What have we learned so far from the disclosure of more than 21,000 transactions? We have learned that the $700 billion Wall Street bailout signed into law by President George W. Bush turned out to be pocket change compared to the trillions and trillions of dollars in near-zero interest loans and other financial arrangements the Federal Reserve doled out to every major financial institution in this country. Among those are Goldman Sachs, which received nearly $600 billion; Morgan Stanley, which received nearly $2 trillion; Citigroup, which received $1.8 trillion; Bear Stearns, which received nearly $1 trillion, and Merrill Lynch, which received some $1.5 trillion in short term loans from the Fed.
MR. HARWOOD: Let’s go to Anthony Scaramucci, who is familiar to some viewers of our network because he appears on CNBC as a hedge fund manager.
Anthony Scaramucci: [...] Listen, I represent the Wall Street community. We have felt like a piñata. Maybe you don’t feel like you’re whacking us with a stick, but we certainly feel like we’ve been whacked with a stick. So I certainly think that Main Street and Wall Street are connected, and if we’re going to heal the society and make the economy better, how are we going to work towards that, healing Wall Street and Main Street?
[...]
THE PRESIDENT: On the first question, I think it would be useful to go back and look at the speeches that I’ve made, including a speech, by the way, I made back in 2007 on Wall Street before Lehmans had gone under, in which I warned about a potential crisis if we didn’t start reforming practices on Wall Street.
At the time, I said exactly what you said, which is Wall Street and Main Street are connected. We need a vibrant, vital financial sector that is investing in businesses, investing in jobs, investing in our people, providing consumers loans so they can buy products — all that is very important and we want that to thrive. But we’ve got to do so in a responsible way.
Now, I had been amused over the last couple years — this sense of somehow me beating up on Wall Street — I think most folks on Main Street feel like they got beat up on — (applause) — and I’ll be honest with you, there’s probably a big chunk of the country –
Q But people connect us –
THE PRESIDENT: Hold on a second — there’s a big chunk of the country that thinks that I have been too soft on Wall Street. (Applause.) That’s probably the majority, not the minority.
Now, what I’ve tried to do is just try to be practical. I’m sure that at any given point over the last two years, there have been times where I have been frustrated, and I’ll give you some examples. I mean, when I hear folks who say that somehow we’re being too tough on Wall Street, but after a huge crisis, the top 25 hedge fund managers took home a billion dollars in income that year – $1 billion. That’s the average for the top 25, which is –
MR. HARWOOD: And yet Forbes Magazine puts on their cover a story saying, “he has an anti-colonial attitude” — or Steve Schwarzman, a big figure on Wall Street, says, “their approach to the financial regulation and taxation is like Hitler invading Poland.” Where does that come from?
THE PRESIDENT: I don’t know where that comes from. That’s my point. I guess — it is a two-way street. If you’re making a billion a year, after a very bad financial crisis where 8 million people lost their jobs and small businesses can’t get loans, then I think that you shouldn’t be feeling put upon. The question should be how can we work with you to continue to grow the economy.
A big source of frustration — this quote that you just said, this was me acting like Hitler going into Poland, had to do with a proposal to change a rule called “carried interest,” which basically allows hedge fund managers to get taxed at 15 percent on their income. Now, everybody else is getting taxed at a lot more. (Laughter.) The secretary of the hedge fund is probably being taxed at 25, 28 — right? And these folks are making — getting taxed at 15.
Now, there are complicated economic arguments as to why this isn’t really income, this is more like capital gains, and so forth, which is a fair argument to have. I have no problem having that argument with hedge fund managers, many of whom I know and went to school with. And I respect their business acumen. But the notion that somehow me saying maybe you should be taxed more like your secretary, when you’re pulling home a billion dollars or a hundred million dollars a year, I don’t think is me being extremist or being anti-business. (Applause.) And that’s the confusion we get into.
