Yays
Ackerman Arcuri Bishop Clarke Crowley Engel Fossella Hall Higgins Israel King Lowey Maloney McCarthy McHugh McNulty Meeks Nadler Rangel Reynolds Slaughter Towns Velazquez Walsh Weiner
Nays
Gillibrand Hinchey Kuhl Serrano
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Gillibrand's nay vote isn't surprising. She's probably the bluest of the New York Blue Dogs.
I am horrified at the rest of the NY delegation voting for this monstrosity. What the hell is wrong with these people?
Oh... yeah... they represent Wall Street not us.
This bill is bad, bad news. We need a real solution to our broken financial system. We do not need to be throwing money into the the pockets of the biggest thieves and gamblers we've ever seen.
Peace,
Andrew
First his FISA vote and now this. Enough to make me sick.
Arcuri does need to go. Personally I can't see how anyone could do worse. Arcuri is starting to make Hanna look good. As much as I dislike the idea, Hanna may be getting my vote. Change is needed in Washington and maybe it needs to start with Arcuri.
Where is Wall St.? That's why.
Here's my alternative idea:
Instead of bailing out the big investment firms and their top management, how about bailing out the homebuyers who, while they probably shouldn't have gotten the mortgages they can't afford to pay, were hoodwinked by mortgage brokers who knew (or should have known) better.
Have Congress create a Mortgage Resolution Corporation (MRC), whose job is to find the mortgages and mortgage-backed securities that are worthless or nearly so because the homebuyers are in default on their mortgages. Buy the paper at a big discount. Then, once the MRC owns the mortgages, allow banks to renegotiate those mortgages for a fee. If the bank can't renegotiate a mortgage, they're out their small fee. If the bank is successful, they can buy the paper from the government.
The government doesn't lose much money, since a lot of the paper they buy will be resold to banks at a profit. The responsible banks that are currently solvent get to add good assets to their portfolio at a low cost. Homebuyers get the opportunity to stay in those homes. The investment and insurance companies get rid of bad assets, albeit at a loss, but still end up better than they are right now.
It's a far more modest plan than the one that went down on the House floor today, but could be one that passes. There is still the problem of executive pay and re-regulation, but that can be dealt with next year. Meanwhile, the markets (all the markets, including the housing market) could stabilize.
I'm open to suggestions, criticism, etc.
Krugman actually wants a temporary nationalization of investment companies, which is not going to happen here (AIG notwithstanding).
No real cities among the 3 of them
Serrano is just an outlier.
It is clear to me that no one here has the slightest clue what the consequences of this bill failing are to the average person, but unless something passes, you'll find out next time you go to buy or lease a car, buy a house, or apply for a credit card, and find no one willing to lend to you.
I can't explain it well, but I urge you to watch Jim Cramer in the next few days to learn.
I know a lot of folks here are having a great time pitting Wall Street against Main Street, but um, you know - they're not that far separated. Yeah, it's perverse when unemployment goes up and Wall Street cheers, though lately I'm marveling at a much broader range of people who cheer at the falling price of oil when the cause of its fall is a crappy economy overall.
The Republicans took us all out on a crazy high-wire act, figuring that working without a net would inspire better performance and higher ticket prices. Now that we're genuinely teetering, we have a lot of folks trying to find a quick way to put the net back.
It's sad but true: credit has been the lifeblood of this nation since its founding. As much as we may all despise big banks and financiers and all those dangerous "elites" - there are few in this country who've never taken out a loan and practically no one who hasn't benefited in some way from the public taking out loans. (Live in New York State? Remember the Erie Canal?)
Should this have happened? No, absolutely not. America let its enthusiasm for profit get ahead of its common sense. We encouraged a system where not-very-transparent institutions made a tremendous amount of money for a brief time using tools it turns out that even they barely understood. There needs to be real change, real accountability, even real punishment.
At the same time, though, the geniuses built a system that, if it unwinds in tangle, will tangle us all. Last week Treasuries had a negative yield - people were willing to buy them at a loss just because of their perceived safety, while at the same time they weren't lending to anyone else. (Buying cheap, maybe.)
I thought Paulson's original plan was terrible. (I think letting Lehman fail was a mistake too, but...) I don't love the bailout plan that failed today, but it was much much better - Democrats did, for once, have some real influence.
It'd be great to have the time to wait for January 21, 2009, but the big question for me is what happens tomorrow, as hedge funds open their "out" windows at the end of the quarter. How fast is the credit market going to go down? What will the consequences be for the rest of us?
I was hoping we'd have a chance to find out if the bailout, though imperfect, could work. Now it looks like we're going to have a chance to find out what happens when there isn't one. Politics and economics are different versions of the art of the possible, and we're going to see more of what the range on 'possible' is.
(I guess this makes me happy to be in Arcuri's district, and not Kuhl's or Hinchey's, though I've lived in both of those.)
Cities like Buffalo with middling credit scores...oooph...would not like to be Mayor Brown the next time the city needs to borrow something.
This mess is so big and so wide and so tall, there is no way to clean it, no way at all.
That Cat-- you remember him, the Cat in the Hat?-- used a coupla things he pulled out of his hat. Mebee Congress has a Thing One and Thing Two it might try to do.
We encouraged a system where not-very-transparent institutions made a tremendous amount of money for a brief time using tools it turns out that even they barely understood. There needs to be real change, real accountability, even real punishment.
This was my problem with this bailout. Where is the accountability? Why should I, who had made good decisions, have to continually bailout the stupid??
People and companies made horrible financial decisions and yet I, you, we all are holding the bag for it.
I think this is one of those times where we need to make some tough decisions. In the short term this situation is bad, but if we just bailout these idiots then they will earn nothing and in a short enough order this will happen again.
Lets be perfectly clear:
Many of those mortgages will be paid off by their homeowners. Those we will make AS A PROFIT the 60-80% between our pay price and the sale price, PLUS interest.
Many of the rest of the mortgages will be partially paid off by a sale of the home for current market value which will be 40-90% of the value of the mortgage. The 0-70% difference will be profit for the taxpayer. The Democrat's refinancing will work in a similar manner.
The rest of the mortgages will default - be foreclosed upon by the original lender (or whatever bank swallowed the original lender up). But even if every last homeowner defaults, the taxpayers still own the homes; those houses are going to be our collateral. They may have been overpriced, but by 30-50%, not 60-80%. The ex-homeowners will be evicted (they can get apartments) and the homes will be put on the market. Eventually they'll sell, but not for the 20-40% of the original price we paid, but for between 40-90% of the price. the 0-70% profit will be paid - wait for it - directly to the federal budget.
There is a TON of money to be made here. The ONLY reason the Federal Government needs to do this instead of private firms is because private firms 1) don't have that kind of cash, and 2) don't have long enough to wait it out. Their accountable to their shareholders now. This could be an incredible deal for the American Taxpayer.
I made good decisions and should have any part of this mess and yet I am going to have to pony up for it. To think otherwise is foolish.
I am not so sure and certainly not very optimistic as you are that these houses were not vastly over valued.
If there is money to be made here and if it was such a sure thing as you think it is, then there would be private companies more than willing to jump in and make said profits. One company couldn't do it, but several could.
If and I think it is a big IF, money is made by the Federal Government, can I expect a profit sharing check in the future? Heck even a tax break. I doubt it.
It's just another tax for me to pay to help the foolish.
I would be much more willing to swallow this crap if I thought there was even the remote possibility that people and companies would learn from it, but as long as the taxpayers bail them out they won't learn a thing.
2) The bundles of mortgages are from across the nation. In california, maybe they were 2 1/2 times the true value. In that case, 40 cents on the dollar is a break even point. But those mortgages are bundles with mortgages from NYC, where home values have only fallen 15-30%, and from Buffalo, where home values have risen 15% since this mess started. The assets are already bundled, to unbundle them would be mind-bogglingly expensive and time-consuming. It's not going to happen.
3) Lets say Goldman Sachs, JP Morgan, Citi, Bank of America, and Morgan Stanley - the 5 real players left - joined together and somehow came up with $700 Billion to buy subprime mortgages. OK, now lets say the price of homes in the short term falls another 15% - not impossible. These companies total shareholder equity is about $500 Billion - all of the sudden, their total shareholder equity is $395 Billion - a loss of 21% of the total value of the companies. Investors will not allow a company they own to take that kind of short term hit to make a long term profit - investors want the most money they can make today, and if your company isn't offering it, they'll move somewhere that is. So this isn't a practical solution. Remember, $700 Billion is 5% of the entire GDP of the USA.
4) Probably. Or some fancy new government program (health care?) Or maybe they'll do us young people a big one and start paying down the damn national debt with the profits!
5) I have the same concern. Bailouts teach people nothing. That's why I instinctively wanted to oppose this before I learned more about it. On the other hand, if we pay people 20-40 cents on the dollar, that means they already lost 60-80 cents - in this case, between 1 and 3 trillion dollars.
What happened? The declines in the housing marked pulled their shareholder equity down and investors bailed for other stocks and bonds. The companies, with no capitol investors (stockholders), needed loans to keep going. All they needed was enough to make it a year or to and they'd be fine.
No one had that much money around, so they'd have to get a lot of small loans. But no one would loan them money because they were afraid that no one else would loan them money and they'd go under.
