Credit where credit is due and all. Here's Kirsten Gillibrand's statement on why she was one of the precious few members of the NY dlegation to vot "Nay."
"While I am fully aware of the seriousness of the financial problems in the market, I do not believe the bill Congress voted on today was the right approach. The bill has insufficient oversight and protections and does not address the root causes of the crisis or the poor economy.
"While the bill is better than the three page document the Bush Administration tried to ram through Congress last week, Secretary Paulson's plan is fundamentally flawed. Moreover, I do not believe Upstate New York taxpayers should pay for the excesses of Wall Street....
We need to help firms recapitalize, and this should be done without solely using taxpayer money. The federal government should work with firms to accurately write down the values of these assets in order to restore confidence in the system and allow investors to begin buying and selling again. Firms should be required to raise their capital standards, and if the federal government needs to intervene, then they should receive a fair equity stake in the company in order to protect the taxpayer. If taxpayer funds are invested, then we would need much stricter executive compensation limits, so that Wall Street executives are not financially rewarded for the crisis they have created. To calm fears, we should raise the FDIC insured limits. Furthermore, we need to put in place regulatory measures that will prevent this type of economic meltdown in the future, so that the middle class' savings will not be threatened again because of Wall Street mismanagement and greed."
In the end, it wasn't even that close. I really thought that they would find a way to ram this piece of crap through. They didn't have the votes. With two members not voting, the tally is 228-205 as of 1:48 EST.
Wow.
UPDATE: This is not what the wizards of Wall St expected. Dow down 570 405.
UPDATE II: It appears two members have changed their votes. The Tally is now 226-207 against.
Our congresscritters would be wise to listen to the words of Abraham Lincoln as they prepare to vote on this abomination of a "bailout."
"It is an old maxim and a very sound one, that he that dances should always pay the fiddler. Now, sir, in the present case, if any gentlemen, whose money is a burden to them, choose to lead off a dance, I am decidedly opposed to the people's money being used to pay the fiddler...all this to settle a question in which the people have no interest, and about which they care nothing. These capitalists generally act harmoniously, and in concert, to fleece the people, and now, that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel." - Abraham Lincoln, January 11, 1837
This is simply stunning to me. This is video from Tuesday, the day before John McCain decided that the situation was so dire that he needed to "suspend" his campaign and ride into DC, a place he hasn't seen much of in about two years and where no one was exactly begging for his immediate intervention, to save the day as regards the plan put forward by Secretary Paulson to throw a trillion dollars at the greedy, incompetent pricks on Wall St. In the interview he's asked:
ANCHOR: The crunch question. Would you vote for it as it's presently constructed?
JSM: I have not had a chance to see it in writing so I have to examine that.
Um, excuse me, Senator? You hadn't read it? Really? The Executive Branch came to the Congress and demanded $700 BILLION dollars in untraceable bills immediately or the economy gets whacked and you didn't even read the ransom note? The proposal was Three. Pages. Long.
This was less than 24 hours before he threw a hissy fit and tried to scuttle the debates because things were so grim. Unbelievable.
The take away is that John McCain is simply not a serious person. This all theater. I mean, I read the plan. Millions of Americans read the plan. None of us are running to be the President of the United States.
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
I have a feeling he wouldn't be bailing out the money changers, that's for sure. Zack Exley has a very simple idea. He's taken Hank Paulson's initial proposal and tweaked it ever so slightly. He calls it "Homeownership For All" act.
I decided to use the treasury's proposal as a template for one that would help me and my neighbors. Paulson's bill is so user friendly, that it took me only 15 minutes just now to convert it from a bailout for billionaires to a "Homeownership For All" act.
Yes, the dollar will crash (it's backed now by bad mortgage investments thanks to Paulson's bailout). Yes, there will be inflation. But that's all happening already. When things get this crazy, it's no longer about amounts of money -- what's really being negotiated in Paulson's bailout (and mine) are social relations. In other words, Paulson is (as we speak) winning society's commitment exchange future payments by all Americans for worthless assets owned by a bunch of rich people, pension funds and university endowments.
