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Fool Blog: Politics Reveals the Cowards

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Notwithstanding a compelling plea from our outgoing president and Treasury secretary, who have no significant future political skin in the game, and a bipartisan team of lawmakers, our House of Representatives has let us down. Things I've heard include "My mail is running 10 to 1 against" and "The partisan tone at the end of the debate today I think did impact the votes on our side."


Elected leaders: You have been presented an opportunity to mitigate a very serious threat to your constituents' ways of life. It does not matter how we got here at this point -- even though many companies took extremely dumb risks, including Fannie Mae (NYSE: FNM  ) , Freddie Mac (NYSE: FRE  ) , AIG (NYSE: AIG  ) , Wachovia (NYSE: WB  ) , Washington Mutual (NYSE: WM  ) , and National City (NYSE: NCC  ) . This crisis extends far beyond those companies' (and others like them) executives, employees, customers, and shareholders -- it extends to every Main Street in America. You need to have the minimum amount of courage necessary to do your job. You need to reassure your constituents and the world that the U.S. economy, underpinned by its financial markets, is and will continue to be the most successful the world has ever known.

Senators McCain and Obama: Please stop the canvassing and cold-calling looking for my vote until you rally your parties to support this. By the way, you were both embarrassing in your inability to address this forthrightly in the debate on Friday night.

Nobody is blaming you. There will still be time for finger-pointing; you can have your fun later. Now is not the time for politics, ladies and gentlemen. Now is the time for a modest amount of bipartisan courage to help our economy stabilize. If you don't believe we have a very serious risk of a crisis, then stand up and say so; don't hide behind your "mail" and "partisan tone." Otherwise, do the right thing and support this bill, or come up with a better one. Sheesh.

Get this done.

Motley Fool President Scott Schedler does not own shares of any company mentioned. The Fool is investors writing for investors.

Read/Post Comments (94) | Recommend This Article (61)

Comments from our Foolish Readers

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  • Report this Comment On September 29, 2008, at 4:31 PM, rockneilly2006 wrote:

    Amen Brother

  • Report this Comment On September 29, 2008, at 4:35 PM, kwill10 wrote:

    This is the chance to prove that Washington can stop the partisan bickering and do something important...and they choked in round one. If they do nothing, and if the credit crunch causes widespread damage, the political cost will be 100 times worse than voting for this bill as is.

  • Report this Comment On September 29, 2008, at 4:41 PM, timlaura99 wrote:

    Is it too late to vote Whig?

  • Report this Comment On September 29, 2008, at 5:05 PM, kevsmith wrote:

    I would like to see some accountability among the politicians before we hand over the economy to Barney Franks et al. If you want to save the US credit market, first take responsibility for ruining it. Otherwise, forget it.

  • Report this Comment On September 29, 2008, at 5:05 PM, ButtSauce wrote:

    The politicians are dreadful at explaining the situation, but it goes further than that. As an investor, I imagine I am not alone in my desire for a little more transparency from banks. How am I supposed to seriously invest in any of the financials if I can't see under completely under the hood? This is not investing with calculated risk, it is simply a bet at the races, except they shoot the horses that lose. Please let the regular tax player have a look at all the various proposals that have put been out there besides the one that just failed. The one that just went belly up was a total farce. Let's put something more akin to the Swiss version out there since it has already has been tested.

  • Report this Comment On September 29, 2008, at 5:11 PM, Pmccorm wrote:


    There will be accountability for politicians come November. I do not believe we can wait that long for some action. It is not about politics at this point. It is time to negotiate until they can not talk anymore and find a point of compromise. I believe there are enough protections in the current bill to avoid one person controlling the decisions and now that there will be an equity stake we are looking more like the deal Buffet negotiated.

  • Report this Comment On September 29, 2008, at 5:19 PM, cpmcmah wrote:

    Cowards? Hardly. I'd rather deal with a years worth of downward economic growth that 10 years of hyper inflation.

    The cowards are those that have to read pre typed letters rather than from their heart.

    All the hype and fear is actually turning people away! As soon as they resort to love and peace, they'll pass the bill.

  • Report this Comment On September 29, 2008, at 5:19 PM, kaiwan wrote:

    I'm not sure I agree with your assessment, unless of course you're just looking for short term market stabilization at the risk of a deeper long term mess. And I mean it whe I say, "I''m not sure". On one hand I can see your point, but on the other, my gut tells me the government might be throwing good money after bad. Yes SOMETHING needs to be done. But, giving more oversight responsibility to the very people who were supposed to be overseeing the practices of these entities (Fannie and Freddie) all along doesn't seem reasonable. The good thing about what happened this weekend, as is usually the case on Capitol Hill, neither one side nor the other pushed their agenda through Congress. Now, the real work of coming up with a solution that actually works might ocurr. And by the way, if a Representative's switchboard is lining up 10:1 against a bill, it IS his responsibility to vote against it. A Senator may have more leeway to vote his conscience, but a Representative is expressly elected to represent the will of his constituents.

  • Report this Comment On September 29, 2008, at 5:25 PM, user981 wrote:

    I think this is a case of politicians of both parties finally standing up against stupidity and scare tactics of the Bush administration! If you can scare people and frame the debate in terms of imminent mushroom clouds and financial doom, it works to get urgent legislation through... to a point. This time, rank and file have stood up to the president and leadership of both parties to say "Enough is enough." Treasury spokespeople have cofirmed that the $700B figure was pulle dout of thin air as a number that would look large. Remember, the treasury secretary had the authority to rinse and repeat (i.e. sell from the asset pool and replenish with toxic waste until he hit the limit again) - this would have cost us a lot more than $700B people.

    FDIC chairperson Sheila Blair says the system is just fine. The capitalist system is finally destroying the bad apples. There's probably no one left who's too big to fail who is shaky any more. Yes, Main Street is going to see some pain. But we'll all be better off once we get the bad apples out.

    Finally, thanks to upcoming elections and sensible people phoning their representatives, our politicians have stood up to Bush & Co. Cowardice - not!

  • Report this Comment On September 29, 2008, at 5:26 PM, zbd wrote:

    I think I understand how we got here, but I sure don't understand the details of the problem, which means I don't understand how to solve it. Somebody has to step up and solve the problem. I think we also have to avoid letting anybody skate away with a fortune in taxpayer's money.

    That doesn't seem so hard, as a guiding principle. Perhaps if all the lobbyists currently in the building were shown the door, some progress could be made.

  • Report this Comment On September 29, 2008, at 5:34 PM, pmbarrett wrote:

    Ok all you cheerleaders, why do you think this "pig in a poke" went down in flames? Easy, the American public has no idea of what is in this bailout package. All we have been told is what we hear in bits and pieces from the media. Has any thoughtful politician gone on television and actually explained to the American public just what this package will do. NOPE! Why? Because they can't tell you. They don't even know what the scope of this mess covers and does not cover. You are not going to sell this crap to the main street if you can't sit down and explain to the average Joe just who and how people are going to benefit. Remember...who, where, what, why and how!!! The pols just can't understand that today people just don't trust their decision making abilities.

  • Report this Comment On September 29, 2008, at 5:35 PM, luscious25 wrote:

    i think we should cancel the election so these politicians can get off their ass and do their job this is not a democrat vs republican thing this is an american thing they need to unite as americans and represenatives of the people and come to an agreement on how to get us out of this mess.

  • Report this Comment On September 29, 2008, at 5:36 PM, oldpbass wrote:

    If the representatives' salaries and benefits were mediocre and they had no access to lobbyists, the vote would have been quite different.

  • Report this Comment On September 29, 2008, at 5:38 PM, oldpbass wrote:

    Regarding those who voted against this bill: On Nov. 4th you will think it's Guy Falk Day.

  • Report this Comment On September 29, 2008, at 5:43 PM, soumd wrote:

    I agree with you k,I wouldn;t support that bailout either. That's like asking the fox to fix the whole in the hen house. I've just seen the video taped of Barney Frank saying back in 2003, that there was no need for further oversight of the banking industry, when the Bush administration was calling for such. He along with others led the fight to defeat action. Now he, and Pelosi ayre screaming the loudest about the republicans not doing their job. Who's he trying to fool now? And how much has he been paid by the lobbiest? You think they thet may just b covering he's own a---?

  • Report this Comment On September 29, 2008, at 5:53 PM, hikerdude7088 wrote:

    A great read on this mess is Kevin Phillips, Bad Money. I think I have a better handle on what has happened and I am a scientist and not an ecomomist from reading his book.

    Why doesn't the big private equity companies take on the debt and risks?

    Here is where I see the blame.

  • Report this Comment On September 29, 2008, at 5:55 PM, CEEJEE wrote:

    Please, elected officials, stop standing around a microphone and a camera like a herd of cattle blaming everyone for not passing the welfare, I mean, bail out. Why aren't you at your desk working with your staff on a better program? If you know so much that you have time to complain about "the other guy" then you must have a plan. Why haven't we, your employers, heard about what you would do? Get off the microphones and tell us: "I will relieve the financial problems we , the people, are now facing." Then you can point fingers and tattle tale.

  • Report this Comment On September 29, 2008, at 5:56 PM, brian6string wrote:

    Seriously, fools. These same "masters of the universe" were on duty and let the economy get to the point it has. Ill-conceived housing policies ("goals") without a thought about the risk and potential economic impact are at the core of this.

    These guys have zero credibility for me to believe that they have a solution to this. On top of that, adding $1 trillion to the US economy will have a very predictable side effect: inflation. The one thing that's good about the economy right now is that inflation is relatively in-check.

    Sorry all, but those who made this mess will have to deal with the consequences. Sorry to Paulson's buddies at Goldman, but the citizens of the US aren't buying this load of malarky. Nor should we.

    Its patently unfair that Wall Streeters should get bailed out at the expense of those of us on other streets in the country.

  • Report this Comment On September 29, 2008, at 6:01 PM, hikerdude7088 wrote:

    soumd? Could you please tell me which Republicans were calling for more regulation? Who was in charge of Finance and Banking in 2003?

    Read "Bad Money" it is enlightning.

    Ron Paul and Bob Barr left the Republican Party for very good reasons.

  • Report this Comment On September 29, 2008, at 6:03 PM, trgeorge wrote:

    How can you call someone a coward if the Rep really did get votes 10 to 1 against? If anything you're the coward.

  • Report this Comment On September 29, 2008, at 6:29 PM, mberan wrote:

    I already emailed and called my Congresswoman. She's so out of touch, and trying to simply distance herself from the Bush administration now, after years of siding with it, she's costing us thousands in our 401K's.

    I'm officially in my "throw the bums out" mode now! Whoever is in, I'm voting them out.

  • Report this Comment On September 29, 2008, at 6:32 PM, blablabla102 wrote:

    why in hell is wall street getting the blame for this????? This was engineered by the banking industries( the fed and rothschilds) the congress took the muzzle of of the lobbiests and financiers years ago.Now that the financiers have run out of money to steal they try to take tax funds.Let the market weed out the crooks.Remember what mr.Keddedy said( it takes a crook to catch a crook) those who have been foolish will not survive.

  • Report this Comment On September 29, 2008, at 6:36 PM, radarlen wrote:

    Synonym for coward--politician of course!!

    Synonym for garbage--politician of course!!

    Synonym for excrement--politician of course!!

    You can substitute politician with investment banker and the formula still works

  • Report this Comment On September 29, 2008, at 6:57 PM, a65fc wrote:

    oldpbass; do you think Guy Falkes Day, celebrated on the 5th of November, the day after our elections, is a coincidence? Perhaps not this year...

  • Report this Comment On September 29, 2008, at 7:01 PM, soumd wrote:

    hikerdude.did u ask me who was in charge of banking in 2003? for a particular reason? The fact that I can't place a name to a face doesn't change the veracity of the previous statement. Neither does calls in 2001, and 2003 and before for more oversight of any less value because someone plagerized events already written at least 5 years earlier.

  • Report this Comment On September 29, 2008, at 7:01 PM, abshelby wrote:

    Does anyone out there know if the proposed legislation that was defeated in the House included provisions that would have freed up the credit necessary for small business operators to meet their pay roles?

  • Report this Comment On September 29, 2008, at 7:17 PM, plasticsguy wrote:

    No bail outs for anyone. Let the chips fall where they may.

  • Report this Comment On September 29, 2008, at 7:26 PM, a65fc wrote:

    "To Those Who May Be Listening (Patriot Act)"; that was metaphorical of course. No one here intends to blow up our Parliament.

  • Report this Comment On September 29, 2008, at 7:50 PM, bigdividends wrote:

    Maybe some people have forgotten politics. A representative represents his constituents at home. It is not being a coward to follow the advice of his/her constituents. The problem is that the leadership (both the white house and democratic leadership) could not sell this proposal to america.

    The reason they could not sell it, it is a bad proposal. If a company wants to raise capital, I am all for the government to loan them the money. But the shareholders lose their stake in the company. And one more thing, the company will need to pay back the loan. Also, those individuals, who basically brought this economy to its knees should be held criminally liable.

    You want to regulate the industry, fine do it. Make it that the only loans you can get for housing is 15 and 30 year loans. Ban the adjustable loans. Ban the subprime loans. Do not try to inflate home prices by allowing people who can not afford a piece a property to buy it.

    In the NFL, they have a salary cap to keep owners in check. By limiting the mortgage products, we keeping in check the general public. Will liberals like it. No, they will say you are keeping the poor out of fair housing (subprime). Will the conservatives like it? No, they will say the market should determine the product available to the general public (alt-A products that has destroyed the middle class).

    You want to figure out where property should be. Take the average price of a home sold in 1995 and muliply it by 3% annually (about the price of inflation). Here is the reality check. In the interior of our great country, we have hit near bottom on home prices. On the coast (re california, arizona, florida and north east) there is still a 20-30% decline that still needs to be factored in.

    Today was a scary day. Tomorrow it will probably not be better. But those companies that made bad decisions should fail. But buying up the bad debt is a bad idea. It is a proposal that needed to fail, even if we takes a major hit to our portfolios.

  • Report this Comment On September 29, 2008, at 7:55 PM, guayaquil wrote:

    Interesting that you didn't mention the courage needed to stand up for free market principles and vote against this proposal! It took more courage to vote on the principal of free markets and vote against this bailout than to vote for it. We may find ourselves with 20% unemployement without the package, but it takes a lot of courage to wait and see if it actually gets there......


  • Report this Comment On September 29, 2008, at 8:11 PM, bigdividends wrote:

    Agree with you Guayaquil. It took alot more courage to vote against it then vote for it. The market/ economy needs to clean itself out. A bailout only delays the inevitable.

  • Report this Comment On September 29, 2008, at 8:54 PM, TerryMKl wrote:

    I am uncertain, from a financial standpoint, the benefits of the proposed bill. However, I think passage may have gone a long way to allay the concerns of the average citizen. Too bad our Congress did not seek advice from some of the successfully run financial concerns. Candidly, I think many in Congress share culpability by encouraging GSE's, like Fannie and Freddie, to engage in the promotion of home ownership at the expense of sound lending practices.

    Notwithstanding the foregoing, I would characterize the Speaker of the House's comments, prior to the vote, rather indelicate.