Which is exactly what happened.
And exactly why JP Morgan, Goldman, Citi, BofA, and Morgan Stanley are not walking through that door.
All they needed was enough to make it a year or to and they'd be fine.
is not really true. We need to rid the global financial system of a lot of Enron-style off-balance-sheet "vehicles" that are basically bets and promises. The US taxpayers should definitely not keep that game going. That's why actually focusing on real assets-- houses, small businesses-- is very, very sensible. Let the wealthy settle their own duels and grudges.
those are a huge part of the problem, but they weren't dragging these companies down, rather, they were the reason the government had no choice but to step in and ensure the continuence of the assets of Bear in particular.
part 2
The swaps themselves weren't dragging these companies down, but were instead further limiting the supply of credit demanding an even larger amount of cash loans and an even more limited supply of available credit.
part 3
these companies would have been fine with a general market supply of cash resembling whats been available since 1989. All of the sudden last year the credit market crashed, Bernanke refused to open the credit window, and at that point all it takes is a loss of confidence - not in the company, no, but rather these companies failed because investors and credit lenders lost confidence not in the companies business models themselves, but rather they lost confidence that other investors and lenders had confidence in the companies.
::poof::
My biggest problem with your thinking is that you assume that the housing market is going to rebound to what it once was (or very near to that) in the relatively near future. I think a very poor assumption. We are in this mess because the Government propped up the housing "industry" and over inflated prices. Now that the bubble has burst on home prices, it won't get back to those levels any time soon.
A vast amount of the $7B was going to help out the companies in their very sketchy practice of mortgage backed securities. That is where too much of the money was going, not to the little guy.
But hey, if your are comfortable giving $700B to the Bush Administration & the very same people who deserve a big chunk of the credit for this mess, and let them spend it as they want well, what can I say, you have much more faith in them than I do.
The bailout is about that - it's about us. Whether or not it takes the exact form that was voted down today, whatever. That part has to happen fast, because finance has a bad way of crashing, not just cruising to a gentle nice place. It's been long enough that we've forgotten what it works like, because the Great Depression left our ancestors vivid memories and they set out to avoid that.
The punishment, accountability, change - that has to come from us, but yes, it's about them. I'm expecting that an active SEC and Justice Department will be very happy to sort that end out come January 21st. Spitzer used the limited tools he had as AG to get a bit done from the state level, but there's vastly more to do from the federal level.
If we get a functioning (just functioning, not perfect) Justice Department and SEC, there'll be a lot more justice coming.
But that's a separate issue from keeping the financial system afloat.
It seems pretty clear that the Bush administration has come close to shutting down the SEC and Justice Departments. If they just wake up - which I'm sure remaining staff would like to do - there'll be an enormous amount for them to do. I have few doubts that they'll wake up under Obama, many more doubts that they'll wake under McCain. (He'll throw some dice and we'll see...)
Will they catch up to everyone? No, probably not. They never do, which is why it's a lot better to regulate in advance rather than prosecute in hindsight. The odds are better.
But I have a very hard time seeing either of the current candidates running things the same way they've run for the past eight years. Even a Clintonian SEC/DOJ would make a huge difference. (Heck, even a Bush I SEC/DOJ would be an improvement.)
It's not as if I don't think Obama's willing, just that the next president, whoever it is, seems more likely to be controlled by events.
(Then again, Lincoln claimed he was controlled by events.)
Here's what scares me:
1. Our public discourse has been completely destroyed by corporate media (the networks and CNN), right-wing talk radio (Rush et al.), and Georgetown insiders who care more about presidential extramarital affairs than about the welfare of the planet (Cokie Roberts, David Broder, etc.). The fact that Sarah Palin has a puncher's chance of getting within a heartbeat of the presidency should frighten everyone.
2. That Bush has screwed things up so badly -- not just Iraq, the economy, the DOJ, the constitution, but things we don't even know about yet -- that it will take 15 years to begin to recover.
I think the nation very well may be headed down the tubes. But I am confident that it will go down those tubes much more slowly with Democrats in charge.
A lot of talk is going around about how people were voting for or against this thing to win re-election. McNulty is retiring. In effect, he had nothing to lose and he still voted for the bailout.
Y'know, there was also a lot of talk about "change" in the primary to replace Rep. McNulty. I figured it was all a political talking point meant to cash in on the big "change" meme in the 2008 cycle thanks to the Obama campaign.
By this vote, Mike proves to us that change was actually necessary in the 21st Congressional District. Happy retirement, Mike. Your timing is impeccable.
http://www.nytimes.com/interac...
I have to say it's a lot more complicated than city vs. country or heartland vs. coasts.
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