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nieh
09-23-2008, 11:19 AM
Someone posted this article on my other board, thought I'd share:

Dirty Secret Of The Bailout: Thirty-Two Words That None Dare Utter (http://www.huffingtonpost.com/2008/09/22/dirty-secret-of-the-bailo_n_128294.html)

A critical - and radical - component of the bailout package proposed by the Bush administration has thus far failed to garner the serious attention of anyone in the press. Section 8 (which ironically reminds one of the popular name of the portion of the 1937 Housing Act that paved the way for subsidized affordable housing ) of this legislation is just a single sentence of thirty-two words, but it represents a significant consolidation of power and an abdication of oversight authority that's so flat-out astounding that it ought to set one's hair on fire. It reads, in its entirety:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
In short, the so-called "mother of all bailouts," which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives. All decision-making power will be consolidated into the Executive Branch - who, we remind you, will have the incentive to act upon this privilege as quickly as possible, before they leave office. The measure will run up the budget deficit by a significant amount, with no guarantee of recouping the outlay, and no fundamental means of holding those who fail to do so accountable.

Is this starting to sound familiar? Robert Kuttner cuts through much of the gloss in an article in today's American Prospect:

The deal proposed by Paulson is nothing short of outrageous. It includes no oversight of his own closed-door operations. It merely gives congressional blessing and funding to what he has already been doing, ad hoc. He plans to retain Wall Street firms as advisors to decide just how to cut deals to value and mop up Wall Street's dubious paper. There are to be no limits on executive compensation for the firms that get relief, and no equity share for the government in exchange for this massive infusion of capital. Both Obama and McCain have opposed the provision denying any judicial review of decisions made by Paulson -- a provision that evokes the Bush administration's suspension of normal constitutional safeguards in its conduct of foreign policy and national security. [...]

The differences between this proposed bailout and the three closest historical equivalents are immense. When the Reconstruction Finance Corporation of the 1930s pumped a total of $35 billion into U.S. corporations and financial institutions, there was close government supervision and quid pro quos at every step of the way. Much of the time, the RFC became a preferred shareholder, and often appointed board members. The Home Owners Loan Corporation, which eventually refinanced one in five mortgage loans, did not operate to bail out banks but to save homeowners. And the Resolution Trust Corporation of the 1980s, created to mop up the damage of the first speculative mortgage meltdown, the S&L collapse, did not pump in money to rescue bad investments; it sorted out good assets from bad after the fact, and made sure to purge bad executives as well as bad loans. And all three of these historic cases of public recapitalization were done without suspending judicial review.


Kuttner's opposition here is perhaps the strongest language I've seen used, pushing back on this piece of legislation, in any publication of repute, and even here, Section 8 is not cited by name or by content. McClatchy Newspapers also alludes to Section 8 with concern, citing the "unfettered authority" that Paulson would be granted, and noting that the "law also would preclude court review of steps Paulson might take, something Joshua Rosner, managing director of economic researcher Graham Fisher & Co. in New York, said could be used to mask previous illegal activity." Jack Balkin also gives the matter the sort of attention it deserves on his blog, Balkinization.

But elsewhere, the conversation is muted. The debate over whether Congress is going to pass the Paulson bailout package, or pass the Paulson bailout package really hard seems to have boiled down to a discussion of time and concessions. The White House has made it clear that they want this package passed yesterday. Congressional Democrats seem to be of different minds on the matter, with some pushing back hard, and others content to demand a small dollop of turd polish to make the package seem more aesthetically pleasing, at which point, they'll likely roll over and pass the bill. Neither candidate, John McCain or Barack Obama, seem all that amenable toward the bailout, but neither have either demonstrated that they are willing to risk their candidacies to do much more than exploit the issue for electoral purposes.

Sunday morning came and went, with Paulson traipsing dutifully from studio to studio, facing nary a question on Section 8. Front page articles in the New York Times, Washington Post, and the Wall Street Journal detail the wranglings, but make no mention of this section of the legislation. On TV, cable news networks are stuck in the fog of the ongoing presidential campaign.

Throughout the coverage, one catches a whiff of what seems like substantive pushback on this power grab, but it largely amounts to a facsimile of journalistic diligence. Most note, in general terms, that the bailout represents a set of "broad powers" that will be granted to the Department of the Treasury. Yet the coverage offsets these concerns through the constant hyping of the White House's overall message of "urgency."

