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Bailout: WHO will be bailed out? (sorry, turned out long..)
Old 09-24-2008, 05:43 AM   #1
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Bailout: WHO will be bailed out? (sorry, turned out long..)

Deputy Press Secretary Tony Fratto tells us that the banks we are bailing out are actually good firms with a lot of profitable assets:
You have to remember, these are not all weak or troubled firms that own mortgage-backed securities. A lot of them are very successful banks and investment houses that have done very well, have been responsible, are holding performing assets that have value.
Press Gaggle Via Conference Call with Deputy Press Secretary Tony Fratto on the Economy
Open Left:: There Is No Crisis--Summary

This Fratto 'gaggle' is worth a tiny bit of Fisking:

Quote: I think you'll hear Secretary Paulson say this morning, the best taxpayer protection plan we can have is to have stable markets where our financial institutions can function in a normal way.

This is not a step that we have taken lightly. It's a very big plan. It was something we felt we had no choice but to do at this point. But we're going to move forward with it with great confidence that it will have the impact that we expect it to have and to allow growth to continue in this economy. But it is critical that we move quickly, that we get a clean bill out of the Congress, and that market participants and the American people can see that Washington is acting on this problem in a very forthright way.

... I know that there's a -- the image out there that this is a rescue plan for Wall Street financial institutions. This is a rescue plan for the American economy. Our economy does not function properly unless we have well-functioning financial institutions. ...

There was some comment on -- out there about the need to do more for homeowners and, of course, we're talking to members of Congress about how this legislation impacts homeowners and mortgage markets. It will have a very positive impact for homeowners and mortgage markets. It will ensure that we have the mortgage financing availability in the system so that we can continue to go out and make home loans for Americans.

Remember that the root of this problem is the housing correction. We don't want to see housing finance freeze up or be restricted. We want to see increasing amounts of funds available for Americans who want to go out and begin to reduce the overhang of homes that we have out there in the market; but also just want to remind everyone that it was just recently that we passed a very large housing bill to help homeowners. We have a number of plans out there that are directed at preventing foreclosures.

And just very quickly, the third item is that we're hearing questions about transparency and oversight. Just want to say up front, transparency and oversight is very important to us. This is a very big program. It's never been done before, and we will insist that there be very strong and robust transparent oversight and review of this program.
"a clean bill" means no strings attached. If transparency and oversight were so important, why is that not in the draft that took "months"?

About the housing part.. just so sick and so obvious. I have been telling people here for months that the way these people reason and the way the system works is that maximum debt is best.

[Q:]Is the President not afraid also of the fact that by putting in such a program he might have a hyper-inflationary takeoff in the U.S., which would destroy the value of the dollar, which is really the only way that the government has means of controlling the prices, is the credibility in the dollar? Isn't that a consideration?

FRATTO: I'm just not going to comment on dollar policy. That's something that we let the -- the Treasury Secretary is the administration's spokesman on the dollar...
I can barely even continue.. I'm getting nauseous..

Number one, there should be no question out there that this plan will get done this week. There is bipartisan consensus that it needs to get done. We are negotiating over some elements of the plan, but we are very, very confident that it will get done this week. We believe it needs to get done this week, and that's our goal
Rush it through. Shock doctrine.

With respect to inflation, inflation is a monetary phenomenon. The Fed is focused on price stability, we have great confidence in Chairman Bernanke to address inflation and price stability.
This guy has no idea what inflation is, nor that the nominal money supply is secondary to the DEBT supply in affecting prices.

Q Yes, hello. Just without getting into too many of the specifics with regard to the negotiations -- I mean, this clause over executive pay, or possibly changing the bankruptcy laws -- I mean, are those bottom-line deal-breakers for the White House, or are you still open to compromise on that? And also with regard to the $700 billion figure, I know there's talk it could go higher, it could be less, we're not sure, but at this point what are you hearing? Are you still kind of sticking with that figure?

FRATTO: Well, I'm going to stick with the figure that's in Secretary Paulson's legislation that he sent up, and it was -- and that was $700 billion. And I have no reason to believe that we think that isn't the best estimate of what's needed for this program; that it's large enough to have the impact that the economy needs right now.

What was the first part of your question?

Q Just with regard to the provision about executive pay and possibly changing --

FRATTO: Oh, right, right, right.

Q -- the bankruptcy laws. Are those deal-breakers for the White House or are you open to talking about that?

FRATTO: Like I said earlier, I'm not going to get in the way of Secretary Paulson's negotiations with the Hill. He and his staff will have those discussions on specific elements and I'm not going to lay those lines out right now.
OH! FAR BE IT from the president to "get in the way" of Paulson. NOW do you all see Bush has never been a protagonist? Notice the press not wanting to offend the sensibilities of Fratto, asking for answers beyond what he might be "open" to give.. The Chinese could not do better/worse.

Q Any reaction to the idea that's been floated of essentially breaking this package into two parts so that you would do some of the operation this year and I guess some of the operation next year when you see how the first part worked?

FRATTO: I'll be honest, John, I hadn't heard that, so I'm not sure that I have a reaction to it. That's the first I'm hearing of it.
It must be all or nothing. (?)

With respect to executive pay, again, I'm not going to get into specific, point-by-point details on what our views are on that, other than the Secretary of Treasury said it would make more difficult to make this plan work and effective if you provide disincentives for companies and firms out there who are holding mortgage-backed securities and other securities from participating in the program. You have to remember, these are not all weak or troubled firms that own mortgage-backed securities. A lot of them are very successful banks and investment houses that have done very well, have been responsible, are holding performing assets that have value. They were not necessarily irresponsible players, and so you have to be careful about how you deal with them.
v. interesting.. the "all on board" message is linked to protecting exec. pay here.

I think what the Vice President and others will emphasize is that this is absolutely necessary to do right now. In no way does it -- should it signal any abandonment of the belief that our markets work and our free market system works. We had a very unique problem in our economy and this is the best way to deal with it.

So that will be the message. It's urgent, it's needed. It's needed to prevent harm to the broader economy, to retirement accounts,
HAH! Where're Bush/McCain on SS privatization these days?

Q And then if I could just follow: A lot of Americans have concerns, too, and I'm wondering, are there any plans for the President perhaps to address Americans directly at length to explain to ordinary people this complicated topic? Many people don't understand it. They don't -- they're nervous, but they don't know why this is happening and why it's needed. So do you have plans for the President to talk directly to Americans on this?

FRATTO: I don't have anything on that right now.

Q Is it possible we'll see that later in the week or after the legislation gets passed?

FRATTO: If we have a scheduling change, we'll announce it.

Q Thank you.
message to lowly rabble and peons: screw you

Q Hi, I was just wondering, the Republicans are proposing an alternative to this bill. Have you seen that bill, and what's your response to them wanting to do the -- something very different from the bailout?

FRATTO: I have not seen that. I'm sure Secretary Paulson's team has, and they're out there talking about all the concerns that members on both sides of the aisle will have, and we'll let Secretary Paulson and his team deal with those.
ABDICATION. This is what one usually calls ABDICATION.

Q I'm just trying to reconcile two points here. On the one hand, you said that there are a lot of members who rightly have questions and acknowledge that this is obviously a huge package, but on the other hand, you've emphasized several times that it's critical that it be done quickly this week and that it be done clean. You know, for lawmakers who are -- I guess I'm asking, isn't there something to be said for being careful beyond the urgency and the haste? Is there a concern here that maybe the administration is being heavy-handed?

FRATTO: No, well, look, I think I would reconcile it this way: This is -- this was not a program that was conceived of or put together hastily. There was an enormous amount of analysis and debate and discussion before we came forward with this program. I think we have anticipated a lot of the questions that members of Congress would naturally have about taking this step, but we have had -- some of the policy staff have had months to think about what a program like this would be like and how it would work. Others have had at least weeks to think about it. Members of Congress have had days to think about it. And it's very, very complex and takes time to think through all of the implications of it and why some alternative ideas might not work as well as this one.

So I think that's really the issue here. We have thought through a lot of the concerns that some members have in advance, and I think we can address them on a member-to-member basis, on a committee-to-committee basis. I think Secretary Paulson and Chairman Bernanke will be able to help in that effort today. I think when people see their extensive discussion of the details and the implications and the consequences, I think more people will understand why this is the appropriate way to address this problem.

Q Well, I guess that's exactly my point, real quickly, is that you're saying the administration and its staff has had months to think about this and lawmakers have only had days. I mean, doesn't Congress get its turn? Doesn't it have its own right?

FRATTO: And they are, and we're taking this time. I mean, I don't -- I'll concede that it is a lot of information to take in in a relatively short period of time, but I think they can -- I think it's enough time. At any rate, there is an urgent need here to get it done and I think members recognize that also -- the overwhelming number of members of Congress recognize that.

"not put together hastily".. ok.. so where are the taxpayer protections and equity stake? Where is the mechanism for oversight?

There aren't any... AWOL.

I saw Schumer was asking where the $700 billion figure came from.. Paulson didn't appear to be able to say.

“One of you mentioned that you will use about $50 billion dollars a month. If that’s the case, and you’re certainly not going to use all $700 billion immediately, and as you can see there are a lot of questions about whether this will work, we understand you’ve done your best and you think this will work best, but it’s clear we’re in uncharted waters. But what about doing this in tranches? Why couldn’t you ask us for $150 billion, and on January 15th or January 20th we would come back, we would assess how this worked and grant some more money if it’s really working?”
Crooks and Liars » Chuck Schumer to Sec. Paulson: Why $700 billion? Why not $150 billion?

Schumer: "I'd never thought that I'd think that $150 billion is a LOW sum of money.. but compared to $700 billion it is.."

Paulson: "the taxpayer IS on the hook"

Schumer: "could you live with less?"

Paulson: "that would be a GRAVE MISTAKE"

Schumer: "if there's an emergency you could call us back, etc."

Paulson does little but stammer at that point..

gotta watch the video.. urgh

Paulson: "all we're doing is GIVING YOU.. "

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Old 09-24-2008, 06:05 AM   #2
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So . . . we're bailing out "financial institutions" because we need strong financial institutions in order to have a sound economy. Okay. Let's look at this another way. When all is said and done, these billions of taxpayers dollars are going to end up on someone's balance sheet. If the dollars end up on the balance sheets of financial institutions, WHO stands to gain most (I'm talking about real people here). Are my tax dollars going to prop up the balance sheets of rich people who made bad investments? Or, are the bulk of my dollars going to help the "little guy?" REAL people are going to cough up these dollars and REAL people are going to reap the benefit. Just WHO are these real people who are going to benefit most? If it's "Average Joe" citizen I'll feel a whole lot better. But, I suspect that is NOT going to be the case. This smells like a bail out the rich plan to me.
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Old 09-24-2008, 06:46 AM   #3
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Last year Paulson said the stock market is toast, he called it "repricing of risk". the day a treasury secretary says things are really getting bad, is the day you want to have sold the day before
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