Everything You Want to Know About the $700 Billion Plan

We've had a rough month.

In case you just woke up from hibernation (welcome back, by the way), here's a quick recap of the events that have crippled our financial and credit markets and forced the government's hand ... all in the last month:

  • Fannie Mae (NYSE: FNM  ) , Freddie Mac (NYSE: FRE  ) , and AIG (NYSE: AIG  ) were all bailed out by the government, while Lehman Brothers was left to fail. Just three weeks ago, we called these events the biggest financial story of the past 50 years.
  • Washington Mutual (NYSE: WM  ) was seized in the largest U.S. bank failure ever and handed over to JPMorgan (NYSE: JPM  ) .
  • The government agreed to backstop Wachovia's (NYSE: WB  ) loan portfolio to speed a sale to Citigroup (NYSE: C  ) . A few days later, Wells Fargo trumped Citi's offer and required no government backstop.
  • The stock market was sent into hyper-reactive mode, spurring ridiculous day-to-day volatility. The VIX, or Volatility Index, hit its highest level ever.
  • We both cried. On more than one occasion.

The financial markets have been especially volatile this past week, as market participants wondered if U.S. government legislation would come in to shore up the credit markets. The plan, led by Treasury Secretary Henry Paulson, asks for -- cue Dr. Evil impression now -- $700 billion to buy the more toxic assets from the Wall Street balance sheets.

The $700 billion bailout plan is by no means an act of charity; this money will be invested, not spent. These assets would not be value-less (in fact, it's possible the government makes a profit), but it could take years to unlock their worth for the American taxpayer.

The ramifications of not passing this legislation are serious. Credit markets will freeze, businesses will take a hit, and, most of all, consumers will be pinched.

Problem is, the ramifications of passing it are serious, too. (Rock, meet hard place.) There was a loud uproar this week from Main Street over this legislation: about the piling on to our national debt, about further devaluing the dollar, about increased governmental intervention in the private sector.

Even we Fools disagree vehemently on which is the right course of action. Heck, we can't even agree on whether it should be called a bailout, a rescue plan, or a stabilization necessity.

To help you figure it out for yourself, we've put together our best thoughts from both perspectives. Read below and educate yourself, Fool!

Understanding the Bailout
Morgan Housel: "What Part of the Bailout Plan Did You Miss?" (Sept. 30)
Morgan Housel: "National Debt: The Race Toward $10 Trillion" (Sept. 30)
David Forrest and Bill Mann: "Fool Blog: No Depression? Really?" (Sept. 30)
David Lee Smith: "Some Tough Questions on the Bailout" (Sept. 23)

The "For" Argument
Morgan Housel: "Market Meltdown: What Happens From Here" (Sept. 30)
Anders Bylund: "How to Be Finnished With This Crisis" (Sept. 30)
Morgan Housel: "The Bailout: Myths, Half-Truths, and Inconsistencies" (Sept. 29)
Scott Schedler: "How We Can Fix a Crisis We Did Not Create" (Sept. 26)

The "Against" Argument
Alyce Lomax: "Fool Blog: 6 Thoughts on the Bailout Buzz" (Sept. 30)
Alyce Lomax: "Bailout: The Sucker Punch" (Sept. 25)
Chuck Saletta: "What This Bailout Means to You" (Sept. 22)
Alyce Lomax: "Fool Blog: Paulson's Mother of All Boondoggles" (Sept. 22)

You Chime In!
"Fool Poll: How Should the Senate Vote?" (Oct. 1)
"Fool Poll: Do You Agree With the House's Vote?" (Sept. 29)
The Paulson Plan Discussion Board

Neither Anand Chokkavelu nor Brian Richards owns shares of any company mentioned. JPMorgan is a Motley Fool Income Investor selection. The Motley Fool has a disclosure policy.


Read/Post Comments (51) | Recommend This Article (21)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 02, 2008, at 2:55 PM, dirsin wrote:

    Per your definition, AIG did not receive a "bailout." It is strictly a loan that AIG intends to pay in full with interest.

  • Report this Comment On October 03, 2008, at 10:34 AM, Chazzzman wrote:

    Washington is not the problem. Look around you.

    You'll see a major portion of the US population voting but can't be bothered to find out if a candidate is lying to them, misleading them, or just pandering to (and stirring up) their fears and emotions.

    Until Americans, as a group, stop voting for whoever makes them 'feel good' we deserve exactly what we get.

    When I question why we have a government that is so grossly incompetent and self-serving, I realize that we got exactly what we asked for.

    If we wanted something different, it would be different. Sadly, smart people know they're smart; dumb people don't know they're dumb.

  • Report this Comment On October 03, 2008, at 11:05 AM, scollins1225 wrote:

    And Wells Fargo side steps Citigroup and attempts to snatch Wachovia...

    How true Chazzzman... "we get the government we deserve".

    No one will make the changes needed to fix the crisis because it doesn't serve their main goal - which is for those in power, want to stay in power. Any tough changes mean they lose their re-electibility, their golden ticket.

    TERM LIMITS for all. Stop passing the debt down to future generations. What happens with $60 Trillion of entitlments (Social Security, Medicare, etc.) come due... how will this country be able to pay for anything else? This house of cards will collapse.

    FIX IT NOW!!!

  • Report this Comment On October 03, 2008, at 11:28 AM, davidyat wrote:

    This was sent to me by a friend. Read it carefully and remember it. It's the progression of Democracy from bondage and back to bondage.

    From Bondage to Spiritual Faith

    From Spiritual Faith to Great Courage

    From Great Courage to Liberty

    From Liberty to Abundance

    From Abundance to Complacency

    From Complacency to Apathy

    From Apathy to Dependency

    From Dependency back to Bondage

    A Democracy will prevail until the populace learns that they can vote themselves entitlements. This leads to Governmental Fiscal Irresponsibility. And this leads back to bondage.

    LOOK FAMILIAR?????????

  • Report this Comment On October 03, 2008, at 11:34 AM, NSK12345 wrote:

    Dumb,stupid,fools-the public.

    Paulsen and the boys are making money hand over fist-they scared the inept Congress and they will probably pass another terrible bill.

    The market is rising now today, but will cave when the specifics come out-forget the pork-that white meat will spoil and it is a tiny part of this bill.

    We have no leaders, just followers-the country is 300,000,000 sheep who are following egoistic and power and money

    hungry non-leaders.

    The public was never smart and will not smarten up.

  • Report this Comment On October 03, 2008, at 11:35 AM, cindy10006 wrote:

    This is what my Senator wrote to me word for word, Quote-Unquote.

    Thank you for contacting my office regarding the financial rescue legislation. I appreciate your views on this matter.

