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The Bailout Explained


Business  (tags: bailout, Wall Street, economy, taxes, US government, Congress )

RC
- 3918 days ago - nytimes.com
An easy-to-understand overview of the Big Bailout. Guaranteed to raise your blood pressure!



   

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Comments

RC deWinter (418)
Tuesday September 23, 2008, 4:26 am
I'm so glad our representatives are eager to leave Washington. There's gonna be a lot of splainin' to do, Lucy!
 

Hans L (958)
Tuesday September 23, 2008, 5:28 am
Dear Cate! Great explanation the taxpayer will pay the bill!
Q. So is it fair to say that Americans who are neither rich nor reckless are being asked to rescue people who are? What is in this package for responsible homeowners of modest means who might be forced out of their homes, perhaps for reasons beyond their control?

A. Yes, you could argue that people who cannot tell soybean futures from puts, calls and options are being asked to clean up the costly mess left by Wall Street. To make the bailout palatable to the public, it is being described as far better than inaction, which administration officials and members of Congress say could imperil the retirement savings and other investments of Americans who are anything but rich.

But it is a good bet that the negotiations between the administration and Capitol Hill will include ideas about ways to help middle-class homeowners avoid foreclosure and perhaps some limits on pay for executives. And it should be noted that neither party is solely responsible for whatever neglect led the country to the brink of disaster.

If they would not do this the NYSE would crash but this is no solution to the problem!

Who should be willing to buy this shit? What comes a a gift to this shit maybe nuclear weapons? Or orders? Anything is possible and will be accepted by all the gangsters in
Washington! Dont believe that this will cost less than 700 Billion in the end experts expect this to cost 1-2 Trillions!

The fact that bank shares all around the world have gone down again shows that the people dont trust this fraude! All around the world people understand that something has to be done but the show at wallstreet and in Washington cannot go on with the same clowns!

IMPEACH BUSH and send the managers who caused this into the desert of Nevada!
 

Joycey B (750)
Tuesday September 23, 2008, 5:41 am
Thanks for this informative article Cate.
 

Blue Bunting (855)
Tuesday September 23, 2008, 5:51 am
Cash for Trash.

The 700 Billion or is it a Trillion dollar bailout brought to you by the same people who brought you the ‘War’ in Iraq.

What is wrong with this picture?
 

Ariel H (46)
Tuesday September 23, 2008, 5:59 am
More lies to the American people. Sometimes don't you just want to yell "liar, liar, pants on fire!"
 

Nancy M (147)
Tuesday September 23, 2008, 7:13 am
So they can yell back, "sticks and stones my break my bones, but names will never hurt me"
 

Marion Y (322)
Tuesday September 23, 2008, 7:16 am
The Senate Bailout Hearing is going on right now. The few senators who have spoken so far are expressing our thoughts well. Senator Dodd said Americans are outraged over this bailout and are asking "What about us?" He said we should not reward the people who got themselves in this mess, that Americans need to get something in return out of this, safeguards need to be in place, and we they will not be rushed into a decision, as we see what that got us with Iraq. He and others are also saying this bailout decision cannot be undone in that if it doesn't work, we're going to suffer dearly for it.

Apparently Americans are writing and calling in droves to these senators demanding they do the right thing and not bailout Wall Street and let them get away with this without accountability and safeguards. I'm writing to each of these senators every single day until the election. I plan to bombard them with letters telling them I am disgusted by their performance and failure to protect us and the world as well. I am not mincing words as I want them to feel my outrage. Our letters must be worded strongly so they know we want a better system and will work to change it. Back to my letters...

To see the hearings now, visit this link

I truly wish all people of the world could get involved in our process. But I do appreciate your concern and input as what happens in America will affect other countries as well. For Americans who want to write to senators, go here.
 

Laurie W (189)
Tuesday September 23, 2008, 7:39 am
Geez...hope everyone realizes this comment got posted here instead of Cate's other story.
Any time someone takes a mind spinning problem and tells me 'It's very simple don't you see' I feel like the wool is being pulled over my eyes..How many of you were invited to Bush's $1,000-$10,000 fund raiser last night ? None well that's cause you weren't one of those asking for a public bailout....INSANITY..we cannot afford the obscene war and this bailout. Perhaps now they will bring our troops home so they can join the ranks of this country's unemployed and homeless.
 

Stephen Hannon (203)
Tuesday September 23, 2008, 8:07 am
Nored, thanks Cate.