But one cannot overstate this: Section 8 is a singularly transformative sentence of economic policy. It transfers a significant amount of power to the Executive Branch, while walling off any avenue for oversight, and offering no guarantees in return. And if the Democrats end up content with winning a few slight concessions, they risk not putting a stop-payment on the real "blank check" - the one in which they allow the erosion of their own powers.

Over in the Senate, Christopher Dodd has proposed a bailout legislation of his own, which critically calls for "an oversight board that not only includes the chairman of the Federal Reserve and the SEC, but congressionally appointed, non-governmental officials" and would require the President to appoint an "independent inspector general to investigate the Treasury asset program." In Dodd's legislation, Section 8 is effectively stripped from the bill.

Nevertheless, the fact that Section 8 of the Paulson plan seems to strike few as a de facto dealbreaker can and should astound. The failure of Congress to hold the line on this point would be truly embarrassing. But if we make it through this week with nobody in the press specifically informing the public about the implications of this single sentence - in the middle of a complicated bill, in the middle of a complicated time - then right there, you have the single largest media failure of this year.

Sunny
09-26-2008, 05:03 PM
tl;dr ;)


bump because people need to read this. so freaking scary.

IamSam
09-26-2008, 05:25 PM
Holy fuck. This is getting ridiculous.

Jesus
09-29-2008, 02:05 PM
So, EPIC FAIL in the House.

All good news so far, the ridiculous bailout didn't pass. And best of all, the Republicans are gonna get blamed for everything that goes wrong. McCain failed to convince his party members to vote in favor of it. Awesome awesome awesome. Obama has just won the election a few hours ago. Epic fail by the Republicans and the McCain campaign.

Now lets hope the wussy Dems finally get the guts to push for a sane plan (which the republicans won't like either obviously, but I doubt they'll vote nay for a second time), like something Galbraith junior proposed (http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092403033.html).

Moose
09-29-2008, 02:36 PM
why didnt obama come out in strong favor of the bailout and make the dems in the house vote in favor of it?...

...something like 95 dems in the house rejected it.


...was it rejected cuz it was a bad bill, or to just make sure obama wins the election?

IamSam
09-29-2008, 02:38 PM
It was just a bad idea. It wasn't just a ploy to get someone elected...just a bad idea.

jacknife737
09-29-2008, 02:52 PM
It was a poorly written bill, and i'm glad it didn't get passed.

This is more then likely the kiss of death for McCain's campaign. Obama has been pulling ahead in both the popular vote and electoral collage, and the GOP is going to get the brunt of public outrage over the crisis. The debate on Thursday isn't going to help matters either. Palin is going to be lucky to get out of there in one piece, let alone try to gain back voter confidence in the GOP.

sKratch
09-29-2008, 03:42 PM
My main question is why isn't anyone out in the media talking about this crazy clause?

nieh
09-29-2008, 03:56 PM
I think Colbert mentioned it after I posted it here, but he didn't actually quote the bill in the process, just mentioned that no courts can review it.

Llamas
09-29-2008, 04:30 PM
So, I'm confused. Who was actually for this bill, besides Bush? The Democrats all voted against it, right? What about the Republicans?

Moose
09-29-2008, 06:06 PM
So, I'm confused. Who was actually for this bill, besides Bush? The Democrats all voted against it, right? What about the Republicans?

originally, the dems were all for it...that is why this all seems so weird and kind of a surprise....it was the house repubs who were raising the concerns about the bill originally.

sKratch
09-29-2008, 09:34 PM
So, I'm confused. Who was actually for this bill, besides Bush? The Democrats all voted against it, right? What about the Republicans?

NO!

The majority of Democrats voted for it. Most Republicans and something like 90 Democrats voted against it.

Moose
09-29-2008, 09:41 PM
95 democrats didnt vote for it...thats like 40 percent haha...thats still a lot...to make this seem like its all the republicans fault is ridiculous. the fact is, this bill can be dangerous, so we need to make sure we get it right.

we definitely need to do something, but we have to be careful as to what we do and how we do it.

...the bill is better than the original, so hopefully at the end of the week, the revised bill will be a stronger and better one than the second version.

the republicans (and maybe mccain) helped in bringing about revisions to the bill, but i guess you can also say they botched it when they didnt pass it...so i guess we can only hope that the newer version will be even better and solve the real issues to the economy.

but i guess no one is really sure about anything, and most of us arent even 100 percent sure on how all this works with the economy.

Little_Miss_1565
09-30-2008, 06:45 AM
*headdesk*

That's what I figured when it didn't pass. No one in congress is listening to Bush anymore, only their constituents, as we get closer to election day.

