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Old 09-21-2008, 06:27 PM   #1
Soul Sequence
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Join Date: Sep 2008
Location: Windsor, Ontario
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Default Paulson urges 'clean and quick' OK

http://money.cnn.com/2008/09/21/news...ion=2008092110

Treasury Secretary calls on Congress to move fast to approve bill that would let Treasury spend as much as $700 billion to buy troubled mortgage-related assets.
Last Updated: September 21, 2008: 1:23 PM EDT
NEW YORK (CNNMoney.com) -- Treasury Secretary Henry Paulson on Sunday called on Congress to move swiftly on the Bush administration's $700 billion proposal to bail out the financial system

"We need this to be clean and quick," Paulson said on ABC's "This Week."

President Bush asked Congress on Saturday for the authority to spend as much as $700 billion to purchase troubled mortgage assets and contain the financial crisis.

The legislative proposal is the centerpiece of what would be the most sweeping economic intervention by the government since the Great Depression. (Read the text here.)

Paulson, Federal Reserve Chairman Ben Bernanke and other officials have said in recent days that the lack of easy credit between banks and other financial institutions threatens to inflict serious damage on the economy if not addressed immediately.

The plan would allow the Treasury to buy up mortgage-related assets from American based companies and foreign firms with a big exposure to these illiquid assets. The aim is for the government to buy the securities at a discount, hold onto them and then sell them for a profit.

"What we're doing is first stabilizing the market," Paulson said. "Once we stabilize the market, we need to ask ourselves how did we get here and how do we avoid getting here again."

"We need a lot of reforms, and this is going to be something Congress and the next administration are going to be working on for some time," Paulson added.

Paulson also stressed that the administration has begun discussions with foreign governments to push them to institute similar action, though he stressed that none have made any commitments to do so yet.

Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, agreed with Paulson that speedy passage of the bill was necessary.

"We need to do it quickly," Dodd said on "This Week." "We need to give the Secretary the authority to work."

House Minority Leader John Boehner, R-Ohio, said Sunday that fellow lawmakers should not try to load up the bill with amendments. "This is not a time for people to be playing games - we need to keep it clean and simple."

Experts liken the Treasury's plan to the Home Owners' Loan Corp., put in place in 1933 to stem foreclosures and help refinance defaulting mortgages and boost banks' liquidity.

The mortgage plan is part of an extraordinary effort by the federal government to contain a financial crisis that has forced a major realignment on Wall Street and has started rippling out to Main Street.

In the past week, two of the nation's most venerable investment banks - Lehman Brothers (LEH, Fortune 500) and Merrill Lynch (MER, Fortune 500) - have fallen and the Federal Reserve was forced to lend $85 billion to prevent the sudden collapse of insurance giant American International Group (AIG, Fortune 500).

Meanwhile, mainstay financial institutions are scrambling to raise cash and shore up their books as lending has frozen up and investor confidence has sunk.

"You can't describe how ugly it would look if we don't act," Boehner said.

Working out the details
The bill is being hammered out on Capitol Hill. Lawmakers have said they will aim to put it up for a vote early in the week. The House Financial Services Committee has scheduled a Wednesday hearing to debate it.

Although they've said they don't want the negotiations to turn the bill into a "Christmas tree" of provisions, Democrats are concerned that there be measures included to protect taxpayers and help homeowners directly.

Among the Democrats advocating that economic stimulus be part of the bailout package was Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

"It's kind of hard to tell the average American that we are going to continue to have foreclosures that destabilize neighborhoods and deprive cities of revenue they need, but we're going to buy up the bad paper," Frank said on CBS' "Face the Nation."

Frank advocated higher taxes on people with income exceeding $1 million a year. And the idea that the deficit would force tax increases even made it across party lines.

"When we add an additional trillion dollars to the debt, the burden of the taxpayer, sooner or later there's got to be a reckoning," Sen. Richard Shelby, R-Ala., ranking member on the Senate Banking Committee, told "Face the Nation." "This is the mother of all bailouts."

Protecting the taxpayers
The administration's proposal also requests that Congress authorize an increase to the nation's debt ceiling. Currently, it's set to rise to $10.6 trillion for fiscal year 2009 - which runs from October 2008 through September 2009. But the proposal requests that limit be increased to $11.315 trillion to allow for the purchases of mortgage-backed assets.

The debt limit is a ceiling on how much debt the federal government is allowed to take on. Budget experts say it acts as a break on spending mostly because of political pressure, because lawmakers don't like to vote to raise it. Lawmakers are free to change it if they have reason, however.

Paulson on Sunday acknowledged that the plan involves considerable risk for taxpayers, but said that the Treasury should recoup at least some of what it will spend on this bailout.

"We're talking about hundreds of billions of dollars, but remember this is not an expenditure, this is money that is being used to purchase illiquid mortgage assets that are very difficult to value," Paulson said on NBC's "Meet the Press."

"They will be held [by the Treasury] and they will be resold at some time. And so we can't determine what the cost is today," Paulson said. "That's going to be based on how quickly the economy recovers, what happens in the mortgage market."

First Published: September 21, 2008: 10:34 AM EDT
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Old 09-21-2008, 06:28 PM   #2
Soul Sequence
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Join Date: Sep 2008
Location: Windsor, Ontario
Posts: 175
Default Mad as hell - taxpayers lash out

http://money.cnn.com/2008/09/21/news...ion=2008092114

We asked you what you had to say about the bailout, and we heard you loud and clear: 'No way!'
By David Goldman, CNNMoney.com staff writer
September 21, 2008: 2:08 PM EDT
NEW YORK (CNNMoney.com) -- "NO NO NO. Not just no, but HELL NO," writes Richard, a reader from Anchorage, Alaska.

"This is robbery pure and simple," Anna from Denver posted on CNNMoney.com's TalkBack blog this weekend.

"It's our money! Let these companies die," added Claudio from Plainville, Conn.

When asked what they thought of the government's proposal to bail out the financial industry by purchasing $700 billion of troubled mortgage assets, most readers gave an overwhelming thumbs down.

"I'm tired of rewarding institutions and people for the bad decisions they have made," said Dean from Madison, Wis. "Sure, it will hurt tax payers if/when some of these institutions fail, but perhaps we need to let that happen. We do not need more big government involved in our lives. Enough is enough."

Don't hand me the tab
Readers focused most of their indignation on having to foot the bill for irresponsible lenders and borrowers.

"Companies, like individuals, should be held responsible for their decisions," wrote Jorge from El Paso, Texas. "This buyout does not address the other problems in the pipeline such as personal credit default and market slowdowns in most industries. No new jobs will be created."

Paul from Portsmouth, N.H., said banks are getting the soft treatment when taxpayers are suffering.

"It is time for the financial institutions of this country to be called to the mat. We should be expecting and demanding responsible and ethical business practice, not rewarding it at the expense of taxpayers."

And John from Springfield, Va., said the government action actually hurts the people it is intended to help.

"The government does not have $700 billion dollars. WE have $700 billion, and it is being taken from us. If this is passed then the next administration and the next will be extracting this one from the people who are supposedly being protected by this bailout."

Where's my bailout?
Other readers wanted to know why the government didn't spend the $700 billion investment on the majority of responsible Americans who are suffering because of the bad bets of the few.

"Why not take the billions and ... make funds available to home owners stuck in the loans these idiots created, marketed and sold," asked Don from Coarsegold Calif. "It will put the money where it should be with the little guy who made a mistake, instead of the big guy who created the problem."

Jordan from Charlestown, Ind. asked why different rules applied to big banks and ordinary investors.

"Once I invested in something and lost money. Maybe I could just change the rules of investing so that my loss turns into a gain? Oh, I forgot only banks can do that!"

Vote these jerks out
Some readers said it was time for the politicians who support the bailout to get the heave-ho come November.

"I will be watching to see which of our representatives vote for this bailout," said R. Kidd in Troy, N.C. "Let the American people see how many we can fire come election time."

And many readers, including Danny from Texas said we should stop typing and start dialing the lawmakers who are prepared to give the OK to the bailout.

"Call your Congressman. Stop blogging, posting comments, and call your Congressman. This is the patriotic thing to do. Let them hear your opinion, show them this is still America and that you will not stand for this!!"

A necessary sacrifice
But not all readers agreed. Some thought the bailout was an unfortunate but necessary move to rescue our financial system from collapse.

For instance, Bill from St. Louis said he changed his mind about the bailout when he realized the consequences of doing nothing.

"I was opposed to the bailout at first, but realized that the scope of this thing is global and so massive that the entire global economy could collapse if nothing was done. ...The priority has to be resolving the present crisis of confidence in our economy. Remember, if Wall Street collapses, Main Street will go with it."

Andy from Chicago said the cost to the taxpayer will not be what the headline number makes it seem.

"This money is not a handout to companies. It's simply giving banks and mortgage companies loans, since the banking system itself is too unstable to raise this kind of capital. And no, the government cannot just use the $700 billion to pay back all the citizens that will be hurt by this. If the companies like AIG fail, the cost will be far far greater than $700 billion. Wake up!!"

Surfta from Brooklyn, N.Y. says the government action is really not a bailout at all.

"It's NOT a bailout. The government is not handing out cash, they actually stand to make a great deal of money out of this, which will trickle down to YOU. First priority should be to try to control and fix the problem, then regulate sufficiently to make sure this NEVER happens again."
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