For the Wall Street Gang and the Bush thugs the plan is plain and simple, will simply pass it down to the tazpayers and screw them with the big bailout like we always have. Ther're stupid and won't know the difference.

We'll pawn off the bad mortgage debts under a new name and the taxpayers won't know what it all means anyway. We'll rip them off big time this time, and we can get away with it because we have the power and the authority. Congress can't tell us what to do for our fearless Nazi leader will make null and void any new laws they pass to try to regulate us. But we really don't care now because we passed the bailout down to the taxpayer, and their children, to their children, to their children. And we really don't give a rats ass about the elderly, hell, by the time they think they have figured this out they will be dying or already dead. No problem there.

I'm Hank Paulson, and I approve this message.
 

Marion Y (322)
Tuesday September 23, 2008, 8:21 am
Paulson just spoke. (I'm being serious here)

He said he agrees with the senators that we must protect the people.

He also said we must rush through this proposal with discussion, but not detailed discussion because time is of the essence. They can hash out details later.

---

How quaint. I'm sure his speedboat has the engine running... (I'm being sarcastic here)
 

Marion Y (322)
Tuesday September 23, 2008, 9:26 am
Ooh, Senator Schumer just asked Paulson why $700 billion at once? Why not $150 billion now, reassess how the bailout is working, then reconvene in 2 months. Of course, Paulson said that would be a grave mistake. Schumer argued that they couldn't possibly spend $700 billion at once, so why the hurry? Paulson is not happy with this proposal at all.

It's getting interesting...our letters and calls must be working because these senators are digging in their heels.

---

Stephen, I'm sorry you are going through this. To work all our adult lives, I believe we should be able to retire with dignity and not have to worry about our basic needs.

Laurie, Good comment. Bush works for 1% of the population of the US.

On the comments appearing in the next, unrelated thread: just ignore it. It will right itself after the next posting. Care2 has been alerted.
 

Joan Mclaughlin (133)
Tuesday September 23, 2008, 9:37 am
gO FIGURE=the people without money get stuck with the bills
 

Estella Ameigh (22)
Tuesday September 23, 2008, 10:23 am
Thanks Cate. It had better be a darned tootin truthful explanation or the many ticked-off people of America just might get together for a big tea party. When you have worked hard to own what little you do have it doesn't feel very nice to know that as property taxes rise along with utilities, food prices,gas prices,etc.......,but wages do not go up that you could run out of money to maintain even a modest home as you approach retirement.
They keep making new laws that require you to maintain things a certain way, but where is the help when you can no longer work and you still have to pay the taxes, replace the furnace, fix the roof, or pay off excessive medical bills that insurance doesn't cover??? Oh, that is right we have to pay for big corporation screw ups before we can help Granny live out the rest of her life in the comfort of her own home. We must have to bail out the corporations before we raise the minimum wage level too. So what if both parents are working at low paying jobs because that is the only work available and they can not make ends meet to properly feed and cloth their children after they just paid high rent and utilities??? This is suppose to be the richest country in the world so I have been told. Well, not to worry.....someone is going to explain it all to us. It had better be a really good explanation!!!!!!!!!!!!!!!! Peace and hope for better times for all.
 

Louise L (48)
Tuesday September 23, 2008, 2:38 pm
Thanks for the blood pressure increase; guess next the top of my head will blow off! We are all just pawns here, waiting to see what happens to the king, the queen, and the knight! Let's face it: our input is 0%, and our effects will be 100%. It's not right, like getting stuck on a continuous roller coaster (and I don't like them!). Good post, Cate, more sleepless nights.
 

Chris Nielsen (75)
Tuesday September 23, 2008, 3:15 pm
Explanation!? What explanation? All I heard was "We can't get into specifics, but we need to act now!", which translates into "Stop asking questions and give us the money now!". This leads me to believe that they have no plans to bailout anything; they just want the money now. They aren't going to fix a damn thing, just want a bribe to start enforcing the laws on the books already.
 

Carol W (119)
Tuesday September 23, 2008, 4:43 pm
Has everyone seen this?

My Fellow Citizens:

I write you as Congress convenes on a momentous decision to Supposedly save Wall Street. I know and believe that you know, that like in declaring war, this decision affects each one of our lives for many years to come! - How - you taxes, that is how !

Directed by the sitting president, where differences in the Republicans and Democrats is window dressing, the decision is to have the Federal Government absorb upwards of $1 Trillion of bad debt so as to enable Wall Street to function once again.

I can only agree that it is necessary to have Wall Street function in order to retain what economy we have left in our nation. But I contend that there is a better way.

