Hey, I'm back. Driven from blog retirement by the latest sh*tty trick that the criminals in the White House are trying to pull on us. This bailout for Wall Street could be one of the worst things Bush does to us, his parting shot. It's up there with the Iraq War and the Patriot Act in terms of potential damage to our country.
"It’s being described as the largest government intervention in private markets since the Great Depression. The Bush administration has asked Congress to swiftly approve a massive $700 billion package to rescue the crippled financial institutions on Wall Street. Some analysts say the final cost to taxpayers could top one trillion dollars. Over the weekend, the size of the proposed bailout grew as the Bush administration said foreign banks, including Barclays and UBS, should be eligible for the bailout. The bailout plan was drawn up by Treasury Secretary Henry Paulson and would set up a fund that uses taxpayer money to buy out the bad debt on Wall Street. The plan would also give nearly unlimited powers to the Treasury Secretary. Meanwhile, the last two major investment banks—Goldman Sachs and Morgan Stanley—have changed their status from investment banks to bank holding companies. This change, approved by the Federal Reserve Sunday, allows them to create commercial banks and also gives them access to the Fed’s emergency loans."
JUAN GONZALEZ (same transcript)
"The amazing irony now is, as we read in some of the papers today, that the very firms that were involved in creating this crisis are now lining up in Washington to be able to become managers, in case the federal government buys up this debt, and then it needs to manage how it will get rid of the debt, so that the very firms are now lining up to become the money managers of the distressed debt that the government buys."
"And let me just make one point that everyone should be very, very clear on. This was not an accident, in the sense that this is like a hurricane. This was a totally predictable event. So when President Bush or Henry Paulson say, you know, we have to come to the rescue, it is because of their incompetence, because people who understood the economy—and putting myself among those, but there are others—we were warning about this a long, long time ago. This was a totally predictable event that brought us here....
"The basic story was, we had a housing bubble, which, again, these people are supposed to be smart. They’re paid tens of millions of dollars. They should have recognized the housing bubble. They should have recognized that house prices would fall, as they have been. And what that meant was, you made a loan on a house for $250,000, $300,000, $400,000, that house price was likely to fall. So if you did that with zero down, as many of them did, plus having mortgages, you know, the predatory mortgages, the subprime mortgages that have got them in particular trouble, these were guaranteed to go bad in many cases...
"They acted as though house prices would just keep going up forever, and they could just keep, you know, going along these lines. They leveraged themselves to the hilt. The investment banks, like Lehman and Bear Stearns, leveraged themselves to a ratio of thirty-to-one. In other words, if they had $10 billion in capital, they had loans on the order of $300 billion. I mean, this was just asking for disaster...Think of what we do to welfare people, when they—you know, everything they have to go through to get, you know, a $500-a-month check, and these people want billions, no questions asked. Unbelievable."
"Yeah, well, the point is, when Bush and McCain and Paulson, who was head of Goldman Sachs before he was head of the Treasury, say they don’t know how this happened, they designed this system. We had a regulatory regime in place ever since the Great Depression to prevent this kind of meltdown, and that said that stockbrokers, insurance companies, banks, investment banks, commercial banks, could not merge. And in 1999, they passed legislation, the Gramm-Leach-Bliley Act. Gramm is the guy who McCain supported for president in ’96. He was co-chair of his campaign until he complained about the whiners out there, meaning the public. And that legislation is what caused this. It allowed the swaps and everything else."
"And now, you know, it seems to me, in terms of the bailout, why don’t they do what Hillary Clinton said during the primaries: just put a freeze on foreclosures? Start out with helping the homeowners and say, “OK, we’re not going to foreclose your house for the next year. We’re going to force the banks to work out reasonable payments. We’ll try to help you hold on to it.” That would have stopped the bleeding here much more effectively than throwing $700 billion at these bandits...
"This is our money. Why isn’t this money used to help people who are going to lose their houses? You miss two, three payments, and they’re going to foreclose on you; then they say, “Well, we hope the banks will work out new agreements.” Nonsense! Do a freeze on foreclosures. Stop the bleeding. Have a year to let it settle, and force the banks to come to agreements...
"Well, this is a Ponzi scheme of their creation, and they thought they would bail before it hit the fan. That’s what they thought. They’d be gone, and someone else would be blamed. They’d have their golden parachutes. I don’t know why we’re not considering criminal charges against these people. They have done more to hurt this nation than bin Laden could ever dream of. "
Ralph Nader has come up with 10 market reforms that he says need to be implemented immediately along with any bailout. These reforms are: