Apparently not, given that his description of the bill isn't accurate. The executive compensation stuff he talks about in #14 isn't how it works. In #13, he says this is a reward for the successful banks; in #14, he says it only benefits the bad institutions. The list of professionals who are the bailout is absolutely necessary is far, far longer than your list of one CEO at BB&T. And they include people not at all exposed to the crisis. He's basically arguing since he's OK, everyone else is. And if the whole economy is destroyed, big deal. Idiotic at best, ignorant at worst.
I'm real enough to know that if Democrats woulds have bailed out McCain and his republican friends on wall Street, they would have turned around and used it against Democrats in the election.
One of my banks is a small, regional bank, and they sent me a letter saying basically the same thing. They said that since they've done good things, they can keep credit lines open and are in a position to really grow based on the failures of the bigger banks. I have seen nothing that makes me think that the "crisis" is a general banking crisis, and not just a crisis of the worst exposed banks. And the fact that former employees of those banks are the ones that wrote it lead me to believe that this bill was written to just benefit them. Of course credit is tight, but it hasn't stopped, and I doubt seriously that it will.
Two things: 1. You are talking about apples and oranges. Yes the US housing market created this mess, but that has nothing to do with the bailout package, because the bailout package is more like "OK, we know we're in deep ****, now how do we get out." If you want to have more stringent supervision in the future, I'm all for it. For example, the CDS market is as of right now, being negotiated bilateral contracts, completely unregulated. So in one of the worst cases you have a hedge fund insuring for 50 different CDS contracts with the same pool of money, at exuberant fees of course. When everything is all nice and fine, the grave train rolls, now that we are in ****, they and we are screwed. Want to know one reason why AIG failed? People think it's the sub-primes. That is part to blame, but they are also the counter-party to hundreds of billions of Lehman debt. 2. There are parts of Allison's arguments I simply don't agree with. Yes of course the bailout helps MS and GS, but have you thought of the effects of either collapsed. MS and GS are counter-parties with (aside from each other), thousands of retail banks, smaller banks, insurance companies, pension funds, etc. The collapse of Lehman brings down AIG et al, think about what if the US banking system fails. You can't bailout the US economy without bailing out the banking system as well. 3. There is something to be said about the credit market as well. Obviously when you are borrowing (especially if you are heavily leveraged), there are risks. And every 10 years or so we have a huge collapse. But think of the alternative. A bank loans out a 30 year mortgage, then what? Twaddle its thumb for the money to come in? Think of the mortgage rates in Europe. Without the MBS market, you'd be seeing rates like it. Instead, bank can sell the loans on the secondary market and generate returns with their newly found liquidity. I know that Allison stated this as a negative, but if you are going to blame Fannie and Freddie for the mess, you should credit them with above normal returns in the good years as well. Agreed.
Bernanke has stepped in with $630 billion, hot off the presses: http://www.bloomberg.com/apps/news?pid=20601087&sid=a9MTZEgukPLY
Please. Ah the RTC gambit. Almost as dishonest as the "might make a profit" gambit. The RTC took over assets from S&Ls that had failed. This attempts to buy assets from institutions that have yet to fail and in order to keep them from failing, you have to buy those assets at an price higher than what they are worth. The assets are directly tied to mortgages and those mortgages aren't coming back to what they were. And it isn't a "bad bailout plan" as you call it either. The banks ARE NOT getting off the hooks for free. For starters, before they only had paper/unrealized losses. Once they unload the MBS' to the RTC, they have have a REALIZED loss. I can. I just think this "solution" sucks. So you agree I should shut up? Damn if this thing isn't upsetting the opinion I have of a bunch of posters (and probably doing the same for their opinion of me). Bush sucks.
Wrong. It has everything to do with the bail out package because the only way the bail out will conceivably work is for Paulie to overpay for that mortgage backed paper.
Exactly. It's mind numbing to try and place any blame on any one person... but the point is that if the Dems were really trying to save the day THEY HAVE THE MAJORITY. Save us Dems... we don't know any better. Get your 97 naysayers in line!!
The problem is that panic isn't rational. Bank runs destroy perfectly healthy institutions because the whole financial system is only successful if people believe in it. The minute the system loses confidence, it falls apart, no matter how theoretically sound the loans are. And the runs almost always start at the small independent banks, as people move their money from Mom-and-Pop Bank to Bank of America or Chase, because people think of those as "safer". It's only a matter of time - as loans start rolling over, they'll start getting pulled, and that will start a cascade effect.
I think most people are smart enough that the exact opposite will happen. The locals all sold off their mortgages as soon as they made them. They're not carrying (for the most part) the kind of crap that is bringing this on.
I think you are right this bailout isn't anything like the RTC that sold off failed S&Ls rimrocker- Why don't they just let these financials go through bankruptcy? That would provide better remedies for the economy without having the banks rape the govt/taxpayer
Doesn't matter - if people start pulling their deposits out of a perfectly healthy bank, it fails regardless of how healthy its loans are. That's basically the definition of a bank run. It happens over and over in history. People are ordinarily smarter than that, yes. They aren't smarter than that when they are in a panic. The whole problem here is purely a confidence crisis which creates a liquidity crisis which then causes otherwise healthy companies to die. That's what nearly happened to GS and MS - profitable, healthy companies that were about to be torn down before they were saved by the potential of a bailout (and the short-sale ban slowing down the process of sucking them down). AIG was arguably a healthy company as well. If there was no confidence crisis, they would never have gotten close to failing. WaMu, Merrill, Lehman, and Bear Stearns certainly took more risks, but the same applies to them - if people didn't panic, they were perfectly capable of surviving, paying all their bills, etc.
Not my fault republicans nominated someone hated and not listened too by his own party. But yes, that's exactly what McCain tried to do and FAILED!
