Here are some quotes from your Democratic Congress -
During the House Financial Services Committee hearing, Sept. 10, 2003:
Rep. Barney Frank (D., Mass.):
I worry, frankly, that there's a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios. . . .
During the House Financial Services Committee hearing, Sept. 25, 2003:
Rep. Frank: I do not want the same kind of focus on safety and soundness that we have in OCC (Office of the Comptroller of the Currency) and OTS (Office of Thrift Supervision). I want to roll the dice a little bit more in this situation towards subsidized housing. . . .
Rep. Maxine Waters (D., Calif.), speaking to Housing and Urban Development Secretary Mel Martinez:
Secretary Martinez, if it ain't broke, why do you want to fix it? Have the GSEs (government-sponsored enterprises) ever missed their housing goals?
MY GRADE = FAIL
Bear Stearns financing
Fannie Mae and Freddie Mac nationalization
AIG loan and nationalization
Federal Housing Administration housing rescue bill
Mortgage community grants
JPMorgan Chase repayments
Loans to banks via Fed's Term Auction Facility
Loans from Depression-era Exchange Stabilization Fund
Purchases of mortgage securities by Fannie Mae and Freddie Mac
NUMBER OF HOUSEHOLDS
POSSIBLE COST PER HOUSEHOLD
MY GRADE = FAIL
Speaker of the House Nancy Pelosi at a press conference after passage of the bailout:
“Under the leadership of our chairman, Barney Frank, as I called him on the floor, a maestro, we were able to make improvements, working in a bipartisan way, making improvements in the legislation, and then make more improvements in the legislation before it came back to the floor today”.
“The eye now is to the future. To shine the bright light of accountability on what is happening in our financial markets so that it doesn't happen again. That accountability will tell us how we got to this place and ferret out the abuses. That accountability will honor our trust to the American people”.
MY GRADE = FAIL
The first bailout bill didn’t pass. And what do you do when you need a bill to pass? Add some stuff that will convince the "no" voters to go your way. The actual bailout portion of the bill did not change substantively; lots of little things were added. This is known in the Senate and House as “Christmas-treeing” – we all know it as bribery and usually go to jail for it.
MY GRADE = FAIL
Here are some things to think about:
(1) NO REAL REFORM: The plan attempts to mask, rather than reform, imbalances in credit markets and in U.S. economic public policy. The plan props up reckless and failed banks by buying "troubled assets" instead of focusing on real reforms that go after those culprits responsible for this mess. But why would we want to do that?
(2) TREASURY POWER GRAB: The plan raises Constitutional concerns by dramatically expanding the power of the current and future Treasury Secretaries, giving the government agency power to directly purchase assets from for-profit financial and non-financial firms. Not to mention the expanded power of the IRS to spy on you – but you didn’t hear about that did you? More on that later.
(3) PRICE TAG: The $700 billion bailout figure is as much money as the combined annual budgets of the Departments of Defense, Education and Health and Human Services.
(4) INCREASES NATIONAL DEBT: Instead of cutting spending elsewhere, Congress will borrow all $700 billion on global capital markets, and the bill raises the national debt ceiling to a staggering $11.3 trillion. But hey, really, what is the difference in 10 trillion and 11?
(5) GLOBAL BAILOUT: The plan includes taxpayer purchases of distressed assets from foreign banks. You are paying for foreign countries debts too. Bet you didn’t know that either.
(6) FLAWED PROCESS: Members of Congress and the public had less than 24 hours (for the new bill) and no hearings to discuss and understand the impact of this sweeping plan. This rush to pass a wildly unpopular plan without benefit of significant public debate and input will also undermine its legitimacy and effectiveness – sounds a lot like the Patriot Act, huh?
(7) WRITTEN BY WALL STREET, FOR WALL STREET: Treasury Secretary Paulson, the architect of the plan, was formerly the head of Goldman Sachs, one of the firms responsible for the mess and a direct beneficiary of the bailout. Further, the advisers managing the bailout auctions and assets will be the same Wall Street firms and will receive billions of tax dollars in fees. That’s right – that 700 billion doesn’t take into account paying somebody to take of all this paperwork over the next few years.
Oh, and by the way, Mr. Paulson will be the one to ensure “APPROPRIATE STANDARDS” when it comes to executive pay for the clowns running these banks – never mind that the bill places doesn’t place any real restrictions on companies going under from paying the top execs millions while their companies bled money. It has plenty of loopholes.
(8) WHEN WAS THE LAST TIME THE GOVERNMENT MADE MONEY?: The idea that taxpayers will make money on the bailout is not credible. There are ready buyers for these "troubled assets" - Merrill Lynch sold its entire portfolio of mortgage backed securities in July- provided the price is low enough. If a profit was possible, private speculators would readily buy these troubled assets.
(9) NOT CONSTITUTIONAL: The plan violates basic principles of American capitalism and honest governance by creating a system of "private profits, socialized losses" that transfers money from taxpayers directly to Wall Street investment banks. Free market capitalism only functions if individuals and firms are held accountable and are allowed to both succeed and profit, and also to sustain losses and even fail.