Nancy said she wanted to include the second "stimulus" package that the Bush Administration and congressional Republicans have blocked. I don't want to trade a $700 billion dollar giveaway to the most unsympathetic human beings on the planet for a few fucking bridges. I want reforms of the industry, and I want it to be as punitive as possible.
Staff at Lehman’s New York office who helped to cause the world’s biggest corporate bankruptcy are to share in a $2.5 billion bonanza.
The bonus, which has been described by London staff as a “scandal” has been pledged by Barclays Capital, the British-based bank that last week acquired Lehman’s American operation and took on 10,000 staff.
The $2.5 billion (£1.4 billion) pot, which has been ring-fenced as part of the acquisition, has caused huge resentment among the 5,000 staff in the firm’s European and Middle Eastern operations who are not guaranteed to be paid after this month. There are, however, hopes that half the jobs in Lehman’s Canary Wharf office could be saved today by either Barclays or Nomura. Bids are being submitted for its UK equities and investment-banking business.
The Paulson RTC will buy toxic assets at inflated prices thereby creating a charitable institution that provides welfare to the rich – at the taxpayers’ expense. If this subsidy is large enough, it will succeed in stopping the crisis. But, again, at what price?
The answer: billions of dollars in taxpayer money and, even worse, the violation of the fundamental capitalist principle that she who reaps the gains also bears the losses. Remember that in the Savings and Loan crisis, the government had to bail out those institutions because the deposits were federally insured. But in this case the government does not have do bail out the debtholders of Bear Sterns, AIG, or any of the other financial institutions that will benefit from the Paulson RTC.
Forcing a debt-for-equity swap or a debt-forgiveness would be no greater a violation of private property rights than a massive bailout, but it faces much stronger political opposition. The appeal of the Paulson solution is that it taxes the many and benefits the few. Since the many (we, the taxpayers) are dispersed, we cannot put up a good fight in Capitol Hill. The financial industry is well represented at all the levels.
Then why is Obama supporting it?
For fuck's sake! The banks didn't break any laws. The executives didn't break any laws. They took risks and didn't look ahead. It's the regulators job to see this, and enact regulation to prevent collapse. The SEC, Fed, and various other regulatory bodies were asleep at the switch. -- SeizeTheDay
What’s more, though I suppose it’s indelicate to raise this point, Paulson’s going to be out of a job in a few months and presumably looking for employment in the very same financial industry he’s now in charge of bailing out. The potential conflict of interest is mind-boggling.
As of now, the Bush Administration has only offered a concept with a staggering price tag, not a plan. Even if the U.S. Treasury recovers some or most of its investment over time, this initial outlay of up to $700 billion is sobering. And in return for their support, the American people must be assured that the deal reflects the basic principles of transparency, fairness, and reform.
First, there must be no blank check when American taxpayers are on the hook for this much money.
Second, taxpayers shouldn’t be spending a dime to reward CEOs on Wall Street.
Third, taxpayers should be protected and should be able to recoup this investment.
Fourth, this plan has to help homeowners stay in their homes.
Fifth, this is a global crisis, and the United States must insist that other nations join us in helping secure the financial markets.
Sixth, we need to start putting in place the rules of the road I’ve been calling for for years to prevent this from ever happening again.
And finally, this plan can’t just be a plan for Wall Street, it has to be a plan for Main Street. We have to come together, as Democrats and Republicans, to pass a stimulus plan that will put money in the pockets of working families, save jobs, and prevent painful budget cuts and tax hikes in our states.
Bush and Paulson say congress needs to rush and give them a blank check — no time to think about it, change anything, or scrutinize anything.
It seems strange to me that they didn’t bolster their rhetoric by providing congressional leaders with a list of all the times congress and the American people decided to swallow their skepticism and give the Bush administration the benefit of the doubt, and then everything worked out fine. It’s a really long list, so spelling it out in detail would surely convince a lot of people. Like remember when some folks said Bush’s math was wrong and his tax cuts would lead to large deficits? Idiots! Or those who warned that occupying Iraq might be kind of hard? Morons! If you can’t trust George W. Bush with an unlimited grant of authority then who can you trust?
Having worked for many years in the banking industry and been closely involved with risk management and derivatives, I can tell you that it looks like catastrophe is already here.
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Paulson is basically rolling you and the rest of Congress into giving him unprecedented power to protect his friends on Wall Street. This decision you are making is probably as momentous as the Iraq War resolution. Don't fall for this bailout disguised as the only way to prevent Armageddon. Armageddon is already here - at least for the big banks - and it needs an entirely different solution. Spend our money protecting us, by ensuring the FDIC is properly funded, by throwing these too-big-to-fail banks into bankruptcy if they truly are insolvent, by preserving the healthy parts of these banks while in bankruptcy, and bringing them back out again so they function under much better safety and soundness regulations. We've had airlines functioning properly and safely for years while in bankruptcy, and there is no reason we can't do the same with banks.
Please, please, do not fall for some useless compromise or bipartisan agreement that gives the administration what it wants in the end. Kill this proposal here and now, protect us from this bailout, and deal with the real problem - the insolvency of the major banks, not the paper that is supposedly blocking their lending capabilities.
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