"The action I am taking is no more than a radical measure to hasten the explosion of truth and justice. I have but one passion: to enlighten those who have been kept in the dark, in the name of humanity which has suffered so much and is entitled to happiness. My fiery protest is simply the cry of my very soul. Let them dare, then, to bring me before a court of law and let the enquiry take place in broad daylight!" - Emile Zola, J'accuse! (1898) -

Thursday, September 25, 2008

There Is Nothing In The World Of Politics Or Finances That Is As Dangerous As An Unfulfilled Expectation. Tomorrow We Will Witness The Full Weight Of That Statement At The Opening Bell On Wall Street!

We Would All Be Better Off If They Simply Closed The Market Tomorrow.

The Expectation Of The Day Was That There Would Be Bipartisan, Two Candidate Agreement On The “Principles” Of Our Financial Crisis, Leaving “The Devil In The Details” For Further Negotiations Throughout The Weekend.

Instead Everyone Had The Rug Pulled Out From Under Their Feet With a Gingrich Motivated, Cantor Executed Monkey Wrench. The Effect Is The Further Undermining Of The Negotiations And Any Faith In Their Integrity. The Whole Process Has Now Been Painted In Neon Glow “Politics As Usual” Corruption Colored Paint.

The “Cantor/Republican” Proposal Should Have been Part And Parcel Of This Weeks Deliberations, And Chris Dodd Is Quite Correct In Volley Returning The Ball To Bush, Berancke, Paulsen And Cantor, etal. To Stipulate How Any Of The Content Can Be Incorporated Into A Generic “Principles” Outline Before Any Serious Detailing Can Continue.

The Specter That This Entire Move Is Part Of A Scenario To Catapult McCain Into The Hero Of Settlement Has Already Been Called Into Full View In Such Fashion That Any Serious Attempt To Pull Off That “Game” Will Be A Kamikaze Mission.

The Final Proposal, For Good Or Ill Will Have To Be Bipartisan In The Name Of America Or It Will Be Destructive Beyond Most Imaginations!

House Republicans' rebellion threatens bipartisan bailout plan
Rock Hill Herald, SC - 39 minutes ago
"What this looked like to me was a rescue plan for John McCain," said Senate Banking Committee Chairman Christopher Dodd of the Republican objections. ...

US bailout deal stalled
Reuters UK, UK - 1 hour ago
A group of conservative Republican lawmakers proposed an alternative mortgage insurance plan, eschewing the Bush administration's Wall Street bailout just ...

Tentative meltdown deal: Bush, McCain, Obama meet
MLive.com, MI - 1 hour ago
A group of Republican members of the House of Representatives, meanwhile, circulated a less government-focused alternative that seemed to be gaining some ...

After bailout meeting, Obama calls for 'urgency'
WIBW, KS - 1 hour ago

£400bn Wall St bail-out deal could be ditched after McCain 'backs ...
Mail on Sunday, UK - 1 hour ago
After the hour-long White House meeting, he said: 'What has happened here is that we have spent seven straight days to find a rescue plan for the economy. ...

GOP conservatives present rescue alternative
guardian.co.uk, UK - 34 minutes ago
Rep Eric Cantor, R-Va., said the plan would be to remove the burden of the bailout from taxpayers and instead place it, over time, on Wall Street. ...

Rep Eric Cantor, R-Va., said the plan would be to remove the burden of the bailout from taxpayers and instead place it, over time, on Wall Street.

``Instead of a purchase scenario where you have the government injecting $700 billion right up front into the markets, what you have here is an insurance plan,'' Cantor told reporters. ``In order to get this insurance, the banks with these failed assets would have to pay for the government backing, pay for the insurance.''

The plan emerged after it became clear that House Republicans in large numbers weren't coming around to the approach favored by Treasury Secretary Henry Paulson, which is to have the government buy up the troubled securities, hold them, and eventually sell them off.

Under the House conservatives' plan, institutions holding stronger assets would pay lower premiums for the government backing; higher-risk securities would require higher premiums.

Robert Litan, an expert on banking and finance at the Brookings Institution, called the framework unworkable, saying it would not achieve the basic goal of creating a market - and establishing prices - for mortgage securities no one's willing to buy.

``Everything depends on how you value the security,'' Litan said. ``If you do the deposit insurance scheme, there's nobody out there to know what the right price is.''

White House Summit Yields No Deal on Financial Bailout
CQPolitics.com, DC - 1 hour ago
About the only thing clear Thursday night was that any financial rescue plan could be a tough sell to rank-and-file Republicans and Democrats alike, ...

Progress toward a financial industry bailout hit a major bump Thursday after what participants described as a contentious meeting at the White House, strong reluctance among House Republicans to sign off on a deal and skepticism from rank-and-file Democrats.

“It was a strong exchange of ideas,” Nadeam Elshami, a spokesman for House Speaker Nancy Pelosi , D-Calif., said of the White House meeting, which included congressional leaders, President Bush and the Republican and Democratic presidential candidates.

Democrats pointed fingers at House Republicans. Earlier in the day, as other key lawmakers were reporting an “agreement on principles” following a bipartisan, bicameral meeting on Capitol Hill, House GOP leaders held back and conservatives floated an alternative to the administration’s plan to buy up to $700 billion in troubled assets from banks and other financial institutions.

House GOP spokesman Brian Steel said the House Republicans’ principal participant in the Capitol Hill meeting, Rep. Spencer Bachus , R-Ala., was not empowered to negotiate on behalf of the Republican caucus. When pressed on why he wasn’t, the aide said Republicans were waiting for bipartisan negotiations and House Minority Leader John A. Boehner , R-Ohio, was waiting to develop his own plan.

“Everyone else is on board. They are the only ones who are not on board,” said Pelosi spokesman Brendan Daly.

But House Democrats held a heated caucus meeting where some of their most liberal members made the case for additional measures in the credit crisis package, including more bankruptcy protection for homeowners facing foreclosure and a stock transaction fee to give the government more revenue to support troubled financial services companies.

The presence of Republican presidential candidate Sen. John McCain and his Democratic rival, Sen. Barack Obama of Illinois, also seemed to complicate matters, at least politically. Some Democrats suggested McCain was an obstacle to an agreement, while some House Republicans said they were looking to him to strike a deal.

About the only thing clear Thursday night was that any financial rescue plan could be a tough sell to rank-and-file Republicans and Democrats alike, though opposition was especially intense among House Republicans.

Several senior House Republicans said they believed only perhaps one in five members of their caucus openly support the proposal. They said that at least a third of the caucus was strongly opposed, and the rest were either leaning against or undecided.

McCain met with House Republicans in Boehner’s office at the end of the noon lunch hour. One of the participants said McCain seemed cool, if not opposed outright, to the administration plan during the discussion, and seemed to have a number of ideas of his own, such as limits on executive compensation and a reduction in the capital gains tax that could form the core of a GOP plan.

Leaders of the Republican Study Committee, the caucus of conservative GOP House members, meanwhile unveiled their proposal for dealing with the mortgage industry crisis. That plan involves having holders of mortgage-backed securities buy insurance, with the Treasury Department designing a system to charge premiums.

Daly said Pelosi told Bush and Treasury Secretary Henry M. Paulson Jr. that it is their responsibility to explain the need for action to dissident House Republicans. “You need to show leadership and get them on board,” he quoted Pelosi as saying.

Sen. Richard C. Shelby , R-Ala., top GOP member of the Senate Banking Committee, didn’t wait until the end of the White House session to voice his opinion. He came out long enough to insist there was “no agreement.” (MORE)

Rescue Plan Talks Set Back by Republican Alternative
Sept. 25 (Bloomberg) --
Negotiations on a $700 billion proposal to inject new capital into the paralyzed credit markets stalled after House Republicans offered a different solution to the financial crisis.

Senate Banking Committee Chairman Christopher Dodd said the agreement in principle he had reached earlier in the day with some Republicans was later undermined by a proposal offered by House Republicans led by Representative Eric Cantor.

Dodd said that if Treasury Secretary Henry Paulson backs Cantor's plan, then negotiations would ``have to start all over again.'' Talks are to resume tonight, Dodd said at a press conference.

The proposal that Dodd, Paulson and Federal Reserve Chairman Ben S. Bernanke had been pursuing would have the federal government buy troubled assets from financial companies.

The plan circulated by Cantor calls for a mortgage-backed security insurance fund, rather than taxpayer-funded purchases of those securities. The plan calls on the Treasury to design a system to charge premiums to MBS holders to finance the insurance, according to a fact sheet.

Republicans also seek ``temporary tax relief'' provisions aimed at allowing financial companies to free up capital. It also suggests that regulators call on financial institutions to suspend dividends, along with other steps to address liquidity problems.

`Wall Street Pays'

Cantor said the House Republican proposal ``does not leave the American taxpayers with the bag and makes sure that Wall Street pays for this recovery.''

Representative Jeb Hensarling of Texas said it shouldn't be ``Paulson's plan or no plan.''

Dodd said on CNN that the Republican plan threatens to force negotiations to begin anew. He said the White House meeting ``looked like a rescue plan for John McCain for two hours, and it took us away from the work we were trying to do today.''

Obama suggested the talks were damaged by politics.

``When you start injecting presidential politics into delicate negotiations you can actually create more problems rather than less,'' Obama said on CNN.

