Frightening!!!!!! (Draft Bailout Bill)

The dow closed down 372 points today. Ladies and gents hold on to your hats. we are witnessing the collapse of the U.S. economy as we speak. Wall street isn't happy with the fallout over the Bailout plan. Some members of congress on both sides os the isle are echoing exactly what some of us here on ATS are saying. this bailout only protects wall street it does nothing to help the taxpayers.

I predict the dow looses the same if not more on tuesday. How long can it slide down before it crashes?

Yep, no ones buying it yet. BUT changes are being made. This is really annoying since usually when a bill is being written the changes are being posted on Thomas, but this one doesn't seem to be there.

Anyway....

Changes Being Made

WASHINGTON - Scrambling for a quick accord on the $700 billion bailout, the Bush administration and leading lawmakers have agreed to include mortgage aid and strong congressional oversight along with unprecedented help for failing financial institutions, a key lawmaker said Monday.

Unimpressed, investors sent stocks plummeting anew, pushed oil up $16 a barrel and propelled gold prices ever higher as they searched for a safe place to park their money.

Okay, so we are getting our oversight, and they are including mortgage aid, (whatever their definition of that is, cause the Housing Bailout was an utter flop), but - UNPRECEDENTED HELP FOR FAILING FINANCIAL INSTITUTIONS - is still the big goal here.

They are now shooting for a Wednesday adoption (if was Friday last night) and we have no clue what it's going to look like, but they must be hearing some of America scream, because some of them are starting to sound like us - lol!

Frank said that lawmakers "are building strong oversight" into the new bailout measure.

"The private sector got us into this mess," he said, "The government has to get us out of it. We do want to do it carefully."

Republican presidential candidate John McCain, speaking Monday on NBC's "Today" show, said, "We are in the most serious crisis since World War II."

We are getting sound bites, but I still think they are lame.

Thanks Frank, like why wasn't the oversight there in the first place?
The private sector got us into it, the government has to get us out? WHY? Why can't the private sector take the responsibility?

As for McCain, seeing as how I didn't see the show I sure hope he said something more substantial than this, because DUH!, we know we are in deep poo, how about a comment about fixing it without creating more. Please someone tell me he said something to indicate he even read the proposal? Pfffffttttt!

I am such a conspiracy believer that I see the powers behind the bill working tomorrow to bring the markets bottom line to force congress into debating anymore and pass the bill.

Why? because this nothing more than a power grab by a private entity to have absolute control over our government.

If tomorrow the markets fall to 500 points or more then I am right.

The bail out is just the bonus.

reply to post by EtSolveMundi

Limitation on Authority

1. In General

The Secretary may not purchase, or make any commitment to purchase, any troubled asset unless the Secretary receives contingent shares in the financial institution from which such assets are to be purchased equal in value to the purchase price of the assets to be purchased.

That's like asking Paulson to buy every bad dollar for 15 cents. Call it Operation Thrifty.


The commodities game: I wouldn't mind if the stock sellers hoarded gold to the tune of $2000 per ounce. But they will go after oil futures, and so $5 gas will be back again shortly. ( I hope not, but I may hope wrong.)

In death we have a name, his name is Hank paulson.... errr Robert Paulson... sorry Freudian slip lol :X

biz.yahoo.com...

Bush is pushing Congress to act quickly but he is also working with congress to allow more oversight since congress made it quite clear over the weekend they were not handing Paulson atleast $700 Billion dollars with Congress not having any oversight.

They also added terms that a Judge could set a monthly payment that homeowers could afford so they can keep their homes. Also Congress wants to expand it to any personal Debt. Credit card and car loan so that helps not just the homeowners but anyone that has defaulted in debt.

They have cut the time period from 2 years to the end of next year. Paulson is suppose to be on capitol hill tomorrow and congress could vote on this bill as soon as wednesday.

Congress is also going after these CEO's Bonuses to recoup some of the money. Also any company that seeks a bail out the goverment gets shares of stock in that company to try and keep this from happening again

I've been at work all day and wasn't able to follow the markets and the news so i'm playing catch-up But i did see the dow was down 372 points at the close of the day. i see an even larger slide tomorrow though.

[edit on 9/22/2008 by Mercenary2007]

[edit on 9/22/2008 by Mercenary2007]

Shouldn't someone give Bush a fiddle?

Anywho. People that know I frequent this site have been up my rear all day today wanting this news. Keep us posted. It does look like a big bitter pill is about to be shoved down our collective throats.

I have a question or a concern (yes another one) with this whole legislation. If the Federal government becomes the loan holder for mortgages, does that make the loan non-dischargeable debt, which also includes taxes, spousal support, and child support? Will mortgages now become debts that cannot be eliminated through filing bankruptcy except in very rare cases?

Also, government debts fall in line, I believe, before spousal and child support, as the first debt that must be paid. Is that provision going to apply now to every mortgage that comes under this legislation, and or debt they take on? This would effectively eliminate bankruptcy as a last resort for people facing financial ruin if the government holds all these debts wouldn't it?

Thanks for all the great information in this thread.


[edit on 22-9-2008 by DancedWithWolves]

reply to post by DancedWithWolves


These same people that runs these companies lobbied congress to change the bankruptcy rules last year IIRC. Even if you file for Bankruptcy and its approved your still responsible for the debt it doesn't go away. judge dictates how much you have to pay every month based on what your income is.

As for your other concerns i'd be lying if i said i knew and so would anyone else here. we'll have to wait and see just what are the ramifications of this bill.

This bill is just a bandage designed to buy more time to fix it. But they waited to long to apply the bandage we can't keep hemorrhaging money like we are to bail these companies out let alone take on other countries debt and prop up their economies.

[edit on 9/22/2008 by Mercenary2007]

reply to post by Relentless


It looks like we have a "crisis" congress.
Do nothing.....do nothing......do nothing.....let's count our kickback
money today.....ok, that's done.....do nothing.....do nothing.....
WHAT???!!!....we have a crisis?...OK, let's do something to fix it.
Should we hold hearings on this Freddie Mac mess?
WHAT???!!!....we are responsible for this?
NO HEARINGS! Mumms the word. Let's run out of DC!!!

It looks like we have a "crisis" congress.
Do nothing..........................
What?! ....we have a crisis?
Ok, let's fix it.
Should we hold hearings and get the guilty guys?
What???!!! we are responsible?
NO HEARINGS! Mumms the word. Let's run out of DC!

the american people can actually do something about this

the funny thing is that collectively we believe we are helpless due to the times in the past that we have bent either bent over at will or refused to get collectively upset enough to WILL a change in the policy's of the Plutocracy

now american's are in economic pain, i have posted about this time in the past (year and 2 year's ago) that this time will be the most opportunistic and our best % chance of actually doing something and standing up for ourselves. In good economic times only a minority care or take enough intrest in the big picture to raise there arms, but this is not enough to rangle the PTB's feathers or actions, but don't let this fool you into thinking we as a nation are hopeless to the whims of the elite (that is what they would LOVE for you to believe), the contrary can be true, especially now.

1. because we are collectively in enough financial pain to actually get angry enough to complain to our senators and congressman EN MASSE

2. past inability's to get the job done leave people highly questionable if we can effect change, but this was due to not enough people caring, NOW due to the wide spread economic pain, the anger is growing, and it is very possible.

i believe A RACE between americans focusing there anger in a constructive and patriotic way against the shadow gov't (the Financial sector) and desperate politicos looking to divert americans anger toward some foreigners (for some odd new reason) may be brewing.

email your congressmen thru this link

tell him you want congressional oversite on what the treasury does with taxpayer funds and you want limits instilled on CEO golden parchutes (after they ruin the company and leave us to pay for it)

globaleconomicanalysis.blogspot.com...

Anyone remember the Savings and loan crisis of the 80's and 90's?

The exact same thing that happened then is happening NOW! Congress the fed and the american citizen has not learned 1 thing from it. we are doomed to repeat history if we don't learn from our mistakes.

for those don't remember the S&L crisis heres a refresher

The savings and loan crisis of the 1980s and 1990s (commonly referred to as the S&L crisis) was the failure of 747 savings and loan associations (S&Ls) in the United States. The ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government—that is, the U.S. taxpayer, either directly or through charges on their savings and loan accounts[1]—which contributed to the large budget deficits of the early 1990s. The concomitant slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990–1991 economic recession. Between 1986 and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, the lowest rate since World War II.

