What if the bailout plan doesn't work?

[CMF Newsman]

Lawmakers raised doubts Monday about what would be the largest government bailout in American history, but a bigger, more terrifying question lurked right under the surface: What if it doesn’t work?

Failure, says one insider, is not an option.

“The alternative is complete financial Armageddon and a great depression,” said a former Federal Reserve official. “Where do they go after this? Well, the U.S. government could nationalize the banking system outright.”

A few months ago, that idea would have been laughed out of the room. But no one’s laughing anymore.

news.yahoo.com/s/politico/20080923/pl_politico/13769;_ylt=AvKc2NbRwx3VjyrvxT7gsPOs0NUE

[doodle]

Just another reason they should have never taken spanking out of schools.....ha...ha.

[Scarlet&Gray]

it won't work chasing good money after bad. let the losers fail and fail big..were a big country we can take it..The market always corrects itself were captitalist not communist's..Thanks W you ass clown!!!!

[Tsavodiner]

Thanks W you ass clown!!!!

The law freeing investment banks from the rules governing oversight of their operation was signed by Mr. Clinton in 1999.

[BlackFox]

Sept 23, 2008 23:43:22 GMT -5 Tsavodiner said:

Thanks W you ass clown!!!!

The law freeing investment banks from the rules governing oversight of their operation was signed by Mr. Clinton in 1999.

You mean the GRAMM(R)-LEACH(R)-BLILEY(?) act?
There's plenty of blame to spread around here. We could nitpick this stuff to death with partisan attacks. Personally, I think it's time to purge the entire government. We are getting royally screwed by these millionaire politicians of BOTH parties. There really isn't much difference in the parties anymore anyway.
The only "Representative" that seems to have seen this coming is Ron Paul, and he's "crazy".

[8trackbaby]

When offered a smaller sum Paulson wouldn't take it. I say don't give them anything and just so we don't hear gripes about how small businesses can't make it or start then lower the capital gains tax.

[gridbug]

Does anyone here trust the idea of giving a trillion (you know it'll run over 700B) to these guys? I would like to see this 'three page' plan, because I doubt it says much more than give me your money and don't ask questions.

[el Gusano]

Sept 24, 2008 8:26:52 GMT -5 BlackFox said:

There's plenty of blame to spread around here.

Lots of people on the take here:

Fannie Mae and Freddie Mac Update

Update: Fannie Mae and Freddie Mac Invest in Lawmakers
Published by Lindsay Renick Mayer on September 11, 2008 11:26 AM | Permalink | Comments (21)

When the federal government announced two months ago that it would prop up mortgage buyers Fannie Mae and Freddie Mac, CRP looked at how much money members of Congress had collected since 1989 from the companies. On Sunday the government completely took over the two government-sponsored enterprises, and we've returned to our data to bring you the updates, this time providing a list of all 354 lawmakers who have gotten money from Fannie Mae and Freddie Mac (in July we posted the top 25). These totals are based on data released electronically from the FEC on Sept. 2 and include contributions to lawmakers' leadership PACs and candidate committees from the floundering companies' PACs and employees. Current members of Congress have received a total of $4.8 million from Fannie Mae and Freddie Mac, with Democrats collecting 57 percent of that. This week we also wrote about how much money lawmakers had invested of their own money in the companies last year--a total of up to $1.7 million.

All Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008

[Jethro]

Sept 23, 2008 23:00:03 GMT -5 Scarlet&Gray said:

it won't work chasing good money after bad. let the losers fail and fail big..were a big country we can take it..The market always corrects itself were captitalist not communist's..Thanks W you ass clown!!!!

I agree that America is big enough to shrug it off. As with any disaster look at the panic that has been created by the media, politicians and those who wish to cash in on it.

It's not Bush that's the ass clown, it's Washington DC overall! It's time to stop blaming the Republicans, Democrats (et al) and tell them to either work together or we'll vote someone else in who will.

[goomba]

we have let the govt de-regulate too much. we let the stock market/investors creep into the banking industry. we let this happen by electing idiots that pander to the movers & shakers in DC..

call/email/write your rep and tell them this MUST stop.. if you need the govt to bail you out, you should not be giving the CEO a multi-million dollar severance package...

grab your guns, its gonna get worse.

[doodle]

Exactly when does anyone pay for the consequences of their own actions these days ? Perhaps a good old depression or recession would shake some sense into lenders or borrowers. A good old fashion spanking....sad thing is everyone would hurt from it but, either way we are all going to...aren't we ?

[daworm]

Keep in mind one thing. This $700B number you hear tossed around, it isn't exactly what you might think. This is the value of the mortgages made. Now, the price of the properties those mortgages are for may well have dropped, but they cannot drop to zero. After all, this is real estate, the land itself will always have an intrinsic value, and all of the buildings on that land aren't just going to vaporize and blow away in the wind overnight. So even if every single one of these loans default, the properties will be sold. The maximum exposure is not $700B, but is the difference between $700B and whatever these properties sell for. If only half default, and they sell for 80% of the loan value, then the government is out $70B.

I'm not saying that's not a lot of money, but it is certainly less than $700B.

[BlackFox]

But what if the REAL number is much higher than 700bl? When was the last time a government cost estimate wasn't WAY off on the low side?

[gridbug]

Something obviously has to be done. I just hope they don't make it worse. At least they are negotiating oversight and other details now. I am astonished at the arrogance that the initial three page proposal actually said

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Who does Poulson think he is?!? Dick Cheney?

[BlackFox]

Go ahead and put the FDIC down for $150,000,000,000 while we're at it.

www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=amZxIbcjZISU

[Tsavodiner]

Sept 24, 2008 23:07:57 GMT -5 doodle said:

Exactly when does anyone pay for the consequences of their own actions these days ? Perhaps a good old depression or recession would shake some sense into lenders or borrowers. A good old fashion spanking....sad thing is everyone would hurt from it but, either way we are all going to...aren't we ?

Apparently that's a quaint old fashioned notion nobody subscribes to anymore. Bush alluded to it in his homily but implied the harm to the economic system would be far worse without intervention.
I must admit if I thought I'd been able to get into a jumbo adjustable for $400,000 and then weasel out of paying it back I might have considered it, but that's just not how I roll.