Editore"s Note
Tilting at Windmills

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September 21, 2008

A PIG WITHOUT LIPSTICK.... I've been trying to find a credible voice on fiscal matters that believes the Bush administration's bailout is a good idea, and should be approved by Congress without alteration. I can't find one.

The plan seems to suffer more as the scrutiny grows more intense, but I'd go with the accountability/oversight problem as the most glaring.

The Bush administration sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets.

Through his plan, Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world's largest economy to a standstill. The bill would prevent courts from reviewing actions taken under its authority.

"He's asking for a huge amount of power," said Nouriel Roubini, an economist at New York University. "He's saying, 'Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy."

Atrios, after noting the $700 billion price tag, highlights this portion of the proposal: "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."

If we were dealing with a competent, capable administration, which had proven itself reliable in dealing with fiscal and budgetary policy, it would still be an extraordinary gamble to turn over hundreds of billions of dollars with no strings at all. But we're dealing with the Bush administration, which hasn't exactly earned the benefit of the doubt.

I can understand the underlying point here. Companies showed some spectacularly bad judgment and bought up some ugly mortgages. To keep those companies from imploding, Paulson wants to use our money to take those mortgages off their hands. If the administration had a plan to buy them up for a song, the approach need not be completely ridiculous, though Paulson has not yet so much as hinted about pricing, or how, exactly, his plan might actually work in practice.

But that's why some safeguards -- you know, checks and balances -- seems like it might be helpful in a case like this. As the plan is currently written, not only will oversight be discouraged, it'll be impossible, by design. Congress is supposed to hand over in upwards of a trillion dollars to Bush's economic team, and then voluntarily forfeit the right to oversee how the money is spent.

If there's a good reason to establish this kind of process, it's hiding well.

Steve Benen 1:00 PM Permalink | Trackbacks | Comments (55)

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Comments

I don't think the plan has any problems that couldn't be solved by a few rousing choruses of "Drill Here! Drill Now"

Posted by: fred on September 21, 2008 at 1:04 PM | PERMALINK

Steve is Congress looking to add any adjustments? You're my best source of information, could you find out if or what their plan might be. Of Course one can hope but ????
Thanks

Posted by: Barb on September 21, 2008 at 1:05 PM | PERMALINK

sounds too much like the 'no-bid contracts' for Iraq and the missing pallets of cash. As Steve mentioned: you can't really give the Bush administration the benefit of the doubt.

I'd say congress needs to take a week to at least consider all other opportunities to address this issue, and the Bush proposal will be ONE of them.

I agree with Paul Glastris who posted earlier today and pointed out a few plausible alternatives.

Posted by: bruno on September 21, 2008 at 1:10 PM | PERMALINK

Steve,


Isn't the biggest problem in this entire mess just this:

Too many financial institutions are leveraged beyond the breaking point. Like Bear-Stearns with its 30-1 ratio.

Isn't the best way to prevent it from ever happening again . . . to just make it illegal for financial institutions to be leveraged beyond a certain point? I'm not an economist, but it seems like common sense to me. If these companies had plenty of reserves on hand, bad debt wouldn't sink them.

It's not really the bad debt that is causing the ripple. It's that companies are borrowing from companies that are borrowing from companies that are borrowing from . . . . and no one seems to have the funds to cover that. These companies simply have more liabilities than they can handle when things go bad.

They should be forced to have enough assets on hand to deal with bad times.

Beyond that, is the U.S. government the right entity to act as a backstop for this? We borrow from China and India and are leveraged waaay beyond our own means as well.

The truth is that the financial sector should take a hit on this in exchange for help from the government. It should cut its dividends and executive pay, get back to a solid, sustainable ratio between assets and liabilities, and be forced into doing that. Forced into it. There should be no bailout without strict and fundamental changes regarding the future.

Posted by: Cuchulain on September 21, 2008 at 1:16 PM | PERMALINK

The fox on Pennsylvania Avenue is saying, "give me the keys to the hen house." Congress should wait for the new occupant, or at least put in safeguards so this doesn't look like the economic equivalent of Guantanamo prisons.

Posted by: Vincent on September 21, 2008 at 1:20 PM | PERMALINK

They are deliberately trying to provoke a democratic objection so that they can blame the democrats for the current financial mess.

not complicated folks.

Posted by: Adam on September 21, 2008 at 1:22 PM | PERMALINK

Bush could not have planned this better. The next
administration is handcuffed to Iraq. Now all
financial choices willed be handcuffed to this
disaster. Kiss health care goodbye.

This law must be publically veted and not signed until February.

Posted by: Himself on September 21, 2008 at 1:25 PM | PERMALINK

The question is, how do we keep the Democrats from simply making some cosmetic adjustment and caving in to the Wall Street profiteers (who fund them too?) Most folks acknowledge their mystification in these matters -- they probably trust they can blow smoke.

We're looking at the S.L.I.M.E. Act -- the Successful Looting and Investment Manager Employment Act.

Posted by: janinsanfran on September 21, 2008 at 1:25 PM | PERMALINK

Forgive my cynicism, but this is going to go through because Democrats are going to bend over and take it in the ass from the GOP once again, worried that they might get some flak for opposing this "rescue." We need to generate some kind of political opposition to this very quickly, because if we don't two years from now everyone in America is going to be sitting at home cursing both parties -- just as they did for the Iraq war -- for failing to ask the appropriate questions. Only in this case, the consequences will be far worse and last far longer.

Posted by: Blutarski on September 21, 2008 at 1:26 PM | PERMALINK

Debt peonage for every American man, woman, child and many future generations is being planned by the W. Bush regime without sufficient taxation of the wealth and oversight of the institutions and individuals responsible for the crisis. A huge amount of wealth is being taken out of the economy by the very richest, leaving nothing for the rest of society and impoverishing it for decades.

Posted by: Brojo on September 21, 2008 at 1:29 PM | PERMALINK

The point is that maybe the crisis isn't as bad as it looks. The horror of horrors last week was that one money market fund lost money, or broke the buck and paid out 97 cents to the dollar. If it only takes the loss of 3% to cause everyone to stop using money market accounts, where will the money go to? Losing 3% isn't that much, and everyone knows that it is possible.

Maybe the fact that the money wasn't insured was the problem. Suddenly folks look up and realize that they were trying to get too much out of their cash reserves. But if you pull money out of a money market and put it into a regular account, you still have money. The only one who suffers is the folks using the cheap money.

Money folks freak out when profits slide a few percent. They will spend as much of other people's money as they can to save their margins.

The Democrats can slow things down with reasonable requests, right now they are stunned. Maybe the easy way to punch back it to agree with McCain: no bailout for greedy Wall Street folks by asleep at the switch regulators with free money.

Posted by: tomj on September 21, 2008 at 1:29 PM | PERMALINK

Obama could inject some currency and meaning into this campaign by standing and saying, 'This plan is bad for America.' He needs to give it his best Jimmy Stewart.

Even heartlanders don't like being suckered by Wall Street.

Posted by: Cameron Orth on September 21, 2008 at 1:30 PM | PERMALINK

In regards to the saying: There are no Atheists in fox holes It is assumed that the majority of people believe in a higher power. When people who don't believe find themselves under immense stress they might start praying as well.

Along those lines; we can also assume the reverse to be true when applied to the financial crisis we find ourselves in today. The majority of executives on Wall Street and the Financial companies, as well as the majority of officials in the Bush Administration and McCain's campaign, have governed under the motto:
1) Smaller government is better.
2) Less government intervention is best.
3) Fewer rules and regulations is preferable.
4) Deregulation improves the economy.
5) Free market always solves its own problems.
6) Capitalism benefits everybody.
7) etc...

When left to their own devices, those individuals have brought the financial markets, and our country by extension, to the brink of bankruptcy. As usual, they are taking their money and run (golden parachutes, nice dividends, bonuses, etc) and leave the tax payer with the debts.

When are voters who tend to lean Republican going to realize that the GOP's economic plan is: Privatize profits, and socialize the losses

It certainly seems like that the entire Free Market Cabal all of a sudden has found their religion: Socialize the debt from their mismanagement.

They realized that Government does have a purpose: Bail us out, anytime we screw up.

It is sickening, and I would like Obama and his surrogates to address this issue. Keep pounding on how the Republican brand of running the country is actually very bad for the American public.

Posted by: bruno on September 21, 2008 at 1:30 PM | PERMALINK

The minimum that congress has to do is tax and regulate hedge funds as they were the principal parties that demanded the worthess paper we are forced to purchase with tax dollars. Better yet, make it illegal to gamble on any wall street transaction and anything you bid on, you must take possession of.

