Posted on 10/01/2008 4:37:37 AM PDT by Mr. Mojo
(CNSNews.com) - Following the defeat of the $700-billion bailout package on Monday, Rep. Jeb Hensarling (R-Texas), chairman of the Republican Study Committee (RSC), introduced a bill that he said relies on the free market rather than the federal government to solve the nation’s financial problems.
Instead of mandating that the U.S. Treasury purchase up to $700 billion in teetering mortgages and mortgage-backed securities, as the plan backed by the Bush administration and congressional leadership mandated, the RSC alternative would try to restore confidence in the mortgage market by insuring all such investments at 100 percent of their value.
Under the plan, mortgages that Treasury officials deemed to be risky would be insured at a higher premium than mortgages considered stable. The mortgages would be insured by the federal government, i.e., tax dollars. Thus, the plan is not pure free market but is more reasonable than an outright federal purchase of the mortgages with tax dollars, suggested Hensarling.
“In order to fundamentally deal with the crisis, some part of the full faith and credit of the government will have to be behind it [the solution],” Hensarling told CNSNews.com, and this would shore-up confidence in the mortgage and mortgage-backed securities markets. “But Wall Street ought to be paying for that, and we ought to be limiting taxpayer exposure.”
The plan also includes provisions important to Democrats that had been a part of the Bush plan, such as a provision that would severely limit the size of the “golden parachute” an executive, whose failing companies opted into the government’s insurance plan, could receive and ensuring that financial institutions participating in the program would have to disclose more about their mortgage-asset holdings.
Hensarling said at a press conference Monday that under ordinary circumstances conservatives would not consider granting the federal government such powers of intervention, but in these “extraordinary times” his caucus realizes that compromise is necessary.
“We come here ready to swallow hard, but we can’t swallow everything,” said Hensarling. “We do not feel that models such as loans secured by assets and the insurance model received the attention they were due. On a normal day, a conservative would run for the exits from either of those plans, but these are extraordinary times.”
However, the bill also includes provisions that appeal to free-market conservatives, including the gradual privatization of federal lending giants Fannie Mae and Freddie Mac; regulations barring Government Sponsored Enterprises (GSE’s) from engaging in risky investments; and temporary tax cuts and regulatory relief for businesses.
A press release from the RSC about the alternative plan states that it will allow Wall Street to work its way out of the financial crisis rather than cause it to depend upon the American workers’ tax dollars.
“We believe that we can help Wall Street work out of this crisis, not force the taxpayers into a bailout,” said the RSC. “We believe that voluntary private capital, not involuntary taxpayer capital, will help the system recover.”
“House conservatives believe that any model that essentially has taxpayers bailing out Wall Street is fundamentally flawed,” said Hensarling at the press conference.
Sources on Capitol Hill told CNSNews.com that at least five other conservatives in the House, including Reps. Bill Sali (R-Idaho), Paul Ryan (R-Wis.), Joe Barton (R-Texas), John Shadegg (R-Ariz.), and Marsha Blackburn (R-Tenn.) are also developing alternative plans to deal with the mortgage crisis.
However, the bill also includes provisions that appeal to free-market conservatives, including the gradual privatization of federal lending giants Fannie Mae and Freddie Mac; (YEAH!) regulations barring Government Sponsored Enterprises (GSE’s) from engaging in risky investments; (won't work) and temporary tax cuts and regulatory relief for businesses. (YEAH!)
I like these ideas, but it looks like the fix is in, judging from news reports. Hopefully the citizenry will light up the switchboards and shoot the bailout down.
Rather than pass an imperfect bill that has the worst Democrat pork removed, we need 5 or 10 "perfect", competing plans, each supported by 5 or 10 true believers who will not compromise. Let the Dems and RINOS get together and pass a bill that is pure socialism and truly bails out the crooks. Obama wins in a landslide, nationalizes everything and we all live in re-education camps and collective farms. Great idea.
You might find this very interesting.
http://ca.youtube.com/user/TheMouthPeace
True. However, McCain could stop them by pounding Fannie Frank, Raines, Clinton, Freddie Mac, Osama Obama, Chris Dodd, et. al., mercilessly.
If the truth got out, the Dems would be toast. The problem is, McCain seems confused, so it's unlikely that the Republicans can stay on message.
Yessir.
As I understand it (admittedly, I may not), the whole crux of this matter is that financial institutions hold securities which are bundles of consumer mortgages. Because of a combination of a fallen housing market, lax lending policies, and some degree of fraud, the ability of the consumers to repay these loans is in question.
Instead of going directly to the banks, why don’t we go directly to consumers?
The Fed loans banks money at prime. Why don’t we set up a one-time Federal mortgage agency. Anyone currently with an existing mortgage could have it refinanced through the Fed at prime, with a fixed rate, and for a long term.
This would eliminate most of the uncertainty for the institutions holding these securities, it would get consumers out of loans likely to be foreclosed, and it wouldn’t be tinkering with the financial markets as much. The Fed is already loaning money at prime to large institutions, I’d say, on balance, that consumers are at least as likely, if not moreso, to pay the loans back.
In return, the loans would be serviced by IRS - just so there’s no question that paying them is optional. The payments would go through normal tax withholding and any tax refunds would go to pay principal for the duration of the loan with the Fed.
I don;t disagree with McCain’s selection of Palin, but if he had chosen Ryan, he would be in VERY good shape considering the current crisis. Ryan has BIG, CONSERVATIVE ideas and the ability to articulate them. He has be a leader on the issue of SS and Medicare reform. Too bad his ideas never get a full airing. Liberals in these parts HATE him, because of his effectiveness. He has a lunatic running against him in the election this year. He’s a lock for re-election.
http://www.opinionjournal.com/weekend/hottopic/?id=110010639
Were on the same side but don’t salt the mine.......
SIX (6) stayed....Not 50. Their number swelled to about 20 as word got out in the building. Tourists and aides were invited in. Republicans sent out the call to come back via Twitter, and cellphone to Rush Limbaugh. Their number went up to 70% (150 plus) of the GOP reps as they came back later that day or the next......
GOP has fewer real conservatives of late. There are good ones in the republican party yet they are harder to find every day !
How many didn’t vote for this bail out bill Monday ? That IMO would be a good indicator as to how many conservatives are in the Republican party.
I owe 85K. My house has fallen in value by 85K.
How do I know?
Trust me. Would Mr Rogers lie? For profit?
The amount Paulson would pay for the securities would be determined by a reverse auction and backed by an asset based yield to maturity valuation. Those are all complex concepts I understand but much different than "unknowable." As for the bailout paying for itself, were you saying the same thing when the Resolution Trust Corporation was formed to work out the S&L Crisis? They made money and paid for themselves. It doesn't defy reality because the mortgages have hard collateral value.
I don't like this conservative plan because we are insuring 100% of value without any ownership control! Who wants to be an insurance company? Let's own the assets, buy it at a reasonable price or slightly lower. We can hold options or warrants on the companies who participate so if they unjustly profit the tax payer will reap some of that profit and fix the problems that started this mess.
Let's privatize Fannie and Freddie. Let's get rid of the CRA. Let's prohibit CMO's in the form they are sold in by forcing a mechanism that will allow for the restructuring of mortgages if necessary. Let's restructure some of the silly loans that were made to try to get them back out of default, and let's inject some capital into the system.
I know I have sounded like a fiscal liberal in the past few days so I have expanded what I'm saying to include the fact that we truly need to change what caused this mess. But the safest place for the taxpayer to be in any "bailout" is in holding the assets at a reasonable value.
Insuring risk is insane. Own the asset.
BTTT
I’ve come to believe this whole affair is politically contrived. The only problem, from the dem point of view, is that the economy did not go south far enough to create an actual crisis. But, dems had to do something to win pres. election. Voila, financial crisis.
I do not believe the lending and Wall Street communities are in dire straights. They have some problems, but they are perfectly capable of working through them without tax payer intervention.
I was on the bail out wagon early on. But the more I read and hear from economic experts outside the federal gov’t the more I’m convinced the situation is not nearly as bad as it appears.
Moreover, with Soros popping up today with his “plan”, I’m more convinced then ever that there is more hot air than substance to the economic situation.
I would remind everyone what the dems, Bush and some pubbies were saying Friday night: If there is not a plan in place by Sunday night, the economy would spiral downward in freefall. In other words, the result would be cataclysmic. Well here it is Wedenesday. Market has not collapsed. In addition, I woke up this morning and the sun was shining.
A bail out is not necessary to recover from bad lending and financial community behavior. What is needed is a return to sound lending practices and the abolition of stock trading ploys—like naked short selling, credit default swaps and spoofing. The later are, in effect, stealing. At it’s essense, stealing is taking something from someone without their knowledge and providing nothing in return. That’s what the thieves with fast ENTER fingers did.
In addition, politicians must be prohibited from making any policy that flys in the face of sound business practices.
Especially when McCain stated that he will suspend the campaign until this is resolved.
Talk about giving the enemy an exposed flank.
Dems don't want to solve this, or any other crisis. They simply wish to occupy the oval office. everything else is secondary.
Here is another poll that the $inators might want to consider before they get tarred and feathered:
Ongoing AT&T/Yahoo poll on the bailout:
http://js.polls.yahoo.com/quiz/quiziframe.php?poll_id=39543
Do you want the $700 billion bailout to be passed? Results
Q. Stunned by a House defeat on Monday, supportive lawmakers along with President Bush are again warning that if the proposed $700 billion bailout plan to buy bad mortgages and other “rotten” bank debts is not passed quickly, America — and the world — is vulnerable to a serious recession. Critics and protesters say the current plan does not include sufficient oversight, and taxpayers should not be put on the hook for the staggering price tag.
What do you think? Should the $700 billion bailout be approved?
Yes. It may not be a perfect plan, but we must take action. 23%
No. I think we need a plan, but this bill still needs work so taxpayers can be protected. 39%
No. I don’t think we need any plan. The markets can right themselves without our intervention. 35%
Not sure/No opinion 3%
33347 votes
If you want to say that “staying” meant that they didn’t leave the building, okay it was six.
When the filming by phones started (You can see the films on YouTube) it was fifty reps there. Yes, fifty. That’s why they were called the “Fierce 50” Tons more came back.
Eeevilconservative lead a live thread that day. We watched it for hours, making calls and trying to send Pizza. The #dontgo movement on Twitter
http://search.twitter.com/search?q=%23dontgo
covered it and continued to cover it as reps took turns coming back to the empty room. The Reps took turns for at least the next week coming back and talking demanding a vote on drilling
The media ignored it so if you weren’t looking, it was hard to find. But to state that there are not people on our side in the house is a mistake. Mike Pence, John Culberson, Pete Hoeskstra, Thaddeus McCotter (to name a few) are with us.
I won’t disregard them.
Lord Love him!
I’m not sure how people are defining conservative, but no one can tell me that people like your Rep Ryan or Mike Pence are not conservative!!!
It started to when the vote did not pass if you remember.
The only reason it's hanging on is it has hopes of the bill passing soon.
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