NOTE:Attorney barred in the District of Columbia and California currently looking for opportunities in the private and government sectors. Specializes in ediscovery/litigation efficiency project management but can do straight litigation or litigation management. Feel free to contact me with opportunities at progress@progresspolitics.com
NOTE:Attorney barred in the District of Columbia and California currently looking for opportunities in the private and government sectors. Specializes in ediscovery/litigation efficiency project management but can do straight litigation or litigation management. Feel free to contact me with opportunities at progress@progresspolitics.com
The Washington Post recently released the results of a survey that it conducted concerning Wall Street reform. The public has spoken and really wants to reign in the financial industry. Yet the GOP, and Ben Nelson (D-NE), through the filibuster mechanism has blocked the Wall Street reform bill from even going to the floor of the Senate for an up or down vote. The two points of contention for the GOP appears to be the Consumer Financial Protection Agency and regulation of the derivatives market. The CFPA is one of the more popular aspects of the Wall Street reform bill yet the GOP wants to kill it even though it would provide oversight and stricter guidelines for banks making loans to the public. Thereby preventing borrowers from being duped into applying for and receiving loans that they cannot afford.
About two-thirds of Americans support stricter regulations on the way banks and other financial institutions conduct their business, according to a new Washington Post-ABC News poll.
Majorities also back two main components of legislation congressional Democrats plan to bring to a vote in the Senate this week: greater federal oversight of consumer loans and a company-paid fund that would cover the costs of dismantling failed firms that put the broader economy at risk.
A third pillar of the reform effort draws a more even split: 43 percent support federal regulation of the derivatives market; 41 percent are opposed. Nearly one in five – 17 percent – express no opinion on this complicated topic…..
The area with the highest levels of cross-party support is on more robust federal oversight of the way banks and other financial companies make consumer loans, such as auto loans, credit cards and mortgages. Here, 44 percent of Republicans approve of stricter guidelines, joining 75 percent of Democrats and 57 percent of independents on the issue.
THE PRESIDENT: Thank you very much. Everybody, please have a seat. Thank you very much. Well, thank you. It is good to be back. (Applause.) It is good to be back in New York, it is good to be back in the Great Hall at Cooper Union. (Applause.)
We’ve got some special guests here that I want to acknowledge. Congresswoman Carolyn Maloney is here in the house. (Applause.) Governor David Paterson is here. (Applause.) Attorney General Andrew Cuomo. (Applause.) State Comptroller Thomas DiNapoli is here. (Applause.) The Mayor of New York City, Michael Bloomberg. (Applause.) Dr. George Campbell, Jr., president of Cooper Union. (Applause.) And all the citywide elected officials who are here. Thank you very much for your attendance.
It is wonderful to be back in Cooper Union, where generations of leaders and citizens have come to defend their ideas and contest their differences. It’s also good to be back in Lower Manhattan, a few blocks from Wall Street. (Laughter.) It really is good to be back, because Wall Street is the heart of our nation’s financial sector.
Now, since I last spoke here two years ago, our country has been through a terrible trial. More than 8 million people have lost their jobs. Countless small businesses have had to shut their doors. Trillions of dollars in savings have been lost — forcing seniors to put off retirement, young people to postpone college, entrepreneurs to give up on the dream of starting a company. And as a nation we were forced to take unprecedented steps to rescue the financial system and the broader economy.
And as a result of the decisions we made — some of which, let’s face it, were very unpopular — we are seeing hopeful signs. A little more than one year ago we were losing an average of 750,000 jobs each month. Today, America is adding jobs again. One year ago the economy was shrinking rapidly. Today the economy is growing. In fact, we’ve seen the fastest turnaround in growth in nearly three decades.
But you’re here and I’m here because we’ve got more work to do. Until this progress is felt not just on Wall Street but on Main Street we cannot be satisfied. Until the millions of our neighbors who are looking for work can find a job, and wages are growing at a meaningful pace, we may be able to claim a technical recovery — but we will not have truly recovered. And even as we seek to revive this economy, it’s also incumbent on us to rebuild it stronger than before. We don’t want an economy that has the same weaknesses that led to this crisis. And that means addressing some of the underlying problems that led to this turmoil and devastation in the first place.
Now, one of the most significant contributors to this recession was a financial crisis as dire as any we’ve known in generations — at least since the ’30s. And that crisis was born of a failure of responsibility — from Wall Street all the way to Washington — that brought down many of the world’s largest financial firms and nearly dragged our economy into a second Great Depression.
It was that failure of responsibility that I spoke about when I came to New York more than two years ago — before the worst of the crisis had unfolded. It was back in 2007. And I take no satisfaction in noting that my comments then have largely been borne out by the events that followed. But I repeat what I said then because it is essential that we learn the lessons from this crisis so we don’t doom ourselves to repeat it. And make no mistake, that is exactly what will happen if we allow this moment to pass — and that’s an outcome that is unacceptable to me and it’s unacceptable to you, the American people. (Applause.)
As I said on this stage two years ago, I believe in the power of the free market. I believe in a strong financial sector that helps people to raise capital and get loans and invest their savings. That’s part of what has made America what it is. But a free market was never meant to be a free license to take whatever you can get, however you can get it. That’s what happened too often in the years leading up to this crisis. Some — and let me be clear, not all — but some on Wall Street forgot that behind every dollar traded or leveraged there’s family looking to buy a house, or pay for an education, open a business, save for retirement. What happens on Wall Street has real consequences across the country, across our economy.
I’ve spoken before about the need to build a new foundation for economic growth in the 21st century. And given the importance of the financial sector, Wall Street reform is an absolutely essential part of that foundation. Without it, our house will continue to sit on shifting sands, and our families, businesses, and the global economy will be vulnerable to future crises. That’s why I feel so strongly that we need to enact a set of updated, commonsense rules to ensure accountability on Wall Street and to protect consumers in our financial system. (Applause.)
Now, here’s the good news: A comprehensive plan to achieve these reforms has already passed the House of Representatives. (Applause.) A Senate version is currently being debated, drawing on ideas from Democrats and Republicans. Both bills represent significant improvement on the flawed rules that we have in place today, despite the furious effort of industry lobbyists to shape this legislation to their special interests.
And for those of you in the financial sector I’m sure that some of these lobbyists work for you and they’re doing what they are being paid to do. But I’m here today specifically — when I speak to the titans of industry here — because I want to urge you to join us, instead of fighting us in this effort. (Applause.) I’m here because I believe that these reforms are, in the end, not only in the best interest of our country, but in the best interest of the financial sector. And I’m here to explain what reform will look like, and why it matters.
Now, first, the bill being considered in the Senate would create what we did not have before, and that is a way to protect the financial system and the broader economy and American taxpayers in the event that a large financial firm begins to fail. If there’s a Lehmans or an AIG, how can we respond in a way that doesn’t force taxpayers to pick up the tab or, alternatively, could bring down the whole system.
In an ordinary local bank when it approaches insolvency, we’ve got a process, an orderly process through the FDIC, that ensures that depositors are protected, maintains confidence in the banking system, and it works. Customers and taxpayers are protected and owners and management lose their equity. But we don’t have that kind of process designed to contain the failure of a Lehman Brothers or any of the largest and most interconnected financial firms in our country.
That’s why, when this crisis began, crucial decisions about what would happen to some of the world’s biggest companies — companies employing tens of thousands of people and holding hundreds of billions of dollars in assets — had to take place in hurried discussions in the middle of the night. And that’s why, to save the entire economy from an even worse catastrophe, we had to deploy taxpayer dollars. Now, much of that money has now been paid back and my administration has proposed a fee to be paid by large financial firms to recover all the money, every dime, because the American people should never have been put in that position in the first place. (Applause.)