  • Report this Comment On September 29, 2008, at 8:59 PM, dsing61 wrote:

    I'm for a rescue plan if it can do two things: restore confidence in the credit markets (affordable capital) and maximize purchase power of good assets left amid the ruins on banks' balance sheets. Don't break the backs of the down-home people who support this great country.

  • Report this Comment On September 29, 2008, at 9:55 PM, 123go100 wrote:

    if you need credit to meet your payroll , you need a new business plan and a concern banker. good luck. no bailout now or ever.

  • Report this Comment On September 29, 2008, at 10:15 PM, mdtopper wrote:

    bigdividends has it EXACTLY right.

  • Report this Comment On September 29, 2008, at 10:17 PM, mdtopper wrote:

    Guayaquil is also spot on

  • Report this Comment On September 29, 2008, at 10:20 PM, spiffyfooldude wrote:

    Is their any legal way to find out which of our Senators and/or Representives sold their stocks before voting their conscience or heart concerning the banking bailout? Or perhaps find out legally if any of them were the recipients of any 'special' gifts in the last ten days or so.

  • Report this Comment On September 29, 2008, at 10:29 PM, lowfiron wrote:

    I agree with Scott. I don't see how they can change the bill, no one wants to budge. The Republicans need to get out the lash like they usually do.

  • Report this Comment On September 29, 2008, at 11:16 PM, TradewindRider wrote:

    Cowards? With all due respect, Scott, what show were you watching today? Voting down that pile of crap was the bravest thing I've ever seen Congress do.

    The Republican representatives voted more than 2 to 1 against a plan created and pushed by a Republican administration. Instead of taking the easy route and being able to claim they'd done "something" so they could save their jobs come November, they stood up for free market principles and said no to a bill that would have stuck the government with the worst of the mortgage debt with very little oversight and even less accountability for those who got us into this mess.

    Does the financial sector need some sort of government support? Probably. But the taxpayers of this country didn't need this. We will not go to 20 percent unemployment overnight. There's time to put together a more rational and balanced plan.

    If only Congress had shown similar courage in 2003...

  • Report this Comment On September 29, 2008, at 11:26 PM, sb101cu wrote:

    See the movie, where the bi-partisan law makers and bankers have given the prognosis if not the diagnosis of things to come. Wait till 2040, when the social security and medicare goes bust. The financial crisis of today,in USA,is just the TIP of the iceberg. It is an irony, that the family unit (in USA) over the last three decade has gone SMALLER and the houses have gone BIGGER. Something to think


    The world is getting "flatter", and USA is losing is technological edge in the information age. The number of PHD'S of native citizens in computer science is is getting smaller, and those foreigners who do earn their PHD'S here are going back home or to Europe.

    The " BRAIN DRAIN" is more important than the "FINANCIAL DRAIN" in the longer term perspective, as Adam Smith said in "The wealth of the Nations", it is the people, the quality of human capital that is COMPARATIVELY more important than the financial and political capital. USA already has lost the political capital in the world, this is Bush's legacy

    I would love to hear the comments of others. Thanks

  • Report this Comment On September 30, 2008, at 3:47 AM, larn919 wrote:

    After reading most of the comments on this page, I can confidently re-affirm that America has learned absolutely nothing from the last eight years and is sorely deserving of everything that happens. The irony is that there is good coming from this mess. While America seems to be drowning itself in its own political and economic bile, the rest of the world is enjoying some redistribution of wealth and power. For the long term, I think the Bush presidency has had an opposite reaction to its intent. The very people we claim are "enemies" and benefiting, while our allies are sharing our "suffering". As a loyal patriot, I hope Americans wake up and do the right thing for a change. In the mean time I'm just another bear enjoying a ride on the options train.

  • Report this Comment On September 30, 2008, at 9:59 AM, rd80 wrote:

    The flawed assumption in favor of the bailout is that it will work. Yesterday, the Fed announce a $630 billion boost to the system and - bupkus.

    If the Fed's $630 billion didn't move the needle, what makes anyone think Treasury's $700 billion will do it?

  • Report this Comment On September 30, 2008, at 10:05 AM, SuperEmy wrote:

    Look at the bright side, stocks are down. Now is the time to BUY! Its a clearance sale.

  • Report this Comment On September 30, 2008, at 10:07 AM, vest0r2 wrote:

    Support what bill? A slightly different version of a corporate bailout? To hell with them all -- let it splat. You want a free market? Well this one's greased up and ready for you, enjoy your ride.


    Thanks to Pelosi, Reid, et al, the strong message from 2006 was ignored and now the voters IMHO are enraged as they have never been in my fifty-year lifetime.

    When do the suits start jumping from their corporate towers? That's something I'd like to see.

    "Oh, just give us a blank check and things will probably get better, I suppose..."

    I don't think so!

  • Report this Comment On September 30, 2008, at 10:12 AM, stoutjw22 wrote:

    I originally came to the Fool Website for new an inovative ideas, now all you care about is lining your pockets with half articles trying to sell your service. The Fool originally represented true capitalism but know you want a socialist fix to our problems. Free Market Capitalism, where business fail allow for ture success in the future. I hope these companies go down in flames and allow the more efficent and competative companies to rise as new leaders.

  • Report this Comment On September 30, 2008, at 10:15 AM, SuperEmy wrote:

    Look at the bright side, stocks are down. Now is the time to BUY! Its a clearance sale.

  • Report this Comment On September 30, 2008, at 10:37 AM, irvhomer wrote:

    I call shenanigans on the Fool!

    Why am I paying the Fool to send me emails encouraging me to support the further socialization of our country/economy? Does the Fool have something to gain from the bailout they’re not disclosing?

    The House republicans didn’t let us down. They actually stood up to corrupt politicians and honored their constitutional vows. All the representatives that voted against this bailout on the grounds of preventing further government encroachment into our markets deserve a very big thank-you for standing up to their own political party in the white house.

    Instead of vague statements on how bad it will be if a bailout plan isn’t approved, can anyone site specific data that will show what happens if the bailout is, or is not, approved. Why $700, billion, what’s the math behind that magic number? Will it really prevent the eventual correction this market so desperately needs? I doubt it, I suspect just like the initial attempts to contain the S&L crisis it will just delay and compound the problem. I believe there are people in positions of power/influence that have a lot to gain by the bailout, at the expense of inflation and/or deferred taxes on the rest of us.

    Hey, the Fed just pumped $636 billion into to market:

    … isn’t this going to solve the problem… why does the Fed need another $700 billion… how do I know they’re not going to announce another crisis 3 months from now for an additional $700 billion? Why should I trust the very people who caused this mess (both republicans and democrats) to fix it? Especially when their solution calls for more of my money and expanding their control over our markets.

    Shame on you Fool!

  • Report this Comment On September 30, 2008, at 10:44 AM, AxIt wrote:

    All these no-bailout comments seem to ignore the big picture that not many are actually highlighting.

    Are you an advocate of the free market principles at all costs? Fine.

    But there's not just US in the world.

    There is a lot of money outside the US that is just waiting for the american finance system to crumble to buy the pieces for nothing. So do you want, say, some Sovereign Fund to buy your finance, in the name of the free market? Your choice.

    Just begin to think how to adapt to the new guys that will manage your debt.

  • Report this Comment On September 30, 2008, at 11:02 AM, Lynn02 wrote:

    From this article/blog, and from observing the reactions yesterday on Wall Street during the House vote, there STILL even now seems to be a BIG disconnect here.

    Asking a guy who has probably already lost his home in a foreclosure, already probably lost his job, to foot the bill that will saddle him and his grandchildren...........

