Posted on 09/25/2008 6:06:08 PM PDT by quesney
SHELBY PROPOSES ALTERNATIVE September 25, 2008
Washington, D.C. -
Senator Richard C. Shelby, ranking Republican on the U.S. Senate Committee on Banking, Housing and Urban Affairs, today issued the following statement:
“Last Saturday Secretary Paulson presented Congress with draft legislation that would grant him sweeping authority to spend up to $700 billion in taxpayer money to buy illiquid securities. The stated goal of this scheme is to return confidence and liquidity to our credit markets.
“I do not believe this is the right approach. We did not get into this situation in a matters of days, and we are not going to fix it in a matter of days.
“Proponents of the Paulson plan are telling the American people we can solve this problem with a single bill. I don’t believe that is credible. We have a number of interrelated problems that need to be addressed in order of their significance. First, and most urgent, is liquidity. Then we must address the solvency of our financial institutions and declining home values, not to mention our entire regulatory structure.
“I believe Congress can address the liquidity issue by increasing the combined resources of the Federal Reserve System and the Treasury. By enhancing the Federal government’s existing lending facilities and guarantee programs, we can help stabilize money market funds and provide loans to troubled financial institutions without exposing taxpayers to massive losses.
“Thereafter, we must determine how to address the troubled assets on the books of financial institutions and continue the process of dealing with declining home values. This will likely be a long and difficult process. We must recognize that now.
“Even if the Paulson plan works perfectly, which many doubt, including nearly two hundred economists, it will not stimulate new lending, stop de-leveraging, help distressed home owners, or jump start the economy.
“The next Congress is going to have to do more to address this crisis and we have not made this clear to the American people. As a member of Congress, I’m concerned that we are being asked to ratify the Secretary’s plan without having given meaningful consideration to any alternatives. This I can not support."
*The list of economists cited above can be found at: http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm
"I’m concerned that we are being asked to ratify the Secretary’s plan without having given meaningful consideration to any alternatives. This I can not support."
Obviously, that should be Senator Shelby in the title. Moderator, please fix.
That’s Senator Shelby (AL). We, here in Alabama are proud to have two conservative republican senators such as Sen. Shelby and Sen Sessions.
God bless Sen. Shelby. He’s clearly one of the few in Congress who is not there just to rape the taxpayer and enrich himself.
Sen Shelby is right — Dems tried to run this through without Republicans and Bush was going to sign off and then the Dems would have turned on the GOP candidates because of Bush.
I have lost total respect for Pres Bush who was siding with the Dems for no oversight of the Treasury Secretary.
Best move those House members made was to tell McCain what had happened this morning and how they had been left out of the deal.
Still pi$$ed about the nasty campaign he ran as a Dem against Denton so many years ago, but he has done good with this one.
I actually erased what took me twenty minutes to write and refine and I all I can type in it’s place is:
This sucks
We only have ourselves (as a nation....not the Freeps) to blame.
Hope this ends up ok.....good luck to all here.
Bwahaha!! Eliminate special interest projects??
Hello, why are they in Congress, if not to pass special interest projects?!?
;-)
Frankly, a “crash” would benefit many.
“Frankly, a “crash” would benefit many.”
NO. Not at all. It would be a disaster.
The economy is taking a turn for the worse already.
The credit system for the economy is like the oil lubricating a car. Take out the oil and the engine seizes up. You turn a healthy economy into a dead economy.
What Paulson was seeing, due to the bad assets pulling some of these banks down, has been banks refuse to lend to *eachother*.
Sen Shelby’s response has good points, especially his recognition for the need for liquidity, and also saying it is important to add the liquidity without socking taxpayers with a big bill.
There will be a heavy price if nothing is done, so this is not a situation where no bill is better than a bad bill. That said, I don’t see why Republicans have to fall behind a Democrat bill that is stuffed with christmas tree items for liberal special interests and is based on flawed concepts.
1. Get rid of the Democrat add-ons
2. Scale the proposal back - from $700 billion to $300 billion.
3. The House GOP wants a workout that underwrites items with govt backed insurance and gets wall st. to fund this. Pursue this.
Linsey Graham was just on Fox ( Greta) and said the original Dem. bill gave 20% of the bailout money to ACORN. Un-frickin believable. Keep the calls going folks.
Yep!
‘Rat heads should roll !!!
Would be nice....I don’t see how it happens though!
Let's try to be correct on this (the truth is bad enough). They are not trying to give $140B to ACORN. They want to give ACORN 20% of the PROFITS realized from this plan. I doubt they will ever see any profit but that is beside the pint.
The fundamental problem in today's economy is that a lot of assets, especially any that involve credit default swaps, are overvalued by an unknown amount. Nobody knows what they're really worth, and nobody knows whether a lot of the businesses that hold such assets are solvent or not.
Controls need to be put in place to prevent asset runs, and ensure that surviving hard assets get distributed among holders of the paper they're supposed to be backing. Then the market needs to be brought down.
If 1,000 people each have a "share" of an asset they bought for $1,000, and the total value of the shared asset is $100,000, then those people have lost $900,000. That money is gone. Kaput. Sayonara. No amount of marketing, bundling, slicing, dicing, or pricing can cause the total losses associated with that asset to be anything less than $900,000. If for some reason those shares become popular in the marketplace and people bid them up to $2,000 each, then the people who started out with them might not lose money (they may even profit), but the new owners are guaranteed to lose $900,000 plus any profit made by the earlier ones.
If, instead of bidding up the price of the assets, people start sensing something fishy and start trying to sell them, those who sell them will take a loss; those who buy them will take a further loss if they pay more than $100/share. Again, no matter what happens, $900,000 will be lost.
The reason the $900,000 loss is inevitable is because, before the start of the scenario, the loss had already occurred. People aren't going to lose money if the share prices plummet. The money is already lost. The crash is simply an acknowledgment of that fact.
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