Some (Sort of) Encouraging News on the Bailout Bill

Readers may recall I included an excerpt of an e-mail from a Congressional staffer in our weekend takedown of the bailout bill, which got pointed to widely, including on some political sites. This in turn has elicited more observations from insiders, this one a Congressional aide.

Not only do the markets not like the bill, it turns out we should give our elected officials a tad of credit. Most of them aren’t too keen about it either:

From the members’ meetings that I’ve been in today, I can tell you that large portions of the rank and file from all across the spectrum really don’t like this bill. Leadership is trying to ram it through, and Barney Frank, who’s been great all Congress has totally turned into Paulson’s lapdog. Very disappointing.

That also suggests that letting your Senators and Congressmen know you are unhappy with the bill (assuming you are) is not an exercise in futility, and may give them the push they need to break with their leadership.

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  1. Anonymous

    I spoke with aides for 2 of my 3 congressmen. Can’t say aides seemed surprised that I kept saying ‘ demand someone follow the money’ and ‘demand transparency’.

  2. Matthew Dubuque

    Matthew Dubuque

    Good post and encouraging too.

    But I’m perplexed at the surprise expressed that Barney Frank is Paulson’s “lapdog”.

    He’s been a key part of the problem for years.

    Matthew Dubuque

  3. JO

    Hi all, the government plan will effectively buy garbage debt at purposely inflated prices.
    Two comments today. Talk about a vision which was right on the money:
    1) I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominent men.
    Woodrow Wilson, after signing the Fed Reserve Act in 1913

    2) 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 grow up around them will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.
    Thomas Jefferson

    All American taxpayers must voice their opinion to Congress and band together to stop this monumental fraud being perpetrated by these animals. Despite loosing most battles which will leave us battered, broke, and feeling beaten, the people will win the war in the end.

  4. Anonymous

    I posted a similar comment at Angry Bear over the weekend, but let me state again that no one can ever expect Frank, Schumer, Dodd, Lieberman, or any of the other NY/Conn politicians to fight against the financial industry. Everything that they say about the financial industry is suspect. This has nothing to do with party affiliation but everything to do with who their donors are. Liberman has long been the worst, carrying water for his rich financial donors since long before LTCM. Everyone in America, regardless of party affiliation, should worry about the possibility that certain heavily influential residents in NY/Conn want a de facto plutocracy.

  5. Anonymous

    anon at 6:24
    Frank is from Mass.
    Anyway since about noon there was in circulation a draft bill by Sen. Dodd which was heavy on support for mortagees demanding stakes in firms for bail-out money and trimming Exec pay.
    Sen Schumer has said much the same thing immediately after Paulson presented his plan and so has to a lesser extent Sen. Clinton. (I doubt anyone in the Senate cares much about Lieberman’s viewpoint.)
    All of this is public knowledge and
    readily available

  6. Anonymous

    At this point in the evening, I can’t even remember how many ways I contacted my senators and reps today – fax, email, blah blah blah.

    Tomorrow? Filibuster…

    Wait? Worried? You should be…

    *I* can barter, can you?

  7. Anonymous

    I work on the Hill, too. Sat in on a meeting today with Members skeptical of the package. They want certain preconditions before they will support it. And they know their constituents are furious and simply won’t stand for a bill that doesn’t: reimburse taxpayers in the form of warrants, contingent shares, etc; limit executive compensation; provide greater oversight than Treasury wanted; ensure that conflicts of interest are addressed. I think it’ll pass eventually. But the final product will vary markedly from Treasury’s spare, broad, dictatorial request.

    “Lapdog” is unfair to Barney Frank.

  8. Anonymous

    “She says offices are being flooded with calls, so members know how unpopular this package is. The Club for Growth has come out against it, but most of the calls (at least to her office) against the bailout are coming from the left.”

    Interesting assessment about where the calls are coming from because I heard Michael Savage on the radio tonight and he is livid. Rabid foam spitting livid. Said this is the United States of Goldman Sachs and we need to tear up the Constitution, Bill of Rights and National Anthem. Yeah, you read it right.

    Anyway, Mr. Savage is hardly the image of a flaming liberal and I, for one, appreciate the help of his audience, regardless of the ideological drivers.

  9. bg

    to Great open letter to congress from Hussman

    My god I hope the democrats can get control of this thing. Barney Frank used to be my congressman. He is a serious guy. Buy I would stay away from words like “fair” and “lap”.

  10. Anonymous

    I work in the securities industry but for the next four weeks am on my couch between jobs. I’ve spent the last two days emailing and calling my own and others congresspeople. And I’ll tell you… I’ve never felt better!

