No BAILOUTS Act

We have all heard about this Wall Street bailout and NO POLITICIAN in this country today will go on record as a big supporter of it. Nobody likes this bill. They didn't like the initial plan proposed by Hank Paulsen, they did not like the first or second versions of this bill and they don't like the current version, either.

Personally, I believe that the most current version of the bill is the WORST and I hope Congress will fail to pass it AGAIN.

The reason that I say that is because we keep hearing this false choice that we either hold our noses and pass this one or do nothing. But those are not the only two choices that we have. There are other proposals out there, but you are not hearing about them. Now you are.

Below, I am posting a bill in the works from Pete DeFazio and several others are co-sponsoring. It is not a bailout, but it provides for the liquidity that the market is saying they currently lack.

The most immediate crisis that this economy faces is the lack of liquidity in lending. Banks are not lending money to other banks and businesses are facing the possiblity of not being able to get capital loans to make payroll and pay their vendors. This is what could break our whole economy. The answer is not to pay Wall Street but to ensure that banks will regain their ability to continue the inter-bank loans that enable businesses to run. DeFazio's bill addresses this need and some other important issues, without handing Wall Street a blank check.

I ask you to read this proposal and click on the title of this blog to read an article about this bill. Then please pass this on to your friends. We all need to get behind this sort of RESPONSIBLE legislation and make sure Congress does the right thing to fix the problem. Call your Congressperson and him/her to support a Responsible Solution to the current crisis.

Bringing Accounting, Increased Liquidity, Oversight and Upholding Taxpayer Security

1) Require the Securities and Exchange Commission (SEC) to require an economic value standard to measure the capital of financial institutions.

This bill will require SEC to implement a rule to suspend the application of fair value accounting standards to financial institutions, which marks assets to the market value, no matter the conditions of the market. When no meaningful market exists, as is the current market for mortgage backed securities, this standard requires institutions to value assets at fire-sale prices. This creates a capital shortfall on paper. Using the economic value standard as bank examines have traditionally done will immediately correct the capital shortfalls experienced by many institutions.

2) Require the Securities and Exchange Commission to restricting naked short sells permanently.

This bill will require SEC to implement a rule that blocks naked selling, selling a stock short without first borrowing the shares or ensuring the shares can be borrowed. Such practices many times harm the companies represented in the sales and hurt their efforts to raise capital. There is no economic value produced by naked short sales, but significant negative effects.

3) Require the Securities and Exchange Commission to restore the up-tick rule permanently.

This bill will require SEC to implement a rule that blocks short sales without an up-tick in the market. On September 19, 2008, the SEC approved a temporary pause of short selling in financial companies “to protect the integrity and quality of the securities market and strengthen investor confidence.” This rule prevents market crashes brought on by irrational short term market behavior.

4) “Net Worth Certificate Program”

This bill will require FDIC to implement a net worth certificate program. The FDIC would determine banks with short-term capital needs and the ability to financially recover in the foreseeable future. For those entities that qualify, the FDIC should purchase net worth certificates in these institutions. In exchange, these institutions issue promissory notes to repay the FDIC, counting the amount “borrowed” as capital on their balance sheets. This exchange provides short term capital, with not cash outlay. Interest rates on the certificates and the FDIC notes should be identical so no subsidy is necessary.

Participating banks must be subject to strict oversight by the FDIC including oversight of top executive compensation and if necessary the removal of poor management. Financial records and business plans should be subject to scrutiny while participating in the program.

In 1982, Congress approved a program, known as the Net Worth Certificate Program, that allowed banks and thrifts to apply for immediate capital assistance. From 1982 to 1993, banks with total assets of $40 billion participated in the program. The majority of these banks, 75%, required no further assistance beyond the certificate program.

5) Increase the FDIC Insurance limit from $100,000 to $250,000.

The bill will require the FDIC raise its limit to provide depositors confidence that their money is safe and help eliminate runs on banks which are destabilizing to the industry.

Peter DeFazio - Member of Congress

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COUNTRY FIRST: PLAYING POLITICS WITH A FINANCIAL CRISIS

In a disgusting partisan display yesterday, when Senate Democrats, Senate Republicans and President Bush had all gone on the record in the media as saying they were close to an accord on how the financial crisis could be managed, John McCain flew into town and injected himself and his campaign hopes into the mix, blowing up whatever agreements had been reached. Democrats were once again left on the hook when, while trying to fix a mess that was created by Republican policies, previous Republican control of the congress and a Republican administration, the Republicans first made it look like they would agree to a plan and then bailed out and pretended they never agreed in the first place. And their next step will surely be to label the Democrats as big spenders on the hook to Wall Street and make it look like they had the interests of the little guy at heart the whole time.

It became fairly obvious what the campaign was up to when Sarah Palin charged that Barack Obama was checking the political winds before taking action, but John McCain was supposedly taking the bull by the horn. The McCain campaign has set a pattern of transmitting the tact they they are about take by first accusing Obama of doing the exact same thing. So, McCain flew in to what was by most accounts a close-to-done deal to make it look like he was taking matters firmly in hand, so that he can take measure of the political winds. After polling showed the Americans had serious doubts and concerns about he bailout, he decided to pander to those fears (Hey, it worked before!). He carefully did not show support for any plan, or publicly propose his own plan. He poses for a smiling but fidgety photo op and the next thing we know, the whole thing suddenly blows up.

Since Democrats were begged not to disclose what happened when the cameras were turned off, the Republican party gets to spin the whole thing any way they want. And, since Obama had been summoned to witness this pathetic political theatre, the blame game will start today and he will somehow be in the thick of why things blew up. Look for the smears to be coming from Sarah Palin. If she deigns to make any kind of statement to the media today, watch what she says because it will tell you what new spin the campaign is trying to use to make it look like they are doing something and Obama is either not doing anything or is not doing the right thing.

From MSNBC this morning:

“..leading Democrats on Capitol Hill were shocked by the level of divisiveness that surfaced at Thursday’s extraordinary White House meeting, leaving six days of intensive efforts to agree on a bailout plan in tatters only hours after key congressional players of both parties had declared they were in accord on the outlines of a $700 billion bill.”

Then this morning Lindsey Graham sits on a morning show and pretends that he knew nothing about any agreement and found out only at lunchtime. He was busy meeting with Republican congress members. What the hell was he doing there if there was no deal yet? Let me guess; figuring out how to derail the whole thing so that they could use this financial crisis to McCain’s advantage somehow.

This also from MSNBC this morning:

“

Schumer said…’Before Sen. McCain made his announcement, we were making progress.’ Schumer was referring to McCain’s announcement earlier in the week that he was suspending his campaign to return to Washington for the negotiations on the financial industry crisis.

McCain met briefly Friday morning with House Republican Leader John Boehner.”

How strange that Boehner meets with McCain, while Lindsey Graham is busy meeting with Republican House Members then all of a sudden the whole plan is derailed. They pretend it was derailed by the House Republicans so that the Senate Republicans don’t appear to be going back on their word or as though they had anything to do with the shenanigans. And suddenly, McCain has his own ideas for how to solve the mess, which he supposedly put forth in the meeting at the White House, though NOBODY has reported on any details of that plan.

The new plan being advanced by Republicans this morning is RIFE with problems. I am no Wall Street insider, but anyone with a small amount of knowledge about the current problems there will tell you that part of the problem now is that those who are holding a lot of this bad debt are hesitant to step up and be known because their stock value and credit rating will drop immediately, to their possible ruin. This is part of what is freezing the market. The Republican plan put forth this morning would force these firms to show their hands, as it were, in the highest-stakes poker game in the world. That is no answer, but a recipe for disaster if you are really trying to constructively fix the problem. Yet, that does not seem to be the aim of the McCain campaign or the Republican party right now. Obviously, Party is coming before the needs of country.

This also from MSNBC this morning:

“The White House summit meeting had been called for the purpose of sealing the deal that Bush has argued is indispensable to stabilizing frenzied markets and reassuring the nervous American public. But it quickly revealed that Bush’s proposal had been suddenly sidetracked by fellow Republicans in the House, who refused to embrace a plan that appeared close to acceptance by the Senate and most House Democrats.

Paulson begged Democratic participants not to disclose how badly the meeting had gone, dropping to one knee in a teasing way to make his point according to witnesses.
And when Paulson hastily tried to revive talks in a nighttime meeting near the Senate chamber, the House’s top Republican refused to send a negotiator.”

Watch today for Sarah Palin to make the claim that it is the Democrats playing politics with the financial crisis. The spin will most likely be that she and John are the ones that are keeping the small-town people’s needs first, but the evil liberal Democrats are just trying to throw their money at Wall Street in a desperate bid for the White House. It is as predictable as it could possibly be.

Unfortunately, it is quite possible that an uninformed electorate will not see it coming and perhaps may even fall for it.

McCain’s new slogan should read:

JOHN MCCAIN: PARTY AND PRESIDENTIAL AMBITIONS FIRST LAST AND ALWAYS

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