I ask you, should it not be the responsibility of Wall Street to correct this major problem of $1 trillion bad debt, or is yours ?

The Government, in absorbing this debt is you absorbing it. They will try to sell it as bonds to investors with your tax dollars to pay it off.

But this will be through high risk junk bonds! This is unusual to be issued by our government. But they must assume that it is easier this way just to hand the American tax payer the bill.

This means that for an investor , such as China, Kuwait, Dubai, or Saudi Arabia to invest in these junk bonds, that they would probably expect for every dollar , to have a return of at least 3 to 4 times. After all, would you buy such bad debt with out good reason ?

This makes this not a $1 trillion, but a $4 trillion liability that each of us will shoulder. Further, to invest in such risk, a foreign investor should also expect these bonds to be callable. This means that they can be fully redeemed upon demand before their maturity.

There is no way that these junk bonds can be fully redeemed. The Fed cannot just print more money, and this can only jeopardize what economic solvency we might have some day. This solvency is what true national security is about: the health , safety and welfare of our families.

The guarantee of this debt is to be on the American tax payer: This means you! Already, our nation has the most unprecedented debt of $15 trillion that we have ever had in history; and we are already as tax payers, expected to pay this off. But now it will be $19 trillion if we let Congress have their way!

Already, over 500,000,00 homes have been lost to foreclosures, where some citizens have now learned what soup kitchens and shelters are. Since year 2,000 over 2.4 million union jobs have been lost, and there is no horizon for relief in our economy.

Yet , it is the American citizen that is expected to bear this crippling burden. It is expected that our children and then theirs are to as well. Which comes first, your family or taxes. How do you think the government will see it ?

This is not necessary, and I ask you to help me tell Congress that there is a better way! I have always contended that we are not a nation of surfs that serve modern day feudal lords, and we do not serve Wall Street!

It is capitalism that is to serve us, and not that we are to serve it. It is Wall Street that should be serving the American Citizen and not the other way.

Given guidance, Wall Street can bail it self outwith out the American tax payer having to absorb the bill. They can build liquid capital, meaning true money in investments. This can be accomplished through ethical means, where there is no swindle, not a game, and not a hustle.

By the government allowing Wall Street to temporarily reinvest what they normally would pay in quarterly taxes, Wall Street in a matter of a short time can earn actual money to back what was their trillion dollars of bad paper.

If the government does so choose to sell junk bonds, it is Wall Street that can back them in a meaningful way.

I ask you to help me tell Congress. The pen is mightier than the sword, and our email and phone calls to Congress are mightier than any lobbyist. I have a letter which I sent to Congress, and I ask you to read it carefully.

You might ask, well did Congress already think of this? But consider, that you are actually promised some tax cut by a presidential candidate. Okay - then how ?

Did you also realize that the economic stimulus package just a few months ago was money borrowed from foreign lenders? It was not a tax cut that you received, but instead, another reason to tax you more later.

My letter to Congress demonstrates the means in how Wall Street, given our government's consent can ethically bail itself out. I ask you to send this letter or one like it to Congress.

For your State, you have two Senators where you can send them such a letter by web mail. This is by you point and clicking your mouse to their specific web sites from http://senate.gov. For your community, you also have a member in the House of Representatives: http://house.gov . They too have a means to get web mail from you.

You can sit back where only a point and click is truly what is only required. But consider, how many family, friends and neighbors do you have that can do this too - and imagine if they too sent an web mail to congress telling them of the better way?

As I send this to just 100, who also send it to another 100 people they know - then you have helped mobilize 10,000 emails to to the Senate and the House. But then just imagine if that 10,000 told another 100, there would be 1,000,000 people would be telling Congress that there is a better way.

That is what your point and click using just your index finger is worth my fellow citizens: in other words, what it is worth today.

Respectfully Yours,


Orion Karl Daley
Presidential Candidate
for 2008 for the Strategic Future of our nation
Author - The New Deal ISBN: 1419670948
Balanced Party http://unity2008.org
New York, NY, USA -

LETTER TO CONGRESS, SENATE, REPRESENTATIVES:
BY Orion Daley

Dear Congress People:
As an alternative to the US Government having to absorb up to $1 Trillion in questionable bad paper from Wall Street, I ask you to consider what I see as a viable alternative.
This will, more than likely, than otherwsie, prevent the American Tax Payer from having to absorb this debt, and obviate the need to write callable bonds to foreign investors for it. In the mean time, it allows institutions on Wall Street a liquid path for addressing their liabilities.
Please consider the following: It is about a straw man for an investment vehicle. It is intended for any institution in question that could affect the over all fabric with its counter parties from its own exposure.
Although the US Treasury is not willing to lend a hand in such cases, I believe a workable solution can help off set liabilities to improve the bottom line of the firm, and if needed, for potential buyers .
As every transaction is taxed, netting is used as a means to average these obligations on a daily bases. This is for billions of US dollars in our banking systems.
Consider , that for a period of time, with government consent, if taxes which are to be paid quarterly to the federal and state governments, are to be invested instead in a non taxable capital markets fund that are managed by the institution. Payment into this fund is to be based on the daily netting amount.
Over time, the non taxable investment fund will build on its own due to its profits in addition to a quarterly based payment by the institution.
When the fund investment reaches 4 times is original starting value, or the average quarterly netted taxes, then 25% of this will be applied to taxes and 75% maintained in the original fund for capital market management.
At this point, those profits that are made on the fund are to remain in it, and the quarterly tax on the following quarter, for the previous one are to be applied to actual quarterly tax.
Hence, for a period of time, this is in effect, having the government making a non interest based loan for taxes owed while the institution can put the money to work.
The Treasury is not lending tax payer dollars for a bailout , but is allowing the firm latitude for building assets to balance its liabilities.
As this 75% grows it is to replenish the 25% periodically. When the 25% actually exceeds the normal quarterly tax, this overflow can be applied toward firm liabilities, and the original 25% applied toward quarterly tax.
At this point, in switching 180 degress, the 75% can then be considered an invenstment on behalf of the government which it can borrow against as is needed.
Respectfully,
 

Denice G (45)
Tuesday September 23, 2008, 11:50 pm
I can't think of what to say, this whole this just makes me so mad. They are all a bunch of crooks. How does the average person afford higher taxes. Blood pressure up!!!!
 

Hans L (958)
Wednesday September 24, 2008, 1:13 am
The pursuant to the NEW authority given to the Secretary by the “Bailout Act” his decisions are “non-reviewable,” “may not be reviewed by any court of law,” and may not be reviewed by “any administrative agency.”

They can do whatever they want!
 

Hans L (958)
Wednesday September 24, 2008, 2:54 am
Dirty secret of the bailout!



A critical - and radical - component of the bailout package proposed by the Bush administration has thus far failed to garner the serious attention of anyone in the press. Section 8 (which ironically reminds one of the popular name of the portion of the 1937 Housing Act that paved the way for subsidized affordable housing ) of this legislation is just a single sentence of thirty-two words, but it represents a significant consolidation of power and an abdication of oversight authority that's so flat-out astounding that it ought to set one's hair on fire. It reads, in its entirety:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

In short, the so-called "mother of all bailouts," which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives. All decision-making power will be consolidated into the Executive Branch - who, we remind you, will have the incentive to act upon this privilege as quickly as possible, before they leave office. The measure will run up the budget deficit by a significant amount, with no guarantee of recouping the outlay, and no fundamental means of holding those who fail to do so accountable.

Is this starting to sound familiar? Robert Kuttner cuts through much of the gloss in an article in today's American Prospect:

The deal proposed by Paulson is nothing short of outrageous. It includes no oversight of his own closed-door operations. It merely gives congressional blessing and funding to what he has already been doing, ad hoc. He plans to retain Wall Street firms as advisors to decide just how to cut deals to value and mop up Wall Street's dubious paper. There are to be no limits on executive compensation for the firms that get relief, and no equity share for the government in exchange for this massive infusion of capital. Both Obama and McCain have opposed the provision denying any judicial review of decisions made by Paulson -- a provision that evokes the Bush administration's suspension of normal constitutional safeguards in its conduct of foreign policy and national security. [...]


The differences between this proposed bailout and the three closest historical equivalents are immense. When the Reconstruction Finance Corporation of the 1930s pumped a total of $35 billion into U.S. corporations and financial institutions, there was close government supervision and quid pro quos at every step of the way. Much of the time, the RFC became a preferred shareholder, and often appointed board members. The Home Owners Loan Corporation, which eventually refinanced one in five mortgage loans, did not operate to bail out banks but to save homeowners. And the Resolution Trust Corporation of the 1980s, created to mop up the damage of the first speculative mortgage meltdown, the S&L collapse, did not pump in money to rescue bad investments; it sorted out good assets from bad after the fact, and made sure to purge bad executives as well as bad loans. And all three of these historic cases of public recapitalization were done without suspending judicial review.