Background Savings and loan institutions (also known as S&Ls or thrifts) have existed since the 1800s. They originally served as community-based institutions for savings and mortgages. In the United States, S&Ls were tightly regulated until the late 1970s.[citation needed] For example, there was a ceiling on the interest rates they could offer to depositors.[citation needed] In the 1970s, many banks, but more particularly S&Ls, were experiencing a significant outflow from low-interest rate deposits, as interest rates were driven up by the high inflation rate of the late 1970s and as depositors moved their money to the new high-interest money-market funds.[citation needed] At the same time, the institutions had much of their money tied up in long-term mortgage loans at fixed interest rates, and with market rates rising, these were worth far less than face value. That is, to sell a 5% mortgage to pay requests from depositors for their funds in a market asking 10%, a savings and loan would have to discount its asking price on the mortgage. This meant that the value of these loans, which were the institution's assets, was less than the deposits used to make them, and the savings and loan's net worth was being eroded. Under financial institution regulation, which had its roots in the Depression era, federally chartered S&Ls were only allowed to make a narrowly limited range of loan types. Late in the administration of President Jimmy Carter, caps were lifted on rates and the amounts insured per account to $100,000. In addition to raising the amounts covered by insurance, the amount of the accounts that would be repaid was increased from 70% to 100%. Increasing Federal Savings and Loan Insurance Corporation (FSLIC) coverage also permitted managers to take more risk to try to work their way out of insolvency so the government would not have to take over an institution. Carter left office in January 1981, a year in which 3,300 out of 3,800 S&Ls lost money. In 1982, the combined tangible net capital of the industry was $4 billion. The chartering of federally regulated S&Ls accelerated rapidly with the Garn-St. Germain Depository Institutions Act of 1982, which was designed to make S&Ls more competitive and more solvent. S&Ls could now pay higher market rates for deposits, borrow money from the Federal Reserve, make commercial loans, and issue credit cards. They were also allowed to take an ownership position in the real estate and other projects to which they made loans and they began to rely on brokered funds to a considerable extent. This was a departure from their original mission of providing savings and mortgages.

Causes:
Deregulation: Although the deregulation of S&Ls gave them many of the capabilities of banks, it did not bring them under the same regulations as banks, and the new legislation allowed them to enter new lending businesses with very little oversight. Thrifts could choose to be under either a state or a federal charter. Immediately after deregulation of the federally chartered thrifts, the state-chartered thrifts rushed to become federally chartered, because of the advantages associated with a federal charter. In response, states (notably, California and Texas) changed their regulations so they would be similar to the federal regulations. States changed their regulations because state regulators were paid by the thrifts they regulated, and they didn't want to lose that money.

Source

We got thru the S&L crisis then in 1999 Congress passed Gramm-Leach-Bliley Act of 1999 signed into law By Bill Clinton

Changes caused by the Act
Many of the largest banks, brokerages, and insurance companies desired the Act at the time. The justification was that individuals usually put more money into investments when the economy is doing well, but they put most of their money into savings accounts when the economy turns bad. With the new Act, they would be able to do both 'savings' and 'investment' at the same financial institution, which would be able to do well in both good and bad economic times.

Prior to the Act, most financial services companies were already offering both saving and investment opportunities to their customers. On the retail/consumer side, a bank called Norwest led the charge in offering all types of financial services products in 1986. American Express attempted to own almost every field of financial business (although there was little synergy among them). Things culminated in 1998 when Travelers, a financial services company with everything but a retail/commercial bank, bought out Citibank, creating the largest and the most profitable company in the world. The move was technically illegal and provided impetus for the passage of the Gramm-Leach-Bliley Act.

Also prior to the passage of the Act, there were many relaxations to the Glass-Steagall Act. For example, a few years earlier, commercial Banks were allowed to get into investment banking, and before that banks were also allowed to get into stock and insurance brokerage. Insurance underwriting was the only main operation they weren't allowed to do, something rarely done by banks even after the passage of the Act.

