Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Key Points on “Rescue” Plan From A Healthy Bank’s Perspective
South Carolina Conservative ^ | September 24, 2008 | Dave Wilson

Posted on 09/24/2008 7:14:26 PM PDT by Delacon

This one came across the desk this morning. It’s a portion of letter going out today from John Allison, President & CEO of BB&T, to every member of the US Congress.

Key Points on “Rescue” Plan From A Healthy Bank’s Perspective

  1. Freddie Mac and Fannie Mae are the primary cause of the mortgage crisis. These government supported enterprises distorted normal market risk mechanisms. While individual private financial institutions have made serious mistakes, the problems in the financial system have been caused by government policies including, affordable housing (now sub-prime), combined with the market disruptions caused by the Federal Reserve holding interest rates too low and then raising interest rates too high.
  2. There is no panic on Main Street and in sound financial institutions. The problems are in high-risk financial institutions and on Wall Street.
  3. While all financial intermediaries are being impacted by liquidity issues, this is primarily a bailout of poorly run financial institutions. It is extremely important that the bailout not damage well run companies.
  4. Corrections are not all bad. The market correction process eliminates irrational competitors. There were a number of poorly managed institutions and poorly made financial decisions during the real estate boom. It is important that any rules post “rescue” punish the poorly run institutions and not punish the well run companies.
  5. A significant and immediate tax credit for purchasing homes would be a far less expensive and more effective cure for the mortgage market and financial system than the proposed “rescue” plan.
  6. This is a housing value crisis. It does not make economic sense to purchase credit card loans, automobile loans, etc. The government should directly purchase housing assets, not real estate bonds. This would include lots and houses under construction.
  7. The guaranty of money funds by the U.S. Treasury creates enormous risk for the banking industry. Banks have been paying into the FDIC insurance fund since 1933. The fund has a limit of $100,000 per client. An arbitrary, “out of the blue” guarantee of money funds creates risk for the taxpayers and significantly distorts financial markets.
  8. Protecting the banking system, which is fundamentally controlled by the Federal Reserve, is an established government function. It is completely unclear why the government needs to or should bailout insurance companies, investment banks, hedge funds and foreign companies.
  9. It is extremely unclear how the government will price the problem real estate assets. Priced too low, the real estate markets will be worse off than if the bail out did not exist. Priced too high, the taxpayers will take huge losses. Without a market price, how can you rationally determine value?
  10. The proposed bankruptcy “cram down” will severely negatively impact mortgage markets and will damage well run institutions. This will provide an incentive for homeowners who are able to pay their mortgages, but have a loss in their house, to take bankruptcy and force losses on banks. (Banks would not have received the gains had the houses appreciated.) This will substantially increase the risk in mortgage lending and make mortgage pricing much higher in the future.
  11. Fair Value accounting should be changed immediately. It does not work when there are no market prices. If we had Fair Value accounting, as interpreted today, in the early 1990’s the United States financial system would have crashed. Accounting should not drive economic activity, it should reflect it.
  12. The proposed new merger accounting rules should be deferred for at least five years. The new merger accounting rules are creating uncertainty for high quality companies who might potentially purchase weaker companies.
  13. The primary beneficiaries of the proposed rescue are Goldman Sachs and Morgan Stanley. The Treasury has a number of smart individuals, including Hank Paulson. However, Treasury is totally dominated by Wall Street investment bankers. They do not have knowledge of the commercial banking industry. Therefore, they can not be relied on to objectively assess all the implications of government policy on all financial intermediaries. The decision to protect the money funds is a clear example of a material lack of insight into the risk to the total financial system.
  14. Arbitrary limits on executive compensation will be self defeating. With these limits, only the failing financial institutions will participate in the “rescue,” effectively making this plan a massive subsidy for incompetence. Also, how will companies attract the leadership talent to manage their business effectively with irrational compensation limits?


TOPICS: Business/Economy; Culture/Society; Editorial; Government
KEYWORDS: bailout; congress; economy; financialcrisis; govwatch; housingbubble; lettertocongress; paulson

From the Corner:

Here's A Radical Thought   [John Hood]

If you want to learn how to manage a winning baseball team, don't spend a lot of time talking to losing baseball managers. If you want to learn how to make it in the music industry, don't spend a lot of time talking to "artists" who've never had a gig or released an album. If you want to learn how to make a really good pasta from scratch, don't spend a lot of time talking to, well, me.

In the current financial debate, if you want to figure out how policymakers can do the most good with the least amount of harm to market incentives, the broader economy, and American freedom, don't spend a lot of time talking to Fannie/Freddie apologists and Wall Streeters. They have huge personal incentives to spin you, incentives that do not necessarily align with the interests of taxpayers. Instead, talk to leaders of banking and finance firms that continue to perform fairly well in a difficult environment.

John Allison is chairman of North Carolina's BB&T, one of the biggest and most successful banks in the U.S. (though Tar Heel State rivals Bank of America and Wachovia are larger still). He is also a passionate believer in freedom (full disclosure: he's a donor to my think tank and his company is a sponsor of my radio program). He dislikes the Paulson Plan, and thinks better alternatives exist.


1 posted on 09/24/2008 7:14:31 PM PDT by Delacon
[ Post Reply | Private Reply | View Replies]

To: Delacon

BTTeffinT


2 posted on 09/24/2008 7:19:55 PM PDT by Principled (Vaporize the "Divide and Conquer" taxes - Have everyone pay the same marginal rate!. NRST!)
[ Post Reply | Private Reply | To 1 | View Replies]

BMFL.


3 posted on 09/24/2008 7:21:10 PM PDT by Spktyr (Overwhelmingly superior firepower and the willingness to use it is the only proven peace solution.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Delacon
Freddie Mac and Fannie Mae are the primary cause of the mortgage crisis.

Removing the restrictions in 1999 which allowed financial institutions to package the mortgages into these backed mortgage security investments was a much bigger problem. It created a hyper demand for bad mortgages with no rules. Mortgage companies would lie and these financial instituions did not care because they peddled them off to unknowing investors. Fannie and Freddie were bad.

4 posted on 09/24/2008 7:21:13 PM PDT by Always Right (Obama: more arrogant than Bill Clinton, more naive than Jimmy Carter, and more liberal than LBJ.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Delacon

This is one of the best thought out responses to the Paulson Plan that I have seen.


5 posted on 09/24/2008 7:27:09 PM PDT by p. henry
[ Post Reply | Private Reply | To 1 | View Replies]

To: Delacon

Sound common sense.


6 posted on 09/24/2008 7:28:26 PM PDT by kenavi (BHO: The only constant is change.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Delacon

BUMP for tomorrow reading!


7 posted on 09/24/2008 7:31:48 PM PDT by CedarDave (Gloom and doom Democrats cheer for financial despair, losing wars and hurricanes. That's leadership!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Always Right

“It is completely unclear why the government needs to or should bailout insurance companies, investment banks, hedge funds and foreign companies.”

Because...just because. Because their minions are rife in the Treasury Dept., the Administration. Because they give millions in political contributions and promises of high paying sinecures after leaving office.

I like your point about the restrictions. But there are those that would say if you only deregulated more and allowed these people to invent more mysterious paper value we would all get rich Rich RICH! The same people who claimed we could “grow out of the deficit”.


8 posted on 09/24/2008 7:33:49 PM PDT by Shermy
[ Post Reply | Private Reply | To 4 | View Replies]

To: Principled

Hope McCain is talking to this guy.


