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Home Front Economy
House Republicans wary of 700b bailout
2008-09-28
Some members of the US Republican Party are opposing to the bailout plan due to be signed by President Bush to save the country's economy. Republicans in the House of Representatives object to the cost of the president's bailout plan and they want an expanded insurance system to cover failing mortgage-backed securities, VOA reported Saturday.
Insurance makes no sense. You buy insurance for things that might happen, not for things that have already happened or are very, very likely to happen.
Though most Democrats and Republicans in the Senate signaled that they are willing to accept a modified version of the president's bailout and said they agree to the broad principles of the bill, a group of conservative Republicans insisted on significant changes to the USD 700b bill.

The US Treasury wants to spend up to USD 700b to buy broken mortgage-backed bonds from banks and dump them into a vast government portfolio, betting that the move will help thaw out frozen capital markets.

Some House Republicans argue that the plan is a risky approach that may rain down blame on the Republicans if the bailout collapses and the markets go sharply even further south.

The chief negotiator for the House Republicans Roy Blunt of Missouri said they still wish to see Wall Street pay more of the cost, adding they want to solve the problem as soon as possible.
The longer we wait, the more it costs. Keep the credit markets frozen and the investors panicked and on the sidelines, keep the banks sitting on cash, keep the money market funds from being able to roll over paper, and we'll see bank runs and pension fund collapses. Guess who'll get blamed for that?
One-third of the Senate and the whole House are facing re-election on the 4th of November and some US lawmakers said they were facing a grass-roots reaction to the plan seen as providing a safety net for powerful banks.

In a radio speech on Saturday, Bush said "the entire US economy is endangered" and added he understands why taxpayers may not want to foot the bill.

Many Americans are upset with the situation and feel it is unfair to pay for mistakes by Wall Street investors when many taxpayers are struggling to meet mortgage payments.

In New York, dozens of noisy fools rubes simpletons protesters rallied from Times Square waving banners that read "No Money for Wall Street, No Money for War, bailout the Workers and the Poor."
Posted by:Fred

#22  "You buy insurance for things that might happen, not for things that have already happened or are very, very likely to happen."

You obviously haven't heard of something called "post-claim underwriting". You think you're covered buuuut....you're probably not.
Posted by: Lonzo   2008-09-28 22:30  

#21  the 5 year review needs to be 3 so its before the next election.
Posted by: 3dc   2008-09-28 19:22  

#20  > bailout plan due to be signed by President Bush to save the country's economy

If government bailouts of the economy worked then the USSR would be the biggest economy in the world.
Posted by: Bright Pebbles   2008-09-28 11:02  

#19  My question is...why is virtually NO ONE in Congress screaming to the heavens about all the pork being attaced to this bail out by both Dimocrats and RINO's??? Just curious, ya' know?
Posted by: WolfDog   2008-09-28 10:52  

#18  The FDIC is probably the second most competent agency in the Federal government. And they do have access to BEP.
Posted by: Nimble Spemble   2008-09-28 10:44  

#17  How secure is FDIC? What's the worst case scenario where even FDIC couldn't pay out?

Martian Secret Service seizing the BEP.
Posted by: .5MT   2008-09-28 10:02  

#16  If we punish who it seems we should it might throw us into a serious recession or worse. That would probably drag the rest of the world into recession.
This is a shit sandwich and we're all going to get a bit.
Posted by: bigjim-ky   2008-09-28 09:50  

#15  How secure is FDIC? What's the worst case scenario where even FDIC couldn't pay out?
Posted by: Tarzan Angeter7567   2008-09-28 09:40  

#14  If I need a loan, I must make proper application. I don't go to my Congressman for the money. Where are the Wallstreet loan applicants? The "punishment" for failed CEO's and firms should come in the way of NO MORE INVESTEMENTS. NO MORE MONEY!
Posted by: Besoeker   2008-09-28 08:20  

#13  the House Reps are trying to remove some of Chris Dodd's pork for ACORN, and keep taxpayers protected by paying off the debt with profits, rather than fund Donk special interests. If this bill was so great, the Donks would pass it without Republican votes or cover
Posted by: Frank G   2008-09-28 07:36  

#12  From Ace:


I can’t tell you how many members of Congress were stunned at that news, and were stunned that none of their local bankers were calling them. And then they called their local bankers, as I called my local bankers, and my local bankers said, “I think things are just fine.” I talked to one banker who said, “Gosh, we’ve got money, and we’re liquid, and we’re making a profit. And we’re in the market selling loans, and we’ve got competitors trying to sell loans against us.”

