Category Archives: Federal bailout

Marcy Kaptur nails it on the House floor.

H/T to Open Left for this gem. Ms. Kaptur is a Dem, and all I got to say is this:


The Shrub will be addressing the Nation tonight..jesus, I can’t wait…I gotta go get a bottle of fine chardonnay for the ‘event’. 😉

Very few in Congress like Paulson and Bernake’s plan..

Even House conservatives are bitching about it. From The Hill:

The House Republican Study Committee (RSC) called an emergency meeting Monday afternoon to finalize an alternative proposal to the administration’s plan to bail out struggling financial institutions, according to several congressional sources.

It is unclear what changes the RSC will seek, but the conservative group’s concerns about the $700 billion package are another indication that the administration’s proposal will not sail through Congress.

Chris Dodd, who heads the Senate Banking Committee isn’t thrilled by a long shot. Indiana’s Republican rep, Mike Pence had this to say about the White House Bailout Plan:

“Congress must not hastily embrace a cure that may do more harm to our economy than the disease of bad debt.”

I hope they all, every single elected member of Congress, tells Paulson and Bernake to take their plan and shove it.

Nationalizing the worst part of our banking system.

Amy Goodman interviews investment banker turned journalist, Nomi Prins, and Michael Hudson, president of the Institute for the Study of Long-Term Economic Trends in the video. The transcript of the interview can be read here. Some of the choice quotes from the interview below:

NOMI PRINS: It’s insane, actually. It’s bad math, and it’s a bad precedent, because they’re not simply bailing it out with putting taxpayers’ money through the Fed into taking on the risks of these companies; they’re taking on risks. They’re not bailing out and selling debt; they are taking on the risk. They’re becoming-the Fed is continuing to become a larger and larger hedge fund. And it’s doing it with taxpayer money, and it’s doing it with the future debt of the United States.

So, for the one thing, they’re not attaching any rules to these bailouts. You know, you bail out Bear Stearns, effectively you’re putting up $30 billion to take Bear Stearns’s junk and say, “Alright, we’ll back the junk. JPMorgan Chase, you take Bear Stearns. We’ll back whatever junk is there.” But there’s no decision to say, “But, you know, you’ve got to tell us what’s there. And JPMorgan, by the way, as you’re taking on this bank, you have to explain to us what you really have. And Bank of America, you have to explain to us what your risks are.”

I know that at Bank of America they were struggling with their own risks and trying to figure out what was going on in their own company, and now they have assumed Merrill Lynch. That creates a tremendous institution, where the Fed is now obligated, when that starts to have more and more trouble, which it will.

Our government is nationalizing private debt. Too many people, progressives included, are saying these moves by the Fed are needed to keep our economy stable. Yet our government refuses to take care of, or bail out, the Social Security system. A system which takes care of the elderly and disabled. Our government will NOT be bailing out the pension funds, the labor funds or the small investors who are being bankrupted by the current financial meltdown.

So, how is giving billions to these private entities going to help the average joe and jill?

It won’t. Simply put…it will take years if not decades for pension funds and individual investors to recoup their losses, if they can at all.

And thats wrong on every damn level to me. This article in The Nation tells us who is taking the hard hit in this horseshit, and its not the banks, its people like you and me. Its people like Mildred:

She is not a rich woman and her retirement investments have been decimated by the perpendicular drop in the stock market. Despite a lifetime of working and saving, like a thrifty squirrel burying acorns in the backyard, she’s now broke.

One of the places she buried her acorns was AIG, thinking it would be hard to find a more conservative, rock-solid place to put her retirement money. She bought AIG preferred shares, that is, shares that are guaranteed to pay dividends and are thus ideal for retirement.

What none of the experts let the investors know was that somewhere along the path, AIG had stopped being rock-solid. Before Mildred knew it, the government had bought AIG and wiped out the stockholders. She, along with others, read in the papers that AIG’s new owners will not be paying preferred stockholders their promised dividends.(emphasis mine)

Where is Mildred’s parachute? It doesn’t have to be golden like the CEO’s get, just enough so she doesn’t have to work until the day she dies. Naomi Klein ties all this bullshittery to BushCo in the video below.

Profits are a private matter but losses are a public responsibility? Since when? Since our government bailed out the airline and insurance industries after 9/11. Where is the end of this process? The American automakers are now looking to the Federal Government now for their handout after years of getting their financial asses kicked by Japanese automakers. Will our federal government once again reward incompetence?