Changes caused by the Act
Many of the largest banks, brokerages, and insurance companies desired the Act at the time. The justification was that individuals usually put more money into investments when the economy is doing well, but they put most of their money into savings accounts when the economy turns bad. With the new Act, they would be able to do both 'savings' and 'investment' at the same financial institution, which would be able to do well in both good and bad economic times.

Prior to the Act, most financial services companies were already offering both saving and investment opportunities to their customers. On the retail/consumer side, a bank called Norwest led the charge in offering all types of financial services products in 1986. American Express attempted to own almost every field of financial business (although there was little synergy among them). Things culminated in 1998 when Travelers, a financial services company with everything but a retail/commercial bank, bought out Citibank, creating the largest and the most profitable company in the world. The move was technically illegal and provided impetus for the passage of the Gramm-Leach-Bliley Act.

Also prior to the passage of the Act, there were many relaxations to the Glass-Steagall Act. For example, a few years earlier, commercial Banks were allowed to get into investment banking, and before that banks were also allowed to get into stock and insurance brokerage. Insurance underwriting was the only main operation they weren't allowed to do, something rarely done by banks even after the passage of the Act.

Continued from above....
Much consolidation occurred in the financial services industry since, but not at the scale some had expected. Retail banks, for example, do not tend to buy insurance underwriters, as they seek to engage in a more profitable business of insurance brokerage by selling products of other insurance companies. Other retail banks were slow to market investments and insurance products and package those products in a convincing way. Brokerage companies had a hard time getting into banking, because they do not have a large branch and backshop footprint. Banks have recently tended to buy other banks, such as the 2004 Bank of America and Fleet Boston merger, yet they have had less success integrating with investment and insurance companies. Many banks have expanded into investment banking, but have found it hard to package it with their banking services, without resorting to questionable tie-ins which caused scandals at Smith Barney.

Senator Phil Gramm led the Senate Banking Committee which sponsored the Act; he later joined UBS Warburg, at the time the investment banking arm of the largest Swiss bank. Gramm registered as a UBS lobbyist in 2004 and began advising John S. McCain as his top economic adviser and general co-chairman during McCain's 2008 presidential campaign.

Source

When the dust settles from the current Crisis The Great depression is going to look like a recession! Congress, and the Federal reserve did not learn a bloody thing after the S&L Crisis. Some of the very People that caused this mess we are in are now suppose to fix it. Hank Paulsen, and Ben Bernanke.

April 14, 2005 congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Pub.L. 109-8, 119 Stat. 23, enacted 2005-04-20), providing for significant changes in bankruptcy in the United States, was passed by the 109th United States Congress on April 14, 2005 and signed into law by President George W. Bush on April 20, 2005. The effective date for most of its provisions apply to cases commenced on or after October 17, 2005. Referred to colloquially as the "New Bankruptcy Law", the Act of Congress attempts to make it more difficult for consumers to discharge debt under Chapter 7; some of these consumers may instead utilize Chapter 13.

Although the BAPCPA was intended to make it more difficult for debtors to file a Chapter 7 Bankruptcy--under which most debts are forgiven (or discharged)--and instead force debtors to file a Chapter 13 Bankruptcy--under which debts are repaid under a plan--the Act has not been effective in practice. Approximately 85% of debtors are not subject to its "means test" and a large percentage of the rest are able to "pass" the means test.

Under the old law, filers had a presumption of eligibility to file under Chapter 7, with the final determination made by bankruptcy judges, who evaluated the specific nature of each bankruptcy. In lieu of this judicial discretion, the new law substitutes a means test to determine whether filers have enough income to pay some portion of their debts, and thus file under Chapter 13. [2]

The means test applies to filers whose gross income (based on the six month period prior to filing), is above the median income in their state. Individuals whose incomes are below the median automatically qualify for Chapter 7. Filers whose incomes are above the median must then calculate their Disposable Monthly Income (DMI) to determine whether they are able to make payments on their debts sufficient to qualify them for Chapter 13. The DMI is determined by subtracting priority debt payments, secured debt payments, Internal Revenue Service determined expense allowances, taxes and certain other expenses from a filer’s monthly income. If the DMI is less than $100 per month, they are permitted to file under Chapter 7. If the DMI is above $100, they must file under Chapter 13.

