Jackson Free Press

CNN is reporting the bailout plan went down in the U.S. House of Representatives by a 228-205 vote. Mississippi Rep. Chip Pickering voted for it; Reps. Bennie Thompson, Travis Childers and Gene Taylor voted against it. (View roll-call vote). CNN:

he fate of the Bush administration's $700 billion financial bailout plan was abruptly thrown in doubt Monday as a House vote turned against the controversial measure. The next steps were not immediately clear but supporters were scrambling to put it up for another vote. What was supposed to be a 15-minute vote stretched past the half-hour mark as leadership scrambled for support. Investors who had been counting on the rescue plan sent the Dow Jones industrial average down as much as 700 points while watching the measure come up short of the necessary support, before rebounding slightly. The key stock reading was down more than 500 points.

The measure needs 218 votes for passage, but it came up 13 votes short of that target, as the final vote was 228 to 205 against. About 60% of Democrats voted for the measure, but less than a third of Republicans backed it.

Previous Comments

ID

138370

Comment

I can't decide what I think. Part of me of course doesn't want another economic depression. But then another part of me says, why should the US taxpayers bail out these irresponsible financial "products" based on extreme leverage - they make no sense and they should be regulated. It's not all about mortgage holders - much of this crisis is due to unregulated debt selling without a foot in reality.

Author

Izzy

Date

2008-09-29T12:59:04-06:00

ID

138372

Comment

Read this from Michael Moore: The Rich are Staging a Coup This morning at http://www.michaelmoore.com/words/message/index.php?id=235 excerpt: Health insurance? Mike, why are you bringing this up? What's this got to do with the Wall Street collapse? It has everything to do with it. This so-called "collapse" was triggered by the massive defaulting and foreclosures going on with people's home mortgages. Do you know why so many Americans are losing their homes? To hear the Republicans describe it, it's because too many working class idiots were given mortgages that they really couldn't afford. Here's the truth: The number one cause of people declaring bankruptcy is because of medical bills. Let me state this simply: If we had had universal health coverage, this mortgage "crisis" may never have happened.

Author

Izzy

Date

2008-09-29T13:21:49-06:00

ID

138373

Comment

This may be the one and only area where Michael Moore and Dave Ramsey (conservative "get out of debt" guru) actually agree. Heard Ramsey celebrating the failure of the bailout on his show today. He's saying, let's hold those accountable for their mistakes, not make the American people pay for it.

Author

Izzy

Date

2008-09-29T13:23:25-06:00

ID

138374

Comment

He's right.

Author

Jeff Lucas

Date

2008-09-29T13:33:31-06:00

ID

138375

Comment

The Times has a funky roll-call vote map up now.

Author

DonnaLadd

Date

2008-09-29T13:39:06-06:00

ID

138376

Comment

(Funny to see that Chip Pickering voted for corporate welfare, while the state's Dems did not.)

Author

DonnaLadd

Date

2008-09-29T13:39:52-06:00

ID

138378

Comment

I heard Ramsey also. He also said this, "I like George Bush, a lot of people are feeding him bad information." Amazing that conservatives can so easily dismiss the responsiblity of the president in this mess. Bush is the President, you would hope he would be smart enough to ask the right questions, and analyze the facts, and not let people just feed him bad information. I like Ramsey, not his politics.

Author

lanier77

Date

2008-09-29T13:49:25-06:00

ID

138380

Comment

It is probably popular to cheer for no action on this; however, I doubt that it is at all wise. This is serious. We need to do what Sweden did and demand an equity stake for a bail out. With an equity stake the taxpayers stand a chance of getting our money back with possibly a profit when the market goes back up. If there is no intervention in the system it is going to be catastrophic. We will all suffer. What good does it do to let the rich guy's house burn down if the rest of the block (including our houses) burn down too? A lack of intervention in the early phases leading up to the Depression made it worse and longer. John McCain gave a speech this morning touting how his leadership led to the bail out while Obama was for not getting involved. That speech seems very foolish now. This article may offer some clarity: http://www.nytimes.com/2008/08/17/magazine/17pessimist-t.html

Author

FreeClif

Date

2008-09-29T14:02:27-06:00

ID

138382

Comment

I agree with a lot of what Michael Moore wrote, but I disagree on tactics. I think we need to make sure the ship does not sink, then get control of it (win in November), and then work to get the safeguards for homeowners that we need once we have a President who will sign off on those bills. George Bush Jr. will NEVER sign off on the things Michael Moore recommends, progressive health and mortgage policies. Let's be realistic.

