Should the $700 Billion Bailout Pass?

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nokia 3230 su 1b digital pens of AL 11:02PM May 19, 2010

"Bailout?" There isn't any need for a "bailout." What IS needed is liquidity within the financial system. That can be achieved in a number of different ways --- some of them rotten. One good way, in my opinion, is to quickly establish and federally fund (perhaps to the tune of 700 billion dollars) a new entity to be titled (for want of a better one) the FDC --- an acronym for Federal Deposit Committee. Who will serve on it? The best economists this nation can find, perhaps a half dozen or so (yes, there are actually at least a few around who really do seem to know what they are doing). What will it be mandated to do? First off, perform "triage" on the banking system by ignoring financial titans (such as Citi-Group, JP Morgan Chase, and Bank of America)who are sufficiently sound to survive without any governmental assistance. Also, ignore banking and other financial institutions so thoroughly devastated by poor financial judgment that it would constitute economic insanity to try and salvage them. Those would simply have to go bust. Instead, the FDC would seek to "rescue" (but not "bail out") all of the remaining institutions expected to survive if the federal government intervenes ... but not if without external assistance. So how would a "rescue" be implemented? By establishing an FDC deposit account at selected institutions --- a LARGE account running into the millions and slated to receive a relatively low interest rate of, say, 2%.
So then ... an FDC established account assures "instant liquidity" amounting in most cases to many millions of dollars and some measure of protection for taxpayers (since the funds injected are not a gift and not a purchase of equity). But what about all the "toxic assets" we keep hearing about and that it has been suggested the government purchase at taxpayer expense? The institutions would retain them on their books and, hopefully, sell some of them later on in the capital markets for whatever price they will fetch. The point is that they are already "toxic" and won't get any more so simply by virtue of the lenders retaining them. So why have the government take them on when liquidity is what is essential --- and an FDC account of sufficient magnitude would solve that problem? But here is the interesting part: no "socialism" would be involved because the government would merely be an account holder like any other, albeit by far the largest one. And no "give-away" would exist because injected funds would be a deposit and not a gift. Nor would those funds purchase any risky equity because, again, they would only be a deposit. But, that said, it should be easy to discern that it would be a very "influential" account to which folks from the CEO on down would pay careful attention --- because failure to do so could bring ... instant failure via withdrawal. I kind of like the idea of Paul Volker, Alan Greenspan, Henry Paulson and perhaps the likes of Warren Buffet, etc. keeping tabs on such an account. Don't you?

D.S. Arthur of CA 4:43PM October 03, 2008

This bail out is an absolute catastrophy! If our elected officials pass this money grab by the government it will destroy our economy! The only way, and the best way to fix this supposed problem in the credit markets is to shore up the FDIC insurance of bank accounts. THAT IS IT! Then let the cards fall where they will. That is going to cause a brief, but necessary shock to our system but after that it can quickly repair and correct itself. That is the beauty of the Free Market System.
We absolutely cannot get on board with the very democrates who caused the problem in the first place. This path of socialism is not the path I want my beloved America to follow. Let us push them and their "pork" special interest handouts aside. We have to make them listen to us and vote NO on this plan!

Adria Karsky of MN 4:07PM October 02, 2008

Tax payer = flesh, Goverment = brain, money = blood, bank & wall street = heart. If there's heart attack case, Who's got priority to be save first?

blue eyes of NY 8:49PM October 01, 2008

We should turn this $700 billion bail nightmare into an American dream. an here is how you do it.
We start by renaming the bail out. "$700 billion lease with option buy out" Which would mean affordable homes for Americans.
We have to bail out the Banks and Wall Street, but why not let the American people make money from it and at the same time help to make the American dream come true? Righ now we can help put millins of Americans into homes and here is how we do it.
We buy up all of the toxic loan debt on houses. We now do a 10 year lease with option to buy these houses at current values. In other words we lease the house with bad loans to people at a low price for ten years, recouping billins of dollars in the process and then sell them the home at current market value.
It would look like this: Right now a house with a $520,00 bad loan is worth $340,000 dollars. The current payment on the loan is $2,800 dollars. No one can afford that so the house has gone into foreclosure or will go into foreclosure. The person leasing the house with an option to buy leases it for $1,800 dollars a month and in ten years can buy that house at $340,00 dollars. Remember high rent because of the housing crunch has caused rent to go up in most areas and is helping to drag down the economy.
The tax payer who hae bailed out the banks will get back $216,000 dollars on the lease plus another $340,000 thousand dollars when the house is sold in ten years recouping a total of $556,00 dollars, more then they put out. Yes it's not very good interest in the first ten years but you are spending tax payer's money for the bailout, right? Money that would other wise disappear. Here the tax payer actually makes a profit.
Now in ten years the economy has recovered the houses are worth more and people ow own tem. The lease istheir down payment and their record for paying that lease proves thier ability to pay the loan. Yes, it is a little more complicated then this but for once the American people can gain from Wall Street's mistakes.
If you really thinkthis through, this is a way to turn this into a win-win: it could accomplish the bail out of th ebanks and Wall Street while stimulatiing the economy and helping the American people attain the American Dream of owning a home.
This is what congress should be selling.

Michael Mercier of CA 8:53PM September 30, 2008

This country is a democracy which should be dedicated to what is good for the people period.....the failure of the banks and their loan sharks is because of the basic dishonesty re the real terms of the loans.....they deserve the trouble they have and not the honest middle class and lower hard working people of our country......a good part of the problem has come from congress for being to willing to deregulate the banks and endlessly give them what they want, including higher fees for everything and less service to the public....

Steve Roisman of CA 5:51PM September 30, 2008

It's imperitive that we ( do not ) BAIL OUT our economy. We Americans need to participate in it. Americans have a vested interest and want to become a partner in the economy. This is our chance to get the government to work for us. Please listen, there are lots of ways for us to make a profit now and for the future. Stop forclosures now...find a way for owners to stay in their homes today! Credit card companys
(banks) have been ripping off the American people far to long. They are being held hostage to outrages interest rates and late fees. This is wrong! Small business is being taxed to death and cannot get a firm footing to even think of helping the people who work for them. Why not give a credit for paying off deb? Small business could get tax credit for hiring more workers.
We the people have had enough and are truely fed up with lobbiest and the pandering to big business who have walked off with our money while we are left with the debt. We understand whats happening and are not ignorant to the consiquences. Get a better bill in congress that the people can get behind ...Please

B of OR 3:02PM September 30, 2008

we already have been tricked into paying for a war we didnt want or need. now we are going to be forced into paying for wallstreets and big bankers greed. come on !wake up peaple we need to shout out to oure so called elected officials no!!!!!!!!!!!!!!1 enough listen to us americans or we vote you out

shane of ND 1:58PM September 30, 2008

THE BAILOUT IS A BANDAID TO GET THE GOP PAST THE ELECTION. IT IS A SMOKESCREEN AND MOST AMERICANS SHOULD THINK TWICE ABOUT IT AND LET THEIR CONGRESSMEN AND SENATORS KNOW THAT THEY OBJECT.

VINCENT CHIN of FL 1:39PM September 30, 2008