Protests Against Bailout Bill Registering With Congress

We received this e-mail today from one of the Congressional staffers who has taken to corresponding with us (boldface ours):

I know that people are often cynical about contacting their representatives. Frankly, they should be. Most days, the overwhelming volume of constituent contacts is form letter e-mails, pre-printed postcards, blast faxes, and automated phone calls. It’s easy for genuine individual requests to get lost in the sea of astroturf (fake grassroots) campaigns.

But, on this issue, the calls and e-mails are making a difference. Members and staffers are talking about it in the halls and in
meetings. The volumes are big (although as big as when the NRA or AARP mobilizes their members) but they’re all individual. And they’re running 99-to-1 against. If you read the capitol hill press (Roll Call, Politico, The Hill, CQ, National Journal), you can see the developing dissent among the rank-and-file on both sides. A lot of that is beign driven by the calls and e-mails from back home. Keep it up!

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  1. Moopheus

    Bush said he would be a uniter, not a divider. Looks like he finally came through on that promise. Somehow, I think that is not quite what he had in mind.

  2. Anonymous

    In addition to many of the concerns listed here and elsewhere, I have three concerns that have not received much, if any, attention.

    First, if anyone at a securitizing firm, let’s call the fictitious firm Silverman, knew of fraudulent activity anywhere in the pipeline, would the investor that purchased the security have legal recourse against Silverman? Could the hedge funds and other investors that purchased Silverman mortgage backed securities force them to purchase the securities back at par because they had knowledge of fraudulent activities? Would this problem disappear if Treasury purchased these securities at inflated prices from everyone?

    Second, did Silverman market these securities to investors while taking opposite positions for the institution? As we saw with auction rate securities, some investment banks were selling the securities to customers while the banks liquidated their own positions. Once that was apparent, the investment banks were forced to buy the securities back due to the misrepresentation. So, did Silverman sell these securities to investors at the same time as they were shorting, liquidating, or purchasing CDSs on these same securities? If so, would the investor have legal recourse?

    Third, would banks and other financial institutions be allowed to act as conduits to hedge funds selling these securities? If the bill had an equity position or limits on executive compensation, the conduit scenario would be less likely and would therefore be opposed if the intention was to include hedge funds (or any investor anywhere).

    It seems like Paulson could have chosen a much more efficient path to achieve the same result. This inefficient path may produce the same result at the end of the day but cost the taxpayer three times as much. Could there be any motivation to choose the inefficient path?

  3. Caleb Mardini

    Wow this is so good to hear. Thank you. I’ve been working hard encouraging people to contact their representatives. A surprising number of people have called and emailed me telling me they were calling and emailing. I’m going to share this with those people.

    Thank you.

  4. Anonymous

    Helllooo . Does anyone notice the dictatorial power this gives Paulson? This is USA 2008, not Italy 1938.

    “Sec. 8. Review.

    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.”

  5. Dean

    This may be a naive question. Let’s assume that the politicos don’t deliver the promised RTC2 by Friday. What then? what would be the global markets reaction? Has anyone considered a chain of events that could potentially lead to a severe reaction? Don’t get me wrong. I am not advocating passage here. I am simply asking the question what will happen if MOAB gets stalled, protracted or seriously altered.

    In business matters one must be anticipatory and this includes all hell breaking loose.

  6. Lewis B. Sckolnick

    I continue to think that we have to stand up and fight this as many of us are doing. Does the rest of the world really want to walk away from us. An economic depression is one thing but a national psychological depression is of another order of magnitude.

    Write to people and pay your bills.

    Stop the bailout save the country.

  7. stream47

    in response to Dean: Every time the Bush Administration wants Congress to grant it dictatorial powers, all hell suddenly breaks loose. Complicated legislation is suddenly introduced in Congress, and Congress is told, cajoled, bullied, and armtwisted to pass the legislation within days of its introduction. The President signs the legislation into law. The forms are preserved while the substance is lost.
    If you will recall, this is the very same thing that happened with the USA PATRIOT Act: the events of September 11, 2001 happened, and not a week later, a piece of legislation exceeding 600 pages in length was introduced. The Administration employed the same kinds of tactics that we're seeing now. Congress passed the legislation almost unanimously, to their (later) great regret, and the President signed it into law. Perhaps we should learn from history and not repeat it. The Amazon reference to the Klein book is:

    There's an interesting book out called "The Shock Doctrine" by Naomi Klein.