    Why is there any wonder/amazement that there is so much anger and resistance?

    My grandmother lived through the depression in an already deeply poor South. I asked what it was like then, and she said "we didn't know there WAS a depression since we were already flat broke anyway."

    The bottom line is: who has more to lose?

  • Report this Comment On September 30, 2008, at 11:08 AM, RaulChapin wrote:

    This is a very sad title and could easily damage the Fool reputation. Name calling is hardly a mature thing, and calling the reps who voted no cowards just because you personally think they should have voted otherwise is not the way to either gain respect, or convince those, who are against the bailout in principle, that it should be approved.

    The ONLY correct reason to vote yes or no is that the vote would represent the wishes of the electors, whatever that might be. It is called democracy... taking the right decission without regard for your voters (in this case, with regard to the "better of the Indurstry" etc) would be Fascism... I doubt any one wants America to become a Fascist country...

    Beware what you whish for... goes the saying.

  • Report this Comment On September 30, 2008, at 11:18 AM, dcrednek wrote:

    I just wish that more people -politicians, businesspeople, investors, and taxpayers- would focus less on the panic and more on the problems. Don't sell your home, don't sell your investments. Start spending less and saving more. Pay your mortgage in full and on time (if you have one). And until we, the people, see a more comprehensive, well planned bailout I say let Rome burn.

  • Report this Comment On September 30, 2008, at 11:27 AM, patdon wrote:

    No corporate welfare! If Joe Smith takes abnormal risk with his business and goes under, no one comes to save him with a handout. The REAL courage here was shown by those who voted no. Sheesh, I might even become a Republican now!

  • Report this Comment On September 30, 2008, at 11:27 AM, Imyourdaisy wrote:

    It is time to leave the denile behind. If our lleaders can not stop arguing politics and realise our nation is in real trouble. We need to come out of the fog and turn off our sports and entertainment chanels and begin to remove those people and deadwood that is, putting our nation and our futures at risk.

    Does anyone remember this is our government

  • Report this Comment On September 30, 2008, at 11:40 AM, bailmeout wrote:

    No. Leave the market alone. Quit your scare tactics. My 401K went in money market funds in December.The market is overpriced above $10K. Lets not artificially boost the housing and stock market. If these executives and directors of these companies are willing to put half of their net worth into their own company stock and leave it alone for 3 years, I am willing to help. This is money they have been draining from these companies anyway. Otherwise their company is not worth the loan if they do not even believe in the company enough to invest heavily themselves. Put the ball in their hands. Let the public see their greed.

  • Report this Comment On September 30, 2008, at 11:57 AM, northhill wrote:

    The citizenry smells a skunk. And they don't want to breed a bigger one. So long as you are confident it is the last one (lots of coumadin laced baits in the basement and attic), you can put up with the smell of the dead rat in the wall until natural rot runs its course. I so distrust rushed decision making.No one has gone on national media to explain just what will happen if a bailout does not take place or if a bailout is delayed until it has been thoroughly chewed over. If Paulson and Bush are so worried, why can't they explain in clear terms what will happen? No one has made a case for anything worse than a major business slowdown (6mo, 1 yr, 2 yr?) and a surge in unemployment. Where are the dispossessed going to live after foreclosure - on the street, with extended family, or might they rent back the house just repossessed? So long as there is shelter and food, unemployment is not as grave as it once was, given the disappearance of health insurance at work. The USA is such an innovative and vital nation. I cannot envision a credit crunch and a recession causing a permanent change in people's lives. That said, someone like me at retirement age who has not shifted 70% of his assets into bonds is going to experience some anxiety at least and significant long term contraction of my nest egg at worst.

  • Report this Comment On September 30, 2008, at 11:59 AM, Orotund wrote:

    Bad help is usually worse than no help.

    Those of you angry at anyone against the bail out seemed to have lost the ability to reasonable and logic thinking.

    Think about the following:

    1. Have you read the bill? If not, why? This is probably the most important issue to affect eveyone. Everyone needs to read the bill abd then ask questions before you make a decision. Otherwise, it's like when people do not vote yet criticize who is in office. This attitude is part of the problem, not the solution. Which are you?

    2. Ask yourself who you beleive the bail out would help first and how long it will take to get help to anyone with pending or existing bankruptcy? Now read the bill.

    3. Ask yourself about who is to sit on the various oversight committees. Do you care if many of the same people who are part of the problem sit on the review boarsds? Read teh bill.

    4. Ask yourself if you beleive there are caps on compensation for executives. Read the bill and you see this is another red herring.

    I do not believ it is cowardice to vote according to your morals and ethics; that takes courage. Some Democratcs well as Republicans did this.

    Yes, this is a mess; a mess decades in the making and every party with every politican and precious few exceptiions are responsible.

    Bad help is usually worse than no help.

  • Report this Comment On September 30, 2008, at 12:02 PM, tttucker wrote:

    What I want to know is this...How is it two weeks ago, congressional leaders were in uncharted territory, and today the Hill has a solution? Why do we look to these people as the experts on everything? They are not...and one bill will not solve the years of abuse and misuse within the financial markets. If anything, we need to look at why this happened, and how we can unleash the market to adjust itself. This is only going to be a band-aid, and will not solve anything. And some have commented on "do we want free market at all costs?"...Well, let's see the free market in action before we condemn it. From what I read, the free markets were not in play was Gov't manipulation and its strong-arm policies that caused this. If we find out what happened, reverse the legislation that caused this, the market will correct itself. I don't mind a market correction if it keeps Gov't. from scaring us into letting it takeover more than it needs to. We are only postponing something greater down the road.


  • Report this Comment On September 30, 2008, at 12:04 PM, SuperEmy wrote:

    They are not cowards they are heroes.

  • Report this Comment On September 30, 2008, at 12:16 PM, tttucker wrote:

    Amen on what SuperEmy said:


  • Report this Comment On September 30, 2008, at 12:16 PM, Infomak wrote:

    Is this the same Motley Fool that says we're better off doing our own investing instead of trusting big, bad brokers to handle our money? And now the Fool is telling us that we should trust the government to get us out of the mess that was created by the same financial elite the Fool actively belittles? So what do we do next year when the government asks for another trillion, and then another? And how is it that the Fool is cheering such blatant socialism... government coming in to fix all our problems? Something smells here...

  • Report this Comment On September 30, 2008, at 12:23 PM, EScroogeJr wrote:

    The opposite of a recommendation for this piece of bailout propaganda. Not only should this bailout be thrown into the dustbin, but the opposite bill should be passed: to double the real estate tax. 1-1.5% a year is way too low, especially in places like California where homeowners literally sit on millions of dollars of equity. Also, we must throw out that mortgage tax deduction.

  • Report this Comment On September 30, 2008, at 12:26 PM, ludwigws wrote:

    Here's my opinion why the bailout failed:

    1. The public does not want to pay for bailing out the greedy wealthy (read that "Overlords") who created this mess.

    2. The public knows that it doesn't help them if Congress passes the bill or not...the public is screwed either way.

    3. Because the public is screwed either way...they prefer that the bailout fail so that the government and financiers (read that "the wealthy") are screwed too...misery likes company.

    4. The public believes that if the wealthy accept their responsibility for the mess and make efforts to clean it up, without asking for taxes to pay for their greed, they will be showing themselves as real partners of the American public in this marvelous American fabric instead of "Overlords." Of course, if they don't, the "Overlords" will lose some of their wealth...but their pain will be much less than that of the workers...history shows that to be true.

    5. The American public today may be compared to Diogenes: "looking for honest men."

  • Report this Comment On September 30, 2008, at 12:34 PM, pondee619 wrote:

    "My mail is running 10 to 1 against"

    Are our elected officials supposed to REPRESENT our, the voter's, positions, or go out and DO WHATEVER they feel is proper?