McCain's campaign said more negotiations were needed to draft legislation that would pass Congress.

``There is not yet a majority of Democrats and Republicans who are willing to vote yes for anything,'' said Steve Schmidt, a senior adviser to McCain's campaign.

Deny McCain

Kevin Smith, a spokesman for House Republican Leader John Boehner, said the speed with which Dodd's plan was put together was designed ``to deny Senator McCain a role in trying to craft a bipartisan solution.''

Cantor was told by Boehner to start working on an alternative two days ago, Smith said. Pelosi was told today.

Senate Majority Leader Harry Reid said negotiations will begin again tonight at the Capitol to ``see if we can put the train back on the tracks.'' Paulson and Bernanke were invited to attend the talks, Reid said.

Michele Davis, a spokeswoman for Paulson, said, ``Secretary Paulson appreciates the hard work by members on both sides of the aisle to address the threat we face to our economy,'' and urged lawmakers to resolve their differences.

Paulson has not rejected any ideas, Davis said. He has no plans to join tonight's negotiations, she said.

To contact the reporters on this story: James Rowley in Washington at jrowley@bloomberg.net; Alison Vekshin in Washington at jgoldman6@bloomberg.net

Plan reawakens Congress suspicions
By Alan Beattie, Daniel Dombey, Stephanie Kirchgaessner, James Politi in Washington
Published: September 25 2008 22:04 Last updated: September 26 2008 00:12

The secretary of the US Treasury and former head of Goldman Sachs is not used to being called a socialist and invited to do remedial homework. Still less might he expect that criticism to come from congressmen and senators in his own party.

But in an extraordinary week in Washington, the White House’s bail-out plan for Wall Street has been batted about and sometimes mauled in the hearing rooms of Capitol Hill. There have been dramatic scenes: hours of grilling in packed hearings by lawmakers expressing outrage at the extraordinary powers the administration is seeking; interruptions by protesters holding up placards decrying corporate welfare; the vice-president being “ripped into shreds”, in the words of one lobbyist, behind closed doors by furious Republican lawmakers.

Deborah Pryce, a Republican on the House of Representatives financial services committee, on Wednesday told Hank Paulson, Treasury secretary, and Ben Bernanke, Federal Reserve chairman, to “prepare for an advanced macroeconomics class” on their plan. Jim Bunning, senator from Kentucky, called it “financial socialism” and “un-American”.

The saga of the bail-out underlines how, even with a tough and admired Treasury secretary, the decaying authority of the Bush administration and the parlous state of the public finances have deepened resistance in Congress to writing the White House a blank cheque.

The game plan was clear from last weekend: produce a simple, clean proposal for clearing up the mess in Wall Street with a specific price tag and point to the sense of panic in the markets as the overwhelming imperative to get it done.

But the very simplicity of the plan was one of its weaknesses. By sending up a three-page proposal to Capitol Hill that essentially gave the US Treasury $700bn to spend as it wished, the White House reawakened all Congress’s suspicions and criticisms of the way it has conducted business for eight years.

Chris Dodd, Democratic chairman of the Senate banking committee, summed up the mood of many in Congress when he said: “After reading this proposal, I can only conclude it is not just our economy that is at risk but our constitution as well.”

Critics of the administration draw comparisons with the extraordinary powers it sought after the September 11 attacks. Steve Clemons of the liberal-leaning New America Foundation think-tank said this week risked being a “9/11 replay” and urged Congress to stand firm: “We saw abuses of power, the expansion of secrecy and the promulgation of norms that seemed to be the very antithesis of what America stands for,” he said.

The Democrats’ fear of being blamed for squabbling while the US financial system imploded gave way to concern about placing public money and their own legacy in the hands of the Bush administration. As it became clear from polls taken early in the week that the American public shared some of their reservations, they became emboldened. Although by no means averse to government intervention in the financial markets (or in housing), they were extremely wary of being saddled with a corporate welfare hand-out.

Even on Thursday morning, as the outline of a deal was coming together, some lawmakers continued to rail against it. “What President Bush is now asking Americans to do is pay for the equivalent of 4,500 Alaskan bridges – a trillion dollar, gold-plated, diamond-encrusted ‘Bridge to Wall Street’,” said Lloyd Doggett, a Texas Democrat, referring to the notorious $400m Alaskan “Bridge to Nowhere” which has become short-hand for misdirected government spending.

As political cover, the Democrats on Capitol Hill needed their Republican counterparts to join them. But some Republicans had reservations of their own, rediscovering conservative principles of fiscal stringency and free markets. The formerly ferocious Republican party discipline on the Hill has long dissipated.