But this is why we need a system to shut these firms down with the least amount of collateral damage to innocent people and innocent businesses. And from the start, I’ve insisted that the financial industry, not taxpayers, shoulder the costs in the event that a large financial company should falter. The goal is to make certain that taxpayers are never again on the hook because a firm is deemed “too big to fail.”
Now, there’s a legitimate debate taking place about how best to ensure taxpayers are held harmless in this process. And that’s a legitimate debate, and I encourage that debate. But what’s not legitimate is to suggest that somehow the legislation being proposed is going to encourage future taxpayer bailouts, as some have claimed. That makes for a good sound bite, but it’s not factually accurate. It is not true. (Applause.) In fact, the system as it stands — the system as it stands is what led to a series of massive, costly taxpayer bailouts. And it’s only with reform that we can avoid a similar outcome in the future. In other words, a vote for reform is a vote to put a stop to taxpayer-funded bailouts. That’s the truth. End of story. And nobody should be fooled in this debate. (Applause.)
By the way, these changes have the added benefit of creating incentives within the industry to ensure that no one company can ever threaten to bring down the whole economy.
To that end, the bill would also enact what’s known as the Volcker Rule — and there’s a tall guy sitting in the front row here, Paul Volcker — (applause) — who we named it after. And it does something very simple: It places some limits on the size of banks and the kinds of risks that banking institutions can take. This will not only safeguard our system against crises, this will also make our system stronger and more competitive by instilling confidence here at home and across the globe. Markets depend on that confidence. Part of what led to the turmoil of the past two years was that in the absence of clear rules and sound practices, people didn’t trust that our system was one in which it was safe to invest or lend. As we’ve seen, that harms all of us.
So by enacting these reforms, we’ll help ensure that our financial system — and our economy — continues to be the envy of the world. That’s the first thing, making sure that we can wind down one firm if it gets into trouble without bringing the whole system down or forcing taxpayers to fund a bailout.
Number two, reform would bring new transparency to many financial markets. As you know, part of what led to this crisis was firms like AIG and others who were making huge and risky bets, using derivatives and other complicated financial instruments, in ways that defied accountability, or even common sense. In fact, many practices were so opaque, so confusing, so complex that the people inside the firms didn’t understand them, much less those who were charged with overseeing them. They weren’t fully aware of the massive bets that were being placed. That’s what led Warren Buffett to describe derivatives that were bought and sold with little oversight as “financial weapons of mass destruction.” That’s what he called them. And that’s why reform will rein in excess and help ensure that these kinds of transactions take place in the light of day.
Now, there’s been a great deal of concern about these changes. So I want to reiterate: There is a legitimate role for these financial instruments in our economy. They can help allay risk and spur investment. And there are a lot of companies that use these instruments to that legitimate end — they are managing exposure to fluctuating prices or currencies, fluctuating markets. For example, a business might hedge against rising oil prices by buying a financial product to secure stable fuel costs, so an airlines might have an interest in locking in a decent price. That’s how markets are supposed to work. The problem is these markets operated in the shadows of our economy, invisible to regulators, invisible to the public. So reckless practices were rampant. Risks accrued until they threatened our entire financial system.
And that’s why these reforms are designed to respect legitimate activities but prevent reckless risk taking. That’s why we want to ensure that financial products like standardized derivatives are traded out in the open, in the full view of businesses, investors, and those charged with oversight.
And I was encouraged to see a Republican senator join with Democrats this week in moving forward on this issue. That’s a good sign. (Applause.) That’s a good sign. For without action, we’ll continue to see what amounts to highly-leveraged, loosely-monitored gambling in our financial system, putting taxpayers and the economy in jeopardy. And the only people who ought to fear the kind of oversight and transparency that we’re proposing are those whose conduct will fail this scrutiny.