    Do they REPRESENT us or do they RULE OVER us?

    In any event, we get the government we deserve. 90+% of the time a Congress person gets re-elected. Will probably happen again this year.

    "My mail is running 10 to 1 against" What do we expect a REPRESENTATIVE to do?

  • Report this Comment On September 30, 2008, at 12:42 PM, JHStrande wrote:

    Hikerdude, I think you are brilliant! Please run for office so i can vote for you : )

  • Report this Comment On September 30, 2008, at 12:43 PM, aamire wrote:

    I just want to tell people investors are also public.

  • Report this Comment On September 30, 2008, at 12:51 PM, ChargePositif wrote:

    The "current" problem here is the credit market. Just not the one on which people here are intently focused, although that one is part of the overall problem. The problem is the overnight lending between banks that drives the commercial paper lending. The banks will not lend to each other. Why not? They don't trust the other banks? Why don't they trust the other banks? Well it's likely due to the fact that the banks in the commercial paper business know that they have some seriously nasty skeletons (toxic derivatives) in their vaults, and they don't really want to step up to the plate and tell anyone how much.

    What's happening is that the banks have looked at their balance sheets and determined that they wouldn't lend to themselves in their current condition, and they are assuming (probably correctly) that the other big banks are hurting just as badly, or maybe even worse. Given that scenario it's no wonder the banks won't lend to each other, right? The current thinking is allowing the banks to "hide" their indiscretions behind the "we can't value these things" mantra.

    Well, gee, if the banks won't come clean enough for other banks to lend tho them, why the heck would I want to lend to them either? The American people who are saying no, and the Representatives who voted no, maybe, just oddly enough, are applying the same principles that lenders used to apply to people looking to obtain loans. Before we commit our hard earned dollars, can you afford to make the payments to pay back this loan? No? Too, bad. Have a nice day.

    Will I take a beating in the market? Yep. I'm cushioned a bit by the fact that I have some bearish options in my account, but not nearly enough to cushion it all. My concern is that the United States, and other so-called free market economies, have been tinkering around with this so-called "Free Market" for so long to push politically expedient positions and programs that we no longer have a very free market, and this "downturn" is just more evidence. If I was allowed to run my personal budget like the United States Government has run theirs (ours?), I know I'd have been in bankruptcy court a long time ago. Maybe that's almost starting to happen...

  • Report this Comment On September 30, 2008, at 1:21 PM, baekeland108 wrote:

    A short essay that gets quickly to the matter at hand. It is written in the voice of The Fool I have known since 1999 -- Bravo!

  • Report this Comment On September 30, 2008, at 1:45 PM, nbar wrote:

    I am proud of the representatives that have stood up against Bush, McCain and Obama's pressuring. I as a US taxpayer do not want my tax dollars going to bail out the companies that have made bad investment decisions. There are still many strong financial institutions that have not made these bad financial decisions. They will be able to take over these weaker companies at very good prices. They in turn will make alot of money doing it and there investors will be very happy.

    The question you have to ask yourself is would you as a private investor lend your money to these banks in the financial condition that they are in? The answer for me is and absolure NO! Why would I want my goverment and my tax dollars at risk on these companies especially if there is no equity stake and therefore no upside to the investment.

    Like everyone else my investments took a hit during this period but I am a long term investor. I believe that the US market is resilient and will overcome this crisis. I will be able to buy weekened financial institutions at very good prices and make money in the long run.

    To the author:

    You make no valid reason why the goverment should be inclined to bail out the financial institutions that are in trouble. You asume that the goverment official voting againsts the bill are a bunch of cowards without providing a reaon why. I think they are very brave going againsts the popular opinion of the news media, Bush, Paulson, McCain and Obama. The one voting for are the cowards beacuse they are caving to these idiots. And unlike you I give a reason as to why above.

  • Report this Comment On September 30, 2008, at 1:51 PM, Joelshann wrote:

    When I read this article, I immediately thought of canceling every Motley Fool interaction I have. Then I read the comments of my fellow Fools, and my confidence is restored. You guys nailed it--the People's House of Representatives have stood up and said no more to the massive devaluing of our dollar at the cost of the tax producers. I applaud them, and my fellow Fools, for holding to a view of government that says, "You serve us, not tell us what to do."

  • Report this Comment On September 30, 2008, at 2:00 PM, WilyInvestor wrote:

    Umm...I think some people have forgotten who is the boss in this country. We the people put OUR representatives in congress. I think the vote went the way it did because the men and women of this nation wanted them to vote that way not because they are cowards. We are their boss, so it makes sense they would vote for as a representative for once.

    As for trying to shove this socialistic bill down the taxpayer throats, I'll say NO THANKS :)

    To learn more about the socialistic cause to our current problems visit here:

  • Report this Comment On September 30, 2008, at 2:10 PM, carstenjansing wrote:

    This bill is not about a "Bailout of Wall Street", nonsense. It is about saving the american economy from a deep long recession like Japan (root: bad credit on bank sheets for a long long time = no lending) had and still has with years of no growth. I hope the best, but really fear the worst for US economy if the rescue bil lis not passed. And also in the greater place i fear for the free system of the West in that regard.

  • Report this Comment On September 30, 2008, at 2:18 PM, freemarketfool wrote:

    I for one am pleased that Congress didn't rush to pass a bill to "fix" this terrible situation. I don't disagree for a moment that something must be done - and soon - but rushing a bill through for something this devastating and far-reaching is like slapping a bandaid on a sucking chest wound. We have to do this the right way around, at least as best as we're able. Congress didn't say they won't do anything, they just said they're not going through with the first idea they were handed. They're already back at the table trying to sort this out. Other bills have been passed in other situations in fear and haste, and we've spent years cleaning up the messes left behind (Patriot Act, anyone?). As much as I distrust all politicians, I approve of their effort to do this the best they can the first time around.

  • Report this Comment On September 30, 2008, at 3:00 PM, fooldotcom76 wrote:

    I've lost repect for The Fool. You guys are not even self-made men. You could only start your business because you inherited a fat portfolio(It is in your book!) Your politics are bad.

  • Report this Comment On September 30, 2008, at 3:01 PM, fooldotcom76 wrote:

    A Congress That Can Say "No!"

    posted by John Nichols on 09/29/2008 @ 7:33pm

    Texas Congressman Lloyd Doggett, one of the few members of the US House with a steady track record of keeping his head at chaotic moments, was not impressed by the fact that the Bush White House and Democratic and Republican congressional leaders had come together to support a $700 billion bailout plan for Wall Street's worst players.

    "Like the Iraq War and the Patriot Act, this bill is fueled by fear and haste," declared Doggett, a former jurist who has a habit of keeping his head when others in the House fail to do so.

    What was different this time was that the populist Democrat with a record of casting votes that do not come to embarrass him, was on the winning side of the House division.

    Unlike 2001, when the White House and congressional leaders forged a bipartisan combination to pass the Patriot Act; unlike 2002, when the powerful players in the executive and legislative branches crossed party lines to form a united front to give President Bush unprecedented war-making powers, the fight over the bailout plan that was backed by President Bush, Vice President Cheney and the Democratic and Republican leaders of the House and Senate finished differently.

    In one of the last monumental votes of an era of legislative dysfunction, courage and prudence prevailed over fear and haste.

    The coalition that rejected the bailout bill by a 228-205 vote Monday was truly bipartisan.

    It was not made up of powerbrokers coalescing to evoke the elite consensus that once led another Texas populist-- Jim Hightower-- to suggest that "America does not need a third party. We need a second party."

    The 95 (mostly) liberal Democrats and the133 (mostly) conservative Republicans who blocked the rush on Monday to pass the bailout bill were the dissenters of both parties-- the outriders from the established order.

    They do not usually unite--although it has happened a few times in recent years on trade votes. And they do not usually hold together in the face of whipping--not to mention outright bribery--by party leaders.

    But this bailout bill was so poorly crafted and so misguided in its priorities that it welded together dissident Democrats and renegade Republicans to say "no."

    The debate was remarkable. Sometimes liberals sounded like conservatives. Sometimes free-marketeers came off as radicals. (Texan John Culberson mustered a populism few thought the conservative Republican had in him when he declared, "This legislation is giving us a choice between bankrupting our children and bankrupting a few of these big financial institutions on Wall Street that made bad decisions.")

    Ultimately, however, it was the word "no"--and the ability to utter it in the form of a roll-call vote--that united all sides. That and the threat of an election where voters may not be inclined to reward members of the House and Senate who seem to be more concerned about Wall Street than Main Street.

    Few of the free-market purists on the Republican side shared the objection of Congressional Hispanic Caucus chair Joe Baca, D-California, who said of the bailout bill, "There's nothing in here that guarantees new jobs, nothing that guarantees salary increases. And that's a huge problem."

    Few of the progressive Democrats who opposed the measure agreed with Michigan Republican Thaddeus McCotter, who worried that the government's entry into the marketplace might limit what he vaguely referred to as "economic freedom" – but what sounded more like survival-of-the-fittest capitalism.

    Yet, on Monday, urged on by two of the Capitol's more consistent dissenters, California Republican Darrell Issa and Ohio Democrat Marcy Kaptur--who developed something of a rogue coalition to whip the "no" votes--the outsiders briefly became the bosses of Capitol Hill.

    It may only have been one vote on one day. And the powers that be will scramble to reestablish their position.

    But Monday's rejection of a bad bailout offered an indication of the republic that might be – if members of Congress voted with the courage and the conscience that the founders intended when they imagined a chamber that was to be "the people's House."

  • Report this Comment On September 30, 2008, at 3:48 PM, wuff3t wrote:

    If the line "My mail is running 10 to 1 against" refers to messages received from voters, then I don't think you can accuse representatives of cowardice for voting in line with the wishes of their constituents. That's exactly what they are there for - to represent those who elected them, not ignore them.

    That isn't political expediency (i.e. I'll do what they want so I get their vote in November) - it's democracy working correctly.

    Having said that, I wonder why Congress doesn't just ask Warren Buffet to step in and construct a solution? If anyone's going to inspire confidence in the market/economy I think Buffet has more chance on his own than every politician in the world combined. And he's achieved just about everything one person can in their lifetime when it comes to investing, so why not ask him to overcome the biggest challenge of all - preventing a worldwide recession?

  • Report this Comment On September 30, 2008, at 4:44 PM, burneb43 wrote:

    One of the surest signs of a scam, or at least a really bad deal, is the old pitch of "you must act NOW, and SIGN today" (or else you might have time to figure out the load we're trying to sell you).

    Bush's original plan was a travesty, the current hash is somewhat better, but not near good enough.

    This is about buying a hastily cobbled-together "solution" from the crooks, greedheads, and bumblers who got us into this mess. We need to hold out for a better deal that actually stands a chance of the taxpayers getting some of the bailout money back eventually.

  • Report this Comment On September 30, 2008, at 5:49 PM, LouThomas wrote:

    So, members of Congress who listen to the overwhelming demands of the people they represent are "cowards." How long have you had this hatred of democracy, Scott?

    And, according to you, our "outgoing president and Treasury secretary" "have no significant future political skin in the game." I guess the key word here is "political." Because you certainly must be aware that Henry Paulson is the former head of Goldman Sachs, which definitely has a mortal stake in the outcome of this major ripoff of the taxpayer. You probably don't think of that as "political," but some of us have a broader definition of politics that includes that kind of self-interest, especially when it is projected into the political arena.

    And, you haven't said a single word about *why* this bailout is a good idea for the economy. Just that everyone who is against it is a coward for listening to the citizens whose money is at stake, and they had better start listening to Bush and Paulsen, who played a major role in creating this mess, and just give them the money to "get this done." Your "article" is just one big rant with no information. How long have you had this hatred of journalism, Scott?

    We do need credit, but the problem is that this bailout will not provide any. The money of the bailout will be swallowed by the banks that bought the notorious, and now-worthless, securitized debt instruments, and then they will howl out for more and more. According to some estimates, there is as much as $5 trillion of such garbage to be sopped up, not 700 billion. Little, if any, lending to the real economy will result from this bailout.

    My suggestion would be to use the 700 billion to directly inject money into the real economy from the bottom, not pour it into the giant dry bankers' sponge at the top and hope for a little to drip over the edges.

    We need to save government money for stimulus programs like extended unemployment benefits, job retraining, small business loans, student loans and grants, and so on. Pouring more into the bottomless pit of buying worthless securities so that investment banks do not have to acknowledge their own insolvency is a recipe for even greater disaster. Not that there will be no disaster without the bailout - there will be disaster either way. But it will be a lot worse with the bailout than without it, because with it government will be too broke to anything truly constructive.

    What was it that Grover Norquist said about government: make it small enough so that you can drown it in a bathtub. Those supporting this bailout must have the same impulse toward destroying government, but I can tell you that government is what got us out of the last depression and so we had better defend what is left of it while we still can.

    150 leading economists have signed a letter to Congress against this bailout:

    Some interesting insights into the politics of the bailout can be found here:

  • Report this Comment On September 30, 2008, at 7:03 PM, mcdiv wrote:

    TMF is just repeating the same hysterical platitudes we read everywhere.

    I'm incredibly disappointed.

    Funny, TMF took down two of my previous posts regarding this abysmal blog post. All I did was mention the above and point to another approach to this problem. My second post was a civil response to a rudely phrased question by another member. So TMF took down all of my posts. Thanks TMF. You can stuff it.

  • Report this Comment On September 30, 2008, at 8:37 PM, SubstanceP wrote:

    Shame on you Schedler! Our REPRESENTATIVES stood up and spoke the will of the people and you call them cowards. Pathetic.

  • Report this Comment On September 30, 2008, at 10:45 PM, skypilot2005 wrote:

    I agree with SubstanceP. Schedler has been sold a bill of goods by the Democrats & Bush.

    He fails to back his position with "Foolish" reason.

    He should be leading the debate with a responsible alternative to this unacceptable bill.

  • Report this Comment On October 01, 2008, at 12:39 AM, southard wrote:

    This article so way way off base. I think it took a lot of courage for Republicans in the house to vote against the bill. Everyone was basically convinced (even the American people who didn't want the bail out) that without it the stock market and the financial companies would suffer. Democrats who voted against it probably were helping themselves since the financial troubles always favor the hand me out liberals. The point is that if your principles are small government, fiscal conservative principles, and free markets this was a tough vote that went against overwhelming media propaganda that bail out or get a great depression. People were even yelling about the crashing market during the vote. Courage is what it took to defeat this bad bill. You may disagree with the outcome but it wasn't because of cowardness. Obama has proven to be much the coward...his only comment is I hope it passes soon. Like everything else who cares about what passes only that it sounds good. That is cowardly. Even McCain showed some courage by trying to take the bull by the horns. Didn't work but at least hes doing something. Obama is just a rich socialist who has never gotten his hands dirty doing anything. I doubt that guy has ever even mowed a yard.

  • Report this Comment On October 01, 2008, at 12:39 AM, southard wrote:

    This article so way way off base. I think it took a lot of courage for Republicans in the house to vote against the bill. Everyone was basically convinced (even the American people who didn't want the bail out) that without it the stock market and the financial companies would suffer. Democrats who voted against it probably were helping themselves since the financial troubles always favor the hand me out liberals. The point is that if your principles are small government, fiscal conservative principles, and free markets this was a tough vote that went against overwhelming media propaganda that bail out or get a great depression. People were even yelling about the crashing market during the vote. Courage is what it took to defeat this bad bill. You may disagree with the outcome but it wasn't because of cowardness. Obama has proven to be much the coward...his only comment is I hope it passes soon. Like everything else who cares about what passes only that it sounds good. That is cowardly. Even McCain showed some courage by trying to take the bull by the horns. Didn't work but at least hes doing something. Obama is just a rich socialist who has never gotten his hands dirty doing anything. I doubt that guy has ever even mowed a yard.

  • Report this Comment On October 01, 2008, at 1:26 AM, SRVENK wrote:

    It is funny that people can't see a 777 drop for a 700 billion non-bailout is either the hedge funds' sweet revenge or plain calamity.

    The whole idea that the entire economy can be fixed by fixing the bond differentials alone is ill-conceived.

    The collapse of credit is dis-concerting to everyone. But when did everyone think it was supposed to be everlasting?

    And as there is no free lunch, the only way credit eventually ends is with defaults. Now we are there.

    The simplest solution is to drag most of the 11,000 odd banks and merge them forcibly into 20-50 banks in all. That will solve all these problems. Why does the country need 11,000 banks and 50,000 credit card issuers?

    Time to consolidate, and fast.

  • Report this Comment On October 01, 2008, at 2:37 AM, Morawk wrote:

    Most of the Americans against the bailout have no idea what the hell is going on. This is not a bailout, it's an investment. The government is not giving out free money, it's buying assets at fire sale prices. These assets could possibly turn profits someday.

    Detractors of the bailout like to emphasize that it's $700 billion of our taxpayer money. Well, yeah it is, so what? They make it sound as if we're literally going to start seeing garnishments in our weekly paychecks as soon as this bill is passed. Helloooo, people! The current US defecit is about $60 trillion dollars. Before this financial crisis or bailout was ever a problem, I bet no one, in their everyday lives, ever realized or paid much attention to how their "taxpayer money" was paying off this $60 trillion dollar debt. You work, you get paid, you pay your taxes. This $700 billion bailout is a small fraction of what we Americans already owe. Sounds alot by itself. Not that much in the big picture. Really not that much to possibly save the backbone of our financial system (banks) from imploding.

    It's easy for people who complain and oppose the "bailout" sitting at home watching the TV and hearing "$700 billion" tossed around here and there. It's easy to stick to "tough love", and free markets, capitalism and scream marxist/socialism when the crap hasn't hit the fan yet, but trust me, people will change their tunes when it actually affects them. Easy to talk tough until you actually get affected by it.

    When people aren't able to get reasonable lending anymore, or are unable to secure credit lines for their businesses, unable to get loans for college, start losing their jobs because their company cannot get financing for daily operations...their tune will change and it will already be too late.

  • Report this Comment On October 01, 2008, at 6:05 AM, rider00 wrote:

    Why is no one in the media mentioning the prior examples of this situation that serve as our best case studies? The Japanese had a massive real estate bubble burst in 1990 and all their financial insititutions were at risk of failing with massive bad loans. Their recession lasted for 15 YEARS because they continued to prop up failing institutions. The US governemnt, including people like Paul Volker, beat mercilessly on the Japanese to LET THE BANKS FAIL! We pressed them hard to suffer through the pain instead of prolonging it with govt subsidy. (Read the book "Saving the Sun" for reference) Now, no politician is willing to say that we must take our own medicine and suffer through the pain.

  • Report this Comment On October 01, 2008, at 7:54 AM, DucatiM900 wrote:

    Morawk must be both a liberal and a socialist. Why does he think the government can buy these "ASSETS" at fire sale prices and make money on them. The government screws up everything, and by the time they create all the infrastructure to oversee this operation, the people will be screwed again.

    If these assets were truly marketable, why aren't other institutions buying them up? Why can't banks sell NOW the good mortgages they have to increase their own money problems. This stinks like a fish wrapped up in used toilet paper. I read the bill and it gave Paulson complete authority over how this will go down. That's bad. Bailing out pension plans is another BAD idea.

    Wait until the Credit card companies start getting the bankruptcies from individuals who can't pay their bills. That bailout could be in the Trillions. The Market should fix itself, and it shouldn't be a bailout all at once, it should be on an as needed basis. Let the markets buy and sell off first, and then we see how much of our tax dollars go to keep them afloat.

  • Report this Comment On October 01, 2008, at 11:09 AM, billdick6 wrote:

    Paulson’s plan will fail because it treats only a symptom and not the cause of America’s financial illness, which is: Too many were persuaded to buy more house than they could afford by irresponsible, greedy writers of innovative new mortgage types. Everyone was operating on the “greater fool” theory and assuming the un-payable mortgage would clear later when the house was resold.

    Un-payable mortgages were a criminal Ponzi scheme, designed to collect large bonuses.

    Prosecute the writers, do not reward them. Prevent reoccurrence, do not make it certain.

    A real cure must:

    (1) Restore liquidity to financial system. (By insuring all mortgages will be paid.)

    (2) Get Joe American into housing he can afford.

    (3) Transfer real assets, not toxic trash, to Uncle Sam.

    (4) Not significantly increase US’s already excessive debt.

    (5) Prevent repetition of the problem.

    This is possible as follows:


    U.S.'s money automatically buys houses at foreclosure auctions if highest bid is less than the mortgage debt, not toxic trash from banks. The banks are helped as they know the foreclosure sales will cover the mortgage so this is an anti-dote to the toxic poison they now hold. I.e. from POV of the banks, not one piece of this paper is worth less than face value. Everyone knows this so, it becomes a marketable security. If the bank needs more liquidity, they can sell it and make new loans. Goal (1) accomplished.

    The ex CEO of Goldman Sack’s plan helps GS and others holding toxic loans by transfer of them to Uncle Sam. It just sticks Joe American with the toxin but is no anti-dote for the poison.

    Here is the anti-dote:

    The government buys partial ownership of EVERY foreclosed house, if it would otherwise sell for less than the mortgage. Joe may remain in the house for up to one year with deferred interest bearing rent. During that year, Joe must find a home (house, apartment or trailer) he can afford, at least to rent. Then, when opportunity exists to recover the price paid, Uncle Sam sells his ownership share of house, which may be more than the price paid as this plan is taking houses off the market. - Keeping price of houses from falling every month as they are now, and will continue to fall under Paulson's plan, which only aids the banks, not the real-estate industry or evicted Joe. When Joe gets out from under some of his debt, he begins to pay his deferred months (<13) of rent and interest, over 5 years if need be.

    Goals (1, 2, & 3) accomplished.

    Goal 4: Instead of an immediate $700 billion increase in US’s debt ceiling, banks send bills to Uncle Sam for ONLY the DIFFERENCE between the unpaid mortgage amount and the price some buyer paid at public foreclosure auctions as they occur, if sales price was less than the mortgage still due. Uncle Sam then receives that fraction of the house’s title in exchange for paying this difference. Individual auction sales are semi-automatic with bank processing all transactions details but periodically inspected. I.e. US is a “silent partner” (minority owner or land-lord renting*) for a few years, but investors may buy the US’s share of title anytime provided US profit equals what US would have received in interest by investing in 10 year Treasury bond, as well as full repayment of the “difference funds” provided initially.

