Paulson to Work Quickly With Congress to Revive Plan

[Pale Blue Dot]

Source: Bloomberg

Sept. 29 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson said he will work with Congress to salvage a $700 billion rescue plan after the House of Representatives rejected his initial proposal.

``We need to work as quickly as possible; we need to get something done,'' Paulson told reporters at the White House after meeting with President George W. Bush. ``We believe that our plan, and the plan that we developed with congressional leaders and worked so hard, is a plan that works. And we need a plan that works.''

The House earlier voted 228 to 205 against giving Paulson the authority to buy troubled assets from financial companies, in what would have been the biggest government intervention in the markets since the Great Depression. U.S. stocks plunged after the vote, with the Standard & Poor's 500 Index falling the most since the October 1987 crash.

Paulson and Federal Reserve Chairman Ben S. Bernanke warned congressional leaders on Sept. 18 that a ``comprehensive'' approach was needed to restore confidence after the government takeover of three financial institutions and the collapse of Lehman Brothers Holdings Inc.

The Fed today said it will pump an additional $630 billion into the global financial system to address the worst banking crisis in almost 80 years.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=arQOMRk_d_s0

[RUMMYisFROSTED]

1. Quickly! Quickly!

Paulson is now an historical figure.

[torbird]

2. Slow down, Hank

The market can still go down by another 10,000 points or so.

Hell, it could happen tomorrow. But you've probably got at least a week, maybe two.

Slow down, man. I mean, my house is already gone. My credit line has been rescinded. My pension plan -- which my UNION decided to invest in the stock market-- is about half what it was 12 month ago.

No hurry now, son. Sit a spell.

[unkachuck]

19. exactly....

....when the former head of goldman sachs, a bushco stooge worth over 500 million dollars, tells us to hurry-up, we need to slow-down....

[Demeter]

3. A Decent, Honorable Man Would Resign

and if Japanese, seppuku.

[aquart]

4. Leave him in his office with a gun. That's the American way.

But noooooooooooooo.

[scytherius]

5. LET IT FAIL! n/t

n/t

[bhikkhu]

6. Paulson wants his 700 billion, or he'll use more really scary words.

My share of that (figured per capita by my household size) is about $12,000. On hand, however, I probably only have about $40 to spare, so the rest will have to go down as debt. It would take me years to pay off a debt that size, and it seems that the 700 billion in question may only be a temporary measure.
On the other hand, what could the country do with 700 million? We could convert quite a bit of infrastructure away from fossil fuels; we could for once actually take a step toward energy independence. Which would reduce the need for foreign military intervention and bases and massive military expenditures. Or we could provide healthcare for every single person in the country. Perhaps as Michael Moore suggests this would so remove the crippling bankrupting costs from people that the economy as a whole would rebound.

I don't know, but I am sorry if I don't trust Paulson or Bernanke. If you have been following the past few months, they are the lyingest POS's in DC, and they have steadily drawn us into a situation of fear and confusion where the only solution is to hand the a blank check and put on blinders. Why is no one calling for their firing? Has anyone ever screwed things up this badly and then gotten a blank check on promises to fix things?

[Alcibiades]

20. what could the country do with 700 million?

You mean billion.

[LatteLibertine]

7. I hate that creepy bastard, Paulson

If Senator Obama helps push this thing through I won't be voting for him in November. Obviously, I won't be supporting McCain.

[endthewar]

22. The bill did have some kind of clause in it

that seemed to be intentionally vague. Essentially, the next President was authorized to come up with a revenue-generating proposal to help pay for this plan. Not a big deal, until you realize that Obama is the likely President along with a Democratic Party majority in both Houses of Congress. So who do you think the Democrats would tax later after the fact? I know that Bernie Sanders had a proposal for a 10% surcharge on wealth over $1 million. If you're rich, you're going to pay more later for this bailout.

By the way, what is your proposal? So many people against this plan, very few people for any other plan.

[bluesmail]

8. This is akin to double jeopardy. Since we are no longer a

nation of laws, he may get his way crying all the way to the banks.