Third, this plan would enact the strongest consumer financial protections ever. (Applause.) And that’s absolutely necessary because this financial crisis wasn’t just the result of decisions made in the executive suites on Wall Street; it was also the result of decisions made around kitchen tables across America, by folks who took on mortgages and credit cards and auto loans. And while it’s true that many Americans took on financial obligations that they knew or should have known they could not have afforded, millions of others were, frankly, duped. They were misled by deceptive terms and conditions, buried deep in the fine print.
And while a few companies made out like bandits by exploiting their customers, our entire economy was made more vulnerable. Millions of people have now lost their homes. Tens of millions more have lost value in their homes. Just about every sector of our economy has felt the pain, whether you’re paving driveways in Arizona, or selling houses in Ohio, or you’re doing home repairs in California, or you’re using your home equity to start a small business in Florida. Read the rest of this entry »
Similar to the astroturf group created to kill health care reform, Wall street has rented a artificial grassroots group to block financial regulatory reform. TPM is reporting that the fake grassroots group has spent $1.6 million in ads fighting against Wall Street reform. Financial industry corporations have paid the group a great deal of money to advocate against reform on its behalf under the guise of “consumer advocacy.” The group uses the tagline of “stop too big to fail” so as to intentionally give the false impression that it is working on behalf of consumers when in actuality it is working furiously on behalf of Wall Street banks and investment companies.
The group went so far as to deceive a top economist from MIT, Simon Johnson, a fierce advocate of breaking up large banks, into participating in media conference call that it claimed concerned “protecting small investors.” The ad campaign currently being run by the front group goes something like this:
Stop Too Big To Fail’s $1.6 million ad campaign, which is targeting Majority Leader Harry Reid, Sen. Claire McCaskill (D-MO), and Sen. Mark Warner (D-VA), asks viewers to tell their senators, “vote against this phony ‘financial reform.’ Support real reform, stop ‘too big to fail.’”
So the astroturf roots shilling for Wall Street is claiming that it wants “real” or stronger reform when in fact it wants to kill the Wall Street reform bill altogether. Fifteen years ago the six largest banks assetts totaled 17 percent of the gross domestic product now the assetts of the six largest banks total a whopping 63 percent of the GDP. When such banks make up such a large portion of our economy and engage in irresponsible and riskier behavior it puts the American economy at risk, e.g., Main Street. We need a strong bill.
In case there was any doubt that citizens of this nation want Wall Street to be held accountable and the rights of consumers more vigorously enforced, the Consumer Federation of America polling shows that the financial regulatory reform bill needs to be toughened up in terms of consumer protection.
The poll found that 62% of Americans support the creation of a “new federal agency to protect consumers who purchase banking and other financial services.” Only 34% opposed such a plan.
Additionally, CFA found that a whopping 85% believe “consumers need more effective protections against unfair and deceptive practices by banks and other financial institutions.”
The Chamber of Commerce has spent $3 million dollars to fight the creation of the CFPA and elisted Repub;ican leader Mitch McConnell to do its bidding on the Senate floor. It appears the GOP strategy for November is to side with Wall Street and protect it at all costs.
While Americans are repeatedly being asked to take it on the chin by our government a bill like ”Make Wall Street Pay for the Restoration of Main Street Act” just make sense. The American people bailed out Wall Street to the tune of $750 billion and Wall Street repays them by raising the insurance rates, imposing abusive and deceptive credit card fees, and continuing the same practice it engaged in to get us into this maelstrom of a crap storm. The American people need fair treatment and reciprocity. Wall Street has pretty much operated with impunity and without repercussions even though it took us into the greatest economic downturn since the Great Depression. The bill currently being worked on by Democratic Reps. Peter DeFazio (Ore.) and Ed Perlmutter (Colo.), would impose a 0.25 percent tax on the sale and purchase of financial instruments such as stocks, options, derivatives and futures. The bill would raise $150 billion in tax revenue per year half of which would go to paying down the deficit and the other half would go to creating JOBS, JOBS, JOBS. See a description of the bill by The Hill below:
The bill, a copy of which was obtained by The Hill, is titled the “Let Wall Street Pay for the Restoration of Main Street Act of 2009.”……..