Author

FreeClif

Date

2008-09-29T14:11:34-06:00

ID

138383

Comment

Two scapegoats are on the block: Nancy Pelosi and dose wascallly minowity bowwowers: I agree with Pelosi: Pelosis's speech http://www.guardian.co.uk/world/2008/sep/29/congress.wallstreet1 Cynthia Tucker debunks blaming minorities for the crisis: www.baltimoresun.com/news/opinion/oped/bal-op.viewpoint28sep28,0,6004405.story

Author

FreeClif

Date

2008-09-29T14:18:00-06:00

ID

138384

Comment

The Dow is going to close down 750 points or so. It is one of the deepest percentage drops in history. This is not just about saving Wall Street. Everything is connected --- Wall Street to main street all the way to China where we borrow our money from. Anyone who thinks people will not lose jobs if credit dries up does not understand what is getting ready to happen. What happens if China, Russia and Arabian states pull their money out of dollar denominated assets? It is unbelievable that they are saying they sent the markets down the outhouse shoot because Nancy Pelosi said some mean things in a speech! I guess it's Disclaimer: Like many "ordinary" people I do have retirement money in equity funds.

Author

FreeClif

Date

2008-09-29T14:32:29-06:00

ID

138385

Comment

I don't want the Joe that went and got a $400,000 house on a $60,000 a year salary, to get any assistance. --Baqan2000 I pretty much agree here - it's not as if there's any kind of housing shortage crisis, right??? Rentals are everywhere, and even if people have to foreclose, they can find an alternative, maybe a house they can really afford. The solution is not to bail them out - that's like someone having a $800 leased car payment loan and you say, well, I'll pay the lease for a month or two, then you take it back. They still won't be able to. And this bailout as I understand it isn't for the mortgage holders themselves. It's for the investors who bought financial products based on the debt the mortgage BROKERS have - right? Wish I'd see details of the bailout more clearly somewhere.

Author

Izzy

Date

2008-09-29T14:37:03-06:00

ID

138386

Comment

It closed down 777, the highest point drop in one day ever. It was down 7 percent, which isn't the 20 percent drop that started the Great Depression (if there is consolation in that). S&P 500 and Nasdaq down about 9 percent each, I believe. It's a disaster, no doubt. The era of unbridled and unregulated greed is ending. Bushco are going out in style. Wall Street, R.I.P. Interesting times ahead, but they were bound to happen: What must go up must come down. Bubbles burst. Companies, with few exceptions, do not self-regulate. Americans must learn that everything comes at a cost, especially those who blindly elected Bush, Chaney and the neocons of the American Enterprise Institute two times. There are a million ways to tell "told you so," but it won't do a damn bit of good now. Personally, I won't miss the madness and greed of Wall Street. But it's going to get bumpy to get to the other side.

Author

DonnaLadd

Date

2008-09-29T14:39:13-06:00

ID

138387

Comment

I have mixed feelings on the bailout, like most of us, but I tend to agree with Whitley that we should save the farm, and then get somebody in there with the good sense (and good team) to get us on a different track in January. Meantime, McCain is tryign to set up a health-care program that would take away the business write-off for providing health insurance. Therefore, many of us couldn't afford to, and others just wouldn't. Therefore, in tough economic times, the onus is back on workers to get and pay for their own insurance. McCain gives a tax break for it, that would cover the "insurance most people have," as he put it this week. So here's how it will go: Companies will stop paying for your insurance because they can't write it off. People will choose to be uninsured rather than fork out the money each month for expensive insurance that isn't very good. (Rather than benefit from the tax credit at the end of the year.)

