Will the Obama administration’s bad bank asset plan work?
"bailout fatigue" is a tremendous understatement. The honeymoon is over. I supported the president in Nov, but the electoral mandate has clearly been confused with a mandate to spend money we don't have at an historic, unprecedented rate. Please end the smoke & mirrors routine re: the ridiculously optimistic recovery pace/rate that's needed to even have a chance of starting to cut down these proposed deficits. I want to hear about what spending we're going to CUT, not about throwing another trillion $ to the wind.
#1 - Mon Mar 23, 2009 11:27 AM EDTWhere has everyone been for the last 20 years? This mess is the culmination of 20 years of top down economic policy, globalization and significant increases in military spending (most of which was not accounted for during the Bush years). I keep waiting for the "loyal opposition" to come up with a plan of their own but they do not have one. Oh yeah, tax cuts, government cuts etc. Look, Ronald Regan has been gone a long time and supply side economics does not work.
We keep whining about government spending but we demand more and more services. My vote is to hold regional town halls and ask people what they are willing to give up.
ikedee - "We keep whining about government spending but we demand more and more services. My vote is to hold regional town halls and ask people what they are willing to give up."......
What about what the government is willing to give up...they get a pay raise this year...just voted themselves one....they get a pork-filled stimulus passed for "pet projects", which means more hard-earned tax dollars in their pocket...they passed bail out for AIG and KNEW about the bonuses before the bill was signed and then feign outrage and pointed fingers and play the blame game after they got their piece of the pie in the form of AIG campagn contributions....mortgage bailout, Big 3 automaker bailout. Have any of these bailouts worked? NO! It is ridiculous to keep printing money this way. Inflation is going to destroy the dollar and we will be paying $10 for a gallon of gas and $5 for a loaf of bread.
It sounds to me like it is the government whining and demanding more and more of the tax payers and they aren't willing to give up anything they feel they are entitled to. I have given up any number of things because the family budget requires it, and this toxic government needs to learn how to function on a budget.
You want a solution to this spending madness?
How about enacting The Fair Tax - Everbody pays taxes including welfare recipients, illegal aliens, tax evaders, and tax-evading politicians.
The FairTax is revenue neutral at $0.23 out of every retail dollar spent.
The FairTax lowers the lifetime tax burden for most Americans.
The FairTax benefits retirees who depend mostly on Social Security.
The FairTax preserves the overall progressivity of the federal tax burden.
The FairTax dramatically improves the U.S. economy.
The FairTax improves the international competitiveness of American producers.
The FairTax promotes home ownership better than the current system. The FairTax simplifies tax compliance, thereby reducing tax evasion.
The government created this "economic meltdown"in the first place for their own greedy purposes, and I am talking about Obama, Geitner, Reed, Pelosi, Dodd, Frank and the like, and they EXPECT tax-payer bail out. I for one am tired of carrying their load.
Term limits for this toxic government.
I love how you left out BUSH and all his pals IKEDEE. They share a larger portion of blame when it comes to the "government created this economic meltdown" . MOST of this happened on Bush's watch, don't you forget it.
kelise, MOST of this happened under a democratic congress and much of it goes back to clinton, and dont YOU forget it. the truth? They are all a bunch of corrupt , worthless people.
kelise...typical partisan response... They all have to go. Obama and Geitner are just making things worse by trying to FIX a system that should be left to bankruptcy. It is pointless to keep throwing money that we don't have at a problem to try and solve it. Nothing this administration has done is working. Stop the insanity. You can say what you want about Bush, but I would much rather have him back than have to deal with these lunatics another day. They don't have a CLUE and everyday is worse than the day before. Just a little hint for your who started this mess trivia game...Obama, ACORN, subprime mortages, Barney Frank, Dodd... Who tried to stop it? Among others was President Bush.
This video clearly shows that George Bush tried to warn Congress starting in 2001, that this economic crisis was coming, if something was not done. But congress refused to listen, along with the arrogant, Congressman Barney Frank. This video says it all.
The liberal media reportedly did not want this video on You Tube; it was taken off.
This link is of the same video but is routed through Canada .
Everyone in America needs to see this before it is yanked off the airwaves again!
http://www.youtube.com/watch?v=cMnSp4qEXNM&NR=1
term limits on this toxic government !!!
This plan will only do what wallstreet heldout for all along. Make the rich richer. Big business runs this country out the people.
#2 - Mon Mar 23, 2009 11:27 AM EDTParticularly financial services, look at congressional campaign donations and see which industry leads the pack in donations to both House and Senate campaigns.
I think this is a great new plan! I'm tired of waiting to see if the free market will correct itself. I'm tired of the banks etc to do right with the money they have been given. It's now time for the government to do what has done a thousand times in the past- get control and get these bad assets off the books. The banks, the CEOs with their undeserved bonuses, many fat cats on Wallstreet gambling with our hard earned money- I'm sick of their greed and incompetence and I fully embrace our government to do what needs to be done to protect the citizens of this country.
PS. The credit lines need to start flowing again, that is the only reason why this has to be done. It has nothing to do with making them (the banks and Wallstreet) "richer".
#3 - Mon Mar 23, 2009 11:32 AM EDTcorrection...thsi was approved LAST year, but the BANKS wanted to hold these until the market heated up and they could get more than just pennies on the dollar.
It is MONEY, and IT IS wanting to get richer,,,
We were supposed to pool these and sell them off when the market started coming back....any of this ring a liberaL BRAIN BELL?
I'm sorry, when was the free market ever given the chance to work? The government gets involved whenever anything turns the least bit sour. You're mad at the banks, the CEO's, and the Wall Street fat cats, yet you totally support the idiots that kept them in business (Obama and Geithner and all the 'representatives' that voted for this)! You've contradicted yourself. Had the 'free market' been allowed to work it's magic, these greedy financial institutions would be OUT OF BUSINESS. It may take some time, but capitalism eventually punishes those who make poor business decisions. Has your government gotten those AIG bonuses back yet?
It would be wonderful if we could let these HUGE banks just die and take responsibility for their mistakes but the sad fact is, and what most of you don't get, is that they are so HUGE they are the foundation to the economy. Yes, one bank going under fine but MANY HUGE banks would mean even worse economic mistakes that we may not be able to recover from at all. After all, many of these huge banks aren't just tied to US but the international economy as well.
PS WHen the hell did people get so damn snotty? No need for name calling. Be an adult, state an opinion without bs name calling, would you? I respect that eveyone has an opinion but I don't respect people who can't be an adult about it.
A great new plan?! Never in a thousand years. Name one thing the government does that if doesnt mess up. this new "plan" holds nothing good for the taxpayer. All we get is risk, and we will end up spending the whole trillon dollars or whatever is needed and things will still continue to get worse. I dont believe any of it. Ninety percent of the mortgages in this country are paid on time. How can ten percent or less of the mortgages cause such a mess in the WHOLE WORLD ?! It just doesnt make sense. This is all a coverup for something much more ominous that the government or someone is trying to do.
Well Jimmiesgirl :
Those that bought a house and had no money to pay for it so they are forclosed on and in turn this sours up the economy and i lose my job at an auto supplier and i can't pay for my home and before somebody pipes up yes i was able to afford it. I did not go over my head and now i can't even pay my charge cards and one is sueing me. Boy how did this happen.
not a republican yes how DID this happen?! And everything SO FAST!!
Free market! Ha! If the markets had been allowed to operate without rediculous amounts of government interference this would not have happened.
Use your head and see if the markets are ever left to correct themselves or even given the chance to operate free of interference they will always achieve equilibrium.
I have seen the enemy and he is government.
This is a plan that funnels cheap assets to Obama campaign supporters with no risk and virually no capital outlay. The people who will get this automatic billionaire making assist are friends of Obama and Geithner. Why can't the government make a plan that helps middle income and poor people. It would be cheaper to just subsidize people's payments when in default than to just give bonuses to already rich friends of the party.
This is the worst Chicago style felonius political crookedness ever because of how much money they are giving away to already well to do people.
#5 - Mon Mar 23, 2009 11:38 AM EDTI agree with kelise. If those who don't like Obama or Geithner would just reread the article, read more widely, and think about it awhile, they'd see that it really is the best way to do this, with the least overall cost to the taxpayers. This is a solid, well-thought-out plan, that will have regulations in place.
We also have to remember that the stimulus money isn't just a give-away! That's not how it works. The taxpayers will get back some of that money through such things as the sale of the stock the government now holds in some of these companies. When the prices of the stocks go up (and some are starting to do that now), the government will eventually sell the shares it owns (for example the 40% of shares it now is holding in Citi) and will make a handsome profit on those shares. Remember when the government took over Chrysler years ago, and the government got about double the money back for the shares they had in Chrysler? Or maybe some of you don't remember that.
And then there's the money that will come back through all the jobs being created, especially in green technology. More workers will mean more tax revenue flowing in to the government. There's a good chance that we'll come out of this okay. IF WE CAN JUST STOP wringing our hands and asking for a quick fix. There's no such thing to correct the giant, global mess created over the last 8 to 10 years. It's going to take awhile. And some regulation and oversight.
#6 - Mon Mar 23, 2009 11:44 AM EDTDear Karl (Marx) not only will it not work- it has not worked. And who owns the mortgage??? The Government? Then there is truly no incentive for the private market to invest- as the best they can do is recoup- they will not profit. The libs are using the crisis to pass a socialist agenda, and they are doing so at break neck speed because they know the country is still center right, and we are beginning to wake up and smell the rats we sent to DC. Jimmy Carter part deux, here we come. At least O will only be a one termer!!!!!!!!!!!!!!
You are quite the idealist Karl, and naive as well. Just how do you think taxpayers will 'get the money back'? Unless you think the measly $400 stimulus check is our payback. Even IF these sorry failed companies EVER see a rise in their stock, and the government does sell their stock at a 'handsome profit', we are not going to see a dime of that money. That money will HAVE to go toward the gargantuan government debt, which now stands at over $36,000 per person in the U.S. (see )! That's over $144,000 for the average family of four. You stated it yourself, the government got the Chrysler money back, not the taxpayer. Be sure to remind your great, great, great, great , great grandkids what a profit the government made off these greedy financial institutions when they are still paying off Obama and Geithner's debt.
And to all those who think more regulation and oversight is the answer, are you kidding me? Who pays for this oversight? You guessed it, we do! They can say the companies are paying it, but any idiot knows that it gets passed on to us. Have any of you purchased any real estate lately? Do you remember the hundreds of pages of documents you had to sign (and never read)? There's your government oversight! Disclosure after disclosure warning the consumer what they are getting into. Now, foreclosure after foreclosure later, these consumers finally understand what they got themselves into. LET THEM LOSE THEIR HOMES! Nothing teaches a lesson better than to lose something valuable. And these financial institutions who sold these bad loans, then turned around and paid their executives huge bonuses, LET THEM FAIL! Lesson learned! At some point, we have to bite the bullet and let the 'invisible hand' of capitalism take over. These financial institutions failed 20 years ago, they failed now, and they WILL AGAIN 20 years from now, because they know the government will bail them out. No amount of government 'oversight' will stop it from happening again. Anybody who sells a home for $200,000 and only gets $180,000 understands the price of government oversight and regulation. 6% to your Realtor who helps your through all the 'red tape' and another 4% in FEES to actually pay for the 'red tape'.
doctorsteph "using the crisis to pass a socialist agenda, and they are doing so at break neck speed because they know the country is still center right, and we are beginning to wake up and smell the rats we sent to DC."
I agree doctor, Obama knows his democratically-controlled congress is about to get the ol' heave-ho...I just hope Pelosi, Frank, Reid, Dodd, Specter and Snowe are the first to go with an avalanche of the rest on corruption hill to follow. We may have to put up with BO for 30-1/2 more years, but we can start doing something about this toxic government before then and hopefully turn the country around.
It is not that I dont like Obama or Geitner(I dont),but here we are as taxpayers taking on the risk of a trillion dollars of toxic assets. A trillion is a lot of money , even tho, the Obama adm. is throwing trillions around like it is nothing. Who is going to want to buy this stuff?? Who is going to want to be a partner with the government??? There is a whole lot more going on here than we are being told. We were supposed to buy up these toxic assets with the first bank bailout money. Why wasnt it done then? Now we are supposed to risk more money. What is REALLY going on? I know one thing, we would not like the truth. Anyone who trusts the government is a fool.
Karl it wouldnt help to read the article again , ONCE was more than enough. Naseating.
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
#7 - Mon Mar 23, 2009 11:50 AM EDTWell, the good news is that most of these banking institutions are no longer 'private'. They are at least partially owned by the U.S. government. I believe it's called Socialism! The great Thomas Jefferson had some great foresight, but I bet he never envisioned the government he helped create would become the behemoth that it is today. At the same time, our government is the largest failed institution in the entire world! Now, banks don't own our property, China does!
Jefferson is rolling over in his grave!
"A wise and frugal govrnment, which shall leave men free to regulate their own industry and improvement, and shall not take from the mouth of labor the bread it has earned, this is the sum of good government" T. Jefferson
If wall street likes you can be sure it giong to make them richer while we once again take on all the burden. Thanks Obama for standing up for the tax payers and not the rich thieving bankers! If this is change that he talked about I have had about all the change I want to see!!!
#8 - Mon Mar 23, 2009 11:50 AM EDTGee. This IS NOT NEWS, This was supposed to be the reason the initial 700+Billion was approved late last year, 2008, while Bush was still in Office the plan was to buy the Banks poison investments.
But, the banks changed their mind and didn't want to offload for only pennies on the dollar. They wanted to hold these until the market came back then, they could sell them back for more han the Gov payoff.
APPARENTLY now they want the government to buy these NOW because the market IS NOT going to rebound till they get rid off these and put money into the system.
DOES ANYONE REMEMBER IT TAKES A BUYER AND SELLER WITH CASH??
iT'S A 3 WAY STREET.
dAMN, BANKS.
#9 - Mon Mar 23, 2009 11:50 AM EDTI would rather the Government hand the money to the American People we know what to do with it.
I can't believe that anyone at this point honestly believes the government can make anything work.
#10 - Mon Mar 23, 2009 11:58 AM EDTI agree except that whatever the government does will work for some. That some being just more of the fat cats that got us into this in the first place.
I used to want to trust our government but more and more I am finding it to be impossible to do that.
Term limits...
Barney Frank is the poster boy for Term Limits...
Once again, the ants are bailing out the grasshoppers! I am SO sick of having to bail out irresponsible people! And here's a question: why is it that the state and federal gov'ts aren't cutting the fat and laying off people at the same rate as the private sector?? Does anyone doubt that most of those employees do the bare minimum while expecting maximum pay and benefits? I don't expect a quick fix, but I DIDN'T CREATE THIS MESS SO WHY SHOULD I HAVE TO PAY TO FIX IT???
Legislate 4% 30-yr mortgage rates to those who have been responsible homeowners and then watch the purse-strings loosen: we'll be buying appliances, renovating our homes, buying new cars, investing and starting small businesses. Taxing us will only make us hold on to our disposable income more tightly....
#11 - Mon Mar 23, 2009 11:59 AM EDTWell said!! It's always the responsible people getting screwed in this country! We need to make people take responsiblity for their bad decisions (like buying a home they knew they couldn't afford, having children they can't afford, etc) Please wake up and vote these people out in the next election! It's the only chance we have.
"I am SO sick of having to bail out irresponsible people! And here's a question: why is it that the state and federal gov'ts aren't cutting the fat and laying off people at the same rate as the private sector?? Does anyone doubt that most of those employees do the bare minimum while expecting maximum pay and benefits? I don't expect a quick fix, but I DIDN'T CREATE THIS MESS SO WHY SHOULD I HAVE TO PAY TO FIX IT???"
I agree with you on this 100%. Why should we, who have been responsible and done without so we can afford our homes, bail out those who live from pay check to pay check?.
People who live beyond their means need to learn to be more responsible and save for what they want or do without - I've tired of paying for their bad judgement too!
The blind followers of the "Rock Star formerly known as President" Obama wouldn't know a free market system if it landed in their bank account. There is no way we will be able to pay off the $12 Trillion Dollar deficit (projected by 2013) that all of the bail out and social programs wrapped as bail out are creating. We are heading down the yellow brick road of Japanese recovery...which is no recovery after two decades with a zombie banking system and companies. Socialism creates two classes of people, the workers and the government; one has all the money and one supplies all of the money. To think otherwise is idealistic and romantic but completely ridiculous. The free market was never "allowed" to work this out. We were all afraid that we would see loss of jobs and failing business (the big bad wolf was at the door!) that we unknowingly opened the door for rampant socialism. The solutions to follow will only get more extreme and unrealistic until the monetary system as we know it is replaced by a global consortium that will end democracy in our nation and the free market system. Too bad some only get their news via thirty second sound bites on the evening news...too bad they don't read...too bad they rely on the intelligence of others to create their opinion. It will cost us our national independence.
#12 - Mon Mar 23, 2009 12:04 PM EDTWell if Wall Street likes it you can be sure that they plan on making a lot of money while we once again shoulder the entire burden. Thanks Pres. Obama for sticking up for the tax payer and not the rich thieving overly paid AIG executives. If this is the change he talked about I've had about as much change that I can stomach
#13 - Mon Mar 23, 2009 12:08 PM EDTThis is an absurd cycle. Giving these incompetent, corrupt, well-connected A**holes anything at all is a recipe for disaster. Why behave fiscally responsible when "DADDY" will take care of everything anyway??? That is why they are back at the door with their hands out. Someone, certainly someone with more guts and brains than anyone in the Obama administration, needs to say NO!! I'm not holding my breath.
#15 - Mon Mar 23, 2009 12:26 PM EDTSmoke & mirrors! Why not make money available to sound banks to be used only for new loans. This would reward good management and leave those with bad loans to deal with the mess they created. They could sell them cheap now or work their way out over time.
Most importantly, such a plan would guarantee the stated goal, i.e., to make credit available to get the economy rolling again, rather then giving the banks more money in hopes that something good will happen for the taxpayer whose money is being used.
One problem, this would not allow the politicians to discriminate and take care of their friends in the financial industry like they have before, and receive generous contributions in return.
#16 - Mon Mar 23, 2009 12:33 PM EDTGood Lord! Who wants to borrow money? if you do you are a fool. The size of the government footprint is getting out of control and to go into (more?) debt now would be insane.
What kind of idiots think the consumer is going to return to their free spending ways? Faith in the government as watchdog and the economy as a free market has been shattered.
Anyone with a brain will be tripleing or quadrupleing the amount they save. Those big screen tvs are just going to have to rot on the shelf.
Screw the government! I'll pay my taxes but I'll not support you in any other way.
It dosn't matter to you or me unless your friends with obama. He is going to continue to give money to his friends. Just like George W. gave money to his pals. Obama promised change but, I don't see anything except more of the same. how will this not help increase spending and lending? The plan will work! Remember he dosn't care for you or me unless you bought his soul prior to the election that goes for all of washington
No more ear marks
#18 - Mon Mar 23, 2009 12:40 PM EDTThe best way to arrange for low interest loans for consumers and businesses is for the govt to take over a few 'zombie' banks, and create a new Bank of the US Treasury. This bank could quickly start taking deposits, allowing withdrawals, and making loans.
The 'other' banks would quickly dispose of their 'toxic assets' on their own, and meet the govt competition for the loan business. This is the cheapest, and quickest way for the administration to lead us out of the economic mess we're in.
Forget buying up the banks 'toxic assets', or providing them with more bailout money. Just open a govt bank, and get to work lending money.
#20 - Mon Mar 23, 2009 1:19 PM EDTAll assets need to be laid on the table, a bad debt bank formed and private investors be allowed first choice on assets. The private investors MUST work out modifications on all assets they purchase (where possible). The Bad debt bank will be left with the "less choice" assets and again modifications MUST be worked out where possible.
Over time the real estate market will rebound and most properties will increase in value closing the gap on what were once upside down properties.
#21 - Mon Mar 23, 2009 1:22 PM EDTYou're in Easy Mode. If you prefer, you can use XHTML Mode instead. |
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It's the best way to do this at the least possible cost to taxpayers. ( I don't think some of the people who respond here really get it.)