Even the dispatching of Vice-President Dick Cheney, the White House’s chief enforcer, to win round the Republicans ended in testy exchanges rather than sullen acquiescence. Richard Shelby, the Republican senator from Alabama, marched out of a White House meeting yesterday to announce: “There’s still a lot of different opinions. Mine is it’s flawed from the beginning.”

More than any Republican leader in office it was Newt Gingrich, the former House speaker, who captured the frustration of his party. He encouraged John McCain to reject the plan: “I think it is a very, very bad idea, and I would argue is a very un-Republican idea,” he told National Public Radio.

Indeed, it was not just the Hill Republicans whom the Democrats needed to pull behind any plan. Harry Reid, the Senate majority leader, said: “We need the Republican nominee for president to let us know where he stands on what we should do.”

The political impact of this episode has only just begun. If it fails, or looks like a bail-out for wealthy and feckless financiers, the compromise proposal being stitched together yesterday has the potential to cause lasting damage. The fall-out will continue long after the departure from office of the administration for whom, critics say, it provides a legacy: seeking power and money without accountability.

Copyright The Financial Times Limited 2008

Not So Fast on the Deal, House GOP Says Make Wall Street Pay

House Republicans, who've been swamped with your phone calls demanding that they reject President George Bush's historically huge $700 billion bailout of Wall Street and bad mortgage bankers, have come up with another idea: Instead of just buying the worthless mortgages, make the banks buy insurance from Washington, which would pay on those that default.

It's a plan offered by House Minority Whip Eric Cantor, who's trying to come up with an alternative under orders from House Minority Leader John Boehner.

Sources say his idea is a simple one, and one Treasury initially liked but rejected because just buying the bad paper was easier. The emerging plan would act just like the mortgage giant Ginnie Mae, which guarantees loans to poor buyers.

It's different from the Bush-Paulson plan in that it doesn't require an upfront, tax-payer-funded kitty of $700 billion.

Instead, companies with bad loans would buy insurance from the feds and the feds would turn around and sell the bad loans they end up getting stuck with.

The expected result: The Treasury isn't out a ton of money upfront and is only on the hook for bad loans. And if past patterns prove true in the future, Uncle Sam could turn the bad loans into a profit.

"Our objective," said a key House GOP leader working the deal, "is we shouldn't burden the taxpayers, the people who have been living by the rules." The document, provided to Whispers, shows their major principles.

The reason for the alternative plan is simple: House members are receiving calls at a rate of 100 to 4 against the Bush-Paulson bailout. "People are angry."

House leaders said that Treasury looked at the insurance idea and initially liked it but then went for the easier fix: Just buy bad loans. House Republicans, however, have balked at that plan, hence Boehner's call to Cantor to drum up a new idea.

Insiders say that the insurance plan isn't exactly an alternative to the Bush-Paulson plan because Paulson's blueprint is written so broadly that the insurance proposals could be folded into the larger plan, leaving it up to Treasury to figure out which program to apply to each bad loan.

Will the GOP get its say? Nobody knows, and they don't think a final deal will come before Sunday. But a GOP source said that House Speaker Nancy Pelosi doesn't want her side holding the bag, so she's demanding that any final bill be supported by a majority of House Republicans.

Pelosi: Paulson must make call on Republican plan
Reuters - 30 minutes ago
WASHINGTON (Reuters) -
The Speaker of the House of Representatives, Nancy Pelosi, said on Thursday that US Treasury Secretary Henry Paulson should decide ...

Congress can wait to defray rescue cost: Pelosi
WASHINGTON (Reuters) -
A group of Democratic lawmakers is pushing for a tax on Wall Street to defray the cost of a financial market rescue plan, ...

Tax on Trades Should Be Part of Rescue Plan, Some Democrats Say
By Laura Litvan Sept. 25 (Bloomberg) --
A group of House Democrats is proposing to make Wall Street companies and investors pay more of the cost of any ...

House Speaker Pelosi reassures market on rescue plan
By Greg Robb
WASHINGTON (MarketWatch) --
Speaker of the House Nancy Pelosi said Thursday that financial markets can rest assured that Congress will act on ...

Pelosi: We Hope to Bring a Bailout Bill Soon
Washington Post, United States
House Speaker Nancy Pelosi (D-Calif.) told reporters that House and Senate negotiators from both parties are hard at work on a $700 billion bailout package ...

End The Bullshit With Some Statesmanship And Sanity That Allows The Flow Of Credit To Resume, Full Accountability, Regulation, Over site and Reorganization Of Our Financial Institutions As Functioning Partners In Our Nation’s Enterprises Rather Than Blood Sucking Profit Machines Who Quietly Believe That When They Screw Up Royally They Are Entitled To Be Bailed Out On The backs Of The Common Folk Of This Nation.

The End of Corporate Obscenity Must Be At Hand, Or We Will fail!