In Paulson's world, struggling homeowners and renters will not get any such deal. Their relationship to society stays the same: if they fail financially, then eventually a sheriff comes to their door and orders them out of their home. All I'm doing is proposing the same kind of relationship-shift for ordinary Americans with regard to housing. In my proposal, the Government buys our mortgages themselves and sets new terms that we can afford. Maybe "the Secretary" will even decide to forgive some of our principal. Is that unfair? Maybe so, but the consequences are so dire -- millions of Americans out on the street, whole neighborhoods boarded up, etc... -- that we have no choice! It's just like what Paulson says, except not ridiculous.
For renters, we'll just buy their apartments and give them mortgages with good terms. The dream of home ownership vs. the dream of Yacht ownership. Which do we value more in America? Time to decide.
And who knew how easy doing this would be! It took those smarties from Goldman to show us. Tomorrow, if I can squeeze it in, I'll do a search-and-replace on my housing proposal to generate a proposal for a national health care system. My friend Marc just told me the total market capitalization of the top health insurers is well under a trillion. And unlike in Paulson's scheme, we'd be buying profitable, healthy companies, not worthless investments. Sounds like good business to me!
The dream of homeownership vs yacht ownership. Seems pretty simple to me.
Daily Kos contributing editor Devilstower has an extremely important and informative post on their front page this morning. Want to know how we got here, how we got ourselves in such a mess? Go read it. Though I think he lets complicit Dems off way to easy, I think it's the single best piece of work I've seen written about what is happening and how it came about. A taste:
A secondary market for trading swaps exploded into existence, and swaps were traded with absolutely no consideration for the nature or quality of the underlying investment. Swaps changed hands a dozen or more times, growing in "value" as they went. Worse still, no one regulated who could buy a swap, so it was (and is) perfectly possible for a company to acquire swaps that theoretically cover billions of dollars in loans, even if that company doesn't have a red cent on hand to cover those swaps should the loans default.
How big did this market become? Here's business correspondent Bob Moon and host Kai Ryssdal on American Public Media's Marketplace from back in the spring.
BOB MOON: OK, I'm about to unload some numbers on you here, so I'll speak slowly so you can follow this.
The value of the entire U.S. Treasuries market: $4.5 trillion.
The value of the entire mortgage market: $7 trillion.
The size of the U.S. stock market: $22 trillion.
OK, you ready?
The size of the credit default swap market last year: $45 trillion.
KAI RYSSDAL: That's a lot of money, Bob.
As in three times the whole US gross domestic product, Bob. And the truth is that Moon probably underestimated. The unregulated and poorly reported credit default swaps may have actually passed $70 trillion last year, or about $5 trillion more than the GDP of the entire world.
So, are you starting to get an idea of just how big a genie Phil Gramm and his pals unleashed?
American International Group will get an $85 billion loan from the federal government in exchange for an 80 percent stake in itself, sources have told CNBC.
Sources said the loan, which will allow AIG to avoid bankruptcy, will be secured and include incentives for quick asset-sales by AIG.
Index futures pointed to a higher market open on Wednesday after the news.
Management at the firm, including AIG's CEO Robert B. Willumstad, will be fired as part of the deal, which will also severely dilute existing shares of the company.
Asian stock markets plummeted Tuesday as the collapse of Lehman Brothers and takeover of Merrill Lynch spurred fears of an imminent global financial crisis.
European markets extended losses in early trading after falling sharply Monday.
Tokyo's Nikkei 225 index sank nearly 5 percent to 11,609.72, its lowest close since July 2005, while Hong Kong's blue-chip Hang Seng Index shed 5.4 percent to its lowest point in nearly two years. Both markets - Asia's two biggest - had been closed for holidays on Monday, when news first broke about the turmoil on Wall Street that has dramatically changed its landscape.
"Today was a bloodbath," said Alex Tang, head of research at Core Pacific-Yamaichi, who noted that trading volume was its highest in months. "This was panic selling ... They are dumping shares, they just want to liquidate their positions."
AIG, one of the largest insurance companies in the world and certainly the largest in the US, is apparently on death's door. They were supposed to announce a restructuring this morning. At Calculated Risk, they note that no announcement has happened as of yet and that "no news is bad news." Subsequently, AIG's shares are off nearly 70% today.
They also note that Governor Paterson is expected to make a statement about AIG at "midday."