My guess is yes…they will. The only question remaining is:

Will regulation of these industries and financial systems be part of the bail out package? Will the Glass-Steagall act be resurrected?

Not if Phil Gramm has any say in the matter…

These bastards want to socialize something..socialize healthcare you scum-sucking bags of batshit! They sure hate socialism until they need it to cover their own greedy asses, don’t they? Friggin amazing.

A Progressive Solution to this friggin mess:

Bring financial markets under control. Government must ensure that financial transactions are transparent and fundamentally fair. If a bank is too big to fail, then it must face public scrutiny and federal regulation. No private financial institution should be allowed to pocket its winnings and make the taxpayers responsible for its losses.

Keep the secondary mortgage market under control. There is no reason to re-privatize Fannie Mae and Freddie Mac. Fannie Mae was a federal agency for thirty years. If it had remained a public body instead of a private one, the mortgage crisis would likely have been much less severe.

Focus on the economic wellbeing of Americans instead of the profits of rich corporations. It is irrational to bail out giant corporations that willfully took imprudent risks, while refusing to help average Americans who are feeling their economic pain. We must jump-start the economy by investing in clean energy; better schools; and safer bridges, highways and levees, simultaneously creating millions of new jobs.

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Fed takes over AIG

From CNN:

Federal officials will take 80% stake in the nation’s largest insurer in an $85 billion rescue plan to prevent financial chaos worldwide.

In a stunning turn, the Federal Reserve Board is taking over crumbling insurer American International Group in an $85 billion rescue plan, officials announced Tuesday evening.

The Fed authorized the Federal Reserve Bank of New York to lend AIG (AIG, Fortune 500) up to $85 billion. In return, the federal government will receive a 79.9% stake in the company.

Officials decided they must act lest the nation’s largest insurer file bankruptcy. Such a move would roil world markets since AIG (AIG, Fortune 500) has $1.1 trillion in assets and 74 million clients in 130 countries.

Somehow, this doesn’t surprise me one iota. What makes this even more heinous imho…this is an insurance company, that evidently has broken federal laws about being able to cover their own ass.

Update: The NYT is reporting its NOT a done deal yet:

With time running out after A.I.G. failed to get a bank loan to avoid bankruptcy, Treasury Secretary Henry M. Paulson Jr. and the Fed chairman Ben S. Bernanke convened a meeting with House and Senate leaders on Capitol Hill about 6:30 p.m. Tuesday to explain the rescue plan.

They emerged just after 7:30 p.m. with Mr. Paulson and Mr. Bernanke looking grim, but with top lawmakers generally expressing support for the plan. But the bailout is likely to prove controversial, because it effectively puts taxpayer money at risk while protecting bad investments made by A.I.G. and other institutions it does business with.

What frightened Fed and Treasury officials was not simply the prospect of another giant corporate bankruptcy, but A.I.G.’s role as an enormous provider of financial insurance to investors who bought complex debt securities. That effectively required A.I.G. to cover losses suffered by the buyers in the event the securities defaulted. It meant A.I.G. was potentially on the hook for billions of dollars worth of risky securities that were once considered safe.

But its real fucking close…

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Shades of the Keating Five-McCain’s son resigns from bank board

Johnny’s son Andrew McCain has resigned two high up posts he held on two bank boards per the Las Vegas Review Journal:

Andrew McCain, son of Republican presidential candidate John McCain, on Saturday resigned from the boards of Silver State Bancorp of Henderson and Silver State Bank for “personal reasons,” the holding company said.

Calls seeking comment from Andrew McCain weren’t returned. A spokesman for Silver State said the company wouldn’t elaborate on its announcement.

Personal reasons my hairy ass. The stock value of these two banks has plummeted recently, which might mean Federal takeover of them is close at hand. Again, from the LVRJ:

Andrew McCain, formerly director of Scottsdale, Arizona-based Choice Bank, joined Silver State’s boards in February after the Henderson bank acquired Choice Bank.

The senator’s son owned 1,226 Silver State shares of stock, according to the company’s latest report to the Securities and Exchange Commission. That investment was worth more than $1,500 on Friday when the Nasdaq stock market closed.

Shares in Silver State and other publicly owned bank holding companies in Southern Nevada have lost most of their value over the past year as they reported increasing numbers of problem loans.

Silver State closed at $1.28 on Nasdaq Friday, down 2 cents for the day, but off from a 52-week high of $24.10.

Hmm…sounds fishy wouldn’t you say? Hope this shit splatters all over Andy’s would make my day! 😉