Bailout bill fails

[socca]

Yep, the Herbert Hoover Solution. That worked out well, didn't it.

I doubt that's a valid analogy, considering how much gov't intervention is going on these days even without the bailout. However, it's not worth arguing the point.

 

[MGYog]

I think they all want it to pass, but in all the jockeying to either take credit or assure a foundation for laying blame depending on the outcome, they all overdid it a little bit.

Really? You aren't saying that this first vote is for show, and the next vote for the Bail-out will be the real thing, are you? If you're not, then I'm saying it!

 

[OAG]

This thing will not be back as it was. It will be reworked and the modifications will be extensive but the end result will not change that much - just enough that it can be said it is "not the same bill". One change will be an increase in FDIC limits which is practically a given now that both Presidential Candidates have endorsed it and, in Senator McCain's he said he discussed it with the President (which to me, indicates the President agrees, or it would not have been mentioned by Senator McCain). Something will be done to at least look like there are controls on CEO (and high level staff) "windfalls" upon failure of the entity. I suspect these will be marketed heavily and may be enough to get it passed again by the end of the week. I would not be surprised if the Secretary of the Treasury resigns shortly thereafter. Her majesty the speaker of the house should be gone but probably will hang on until January when she will either "fade into the masses" or be replaced by another.

 

[cute fuzzy bunny]

The CEO parachutes should be deferred and become a percentage of whatever profit the government eventually turns as a result of unloading the bad debt.

We get nothing, they get nothing. Might also encourage them to fix things up a bit in the days and weeks they have left.

 

[CompoundInterestFan]

Every time one more domino falls, it only increases the fear and the panic, and that only makes the situation more precarious -- making other dominoes fall.

And what if they pass the Paulson plan, and it doesn't work? What do think the panic will look like then?

 

[Nords]

I'm not selling a thing, I'm just pointing out how big this beast of an economy is, and that the 700 billion bailout seems a bit niave. If you lost your job would a day's pay handout make difference?

To you or to your representative's re-election campaign?

... in Senator McCain's he said he discussed it with the President (which to me, indicates the President agrees, or it would not have been mentioned by Senator McCain).

I'm not sure that anyone cares anymore whether the President agrees, least of all Congress. I'm also not sure that I'd want to have my campaign trumpet that I'm discussing things with the President-- let alone give the impression that he agrees with me...

Maybe it's better that Congress and the Execs keep wrangling over the legislation while the current financial/credit system works through its woes.

 

[OAG]

Have to add another "we want it": First $50K, $100K of Interest is TAX EXEMPT and INDEX it to INFLATION. Would make people save more (any/some) and would help banks/CU get some deposits to prudently lend.

I am joking about the amount but we had this in smaller amounts not too many years ago and it would also require too much money to teach bankers what "prudent means".

 

[rickier55]

going to send some emails to different congresspeople urging them to look at an alternative proposal.

my idea is to simply buy up the homes in foreclosure. it will pay off the toxic loans but there won't be any interest like originally thought. and the government can rent the homes out to whoever lives in there.

I'm not sure if you were serious, but for last few days, I've been wondring the same thing. If this"problem" is because financial institutions have mortgages in default, then why not go to that core of the problem, and help not only the financial institutions get rid of tha risky(or bad) debt and at same time help people that are losing their home.

Must be some reason something this simple won't work.

Rick

 

[Milton]

Apparently the FDIC is seriously underreserved and may soon have no choice but to dip into tax dollars [FDIC may borrow money from Treasury].

See generally Solvency Street is paved with pain:

The United States, home of more than 8,000 financial institutions, has had relatively few of them go broke since the savings-and-loan debacle, and that was nearly 20 years ago. Only three small FDIC-insured banks failed last year and none in 2005 and 2006. There has been plenty of time to build up the fund. But it hasn't happened because some genius decided, back in the mid-1990s, that the deposit insurance fund need not save too much for a rainy day. So for the next decade, most U.S. banks got a holiday from sending their dimes to FDIC.

Well, baby, it's pouring outside now. And the tale of FDIC seems like a perfect illustration of what has made the U.S. economy so sick. Subprime mortgages are just a manifestation of the bigger problem: The people don't save, the government doesn't save and even the parts of it that exist to set aside money for the bad times, don't save enough.

 

[OAG]

FDIC has formally requested permission to raise FDIC limits on savings. Lots of Government now talking about it. New limit would be $250K on single owner account.

 

[FinanceDude]

FDIC has formally requested permission to raise FDIC limits on savings. Lots of Government now talking about it. New limit would be $250K on single owner account.

Expect CD rates to plummet.....

 

[ST in London]

I can't help but wonder if the House of Representatives might be more in tune with their constituencies than the President and news media. Might they have canvased their boroughs and voted accordingly?

It seems the media gave this proposal a poor chance by entitling it "bailout". Just a trans-Atlantic view.

 

[al_bundy]

what else was it?

 

[al_bundy]

Expect CD rates to plummet.....

good

 

[al_bundy]

FDIC has formally requested permission to raise FDIC limits on savings. Lots of Government now talking about it. New limit would be $250K on single owner account.

after the defeat of the bailout someone from the House was talking about this. supposedly there is an old law that gives them the authority. this should help stop the run on the banks.

 

[Running_Man]

Best case is since most Americans don't save and don't have stocks they don't care about the market as much as others. Throw a 5 percent tax on all stock holdings (can give them a share of a goverment preferred dividend to get back the money in the future on this great profitable deal) and let all stock holders pay for their support and see if their demands change.

 

[OAG]

Expect CD rates to plummet.....

Why would that happen? The cost of the insurance (which they have not had to pay for years) is not that much. Besides I tend to use Credit Unions whose fees are IMO always lower.

 

[Gone4Good]

Do not be fooled. The $700 billion (ultimately $1 trillion or more) bailout is not predominantly for mortgages and homeowners. Instead, the bailout is for mortgage-backed securities.

Yup, just like Secretary Paulson said . . . buying "securities".

 

[Gone4Good]

Must be some reason something this simple won't work.

Because setting up an infrastructure to buy and administer millions of residential properties is not simple . . . we'd still be working through the backlog when Chelsea Clinton runs for her first Presidential term in 2020.

 

[cute fuzzy bunny]

Because setting up an infrastructure to buy and administer millions of residential properties is not simple

Yep, and the Paulson plan will probably do a good job of employing all the bank employees who get axed. Probably a lot of the same folks that helped create the mess.

I hear some banks are already forming outsourcing capabilities to take on the task.

 

[REWahoo]

I hear some banks are already forming outsourcing capabilities to take on the task.