Jesus
09-30-2008, 06:54 AM
95 democrats didnt vote for it...thats like 40 percent haha...thats still a lot...to make this seem like its all the republicans fault is ridiculous. the fact is, this bill can be dangerous, so we need to make sure we get it right.
Democrats voted for it 140-95. Republicans opposed it 133-65.




the republicans (and maybe mccain) helped in bringing about revisions to the bill, but i guess you can also say they botched it when they didnt pass it...so i guess we can only hope that the newer version will be even better and solve the real issues to the economy.

Doubt it, this was the best bill the republicans would get because it would socialize the losses and privatize the profits. The way they have run the economy ever since the 80's. Only the dems get to gain, because a new bill can only be more new deal like.
There are only 3 options:
1) The current plan gets voted again (maybe after the Senate votes for it) and passes (only 12 people have to switch).
2) A complete new plan more democrat friendly plan, which would take quite a while and the republicans would get shit in the mean time.
3) No bailout, which would make even Fox/Murdoch turn against the Republicans.

Moose
09-30-2008, 06:06 PM
...

http://www.youtube.com/watch?v=3p1Wc2NFa3w

Jesus
10-01-2008, 07:58 AM
...

http://www.youtube.com/watch?v=3p1Wc2NFa3w

Well that's 8 minutes I won't get back. And I really don't understand why you post it.

-If it's to discredit democrats then just look at when it took place. 2004, the republicans had majorities.
-If you're saying that the current crisis can be attributed to Fannie Mae and Freddie Mac. Then that makes as much sense as saying Homer Simpson is a power ranger. Sure they helped fuel the housing bubble, but they were trailing the the private sector. They in fact lost market share between 2002-2007, as the volume of private issue mortgage backed securities exploded.
-If you're saying that the democrats stopped a reform bill, well then i'll just quote (http://www.ft.com/cms/s/0/8780c35e-7e91-11dd-b1af-000077b07658.html?nclick_check=1)former House Republican Financial Services Chair Mike Oxley: “What did we get from the White House? We got a one-finger salute.”

sKratch
10-01-2008, 05:31 PM
Biggest LOL ever:
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1

Article from September 30, 1999 when Fannie started subprime loans.


If you're saying that the current crisis can be attributed to Fannie Mae and Freddie Mac. Then that makes as much sense as saying Homer Simpson is a power ranger.

Read the article and weep, buddy.

Endymion
10-02-2008, 12:37 AM
Dirty secrets of economy (http://www.youtube.com/watch?v=EwTZ2xpQwpA)

i knew memorizing that would pay off one day.

Jesus
10-02-2008, 04:35 PM
Biggest LOL ever:
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1

Article from September 30, 1999 when Fannie started subprime loans.



Read the article and weep, buddy.

Yeah I've seen that article quoted on a bunch libertarian, neo-liberal blogs. Who are now scared that their wet dreams of unfettered free markets can't work in reality. Reminds me of western commies years ago justifying/lying about Stalinism.

Anyway the reasoning behind it makes no sense to me. Nor does it contradict with anything I said.

Look Fannie and Freddie had little to do with the explosion of shitty lending a few years ago. As I already stated their share started to fall drastically after 2002. So their share was declining when the housing bubble was rapidly increasing, and the subprime peak was 2006.
http://users.telenet.be/thrice/uard.png

You can see them taking over the S&L position after the S&L crisis in the 1980s all the way up to 2000. In 2002 you can see that their market share drops significantly. Because risky lending by the (complete) private sector, which was even more poorly regulated compared to (quasi government agencies) Freddie and Fannie, exploded. Now for the sake of argument lets say that Feddie and Fannie hadn't done all the bad stuff, then all the money flowing in would have gone through the private sector. Which would result in a bigger mess than what it is now.

So for what it's worth the biggest problem wasn't the subprime loans. That's a convenient excuse for all those that missed the housing bubble. The nature of the loans isn't the most relevant thing. The housing bubble resulted in more people buying houses a inflated prices and therefor more people needing to take on these crap subprime loan (which then on their own played a role in further enhancing the bubble). Furthermore, the reason why fannie and freddie failed was a lack of capitalization and the unraveling of the housing bubble which resulted in a rise in the delinquency rate on good loans (http://www.nytimes.com/2008/08/04/business/04lend.html?ref=business) too.
So the main cause is the housing bubble, and whose to blame? A shit load of people and a lack of regulation. Basically every person that missed the bubble and wanted to foster it, 'ownership society' and all that nonsense.