Author

DonnaLadd

Date

2008-09-29T14:43:11-06:00

ID

138388

Comment

Obama was speacking in Colorado and compared it to landing at the airport in Denver.... Yeah right, IF you trust the pilots to get that plane down (in rough weather). I trust the pilot when I fly SouthWest air, but I do not trust those pilots in DC!

Author

FreeClif

Date

2008-09-29T14:45:45-06:00

ID

138390

Comment

...And the increase in uninsured people will lead to more bankruptcies...It is midnight in America (again). If the wrong choice is made in November, it is going to be one of the longest, coldest nights in decades because if voters don't get it right there will be no safety nets. That was made clear Friday night.

Author

FreeClif

Date

2008-09-29T14:49:57-06:00

ID

138391

Comment

I'm with Donna, I think it's an issue of a bubble getting popped - housing prices cannot rise indefinitely, especially when you factor in these people buying huge houses then taking out equity loans on top of their mortgage - falsely drove up the cost of the homes. I agree with the guest lecturer in my business class at Millsaps last week: Do a bailout but only protect with FDIC the local BANKS and the MONEY MARKET ACCOUNTS - in other words, shore up the crucial pieces of the financial world, make any money paid out payable back with interest, and let these investment firms deal with their failures and either get back on their feet or fold up. Finally, get this deregulation streak back on track by regulating the kind of investment products you can sell.

Author

Izzy

Date

2008-09-29T14:56:54-06:00

ID

138392

Comment

As Roubini pointed out in the article cited above, it is a vast misunderstanding that the economic situation in PRIMARILY due to a housing bubble. We have a SUBPRIME FINANCIAL SYSTEM. It is not about hispanics and african americans buying homes they couldn't afford. This ENTIRE country does not save and invest at a healthy rate. ALL kinds of debt (not just mortgage debt) is highly leveraged. If you only shore up money market accounts and local banks you will hear a HUGE sucking sound ---the sound of all the foreign investors' money being sucked out of dollar denominated investments. Confidence in the stability of this country is the only thing that makes this a good place to let your money sit if you are in China, Russia or Arabia. If there is no confidence in the U.S. market, then you might as well put all your money in British Pounds or in oil futures or gold bullion --- wouldn't you if you had a few trillion dollars laying around? I have a bachelors in economics from Northwestern and and an MBA from UT Austin; I don't know if they help me understand anything better but I just ask, What would I do if I were in China or Arabia?

Author

FreeClif

Date

2008-09-29T15:07:56-06:00

ID

138393

Comment

ok, BA in economics trumps my MA in ethnomusicology (yes, that's village music from Bulgaria primarily)- but I am in business classes now at Millsaps. ;-) I agree that we have a Subprime Financial System, yes, that makes total sense. But, what good will it do to put try to plug up this hole with more debt? Right? I mean, based on our deficit, any bailout is gonna be borrowed money from China anyway, right? Is the solution to feed the madness? What do you propose?

Author

Izzy

Date

2008-09-29T15:12:37-06:00

ID

138395

Comment

I'm kidding about my MA, but I'm very interested in comments from anyone, and especially people who have training in economics or business - we need minds together on this - I haven't made mine up, I want to know more. Pass the p-corn ;-)

Author

Izzy

Date

2008-09-29T15:18:19-06:00

ID

138396

Comment

Sweden had a similar credit crisis in the nineties. They passed a rescue plan for the markets that cost them about 4% of annual GDP. The plan floating in DC for a 700 billion dollar deal is supposedly about 5% of our GDP. In Sweden, taxpayers ended up recovering all their "investment" when their markets recovered. It is about engineering a soft landing for for credit markets (equities are part of that) as opposed to a crash which leaves everyone from Wall Street to main street in shambles.

Author

FreeClif

Date

2008-09-29T15:19:46-06:00

ID

138397

Comment

I believed you, Hippie Girl. ;-)

Author

DonnaLadd

Date

2008-09-29T15:20:16-06:00

ID

138398

Comment

Thank God I put is all in Bonds and Mattresses...... ;)

Author

atlntaexile

Date

2008-09-29T15:23:44-06:00

ID

138399

Comment

Oh yeah, hippie girl ;-) well, I *do* have an MA in Ethnomusicology, but I don't think it's relevant, just amusing.

Author

Izzy

Date

2008-09-29T15:28:30-06:00

ID

138400

Comment

Thanks, Whitley, for concrete & relevant info - does anyone know if the proposed bailout we're discussing had provisions for recovery of all investment?

Author

Izzy

Date

2008-09-29T15:29:46-06:00

ID

138401

Comment

Much of what I was taught over nine years of coursework seems to have been discredited in only 30 days (lol).

Author

FreeClif

Date

2008-09-29T15:33:27-06:00

ID

138402

Comment

Iz, I know the Repubs were fighting an equity stake for taxpayers because they felt it was "socialism". I don't know what was in today's proposal. They favored "insurance". If you only "insure" investments, then that seems like socialism for investors to me. You are socializing the down side with no upside for the taxpayer/investors.

Author

FreeClif

Date

2008-09-29T15:37:10-06:00

ID

138404

Comment

We will get cheaper if the Chinese want to buy in a little more. I am going to hedge my bet and start learning Chinese. I am starting with: 动 帮忙;拯救;促进;治疗;抑制 Help!

Author

FreeClif

Date

2008-09-29T15:46:45-06:00

ID

138406

Comment

Taxpayers shouldn't pay for Wall Street's greed. That said, I might be willing to go along with a bailout at a much smaller price. Another way to possibly pay for the bailout: stop the war in Iraq, which is costing us $10 billion a month.

Author

golden eagle

Date

2008-09-29T17:31:11-06:00

ID

138407

Comment

maybe all Americans ought to have small business training in addition to civics/Am. govt in high school - that way we'd all be able to read a balance sheet and find out if proposals from our legislators make fiscal sense. At the least, we ought to have details of what's been proposed.

Author

Izzy

Date

2008-09-29T19:36:34-06:00

ID

138408

Comment

The subprime mortgage crisis led to this; the subprime mortgage gateway was led by democrats (Carter then Clinton) insistent on the theory (while noble) that everyone should be able to buy a home. Not everyone can. Heck, I'm a renter. I know too many folks who bought mcmansions on this same goverment loophole. And when you create a loophole for money like that, don't think financial institutions are going to act like boy scouts. This is a BIG mess. The drop today may be not the largest percentage drop ever, but it was the biggest ever, and we are playing with fire at this point. A quote above: "I don't want the Joe that went and got a $400,000 house on a $60,000 a year salary, to get any assistance. --Baqan2000" They are not; the house will be foreclosed; it is the bank that holds the note if the home owners can't pay it; the banks are being bailed out for the bonehead decision to give the original loan. I agree it stinks. But I don't see a choice. And the consequences are dire.

Author

MAllen

Date

2008-09-29T20:02:22-06:00

ID

138410

Comment

This is the "bail out" plan as I understand it. Economics has never been my strong suit (or math). So, I'm going to give my explanation/understanding and then I would LOVE for anyone who knows more than me to please explain it better. I read this "dumbed down" version on the web today on MSN from an economist. It was the best explanation that I've heard for a "normal person" so far. I've also heard that unless you have a degree from Wharton or a PHD in economics from an Ivy League...you probably ARE NOT going to understand the "true" bail out plan (this is why is scares me that Bushy is in charge). As I've learned lately...economics are actually very esoteric, abstract and somewhat "sexy". ;) Anyway, the guy today in the article said this....imagine that you buy a $500,000 home. You go to the bank for a home equity loan and they approve you for a hundred thousand (this was fairly normal for the last decade.) But, imagine if you go to the bank with a five hundred thousand dollar house and they said, "Hey, dude, we'll give you twenty five million dollars". And then you say, "okay...sounds great to me." The only problem being that the capital (the house) doesn't exist to back up the loan. (Here's another random example) Suppose a bank owns 300 million dollars in mortgages. This is actual DEBT dependent upon actual people paying back the DEBT (debt has a negative value in the real world). The bank then sold these 300 million dollars worth of mortgages as actual "capital" (a hard asset). Then, the person that bought them "re-bundled" them and sold them for 600 million. So, now you have 600 million dollars worth of investments based on 300 million dollars worth of DEBT (sold as "capital). This went on infinite until the "bubble" (as people like to call it) collapsed...as things leveraged on nothingness will return to nothingness. The guy in the article actually said, "Things leveraged always look crappier on the way down." (or basically that) :) OK...now, based on those examples. Paulson decided that the mortgages at the "bottom rung" on which all these investments were leveraged would take about 700 billion in "hard assests" to cover. Basically meaning that they are asking the American people to come up with the real capital to back these mortgages so the 5 trillion dollars worth of investments leveraged "above" these mortgages won't fall apart. That's what they mean when they say "shore up" the economy. We aren't actually bailing out for the entire sum...we are asking to produce the capital for the leveraged sums "above" it. The Man explained it succinctly as someone breaking into your home and stealing all your sh1t. Then, you have to go bail the thief out of jail and REPAY HIM for all the sh1t he took from you. Now, this pisses me off as I am one of the few Americans that doesn't live on credit. I am five payments away from owning my car. I haven't bought a house because I CANNOT AFFORD IT and I have no credit card debt (I don't believe in them...blame/give credit to my daddy). I am most angry about it because from what I've heard, Americans that actually live on their income are the ones that will bear the brunt of this. But, IF WE DO NOT, the fall out comes in the form of me not being able to buy a new car or a new home or the $7 jar of peanut butter at McDade's that will result. It also comes in the form that all of our Memaws and Pepaws that have been faithfully paying into pension funds and 401Ks that are mixed up in this mess will lose their retirements and end up living back at OUR HOUSE. I LOVE my pseudo-mother-in-law, but I don't want her living here. This is how I comprehend what is going on now. Basically in small personal terms. I would LOVE knowledgeable input. Seriously.

Author

Lori G

Date

2008-09-29T20:26:39-06:00

ID

138411

Comment

And, I would like for all everyone that thinks this crisis is due to poor people that got loans they "could not afford" to know that LOWER INCOME FAMILIES WITH MORTGAGES HAD THE HIGHEST REPAYMENT RATES (cough, Matt Allen, cough):) Although, Matt, you are right about the "McMansions". THOSE are the people that couldn't repay their mortgages. So, we can effectively blame this entire meltdown on Madison. Screw 'em. ;P

Author

Lori G

Date

2008-09-29T20:27:32-06:00

ID

138412

Comment

I will concede that Clinton had a hand in the deregulation "own a home" mentality that led to this. But, we all know I have no love for Bill...other than that unspoken love that every woman holds for Bill that she "cannot explain". :)

Author

Lori G

Date

2008-09-29T20:40:18-06:00

ID

138413

Comment

I agree with Lori, this meltdown is squarely on the hands of Wall Street. Hundreds, maybe even thousands of low income failures don't a housing crisis make. This was the guy or gal who bought the 750,000 house on some screwed up 2% ARM. Add those folks up and you cover up a few low income failures quickly. While Matt is right in that it's simply bad public policy to decide everyone needs a mortgage, it was out and out pure greed at a much higher level that caused this and as bad as it is, I fear that something similar to what failed today is the only thing that will keep us from an out and out total meltdown. In three months, no one will be able to borrow money to buy anything much less a home.

Author

Hayes

Date

2008-09-29T21:26:22-06:00

ID

138414

Comment

I read "Confessions of a Sub-Prime Lender" about two months ago. He predicted this entire thing...the book came out MONTHS ago. The author also got out of the market two years ago...PEOPLE KNEW THIS WAS COMING. What's even worse is that in the book he predicts the second wave of failures in 2009. These loans weren't "subprime" loans, per se. They were loans given to families living in "desirable" areas...Miami, parts of California. They weren't exactly "subprime" loans but they were based upon the property value on which they lay (or something close enough to that :)). THESE loans originated a bit after the sub-prime ARM mortgages (the book goes into great detail about how creative and crazy lenders were getting with loans at this time) and the bulk of those mortgages "adustment rate" will come due in 2009. The author made a point to say that we are still just on the front end of this thing. There will be another huge wave of foreclosures. I've got to STOP reading sh1t. Its freaking me out.

Author

Lori G

Date

2008-09-29T21:41:43-06:00

ID

138417

Comment

Of course they knew it was coming. In 2005 McCain predicted it (saying we are about to see a financial disaster in the housing market and wanting reform). I'm going to make a lot of folks on here mad by saying this (although that is not my intention), but Obama has been a large supporter of subprimes. He supported it as a congressperson, even sued over it as a lawyer on behalf of a client. And also been a HUGE (from the F-Macs) finacial recipient for campaigns. Hayes, I agree it is squarely on the hands on Wall Street. I am just saying The Hill opened the door. You can't open it and declare "I didn't know." Wall Street is as Wall Street is. They are there to make a dollar. No political parties attached, as long as the greenback is there.

Author

MAllen

Date

2008-09-29T22:34:44-06:00

ID

138420

Comment

Making stuff up again? "The fundamentals of the economy are strong." I guess his error was in not stating his prediction more clearly so average people could understand. If McCain KNEW this was coming, then why didn't he act with greater urgency? Can you provide a link to his prediction or cite what publication it appeared in? Look MAllen, if you really had an understanding of the basic facts, you would know that Fannie and Freddie represent only a small fraction of sub-prime mortgages. MANY congreessmen supported Fannie and Freddie to help lower income families get into homes and should continue to do so. Those families are NOT the culprits. They are the scapegoats! This problem will never get solved as long as disinformation and falsification is the order of the day.

Author

FreeClif

Date

2008-09-30T09:00:42-06:00

ID

138422

Comment

tell 'em Whitley - use that MBA!!! MPB had a good interview this morning with a prof. of econ from UMiss - he said bailout wasn't good - and the "scare tactics" about losing credit were 1) a natural outcome after a decade of too much loose credit and 2) a response lending institutions are making BECAUSE they think a bailout might be immanent (sp?) and they may get better $$ from the govt

Author

Izzy

Date

2008-09-30T09:10:10-06:00

ID

138426

Comment

I heard that theory about the credit crunch that the USM prof endorses. That may explain part of the problem. If that prof thinks that this is all scare and hoax, then I HOPE he is right and that all of the economists predicting disaster if nothing is done are wrong because the odds don't look good for action right now. The right wingnuts have been wrong so far, but the law of averages is in their favor to finally be right about something. It will be good for my portfolio!

Author

FreeClif

Date

2008-09-30T09:23:48-06:00

ID

138427

Comment

here's the thing - you know, if you personally had been overspending your income by 40% for 10 years, you'd be in major debt, right? How do you think you'd get out of it? By passing a law? NEIN. You'd have to scrimp, cut back your lifestyle, maybe get an extra job - you'd have to DEAL with the truth of the situation. Maybe you'd realize you couldn't put your business inventory on credit every year - maybe you'd have to actually MAKE enough money to keep your business liquid and pay for it out of cash. What a concept! I myself have worked 2-3 jobs for years now, one reason I'm not in any debt and have a decent emergency fund. Maybe I can't get a house just yet, but give me enough time and I will.

Author

Izzy

Date

2008-09-30T09:26:31-06:00

ID

138428

Comment

One good thing from all this is it should encourage people to save more and borrow less. I have zero credit card debt --- only a student loan and a mortgage.

Author

FreeClif

Date

2008-09-30T09:41:27-06:00

ID

138429

Comment

Bob Herbert correctly affixes blame in the Times today: Game. Checkmate. All right wingnuts need to do is look in the mirror. Flog yourselves!

Author

FreeClif

Date

2008-09-30T10:24:50-06:00

ID

138430

Comment

There's plenty of blame to go around. Mirrors for everyone involved. Letting the financial industry *regulate* themselves was the crux of the problem. And politicians turned a blind eye to it for various reasons.

