The Washington Post reports that:
Treasury Department officials are laying the groundwork for seeking the second half of the $700 billion financial rescue package from Congress ... [but w]ith lawmakers on both sides of the aisle expressing heated opposition to such a request, Treasury officials have come to realize that they need the president-elect's help to obtain the rescue money, the sources said.
The Treasury aired the possibility of seeking the second half of the funds with transition team officials, who said they would attend a meeting with lawmakers and the Bush administration if the department pulled one together.
....
Obama has not yet stated whether the Treasury should receive the rest of the funds. But in agreeing to allow his aides to meet with administration officials and lawmakers on the issue, Obama appears to be demonstrating his willingness to engage on the issue, two of the sources said.
....
In a meeting with Treasury officials, Obama's transition team pressed them to use the second installment, if forthcoming, to help struggling homeowners.
Consider me not encouraged in the slightest by this development. Not that Paulson wants the second $350 billion to throw at properly connected Wall Street cronies, which was a virtual certainty anyway, but that Obama as President-elect rather than candidate is willing to play along.
When Obama was a candidate, not wanting to be seen as standing in the way of Economic Rescue could be excused. As President-elect, though, this will say a lot about his priorities and will preview his Administration.
Granted, he is being typically cautious and leaving his options open, while generally being cooperative; and granted the odds of the necessary 2/3 of both Houses of Congress voting against the second tranche (yes, that is more of that marvelous "oversight" Congress touted in the Bailout Bill) are infinitesimal and none; nevertheless the mere idea that Obama is willing to participate in Wall Street Kleptocracy is disheartening.
And no, I'm not reassured by the meme that Obama is insisting that the second tranche "help struggling homeowners". The vast majority of Americans did not buy into the housing bubble, did not HELOC to the max to buy SUVs and other toys, and did not trade in a reasonable tract home for a status-symbol half-empty McMansion. "Helping struggling homeowners" at least in part means that the prudent and the thrifty, many of whom are also in financial distress due to job losses, and increasing food costs and health premiums, get stuck with the bill in order to aid the reckless and the spendthrift.
Comments
Good God
I agree with you and to me, the financial sector bail out is pure stealing from the taxpayer at this point.
There are so many things that need to change with corporations and this is a golden opportunity to pass those changes.
I also think since they won't give any money from this to the auto bail out, it should just how badly it stinks.
Then on who gets the money on that one I completely agree.
They had better weed out the speculators, the irresponsible from the predatory lenders and ARM option mortgages.
Not Buying It
I find it a bit suspect to make such claims as "the vast majority of whom.." None of the data suggests that, specifically when we look at the average debt load and savings rates of Americans compared to other countries.
Finally, as much as you may want to distance yourself from this issue and principle and judge from on high, the truth is you, like everyone else is in the middle of this maelstrom, and have little hope at this point of getting out of this better for it without these, however unpopular, actions being taken by both parties.
Let's also not forget that our judgements are inherently flawed, during the good years we looked aside at the wealth and bonuses these managers and CEO's received. Further, our Congress and Bill Clinton passed the bulk of the legislation that allowed us to get into this current position. This is blood borne by all.
Unless you are lucky enough to live in an area and be employed in a manner such that your property value has not started to plummet and your general industry is not going to be hard hit, then I suggest that you lean first to understand that anything that can get things back on a positive track is desirable over a philosophical line in the sand that is meaningless when on the soup kitchen line.
Personally, I find it ironic that no-one questions more fundamental issues in moving forward the right way and not letting this sort of thing happen again, like changing the metric of success from GDP. I trust that all reading here can see the resultant failure of this metric, while we are cleaning house we should start with the correct dashboard.
Dave
wrong side of the bed this morning?
Me? Me personally?
Hey, on EP we are continually implying dramatic policy change so this cannot happen.
So "us" or "me", we're not up on high at all. EP is all about us regular folk looking at overall economics and we are assuredly right down in the mud with everybody else, potentially losing our financial rear ends, that's why we are here.
There for the Grace of God Go I I would say most on EP get that phrase.
Actually, we do have good data
For example, we know that existing home sales in 2005-7 totalled 20 million. New home sales add about another 2 million.
Give 2.5 people per household and that's about 60 million Americans who bought at or near the top of the housing bubble -- and 240 million who didn't.
Seven percent of all homeowners are presently delinquent or are in foreclosure. On the other hand, 30% of homeowners carry no mortgage whatsoever.
As to credit cards, as of last year, 2/3 of all Americans either have no credit card, always pay off the card in full each month, or usually pay it off in full each month.
Don't get smart with me about "judging from on high". The data says most Americans have lived prudently and did not get caught up in the housing mania.
If you have better data, bring it. Until then, there is no justification for the Stanley Johnsons among us who lived high on the hog by being in debt up to their eyeballs, to reach into the pockets of their next door neighbors who didn't.
"Don't get smart with me?"
"Don't get smart with me?" Hmm...excuse me, you are not dealing with a 5 year old, if you are going to make implications in your expression that you will resent having to deal with, then edit prior so you do not have to circle back.
Now, on to the issue. It still appears that you just aren't getting it. The self-reinforcing downward spiral will take the majority of us "prudent" Americans with it if we don't realize that this is not about "those who acted irresponsibly" because they can no longer be separated from those who did not. the collateral damage is already going too far. We need to address the situation using clarity moving forward and not by trying to necessarily "shield those who did not cause this" by acting in apprehensive half-acts that will only compound the problem.
At the foundation of this issue is housing and action must be done to significantly curtail the foreclosure and mortgage finance collapse that is occuring.
As far as the auto industry is concerned, well, lack of competitive subsidies, the past strength of the dollar especially with respect to the yen, and the ridiculous union contracts have ensured that this day would come. But again, I see no other option as failure of the entire industry is not acceptable for so many reasons.
The times we are in will go down as one of the worst economically speaking and so I agree with all in wanting to rage against the machine. However, right now we are still in a situation of having to stabilize the patient.
Dave
enough of this stuff
We don't do rage and insult on EP, so cool it. NDD is fairly objective and looking at macro economic indicators.
See the about and user guide for the rules.
There's a difference between
Helping those who overextended themselves on housing with writeoffs vs. handing them monetary assistance.
For example, if bankruptcy cramdowns of primary residences were allowed, those overextended homeowners would get help, without reaching into their next door neighbor's pockets (let alone those who decided to keep renting because house prices were spiraling out of control).
Some people object to even that, but cramdowns at least continue the process of making housing more affordable as a multiple of median income.
If we give monetary asistance to those who overextended themselves and now have problems with a toxic mortgage, then the obvious thing for everyone to do, is to move into the biggest McMansion they want, don't bother paying the mortgage, and wait for the government check. Iirc, there are some people who are already deliberately not paying their mortgage, just so they will qualify for assistance programs (and pocketing the money or spending it on some other consumer bauble),
The patient can't be stabilized
because we're looking at the wrong patient.
I've seen far too many economists label this as a liquidity crisis- when in reality it's a SOLVENCY crisis. We let the cancer go for 70 years, and now we're treating the cancer instead of the patient because we can't even see the patient.
Housing is NOT the foundation of the issue, housing is just the most visible symptom of a general systemic problem of relying too much on credit and not enough on assets.
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Maximum jobs, not maximum profits.
I say no to this
Not unless Congress hauls in these executives and this time do their God damn job. We got no concessions from the bankers. Paulson's blackmail did work for the most part, but now we got a second chance here. We have grilled the automakers more than we did the guys who...in reality, are more a cause of the mess we are in that the Detroit 3! Where's the hours of testimony from the heads of Goldman Sachs? Where's Jaime Dimond of JP Morgan Chase? How about Vikram Pandit of Citigroup? The gang at AIG have a lot of explaining to do as well. No, they want the money, and we want answers and give backs then. The British, for crying out loud, got a better deal from their banks than we did!
I agree
There are bills in both houses to pull the rest of the TARP money and I full agree with it.
Even worse, Peter DeFazio proposed a simple stock transaction fee that was pennies, absolutely pennies to pay for this and it was rejected outright.
Now why is something that really doesn't add a lot of cost to traders immediately rejected?
But this is clearly a pig fest, something horribly wrong, corrupt from all of our many posts with the details.
pennies?
Any info on this? Is this that transaction bill?
transaction fee
reuters.
so let's say someone bought 100k worth of stock, that would be $250 dollars.
$5000 dollars worth of stock is $12.50
I think it's reasonable and would have raised $150 Billion per year.
It also would have seriously messed up the day traders and short sellers as a disincentive.
damn
As a day trader, I'm conflicted on this. I could see a reason behind this with larger players or large single orders. I have a ton of questions on this law, and will have to investigate it further. But just by going off what you posted, there is already a way to circumvent it.
For starters, if the .25% is off the entire value of the stock itself in question in a spot exchange (i.e. buying or selling shares), then traders will go to the options. Because it is a "transaction fee" that means a percentage of what is being changed hands. Traders would be paying the .25% on the price of the option versus the underlying. So for example, say IBM for example. It's around $80.50 a share. To purchase 100 shares, that would be $8050. That tax would be $20.125. Now I know traders who (like myself) will unload a stock after a few cents, so in ibm's case, I need the stock to move 20 cents in my favor just to break even. Now instead I could by an April 09 at-the-money 80 Call for $10 or $1000 (10 x 100 shares underlying that is represented in one options contract). My tax would be$2.50.
Speculators, though hated perhaps by folks like you and many others, provide liquidity to markets. Liquidity that allows folks like pension funds and yourself (assuming you invest in the market) a chance to buy or sell what you want. If Congress is not careful, this liquidity could easily move to London which has been heavily advertising their wares.
I don't hate speculators, day traders
I think he had it all everything, options, spreads, swaps.
I mean what's this in comparison to raising capital gains?
Maybe they could lower it.
Bill Issacs also had warrants and other vehicles which cost the taxpayer nothing (on the bail out).
I do hate people who won't pick a blockquote format! ;)
Liquidity vs Solvency
But how much of the liquidity in the markets is fake? How much of it comes from such stupid moves as short sells, which arguably increase risk and chance of insolvency for all parties that it touches?
Of course, I got out of this market back in '04 when I realized it was nothing more than a con game for suckers.
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Maximum jobs, not maximum profits.
Hey....
....maybe if it's in London it might be more honestly dealt with?
Nah...
Crooks everywhere.
I must say this sounds like, 'I don't want to pay my share of the costs of doing business...let the taxpayer suck it up', eh?
But what do I know....
I take a shower at the end of the day.
'When you see a rattlesnake poised to strike, you do not wait until he has struck to crush him.'