Posted by: SteveA on September 21, 2008 at 1:33 PM | PERMALINK
If there's a good reason to establish this kind of process, it's hiding well.
There's a very "good" reason for this kind of process: it's clearly unconstitutional. Delegations of power from Congress, to be constitutional, must come with guidelines and oversight. The intention here is to make sure that, when the plan is inevitably held up in the courts, liberals and activist courts can be blamed. This plan is the administration's way of doing nothing and laying the blame at someone else's feet in a way that's most politically beneficial to the Republican party. Posted by: R Johnston on September 21, 2008 at 1:35 PM | PERMALINK

No deal without equity for the government. If the current shareholders get diluted out, fine. That mitigates the moral hazard.

It is that simple. I would not lard up the deal with unemployment benefits or other measures. Keep it simple: we get something for our money - stock. Force the Republicans to argue the opposite: force them to say that the companies need a free lunch. Force them to say that the possibility that the Treasury will make money on this deal on a stock deal (hehe, as if) is some sort of abomination.

Posted by: airron on September 21, 2008 at 1:45 PM | PERMALINK

I wonder how much of this unfettered money will go to Iraq where Bush mortgaged our futures.

That's Just What I Said

Posted by: Dale on September 21, 2008 at 1:47 PM | PERMALINK

I am so excited to watch Pelosi and Reid give all control, authority, discretion, etc. once again to the Bush/Cheney crime family!

So in what would have otherwise been viewed as an absolute move to socialism - turning over control of key financial institutions to the government (heck, even communism) - we see that yet again it all seems to work in their favor.

So are Pelosi and Reid, et al stupid or just spineless??

Posted by: Homer on September 21, 2008 at 1:53 PM | PERMALINK

This is the domestic version of the pallets of cash program.

That's Just What I Said

Posted by: Dale on September 21, 2008 at 1:57 PM | PERMALINK

This little piggy had lipstick. This little piggy had none. This little piggy cried, "Drill, Baby, Drill" all the way home.

Posted by: hark on September 21, 2008 at 2:05 PM | PERMALINK

Please look at section 8 - review - no administrative or court review. Problems, anyone?

Posted by: annieH on September 21, 2008 at 2:05 PM | PERMALINK

I listen from time to time to the Hannity Show (only because it's on the best radio station for news and traffic during my commute home). Hannity was saying, a few months ago, that the biggest objection to Hillary/Obama's health care system is that it put the whole thing in the hands of the Government - and we all know, the gov. can't even pour pi$$ out of a boot without instructions written on the heel...

So why is giving hundres of billions of OUR money to bail out mortgage and investment companies any safer - and such a wonderful idea???

Posted by: Blaidd Drwg on September 21, 2008 at 2:08 PM | PERMALINK

Gotta hand it to these guys for cheek. They see this as another opportunity to rape the treasury! Unfuckingbelievable!

Posted by: gorp on September 21, 2008 at 2:19 PM | PERMALINK

Passive Pelosi™ and Land-Swap Harry Reid will bit a bit, then roll over and play dead.

Andy, you know what?

So will about 98 percent of you posting here in these comment sections.

Even where you have Green (or Socialist/Social Democratic) alternatives on the ballot for president, or even local Congressional races, you'll listen to Democrats' fear-mongering.

"What's the Matter with Kansas" has nothing on this.

Posted by: SocraticGadfly on September 21, 2008 at 2:53 PM | PERMALINK

How to give away 700 billion dollars of taxpayer money:

Every second for the next 22 years, without ever taking a break to eat, sleep, or any other human function, day in and day out, twenty-four, seven, and three-sixty-five, hand over a thousand bucks to a CEO.

Every second for 22 years.

And you still wouldn't be all the way through the 700 billion.

That's a lot of money to give away to thieves and incompetents.

Posted by: on September 21, 2008 at 3:09 PM | PERMALINK

Barack Obama will be our President in 121 days. Mightn't the Congress grow a pair and "hold until relieved" for that long?

Hmmmmm???

Posted by: Steve on September 21, 2008 at 3:12 PM | PERMALINK

Someone in Big Picture blog brought out a comparison to the previous major bailout. The S&L original estimate was $30-35B, and ended up costing taxpayer $125B.