    As individual auctions are expensive, many “under water” owners may avoid foreclosure auctions and simply transfer the entire title and debt to US (FHA?) for later sale** in collective auctions. By avoiding auction expenses, Joe hopes to get small check later, if the house sells for more than the mortgage debt. If house is re-possessed by the bank and not sold at auction, the bank may also transfer title to US and receive the unpaid mortgage due. In any case, bank receives full repayment of the mortgage due.

    Goals (1) & (4) accomplished.

    Goal 5 may require new legislation and/or adequate enforcement of existing laws; however, criminal miss-representation by greedy creators of these inventive new mortgage types should not go unpunished. Bonuses they received for writing and selling these trouble making mortgages should be return 100% with interest to their firms (golden parachutes of their now retired CEOs included). If they cannot afford to do so, some of their assets should be ceased. They also may transfer titles to US (FHA?) to avoid extra cost, criminal prosecution and probable*** jail time. It is a well accepted principle of law that criminals are not allowed to keep the loot they took. Ponzi schemes are illegal and these greedy CEOs should have known that was what they were doing. Do not let them now pass their toxic trash to Joe.


    *If Uncle Sam receives a fraction of the title of house sold at auction, and it is rented by buyer, Uncle Sam receives that fraction of the rent and pays none of the maintenance expenses.

    ** Joe American remaining in “his house” after US (FHA?) holds the entire title via "rent to buy" instead of sale is best option, if Joe can afford it. Many who cannot pay their old mortgage will be able to, especially if they still have any equity in the house. Effectively, the US (FHA?) grants Joe a new mortgage with principle equal only to the old unpaid balance.

    “Better” socially and economically because Joe as renter will not damage “his house.” - That is hard to control. - It is very tempting (to a transitory renter) to sell the dishwasher etc. during the last month of the rental contract, if he is planning to move to another house. That renter can always claim it was broken and did not bother to tell Uncle Sam. - "I just discarded it as the repair man said it was not worth fixing." etc.

    Second reason "rent-to-buy" is better is it eliminates the sales commission the real estate agents would take and other title transfer expenses. (US got title cheaply directly from Joe without auction expenses. - No one can claim US does not own the house, even if not recorded at the local court house etc. but it should be. The county can contribute by making no charge to US for recording in land records as this plan helps hold up their assessment based taxes on the house.)

    ***Joe American is likely to be part of the jury.

  • Report this Comment On October 01, 2008, at 6:32 PM, ZOLE wrote:

    Take a look at how those up for re-election in November voted on this measure. Looks to me like they voted "job security". Had they exercised some leadership in the matter the Senate would not be getting ready to duplicate their effort. Also, you "Free Market" folks might want to at least question your mantra - and whether that economic philosophy in a perfect world (academia) really works 100% of the time here on earth. Next time you are flying at 27,000 ft. with your knees in your face and think about the maintenance of the aircraft, shout out "deregulation - I love it!"

  • Report this Comment On October 02, 2008, at 2:03 AM, EinC wrote:

    You want courage? How about standing on the basic principals of what is really right and riding that principal down to the ground with the economy in flames?

    You think that doesn't take courage?

    Yeah that's frightening, you bet it is, and it's also the most responsible thing to do. An extreme measure for an extreme condition. Think of it as economic chemotherapy.

    It's already scaring the pants off of the lending market at the mere mention of there not being a bailout!

    When this correction happens, whether soon or eventually, the economy will be upside down for awhile. Business and people and Government will have to adjust as never before. It will take courage! And soon we will all have the rare insight of knowing true value.

    All along we will be making improvements and rebuilding our future.

    If you listen closely, the people with true courage-- The people that care more about their country and its long term future more than they fear their immediate discomfort-- can hear the wisdom of Thomas Jefferson warning us--

    "I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."

    And Andrew Jackson's eerily appropriate message could be heard in Congress today --

    "Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin!"

  • Report this Comment On October 02, 2008, at 3:02 PM, DudeYes wrote:

    I'm reminded of the line from "Cool Hand Luke", even more apropos due to the recent death of Paul Newman, where the captain replies" what we have here a failure to communicate" after he has just ordered the guards to pummel Luke (Newman) into submission. In this case the captain is the Bush administration while we, the American taxpayers, take the persona of Luke.

    We've been beaten into submission by the disastrous policies(lax/nonexistent regulation of credit and securities markets) of the current administration and now they want to dictate to us how it is they will "save us" by in essence giving a free "get out of jail card" to all the lending institutions who got us here in the first place, while doing absolutely nothing to fix the fundamental problem - the derivatization and securitization of mountains of toxic mortgage debt.

    How do we know the current plan will even work?

    Now that the Senate has loaded heaps of new pork(one example - on one page there is a proposed tax exemption for makers of wooden arrows - I'm 100% serious) and earmarks on the current bill, I see no hope for a true solution - just politics as usual.

    This country is in a for a huge reckoning and its not going to be pretty at all.

  • Report this Comment On October 02, 2008, at 4:22 PM, Elerra wrote:

    To those who "thanks" those politicians to stand up to the Bush administration tactics better hope that her/his employer can issue those paychecks. This is NOT about wall street. It is ABOUT the small businesses out there that depends on the "big" shot to make it. This bailout is NOT FREE money given to this companies. It does come with a price. I think that is the one thing that we must understand. Lets take medicaid, and welfare. We PUT a LOT of money to this programs every single year to take care of the poor. What do we get in return? Oh, an increase population of the poor, increase expenses in medicaid. NOW THAT IS BAILING OUT. I hate to sound insensitive but we need to understand the TRUE cost of not passing it. Was it better NOT bailing out these companies for $700 billion? and allowing one TRILLION dollars off the american peoples wealth? NOW, where is the logic in that?

  • Report this Comment On October 02, 2008, at 4:27 PM, Elerra wrote:

    ANYBODY that voted nay on this bailout the first time should NOT be reelected and ANYONE who contributed to its demise should not be reelected. In this case, Pelosi and half of the morons in the democratic party. This is NOT a time to blame everyone under the sun. Remember, this "easy" credit started in the clinton administration to help those in "middle class" and the "poor." To allow them to achieve the american dream. Well, you know what, sometimes owning a home is NOT the best thing. Look at us now.

  • Report this Comment On October 03, 2008, at 8:03 AM, LANORTH11 wrote:

    The Article is basically correct. A Bill is going to happen - so set your energy toward making the bill effective. Sniping at the process is not productive unless you show realistic alternatives or enhancements to the current proposal.

    The morons are not enhancing the bill, they are buying votes with pork. If all the snipers focused on that reality, we might still get a good bill. A good bill does the following:

    (1) Makes the bill an outline for an investment - not a give-away.

    (2) Keep the Politicians away from the assets

    (3) Does not mix this with other matters (such as AMT, etc....)

    Use DIV as the asset value tool. Get warrants, get share of tax loss value as kickers. Cull Mgmt/Directors . Buy Pref or Sen Sub to complete recap.

    Advocate homeowner refinance and tax credits for new buyers.

  • Report this Comment On October 05, 2008, at 2:09 AM, MSmailbox wrote:

    I've had it with both major parties... It really doesn't matter, which one that I belong to, because they are just different sides of the same coin. I've always been disappointed when I trusted either one to change anything, which I was concerned about. So, rather than allow my 1 vote to go to waste, I intend to join one of the minor parties; Libertarian, Independant, or Green, I'm not saying. My 1 vote will have a much greater affect, in a smaller pond. I'm not going to sway the election, so I might as well go with the group that best represents my beliefs and views. Granted, I won't be able to say that I voted for a winner, but I'll have a much greater impact, by voting my conscience and not playing the Demo/Repub political game.

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