    As a “man on the street” observation, I spent all day yesterday leaving voicemails. When I went at it again this morning, all the mailboxes were full. Call me crazy, but I can’t imagine they were getting many calls from voters telling them how much they LOVED the proposal. I have this sneaking suspicion that congress is getting absolutely BOMBARDED by calls from furious voters. One can hope…

    The alliance here is a weird one… the first time I can recall the far left and the far right teaming up against the supposed “middle”.

    I’m pretty conservative, but having spent the weekend reading the positions of my newfound allies, I stumbled across something I thought was amazingly noteworthy. In 2001, people who were accepted at the time as “experts” were paraded in front of Congress in an effort to scare them into voting for the war in Iraq and the Patriot Act. For the last seven years, the Democratic Party has been complaining (loudly) that they feel they were hoodwinked. And now, with this issue and these experts they’re falling for the EXACT SAME THING!!

    Anyways, write and call your rep and senators. Its the first time I’ve done it and I haven’t felt better in years.

  11. Anonymous

    Open letter?

    I’ll give you an open letter!

    The “democrats”????? Get “control of this thing”?

    Spare me!

  12. Anonymous

    $700 Billion Dollar Bailout Good For Economy

    WASHINGTON (AP) — It’s the largest government bailout in U.S. history and two days after it was introduced to the Americans paying for it, the proposal is still largely a mystery.

    Among the unanswered questions: How will the government mop up the bad mortgage debt on banks’ books, who will run the process and how much will it cost?

    Key elements of the plan remain in flux as behind closed doors Democrats demand modifications that would provide more help for ordinary Americans in return for bailing out the country’s financial giants.

  13. Conservative Green

    I don’t know what the sunshine-patriot talk-show flagwavers are saying, but over at the
    American Conservative Magazine’s blog, you can see they aren’t happy either. I’m more of a Green, but I agree with the AmConMag people surprisingly often. They don’t pull any punches, and quite often get it right.

    Some of the language used brings to mind another incidence of grandstanding hysterics, that precipitating the Iraq war. This crisis is real, of course, and the content of this tragedy less fictional, but the form is the same: a sudden threat is identified, extraordinary actions and powers are deemed necessary post haste. Drastic measures will be accomplished through the mixture of cowardice and corruption that is sometimes called bipartisanship, new powers will be concentrated in sectors of the government; they will likely be difficult to unwind, if not permanent. Questioning the consensus is all but forbidden. Now, as then, the details are too grim for the tender public: Senators Dodd, Schumer, et al, would not disclose them Friday. Back then it was classified information that couldn’t be freely circulated; I could tell you but then I’d have to kill you. Now it’s I could tell you but it’d probably kill you.

    You’ll recall the ”crisis” precipitating the war also featured administration appointees briefing Congressional leaders and leaving no dry seat in the house. It makes me wonder what sort of prop Paulson might have used, a la Powell brandishing his vial of mock anthrax at the UN. Perhaps a toilet brush, to terrify them with the prospect of poverty and its indignities. As with the war, consequences for the powerful and responsible few will be deferred indefinitely, but will be immediate for the nation’s integrity, prestige and pocketbook. The war may have not been necessary (though this question, and its moral implications, have been flushed down a memory hole capped with the illusion of “success”–as if we’ve gone through it all to deliver Iraq and its oil wealth to an Iran-allied Shi’ite government) but even so it can be seen as a consequence of an extravagant society overly dependent on oil–just as the collapse of our financial system is a consequence of our dependence on borrowed money.

  14. Anonymous

    When I heard the news I thought the USA citizens would just roll over like they have before, but comments like those here are giving me a renewed faith. It’s YOUR country, take it back!

  15. alan von altendorf

    === FLASH ===
    A proposal that actually makes sense, article by Roger Ehrenburg posted at Seeking Alpha today:

    “Buying assets at anything other than fair market value is against every principle we should be enforcing. Transparency. Accuracy. Full disclosure. This is a non-starter. Who cares where the assets are carried on a firm’s books? If Morgan Stanley (MS) has them at $.30, Merrill (MER) at $.32 and Goldman (GS) at $.50, this is not the point and should play no part in the analysis. There should be a reverse auction to determine price, with the Treasury buying the cheapest and moving up the line. Depending on where firms are carrying these assets, it might require a write-down that would threaten its solvency. If not, great. The firm has liquefied the assets and the U.S. taxpayer gets the upside over time (monetizing the liquidity option, in my parlance).

    However, if there is a capital gap I’d suggest that the Treasury gets issued convertible preferred stock on attractive terms, supporting the firm in its operations while substantially diluting common equity holders. In this case jobs are saved, the institution continues to operate as a smaller, leaner, hopefully more prudent firm while the U.S. taxpayer, once again, owns the liquidity option.

    “As time goes by, the markets stabilize and the convertible preferred moves in the money, the U.S. Treasury can “privatize” its holding thorugh a public offering or a private sale, recouping funds that bridged the firm to health and hopefully making a profit for the U.S. taxpayer in the process. This would be a win/win. The only losers here are the common stockholders of troubled institutions. And this is as it should be. Losers shouldn’t become winners overnight because of Government largesse, and hopefully our policy-makers know that we’re watching. As is the rest of the world.”

  16. Anonymous

    Grab power while the public is stunned and scared. ‘The Shock Doctrine’ by Naomi Klein documents the techniques and strategy and these moves are very predictable. Bet the stock market will dramatically go down until a deal is hastilly done

    “Give me control of a Nation’s currency and I care not who makes it’s laws”
    …Baron Rothchild

  17. Anonymous

    “Lapdog” is unfair to Barney Frank.”

    This needs to be said. All politicians are whores. They may have very nice personalities, some of them may even believe what they say, but they are whores, plain and simple.

    The entire lobbying crew are their pimps, and the industry and special interest groups their tricks.

    The sad part is that, brought to my attention by the spitzer mess, good whores are expensive. You can get a congressman for much less than what she cost.

    Look at the numbers, its so very, very true.

    I’d rather get the happy ending.

  18. tom a taxpayer

    Here are two “must-have” additions to the Paulson/Pelosi bailout plan.
    Add to Sec. 2(b) Necessary Actions:
    Department of Justice shall conduct a fast-track Racketeer Influenced and Corrupt Organizations Act (RICO) investigation of Fannie and Freddie, mortgage lenders, appraisal companies, commercial banks, Wall Street investment banks and brokerages, rating agencies, Federal Reserve, Treasury Department and SEC…,… the entire gang that raped and pillaged the mortgage industry, ruined the housing market, destroyed the credit system, endangered municipal financing, pension funds, and the banking system, sent the economy into a downward spiral, endangered the world financial system, and required the extreme rescue measures in this law.

    Add Sec 3 (3) Considerations:
    -punishing lawbreakers and restoring law and order in financial markets.

  19. ScottH

    If Paulson and the rest of Wall Street are not squealing in protest even as they reach for the life preserver coming up for air for the third time … it’s the wrong deal.

    Enough with Wall Street and their numerous shills. Enough is enough.

    Email is useless, letters take too long to arrive. Fax or call your elected representatives. Make clear that you will vote against them if they support a deal that does not inflict enough pain to cause serious complaining from Wall Street.

    As an aside, on the “word verification” thing you have to do when posting, since when is “slbttxft” a word?

  20. Richard Kline

    Democracy in action, folks: us against them, and the plutocrats are outnumbered by six figures to one. When ones way of life and system are threatened—and I would identify the Paulson Proposal as a systemic threat to the United States—folks of all ideologies start popping off. We’re not a kleptocratic oligarchy yet, so pump up the volume.

    Anyone who is at all ‘surprised’ at the methodology of by which the Paulson Proposal was presented has been out of the country for eight years. Fourteen months and counting, and Paulson does little; then one week, ONE WEEK before Congress is to adjourn for a pivotal election he comes in and asks for our lives, fortunes, and sacred honor to be paid into his Treasury account by 0800 48 hours hence. The Bushies have pulled this trick more than once, and to their extreme discredit the Demublicans jumped through the dufus hoop on schedule. Rather amazingly, a few of them seemed to have learned something from _that_ clownish experience going by published comments and snippets here on NC also. Who could have known that the Demos could think? I feel offhand that the Admin knew that the Australopithicus Republicrats in Congress would howl but it was counted on that the Demublicans would grovel and lick the foot. Well, the Admin is getting nothing but teeth so far (and not enough of that, either).

    I suspect that the Dodd Proposal was already worked up in its separate portions, but that he and his confidants were waiting to propose it until after the Election when they stand to have comfortable majorities in both houses of Congress. Lazy bastard if so, but that’s been the MO of the do-nothing, good-for-nothing 110th Congress. It will be interesting to see if a realistic and substantive plan comes through Congress to be rammed up the Admin’s rear and out their mouth to the public. Rather than eating crow we may actually get the more than amusing spectacle of George W. Bush vomiting forth elements of truth for the first time in his tenure. . . . Nor as satisfying an end as the Execration of Justinian II, but it will have to suffice, if so.

  21. Richard Kline

    Anti-Paulson Proposal slogan: “Too much is more than enough.” Or, “Do not pass Go; do not collect a trillion,” has social context behind it, and aura of anti-monopoly.

  22. Richard Kline

    I am completely in sympathy with John Hussman’s views on the fat catting of financial industry bondholders, and broadly sympathetic to his mortgage rollover proposal, both in his Open Letter mentioned elsewhere in comments here on NC and now linked in by Yves for 23 Sept.

    The great flywheel missing from the Paulson Proposal was any mechanism to seize equity insolvent financials and make their bondholders assume first losses on subsequent portfolio declines through a quick resale of the firms. It is notable that there is no mention of such a procedure in the Dodd Proposal, either—and unsurprising given Dodd’s financial industry ties. But it is manifest that THE BEST DEAL FOR THE US PUBLIC in coping with insolvent financials would be to seize the shop and make the bondholders take the shrapnel like they would in any normal receivership. No plan out of Congress lacking a ‘seize and clear’ mechanism is a good plan for us, and I would like to be more hopeful than I am (not at all) that Congress will go this far. That was the first ‘must’ in my own email/letter to Congressfactors diverse, but.

    Bear this in mind, then: Any plan out of Congress which does not provide for seizure of insolvent or nearly so financials is _a direct bail out of bondholders_. Well crafted equity warrants may still force bondholders to take the loss. For floating hard-pressed financials, that would be not a bad go, but it’s a distant second best for resolving _insolvencies_. The two conditions are distinct, and need distinct operational solutions—but insolvency is the word which must not be uttered, and bondholders seem to have better standing under the Capitol’s Dome than does senior management. But bondholders are nearly as culpable and no lighter piled on the backs of the citizenry. (Even if a lot of those bondholders are pension funds, be it said.)

  23. eh

    This is exactly what taxpayers have to worry about: that this total abomination will be negotiated down to what the media will portray as something less than a total abomination, at which point it will receive wide kudos and win passage and be signed into law. All of this when the basic reality has not changed one bit.

  24. Anonymous

    Whether or not KongressKlowns “like” the bailout bill is not the issue. It’s unconstitutional on its face; a gigantic theft which profoundly subverts the rule of law.

    Parliamentary immunity does not shield participation in looting. If this atrocity passes, any KongressKlown with an ounce of conscience (a far-fetched proposition, I know, but hear me out) should RESIGN to avoid future prosecution for racketeering, as an accomplice of criminal mastermind Hank Paulson.

    I hope, during the next administration in 2009, to see Bush, Cheney, Paulson and Cox prosecuted as the common criminals they are.

  25. Boat 52

    I wanted to send Barney Frank an e-mail and I am not from his district. His website would not accept it. Given his leadership role, I feel it is an outrage that he precludes receiving comments from taxpayers.

    If he wants to be restrictive in who e-mails his office, then he should resign from all his leadership roles and become a rank and file Congress person.

    Shame on Barney Frank.

  26. Anonymous

    Dear American:

    I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

    I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

    I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

    This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

    Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

    Yours Faithfully Minister of Treasury Paulson


  27. Anonymous

    Anon 7.24: Hilarious! You actually made me laugh out loud, which, during a week in which the US democracy is actually transformed into something resembling Nigeria, is quite a feat. Thanks for the chuckle ….

  28. Anonymous

    September 23, 2008

    I like what I’m hearing in this blog section to wit:

    I said two days ago in a private letter to an old friend recently reconnected with:

    “The best that I can say is that I’m a “Non-Violent Anarchist” [Formerly a well connected, life long, Republican when it meant something different than we have had since Reagan.] What that means in specific from over here is that my non-aligned view of the last 16 years or so has lead me to “See” that our Federal Government, as presently operated for many years, is beyond fixing, meaning that it needs to be “broken” so that our sacred Declaration of Independence, The Constitution, and the Bill of Rights can be restored. The “Independent Review of Iraq” that was done by the “Super Committee”, that included Jim Baker, a very capable guy, said two things that stuck with me: “Iraq needs to end the civil war, and build a national identity and purpose.” As I thought those two statements over it occurred to me that that was also what we needed to do in the USA. We’re all now “Blue” or “Red” and it’s not longer OK to just be a Dem. or Rep. If you’re one or the other then you must attack and malign the other aka declare and maintain a “civil war”. Any National Identity, or Purpose, went out the door with our “civil war” just like it has done in Iraq.”

    What I’m hearing today on this blog section leads me to believe that we might have an opportunity to put aside our “Civil War USA Style” that could then be extended to a reorganization intend towards how our government could once again be run by Law rather than Men. Wouldn’t that be wonderful, and wouldn’t it be a large motivation for us to “lay down our arms’ like we seem to be doing today? We do have the means dear citizens, red and blue alike. All we need is the will.

    Earl L. Crockett
    Santa Cruz, CA

  29. Anonymous

    September 23, 2008

    Hot off the press 11:20 AM PDS:

    “Bernanke, putting aside his prepared remarks released earlier today, said the Treasury should buy illiquid assets at “hold-to-maturity'' values rather than at discounted “fire- sale'' prices. The suspension of “mark-to-market'' accounting for assets, a change backed by “many banks,'' would instead hurt investor confidence.”
    Can you believe?


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