Half of the $150 billion in tax revenue would go toward reducing the deficit, while the other half would be deposited in a “Job Creation Reserve” to support new jobs.
The job fund would be available to offset the additional costs of the 2009 highway bill and other legislation that creates jobs.
This is a common sense solution that may make too much sense for Congress.
Treasury Secretary Geithner will appear before Congress today to propose his plan to address the current state of the financial industry.
The administration’s signature proposal is to vest a single federal agency with the power to police risk across the entire financial system. The agency would regulate the largest financial firms, including hedge funds and insurers not currently subject to federal regulation. It also would monitor financial markets for emergent dangers.
Geithner plans to call for legislation that would define which financial firms are sufficiently large and important to be subjected to this increased regulation. Those firms would be required to hold relatively more capital in their reserves against losses than smaller firms, to demonstrate that they have access to adequate funding to support their operations, and to maintain constantly updated assessments of their exposure to financial risk.
The designated agency would not replace existing regulators but would be granted the power to compel firms to comply with its directives. Geithner’s testimony will not identify which agency should hold those powers, but sources familiar with the matter said that the Federal Reserve, widely viewed as the most obvious choice, is the administration’s favored candidate.
Officials of the Treasury Department speaking on the condition of anonymity spoke about the three major parts of the Treasury department’s plan to reboot the economy and get the banks to start lending again. Treasury expects to remove as much as $1 trillion in toxic assets from the banks ledgers freeing such banks up to resume normal lending. The administration plans to rely on the Federal Reserve and the Federal Deposit Insurance Corporation for funding the plan. Treasury Secretary Tim Geitner is rumored to make the official announcement fifteen minutes before the opening bell of Wall Street today. See below for the basics.
_a public-private partnership to back private investors’ purchases of bad assets. The $700 billion bailout fund would provide the backing. The government would match private investors dollar for dollar and share any profits equally.
_expanding a recent Fed program that provides loan for investors to buy securities backed by consumer debt. It’s an effort to make it easier for people to get auto, student and credit card loans. The Term Asset-Backed Securities Loan Facility (TALF) program is getting up to $100 billion from the bailout fund; that money then is being leveraged to support up to $1 trillion in Fed loans. Under Geithner’s plan for the toxic assets, part of that $1 trillion would now go to support purchases of banks’ troubled assets.
_using the FDIC, which guarantees bank deposits, to purchase toxic assets. Officials said the agency would create special investment partnerships and then lend them money to buy up troubled assets.
Economists Reactions
“The key is going to be if the government buys these assets quickly,” said Mark Zandi, chief economist at Moody’s Economy.com. “The sooner they get these assets off banks’ balance sheets, the quicker the system will find its footing and get the economy moving again.”
“The market is looking for a `wow’ factor where they can see the administration is finally doing enough,” said Sung Won Sohn, an economics professor at the Smith School of Business at California State University.
Like in that Doobie Brothers song ‘Takin it to the Streets,’ the grassroots organization Neighborhood Assistance Corporation of America, an organization that assists homeowners in avoiding foreclosure, took their grievances directly to the source of their frustration….Wall Street executives. Almost 400 members of the group of potential foreclosure victims protested outside the homes of several CEO’s of Wall Street firms who refuse to renegotiate loans on behalf of NACA homeowners. One particular manager, William Frey of Greenwich Financial Services, was targeted because he is currently suing Bank of America on behalf of two of BofA’s primary investors because BofA moved to modify several hundred mortgages to make them more affordable the homeowners. Monikered “the Predators tour,” the group has mounted an all out “accountability campaign” against the excesses of Wall Street executives and their obliviousness to the pain and distress of Main Street, i.e., their fellow man and woman. NACA confronted the executives on their own turf by showing up outside their homes and placing furniture on the lawns to demonstrate what it might feel like to be displaced. The protesters also stood on the street in front of the executive’s homes holding signs reading “Stop the Loan Sharks.” That’s another way of getting accountability. See full story here.