    I reluctantly supported this package because the failure of Congress to act would run the risk of dire consequences, including an economic downturn which could cause more foreclosures, jeopardize retirement accounts, and further restrict credit which is necessary for small businesses to operate. I am philosophically opposed to bailouts. I think that when you have Wall Street entrepreneurs who take big risks to make big profits and they go sour, they ought to sustain the loss themselves and not look to the government for a bailout which ends up in the laps of the taxpayers. However, I supported the plan to avoid economic disaster that would extend well beyond Wall Street.

    From the outset, I cautioned against Congress's rushing to judgment. When the initial proposal was made in mid-September, I wrote to Majority Leader Harry Reid and Republican Leader Mitch McConnell by letter dated September 21, 2008 urging we take the time necessary to get the legislation right. By letter dated September 23, 2008, I wrote to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke asking a series of questions which have not yet been answered. Then by letter dated September 27, 2008, accompanied by a Senate floor statement, I made a series of suggestions to the executive and legislative negotiators. Again, there has been insufficient time for a reply. Copies of these letters are available on my website: http://specter.senate.gov.

    Whenever we deviate from regular order which has been developed during more than 200 years of serving our country very well, we are on thin ice. On regular order, the legislative process customarily begins with a bill which members of Congress can study and analyze. After the legislation is in hand, there are hearings with proponents and opponents of the bill and an opportunity for members to examine, really cross examine, to get to the heart of the issues and alternatives. Regular order calls for a markup in the committee of jurisdiction going over the language line by line with an opportunity to make changes with votes on those proposed modifications. Then the committee files a report which is reviewed by members in advance of floor action where amendments can be offered and debate occurs. The action by each house is then subjected to further refinement by a conference committee which makes the presentment to the President for yet another line of review. The process used to finalize this legislation drastically shortcut regular order.

    The legislation passed by the Senate is enormously improved over the first Paulson proposal. The $700 billion is not to be authorized immediately, but instead there are installments of $250 billion, $100 billion at the request of the president and $350 billion more subject to congressional objection, although the latter phase may be unconstitutional under INS v. Chadha, which requires following regular legislative process with passage by both houses and Presidential approval to overrule Presidential action and perhaps inferentially legislative conditions. For protection of the taxpayers, the proposal contains a provision that if the government does not regain its money after five years, the President would be required to submit a plan for compensating the Treasury "from entities benefiting from the programs." While that provision is a far way from a guarantee or even assurances that such recovery legislation would be enacted, it gives some important comfort to the taxpayers' position.

    There are provisions for multiple layers of oversight including a Financial Stability Oversight Board that will meet monthly to oversee the program. The Treasury Secretary will be required to report to Congress on a regular basis on the actions taken, along with a detailed financial statement. These reports will include information on each of the agreements made, insurance contracts entered into, and the nature of the asset purchased and projected costs and liabilities. Additional oversight will be provided by the Comptroller General (reports to Congress), a new Inspector General (audits and quarterly reports), a congressionally-appointed oversight panel (market and regulatory review, and reports to Congress on the program and the effectiveness of foreclosure mitigation efforts), and by the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) (cost estimates). A report will be required from the Secretary of the Treasury with an analysis of the current financial regulatory framework and recommendations for improvements.

    There are substantial limitations on having benefits for entities which created the problem and limitations on executive pay. In cases where financial institutions sell troubled assets directly to the government with no competitive bidding and where the government receives a meaningful equity position, the legislation states that, until that equity stake is sold, executives would not get incentives "to take unnecessary and excessive risks" and would have to give up or repay bonuses or other incentives based on financial statements that "are later proven to be materially inaccurate." The bill also would prohibit "any golden parachute payment to senior executives."

    The legislation is less stringent in provisions for financial institutions that sell their assets to the government through an auction. Such provisions would apply only to companies that sell more than $300 million in assets and would subject companies and employees to extra taxes. Corporations would not be able to deduct any salary or deferred compensation of more than $500,000, and top executives would face a 20% excise tax on golden parachute payments if they left for any reason other than retirement. In evaluating limitations on executive salaries, it is relevant to note that the Institute for Public Studies found that chief executives of large U.S. companies made an average of $10.5 million last year. That is more than 300 times the pay of the average worker.

    The final proposal does provide for debt insurance, as advocated for by House Republicans, but leaves it to the Secretary of the Treasury to utilize that approach so it seems unlikely that it will be implemented in light of the fact that Secretary Paulson has bluntly stated his disagreement with it. Had there been floor amendments, Congress could have structured standards for utilization of debt insurance.

    Had we followed regular order with an opportunity to propose amendments, consideration could have been given to my proposal, S.2133, which would have authorized the bankruptcy courts to restructure interest and scheduling of payments. The so-called variable rate mortgages have confronted many homeowners with the surprise that original payments, illustratively, of $1200 a month were soon raised to $2000 which resulted in defaults. Individualized examination by the bankruptcy courts might show misrepresentation or even fraud to justify revising the interest payments and rearranging the payment schedule. Or consideration could have been given to Senator Durbin's proposed legislation, S.2136, which would have authorized the bankruptcy courts to reset the principal balance depending on the value of the home. I opposed that bill because I thought it would discourage future lending, and in the long run raise the cost to homebuyers. But at least, following regular order, there would have been an opportunity to consider Senator Durbin's proposal as well as my suggested legislation.

    The legislation contains authority for the Treasury Secretary to compensate foreign central banks under some conditions. It provides that troubled assets held by foreign financial authorities and banks are eligible for the Toxic Assets Recover Program (TARP) if the banks hold such assets as a result of having extended financing to financial institutions that have failed or defaulted. Had there been an opportunity for floor debate, that provision might have been sufficiently unpopular to be rejected or at least sharply circumscribed with conditions.

    As a step to help keep borrowers in their homes, I proposed language found in Section 119 (b) of the bill to address the concern that some loan servicers have been reluctant to modify home mortgage loan terms because they fear litigation from investors who hold securities or other vehicles backed by the mortgage in question. The loan servicers have a legal duty to the investors to maximize the return on their investments. In testimony on December 6, 2007, before the House Committee on Financial Services, Mark Pearce, speaking on behalf of the conference of State Bank supervisors, discussed a meeting with the top 20 subprime servicers. He explained that "many of them brought up fear of investor lawsuits" as a hurdle to voluntary loan modification efforts. Because the rescue legislation encourages the government to seek voluntary loan modifications, it is important to remove any impediments to such modifications. To that end, the language provides a legal safe harbor for mortgage servicers making loan modifications, if the loan modifiers take reasonable mitigation steps, including accepting partial payments from homeowners.

    On reforms to prevent a recurrence of this crisis, we need to question whether the rating agencies adequately analyzed mortgage-backed securities before issuing investment-grade ratings. These agencies appear to have failed. In July of 2007, when it became apparent that ratings issued by the big three rating agencies-Moody's, S&P and Fitch- could not be relied upon, I urged the relevant committees to look into the ratings that those agencies issued in recent years regarding mortgage-backed securities. Financial institutions that issue asset-backed securities obtain ratings for such securities. The failure to issue reliable ratings misrepresented the facts and fed the ability of financial institutions to tout the value of securities even though their value was declining. Congress and the regulators need to take up the rating agencies issue, and consider whether ratings agencies that have utterly failed to detect and reflect the risks associated with the securities they were rating should be accorded any reliance or role in our financial system. Some have suggested they should be regulated and we may need to consider that.

    In addition, Congress and the regulators should review "off-balance sheet" transactions and leveraging. There should be a close examination on whether banks are sufficiently transparent and providing accurate accounting that truly reflects risk and leverage. Similarly there should be a review on Credit Default Swaps (CDS), which are privately traded derivatives contracts that have ballooned to make up what is a $2 trillion dollar market according to the Bank of International Settlements. They are a fast-growing major type of financial derivative. Many experts assert that they have played a critical role in this financial crisis as various financial players believed that they were safe because they thought CDS fully insured or protected them, but the CDS market is unregulated and no one really knows what exposure everyone else has from the CDS contracts. Consideration should be given to subjecting all over-the-counter derivatives onto a regulated exchange similar to that used by listed options in the equity markets.

    Overleveraging has been a contributing factor in the turmoil that now threatens our financial institutions. We have seen a massive expansion of the practice of leveraged financial institutions (banks, investment banks, and hedge funds) making investments with borrowed money. In turn, they borrow more money by using the assets they just purchased as collateral. This sequence is continued again and again. The financial system, in its efforts to deleverage, is contracting credit. They must guard against future losses by holding more capital. Deleveraging is leading to difficulty on Main Street for individuals seeking to get a mortgage or buy a car. If a financial institution is able to unload its toxic assets onto the government, it will again be able to resume its lending activities that are crucial for economic growth in the United States. Unfortunately, much of the financial crisis has arisen from miscalculations of the risks involved with purchasing large amounts of securities backed by subprime mortgages and other toxic assets. We now see a situation where we are not just talking about a handful of firms. This is a widespread problem that should be addressed by this package and in future reforms of our financial regulatory structure.

    In addition, the package crafted by Senate leaders includes two notable changes from the version that was rejected by the House on Monday. It includes a tax package that was previously passed in the Senate by a vote of 93-2 on September 23, 2008, but has since been rejected by the House in a dispute over revenue offsets. It includes tax incentives for wind, solar, biomass, and other alternative energy technologies. It also includes critically important relief from the Alternative Minimum Tax, which threatens to raise the tax liability of over 22 million unintended filers in 2008 if no action is taken. Finally, the package includes a host of provisions that either expired in 2007 or are set to expire in 2008, including the research and development tax credit, rail line improvement incentives, and quicker restaurant and retail depreciation schedules. I supported the Senate-passed tax extenders bill because it struck a responsible balance on the issue of revenue raising offsets.

    The package also includes a provision to temporarily increase the Federal Deposit Insurance Corporation (FDIC) insurance limit to $250,000. Currently, the FDIC provides deposit insurance which guarantees the safety of checking and savings deposits in member banks, up to $100,000 per depositor per bank. Member banks pay a fee to participate. The current $100,000 limit has been unchanged since 1980 despite inflation. This approach is supported by both Senator McCain and Senator Obama, by House Republicans, and by the FDIC Chairman Sheila Bair. Raising the cap could stem a potential run on deposits by bank customers, particularly businesses, who fear losing their money. Such fears contributed to the collapse of Washington Mutual and Wachovia Bank.

    Congress has been called upon to make the best of a very bad situation. Careful oversight of the authority given to the Treasury Department will need to be undertaken, and a review of our regulatory structure will be necessary as we move forward.

    Again, thank you for writing. The concerns of my constituents are of great importance to me, and I rely on you and other Pennsylvanians to inform me of your views. If you require assistance with a federal agency, please contact my state office in your area. The contact information can be found on my website at specter.senate.gov.

    Sincerely,

    Arlen Specter

  • Report this Comment On October 03, 2008, at 12:21 PM, dolores38 wrote:

    everytime they reenter a new bill it contains more pork.......money cannot go to shanghi or anyother place out of the country ......with the imports high and the exports way way way almost nonnexisient we are working for all those big corporation the went off shore to make bigger incomes and now we have next to no manfacturing as we are making china and japan and all the other countries rich while we get the shaft . it s bad enouth that the government loves this type of free trade now theye same government wants us to bail them out. never mind the greed and coruption just sit back and let this FREE COUNTRY go to hell.

  • Report this Comment On October 03, 2008, at 12:24 PM, WayRuss wrote:

    Someone needs to post a list of all the pork that was added to the bill along with its sponsor(s). We should then vote every one of them out of office. Let them know we are paying attention and will not put up with their flavor of foolishness!

  • Report this Comment On October 03, 2008, at 12:42 PM, jstr2 wrote:

    From cindy10006's post:

    From Alrn Spector:

    "...my proposal, S.2133, which would have authorized the bankruptcy courts to restructure interest and scheduling of payments. The so-called variable rate mortgages have confronted many homeowners with the surprise that original payments, illustratively, of $1200 a month were soon raised to $2000 which resulted in defaults."

    "...Senator Durbin's proposed legislation, S.2136, which would have authorized the bankruptcy courts to reset the principal balance depending on the value of the home."

    Two proposals from two Senators that miss the basic point of personal responsibility and reinforce the notion that defaulting on a motrgage is rewarded.

    The only "surprise" about variable-rate mortgages was that people who utilized them to qualify for a mortage weren't able to flip the houses quickly enough to make their money and move on. It's a game widely played that had no chance of ending well. Now every taxpayer is asked not only to feel sorry for these people but to help them keep their houses and lifestyles by paying their defaulted mortgages.

    Hey Senators, what about the rest of us - the people who haven't defaulted on their mortgages and pay all their bills on time? Can we also get a chance "to restructure interest and scheduling of payments" of our mortgages? And why not? Because we're responsible with our money? Because we don't take chances on making a quick buck? Tell us, Senators, why not?

    I'm soo disgusted and ashamed at what our country has become.......

  • Report this Comment On October 03, 2008, at 1:10 PM, future1investor wrote:

    This bill is all about ensuring that the USA will buy up the bad debt of the Federal Reserve's foreign friends who have made bad investments because of us. Germany, United Kingdom, Australia, China particularly.

    Haha! you (the tax payer) are FOOLED AGAIN!!!!

  • Report this Comment On October 03, 2008, at 1:12 PM, Lumindanu wrote:

    Someone needs to post the provisions of the measure...

    Let's see what it says...

  • Report this Comment On October 03, 2008, at 1:45 PM, mencik21054 wrote:

    WayRuss said, "Someone needs to post a list of all the pork that was added to the bill along with its sponsor(s). We should then vote every one of them out of office. Let them know we are paying attention and will not put up with their flavor of foolishness!"

    The pork you refer to was actually added by the House, not the Senate. Per the Constitution, only the House can originate a revenue bill. Thus, for the Senate to consider this bailout bill first, they needed to amend a revenue bill that had already passed the house but had not yet been acted upon by the Senate. So, they did not add the pork to the bailout bill, they added the bailout bill to the pork.

    Your point is taken, however. You just need to look to the House to see who originated all that stuff, not the Senate.

  • Report this Comment On October 03, 2008, at 1:45 PM, mshaw29 wrote:

    The Senate by passing this bill has acted illegally and in DIRECT DEFIANCE

    of the CONSTITUTION which they swore to uphold and protect. Article 1

    Section 7 Constitution states that, "All bills for raising revenue shall

    originate in the House of Representatives..." You must not allow the breach of Law that governs our land to slip buy unnoticed.

    This bill is constitutionally illegal

  • Report this Comment On October 03, 2008, at 1:51 PM, amz002 wrote:

    Thank you Cindy 10006 for providing facts, albeit from Mr. Specter's office. I had expected our Foolish friends to give me some type of executive summary. Since the result of this past week's market turmoil is the exact consolidation and decrease in competition that many government personas sought to prevent, I wondered if any congressional offices might be competent or bold enough to insert provisions in the legislation to level the playing field. Otherwise, by GS options now.

  • Report this Comment On October 03, 2008, at 2:09 PM, basiceconomics wrote:

    Anybody who believes this bailout is a good thing for the economy needs to have their head examined. Same goes for the Fannie and Freddie bailouts. And this quote is pure economic ignorance -- "The $700 billion bailout plan is by no means an act of charity; this money will be invested, not spent."

    If these assets had ANY value, they would have been sold. This entire episode (propping up of prices) is exactly what turned the stock market crash of 1929 (which should have been a quick correction) into the Great Depression. The market wants to let prices deflate in order to correct the easy-credit policies of the past 15 years, but it's not being allowed to. Funny how nobody listened to Ron Paul and the Austrian economists for the past 25 years, but now are starting to open their eyes. But it is the ignorance that we find in this article as well as the MSM that is dangerous, as you just don't get it.

  • Report this Comment On October 03, 2008, at 2:20 PM, ITankResevoir wrote:

    I have over a million dollars in securities with Wachovia and my Veteran's 100% disability with Wells Fargo. Wells Fargo is fully capatilistic in the good sense and I have never seen so much attrition at Wachovia - my rent is less than they manage my securites for and due to my error, I myself made it an irrevocable trust - at that, they assume it is theirs with no further customer care. I will see Wells Fargo in heaven, I am not looking to take a life from the other side with me.

  • Report this Comment On October 03, 2008, at 2:23 PM, thedavil wrote:

    Somebody wanted a list of pork in the bill. Here's a list of some of it:

    http://www.knx1070.com/List-of-some--Pork-Barrel--items-on-b...

    Wool research? Seriously? WOOL RESEARCH?

  • Report this Comment On October 03, 2008, at 2:44 PM, Weneedchange wrote:

    We got to start at the top. We need term limits on the Legislature like we do the President. Otherwise we have what we got and that's politicians-from both parties-that don't serve us but themselves instead while they build an empire. This causes all of the vices we see now. Start by voting the incumbent out-each time until they get the message. Ask whoever is trying to get elected-what will you do to listen to the people's voice and show us that you will do that. The system is corrupt as it stands and even good people that get voted in find it hard to have integrity. It is up to us to make this happen-no one in the system will chg it. Should they still have pensions? How many of us still do? Vote them out in November!

  • Report this Comment On October 03, 2008, at 3:18 PM, seelight wrote:

    Given the nature of the current congress, it's amazing to me that they were actually able to agree. I read the Senate version yesterday. In my business I read a lot of legislation, and there were just a few things that bothered me. It was written in typical legalese with many sentences too long to follow. It requires the Treasury Secretary to give contract preference to minority firms (probably a concession to deleting ACORN). The "pork" in the barrel is primarily tax credits or adjustments (increases in $$) to existing legislated programs which doesn't concern me as much (the $$ are relatively small). The bill also gives the Treasury Secretary authority to value the purchased assets with no prescribed parameters. The bill also requires a vote from Congress to stop the additional $100 billion and $350 billion rather than the Secretary asking for the $$. I think it should be the other way around - let the Secretary prove the extra $$$ is needed, rather than congress having to pass a bill to stop the additional $$. But at least they did something, and hopefully that will allay people's fears and we will be able to move on. I agree with weneedchange. The system is broken. Too many have forgotten it is "of the people, for the people and by the people", not "congress knows best". Make informed votes and we can change things for the better.

  • Report this Comment On October 03, 2008, at 3:18 PM, FlyingCircus wrote:

    The federal government has ALWAYS been the lender of last resort for the financial markets. "Free-market" capitalism rules do not apply here the same way. Destroying the ability to lend money at a reasonable profit helps no one - not people depending on paychecks from their local businesses, not the business owners needing inventory loans for their cars/books/spas/jewelry/sunglasses / coffee / etc etc. Congress created this disaster 15 years ago by forcing banks into the subprime market and then looking the other way as those loans got securitized into 30x leverage by their own GSE's. Now they're getting payback. At least in The Bill Round 2 they limited the pork to extending tax cuts the Democrats wanted to expire. Demagoguery about bailing out Wall Street was totally useless.

  • Report this Comment On October 03, 2008, at 3:32 PM, sparker2005 wrote:

    I want to know about credit default swaps as they relate to the bailout. Will the credit default swaps held by financial institutions be eligible for relief from the 700 billion dollars? Yes or no.

    I have read that the market for credit default swaps is about 7 trillion dollars.

    Also, can an institution buy a bundle of mortgages at a distressed price today and get bailed out on that bundle at a substantially higher price next week?

    I suggest that an institution that has owned a distressed mortage bundle since September 30, 2008, have a higher bailout priority for that bundle than institutions that have owned distressed mortgage bundles only following that date.

  • Report this Comment On October 03, 2008, at 3:43 PM, daconbo wrote:

    I sent an email to many our elected representatives. For purposes of brevity, I've shortened what I wrote them.

    In short, it says to take the $700 billion and pay down the principal balance on all responsible homeowners mortgages. This accomplishes much more than the the current proposal of the bailout plan.

    1. It pays down the principal balance on responsible homeowners mortgages, thus bringing them closer to paying off their mortgages which in turn would more quickly free up that extra cash to be spent elsewhere which creates prosperity and both income tax revenues and sales tax revenues which feed the governments coffers

    2. It rewards the responsible for being responsible and punishes the irresponsible for being irresponsible. A simple principle we all learned well before entering kindergarten.

    3. Since it is used to pay down prinicpal on mortgages, the entire $700 billion goes directly to banks, which is where the money is slated to go anyway. In addition to being a huge cash influx to the banking/credit system it, at the same time, increases their mark-to-market obligations which puts them in a stronger position with the reserve requirements so they can ease credit and it further reduces their total liabilities since an extra $700 billion in mortgages would have been paid-down. This in turn limits their potential future exposure to mortgage insolvency by that same $700 billion.

    Ok, so how do we determine responsible homeowners from irresponsible homeowners? Simple. Get a list of all mortgage holders. This could be done in less than a week. Then pull credit reports on all those people. The credit reports list any delinquent mortgage payments (payments more than 32 and up to 62 days late). Anybody with a late payment is put in the irresponsible pile and anybody that hasn't had a delinquent payment gets an equal share of the $700 billion to pay down principal on their mortgage.

    Now, let's see. The Congress is going to give this money away no matter what. Should we put it back in the hands of the people (banks and irresponsible home buyers) that got us in this mess in the first place (actually, if I'm not mistaken, it was congress that required Fannie and Freddie to ease their lending requirements back in 1999)? Or should we, FOR ONCE, reward those who have exhibited a certain level of fiscal responsibility?

    I don't know about you, but... if I loaned someone some money and they didn't pay me back, I sure as heck wouldn't lend them more in the hopes that they'd fix their financial problems.

    I have to tell you, I am so sick and tired of paying for other's mistakes. Hey, no one has ever come along and bailed out individual investors who lost money in the stock market. Trillions have been lost in the stock market but no one has come to their rescue. We all gambled that the stocks we invested in would increase in value and sometimes that just doesn't happen. And so it is with these banks and home owners who gambled on homes appreciating in value.

    Ok, that's the short version. If anybody wants the full version with required regulations, reduction in government spending, the proper handling of welfare, unemployment and a whole host of other government entitlement programs, don't be afraid to ask.

  • Report this Comment On October 03, 2008, at 4:15 PM, noahchilly wrote:

    That won't work either. You can't create $700B out of thin air. Inflation is coming... The Fed will probably try to cut rates initially, and will eventually have to re-capitalize banks. This "bailout" is a piss in the ocean. There is an enormous global recession coming. We've earned it.

  • Report this Comment On October 03, 2008, at 4:20 PM, Orthros wrote:

    If you believe in Wall Street & Washington,

    go right ahead and add your money to their piles. Otherwise, protect yourself and go to

    gold and any currency other than the dollar.

  • Report this Comment On October 03, 2008, at 4:36 PM, daconbo wrote:

    To jstr2's comment:

    Precisely. Precisely. You nailed it on the head. From the blogs/posts that I've read over the past week, it seems that all Americans know what to do and they've told their elected officials to act according to our wishes. We responsible citizens have to suck it up for the irresponsible citizens. That philosophy is completely backwards, unethical and immoral and yet it is espoused by our Congress. We have two alternatives folks:

    1. vote them ALL out of office at the next election and,

    2. if it still doesn't change, stop paying our taxes. If they think that they can just spend our money any way they like even though we tell them otherwise, well then, we're just going to have to stop sending them our money until somebody starts to listen. Anybody remember the Boston Tea Party? "No taxation without representation". Well... we're not being represented, therefore, they don't get their taxes.

  • Report this Comment On October 03, 2008, at 4:43 PM, mywirelesskit wrote:

    I guess we all are forgetting the fundamentals of nature "THERE IS A LIMIT TO EVERYTHING" . This includes growth too. If we analyze the Dow figures since 1950 :

    Year end 1950 (DJIA : 235)

    Year end 1960 (DJIA : 616)

    Year end 1970 (DJIA : 838)

    Year end 1980 (DJIA : 964)

    Year end 1990 (DJIA : 2,634)

    Year end 2000 (DJIA : 10,788)

    Year end 2008 ?????

    We can see from the above figures that the DOW has increased 2.6 times in 1980s and 4 times in 1990s. This makes it a combined 10 times growth in the 20 year period.

    I guess it is now time for some fundamental correctionsin our economy to make it grow in a normal fashion.

  • Report this Comment On October 03, 2008, at 5:23 PM, noahchilly wrote:

    That won't work either. You can't create $700B out of thin air. Inflation is coming... The Fed will probably try to cut rates initially, and will eventually have to re-capitalize banks. This "bailout" is a piss in the ocean. There is an enormous global recession coming. We've earned it.

  • Report this Comment On October 03, 2008, at 6:35 PM, Soco25 wrote:

    Lots of different and interesting comments above. One thing that stands out loudly for me is a philosophic point.

    The public was reputedly against the house version 6:1 and the senate version 3:1.

    The Fool pool showed respondents against the House bill outright or against it as written 11:5, and against the Senate 7:5.

    I don't understand how the august Senators managed to vote 3:1 IN FAVOR on Wednesday; and the House, nearly 8:5 IN FAVOR today.

    Seems democracy is as dead as free markets.

  • Report this Comment On October 03, 2008, at 7:33 PM, enet12001 wrote:

    I was sent an article from "The Motley Fool" titled "The ONE shock proof investment that just goes up." And "Just look at these gains last year from water technology companies..." The stocks and there last year gains that were listed in this article were as follows:

    CCC -- stock up 283%

    HDRX -- stock up 325%

    PNR -- stock up 528%

    WWAT -- stock up 630%

    I personally went back and check out these stocks via Bloomberg.com and none of them were even close to showing these gains, in fact HDRX closed the year as a loss.

    So what gives with these gentlemen and there newsletter? Would anyone from "The Motley Fool" please explain this to me?

    Thank you!

  • Report this Comment On October 03, 2008, at 8:25 PM, kyaku wrote:

    daconbo for President!

    Otherwise I'm looking for a list of who voted which way.

  • Report this Comment On October 03, 2008, at 8:33 PM, bbeverage61 wrote:

    From Bondage to Spiritual Faith

    From Spiritual Faith to Great Courage

    From Great Courage to Liberty

    From Liberty to Abundance

    From Abundance to Complacency

    From Complacency to Apathy

    From Apathy to Dependency

    From Dependency back to Bondage

    THE GREAT THING ABOUT A CYCLE IS IT LEADS BACK TO SPIRITUAL FAITH.