This formula effectively rewards filers with assets that are heavily mortgaged and hurts debtors with larger amounts of unsecured debt. Since alimony and child support payments are "priority debts" it also has the effect of making it easier for people who owe back domestic support obligations (such as "deadbeat dads") to file under Chapter 7 than other debtors (but the child support is not dischargeable).

Source

These same Companies that lobbied congress to change the bankruptcy laws are now the heads of bankrupt Banks. They made it harder for the average citizen to discharge their debt and have now force them to have to pay it back under a plan.

Now they want Congress to baill their butts out of the mess they create and pass it onto the taxpayers while they take their full salaries and Bonuses for ruinning their companies.

theres an old saying "the rich get richer and the poor get poorer!"

Why should the Taxpayers have to Bail these guys out when they are the ones that created this mess?

Why Should the U.S. Taxpayers HAve to pay to Bailout foreign Businesses, Banks And economies?

Why should the Taxpayers be reduced to servitude for the next 2 maybe 3 generations?

Anyone that thinks this Bailout is going to help the U.S. needs to wake up! Congress is just going thru the motions to make it look like they are looking out for the taxpayers and the homeowners.

But what happens in a month or 2 when they fail in their oversight of this bill and the economy crashes harder than it would if it crashed now?

Sorry for the super long posts but putting this into light took a lot explaining.

Here comes the BBC's belated effort to relay the significance of the proposed bailout. What is interesting is the impression given that there is a real battle between the President and the Congress developing. Is this an accurate impression?

The White House says Congress must back the rescue plan to stop wider economic harm...

"The Bush Administration has called on Congress to rubber stamp its bail-out legislation without serious debate or efforts to improve it," said US Senate Majority Leader Harry Reid. "That will not happen," he said.

Richard Shelby, a senior republican on the Senate Banking Committee, also hit out at the plan.
"It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted," he said.

President George W Bush has warned that "failure to act would have broad consequences".

Source article: Shares Slide amid Bail-Out Fears

I even detect a hint of "If this doesn't get passed soon, it will cause further turmoil" in the article. Comments?





[edit to correct typo]


[edit on 23/9/08 by pause4thought]

I am afraid the market panic is back in an effort to convince people we have to act fast (faster than originally planned - it was slated for Friday, and now they are shooting for Wednesday). the faster they push this thorugh, the worse the final draft will be for us, so it's only logical they need people to see a panic situation to get the support for what they are doing.

don't buy into the fact that the markets are corrected by this bill. In fact, the worst thing you can do to support this bill is pump more money into the market once it goes through.

this is not a market anyone should be playing, it is too manipulated IMO. Don't fall for it. On the next run up take your money and run. Do not reward this scam.

These views are my opion, not market advice, so take it for what it's worth.

It seems as though Congress has similar qualms with this proposal as we do... thankfully.

"After reading this proposal, I can only conclude that it is not just our economy that is at risk, Mr. Secretary, but our Constitution, as well," Dodd said.

Even a lot of republicans are opposed to it...

"This massive bailout is not a solution, It is financial socialism and it's un-American," said Sen. Jim Bunning, R-Ky.

Read the full article here.

A perspective from one who does not have a troubled mortgage...
Essentially this bailout stinks of a massive, "legit" land grab. After passage, the Agency holding the bad paper sells them for $.02 on the dollar, the buyer then turns around and sells for $.04,etc. The property values plummet, I will have to sell my property at a loss, along with how many millions of others.

section 3 (b) protect the taxpayer....

BAD IDEA...this.

reply to post by Anonymous Avatar


That article says a lot. How many Americans realise their Constitution hangs in the balance?

"I understand speed is important, but I'm far more interested in whether or not we get this right," said Sen. Chris Dodd, D-Conn., presiding over a a hearing by the banking panel.

"There is no second act to this. There is no alternative idea out there with resources available if this does not work," he added.

Bernanke's remarks about the risk of recession came in response to a question from Dodd, who seemed eager to hear a strong rationale for lawmakers to act swiftly on the administration's unprecedented request.

So if Congress won't pass it what do they go for - THE NUCLEAR OPTION? Whatever that means. Some people would even fear a literal interpretation, others would just anticipate 'manoeuvring the economy into total meltdown'.

Is this a film, or reality?