The $1.5 trillion handout to the rich

[Tim]

WASHINGTON - Scrambling for a swift deal on the $700 billion bailout for failing financial firms, key Democrats and Bush administration officials agreed Monday to include mortgage help for beleaguered homeowners but wrangled over other issues including “golden parachutes” for executives who benefit from the unprecedented rescue.

Democrats demanded that the measure limit pay packages for executives of companies helped by the biggest financial rescue since the Great Depression. The administration was balking at that, and also at a proposal by Democrats to let judges rewrite mortgages to lower bankrupt homeowners’ monthly payments.

CEOs Golden Parachutes: What they got away with

I can't believe this. How can the administration or anyone remotely justify the golden parachutes for executives who run their 100+ year old companies into the ground, destroy thousands of jobs and cost taxpayers over a trillion dollars to bail them out? Hell, some of them ought to go to jail for cooking the books.

Henry Paulson, the Treasury Secretary, even wants to extend the bailout to foreign banks. WHAT THE HELL???

Once again (remember the S&L crisis?), us working stiffs get to pay more to make the rich and powerful even richer. It's like Robin Hood's nemesis, steal from the poor and give to the rich. We privatize our profits and socialize our losses. We charge $5 for adventure passes and never have enough money to take care of our land or prevent crime, yet we have trillions to bail out irresponsible corporations run by greedy, unethical, arrogant executives (Fannie Mai execs cooked the books to get their bonuses among other things). I'm so freakin pissed.

[JMunaretto]

Regardless of economic beliefs (which are much more complicated than the whole big / small government sides), I think the strongest correlation with economic strength is amount of corruption.

[AW~]

Hehehehe...I know its not funny, but I say the truth that a lot of those insiders dont think we will be paying for this...Im not kidding, the experts of the field believe that these permanent deficits are not bad and some think this is a great idea. The logic behind that is the more the government borrows the smaller it will eventually become.

I dont see how the CEOs are to blame. They didnt force the companies to sign those employment contracts. Its so typical....the same people who complain about the cost of health care live in a house they could never afford with a flat screen TV. I need more money but I have no problem with someone else earning less(than me too) attitude. Walmart in Mexico pays part of the $5 a day in vouchers(to be spend at their store)! And then you ask who shops/hands over their money to Walmart and the only people who answer are the ones that hate unions.

We have no problem handing over public airspace to TV networks and cellphone companies and they deliver us garbage and cash in on it. But again, its 'I know Im paying 50 cents a minute but I would rather complain than not pay it, if someone tells me that the cellphone companies have rigged the market through the government, then I'll just complain, I want to be an "ECONOMIC PATRIOT"'.

The bottom line is people dont want to vote for accountability, because they themselves dont want to be held accountable. I know for myself, I had to think about this...took a look at my financial picture and hopefully making changes so I dont view life as going to hand me at least a comfortable way through.

[FIGHT ON]

BAILOUT DEAL IN DOUBT

[Bill]

I think there is plenty of blame to go around and there has been a head-in-the-sand strategy of oversight with regard to Fanny Mae/Freddie Mac(which was started during the Clinton administration)
Allowing those institutions which underwrote ridiculous loans that were low interest, or interest only, and often required no income qualification.
They did this in order to allow low income families and others to own homes which admittedly is a noble endeaver. I agree there should not be exorbitant severance packages for CEO's but I'm not sure a free ride for people who got in over their head is fair. I believe there are exceptional cases where loans were made to people did'nt understand what they were getting into. But for many, benifitting from a poor business decision is unfair for the 95 percent of us who make our payments monthly. Where is the accountability?!
Attempts were made to reign them in, but were rebuffed by Congress. Barney Frank and others, rejected legislation which would have tightened regulations. This is why the apparent outrage by these people seems ironic!
As for Walmart. I don't understand what the problem is. Rich people bag on Walmart but those who work there and those (many low income) who shop there find low prices and convenience.
Would people working at Walmart find a better job at a "Mom and Pop" store with benefits? I don't think so. Walmart provides opportunity for a job,where there are no jobs and inexpensive products for the community. People have a choice to work or shop there if they want to. Thats the way this country works. Just my opinion.