Given the situation, this little melody is particularly pertinent. For those not familiar with the song it was recorded in the 70′s (video above) and in this case is a message to all those who, in the name of greed, were willing to exploit the desperation of the oppressed and disenfranchised simply trying to achieve the American dream.
Takin’ It To The Streets
You don’t know me but I’m your brother
I was raised here in this living hell
You don’t know my kind in your world
Fairly soon the time will tell
You, telling me the things you’re gonna do for me
I ain’t blind and I don’t like what I think I see
Takin’ it to the streets
Takin’ it to the streets
Takin’ it to the streets
Takin’ it to the streets
Take this message to my brother
You will find him everywhere
Wherever people live together
Tied in poverty’s despair
You, telling me the things you’re gonna do for me
I ain’t blind and I don’t like what I think I see
Takin’ it to the streets
Takin’ it to the streets
Takin’ it to the streets
Takin’ it to the streets
After the bailout bill passed in the House by a significant margin there were high hopes by for the bill’s passage. However, in a vote of 52-35, the automobile bailout deal died in the Senate last night. GM and Chrysler were seeking a $14 billion dollar loan. Ford is not seeking funds at this time. The proponents of the bailout needed 60 senate votes for the bill to pass. The White House was adamantly against using any of the $700 billion dollar TARP (Troubled Asset Rescue Plan) money to give to the automobile makers. Looks like the White House will have to reverse itself and use part of the TARP money afterall because W doesn’t want to see the automobile industry fail on his watch. The Democrats advocated the use of the TARP money to begin with but was immediately shut down by the White House. One of Sen. Harry Reid final statements ”I dread looking at Wall Street tomorrow….it’s not going to be a pleasant sight.” Japan’s Nikkei index and Hong Kong’s HANG SANG lost more than 5% overnight.
UPDATE: Twenty minutes before the Wall Street rings its opening bell the White House signals that it would be willing to consider using the TARP money for the auto bailout. No indication if many of the strings negotiated within Congress for the last couple of days will be part of a TARP package. Lets hope that this news makes a difference to Wall Street.
Well it appears that the Treasury department is still trying to pull something over on the American people. Why is Wall Street executives receiving a one on one with Treasury officials? Read full story here.
Well, Treasury officials had a secret conference call with Wall Street executives. Unfortunately for them, some bloggers were on the call.
The ‘Treasury boys’ on the call made it clear that “the tranching is a mere formality, and the Treasury boys as much as said so. They could take the $700 billion max as soon as the bill has passed.” That was always obvious.
And they admitted that “the exec comp provisions sound like a joke, They DO NOT affect existing contracts, they affect only contracts entered into during the two years of the authority of this program and then affect only golden parachutes.” Both of these provisions were ‘concessions’ sought by Democrats. Of course, no one could have predicted this bill’s ‘concessions’ to Democrats were farcical. No one at all.
1. The tranching is a mere formality, and the Treasury boys as much as said so. They could take the $700 billion max as soon as the bill has passed,
2. However, they do not plan any action immediately, will wait a couple of weeks. They want to focus their efforts on stronger companies but also made noise about protecting the financial system. This, by the way, is the Japanese convoy system all over.
3. There seemed to be a lot of tap dancing about what price they will pay for assets and no straight answer about their policy on warrants. They did say that if the amount sold was greater than $100 million, they would take warrants. FYI, the current draft allows them to pay up to the price at which the assets were initially booked (yikes) . I wonder if this is obfuscation, if they have an idea of what the plan to do but will not admit it in any public forum.
4. As the person who listened to the call stressed, DealBreaker wasn’t clear on the bifurcated process. If you come to the Treasury and you are in trouble, you get reamed. Bear/AIG style treatment, execs probably fired. But if you participate on a voluntary basis, the intent is to make it very user friendly. That is consistent with Paulson’s position during the negotiations.