9 posted on 09/24/2008 7:34:14 PM PDT by stevestras
[ Post Reply | Private Reply | To 2 | View Replies]

To: p. henry

I am an American taxpayer who has been bled nearly dry. I paid for the S&L scandal, endured recovery from 9/11, pay for pork, taxed every way from Sunday including income tax, telecommunication tax, users fees (hidden tax), payroll tax, taxes to support those who don’t put out effort to support themselves, taxes that go to state-funded abortions, sales tax, federal excise tax, tax when I sell a house, tax when I buy a house....it does not stop. Now I’ve been asked to bail out the automotive industry to the tune of $25B and now Freddie/Fannie bailout. In this ONE CASE, I am asking for 2 things: 1) stop allowing Freddie/Fannie from making political contributions, and 2) PUNISH the wrongdoers! Start there, PLEASE! This turnip has had all the blood squeezed out of it and all I see are idiots lining their pockets truly at my expense. Let’s dress up like Indians and toss some tea into the harbor along with some Gorelicks, and Todds, and Obamas, and Johnsons, and Raines!!!!


10 posted on 09/24/2008 7:36:30 PM PDT by SERKIT ("Blazing Saddles" explains it all.....)
[ Post Reply | Private Reply | To 5 | View Replies]

To: Delacon
The primary beneficiaries of the proposed rescue are Goldman Sachs and Morgan Stanley. The Treasury has a number of smart individuals, including Hank Paulson. However, Treasury is totally dominated by Wall Street investment bankers. They do not have knowledge of the commercial banking industry.

Gee, ya think???

This is WONDERFUL stuff. Mega-bump called for!

11 posted on 09/24/2008 7:36:51 PM PDT by Notary Sojac (I'll back the bailout if Angelo Mozilo lets me borrow his Lamborghini on Saturday nights.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Delacon
BB&T is a hard-core Ayn Rand believing institution. After the Kelo decision, BB&T announced they would not participate in any financing of government projects where land was obtained through Kelo.

They also have their official painting done by people with ties to the Ayn Rand art movement.

Good people. Too bad PNC has better checking for personal and business.

12 posted on 09/24/2008 7:38:29 PM PDT by mbraynard (You are the Republican Party. See you at the precinct meeting.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Delacon
BB&T is a hard-core Ayn Rand believing institution. After the Kelo decision, BB&T announced they would not participate in any financing of government projects where land was obtained through Kelo.

They also have their official painting done by people with ties to the Ayn Rand art movement.

Good people. Too bad PNC has better checking for personal and business.

13 posted on 09/24/2008 7:38:42 PM PDT by mbraynard (You are the Republican Party. See you at the precinct meeting.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Delacon
There is no panic on Main Street and in sound financial institutions. The problems are in high-risk financial institutions and on Wall Street.

While all financial intermediaries are being impacted by liquidity issues, this is primarily a bailout of poorly run financial institutions. It is extremely important that the bailout not damage well run companies.

I do believe the man has been reading my thoughts.

14 posted on 09/24/2008 7:43:14 PM PDT by org.whodat (Republicans should support the SAM Walton business model, and then drill???)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Shermy

I was just a loan officer but I was taught that the reason for the very existence of Fanny and Freddie was that the government agreed to pay the cost of the risk of extending loans to people who didn’t have 20% to put down. The cost was pegged and the government felt that the cost to us the taxpayers was outweighed by the resultant boost to the economy and stability to society that home ownership would provide. Somewhere along the line the cost and the payoff diverged. Was this caused by “removed restrictions” that you refer to?


15 posted on 09/24/2008 7:45:29 PM PDT by Delacon ("The urge to save humanity is almost always a false front for the urge to rule." H. L. Mencken)
[ Post Reply | Private Reply | To 8 | View Replies]

To: Notary Sojac
The primary beneficiaries of the proposed rescue are Goldman Sachs and Morgan Stanley. The Treasury has a number of smart individuals, including Hank Paulson. However, Treasury is totally dominated by Wall Street investment bankers. They do not have knowledge of the commercial banking industry.

From the start I have though Paulson was trying one of the biggest bank robberies in the history of the world, His statement that to control the salaries of over paid thieves is just beyond belief. Maybe if they hadn't stole the company blind it would be sound.

16 posted on 09/24/2008 7:47:09 PM PDT by org.whodat (Republicans should support the SAM Walton business model, and then drill???)
[ Post Reply | Private Reply | To 11 | View Replies]

To: mbraynard

Never heard of them, but I now want to put all my money in their bank!!


17 posted on 09/24/2008 7:51:47 PM PDT by penelopesire ("The only CHANGE you will get with the Democrats is the CHANGE left in your pocket")
[ Post Reply | Private Reply | To 13 | View Replies]

To: penelopesire

I’m sure there is good stuff all over their Wikipedia page.

Matt


18 posted on 09/24/2008 7:53:27 PM PDT by mbraynard (You are the Republican Party. See you at the precinct meeting.)
[ Post Reply | Private Reply | To 17 | View Replies]

To: penelopesire

I’m sure there is good stuff all over their Wikipedia page.

Matt


19 posted on 09/24/2008 7:53:32 PM PDT by mbraynard (You are the Republican Party. See you at the precinct meeting.)
[ Post Reply | Private Reply | To 17 | View Replies]

To: penelopesire

I’m sure there is good stuff all over their Wikipedia page.

Matt


20 posted on 09/24/2008 7:53:34 PM PDT by mbraynard (You are the Republican Party. See you at the precinct meeting.)
[ Post Reply | Private Reply | To 17 | View Replies]

To: mbraynard

OK...OK..OK...:)

Having posting problems there?

(grin)


21 posted on 09/24/2008 7:56:39 PM PDT by penelopesire ("The only CHANGE you will get with the Democrats is the CHANGE left in your pocket")
[ Post Reply | Private Reply | To 20 | View Replies]

To: penelopesire

A well-managed institution with a history of dividend growth.


22 posted on 09/24/2008 7:58:51 PM PDT by Atticus
[ Post Reply | Private Reply | To 17 | View Replies]

To: Delacon
Here's what the bailout does - it rewards foolish banking like the high risk crap of WAMU. And it punishes the banks that have acted responsibly.

What you reward, you get more of... if the bailout goes through - the financial mess will be worse in a year.

23 posted on 09/24/2008 8:00:17 PM PDT by GOPJ (Let free markets work - stupid companies SHOULD go belly-up - including Frannie and Freddie.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Always Right

Freddie Mac and Fannie Mae are the primary cause of the mortgage crisis.

Not true. These comprise a small fraction, the makority are credit derivative swaps.

From what I understand, they are basically bets/insurance that rates will or won’t go up or down.

So the banks and institutions made a humongous amount of bad bets. And now the S is HTF.

See my post 65.

http://www.freerepublic.com/focus/f-news/2089498/posts


24 posted on 09/24/2008 8:01:37 PM PDT by djf (Sound of gunfire, off in the distance, I'm getting used to that now...)
[ Post Reply | Private Reply | To 4 | View Replies]

To: Delacon
1. Freddie Mac and Fannie Mae are the primary cause of the mortgage crisis. These government supported enterprises distorted normal market risk mechanisms. While individual private financial institutions have made serious mistakes, the problems in the financial system have been caused by government policies including, affordable housing (now sub-prime), combined with the market disruptions caused by the Federal Reserve holding interest rates too low and then raising interest rates too high.

Yes, correct, but the picture is incomplete without a discussion of the destruction of sound credit standards throughout the residential mortgage market in the name of "diversity" at the behest of our political masters.

2. There is no panic on Main Street and in sound financial institutions. The problems are in high-risk financial institutions and on Wall Street.

Oh really?? Do nothing and wait a few days. Caterpillar just paid twice the borrowing costs on $1.3 billion compared to just a couple of weeks ago. GM has exhausted their credit lines and there is none left. That's just the beginning.

3. While all financial intermediaries are being impacted by liquidity issues, this is primarily a bailout of poorly run financial institutions. It is extremely important that the bailout not damage well run companies.

Only partly true. There were certainly concentrated pockets of bad mortgage securities as we saw in Bear, Lehman, Merrill and the big writedowns by the big money center banks, but losses from the impaired mortgage securities can be found throughout the financial sector. Certainly, it is important not to damage well-run companies.

4. Corrections are not all bad. The market correction process eliminates irrational competitors. There were a number of poorly managed institutions and poorly made financial decisions during the real estate boom. It is important that any rules post “rescue” punish the poorly run institutions and not punish the well run companies.

The most important thing the post-"rescue" rule changes should do is make sure there is never a recurrence of this again, and remove the massive political interference in and distortion of market mechanisms.

5. A significant and immediate tax credit for purchasing homes would be a far less expensive and more effective cure for the mortgage market and financial system than the proposed “rescue” plan.

But we've pissed away amounts literally in the trillions of dollars on houses that the a market never would have built thanks to the Rats' government-sponsored "diversity" housing bubble. Um, that sort of leaves a hole in the supply side of the credit markets. Without a functioning credit market there is not the lending capacity in the financial markets to give purchasers the resources to make a sufficient impact in time to solve the problem, and in the meantime the big money center banks will have been flushed down the toilet.

6. This is a housing value crisis. It does not make economic sense to purchase credit card loans, automobile loans, etc. The government should directly purchase housing assets, not real estate bonds. This would include lots and houses under construction.

Yes, as I have posted before the most efficient economic solution is come in at the bottom of the pyramid and the government take over the loans on an individual house-by-house basis. But that would require a vast federal bureaucracy and would simply be unworkable.

7. The guaranty of money funds by the U.S. Treasury creates enormous risk for the banking industry. Banks have been paying into the FDIC insurance fund since 1933. The fund has a limit of $100,000 per client. An arbitrary, “out of the blue” guarantee of money funds creates risk for the taxpayers and significantly distorts financial markets.

Hm, what do you think an out-of-the-blue run destroying the money market funds would do to the financial markets? Oh well, I guess everyone can dump their cash into BB&T!

8. Protecting the banking system, which is fundamentally controlled by the Federal Reserve, is an established government function. It is completely unclear why the government needs to or should bailout insurance companies, investment banks, hedge funds and foreign companies.

Um, so we can create a functioning credit market again and avoid a loss of confidence in our financial system and the onset of a depression with mass business failures and unemployment.

9. It is extremely unclear how the government will price the problem real estate assets. Priced too low, the real estate markets will be worse off than if the bail out did not exist. Priced too high, the taxpayers will take huge losses. Without a market price, how can you rationally determine value?

There is no market price now, the market is broken. With our capital-depleted financial sector only the government can bring the liquidity and staying power to jump start real market pricing again.

10. The proposed bankruptcy “cram down” will severely negatively impact mortgage markets and will damage well run institutions. This will provide an incentive for homeowners who are able to pay their mortgages, but have a loss in their house, to take bankruptcy and force losses on banks. (Banks would not have received the gains had the houses appreciated.) This will substantially increase the risk in mortgage lending and make mortgage pricing much higher in the future.

Yes, it's a bad idea.

11. Fair Value accounting should be changed immediately. It does not work when there are no market prices. If we had Fair Value accounting, as interpreted today, in the early 1990’s the United States financial system would have crashed. Accounting should not drive economic activity, it should reflect it.

Agreed.

12. The proposed new merger accounting rules should be deferred for at least five years. The new merger accounting rules are creating uncertainty for high quality companies who might potentially purchase weaker companies.

Not for five years, but deferred to be considered by the accounting profession and regulators as a part of the larger issue of fair value accounting in light of lessons learned from the crisis.

13. The primary beneficiaries of the proposed rescue are Goldman Sachs and Morgan Stanley. The Treasury has a number of smart individuals, including Hank Paulson. However, Treasury is totally dominated by Wall Street investment bankers. They do not have knowledge of the commercial banking industry. Therefore, they can not be relied on to objectively assess all the implications of government policy on all financial intermediaries. The decision to protect the money funds is a clear example of a material lack of insight into the risk to the total financial system.