[AW~]

Tis about accountability...thats what Im getting at.

I mentioned Walmart because they are a great example of a group not held accountable. There are labor laws sure...that were passed a long time ago...and by todays standards would be considered communists...thats the only reason anyone is actually getting any kind of wage today. Of course if there were no labor laws Im sure Walmart would pay a decent wage...thats why they appealed to the Mexico Supreme Court to pay those workers as part of the min wage VOUCHERS to be spent at Walmart.

Back to Walmart.....they are destroying the world economy. They are held unaccountable and only demanded to supply the world with comparatively cheap goods...well theres a limited supply of certain materials folks. Metals are going to be in permanent short supply. Oil can be argued away( I would disagree heavily with that but I suppose the rich will always be able to buy it), but there are a lot of items that cant...its a permanent deal and theres nothing we can do about it now. Thinks its expensive now , LOL....

http://www.upiasia.com/Economics/2008/0 ... mand/6087/

Another article...
http://finance.yahoo.com/expert/article ... her/109941

"It seems most people will vote for anyone who promises a chicken in every pot and a guaranteed mortgage payment."....

Should have also said anything they think they are entitled to and have no regard for the consquences...its not Walmart's fault, its the US...it us. And soon China and others will be right there with us.

[Tim]

I think the CEOs are definitely to blame for the destruction of their companies. They are the ones in charge. They're suppose to be the business professionals that know how to run a company. These are investment banks and large financial institutions who's sole business is to understand risk and how to mitigate them. But these guys were all drinking the Kool-Aid. They leveraged out their companies way beyond what was normal (I've heard numbers like 30:1) to try to make even more money. So when all the bad bets came back, it killed them. They no longer had enough cash on hand or the ability to borrow more to cover losses or operations. It's totally irresponsible to run a company or any financial affairs that way.

It's just amazing to me how companies like Bear Stearns, Lehman Bros, AIG, etc. have been around for over 150 years in some cases, but were totally destroyed in less than a decade by greedy management.

[Kit Fox]

I think there is plenty of blame to go around and there has been a head-in-the-sand strategy of oversight with regard to Fanny Mae/Freddie Mac(which was started during the Clinton administration)

President Bill Clinton repealed the Glass-Steagall Act which had prevented the coupling of investment banking and lending. To be exact, on November 12, 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933. One of the effects of the repeal is it allowed commercial and investment banks to consolidate. Economists have criticized the action.

Of course economists criticized the way in which the Bush administration manufactured money by allowing anybody and everybody the opportunity to buy or refinance homes. Economist Robert Kuttner has criticized the repeal of the Glass-Steagall Act as contributing to the 2007 subprime mortgage financial crisis.

[Tim]

I feel like this all has been a big scam. We're all being screwed by a few people at the top because the rest of us minions won't wake up. Check it out:

Who Owns You (By: George Carlin)


Just like George Carlin said, they will take your retirement. The Democrats are now floating around the idea of killing 401(k) and making us all transfer our dough into government-created "guaranteed retirement accounts" for every worker. WTF?? Guaranteed my ass. As soon as they take it, you're not getting it back. Just like the $50+ trillion in obligations for entitlement programs we already have which we have no way of funding.

The Republicans aren't any better because they're part of the same corrupt political machine. It's the same machine that owns us and keeps us down so that they stay in power. The bailout of Wall Street proves it, which was nothing more than socialism for the rich.

[FIGHT ON]

I'm not a member of the f word club. 8)

[Tim]

Even animated ducks are smarter than the Federal Reserve.

Duck Tales Lesson on Inflation


The only single Congressman who has been warning about this economic collapse because of devaluing the dollar has been Ron Paul.

Stock Market and Monetary System on the verge of collapse

[Tim]

Banks Using $700 Billion Bailout To Buy Other Banks, Not Make More Loans

Washington told taxpayers a major rationale for us to fork over $700 billion to banks was to save the American economy by making loans more accessible, but it looks like at least at Chase they rather use it to buy other banks, NYT reports.

Times reporter Joe Nocera listened in on a Chase employee-only conference call and one employee asked, "Chase recently received $25 billion in federal funding. What effect will that have on the business side and will it change our strategic lending policy?"

Translation: When are we going to start making loans?The executive moderator replied:

Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase.. What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.

Later, the same executive said,

We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side.

Translation: We'll use that $25 billion as a war chest to buy other banks, and hoard it in case times get tougher.

"Read that answer as many times as you want," wrote NYT, "You are not going to find a single word in there about making loans to help the American economy."

Furthermore, a new tax break allows banks to immediately deduct any losses they that are on the books of the banks they acquire.

What is the government doing to make banks use the money for loans? Apparently, jack, except for asking really really nicely. If this continues and banks don't use their government handout to open up loans, this bailout will be the single greatest ripoff in American history, and those responsible are naive if they don't think they'll have a giant bloody revolution on their hands—and I mean that in the literal sense.

Remember, both Obama and McCain voted for the Bailout Bill. These representatives also did as well. I say they all need to be fired.

[Tim]

A Quiet Windfall For U.S. Banks

The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.

But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.

"Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no," said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. "They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks."

The story of the obscure provision underscores what critics in Congress, academia and the legal profession warn are the dangers of the broad authority being exercised by Treasury Secretary Henry M. Paulson Jr. in addressing the financial crisis. Lawmakers are now looking at whether the new notice was introduced to benefit specific banks, as well as whether it inappropriately accelerated bank takeovers.

The change to Section 382 of the tax code -- a provision that limited a kind of tax shelter arising in corporate mergers -- came after a two-decade effort by conservative economists and Republican administration officials to eliminate or overhaul the law, which is so little-known that even influential tax experts sometimes draw a blank at its mention. Until the financial meltdown, its opponents thought it would be nearly impossible to revamp the section because this would look like a corporate giveaway, according to lobbyists.

Andrew C. DeSouza, a Treasury spokesman, said the administration had the legal authority to issue the notice as part of its power to interpret the tax code and provide legal guidance to companies. He described the Sept. 30 notice, which allows some banks to keep more money by lowering their taxes, as a way to help financial institutions during a time of economic crisis. "This is part of our overall effort to provide relief," he said.

The Treasury itself did not estimate how much the tax change would cost, DeSouza said.

A Tax Law 'Shock'

The guidance issued from the IRS caught even some of the closest followers of tax law off guard because it seemed to come out of the blue when Treasury's work seemed focused almost exclusively on the bailout.

"It was a shock to most of the tax law community. It was one of those things where it pops up on your screen and your jaw drops," said Candace A. Ridgway, a partner at Jones Day, a law firm that represents banks that could benefit from the notice. "I've been in tax law for 20 years, and I've never seen anything like this."

More than a dozen tax lawyers interviewed for this story -- including several representing banks that stand to reap billions from the change -- said the Treasury had no authority to issue the notice.

Several other tax lawyers, all of whom represent banks, said the change was legal. Like DeSouza, they said the legal authority came from Section 382 itself, which says the secretary can write regulations to "carry out the purposes of this section."

[SNIP]

Lawmakers are considering legislation to undo the change. According to tax attorneys, no one would have legal standing to file a lawsuit challenging the Treasury notice, so only Congress or Treasury could reverse it. Such action could undo the notice going forward or make it clear that it was never legal, a move that experts say would be unlikely.

But several aides said they were still torn between their belief that the change is illegal and fear of further destabilizing the economy.

"None of us wants to be blamed for ruining these mergers and creating a new Great Depression," one said.

Some legal experts said these under-the-radar objections mirror the objections to the congressional resolution authorizing the war in Iraq.

"It's just like after September 11. Back then no one wanted to be seen as not patriotic, and now no one wants to be seen as not doing all they can to save the financial system," said Lee A. Sheppard, a tax attorney who is a contributing editor at the trade publication Tax Analysts. "We're left now with congressional Democrats that have spines like overcooked spaghetti. So who is going to stop the Treasury secretary from doing whatever he wants?"

So not only do they get to use bailout money from us taxpapers to acquire other banks, they get a huge fat tax shelter too!

This keeps sounding like the biggest ripoff in history.