Using S&L as yardstick, this bailout will actually cost us $2.5T, just about 2.5 times of the waste we spend in Iraq.

This is a Robber Barron administration at its finest. Democracy RIP.

Posted by: fencesitter on September 21, 2008 at 3:19 PM | PERMALINK

A friend of mine sent this to me. Maybe we (of ALL political persuasions) should pass this along – to our “e-mail lists” AND to our senators and representatives.

Hundreds of billions of dollars have already walked out the door with the people responsible for this, but we don’t have to set them and ourselves up for them to do it again!

Although the U.S. taxpayers will be paying for the funding of the Toxic Waste Dump Fund, we won't have anybody at the table representing our interests when the bill gets drafted ( however, lobbyists for BAC, Goldman,Morgan,Pimco etc. will all be there). Here are some suggestions for what ought to be in the bill (please add your own):

1. Only U.S. domesticated banks are eligble to participate- - no foreign banks or U.S. subsidiaries or affiliates of foreign banks are eligible. No entity that holds MBS for investment purposes only(i.e. hedge funds and mutual funds) are eligible to participate. (The purpose of the Fund is to free up capital to loan to U.S. borrowers- - not to bail out speculative investors.)

2. Any entity availing itself of the Fund can not pay any officer, director or employee more than the annual pay of the highest paid U.S. government civil servant until the Fund recoups 100% of the amounts advanced by the Fund to that entity, together with interest.

3. No officer or director of any entity availing itself of the Fund can sell stock in that entity until the Fund recoups 100% of the amounts advanced to that entity, together with interest.

4. No dividends may be paid by any entity availing itself of the Fund until the Fund recoups 100% of the amounts advanced by the Fund to that entity, together with interest.

5. In the event the Fund does not recoup 100% of the amounts advanced to an entity within a reasonable period (i.e. 3-5 years), the Fund will receive warrants equal to 79.9% of equity securities of such entity.

6. All amounts advanced by the Fund to an entity must be placed in a segregated account and LOANED to customers of that entity at commercially reasonable rates and terms. Such amounts can not be used by the entity for trading or investment purposes (remember were doing this for Mainstreet, not to create the next bubble.)

7. The costs of the Fund(i.e. the temporary federal agency) will be ratably paid for by Fund participants by issuance of warrants in the participating entities or by cash payment.

If an entity is not willing to comply with the above, then they are not eligible to participate.

As it appears that the "Fund" is a done deal, it would be great if we came up with a list of conditions to protect the U.S. taxpayer.

Posted by: GAJohn on September 21, 2008 at 3:22 PM | PERMALINK

It appears the Deal is a done deal, no conditions allowed.

Welcome to the third world, America.

Posted by: on September 21, 2008 at 3:25 PM | PERMALINK

Giving absolute power to Paulson is a big mistake.
He's trying to save his own investment from burning because Goldman Sachs is only one house away from the fire that's engulfing the wallstreet.

Posted by: fencesitter on September 21, 2008 at 3:27 PM | PERMALINK

Dim Son must be pouting hard in the Oval Office.

HE wanted to be Dictator. He NEVER gets anything he REALLY wants.

Posted by: Jesus was a community organizer; Pontius Pilate was a governor. on September 21, 2008 at 3:27 PM | PERMALINK

I want to know what we, the taxpayers, are going to get out of this colossal clusterfuck?

Are we part owners?

Will we get dividends should the economy manage to rebound without going completely down the shitter?

Since we are paying for it...WHAT DO WE GET?

This is an outrage. No oversight for the already most secretive administration ever?

Two words: Fuck. This.

Posted by: MsJoanne on September 21, 2008 at 3:31 PM | PERMALINK

As I mentioned in my screed about this ridiculous joke pretending to be a "plan" for a bail-out, there are petty cash boxes all over America that have stricter controls than this $700 Billion slush fund would have.

Howzabout we just send planes with pallet-loads of cash to Wall Street? It worked just peachy when we did it in Baghdad. Oh, but wait, $700 Billion - we don't have that many planes!

They're just insulting us. They don't even bother requiring that Bernanke co-sign any of the deals. Just $700 Billion on Big Hank's say-so. The waning days of Bush's term have not diminished their audacity in any way.

Posted by: biggerbox on September 21, 2008 at 3:31 PM | PERMALINK

I read in the paper this morning (WaPo, I think) that there is not even any requirement that this bailout money be used for loaning out. Once they get these bad debts off their books, they can raise their own salaries with the bailout money.

I mean, come ON. Just take their bad paper, hand them money, and TRUST THEM to do the right thing with it? How stupid do they think Congress is?

Well, less stupid that it actually is, I guess.

I am soooooo disgusted.

Posted by: A pit bull would make a better VP, too. That's TWO things. on September 21, 2008 at 3:32 PM | PERMALINK

"Since we are paying for it...WHAT DO WE GET?"

Reamed. Every day for the rest of our lives.

How do you like the century so far?

Posted by: on September 21, 2008 at 3:34 PM | PERMALINK

I was driving home, listening to NPR this morning. They had a guest speaker from the Brookings Institute discussing this very thing. I heard him say the words, "blank check" and "Congress" and "no oversight" and I was so shocked and flabbergasted that I almost ran a red light. Then memory kicked in, I recalled that Reid and Pelosi are still in Congress, and realized that yep, they'll give Bush's Treasury Department the combination to the bank vault, and cower in the corner hoping the bullies won't think they're weak, spineless pansies. Meanwhile, the unarmed mafioso walk out with the money again.

Posted by: Keori on September 21, 2008 at 3:38 PM | PERMALINK

I'm currently reading "Angler" by Barton Gellman. Smell "Cheney-nigans" all over this one. Hmmm...
1). Must act quickly -- check
2). Fear mongering -- check
3). unhindered control -- check
4). no oversite -- check
5). no accountablility -- check.

If is smells like shit, it's Cheney.

Posted by: JWK on September 21, 2008 at 3:48 PM | PERMALINK

Ms. Joanne: "I want to know what we, the taxpayers, are going to get out of this colossal clusterfuck?"

You are saving the dollar from being pegged to a foreign currency.

Posted by: Mick on September 21, 2008 at 3:59 PM | PERMALINK

The "Fund."

????

I say call it Wealthcare.

Folks have been screaming for years that Social Security will go broke. Now comes Wealthcare. If this thing goes through, the 700-1,000 billion dollar price tag will be more than the total outlays for SS in 2009 (and SS will still be bringing in 100s of billions of dollars). There will be NO return on Wealthcare. Yeah, they say it's a loan... but look at the waste of Iraq, the abuses from Katrina, the tax-cuts for the wealthy.

How on earth have we come to this point?

Oh, I forgot, we have a government for the rich and nothing but the rich so help us god.

Posted by: Tom Nicholson on September 21, 2008 at 4:03 PM | PERMALINK

You are saving the dollar from being pegged to a foreign currency.

When we lose our jobs after this whole thing goes south and souther, I'll be thrilled about that.

Not that it matters since the USD will be at par with the Mexican peso or the once Italian lire where it takes a thousand of them to buy a cup of coffee.

But hey, Zimbabwe just printed a ten trillion bill...maybe that will be the cost for an American loaf of bread.

Posted by: MsJoanne on September 21, 2008 at 4:06 PM | PERMALINK

No. No way.

I wouldn't bet against the Dems not getting played, like the AUMF all over again, though.

Posted by: Gregory on September 21, 2008 at 4:11 PM | PERMALINK

Are we buying mortgages or some sort of derivative of mortgages? Mortgages will have some intrinsic value. I suspect many of the CDOs are worth nothing.

Posted by: Nat on September 21, 2008 at 4:24 PM | PERMALINK

I suspect many of the CDOs are worth nothing.

Remember this post, because I suspect we're BOUND to hear these thieves repeat it endlessly: "Nobody could have anticipated that the CDOs were worthless."

Posted by: on September 21, 2008 at 4:44 PM | PERMALINK

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks...will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Thomas Jefferson

Posted by: GAJohn on September 21, 2008 at 4:51 PM | PERMALINK

No oversight looks like a deal-breaker to me. Not that I really trust congressional overseers, who're as snugly bedded down with buchaneer financiers as the Bush administration is.

This is beginning to look like, "You've got one week to live. The only people who can save you are the guys who're killing you."

Posted by: allbetsareoff on September 21, 2008 at 5:13 PM | PERMALINK

The Republican party has turned into a bunch of Commie Pinkos.

No bailouts for failed banks. Let them fail. That's why we have the FDIC and bankruptcy court.

And no last minute rushed minute deals. Bush is a lame duck. The next President is going to need all the leeway available to tackle this mess.

Write your Senators and Congresspersons. No deals.

Posted by: Glen on September 21, 2008 at 5:20 PM | PERMALINK

Not that it matters since the USD will be at par with the Mexican peso or the once Italian lire where it takes a thousand of them to buy a cup of coffee.

I'm not so sure that would ever happen without the global market joining us, but we may bow out if we keep letting Investment Banks act like glorified casinos.

Think of the next 5-10 years as a growing pain in capitalism. Good luck buying a home in the next decade America. It's not perfect, but every now and then you need to feel pain in order to appreciate free market in all its glory.

Are you buying this line of reasoning??

Posted by: Mick on September 21, 2008 at 5:52 PM | PERMALINK

Here's wghat Bernie Sanders proposes. Funny how it takes a Socialist to save capitalism.

Sanders Op-Ed: Billions for Bailouts! Who Pays? -- 09/19/2008

By Senator Bernie Sanders

The current financial crisis facing our country has been caused by the extreme right-wing economic policies pursued by the Bush administration. These policies, which include huge tax breaks for the rich, unfettered free trade and the wholesale deregulation of commerce, have resulted in a massive redistribution of wealth from the middle class to the very wealthy.

The middle class has really been under assault. Since President Bush has been in office, nearly 6 million Americans have slipped into poverty, median family income for working Americans has declined by more than $2,000, more than 7 million Americans have lost their health insurance, over 4 million have lost their pensions, foreclosures are at an all time high, total consumer debt has more than doubled, and we have a national debt of over $9.7 trillion dollars.

While the middle class collapses, the richest people in this country have made out like bandits and have not had it so good since the 1920s. The top 0.1 percent now earn more money than the bottom 50 percent of Americans, and the top 1 percent own more wealth than the bottom 90 percent. The wealthiest 400 people in our country saw their wealth increase by $670 billion while Bush has been president. In the midst of all of this, Bush lowered taxes on the very rich so that they are paying lower income tax rates than teachers, police officers or nurses.

Now, having mismanaged the economy for eight years as well as having lied about our situation by continually insisting, "The fundamentals of our economy are strong," the Bush administration, six weeks before an election, wants the middle class of this country to spend many hundreds of billions on a bailout. The wealthiest people, who have benefited from Bush's policies and are in the best position to pay, are being asked for no sacrifice at all. This is absurd. This is the most extreme example that I can recall of socialism for the rich and free enterprise for the poor.

In my view, we need to go forward in addressing this financial crisis by insisting on four basic principles:

(1) The people who can best afford to pay and the people who have benefited most from Bush's economic policies are the people who should provide the funds for the bailout. It would be immoral to ask the middle class, the people whose standard of living has declined under Bush, to pay for this bailout while the rich, once again, avoid their responsibilities. Further, if the government is going to save companies from bankruptcy, the taxpayers of this country should be rewarded for assuming the risk by sharing in the gains that result from this government bailout.

Specifically, to pay for the bailout, which is estimated to cost up to $1 trillion, the government should:

a) Impose a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers. That would raise more than $300 billion in revenue;

b) Ensure that assets purchased from banks are realistically discounted so companies are not rewarded for their risky behavior and taxpayers can recover the amount they paid for them; and

c) Require that taxpayers receive equity stakes in the bailed-out companies so that the assumption of risk is rewarded when companies' stock goes up.

(2) There must be a major economic recovery package which puts Americans to work at decent wages. Among many other areas, we can create millions of jobs rebuilding our crumbling infrastructure and moving our country from fossil fuels to energy efficiency and sustainable energy. Further, we must protect working families from the difficult times they are experiencing. We must ensure that every child has health insurance and that every American has access to quality health and dental care, that families can send their children to college, that seniors are not allowed to go without heat in the winter, and that no American goes to bed hungry.

(3) Legislation must be passed which undoes the damage caused by excessive de-regulation. That means reinstalling the regulatory firewalls that were ripped down in 1999. That means re-regulating the energy markets so that we never again see the rampant speculation in oil that helped drive up prices. That means regulating or abolishing various financial instruments that have created the enormous shadow banking system that is at the heart of the collapse of AIG and the financial services meltdown.

(4) We must end the danger posed by companies that are "too big too fail," that is, companies whose failure would cause systemic harm to the U.S. economy. If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up. Right now, for example, the Bank of America, the nation's largest depository institution, has absorbed Countrywide, the nation's largest mortgage lender, and Merrill Lynch, the nation's largest brokerage house. We should not be trying to solve the current financial crisis by creating even larger, more powerful institutions. Their failure could cause even more harm to the entire economy.

Posted by: TCinLA on September 21, 2008 at 6:23 PM | PERMALINK

Krugman asked a pertinent question that needs answering in his article

...the plan does nothing to address the lack of capital unless the Treasury overpays for assets. And if that’s the real plan, Congress has every right to balk.

I sure hope that the Democrats do not cave in OR worse, come up with some other silly conditions that need to be attached. We deserve answers and a REAL solution,not a bandaid to bail out the large companies and their executives.

Posted by: bruno on September 21, 2008 at 7:44 PM | PERMALINK

WOW... I'm supposed to be impressed with this Draft because Paulson explained in the definitions section what secretary and United States means.

He forgot to mention the more important issue: Who decides what a 'fair' market value is for those so called Mortgage-Related Assets

As Krugman asks in his latest post:

So is the plan to pay premium prices to the most troubled institutions?

We deserve to know, especially because he does not want there to be ANY accountability on his part.

Posted by: bruno on September 21, 2008 at 7:56 PM | PERMALINK

Thank you TCinLAThis is the most extreme example that I can recall of socialism for the rich and free enterprise for the poor.

This needs to be repeated by Obama.

Does this fit on a bumpersticker?

McCain/Palin '08: Socialism for the Rich; Free Enterprise for the rest.

Posted by: on September 21, 2008 at 8:10 PM | PERMALINK

This proposal is pure BushCo. In a sane society their totalitarian demands would be a positioning for hardball negotiation, but we all know that BushCo will just take the country (and the feckless Dems and media) to the mat over their visions of a feudalist American empire. Call your Representatives, folks. Call them EVERY DAY. Make it short and sweet. Demand penalties, regulatory oversight, and accountability. Emphasize that the Bush administration CANNOT BE TRUSTED. Remind them that November is right around the corner. I'm calling at 9:00 am tomorrow, and Tuesday, and Wednesday...I will not let these venal, amoral, trolls get this one without a fight.

Posted by: Conrad's Ghost on September 21, 2008 at 9:04 PM | PERMALINK

"This little piggy had lipstick. This little piggy had none. This little piggy cried, "Drill, Baby, Drill" all the way home."

Posted by: hark on September 21, 2008

Posted by: ROFLMAO on September 21, 2008 at 9:37 PM | PERMALINK

Talk about playing the electorate for a bunch of fools. For heavens sakes alarm bells should have been going off across the spectrum, the IRS should be reeling with tax problems.

Consider this Now about one trillion in real estate taxes are due besides the fundemental loans. Where is all that revenue going to come from? Another bail out? Probably but this time a huge list of Administration cronies likely will be bailed out of the slammer.

Actually, why should the Congress take any action now since Bush and Company have made it obvious Bush would likely pardon anyone indicted or convicted for crimes in this scandal.

This mess should be thoughtfully untangled after Bush is gone. Obama only needs to rally around this ideal in the closing days of the election. Reason the Mainstream Media has no recourse but to lie along with this administration being embeded in the Iraq war and now with this huge huge rip off. Yes indeed as Bush said a very bold step " The big electorate tax rip off ever committed in political history" and to think these Republicans cheer and appluad this stuff at rallies and town hall meetings.

These Republicans are part of a seriously sick America. It is extordinary that the government issues a business license for these entities to properly serve the public and in all these first line Journalist analysis rant that the electorate should be repsonsible for this horrible situation we the people who give trust to them that business person to honestly work in a free market.

Well now we the people know Bush should not only leave office in shame, we the people need to shout out loudly for Bush to resign with all his friends so he does not have the cappability to pardon anyone. Then bring the Bush family to justice, this is it this is straw that brakes the camels back. For me it is very hard to watch this or anyone in this administration talk about what is good for the American people.

Posted by: Megalomania on September 22, 2008 at 3:15 AM | PERMALINK

Where the hell is Dick Cheney in all this? Haven't heard a word from him....

Posted by: bigapplegeorgiapeach on September 22, 2008 at 12:56 PM | PERMALINK




 

 

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