Posted on 09/19/2008 4:22:12 AM PDT by kellynla
NEW YORK (CNNMoney.com) -- The numbers are big. That much is certain.
The Federal Reserve has backstopped the purchase of Bear Stearns to the tune of $29 billion. It will loan $85 billion to insurer AIG. It's letting banks borrow up to $150 billion using risky mortgage-backed securities as collateral. And it's letting investment banks, which it doesn't regulate, get short-term loans using the central bank's discount window.
The Treasury, meanwhile, has pledged to backstop Fannie and Freddie up to $200 billion. Lawmakers passed legislation allowing the Federal Housing Administration to insure up to $300 billion in loans for troubled borrowers. They're likely to loan $25 billion to the auto industry.
And the government might not be finished. Some Democrats on Capitol Hill are arguing for an expansion of the FHA program for troubled borrowers. And talk is building that the government might have to set up a fund - similar to efforts in the 1930s and 1980s - to buy bad securities clogging up the financial system.
If you add up how much the Treasury and Fed have pledged or made available for loans so far, it's close to $800 billion.
(Excerpt) Read more at money.cnn.com ...
The Constitution? Oh man, that’s rich.
The only way this works is if the bad assets are weeded out and the market is restored. Remember, it was government involvement that brought us to the edge of the cliff. Too many honest and innocent people are going to get hosed if this isn’t fixed.
I think back to 1996 when people couldn’t get it up to vote for Dole. Instead we got Clinton and in addition to 9/11 we got a banking and real estate mess that could take the global economy down.
And by what authority are Hank Paulson and Ben Bernanke allowed to pledge that much of our money with no vote from congress? Also, who are these guys they are installing to run the newly nationalized companies? Friends? Who is vetting them and why should we believe they will do any better than the guys who got ousted?
You can’t fix it by throwing good money after bad.
Oh wait this isn’t even good money because the US government is insolvent even BEFORE this latest taxdollar grab.
Read “Atlas Shrugged” if you want to know in advance how this ends.
Open up your wallets folks, we’re being taken to the cleaners.
Inflation, the collapse of the dollar and vastly higher taxes are coming your way lickety split.
“And by what authority are Hank Paulson and Ben Bernanke allowed to pledge that much of our money with no vote from congress?”
That’s EXACTLY my point!
They don’t have the authority! BUT I don’t hear one word from the WH or ANYONE in Congress coming forward and saying “STOP, you don’t have the authority to do this!”
That’s supposed to be Congress’s job. They’ve delegated that repsonsibility to the Fed since 1913, but they haven’t exercised any oversight or accountability in decades either.
This is the point Ron Paul has been making lately. But he’s just a ‘kook’, remember?
Meanwhile, his warnings go ignored as they have for years.
Here you go: http://www.youtube.com/watch?v=wrIFkNispMk
I also don’t hear any wailing or gnashing of teeth from congress calling for investigations. Why aren’t these people in jail? Enron was chump change compared to Fannie and Freddie. But the Enron guys - and even some of their wives - went to jail while the Fannie and Freddie guys are out there raising funds for the Obama campaign.
Just the opposite.
Everyone that owns property and has money saved is screwed by the government devaluing everything they have to bail out the irresponsible.
Bring on the world wide depression and wipe out those that live on credit!!!!
“””””And by what authority are Hank Paulson and Ben Bernanke allowed to pledge that much of our money with no vote from congress?””””””
_________________________________________________________
What authority you ask? The Dodd/Frank “Housing Reform Act” or whatever the official name of it is, you know, the bill that was going to protect the homeowner, created a new US Government agency called the FHFA. The “mission” of the FHFA is to protect or shore up Fannie & Freddie, other GSE’s, The Federal Home Loan Banks and their affiliates or counter parties.
The affiliates of the Federal Home Loan Banks are, in fact, pretty much all 8,000 banks around the country. Counter parties to F & F or FHLB and their affiliates could be construed to be just about anyone that does business with the above and who the government decides is “too big to fail”.
Sen. Chris Dodd has denied all the while that his bill was a “bank bailout bill”.....you see it was only to protect the homeowner. Which is why congressional staffers and those in banking circles privately refer to the Dodd bill as “The Bank of America Bill” as BOA legal experts wrote the bill for Dodd, who of course got sweetheart mortgage deals from Countrywide who was purchased by BOA.
Anyway........Dodd has been indignant to the point of frothing at the mouth that it was not a bank bailout bill. However, on Wednesday, as the sh!t was hitting the fan and meltdown was underway and Hairy Reid said “we don’t know what to do”, a reporter asked Chris Dodd what could be done and his reply was “LET THE FED HANDLE IT, WE GAVE THEM THE AUTHORITY”.
So there you have it, Dodd is a scumbag, banks and their slush funds will buy them whatever they need.
I’m still waiting for all of you to start footing my bills. I’m special too, ya know.
LIBOR (London inter-bank overnight rate) + 850 basis points.
The problem actually is in part due to Sarbanes-Oxley: in order to prevent shenanigans, if an asset cannot be sold quickly at a known value, then it must be treated as though its value were ZERO.
AIG has a lot of stuff on its books, but because of the junk, nobody wants *ANY* of it.
The loan will buy them time to sell off some of their not-so-bad holdings to raise capital.
And the reason AIG had to be saved is that they are a "counterparty" to a gazillion other companies on these credit-default swaps we hear so much about. This means that they had guaranteed other companies against losses. But their business model had a flaw: it did not allow for the possibility of *correlated* risk, i.e. a systemic loss in value of real-estate.
Since they leveraged their available cash many times (since they thought there was very little risk of any defaults which they would need to backstop), many many other folks are depending on them...
In other words, it's not that they're "too big to fail".
It's that they're "too interconnected to fail".
Segue Rant: Gorelick, Johnson, Raines, and a few others should be in Leavenworth, in my not-so-humble-this-time opinion.
NO cheers, unfortunately.
Time to convert Federal Reserve notes to silver or gold.
Constitution?? What the hell is that?
Remember, MARTHA STEWART was thrown in jail - but nobody who deserves much worse will see any accountability, in this mess.
Here is how the continued down slide of AIG would of effected my state, and me personally.
“Embattled AIG’s fate could affect Boeing’s aircraft sales and state”
http://www.bizjournals.com/seattle/stories/2008/09/15/daily17.html
“Here is how the continued down slide of AIG would of effected my state, and me personally.”
I couldn’t care less how this would “effect” you personally or your state! There are more than 300 million AMERICANS and 49 other states who are “effected” by this, thank you!
The U.S. Treasury & the Federal Reserve DO NOT and I repeat DO NOT have the authority to bail out ANYONE!
This whole business should have gone through congress and voted on. PERIOD!
As a result, I and the rest of American taxpayers are going to have to PERSONALLY pay for this bailout for the rest of our lives and do so without a vote!
shezzzzzzzzzzzzzz...
The loan will buy them time to sell off some of their not-so-bad holdings to raise capital............................. to fund the BONUSES of the departing executives!!!
I’m less pissed about AIG than Fannie and Freddie, country club for former Clinton and Carter officials.
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