5. The exec comp provisions sound like a joke, They DO NOT affect existing contracts, they affect only contracts entered into during the two years of the authority of this program and then affect only golden parachutes. More detail on that point, but I don’t need more detail to get the drift of the gist.
Sen. John McCain, at the helm every time the nation has experienced a financial crisis, now claims that he is the one that will fix this problem. McCain was in Congress and was implicated in the Keating Five scandal or more popularly known as the savings and loan crisis. You know, the crisis that resulted in a government bailout of $126 billion dollars.
McCain was also one of the Senators who helped pass the deregulation bill that caused the current crisis. McCain had this to say about the bill’s passing on 60 Minutes last night:
Q: In 1999, you were one of the senators who helped pass deregulation of Wall Street. Do you regret that now?
McCAIN: No. I think the deregulation was probably helpful to the growth of our economy.
If you had any doubt as to how a McCain administration would handle the current financial crisis, the above quote is your answer. Incompetence and denial, denial, denial, denial. McCain is a pure free-market ideologue. He believes that the government should get out of the way and let the private sector regulate itself….well it is that exact ideology that is directly responsible for the greatest collapse of the financial industry since the Depression. To put the cherry on top, the McCain campaign refuses to rule out that Phil Gramm, architect of the deregulation bill that caused this crisis and referred to Americans as a “nation of whiners,” will be the Treasury Secretary in a McCain administration. Also, remember McCain’s plan, until last Friday, to privatize social security? Imagine the state the nation’s social security program had we followed McCain’s advice and invested in stock market. Thanks for everything Senator McCain but it is really time to turn the page.
Speaking at a rally in North Carolina on Sunday, Sen Obama gave his requirements for any bailout for the financial industry. Bush appointed Treasury Secretary Henry Paulson seems to want Congress to sign a blank check for 700 billion dollars giving him full discretion to spend it anyway he chooses. When asked on Meet the Press on Sunday as to whether he would curtail excessive CEO compensation, Paulson opined such a requirement may discourage companies from participating in the program. Not so much. Meanwhile he is asking for 5% of the gross national product to spend as he pleases. Hasn’t he been at the helm this entire time and could have raised the alarm about the potential of this happening years ago…..now he wants the Americans to just trust that he will prudently spend 700 billion in the best interest of the the majority. I think not. So, Mr Paulson, you and the other republicans keep saying how this needs to be a “clean bill.” Well, if by “clean bill” you mean no oversight and no safeguards and assistance for the American taxpayers/main street………you’re on something. As for Mr. Paulson’s objectivity, one reader summed it up perfectly:
Reuters reports today that “The incoming Treasury secretary, Henry M. Paulson Jr., was awarded an $18.7 million cash bonus for half a year of work as the chief executive of the Goldman Sachs Group.” The massive bonus was, not surprisingly, approved by Goldman Sachs at the very same time Paulson was both CEO and Treasury Secretary designate. This raises a very simple question: What is Goldman Sachs buying with this brazen payoff to someone they knew was headed to one of the most powerful government posts in America?
Sen. Obama insists that the following conditions must be included in any financial industry bailout.
Excerpt from Sen. Barack Obama’s speech in North Carolina on Sunday Sept 21, 2008
The era of greed and irresponsibility on Wall Street and in Washington has led us to a perilous moment. They said they wanted to let the market run free but instead they let it run wild. And now we are facing a financial crisis as profound as any we have faced since the Great Depression
But here’s the truth:
Regardless of how we got here, we’re here today. And the circumstances we face require decisive action because your jobs, your savings, and your economic security are now at risk.
We must work quickly in a bipartisan fashion to resolve this crisis to avert an even broader economic catastrophe. But Washington also has to recognize that economic recovery requires that we act, not just to address the crisis on Wall Street, but also the crisis on Main Street and around kitchen tables across America.
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.
