Lets stop listening to the pundits on CNN and FOX for a few minutes, and examine the defeated Bailout For Wall Street from the perspective of Main Street America. If you agree with me, contact your elected officials and tell them we want a Main Street Bailout instead of a Wall Street Bailout that simply reapportions more of OUR WEALTH into the hands of the UBER RICH.
The Bailout of Wall Street Bill went down in flames today for various reasons, primary among them thin skinned Republicans voting not for the country, but out of anger as they swiped out angrily at Democrats, specific among them Nancy Pelosi. There will be no revote before Thursday because someone decided the Jewish Holiday was far more important than our nation…sorry, I have a problem with that one. Surely God would understand breaking the Sabbath in a National Time of Need? The bill as it exists is a farce that does absolutely nothing for Main Street America, no matter what pundits such as Ali Velchi say, no matter how much they try to convince us otherwise. The bill should go back to square one, the lobbyist should be LOCKED OUT OF THE HALLS OF CONGRESS, and a new bill should be written.
The Troubled Asset Relief Fund:
Bill authorizes $700 billion for the fund in installments. Treasury gets $250 billion, with an additional $100 billion immediately accessible, and with no strings attached to it. Congress supposedly has the option of blocking the $350 billion by issuing a joint resolution within 15 days of the request. Problem is, the President could simply veto said resolution, and unless there are enough politicians to override the veto, Wall Street gets the money…in short, the resolution out is nothing more than a paper tiger with no teeth.
How it all is supposed to work:
Treasury (specifically Mr. Paulson) will hire asset managers from his close circle of out of work friends who will figure out how to buy bad loans and other ailing assets from financial institutions. Those OTHER AILING ASSETS are not defined, left instead up to the discretion of one Secretary Paulson! Other details, such as pricing and purchase procedures, are left to the sole discretion of the Secretary of the Treasury and his hand picked staff
The bill would require the Treasury to establish guidelines for pricing, setting value of troubled assets, and mechanisms for purchasing assets, procedures for selecting asset managers and criteria for identifying troubled assets to buy, all within 45 days of the legistlation being passed and signed into law. If you start doing the math, Mr. Paulson would have started writing out BIG CHECKS to Wall Street just in time for Christmas. Perhaps the Republicans refused to vote in favor of the bailout today as the bill was not a big enough Golden Parachute to give to their friends as they give up the White House.
The bill would require the Treasury to purchase assets at the lowest price, most likely through auction, and occassionally directly from institutions. Problem with an auction…the UBER RICH will scoop up the BEST of these lousy assets, and leave us the taxpayers with the pits while the Buffett’s of the world scope up the cherries.
Executive compensation:
The legislation supposedly placed restrictions on executive compensation for certain companies that sell assets to Treasury. In reality, there are so many ways to dance around this salary limit that it amounts to nothing more than window dressing meant to apease the masses here in Main Street.
As a part of the bailout, taxpayers were supposed to get an Equity stake in the companies we were bailing out. Instead of an equity stake, Congress created a second tier profit picture for these companies. Instead of receiving stocks, the legislation has the Treasury receiving warrants from the companies that participate in the program. First, a warrant gives the holder the right to buy stock later on at a HIGHER PRICE than it is currently being sold for! So, right now the stock is worth a buck or two. We buy all their crappy assets, we SAVE THE COMPANY, their stock prices start RISING, and then we can go in and buy stock at the now elevated price! WOW, can I have that deal? Even these warrants are not all they are cracked up to be, and there is a HUGE LOOPHOLE…if the treasure buys assets at auction (as most purchases would be) the treasure would only get a small handful of non-voting warrants. Only when the Treasury buys assets directly from an all but failed company would it get a majority equity stake (still in warrants, rather than stock).
Oversight:
In a word…NONE! The oversight was window dressing meant again to apease the masses while having no real teeth. The supposed oversight committee would have the SAME FOXES guarding the hen house.
Protecting taxpayers:
We ARE NOT PROTECTED! Sure, if after five years the treasure has a net loss, the president will be required to submit a legislative proposal to seek reimbursement from the financial institutions that participated. OH WOW! So, the president submits a proposal to the Congress asking them to pass legislation that would make Wall Street reimburse the government for our losses. The proposal is submitted to Congress, the Lobbyist on K Street throw a few campaign donations around, pay for a few trips to exotic places, and WALLA the proposal goes to committee where it is sent down to a sub-committee never to be heard from again!
Help for homeowners:
Again, WHAT HELP, there is NONE. The Secretary will "encourage the servicers of the underlying mortgages" to help minimize foreclosures. Doesn’t that make you feel BETTER? The treasury will ask those we are giving $700 Billion dollars to BE NICE, to work with us rather than take our homes away! Best case scenerio…to make it look good, every one will get and EXTRA 30 days before these financial institutions move to foreclose on your home. Think about it, they foreclose on your home, and have an INSTANT BUYER in the treasury!
Insurance:
What a BONANZA for financial institutions…yet another new product they can foist off on us the homeowner. How long do you think it will be before we are REQUIRED to have Mortgage Guard insurance on our loan at a yearly cost of a couple extra thousand dollars a year!
That is the bill in a nutshell…tell me Main Street, what is in it for us? What safeguards were put into the bill for us? Do you see anything that will RESTORE OUR LOST HOME EQUITY that was squandered away by Wall Street? The pundits want to run to the ramparts shouting their warnings to all who will hear, “The market lost one and a half TRILLION dollars today, the SKY IS FALLING!” I personally have lost over $60,000 worth of Equity in my home as a result of Wall Street. Multiply that times say 20 Million homes, and Main Street has lost $1.2 TRILLION of our equity in our homes! Where is our bailout? Maybe, just maybe…instead of bailing out Wall Street, the Congress should bailout Main Street! Renegotiate every foreclosed mortgage in a fashion that lets people keep their homes. Figure out neighborhood by neighborhood how much each home owner has lost in equity, and WRITE US OUT A CHECK! That money would be put back into the economy, rather than being BANKED by the rich and elite who are asking us to pay off their gambling debts.