  • Report this Comment On October 03, 2008, at 9:23 PM, deeanddeeltd wrote:

    This Financial Crisis bothers me a lot. I had predicted it quite a while ago but nothing has been done to stop it.

    The "Federal Bailout" ? Don't make me laugh - it is like putting a band-Aid on a .357 Magnum wound! To see just how serious it is, read Weiss Research paper (it is on the web) - "The Proposed 700 Billion Bailout is Too Little,Too Late To End the Debt Crisis; and Too Much, Too Soon for the US Bond Market".

    The cause of the problem was lack of regulation - the Fed did nothing, the Treasury did nothing, Bernake did the same, Paulson did nothing!!! And they are "Heroes"??? Come on! don't kid me!

  • Report this Comment On October 03, 2008, at 9:26 PM, rubylady9899 wrote:

    I can't understand how you can say there's not a depression. companies closing up,jobs going overseas. what are the americans suppose to do? I'm glad that God is sitting high and looking at the mess as I feel in due time he will heal the land. I'm glad I have faith and trust in God and not man.

    Gas and food is on the top shelf. Banks foreclosing on homes some families don't have a place to go. I see the bail out as a help to the rich and wealthy bank accounts. while the poor are getting poorer. feel we should take care of home first.

    People get turned away from doctors and hospitals because they don't have insurance and not everyone is eligible for medicare or medicaide. foreigners come to the United States don't pay taxes and I alone with a million other citizens don't agree with this. what's good for the goose is good for the gander.

    The Bailout is a big mistake.

  • Report this Comment On October 03, 2008, at 10:20 PM, rlgillett wrote:

    I will make it simple. Bail out or not: If our government,business, and financial institutions do not get back to the basics of economics (i.e. do not spend what you do not have, do not loan to dead beats, and operating with honesty and integrity). We will have an economic implosion that will ruin this country. That includes all of us from the poorest to the richest, from black to white, and from democrat to the republican.

    The problem with government intervention in the past 70 to 80 years is it has been an exponential turn from a democratic republic and free enterprise capitalist system to a toxic socialistic, state controlled system. It started small like a snowflake here or there and has built till now the avalanche is poised to roll.

    Change is needed but not Oboma's or necessarily McCain's and definitely not Congresses.

  • Report this Comment On October 03, 2008, at 10:42 PM, tazbo wrote:

    I read somewhere that this not a bailout or rescue but a foreign aid program to help China and other foreigner that bought these toxic investments so our government can keep on borrowing from them. This might explain the rush and why Paulson gets carte blanc with no checks and balances. I might note that his has not been confirmed at this time. Does anyone have further knowledge or refuting information on this?

  • Report this Comment On October 03, 2008, at 11:25 PM, denniswolz wrote:

    10/01/08

    Do you want to make a difference?

    If you do, read the following and send it to at least 8 people. Also send a copy to anyone in Government that you know and let them know what you are going to do on Nov 4th. Within a few days everyone will have read the following and hopefully buckle down and have faith that within a few years you and I will be better off than the rich greedy bastards that now run your government and businesses. Bring main street back to life!

    What is going on now is very good for Main Street.

    Oil came down again today. Corn, Cattle, Soybeans, everything except gold is down today. This has to happen, now or next week or next month.

    Until Commodities match wages we are simply living in a false economy and it cannot continue forever. No way, now how. In the last 10 years wages have hardly risen for the 95% of the working public, adjusted for the devalued dollar wages actually fell. Commodities have risen as much as 10 times in that period (oil from $10 to $150). Wages pay for everything and commodities make up everything, gas, oatmeal, eggs, houses, you name it, what you buy is a commodity. Their price has to be relative to wages or you have to buy less.

    Our government, your banker, your talking heads on the TV and radio talked you into buying a house you couldn’t afford, a car you couldn’t afford, a student loan that you couldn’t afford, a credit card you couldn’t pay down, all to line their greedy pockets. This money was given to you even though it didn’t really exist so that you could drive up commodity prices and line their pockets. It might have made you feel good but it is destroying our way of life.

    Given all this oil needs to be somewhere between $30 and $50 per barrel. In fact if we could get oil to $40 the other commodities will be back to where they were before all of this funny money started flowing 10 years ago.

    How do we get oil prices down? Demand is going to do it sooner or later because the global economy will shrink until that point. We could speed up this drop in price and pump the reserve dry if you had to. Conserve, conserve, conserve, drive only when you have to. Once we get it down the government can keep oil down by buying and selling in the market with the vengeance of a greedy commodities broker who gets rich on the back of others. Another way is to strengthen the dollar, the higher the dollar the lower oil goes. Quit spending on stupid things until you balance the budget.

    Once main street can afford to buy gas and shop for groceries, then and only then will the markets start to function again. Then we can start to talk about fixing the system again. Stocks used to be in the form of certificates, you actually owned a share. If you bought a barrel of oil you took it with you, you actually owned something, you didn’t just trade it to drive the price up or down. When this is all over we need to establish laws that control greed and dishonesty, not laws that line the rich and powerful.

    Get rid of the IRS and go to value added. A rich fat cat buying a 10 million dollar home would pay 1 million dollars in tax to the government at 10 percent. You and I would have to pay the government 30 dollars if we bought a lawnmower for $300, 10 cents for a loaf of bread. A 10 percent tax would more than finance any government worth its salt, do away with the rest. The state would collect the money just like it does the sales tax every month and send it to Washington. Congress could make this happen overnight, but they will not because most of the money will come from the 10 percent at the top who are your congressmen and bankers and greedy CEO’s, your voice will never be heard on this matter.

    Have your government pass a law to cut all government employees by 33%. The waste in our government is criminal, criminal, criminal. By reducing government by a third you would actually speed it up and get out of deficit spending (balance the budget and spend real money again).

    Take interest rates to +-1%. Banks giving you money at 7 or 8 percent when you get less than 1 percent on your savings only builds more and more banks. Banks and your government do not have to be rich fat cats. Banks could lend money at 1 percent over their cost and still get by. The government could lend to the banks at zero, therefore interest rates at 1 percent.

    The cost of money causes inflation. High interest rates are simply passed on to the consumer in the form of price increases thus causing inflation and higher prices. Control the supply of money and you control inflation. Control the deflation of the dollar and you control inflation.

    Lower interest rates and save mortgage holders, a zero principal mortgage would owe how much every month at a zero interest rate, zero. Even the person that is over their head with a $500,000 mortgage would owe less than $900 per month at 2% interest. This would fix most foreclosures and be enough to pay for any work the banker is doing on your behalf. It will not pay his 10 million per year salary but who cares.

    The best way to fix this mess is to form a new Independent party and get rid of Republicans and Democrats. But we don’t have time to do this right now. The next best way to let our government know we are serious about a fix is to remove anyone in office on November 4th. Forget your political allegiance, anyone in government has to understand that we want change. Having all new faces in all units of government from the county rep to the state rep to the federal rep will send a message heard around the world.

    My vote in November is to vote anyone in out, it is a shame that Bush isn’t up for reelection so that I could take him out also. By the way I will be glad to be president, write me in as your candidate for president. I will do the job for free.

    Send this to anyone in government you know and wish them good luck in finding a job come January

    Thanks for your attention to this matter.

    Dennis

    Send me an email and let me know what you think – denniswolz@att.net

    If you send this on mark your email at 512. Whatever number is on your copy times it by 8 and replace that number. This will let everyone know how many people have read and passed it on. We can make a difference.

    8

  • Report this Comment On October 04, 2008, at 1:13 AM, crossman20 wrote:

    Now that the bailout has passed ,what do you think is the outlook for the dollar against other currencies, particularly the euro, in 2009. I have a property in Europe that I am considering selling and bringing the proceeds Stateside.Thank you in advance for your comments.

  • Report this Comment On October 04, 2008, at 1:22 AM, detenburn wrote:

    Recession? I am not concerned about a recession. It's a hyperinflation I'm worried about. .

    Imagine a day's wages to buy a day's worth of food. A million dollars to buy a postage stamp. It's happened before, in Germany, in Argentina, in Mexico, in Indonesia, and in Brazil.

    This bailout won't be the cause of the chaos I'm describing. It's the recklessness with the money supply that has been going on, in increasing numbers, for over 60 years, that has caused it. It's not the Democrats or Republican's fault. It's all of our faults, for demanding the government take care of us, more and more, to one degree or another. And very soon we are all going to pay for it. My attitude is, the sooner the better, and the less painful it will be.

    When this happens (and I don't know when it will), get liquid, and get commodity based. Gold, silver, oil, grains, timber, livestock, you choose. Stocks that are commodity based should do allright. Real Estate is not liquid, invest in moderation there. Cash (not currency) will be king. Hang in there!

  • Report this Comment On October 04, 2008, at 1:45 AM, whity4d wrote:

    If you folks really want to fix the problems on Wall Street then what really needs to be done is " repeal the TAx Reform Act of 1986. Prior to the tax reform act of 1986 the highest tax bracket was 92% not the 35% that the govenment used to sell the tax break to the public. If you made over 4 million dollars a year prior to 1986 you were taxed at the 92% tax rate. While the average jo went from 28 % to around 20% the big dogs in the corporate world went from 92% to 28%. Good for us, so we thought, better for them. The Executives and Board of Directors of most major companies took this opportunity to increase their pay while cutting benefits and pay of the guys in the trenches doing all the real work. My first job was working in the toy department at JCPenny, I made $2.65 an hour and had full medical and dental as well as a retirement plan. Do you think you get that today. The retirement plans most corporations offered in the passed have gone by the wayside to make way for multi-million dolar bonuses for the CEO and his cronies at the top. The governments responce to the loss of retirment plans was to allow us to save our own money in an IRA. Wow $2,000 a year that we could take out of the money we needed to live on an save for our own retiement. Seems like quit a deal to me. All we hear now is how they want to implement a national health care policy. Who will pay for it? Not the corporations it will be you and me in the form of higher taxes. Unless we put a cap on saleries via a higher tax on the most wealthy, that money will never trickel down to the middle class. Congress needs to implement the 92% tax rate and get the corporations to put the money back into their employees in the form of medical , dental, disability and retirement benefits. Heck, I am not adverse to giving them a tax credit for doing it. The CEO and the rest will have to find someway to live on 4 million dollars a year. I know it will be tough but we all have to tighten our belts.

  • Report this Comment On October 04, 2008, at 10:42 AM, tutorman wrote:

    I recieved a similar response from Sen. Spector on the "bailout", as well as one on drilling in the US - the Senate staff must use the same template to answer questions from the sheeple - another excellent reason to impose term limits on these bozoes.

  • Report this Comment On October 04, 2008, at 11:34 AM, Tri3 wrote:

    If you trace the chronology, Lehman Bros had hopes of a last second merger or bailout. Many thought they were too essential to the process to be allowed to simply fail.

    Within days of Lehman's collapse, the money market funds "broke the buck". Then the overnight credit markets lock up. Then Paulsen needed $700B to fix what he could have fixed with less than $100B.

    What you need to know is: The Bailout will cure the economy in the same sense that astrology cured small pox.

    - CarlD

  • Report this Comment On October 04, 2008, at 12:40 PM, outtafunds wrote:

    Big Oil posts record profits and gets tax breaks vs paying in to the system (sharing the wealth made off the common individual). I would condsider this a 'giving back to the community. Wall Street execs get fat salaries, break the bank and walk away with no repercussions leaving investors and employees wallowing in their wake. Congress succumbs to fear but only after they get their pork. They've gone again and thrown good (freshly minted) money after bad; and we are now hearing the same prophecies I heard when I was child- 'Our children will be paying for the mistakes of the present administration and financial market morons.'

    Fear has allowed our Congress to open up our coasts to offshore drilling- and I say SORRY, NOT OFF MY COAST THAT WE HAVE STRUGGLED SO HARD FOR THE LAST TWETY-FIVE YEARS TO CLEAN UP.

    Why is everyone so afraid of being however slightly discomforted, unwilling to live within their means. I admit that the rumblings of economic seizure are unsettling but when something ails you, the longer you wait to remedy the situation, the more bitter the pill becomes. No pain, no gain so they say. Bring on the pain now and get it over with because (unless there is some silver lining that no-one can see exists) the &$#$%#^ is gonna' hit the fan eventually.

    It's good to be not quite reasonably poor (the American middle class) with no debt; there is alot less to worry about.

  • Report this Comment On October 04, 2008, at 2:26 PM, Sophialily1 wrote:

    Shame on Washington and Shame on us.

    We are a strong nation built on the ideas of capitalism. I have proudly teared up every time I say the Pledge of Allegiance; after Fridays bail out I feel we are on the slow slippery slope to socialism, i feel shame that we stooped to this.

    Are we such a fat entitlement society that we could not bear what our grandparents went through; depression. I say shame on us shame on Washington. I do not want to pay $14, 000 dollars because of others greed.

    I feel as an educator we are teaching the future not to feel any discomfort, spend spend spend and some other fool with pick up the bill. Well not this fool.

  • Report this Comment On October 05, 2008, at 1:24 PM, tyeedaddy wrote:

    to cindy, lets remember that the guy who came up with the 'single bullit theory' that killed kennedy was non other than a young man named Arlon Specter.I don't think I would believe a word he says.On the other hand,I would love to see the host of Mad Money,Mr. Cramer, be selected as the next Treasury Secretary.

  • Report this Comment On October 05, 2008, at 11:02 PM, MRWALLST08 wrote:

    Mr WALL ST. HERE…all you lemmings really have no clue about how this bailout really works…we are going to baffle you with bullsh%& about derivatives, arbitrage, swaps, mark to market, hedging, collars, shorting, naked shorting, tranches, no uptick and a whole slew of terms and conditions that will only confuse you. You really are not smart enough to understand why we need and will get this bailout since you the general public have and always will be an endless source of capital for US the super-rich and politically connected…YEAH we made another bad bet with your money however please do not fret about it, we are so good at what we do that we will make your kids and grandkids pay for it all!! Mr Paulson is just our puppet who knows the game inside and out, remember he was the top dog at Goldman Sachs for years, so he knows how to make and protect our billions of dollars of profits.His game is basically simple- to scare all of you into the bailout, DAMN HE’S GOOD. And consider Bank of America and JP Morgan Chase coming in as angels to lend a helping hand to these suddenly impoverished banks…jeez, we are going to reep GODZILLA sized profits from those transactions. We made billions the last 6 years during the bull run after 911…WE EVEN PROFITED FROM THE 911 ATTACKS, THAT WAS PURE GENIUS ON OUR PART. What is the government going to give you for your $700 billion?? OH ya!! Another tax cut in the future, not a single dollar will go into your pocket, GAURANTEED!! So, Someone has to pay for my new castle in the Carribean, why should I use my own money when I can use yours, AGAIN!! LEMMINGS WILL ALWAYS BE LEMMINGS …

  • Report this Comment On October 05, 2008, at 11:20 PM, gaahdaah wrote:

    On October 03, 2008, at 10:34 AM, Chazzzman wrote:

    "Washington is not the problem. Look around you.

    You'll see a major portion of the US population voting but can't be bothered to find out if a candidate is lying to them, misleading them, or just pandering to (and stirring up) their fears and emotions.

    Until Americans, as a group, stop voting for whoever makes them 'feel good' we deserve exactly what we get."

    Chazzzman, I agree.

    Biden tells 14 lies during a nation debate and is declared the winner by the Major News Networks.

    The Ohio Secretary of State allows College Kids working for Obama to go to Homeless Shelters and register and cast absentee ballots for president simultaneously.

    Obama keeps talking about CHANGE. But Change to what? There are never any specifics. So I for each supporter I it becomes what they imagine. The only way to really tell is to look at his record and past life, which the Mainstream

    Media does not report on. However there are a few goods books that have done a good job of research. The picture they paint is not pretty. It is in fact scary.

    Obama's whole campaign is intended to get as many of the mindless voting for him as possible.

  • Report this Comment On October 05, 2008, at 11:48 PM, popsikle wrote:

    The Common Sense Fix

    Years of bad decisions and stupid mistakes have created an economic nightmare in this country,

    but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support

    any congressperson who votes to implement such a policy. Instead, I submit the following threestep

    Common Sense Plan.

    I. INSURANCE

    a. Insure the subprime bonds/mortgages with an underlying FHA-type insurance.

    Government-insured and backed loans would have an instant market all over the

    world, creating immediate and needed liquidity.

    b. In order for a company to accept the government-backed insurance, they must do two

    things:

    1. Rewrite any mortgage that is more than three months delinquent to a

    6% fixed-rate mortgage.

    a. Roll all back payments with no late fees or legal costs into the

    balance. This brings homeowners current and allows them a

    chance to keep their homes.

    b. Cancel all prepayment penalties to encourage refinancing or

    the sale of the property to pay off the bad loan. In the event of

    foreclosure or short sale, the borrower will not be held liable

    for any deficit balance. FHA does this now, and that

    encourages mortgage companies to go the extra mile while

    working with the borrower—again limiting foreclosures and

    ruined lives.

    2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and

    executive team members as long as the company holds these

    government-insured bonds/mortgages. This keeps underperforming

    executives from being paid when they don’t do their jobs.

    c. This backstop will cost less than $50 billion—a small fraction of the current proposal.

    II. MARK TO MARKET

    a. Remove mark to market accounting rules for two years on only subprime Tier III

    bonds/mortgages. This keeps companies from being forced to artificially mark down

    bonds/mortgages below the value of the underlying mortgages and real estate.

    b. This move creates patience in the market and has an immediate stabilizing effect on

    failing and ailing banks—and it costs the taxpayer nothing.

    III. CAPITAL GAINS TAX

    a. Remove the capital gains tax completely. Investors will flood the real estate and stock

    market in search of tax-free profits, creating tremendous—and immediate—liquidity in

    the markets. Again, this costs the taxpayer nothing.

    b. This move will be seen as a lightning rod politically because many will say it is helping

    the rich. The truth is the rich will benefit, but it will be their money that stimulates the

    economy. This will enable all Americans to have more stable jobs and retirement

    investments that go up instead of down.

    This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to

    stand up, speak out, and fix this mess.

    DR

  • Report this Comment On October 06, 2008, at 12:32 PM, gaahdaah wrote:

    Also hold those responsible for the mess responsible so it does not happen again. So far the only major media source exposing it is Fox Business New and Fox News Channel.

  • Report this Comment On October 09, 2008, at 3:26 AM, GEOTWEAKER wrote:

    Are we here yet?

    From Wikipedia:

    Fascists opposed what they believed to be laissez-faire or quasi-laissez-faire economic policies dominant in the era prior to the creation of the Federal Reserve and the Income Tax, and the subsequent Great Depression.[62] People of many different political stripes blamed laissez-faire capitalism for the Great Depression, and fascists promoted their ideology as a "third way" between capitalism and Marxian socialism.[63] Their policies manifested as a radical extension of government control over the economy without wholesale expropriation of the means of production. Fascist governments nationalized some key industries, managed their currencies and made some massive state investments. They also introduced price controls, wage controls and other types of economic planning measures.[64] Fascist governments instituted state-regulated allocation of resources, especially in the financial and raw materials sectors.

  • Report this Comment On October 09, 2008, at 1:08 PM, bigbroslittlebro wrote:

    Bondage leads to ignorance, not spiritual faith

    because your owner says no education for slaves.

    Bondage to ignorance

    ignorance to superstition

    superstition to fear

    Only a great leader returns faith.

    We need to follow a great leader but are too ignorant

    Force is the only alternative left.

    It is called Rebellion of which AMERICA is founded.

    America brings freedom of religion which leads to faith.

  • Report this Comment On November 02, 2008, at 5:47 AM, Capt138 wrote:

    A $700 Billion bailout plan sounds like an "Economic Catastrophy" to me as defined by Directive 51. It has even been described as such by the media. Read carefuly when you look it up, it says there could be an undefined amount of years G.W. could stay in office.

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