700 billion "rescue" bill rejected by the house! Pelosi is toxic could not lead a girl scout troop.

[barn32]

I'm not going to pretend to have an answer. But Warren Buffet said if they don't pass something it could be the end.

He knows more than me.

[prospector]

the word bailout didn't help...

it looked like the poor bailing out the rich..its not what America was built on..we always rewarded success, not failure..

why should we bail out losers? they never answered the question..."what about the people and businesses who pay their bills monthly?" they should bail out the ones who gamble and lose? i got a few losing tickets from this weekend nancy can buy from me..cheap

it needs to be re-worked strictly as a loan or insurance program with a profit for taxpayers, not pie in the sky..and not called a bailout..

they could do a quick fix in hours by cutting the capital gains tax..its just more punishment for the successful..

on a personal side note..if you're dumb enough to buy a house you can't afford..too bad...you're an idiot and deserve to lose it..its fun to see the guys who flipped houses suffering..

[Jake]

The failure to pass this bill is a huge mistake. It needed to be passed, however bad it seemed. Republicans made a terrible mistake here. It guarantees Obama election, as this continues to come tumbling down. Very stupid! Wait until everyone watches the damage to their retirements now, as well as the lack of liquidity and China/Japan refusing to fund our trade imbalance. What a political mindset at work here, absolutely stupid. If they can't find a compromise bill, this is going down like the house of cards.

[bigmack]

Republicans made a terrible mistake here. It guarantees Obama election, as this continues to come tumbling down. Very stupid!
Who has the majority in the house? Dems

How many Dems voted no? 90+

Damn those Republicans! :lol:

[lsbets]

COngrats to 2/3rds of the Repubds and 90 brave Dems who risked Nancy's wrath. The plan sucked, it needed to be reworked and rethought, not rammed down everyone's throats by Bush/Pelosi/Reid. Now they can go back to the drawing board and actually listen to the input of the Reps who have heard the people speak and say we hate this. My prediction is there will be a bill this week and it will be much, much better than the one voted down today.

[Marshall Bennett]

Without a doubt this plays right into Obama's hands . Why worry about getting there on your own merit , let the miserable actions of others put you there . Really , all he needs to do is shutup and stay out of churches till election day .

[prospector]

Who has the majority in the house? Dems

How many Dems voted no? 90+

Damn those Republicans! :lol:
94 dems voted no..the question is...why was the vote called? she had to know the votes weren't there

12 % approval rate for congress seems high to me..:jump:

[riskman]

The failure to pass this bill is a huge mistake. It needed to be passed, however bad it seemed. Republicans made a terrible mistake here. It guarantees Obama election, as this continues to come tumbling down. Very stupid! Wait until everyone watches the damage to their retirements now, as well as the lack of liquidity and China/Japan refusing to fund our trade imbalance. What a political mindset at work here, absolutely stupid. If they can't find a compromise bill, this is going down like the house of cards.

A bill will be passed. This is plain old politics.The mask is been pulled away from this half assed Congress.It is ugly and real and represents their true colors.The finance pigs are allowed to run roughshod through our social and economic infrastructure and we are expected to clean up THEIR mess.These suits should not be able to walk away from the economic carnage relatively unscathed. The suits multi-million dollar severance packages are still firmly in place, while we are left to bear the burden of their greed and recklessness. Most Americans want them punished.

Are you as pissed off as I am? I am at the end of my patience. I have had up to here with the stupid and incompetent bastards who have spent the last 15 years destroying our country.


Early in the summer Henry Paulson told reporters that the economy was doing well, he was lying. The economy was about to go over a cliff and the son-of-a-bitch knew it. It was also obvious to the empty suits in the Oval Office.


Both major political parties are ideologically bankrupt. Their ideas are atrocious.In Nov. all present incumbents should be voted out.All they do is to divide, distort and distract.

This bailout is an ugly, ugly thing.Wether the bailout passes or fails we are looking into a big empty hole. This is not now about Wall Street---it is now about YOU--about your 401K, your credit line, your paycheck.

[Overlay]

The thing that rankles me is that Pelosi's speech (which killed tentative Republican support, and assured the defeat of the bill) was not based on the merits of the legislation, but was a "who-got-us-into-this-mess" attack that was guaranteed to drive tentative Republican supporters back over to the "No" column. (Just to show I'm apolitical about this, it's the same kind of small-minded stunt, putting partisan politics above the national welfare, that I might have expected Newt Gingrich to pull during his tenure in the Speaker's chair. He wasn't worthy of the Speaker's position, and neither is Pelosi.)

[ddog]

I'm not going to pretend to have an answer. But Warren Buffet said if they don't pass something it could be the end.

He knows more than me.


buffet is a shark in corn pone clothing. A bottom feeder, not that there is anything especially wrong with that.

The only END may be the end of some of his sweet gravy deals he is cutting with JPM and the other pond scum.

Talking hs book in other words.

Wish MY BOOK looked the same.....
:(

[ddog]

i guess those 8 million faxes me and my boys sent in maybe rattled those clowns a bit.

KEEP THE PRESSURE ON THEM, DO NOT LET THEM PASS THIS STINKING PILE OF BAIL.

It will just prolong the time to the bottom, that's what we need to see.

There is money out there to do good deals at TRUE fire-sale prices.

Let's have the fire and be done with it.

[Jake]

A bill will be passed. This is plain old politics.The mask is been pulled away from this half assed Congress.It is ugly and real and represents their true colors.The finance pigs are allowed to run roughshod through our social and economic infrastructure and we are expected to clean up THEIR mess.These suits should not be able to walk away from the economic carnage relatively unscathed. The suits multi-million dollar severance packages are still firmly in place, while we are left to bear the burden of their greed and recklessness. Most Americans want them punished.

Are you as pissed off as I am? I am at the end of my patience. I have had up to here with the stupid and incompetent bastards who have spent the last 15 years destroying our country.


Early in the summer Henry Paulson told reporters that the economy was doing well, he was lying. The economy was about to go over a cliff and the son-of-a-bitch knew it. It was also obvious to the empty suits in the Oval Office.


Both major political parties are ideologically bankrupt. Their ideas are atrocious.In Nov. all present incumbents should be voted out.All they do is to divide, distort and distract.

This bailout is an ugly, ugly thing.Wether the bailout passes or fails we are looking into a big empty hole. This is not now about Wall Street---it is now about YOU--about your 401K, your credit line, your paycheck.

It's about global money flows. That's it, and that's only what it is about. That's why getting this halted sooner rather than later determines just how deep this hole is going to be. This was gutless on the part of both Democrats and Republicans in the House. Cheer it all you want on this board, but short of a working compromise very soon, just start tacking on additional years to one long term depressive global economy. When you get
a layoff notice because your boss or company can't cover short term costs with credit, you'll understand this isn't about a bailout of fatcats. It limits the military budget, social security payments, and above all, foreign trade which has been our only one bright spot the last year. This is another nail into the housing problem. Hey, it's going to adversely affect horse racing bigtime. We need to pass a timeout bill--which was the only thing this really was--to buy some time to work through this mess. Failure to understand that, and how money flows, is going to destroy this economy for a long time.

[HUSKER55]

i guess those 8 million faxes me and my boys sent in maybe rattled those clowns a bit.

KEEP THE PRESSURE ON THEM, DO NOT LET THEM PASS THIS STINKING PILE OF BAIL.

It will just prolong the time to the bottom, that's what we need to see.

There is money out there to do good deals at TRUE fire-sale prices.

Let's have the fire and be done with it.

I agree. There are way better ways to deal with this.

husker55

[ddog]

It's about global money flows. That's it, and that's only what it is about. That's why getting this halted sooner rather than later determines just how deep this hole is going to be. This was gutless on the part of both Democrats and Republicans in the House. Cheer it all you want on this board, but short of a working compromise very soon, just start tacking on additional years to one long term depressive global economy. When you get
a layoff notice because your boss or company can't cover short term costs with credit, you'll understand this isn't about a bailout of fatcats. It limits the military budget, social security payments, and above all, foreign trade which has been our only one bright spot the last year. This is another nail into the housing problem. Hey, it's going to adversely affect horse racing bigtime. We need to pass a timeout bill--which was the only thing this really was--to buy some time to work through this mess. Failure to understand that, and how money flows, is going to destroy this economy for a long time.

I humbly disagree, the only way we will ever pay for all the stuff we have prmised(I don't think we can anyway) is with a healthy growing productive economy.

We will just not get there if we keep allocating capital to bad enterprises that should have failed and be replaced with PRODUCTIVE endeavors.

You just can't prop up this crap, it needs to get back to some level of reality and people need to see what REAL growth looks like again.

This is not the end of the world, not even close.

Maybe backstop money funds and all bank deposits no matter the amount and let the FDIC work the banking end of the deal.

Let the rest play itself out.

[Sailwolf]

Bloomberg for President

[PaceAdvantage]

I'm not going to pretend to have an answer. But Warren Buffet said if they don't pass something it could be the end. Oh stop it. It's not the end of anything. Jeez....

Warren Buffet only knows that he got one super sweet deal on Goldman...that's all he knows right now.

[riskman]

This from an article here: http://www.minyanville.com/articles/lehman-LEH-fre-fnm-aig-ms/index/a/19213

Welcome to the World of Deflation
Bennet Sedacca Sep 29, 2008 12:45 pm

"The recipe as I see it is that your balance sheet is impaired from poor loans and ownership of esoteric securities that are constantly re-priced lower which results in write-downs/write-offs. This places you in a position that you either need an equity infusion or need to raise capital in the public or private markets, which in theory, sounds great—all the way until you find out that the current cost of capital is so high that it is un-economic to do so.

So if you are one of these unfortunate institutions, what do you do if you cannot get access to capital?

You either:

a) Fail or are forced into the hands of a stronger institution like WaMu was given to JP Morgan on Friday
b) Shrink your balance sheet,
c) Sell common equity to a vulture investor, forever diluting your existing shareholders or
d) Declare bankruptcy

No matter which you choose, all options are deflationary in nature.

More problematic is that it is not just present at Wachovia and is not confined to the US. It is a global problem and one that won’t go away very easily. No matter how much money the Treasury, Fed, ECB and Congress throw at the Crisis, the Crisis ends up winning. Simply put, the Crisis is bigger than the system itself. "

I believe ddog linked this site and maybe even this article in a previous post. Minyanville is an interesting site and has some excellent articles .Thanks ddog !