So, at that point, there’s a disconnect. Secretary Paulson is claiming that this is a catastrophe of generational proportions that could go worldwide. And none of what we were hearing back home matches that. And I’m not speaking just for myself, but also for many of my colleagues who were making similar calls. They weren’t being called by their bankers, or by any of the businesses back home saying, “I can’t borrow any money”.... If, in fact, Paulson had struck a chord with the American banking community, wouldn’t you think that after he announced on Friday that there was a crisis of liquidity that threatens the entire nation’s financial solvency and Americans’ jobs from coast to coast, that my community bankers in Arizona wouldn’t have been picking up the phone by Monday morning, if not over the weekend, to say that “I share the Secretary’s concerns”?
Posted by: badanov   2008-09-28 04:19  

#11  And what is the price tag for no fix?

Exactly zero...
Posted by: badanov   2008-09-28 03:40  

#10  Criminals?
Posted by: Mike N.   2008-09-28 03:40  

#9  I heard somewhere the price tag for the fix is closer to $5 trillion And what is the price tag for no fix?
Posted by: Anguper Hupomosing9418   2008-09-28 02:58  

#8  The world entire should worry about handing over this much cash to the very people criminals who created the problem to begin with.

And I heard somewhere the price tag for the fix is closer to $5 trillion
Posted by: badanov   2008-09-28 02:54  

#7  "We should all be wary of the $700B bailout Congress."

There - fixed.
Posted by: Barbara Skolaut   2008-09-28 02:35  

#6  We should all be wary of the $700B bailout.
Posted by: JohnQC   2008-09-28 02:16  

#5  "Iyer, who thought his $400,000 at the brokerage was in a government-insured bank account"

Ummmm, NO.

I don't have $400,000 or a brokerage account, but I do know that (1) brokerage accounts - "money market" or otherwise - ain't secured by the FDIC, and (2) deposits in actual FDIC-secured accounts are only insured up to $100,000.

Bzzzzzzt. Nice try, Mr. Iyer. Thanks for playing. Next time, read the not-so-fine print.
Posted by: Barbara Skolaut   2008-09-28 01:39  

#4  Sausage-making in Congress this weekend: Republicans, under pressure from Democrats to deliver 70 to 100 votes from their side, were scouring the ranks and focusing on the two dozen Republicans who were retiring this year...Both parties were also scouring the political map to identify lawmakers who face little or no opposition for re-election in November, knowing they would be more willing to vote yes. Democratic officials warned that Democrats in potentially tough races could not be counted on to provide the votes to put the package over the top when, and if, it reaches the floor. Sen. Conrad D-ND, said in a speech on the floor: “ItÂ’s not just going to be Wall Street. The chairman of the Federal Reserve has told us if the credit lockup continues, three million to four million Americans will lose their jobs in the next six months.”
Posted by: Anguper Hupomosing9418   2008-09-28 01:35  

#3  Jittery Money-Market Investors Await Treasury Guarantee Details
"Murali Iyer and his wife haven't slept much since Sept. 17. That's when they got a call from TD Ameritrade Holding Corp. that made them worry about their life savings.
Iyer, who thought his $400,000 at the brokerage was in a government-insured bank account, learned that it was really in the Reserve Primary Fund" -- RPF, a non-FDIC money market fund, is now frozen after a run on it. If Mr. Iyer had studied the paperwork associated with RPF or searched on the internet, he would have easily been able to learn the truth. Diversification of savings is important, do not put all your eggs in one basket.
"Consumers have been using money-market mutual funds for three decades as a kind of bank account. The funds aren't FDIC- insured, but they do follow rules enforced by the U.S. Securities and Exchange Commission designed to keep them in conservative investments. Alongside bank accounts and U.S. Treasury bonds, they are considered one of the safest places to put money. I doubt this will be the case any longer.

Like other investors in the Primary Fund, TD Ameritrade customers will have to wait until the Reserve permits withdrawals. Money-market funds are usually allowed up to seven days to honor requests for cash. In this case, because of the credit market freeze, the company received a waiver from the SEC for a longer delay. ``We anticipate that the SEC order will remain in effect until sufficient liquidity returns to the markets,'' said the Reserve's spokeswoman, Ming Hatch, in an e-mailed response to questions. "
Posted by: Anguper Hupomosing9418   2008-09-28 01:13  

#2  Opposing the bailout because it's unpopular makes sense from a political perspective, but when pension funds go bust, it's far worse for their chances. Although I'm afraid of a potential economic crash, I am kind of enjoying the spectacle of a real important national issue intruding on the national entertainment spectacle called the election. The politicians are stumbling all over themselves.
Posted by: Anguper Hupomosing9418   2008-09-28 01:02  

#1  The trunks in Teh House confuse me. Opposing the bailout because it's unpopular makes sense from a political perspective, but when pension funds go bust, it's far worse for their chances. That only needs to happen to one pension, just one and the MSM will pound it until the election.

If any house trunks are reading this, I would advise you to remember how long they dragged out Enron.
Posted by: Mike N.   2008-09-28 00:16  

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