The Bail-out -- how it works and what's the problem

[Spare]

From CNN -- a pretty concise synopsis of the bail-out, and the respective positions:

1) The Bail out Plan - The Treasury would buy troubled assets from US-based financial institutions. The primary target is mortgage-backed securities that have lost value because of foreclosures and declining home values.

The plan calls for the government to hold on to the assets until the markets improve. The Treasury would then sell the assets and potentially earn a profit.

2) Democrat Position - Obama said the plan should:

* Help the "millions of families facing foreclosure" and not just Wall Street
* Create an "independent, bipartisan board to ensure accountability and complete transparency"
* Have Wall Street repay taxpayers after the bailout
* Have an independent, bipartisan board oversee the bailout
* This plan cannot be a welfare program for CEOs whose greed and irresponsibility have contributed to the problem

3) Republican Position - McCain urged five improvements to the plan

* Allow for greater accountability, including a bipartisan board to provide oversight of the rescue
* Help for taxpayers to recover the $700 billion
* Complete transparency in regards to drafting and implementation of any legislation.
* Cap on executive pay for companies getting federal help
* Ban on earmarks and so-called pork barrel legislation being added to the plan

 

[Spare]

So, if we put the two prospective positions together, it looks like this (I renumbered them 2a,b,c, etc -- 2 is Dem, 3 is Rep.

2a Help the "millions of families facing foreclosure" and not just Wall Street

2b Create an "independent, bipartisan board to ensure accountability and complete transparency"
2d Have an independent, bipartisan board oversee the bailout
3a Allow for greater accountability, including a bipartisan board to provide oversight of the rescue

2c Have Wall Street repay taxpayers after the bailout
3b Help for taxpayers to recover the $700 billion


2e This plan cannot be a welfare program for CEOs whose greed and irresponsibility have contributed to the problem
3d Cap on executive pay for companies getting federal help

3c Complete transparency in regards to drafting and implementation of any legislation.

3e Ban on earmarks and so-called pork barrel legislation being added to the plan

 

[Spare]

Now, you can see where the issues are:

2a Help the "millions of families facing foreclosure" and not just Wall Street
Not sure how this would be done, but it sounds expensive! I suspect this is just rhetoric for the masses.

2b Create an "independent, bipartisan board to ensure accountability and complete transparency"
2d Have an independent, bipartisan board oversee the bailout
3a Allow for greater accountability, including a bipartisan board to provide oversight of the rescue

Sounds like a trade-off - we'll call it a tie, though there is probably contention in the implementation.

2c Have Wall Street repay taxpayers after the bailout
3b Help for taxpayers to recover the $700 billion
Another tie --- no issue here.

2e This plan cannot be a welfare program for CEOs whose greed and irresponsibility have contributed to the problem
3d Cap on executive pay for companies getting federal help
One pays lip service; the other has a specific plan

3c Complete transparency in regards to drafting and implementation of any legislation.
This one is a stickler ... if there is transparency, the history will come out, and the Democrats will suffer greatly. That's why the Republicans want it in there.

3e Ban on earmarks and so-called pork barrel legislation being added to the plan
A McCain special -- and if the Democrats allow it to be in the bill, it will appear that McCain won the negotiations, not an insignificant issue in this campaign time

 

[editec]

That's a CRAPPY PLAN. It REWARDS the banks for screwing up.

The way to do this is for our government to take over the banks which are insolvent because of these mortgages.

We don't JUST take the bad debt off their hands, we put those banks OOB.

They lose their charters, the stockholders lose everything.

Hey that's hard but that IS capitalism, isn't it?

The mortgage issuers (the homeowners) and the government work out a new mortgages that they can pay.

Basically, they continue to pay the amounts they originally signed onto, BUT (probably) the length of the mortgage period increases so that they actually do end up paying off their houses in the full amount.

But, they cannot just WALK AWAY from those mortgages either.

If they're flippers who aren't interested now that the price of RE is no longer advancing, tought shit!

Flippers.....,ake it work with you now that the gov has lowered the mortgage or expect the goverment to keep coming after you until you do.

This keeps those people in their homes, and the number of houses on the market doesn't crash the value of real estate worse than it already has.

As to the bond holders?

They must accept the fact that those high rates of interest they were expecting for their investment is not going to be the same. They're going to get paid, but the ROI is lowers because the RISK is ALSO lowered.


We already did something like this once during the last depression, and it worked out well for the taxpayers, and for the home owners in trouble, and for the homeowners NOT in trouble, too.

In other words it was FAIR.

One more thing...those responsible for this mess should NEVER be allowed to work in the banking for finance industry again...EVER.

Those who sat on the boards of those institutions, likewise , never again.

Stockholders should be able, in civil court, to take those responsible to court to recoup their loses from MISmanagement of the banks, and board of director members, and from the RATING COMAPNIES which screwed up, too..

Those masters of the universe should end up personally totally broke, BTW if the courts are just.

Bond holders also (though class action suit) can try to get the difference from what they finally get paid in interest, to what they signed onto from those who are PERSONALLY REPSONSIBLE at the banks or creidit rating agencies.

But the taxpayers should NOT be on the hook to stockholders or bond holders for their loses since the taxpayers had NOTHING to do with those deals.

That is a FAIR way to do this. This is capitalism WORKING as it is SUPPOSED TO WORK.

Everybody gets something, and those responsible get punished for screwing up so badly.

No blank checks should be issued to the FED or TREASURY, though.

NO more taking bad paper off the banks hands and sticking the taxpayers with it, so the bankers aren't hurt for their mistakes.

That idea is nothing more than CLASS WARFARE and if our government goes for that then to be honest it is time for a revolution, because then what we really live in is not a government of the people but a fascist government run FOR THE RICH, BY THE RICH.

And yes, that IS what fascism really is folks, so if the taxpayer gets screwed and the banks don't?

Then you know that we really live in a tryanny of the banks for the banks and by the banks.


We have to make up our minds and this issue is where the rubber meets the road.


Do we want to live in a shamocracy or a democracy?


Do we want to have something approaching fair capitalist system or do we want to live in a capitalist systemwhere the RICH have all the advantages and when they screw up (like they did again) the POOR have to bail them out?

Some of you conservatives are just now waking up to how unjust and crooked this system really has ALWAYS been. Those of you who get and understand why this happened are halfway to CECOMING LIBERALS by the way.

But government and business doesn't have to be crooked, and it can still be a very well run system of capitalism, too.

It just CANNOT BE laisse fair capitalism because laisse fair capitalism has these kinds of screwups where capitalists blows itself up far too often for it to be a system that actually works for a modern society.

Welcome, those of you who are just now getting it, to the world of FAIR and REGULATED CAPITALISM.

Basically FAI"R CAPITALISM what we liberals have been demanding (and not getting) for the last thirty years!

 

[jeet]

I Personally believe instead of giving these financial companies tax payers money, they should give each household a fresh start. If you are a US Citizen, Green Card Holder the government should give each household a Million Dollars taxable of course and state that you have to pay your debts off from your home to credit cards. An average American debt including house is close to $450,000 with the housing slump. when that's paid off and whatever your left with eventually will go in the banks and back in the economy. Within 6 to 8 months your economy will flow again at its normal pace.

 

[IndyVoter&Rockr]

No matter what happens with the bailouts nothing will get better in this country without a massive overhaul of the public education system.The average citizens of this country have no mind of their own, and just believe what the major news broadcast networks tell them. Everyone I talked to just babbles on about how the world is over if this bailout doesn't pass; they don't realize how they are getting screwed in the process. I will go out on a limb and say 50% of Americans don't even know the difference between conservatives and liberals, which is a sad state of affairs for the country that is trying to spread democracy throughout the world.