The primary beneficiary of the rescue is the American economy. Goldman Sachs and Morgan Stanley have relatively strong balance sheets because they avoided plunging into so many bad mortgages. I thought you just said the better-run companies should make out better than the worse-run companies after the dust settles?

Ben Bernanke is not just a potted plant, and for that matter Hank Paulson does not single-handedly constitute the Treasury Department. And there is always the office of the Comptroller of the Currency and their vast experience that can be called upon with respect to commercial banks.

14. Arbitrary limits on executive compensation will be self defeating. With these limits, only the failing financial institutions will participate in the “rescue,” effectively making this plan a massive subsidy for incompetence. Also, how will companies attract the leadership talent to manage their business effectively with irrational compensation limits.

Agreed.

25 posted on 09/24/2008 8:03:42 PM PDT by SirJohnBarleycorn
[ Post Reply | Private Reply | To 1 | View Replies]

To: penelopesire

?


26 posted on 09/24/2008 8:37:35 PM PDT by mbraynard (You are the Republican Party. See you at the precinct meeting.)
[ Post Reply | Private Reply | To 21 | View Replies]

To: SirJohnBarleycorn; All

Guess what the democrats are trying to add now(besides consumer credit card debt, car loans, student loans, home heating help and a various other disasterous proposals?

They want new legislation in the bailout to allow U.S. JUDGES TO MODIFY MORTGAGES!! Isn’t that a typical democrat solution...(eye roll)

(see ‘Provision To Alter Loans Is Sought’ in the WSJ today)

Dumb question...how will the federal government ever be able to ‘value’ this garbage if Judges all over the country are setting arbitrary values that can be repaid for up to 40 years? How is that going to help so-called ‘liquidity’?

Critics of this latest democrat ‘provision’ say that the language of the bill is so expansive that ANY MORTAGE-NOT JUST THE RISKIER MORTGAGES that have the highest default rates, would be covered! ‘Homeowners who simply made bad borrowing decisions could be bailed out’!!

Folks....this whole thing is a nightmare and if the democrats get any of their so called ‘provisions’ through..our country is truly in peril!!

STOP THE INSANITY!!!


27 posted on 09/24/2008 8:42:32 PM PDT by penelopesire ("The only CHANGE you will get with the Democrats is the CHANGE left in your pocket")
[ Post Reply | Private Reply | To 25 | View Replies]

To: mbraynard

Everytime you post, it is in triples...lol. Just teasing you about it.


28 posted on 09/24/2008 8:43:46 PM PDT by penelopesire ("The only CHANGE you will get with the Democrats is the CHANGE left in your pocket")
[ Post Reply | Private Reply | To 26 | View Replies]

To: SirJohnBarleycorn

I never like to shoot the messenger and this is “way above my pay-grade” as Obama likes and deserves to say. But when I am not schooled in something, I fall back on credibility. In fact, it happens all the time in my day to day. With my mechanic, my accountant, my plumber, and my realtor. But I must ask, what huge banks have you successfully captained? Just askin.


29 posted on 09/24/2008 9:09:20 PM PDT by Delacon ("The urge to save humanity is almost always a false front for the urge to rule." H. L. Mencken)
[ Post Reply | Private Reply | To 25 | View Replies]

To: Delacon

BTTT!


30 posted on 09/24/2008 9:11:42 PM PDT by To Hell With Poverty (If you rob Peter to pay Paul, you can always count on Paul's vote. - Howie Carr)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Delacon

I’m sorry, but I’m not going to defer to John Allison. Just yesterday, Dick Fuld and Jimmy Cayne were supposed geniuses of finance, and now they are drooling morons. Rather than parade my qualifications, my arguments can stand or fall by their inherent force and logic or by their lack thereof. Think for yourself.


31 posted on 09/24/2008 9:21:38 PM PDT by SirJohnBarleycorn
[ Post Reply | Private Reply | To 29 | View Replies]

To: djf; All

Do you have the link for the earlier Paulson Plan thread that was on Monday and Tuesday. All my pings have disappeared, and I really wanted to study the many interesting comments made, and use the link for Congressional email addresses someone provided, as well as the FR link for all sorts of government contact information.


32 posted on 09/24/2008 10:27:54 PM PDT by gleeaikin
[ Post Reply | Private Reply | To 24 | View Replies]

To: SirJohnBarleycorn; Delacon
Think for yourself.

I guess the point was [at least fer me] that im attempting to understand a bit more of the hidden traps of finance, [and IF you have special training in the area, I can learn somethin] or whether your post just looks pretty good to a dumbass like myself...

I simply dont have the time/energy to learn it all to know it all...

33 posted on 09/24/2008 10:46:39 PM PDT by Gilbo_3 ("JesusChrist 08"...Trust in the Lord......=...LiveFReeOr Die...)
[ Post Reply | Private Reply | To 31 | View Replies]

To: Gilbo_3

I understand what you are saying.

I would argue that even someone who may not spend all of his waking hours contemplating Treasury-to-Libor swap spreads but who has a good understanding of basic conservative and free market principles nevertheless would have a better grasp on what’s going on in this crisis than a liberal who has worked his whole life in the financial industry.

A conservative understands that a free market is far better at pricing and allocating goods and services in an economy than politicians trying to twist the market to benefit certain groups, no matter how noble-sounding the goal, and that sooner or later there will be a cost for that meddling and the piper must be paid.

A conservative understands that when a warning has been given that a major hurricane is about to devastate his community, that he is better off heeding the warning, and spending the time and expense to buy plywood and cover all of the openings of his house, packing up all of his transportable valuables and travelling somewhere safe and incurring the cost of a hotel if necessary to preserve as much value as possible while weathering the storm. A liberal will put his fingers in his ears and say “la la la” while all of his possessions are wiped out in the storm and if he is lucky enough himself to survive will then go running to the government and demand to be made whole.

Trust your conservative instincts.


34 posted on 09/24/2008 11:36:23 PM PDT by SirJohnBarleycorn
[ Post Reply | Private Reply | To 33 | View Replies]

To: SirJohnBarleycorn
Hm, what do you think an out-of-the-blue run destroying the money market funds would do to the financial markets? Oh well, I guess everyone can dump their cash into BB&T!

IMHO, the proper thing to do would be to set up an insurance scheme which would (1) pay less than 100 cents on the dollar, but would shield against some loss, and (2) would cover against an increasing percentage of losses throughout the next couple years. That would encourage people who didn't need their money immediately to withdraw it from the money market funds at a controlled rate.

35 posted on 09/24/2008 11:36:31 PM PDT by supercat
[ Post Reply | Private Reply | To 25 | View Replies]

To: Delacon

It is extremely unclear how the government will price the problem real estate assets. Priced too low, the real estate markets will be worse off than if the bail out did not exist. Priced too high, the taxpayers will take huge losses. Without a market price, how can you rationally determine value?
//////////////////////////
That says it all.

KILL THE BULLSHEET BAILOUT


36 posted on 09/24/2008 11:55:33 PM PDT by TomasUSMC ( FIGHT LIKE WW2, FINISH LIKE WW2. FIGHT LIKE NAM, FINISH LIKE NAM)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SirJohnBarleycorn
There is no market price now, the market is broken. With our capital-depleted financial sector only the government can bring the liquidity and staying power to jump start real market pricing again.

A ridiculous assertion, and certainly not conservative. You obviously have a stake in this game.

There is ALWAYS a market price.