  8. don

    I have given thought to the possibility that the threat of an imminent meltdown was exaggerated . . . for tactical purposes, and that it was done so by design to ensure the passage of a bailout bill.

    This is not to suggest that something of a meltdown is not underway, but that it has been depicted as an overnight event, rather than a process that takes place over time. The setup was as follows: create the prospect for an meltdown within days unless the bailout is implemented. No doubt the proposal of a bailout itself served a purpose: to ‘calm’ the markets.

    But there is more to it than this. The threat of a depression unless swift action was taken has been depicted by no less than Senator Schumer, as well, if I’m not mistaken, by Paulson. So, the situation is such that those who vote against the bailout are essentially voting for a depression. This appears to be no less than a set up, not only for members of Congress who may privately wish to vote any bailout bill down, but perhaps more importantly, for the public at large. It is as if the crisis managers have turned to creating the impression of crisis to subdue crisis, while up until less than a week ago, it was deliberate to play down any such crisis, for fear of encouraging said crisis.

    Could it be that the impression of a crisis was building at such a rapid pace . . . assisted of course by all the news media attention, that it was perceived as necessary to jump on the bandwagon (since it was unstoppable), by taking advantage of it?

    In some respects, the negotiations now being played out is itself also part of the theater (of the absurd). A ‘compromise’ is inevitable, and it will serve to demonstrate how well the system of legislation works in D.C. We will all be able to breathe easier now that we are confident of our great leaders to lead. A crisis situation has been made out to be a crisis, one of imminent depression even, but has been turned around by our wise leadership, not only in the Bush administration but Congress too.

    This seems a larger part of the crisis management now underway, and we have reached a point where maintaining legitimacy, for not only the Bush administration, the Fed, but also the Democrats, is being staged in unison.

    I found it a bit ironic that today before Congress Bernancke stated that unless the bill is passed, the country will very likely go into recession. So now we are backtracking. Last week it was a depression, this week its a recession.

    At risk of sounding like I am suggesting a conspiracy (the poor man’s theory), I have even entertained the possibility that our great leaders have had designs for some time to take us down this direction. Perhaps they have been of the opinion all along that some kind of government/taxpayers bailout was inevitable, and even desirable.

    While many have suggested that the bailout is a form of socializing risk (and I understand this perspective entirely), it also be that something more devious is at play: lock the taxpayer into ‘saving’ the financial system, and in so doing, the Bush administration and its supporters have made it all the more likely that the funding of social programs will in the future be cut back, and that we may in fact be looking at the eventual privatization of social security as a result of the bailout. Consequently, the bailout ultimately serves the purpose of advancing more privatization, not less.

  9. Anonymous

    Responsible journalism would dictate that you labeled the email as from an anonymous source. That way readers could make their own judgments about the veracity of the report. To cite a congressional staffer and not include a name is over the line. At least you could have said it was from a congressional staffer that preferred to remain anonymous. Did you verify that the source is indeed a congressional staffer?

  10. bg

    It is reassuring that public opinion matters. Democracy is a blunt instrument. It is remarkable that common intellegence can have such a powerful transmission mechanism through the internet, blogs, emails and democracy. It doesn’t work on the little things, but on the big important ones … maybe.

    It just so happens that the Paulson plan was really bad and the lawmakers were really scared. There were a lot of us who were getting really, really mad at what was about to happen.

    His plan was never the only choice. We read about 1929 as an act of electoral ignorance. Our grandchildren would have read about 2008 as the peak of greedy arrogance of the leadership class. Hopefully we have averted that crisis.

  11. bg

    “Responsible journalism would dictate that you labeled the email as from an anonymous source.”


    I disagree. Yves has put herself out for us. Not for ‘journalism’ or any other ism, but for intellegence, honesty and truth.

    She has posted tidbits that later on appeared false (or worse intentional plants), and has taken liberties with editing and in her rush to provide data has given us many typos. All of that adds to the sponteneity, genuineness and clarity of the blog and its community.

    The staffer posts were believable to me simply because Yves said so. And their presence added significantly to the discussion.

    This is a macroeconomic blog, not a political one. But in the extreme earthquakes are human interest stories – and not just geology.

  12. Anonymous

    I like her blog. Generally it is highly informative and well researched. Just not this time.

    Examine the contradicions in your comment. You speak of truth and clarity but neither can be present when sources are unverified.

    Sorry. Had adherence to standards helps prevent errors. Kind of like the mess we are in now. A little attention to detail and we might not be looking at 700 very large as a price tag.

  13. bg


    Sorry if I came off too strong. I just was put off by you blowing the whistle on something I thought was a foot fault during a war.


  14. Yves Smith

    I find it curious that you assume that the source was anonymous (which I presume means that you assume he hid his identity from me).

    This is a real Congressional staffer and I did not disclose his name.

    As for the one time a non-disclosed source passed on bad information, the source (who was legit and had provided valid information previously) was given incorrect information from people at his former firm. He was truthful, in that he said people were telling him “X”. HIs sources in turn may have been lied to.

  15. doc holiday

    If people would connect the dots to pension fraud and The Pension Protection Act, they might realize that every member of congress/senate are crooks linked to on-going fraud. These elected reps are the crooks that have allowed Department of Labor to open up pension funds to global hedge activity, like CDOs and derivative swaps — our elected reps have opened the pocket books of Americans for wall street crooks, aka underwriters who are allowed to play with your cash, as if their casino/mafia has the right to abuse you all! It’s time to get rid of everyone of them starting today!

  16. Blissex

    Well if you really want to get listened by your representative or senator, MAKE A DONATION (even just a $10 check) saying that it is to help them resist the temptations of the lobbysts at re-election time.

    A personal letter is good (WITH YOUR FULL ADDRESS so the representative knows you are in his district/state), but if it comes with a campaign donation it is much, much better.

  17. Fascist Nation

    Rassmusen reports only 7% of Americans support the bailout. 7%! That is the same as the undecideds in every friggin poll.

  18. Anonymous

    What I don’t understand is where is this amount of money coming from?
    A: By printing new notes and coins?
    B: By issuing treasury notes to soverign countries?
    C: Both

    Does anyone actually know the truth?

  19. Richard Kline

    Auto-emails, form postcards, and block faxes tend to get tuned out; Congress knows that game. Individual contacts, especially those that take time like phone calls and letters, carry extra weight, as do actual constituency contacts by any media. And 99-1 against is a nice ratio to have. One reason why the Demos have been such ninnys, frankly, is that they have had a constant 48% sclub block from the public which preferred hearing lies to arguing about truth. The Demos have had no hard nut of public opinion to use as fulcrum, making every issue a hairsbreadth confrontation where lies and obfuscation aimed at the leaners carry disproportionate weight. So a large and staunch majority opinion for ‘Other’ gives them a fulcrum upon which to act, or rather Act. They may not Act wisely, being Demos, but given the Paulson Proposal there’s nowhere to go but up.

    Takedown not Bailout!

  20. Anonymous

    To Blissex:
    thank you for your suggestion. I have felt strong revulsion to Paulson’s proposal, but did not know how to channel it to make a difference. More information about how best to communicate our thoughts to those in power will be highly appreciated.

    Also thank you Yves Smith for your blogs. I have been coming to you for updates multiple times a day.

  21. Peggy McGilligan

    When Bill Clinton eased banking restrictions in California, he also dished out $8-billion dollars for “community redevelopment loans.” Of course, the money would never get paid back. Undoing regulations sets a precedent, as does “comping” real estate. With the influx of cheap capital, properties already overvalued at $125,000 inflated to $525,000. Enter, “creative financing.” When the schemes fell through, as they are wont to do whenever 30-million Mexican nationals buy inflated properties in another country and default, it left bankers around the world in the lurch (see global economy). Never mind that the aforementioned demographic is the new face of the Democratic Party; Congress simply cannot determine the worth of the financial instruments, because of rampant “creativity” and subjective prices. It’s a $90-billion bailout at best. But if you want to thank someone, thank Hillary Clinton. She knew all along who’d get the loan giveaways; she knew whose votes she’d buy. So, why should you bail the housing bubble? Let the Dems do it, let those 18-million cracks pass the hat:

  22. Howard

    Why not bring Alan Greenspan into the mix. He’s the one who warned about this meltdown back in April. Remember, when the democrats voted against his advised legislation to prevent this mess. And, how about Newt, who suggested that we consider a plan B, and consult with the advisers who successfully turned the economy around before, during the Reagan administration. Why are we looking to Paulson and Bernecke? Aren’t they the ones at the helm when this mess took place? An independent panel should determine who will benefit from this bailout … and, who’s asses will be saved by it … and, if any of those people are the ones pushing it through? Let’s not be rushed by foxes, who might be guarding the chicken coup … AGAIN !!!

  23. Anonymous

    this is a tax plan, they say the tax payers will foot the bill.its called a bailout because it would never pass if they called it tax plan .when you get the BILL ,it will be pay up suckers for wall street.have a nice day

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