Kuttner's opposition here is perhaps the strongest language I've seen used, pushing back on this piece of legislation, in any publication of repute, and even here, Section 8 is not cited by name or by content. McClatchy Newspapers also alludes to Section 8 with concern, citing the "unfettered authority" that Paulson would be granted, and noting that the "law also would preclude court review of steps Paulson might take, something Joshua Rosner, managing director of economic researcher Graham Fisher & Co. in New York, said could be used to mask previous illegal activity." Jack Balkin also gives the matter the sort of attention it deserves on his blog, Balkinization.

But elsewhere, the conversation is muted. The debate over whether Congress is going to pass the Paulson bailout package, or pass the Paulson bailout package really hard seems to have boiled down to a discussion of time and concessions. The White House has made it clear that they want this package passed yesterday. Congressional Democrats seem to be of different minds on the matter, with some pushing back hard, and others content to demand a small dollop of turd polish to make the package seem more aesthetically pleasing, at which point, they'll likely roll over and pass the bill. Neither candidate, John McCain or Barack Obama, seem all that amenable toward the bailout, but neither have either demonstrated that they are willing to risk their candidacies to do much more than exploit the issue for electoral purposes.

Sunday morning came and went, with Paulson traipsing dutifully from studio to studio, facing nary a question on Section 8. Front page articles in the New York Times, Washington Post, and the Wall Street Journal detail the wranglings, but make no mention of this section of the legislation. On TV, cable news networks are stuck in the fog of the ongoing presidential campaign.

Throughout the coverage, one catches a whiff of what seems like substantive pushback on this power grab, but it largely amounts to a facsimile of journalistic diligence. Most note, in general terms, that the bailout represents a set of "broad powers" that will be granted to the Department of the Treasury. Yet the coverage offsets these concerns through the constant hyping of the White House's overall message of "urgency."

But one cannot overstate this: Section 8 is a singularly transformative sentence of economic policy. It transfers a significant amount of power to the Executive Branch, while walling off any avenue for oversight, and offering no guarantees in return. And if the Democrats end up content with winning a few slight concessions, they risk not putting a stop-payment on the real "blank check" - the one in which they allow the erosion of their own powers.

Over in the Senate, Christopher Dodd has proposed a bailout legislation of his own, which critically calls for "an oversight board that not only includes the chairman of the Federal Reserve and the SEC, but congressionally appointed, non-governmental officials" and would require the President to appoint an "independent inspector general to investigate the Treasury asset program." In Dodd's legislation, Section 8 is effectively stripped from the bill.

Nevertheless, the fact that Section 8 of the Paulson plan seems to strike few as a de facto dealbreaker can and should astound. The failure of Congress to hold the line on this point would be truly embarrassing. But if we make it through this week with nobody in the press specifically informing the public about the implications of this single sentence - in the middle of a complicated bill, in the middle of a complicated time - then right there, you have the single largest media failure of this year.
 

Marion Y (322)
Wednesday September 24, 2008, 12:45 pm
Hans...excellent commentary!

Section 8 is being considered. Whether congress strikes it or changes it remains to be seen. I watched the hearing yesterday at length. While serious questions were asked, it's anyone's guess if Congress will fail us again. Over 2/3rds of Americans are opposed to the bailout. I think the number is greater than that. And most of congress is working with Obama's plan to revamp the proposal which has considerable merit. The FBI investigating these crooks is nothing but a diversion. Cheney runs the FBI and CIA. Go figure...

With that said, I oppose the bailout and think Wall Street should fall flat on their faces, and America needs to live within its means. We can bite the bullet now, or prolong the nightmare which will only worsen if we delay it. We have plenty of rich elites in this country who can afford to bailout Wall Street. After all, they benefited greatly from the corruption and most of them were part of it.

As I've said before, this financial crash was planned just like the 1929 Crash and Depression. Just prior to the stock market crashing in 1929, insiders, congress, elites and other key people were told to sell their stock quick. They did, and as the entire country suffered for many years, these insiders did very well during and after the hard times.

If we don't learn from history, we stand to repeat it.

http://www.thisisby.us/index.php/content/crash__the_kool_aid_state#top
 

Past Member (0)
Wednesday September 24, 2008, 4:41 pm
HA! I have been watching this pot boil since 1973 and I predicted back then approximately when it would boil over. I lost money in the banking crisis in 1990 when the savings and loans in Rhode Island went belly up over unsecured loans and speculative lending in the real estate market. It seems that the banking boys every where have the same kind of a mind set: Nothing matteres but proffit. Money, money, money, "Damn the consequences full spend ahead".
Of course we all must accept some responsibility for allowing things to get to this point. We all have been feeding at the pigs trough of largess in the great American "Have It All", bigger and more is always better keeping up with the Jonses, spend, spend, spend, buy, buy, buy.
By the way, have you all paid up your credit cards?
 

Marion Y (322)
Wednesday September 24, 2008, 5:22 pm
Seamus...Sorry about your losses. Along with paying up credit cards, does everyone have a garden?
 

Eric Straatsma (3802)
Wednesday September 24, 2008, 6:12 pm
Thousands of you responded yesterday when I wrote. I'm writing to urge you to respond again. We are having an impact but it is going to take an avalanche of citizen input to re-think the bailout. The decision Congress is considering could affect us for a generation or even two.

One reported quote from an anonymous congressional staffer about the effect of our e-mails, phone calls, faxes, etc. indicates that support for the bailout plan in its present form is rapidly declining due to citizen pressure. The Congressional newspaper Roll Call reports:

"The Bush administration's forceful lobbying effort failed Tuesday to win support from rank-and-file Republicans or Democrats for a $700 billion Wall Street bailout package, though GOP and Democratic leaders still planned to move a bipartisan bill by the end of the week. . . .

"The rank and file in both parties expressed deep concerns about anything resembling the $700 billion that the White House wants, and leaders struggled to keep their Members open-minded in the face of surging outside opposition from a diverse range of voices from former Speaker Newt Gingrich (R-Ga.) and the Club for Growth on the right to liberal bloggers on the left. . .

"But both sides face heat internally, with liberals upset with what some see as a handout to Wall Street cronies and with conservatives who are appalled at the unprecedented intervention in the free market."

It is important to get more people writing (click here) and calling their legislators (202-224-3121). Please forward this newsletter to everyone you know or send them to www.FreshAirCleanPolitics.net to take action. You can write/call again and update your representatives on your views as this drama is unfolding.

And, people are starting to ask very sensible questions that should slow down the process. One writer on economics and taxes that I have a great deal of respect for, David Kay Johnson of the N.Y. Times, is making some important points in a memo to the media:

"In covering the proposed $700 billion bailout of Wall Street don't repeat the failed lapdog practices that so damaged our reputations in the rush to war in Iraq and the adoption of the Patriot Act. Don't assume that Congress must act instantly, as so many news stories state as if it was an immutable fact. Don't assume there is a case just because officials say there is.

"The coverage of the Paulson plan focuses on the edges, on the details. The focus should be on the premise. And be skeptical of what gullible Congressional leaders, most of them up before the voters in a few weeks, say after being given a closed-door meeting on supposed horrors. . .

"Ask this question -- are the credit markets really about to seize up?

"If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.

"If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why or why would taxpayers be bailing out banks that are continuing to sell these toxic loans? . . .

"What steps are being taken to take back bonuses, fees and other compensation from the folks who got rich selling toxic mortgages and illiquid investments that Secretary Paulsen claims are threatening the whole system?

"How will adding $700 billion to the national debt ease strains on the credit markets?

"As of now we are, as a group, behaving just as we did the last two times the administration sought to rush through a hastily thought out, ill-conceived plan. Why in the world are we being so gullible and naive? Whatever happened to the core value of journalism -- check it out?

And, Nobel laureate Joseph Stiglitz, an economics professor at Columbia University, is describing the plan as a raw deal for taxpayers. What's needed most, Stiglitz argues, is to assist struggling homeowners. "We should begin with the core of the problem, the fact that millions of Americans were made loans beyond their ability to pay. We need to help them stay in their homes, including by converting the home mortgage deduction into a cashable tax credit and creating a homeowners' Chapter 11, an expedited way to restructure their liabilities." If these mortgages are fixed so the debts are paid, will that not make the banks solvent? It is time to build the economy from the base, rather than the top. Trickle down does not work - especially when it is debts that trickle down.

Please take action NOW. Three steps below.

Write Congress. We have a model letter but you can modify it to make the points you think are important. Click here.
Write the media. Use the information in the newsletter above to send a letter to the editor and get the media to do their job - approach this massive, record setting bailout with skepticism. Click here.
Forward this newsletter to everyone you know. It is going to take IMMEDIATE, CONCERTED citizen action to prevent this rush to judgment.
If you are able to make a donation to our work we would greatly appreciate it.

Thank you for your support and efforts at this critical crossroads in American history.

Sincerely,

Kevin B. Zeese
Executive Director
 
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