37 posted on 09/25/2008 12:04:12 AM PDT by garandgal
[ Post Reply | Private Reply | To 34 | View Replies]

To: SirJohnBarleycorn; NFHale; hiredhand; Squantos
Trust your conservative instincts

thanks SJB, although usually around here when I get to lookin at a gov run shell game with that many zeros behind the numbers [and the legislation], most would say 'my instinct' needs to be tempered...

IOW, how much ROPE would a cool TRILLION bucks buy...???

How do they 'screw you'[the People] in washington ???......'trust me, we can fix it'...

38 posted on 09/25/2008 4:03:29 AM PDT by Gilbo_3 ("JesusChrist 08"...Trust in the Lord......=...LiveFReeOr Die...)
[ Post Reply | Private Reply | To 34 | View Replies]

To: mbraynard

“BB&T is a hard-core Ayn Rand believing institution. After the Kelo decision, BB&T announced they would not participate in any financing of government projects where land was obtained through Kelo.
They also have their official painting done by people with ties to the Ayn Rand art movement.”

I know nothing about the company, a buddy of mine has pointed it out. But as a stock trader I find it interesting that BB&T is trading much closer to its 52 week high than say GS or any of the Wall St banks.


39 posted on 09/25/2008 6:19:33 AM PDT by Attention Surplus Disorder (Tired from wondering whether we wake up in the newest socialist country tomorrow.)
[ Post Reply | Private Reply | To 12 | View Replies]

To: Gilbo_3

Got an e-mail that included a grin from this guy .....

http://orcastl.com/gestalt/go.cfm?objectid=40C3107D-C290-EABA-6E435006238C4959

A SOLUTION TO THE BAIL OUT.

Subject: The Birk Economic Recovery Plan

Hi Pals,

I’m against the $85,000,000,000.00 bailout of AIG.

Instead, I’m in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.

To make the math simple, let’s assume there are 200,000,000 bonafide U.S. Citizens 18+.

Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up..

So divide 200 million adults 18+ into $85 billion that equals $425,000.00.

My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.

Of course, it would NOT be tax free.

So let’s assume a tax rate of 30%.

Every individual 18+ has to pay $127,500.00 in taxes.

That sends $25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their pocket.

A husband and wife has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?

Pay off your mortgage - housing crisis solved.

Repay college loans - what a great boost to new grads

Put away money for college - it’ll be there

Save in a bank - create money to loan to entrepreneurs.

Buy a new car - create jobs

Invest in the market - capital drives growth

Pay for your parent’s medical insurance - health care improves

Enable Deadbeat Dads to come clean - or else

Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces.

If we’re going to re-distribute wealth let’s really do it...instead of trickling out a puny $1000.00 ( “vote buy” ) economic incentive that is being proposed
By one of our candidates for President.

If we’re going to do an $85 billion bailout, let’s bail out every adult U S Citizen 18+!

As for AIG - liquidate it.

Sell off its parts.

Let American General go back to being American General.

Sell off the real estate.

Let the private sector bargain hunters cut it up and clean it up.

Here’s my rationale. We deserve it and AIG doesn’t.

Sure it’s a crazy idea that can “never work.”

But can you imagine the Coast-To-Coast Block Party!

How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion

We Deserve It Dividend more than I do the geniuses at AIG or in Washington DC .

And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.

Ahhh...I feel so much better getting that off my chest.

Kindest personal regards,

Birk

T. J. Birkenmeier, A Creative Guy & Citizen of the Republic


40 posted on 09/25/2008 6:57:06 AM PDT by Squantos (Be polite. Be professional. But have a plan to kill everyone you meet)
[ Post Reply | Private Reply | To 38 | View Replies]

To: Squantos
Can you get a ballot initiative started ???

the raw numbers that uncle sug are throwin around are staggering when put in context...

41 posted on 09/25/2008 11:14:15 AM PDT by Gilbo_3 ("JesusChrist 08"...Trust in the Lord......=...LiveFReeOr Die...)
[ Post Reply | Private Reply | To 40 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson