September
2008
Bush Administration Wants to Push Through a $700 Billion Bailout of the Banking and Mortgage Industry for their Scams and Incompetence
This just goes to show that the economic “gains” under the Bush Administration have only been a Ponzi Scheme where the last person to pay for the “investment” is left holding the bag.
While the big investment houses have been promoting products to push their value up on paper, there really hasn’t been any real value there to support it. Now when Wall Street is tanking, the Bush Administration expects the middle class to bail out the people who have been stealing from average Americans with the deregulations that the Republicans provided them to make it all possible.
This is just like the Savings and Loan scams during the FIRST Bush Administration. That cost us taxpayers $1.4 Trillion dollars.
And, remember when miles and miles of suburban development was taking place in the middle of “Nowhere”, Texas and the developers just sold the properties back and forth between one another to jack up the value on paper, and the government ended up paying for that scam? The homes were built, but no individuals actually ever lived there, (and couldn’t because the “new homes” were falling apart!) The taxpayers ended up bailing out the government housing development branch, for billions of dollars, with the swoop of President George H.W. Bush’s pen.
Senator Bernie Sanders I – Vermont was on the floor of the Senate today saying that he did NOT support the bailout, and specifically cited the fact that the 400 richest people in America increased their wealth by $670 BILLION during the Bush Administration’s terms in office. He repeated that so that no one would miss the point he was making.
I’ll repeat it so that no one misses it by reading it here either.
The top 400 richest PEOPLE in America increased their wealth by $670 BILLION during George W. Bush’s terms in office. 400 people – $670 BILLION richer.
Remember, these are the people he calls his “base”. No poor people need apply.
Note that Bush’s bailout is for $700 BILLION. Hmmmmm. there wouldn’t be any connection between these two numbers now would there? Somebody has to pay the final price tag in order for the Ponzi Scheme to work, remember? So, in order for someone to collect on the “value” of the investments, someone has to either purchase those investments at full value (which no one is willing to do these days), or the government has to force the taxpayers to “bail” them out. So, if we the taxpayers pay this $700 BILLION, just where is this money going? I can guarantee that none of the money is going to go to the TAXPAYERS who are bailing these guys out. But it will cost every man, woman and child about $2,200, or the average family of four almost $9,000.
Boy, this trickle down economics of supporting the wealthy with their multi-TRILLION dollar tax cuts really worked out well for the working stiff, didn’t it?
Oh, that’s right, the Billionaires got the tax cuts AND the bailouts, and the working stiffs got…STIFFED!
Now, wouldn’t the rich Republicans call any kind of bailout to the poor or the middle class…like universal healthcare, SOCIALISM?
Isn’t this SOCIALIZED WELFARE for the BILLIONAIRES who gambled and lost on Wall Street? (They gambled your money and lost it, and now they want you to pay for their gambling. Don’t NORMAL people get thrown into jail for this?)
So if this SOCIALIZED BAILOUT for the wealthiest, who have been taking huge bonuses and compensation during the Bush presidency, is okay, then why isn’t it fair for THEM to be paying their fair share of TAXES, and taking responsibility for their own screw-ups, instead of sticking it to the middle class instead?
And since the richest 400 people in America INCREASED their wealth by $670 BILLION because of this fraud, shouldn’t they have to pay it BACK?
Here’s an idea. Make the richest 400 people in America pay for this bailout and leave the poor and middle class alone. Those who benefited from this fraud should be forced to pay for their crimes – NOT benefit from them AGAIN.
And why is it that Democrats should have to hurry up and agree to this quickly thrown together three page plan that gives the Treasury Secretary total control over $700 Billion with no need for any sign off from Congress?
What? No constraints, no accountability and no oversight? And his actions wouldn’t be reviewable by any court of law or oversight committee. Isn’t that what got us into this mess in the first place?
How does that saying go? “The Lack of Planning on Your Part Does Not Constitute an Emergency On My Part!”
Only a few months ago, Secretary Paulsen said that our economy was “marvelous”. Now he says we are “days away from a total meltdown”.
On July 31, President Bush said our economy was “strong”.
And on the morning of September 15, John McCain said our economy was “fundamentally strong”, just before the market lost 504.4 points or $700 Billion dollars in the largest one day drop in value since the Great Depression.
John McCain suddenly made an about face and called it an “economic crisis” later that afternoon. OK, so he did say that economics wasn’t his strongest subject, but don’t you think that a little oversight and reports from experts would have provided him with a better feel for where the economy really was? Except that for 26 years he hasn’t wanted any oversight or reports from experts. So, now McCain thinks we should have a regulatory agency overseeing the financial markets, to avoid this type of disaster, even though he’s called himself “fundamentally a deregulator” and voted against regulatory controls for the last 26 years. And of course, when John McCain was head of the Senate Commerce Committee, he didn’t want regulations then either. (And he wants to deregulate your Healthcare too!)
This crisis didn’t happen overnight. It took years for this to develop. So, why didn’t Paulsen, Bush and McCain see this coming? Most average Americans saw it coming. Are Paulsen, Bush and McCain really that stupid? Or were they lying and covering up the scam all along?
And Rick Davis, McCain’s Campaign Manager, was paid $1.8 million over five years to run the lobbying organization (who all back McCain) to pressure Fannie Mae and Freddie Mac to loosen up their regulatory practices. And it is clear that these “loosened up practices” made it possible for the con artists to scam billions of dollars out of our economy.
http://www.allheadlinenews.com/articles/7012388183
And McCain’s top financial advisor, former Senator Phil Gramm, of “we are a nation of whiners” and “this is a mental recession” fame, was the guy who, in 1999, as Chairman of the Senate Banking Committee, through his Gramm-Leach-Biley Act, was responsible for the repeal of the Glass-Steagall Act, the Great Depression era legislation which had regulations in place to prevent this type of meltdown from occurring in the first place.
Currently Gramm is Vice Chairman of UBS, the Swiss Bank that came up with the idea of “death bonds.” Worse, though, UBS is involved in a scam where they sold auction rate securities to American customers. Auction rate securities are supposed to be as safe as cash, but the way UBS did it, the fees garnished by their in-house investment bankers were intentionally higher than the return on the securities, ripping off their American customers. The Massachusetts Attorney General has already filed charges against UBS, and private brokers world-wide have dropped UBS stock. UBS is forecasted to lose 82.91% of its value in 2008. We are talking about the corporate bank where Gramm is Vice Chairman. Looking at his track record there and at the havoc he has wrought on the US economy through the Senate Banking Committee, it’s clear that either Gramm is a criminal or grossly incompetent.
This is the guy that McCain wants to make Secretary of the Treasury. With no constraints, accountability or oversight.
But I’m sure that Republicans will claim that their demand for bailouts is an entitlement (for BILLIONAIRES), and necessary for the economic security of our country.
Yeah, just like the Patriot Act was for our “freedoms” and the War in Iraq was for “weapons of mass destruction”.
Les Nakamoto
Les Nakamoto, Uncategorized
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We have to stop this bailout!
They are stampeding us and we have to get smarter than them.
Drag this decision out and we will see that this is a bogus emergency.
I’m with you on this one, Les.
Update:
The amount that each American man, woman and child would have to spend to bail out the financial institutions with Bush/Paulson’s plan would be closer to $2300 rather than $2200 each, and sldo doesn’t even include the $315 Billion that has already been spent to bail out Bear Stearns ($30 Billion), Fannie Mae and Freddie Mac ($200 Billion), and AIG ($85 Billion). Adding in the $315 Billion would increase each Americans’ debt by an additional $1035 for a total of about $3335.
I also had incorrectly worded the article when in reference to Rick Davis’s lobbying, when I said that he was paid $1.8 million “to pressure Fannie Mae and Freddie Mac to loosen up their regulatory practices”.
In fact, Rick Davis was paid BY Fannie Mae and Freddie Mac to pressure CONGRESS to loosen up their regulatory practices OVER Fannie Mae and Freddie Mac.
McCain recently claimed that Davis had disassociated himself with his own firm (which he is a partner of), which lobbied for them, and had not received any payments as of several years ago. Except that recent investigative reports show that Rick Davis had gone in and negotiated a NEW deal where he would be paid $15,000 DIRECTLY each month, bypassing his company, until only a month ago.
The McCain campaign claims that Davis never did anything for the $15,000 fee, but the investigation is showing that Davis was paid specifically to have ACCESS to JOHN MCCAIN.
Couldn’t agree more. The wealthy took $640B out of the national pie and the public now must repay it with a $700B bailout. The pie isn’t getting any bigger, with jobs and cash being exported to other countries. It is just being transferred to those who are funding the political campaigns.
Jack Lohman
http://tinyurl.com/3lqpuw
However, in fairness you should be mentioning Obamas finacial ties to Fannie Mae $$’s and execs. This thing stinks all over the place regardless of party preference.
Obama isn’t free of fault, but he wasn’t around when the bankers bribed our politicians with campaign contributions to repeal the Glass-Steagall banking regulations in 1999.
Jack Lohman
http://MoneyedPoliticians.net
Bill,
Obama received $120,000 in contributions from employees of Fannie Mae and Freddie Mac, (not from their officers) along with $6,000 in PAC money since 2004. He has been falsely connected to Mr. Franklin Raines, by the McCain campaign, (who I believe was a CEO of Fannie Mae).
A former Chief Executive Officer of Fannie Mae, James A. Johnson had headed Obama’s vice-presidential search team but stepped down after coming under criticism for getting a mortgage on preferential terms from Countrywide Financial Corporation.
There are no records of any campaign donations from the officers that I am aware of.
References:
http://www.nytimes.com/2008/09/24/us/politics/24davis.html?_r=1&hp&oref=slogin
http://www.opensecrets.org/news/2008/09/update-fannie-mae-and-freddie.html
John McCain has received about $22,000 over the past decade from employees of Fannie Mae and Freddie Mac, but he has a number of his campaign staff, who have received substantial sums from both organizations.
The nearly $6 million that the lobbyists for Freddie Mac and Fannie Mae received, who are currently on John McCain’s staff, should cause you to raise some eyebrows, particularly given the fact that John McCain is trying so hard to make it appear that Obama has stronger ties to these organizations that McCain himself has.
Freddie Mac’s payments of roughly $500,000 to Davis Manafort, the people familiar with the arrangement said, began in late 2005, immediately after Freddie Mac and Fannie Mae disbanded an advocacy coalition that they had set up and hired Mr. Davis to run.
From 2000 to the end of 2005, Mr. Davis received nearly $2 million as president of the coalition, the Homeownership Alliance, which the companies created to help them oppose new regulations and protect their status as federally chartered companies with implicit government backing. That status let them borrow cheaply, helping to fuel rapid growth but also their increased purchases of the risky mortgage securities that proved to be their downfall.
The payments that Mr. Davis received for leading the Homeownership Alliance were reported in Monday’s issue of The New York Times. On Sunday, in an interview with CNBC and The Times, Mr. McCain responded to a question about that tie between Mr. Davis and the two mortgage companies by saying that he “has had nothing to do with it since, and I’ll be glad to have his record examined by anybody who wants to look at it.”
Such assertions, along with McCain campaign television advertisements tying Mr. Obama to former Fannie Mae chiefs, have riled current and former officials of the two companies and provoked them to volunteer rebuttals.
The two people with direct knowledge of Freddie Mac’s post-2005 contract with Mr. Davis spoke on condition of anonymity. Four outside consultants — three Democrats and a Republican, also speaking on condition of anonymity — said the arrangement was widely known among people involved in Freddie Mac’s efforts to influence policy makers.
As president of the Homeownership Alliance, Mr. Davis received $30,000 to $35,000 a month. He, along with Fannie Mae and Freddie Mac, have characterized the alliance as a coalition of many housing industry and consumer groups to promote homeownership, but numerous current and former officials at both companies say the companies created and bankrolled the operation to combat efforts by competitors to rein in their business. The companies dissolved the group at the end of 2005 as part of cost-cutting in the wake of accounting scandals and, at Freddie Mac, a lobbying scandal that forced out its top Republican lobbyist.
After the Homeownership Alliance was dissolved, Mr. Davis asked to stay on a retainer, the people familiar with the deal said. Hollis McLoughlin, who was chief of staff to Richard F. Syron, Freddie Mac’s chief executive, arranged for a new contract with Davis Manafort at the reduced rate of $15,000 a month, they said.
Mr. Syron lost his job in the government takeover this month. Mr. McLoughlin, who through a spokeswoman declined to comment, was a chief of staff to Treasury Secretary Nicholas F. Brady in the administration of the first President Bush and has longstanding Republican ties.
Mr. Davis’s firm was hired as a consultant, not a lobbyist. Davis Manafort in recent years has filed federal lobbying reports for a number of companies, but not Freddie Mac or Fannie Mae.
The only thing that Freddie Mac officials could recall Mr. Davis’s doing for the company was speaking at the October 2006 pre-election forum, attended by midlevel and senior executives who contributed to Freddie PAC, the company’s political action committee.
An electronic invitation to those employees, read to The Times by a Freddie Mac official, said, “Please join us for political food for thought” with Paul Begala, a longtime Democratic consultant, “and Rick Davis, former 2000 presidential campaign manager and current adviser to Senator John McCain.” Mr. Begala, who was also a paid consultant to Freddie Mac until this month, confirmed that the event had taken place.
Several top McCain campaign officials have ties to either Freddie Mac or Fannie Mae. So do at least two McCain advisers outside the campaign. The lobbying firm of William E. Timmons Sr., the Republican whom Mr. McCain has enlisted to plan his transition to the White House, earned nearly $3 million from Freddie Mac from 2000 until its seizure, federal lobbying records show.
Mr. Timmons is the founder of Timmons & Company, one of Washington’s best-known lobbying shops. The payments to the firm were first reported Tuesday by Bloomberg News.
And Mark Buse, chief of staff at Mr. McCain’s Senate office, is also a Freddie Mac alumnus. He and his former lobbying employer, ML Strategies, registered to lobby for the company in July 2003, and had received $460,000 by the time the association ended after 2004.
While I did not agree with Treasury Secretary Paulson’s original bailout, nor the plan that the White House had under wraps for months before this crisis “suddenly appeared”, I do believe that some action by Congress should be taken. The following information provides you with some of the alternatives that are being offered, in addition to the negotiated bill that was just voted down.
I don’t like any of them, but we are where we are, and I’d rather see something done to protect taxpayer’s assets rather than continue to see more handouts and freebies to the very people who have caused this crisis.
So, here are what I see as our possible options, as have been presented by a number of other analysts, and economists.
(I’ve also taken the liberty to comment on the latest showdown in the House as well as the resulting market meltdown.)
Who leads the GOP? Bush? McCain? Minority Leader Boehner? They all said that they would support the bailout bill, but it was Representative Eric Cantor R – Virginia who claimed that the reason that he led the group to kill the bill was because of Speaker Pelosi’s speech criticizing President Bush and the Republican’s anti-regulatory practices. The fact is that Speaker Pelosi did what she had to do to explain to the public that while Democrats don’t like this bill, they don’t have a choice but to pass something in order to prevent the economic meltdown. Here’s part of what she said:
“When was the last time someone asked you for $700 billion? It is a number that is staggering, but tells us only the costs of the Bush Administration’s failed economic policies — policies built on budgetary recklessness, on an anything goes mentality, with no regulation, no supervision, and no discipline in the system. Democrats believe in the free market, which can and does create jobs, wealth, and capital, but left to its own devices it has created chaos.”
“Our message to Wall Street is this: the party is over. The era of golden parachutes for high-flying Wall Street operators is over. No longer will the U.S. taxpayer bailout the recklessness of Wall Street.
The taxpayers who bear the risk in this recovery must share in the upside as the economy recovers.
And should this program not pay for itself, the financial institutions that benefited, not the taxpayers, must bear responsibility for making up the difference.”
I don’t see anything wrong with what Speaker Pelosi said about this bailout and the fact that we were placed in a position where Congress was pushed to “act immediately”. And I’m not much of a fan of Speaker Pelosi, but she does have her moments. I think she needed to say what she said, but Republicans just can’t handle the truth.
McCain claims that “Now is not the time to fix the blame. Now is the time to fix the problem.” Yet he claimed that it was “Pelosi’s partisan tone”, which caused the failure of the bailout bill which he had only earlier in the day claimed that he had “rescued”.
Democrats weren’t going to pass this bill on their own, and bear the burden of blame from the American public for doing something that is this unpopular, with the risk that they could lose control of Congress during the elections that are coming up in only five or six short weeks. Republicans took advantage of this as a political opportunity to blame Democrats for doing a bailout in response for something that Republicans had caused in the first place, by not supporting it, so that they could look like they were “principled” and standing up for the taxpayers. Both Democratic and Republican Leaders had agreed that in order for this deal to go through, they both had to have equal support and equal responsibility and blame for support for the bill in order for the bill to pass. But because Republicans decided that they could use this as a political talking point to gain back support from voters, they agreed privately to support this bill, but then bailed on the bill when it came down to the actual vote.
There is nothing new about this type of political game from Republicans.
In California, when energy deregulation was put in place by Governor Pete Wilson, he didn’t get the blame for it. Once Enron started bumping up rates to astronomical levels that rolling blackouts became a regular occurrence, and people were going bankrupt, Governor Gray Davis – Governor Pete Wilson’s successor, was the one who took the blame. Arnold Schwartzenegger jumped in to “save the day” with a recall against Gray Davis, and a special election to get himself elected, with former Governor Pete Wilson at AHNULD’s side as his top campaign advisor.
Today this economic meltdown, caused by lack of regulation over the financial, mortgage and insurance industries, put in place by Republicans, like Senator McCain, who has been a deregulator for the entire 26 years of his career. And former Senator Phil Gramm who was responsible for pushing through the Gramm-Leach-Bliley bill which rescinded the Glass-Steagall Act, which was put into place in 1933 to prevent another Great Depression, along with McCain who supported Gramm’s bill, are two of the key players who caused this to occur. Former Senator Gramm’s wife, Wendy Gramm, was also a Director of ENRON, who approved of Enron’s policies and led to its collapse.
Now McCain and his clones are trying to blame Democrats for this meltdown and claim that it was high taxes that caused it. Excuse me? Trillions of dollars of Bush tax cuts over the last eight years, and a $12.1 Trillion Federal Deficit because of it, and they still want you to believe that it was high taxes that caused this?
McCain “suspends his campaign” (without really suspending his campaign – his memo to his staff explained how he was going to act like he was suspending it, without really suspending it at all – one of his staff members accidentally forwarded the memo on to the MEDIA), and then claims that he was going to “save the country” by putting in his plan and rescue the bailout plan. McCain even took credit for the success of the bailout plan’s passage, just before the bailout plan was scuttled by House Republicans, who were more interested in saving their own seats, by suddenly taking a populist position, and acting like they were suddenly standing up for the taxpayers while they were doing it! (Keith Olbermann had reported on Countdown several days ago, that House Republicans had been planning this double cross to embarrass Democrats, in spite of the fact that their refusal to come up with a real solution would cost everybody Trillions of dollars.)
The problem with the banks and insurance industry losing money on subprime mortgages, isn’t so much that these properties have lost real value, so much as the accounting practice that they are required to use to value these assets, reduces their value on paper. “Marked to Market” drops the value on even performing assets, because the market isn’t buying those in a particular category. So, the companies that own those assets have to mark down their value and write them off. By doing that, they cannot use those assets as collateral to offer credit, or write new loans. And since they have so many subprime mortgages that have been written off or written down, by law, they are unable to provide new credit. But according to analyst reports, 95% of all mortgages are still being paid on time. 75% of subprime mortgages are still being paid on time, but even they are being written down or written off under the Marked to Market accounting rules. That unnecessarily characterizes performing assets as non- or under-performing assets. All it would take to free up credit would be a simple accounting rule change to only write down the non-performing assets rather than all of the assets in the category. But the guys in charge don’t want you to have that option. So, you might ask, “Why not?”
You might recall that during the 80’s and 90’s corporate executive officers of publicly held companies did hundreds of LBOs, or Leveraged Buy Outs. These were really scams that created company balance sheets which were manipulated to appear as if these companies weren’t performing as well as the market expected them to. The executive officers would tell the shareholders that the companies were failing and that the only way that they could be “saved” would be by taking the company private (which meant that the company records no longer had to be made public), and that the share holders would be offered pennies on the dollar for their failing shares. The corporate officers would buy up all the shares, and then “miraculously” turn the companies around once they were taken private, showing the companies were now worth hundreds of millions of dollars more (on paper) than they had been only a short time earlier, and then the officers would sell the companies for hundreds of millions of dollars and run away with the cash, leaving the new owners with companies that were supposedly worth hundreds of millions of dollars because that is what the companies were purchased for, but the money, the value, was now GONE, with the previous officers, and the new owners were stuck with nothing but the DEBT.
So how did where we are now, come about in the first place? It was Bush and his idea of creating an “ownership society” which he could create out of nothing, by allowing banks to offer zero down loans to people who couldn’t pay back the loans, because of bankruptcy due to health problems or job losses, or rising interest rates and expenses that got out of control. Mortgage companies were far too willing to offer loans even when they recognized that people didn’t qualify under conventional terms, because they made money from the transaction and could sell the riskiest loans to somebody else. Without any regulations, mortgage companies, investment banks and insurance companies could take all the risks they wanted without any concern for the downside.
The LBO situation isn’t too different than what we are being faced with today. Why? Because you all instinctively know that the bailout and top down approach of giving money to the banks and the insurance companies who bought the subprime mortgages, and the mortgage companies who sold the subprime mortgages shouldn’t be paid to bail them out for their bad investments, to further enrich them after their greed caused them to write bad loans in the first place. But the motivation they provide you with to support such a bailout is that the alternative of a market crash is worse than putting something in place to try to fix it. And the worst part is that they further beat you with a stick to support not just a bad bailout, but a proposal which could possibly be even WORSE than that, because after the market has crashed (because they didn’t act the first time), it provides additional motivation to force you to jump in and accept a proposal which could be worse because you have been burned by not acting, or not supporting their bad proposals the first time.
But Democrats had worked to improve the original bailout plan with several key provisions:
This legislation must contain independent and ongoing oversight to ensure that the recovery program is managed with full transparency and strict accountability.
The legislation must do everything possible to allow as many people to stay in their homes rather than face foreclosure.
The corporate CEOs whose companies will benefit from the public’s participation in this recovery must not benefit by exorbitant salaries and golden parachute retirement bonuses.
It would also have limited initial expenditures to $250 Billion with a review to ensure that the money was being properly invested.
And what are these latest bad ideas that the House Republicans are offering as alternatives to the negotiated plan that had been haggled out and rejected today after rejecting Paulson’s original three page, no plan, no oversight, no responsibility, no access to a court review process proposal?
House Republicans are asking for wealthy individuals to step in and buy these assets that the banks have written off, and they are asking that no capital gains taxes and no taxes at all would be imposed on them when the value of those assets increases in the future. These assets aren’t worthless, they have a value, but they were over valued, and now have been written down or don’t have an updated valuation because no one wants to buy them now that the market has tanked. This would be a giveaway to the rich so they could become even wealthier with LITTLE RISK and NO TAXES. This just gives them an opportunity to buy assets for pennies on the dollar, with no cost to them long term, even though many of them may have been involved in pushing the subprime mortgages in the first place. (Remember, buy low – sell high. And if you buy low enough, you don’t have to sell very high to make a decent profit.) Yes, these properties are currently overvalued because of the drop in the real estate markets, but they aren’t without value. And if our government allows these properties to be fraudulently undervalued so that they can be sold for next to nothing, ((even after foreclosing on these properties because of ARMs (adjustable rate mortgages), which unfairly jacked up interest rates so high that the mortgage holders couldn’t keep up with the monthly payments)), then you will not only see a huge transfer of wealth which should be illegal, (but obviously isn’t because of deregulation), but you will also see that all other properties will go down in value as well, because the low cost of acquisition allows the new owners the opportunity to undercut the competition when selling.
Another suggestion that Republicans are offering is that wealthy individuals who have illegally evaded U.S. taxes by putting their money (over $1.5 TRILLION) in foreign banks (the ones that the Republicans in Congress knew about for the last five years, but refused to investigate – only after the Democrats took control was any investigation launched), be offered the “opportunity to repatriate” those funds by buying up those undervalued assets, again with no capital gains taxes, no taxes, and no penalties for having evaded taxes in the first place!
The problem with both of these proposals is that the wealthy would be buying up assets for pennies on the dollar, and end up with trillions of dollars of assets in increased value down the road, without having to pay any taxes or capital gains on it! That is particularly offensive when a tax cheat is offered the elimination of any legal penalties for buying up undervalued assets which will end up making them EVEN MORE WEALTHY!
Even the current proposal (not Paulson’s), which was voted down, at least offered taxpayers an equity stake where ownership of the companies and the assets that they were bailing out would end up being owned by the taxpayers and could have paid back the money that taxpayers put up to fund the bailout. That was a much more equitable proposal for the taxpayers than the two other suggestions mentioned above, that Republicans have proposed as “new and improved” in order to get House Republicans to back a bailout for an economic crisis which they created.
The Bush Administration and Treasury Secretary Paulson, as well as many industry analysts claimed that this bill was absolutely necessary in order to avoid a market meltdown, not only in the United States, but globally. Yet, in spite of the warnings of a meltdown “within days”, and this bill being essential to prevent this, it was House Republicans who derailed this bill in order to put the blame on Democrats for voting for an unpopular bill.
Treasury Secretary Paulson’s initial proposal and Bush’s proposal which the White House had written up over the past several months, prior to admitting that there was ever a problem with the economy, were terrible proposals. The compromise proposal which was worked out wasn’t very good either, but it was better than what had originally been proposed, and it was a stop gap measure which could have helped to stop the bleeding. It is clear that Republicans are more interested in partisan politics than in correcting the problems that they have created for decades, and have made even more critical since the elimination of the Glass-Stengall Regulatory Act in 1999.
McCain claimed that he suspended his campaign in order to put the country first, and went to Washington “in order to save the country from an economic meltdown”. Even Republican Congressman Trent Franks who showered praise on McCain for his leadership in putting a bipartisan deal together, voted against the bill.
Stock Market dropped 777.68 points; a $1.2 Trillion loss, or 8.8% of total stock market value, in six and a half hours, three billion dollars A MINUTE, on the news of the rejection of the bailout. This is the Largest point drop ever. 17th largest percentage drop ever. 2nd biggest percentage drop since April 2000. Largest drop since 9/11. Nasdaq also dropped 9.1% today.
It is estimated by some analysts that people who have money invested in the stock market or 401Ks or mutual funds, if they haven’t already been wiped out, will take ten years or more to recover from this loss. And the worst part about this? We don’t know if these drops are over yet.
So much for McCain saving us from an economic meltdown.
On Larry King, even Ben Stein (former Nixon speech writer) claims that Wall Street executives had been taking the largest salaries for the worst performances for years, and that Bush has been a terrible President. He also claims that in spite of some analysts’ claims that trillions of dollars have “vaporized”, that those trillions that have been “lost” have actually been made by those who gambled on the stocks losing value. (That is also true when people invest in short selling, but that was stopped to prevent the market from tanking even more. “Naked” short selling is another tactic that market investors use to great advantage by leveraging their bets on stocks and commodities dropping in value without having to put any money up front. It’s a way for people who manipulate the market, to cause huge swings and cause the market to drop even faster.)
Stein stated that, “Credit default swaps are probably ten times the problem of mortgage defaults.” But he also said, “The people who bought the credit default swaps are going to be the richest people in the world. The people who bought the credit default swaps couldn’t be making trillions if the insurers weren’t losing trillions.”
Stein even suggested an investment process that goes from the bottom up rather than from the top down – helping individuals with their mortgages, putting money into businesses rather than into the banks and institutions – precisely what Democrats have been arguing for and what Republicans have been rejecting for the last eighty years. He also argues against giving the power to Paulson, because Paulson failed so miserably in the attempted bailout of Lehman Brothers.
The Dow is now down four consecutive quarters. That is considered a recession. (Bush apologists keep claiming that because the GDP is still up that we can’t be in a recession. They leave out the fact that the Bush Administration has changed the calculation of the GDP by so much, that it doesn’t reflect the economy accurately anymore. They now include the value of Foreign production by American companies (which is increasing), and divide that by the number of American workers (which are decreasing). That gives you a false increase in GDP, which is not truly indicative of a strong economy. That was intentional on their part, I’m sure. That practice was actually started by the Reagan/Bush Administration in 1980 and expanded on by Bush Jr.)
Fund money in oil investments is also drying up, down from $58 Billion at its peak in July to $8 Billion today.
Wasn’t it McCain who called the economy “fundamentally strong” on September 15th, just before the market dropped 504.4 points, or $700 Billion?
So, how’s this “fundamentally strong” economy working for YOU?
Factcheck just released information regarding the campaign donations to both Obama and McCain from Fannie Mae and Freddie Mac.
http://politicalticker.blogs.cnn.com/2008/10/07/fact-check-did-obama-get-second-most-money-from-freddie-and-fannie/
October 7, 2008
Fact Check: Did Obama get second-most money from Freddie and Fannie?
Posted: 10:30 PM ET
The Statement: At a presidential debate Tuesday, October 7 in Nashville, Tennessee, Republican presidential candidate Sen. John McCain said Democratic opponent Sen. Barack Obama and other Democrats resisted regulating mortgage giants Fannie Mae and Freddie Mac, which ultimately collapsed and had to be taken over by the government. “Meanwhile, they were getting all kinds of money in campaign contributions. Sen. Obama was the second-highest recipient of Fannie Mae and Freddie Mac money in history — in history,” he said.
Get the facts!
The Facts: Federal law forbids candidates from receiving money directly from companies. The nonpartisan Center for Responsive Politics tracks donations from employees of various companies. The center’s list of contributions from Fannie and Freddie employees places Obama second.
Ahead of him is Sen. Chris Dodd, Democratic chairman of the Senate Banking Committee.
The total listed for Obama is $126,349 — a tiny fraction of the approximately $390 million his campaign has raised, according to the center. The list shows McCain has received a total of $21,550 from Fannie and Freddie employees. The list includes donations of at least $200 from those who receive paychecks from Fannie and Freddie. It also includes donations from political action committees — pooled contributions from employees.
The report spans from 1989-2008 — just a portion of the time since Fannie Mae went private in 1968 and Freddie Mac was created in 1970.
The New York Times has published a separate list looking at contributions from “directors, officers, and lobbyists for Fannie Mae and Freddie Mac” for the 2008 campaign cycle. That list — using figures from the Federal Election Commission — shows McCain receiving $169,000, while Obama received only $16,000.
VERDICT: Misleading. No donations actually came from the companies. One method of measuring employee contributions does put Obama second overall, but another, for the current election cycle, shows McCain receiving significantly more.