Author

Jeff Lucas

Date

2008-09-30T11:02:46-06:00

ID

138477

Comment

OK, I've posted our editorial about the racist Carter-Clinton-CRA talking point. Also ... The business media are continuing the effort to debunk this racist GOP talking point. Thomas Frank today in the Wall Street Journal: On economic questions the standard exculpatory maneuver is even simpler. When some free-market scheme blows up, one needs only find an institution of government in close proximity to the wreckage and commence accusing. Thus we hear from some on the right that the disaster on Wall Street was the handiwork not of those with unbridled pecuniary motives but of Fannie Mae and Freddie Mac, which were government-sponsored enterprises and therefore partially exempt from market discipline and of theoretical necessity the sole culprits. There is no doubt that Fannie and Freddie enabled the subprime neurosis, but for certain conservatives they are virtually the only malefactors worth noting. The dirge goes like this: Fannie and Freddie were buying up subprime mortgages, and they were doing it for (liberal) political reasons. Mortgage originators thus had no choice but to hand out mortgages like candy. Had market forces been in charge, loans would, no doubt, have been administered with a rigor and sternness to make John Calvin blanch. I asked Bill Black, a professor of economics and law at the University of Missouri-Kansas City and an authority on the Savings and Loan debacle of the 1980s, what he thought of the latest blame offensive. He pointed out that, for all their failings, Fannie and Freddie didn't originate any of the bad loans -- that disastrous piece of work was done by purely private, largely unregulated companies, which did it for the usual bubble-logic reason: to make a quick buck. Most of the mistakes for which we are paying now, Mr. Black told me, were actually made "by four entities that under conservative economic theory should have exercised effective market discipline -- the appraisers, the originators of the mortgages, the rating agencies, and the investment banking firms that packaged the subprime mortgage-backed securities." Instead of "disciplining" the markets, these private actors "served as the four horsemen of the financial apocalypse, aiding the accounting fraud and inflating the housing bubble." It is they, Mr. Black says, who "turned a crisis into a catastrophe." Ah, but truth is no ally to a conservative with his back to the wall. So much more helpful are the trusty narratives on which the movement was built. So when we have dispatched this first canard, we learn from other conservatives that it is the sub-prime people who are to blame; that by taking out loans they couldn't possibly pay off, these undesirable borrowers have ruined us all. There is no way to measure the number of people who took out mortgages they knew they couldn't afford, of course, but for what it's worth, a 2007 report by the Mortgage Bankers Association reports that the FBI estimates "80 percent of all reported fraud losses arise from fraud for profit schemes that involve industry insiders." That means the lenders, not the borrowers.

Author

DonnaLadd

Date

2008-10-01T08:47:11-06:00

ID

138481

Comment

Obama clarified his position on the rescue/bailout yesterday: http://hotlineblog.nationaljournal.com/archives/2008/09/obama_to_congre.html

Author

FreeClif

Date

2008-10-01T09:29:52-06:00

ID

138496

Comment

The Senate just passsed the second version of the bill 74-25 per MSNBC.

Author

LatashaWillis

Date

2008-10-01T19:47:28-06:00

ID

138497

Comment

From MSNBC: The higher FDIC cap was just one of many additions the Senate made to the House version of the bill in a transparent attempt to switch at least 12 "no" votes in the House. Also dropped in were $100 billion in tax breaks for businesses and the middle class, including mechanisms to keep the alternative minimum tax from hitting 20 million middle-income Americans and to provide $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana. The bill does not specify spending cuts to offset the alternative minimum tax and disaster provisions. A similar failure to offset many of the tax cuts angered the House's band of conservative "Blue Dog" Democrats, half of whom voted against it. Altogether, the additions would swell the projected coat of the bailout from $700 billion to more than $800 billion, a frightening number to swallow for House members in tight re-election battles. But the heart of the bill, and the opposition to it, remained the same. It would enable the government to spend billions of dollars to buy bad mortgage-related securities and other devalued assets held by troubled financial institutions. If successful, advocates say, that would allow frozen credit to begin flowing again and keep the economy from a deep recession. Proponents say the government eventually could sell the devalued assets at a better price, reducing the program's final cost. The House will most likely vote on Friday. Let's see what happens.

Author

LatashaWillis

Date

2008-10-01T19:51:44-06:00