[IndianaGreen]

9. Let it die! A better solution is bankruptcy and relying on FDIC

Congress should increase the insurance level for FDIC so that people don't freak out.

[Kaleko]

10. Jim Cramer of Mad Money fame suggested that too.

First time in memory that I agree with him.

[IndianaGreen]

11. And so has Larry Kudlow

and I don't remember ever agreeing with him before.

Obama did the right thing in calling for calm, while McCain was his usual loose canon.

[depakid]

13. If you find yourself agreeing with a free market fundamentalist

that might be a good time to reassess your views.

[IndianaGreen]

21. Chile dealt with a financial crisis worse than ours back in the 1980s

What We Can Learn From Chile's Financial Crisis

You wouldn't know it from all the panicky headlines but the current turmoil on Wall Street is not the world's first financial crisis. Latin America has suffered more than a few, and many were on a larger scale relative to the economies they hit.

One was triggered by Chile's 1982 economic collapse. For a small country it was a lot worse than what is happening in the U.S. today. The Bush economic team could learn from how it was handled.

The Chilean plan helped the banks recapitalize and protected depositors. It also minimized moral hazard and kept the government's role from expanding. The intellectual support for economic liberty was preserved and this protected the market system, which over the past 25 years has not only survived but prospered.

<snip>

One alternative to the Paulson plan would be to provide secured loans to troubled institutions as a way to allow them to recapitalize. The collateral against the loans would be bank assets (presumably impaired assets) but the transaction would be similar to a "repurchase agreement." In this transaction, otherwise known as a "repo," the borrower is required to repurchase the securities, with interest, in the future in order to retire the loan.

Chile used such an instrument to recover from its 1983 banking crisis. It is true that the government intervened directly in two banks, wiping out shareholders, removing management and nationalizing the firms. Those banks were later re-privatized in a sale that gave tax incentives to encourage Chileans to participate in the offering.

The many other banks that were in trouble were handled differently. For those, the government provided loans that were secured by bank assets, with an agreement that the banks would later repurchase those assets.

http://online.wsj.com/article_email/SB122265260912184329-lMyQjAxMDI4MjIyOTYyNTkyWj.html

[Kaleko]

18. Larry Kudlow?!?

What is the world coming to when Kudlow and the two of us can agree on a major policy?

:hi:

[kirby]

12. Cramer said FDIC should be increased to $1 million, but...

he uses an unfair comparison saying that $100,000 was Great Depression era levels. Actually the FDIC was $2,500 during the depression. It was later adjusted to $100,000 in 1980. Inflation adjusted it would be about $250,000 today.

[Malidictus Maximus]

14. Paulsen *IS* the problem. Or at least symbolic and symptomatic of it.

How many of y'all agree?
Kick that dickwad to the curb, taser his ass and give him beatdown.

[iconicgnom]

15. I don't think forcing a timetable panic will work a second time.

But who knows, we aren't dealing with the brightest congress.

[mbperrin]

16. Leave the wooden stake in that Billionaire Bailout.

Go home, Congress! You've done enough!

Why, just last week, the Pretzledent told us that if this was done today by both houses and signed by him, that millions of Americans would lose their jobs today and the bank in my own hometown would definitely close.

Well, the bank is open, no one I know got fired, and gasoline actually got a little cheaper today.

Bargains on Wall Street will be picked up by the savvy, whether foreign or domestic, and I hope the New York kleptotraders sit out and lose all the upside. I'm tired of them.

[truthisfreedom]

17. Ya think?

As if there was some chance he'd drag his feet.

[martymar64]

23. Solution: Nationalize the banks, arrest Paulson

and seize all of his assets along with the assets of every CEO of every bank that failed. Use the $700 B to pay off everybody's mortgages that are with those malfeasant banks and distribute the rest to the rest of us.

[BearSquirrel2]

24. Paulson is the problem ...

Paulson is the problem. Get rid of him. He has .5 Billion in Goldman Sachs stock (at some point or another). It's a clear conflict of interest and we cannot trust this man when his loyalties clearly lie with his billionaire golf buddies.

[nolabels]

25. Poor boy, you make such a lousy cheerleader

Perhaps a set of tights and some pom-poms :woohoo: