| But the pigs up at Goldman Sachs want CASH CASH CASH.
We appreciate your sentiments, but ask that you please find out what you're talking about before opening your mouth and spewing nonsensical rant. |
Posted on 09/26/2008 3:00:28 PM PDT by johncocktoasten
Note to Paulson: The Key to Passing the $700 Billion Bailout Is Insurance September 26, 2008 09:58 AM ET | Michael Barone | Permanent Link
Contrary to widespread expectations in Washington and on Wall Street, Treasury Secretary Henry Paulson's financial bailout/rescue package was not agreed to at the White House meeting that started at 4 p.m. Thursday. The meeting included the congressional and committee leaders of both parties and the administration's top financial officials, plus two presidents—George W. Bush and either Barack Obama or John McCain.
What's the problem? An agreement modifying the Paulson plan in significant ways seems to have been reached on the Senate side, between Banking Committee Chairman Christopher Dodd and the committee's second-ranking Republican, Bob Bennett (the ranking Republican, Richard Shelby, is against the whole thing). Barney Frank, chairman of the House Financial Services Committee, expressed confidence that an agreement was reachable. But the word on Capitol Hill is that Speaker Nancy Pelosi is insisting that some substantial number of House Republicans—I've heard the number 110—vote for the measure.
(Excerpt) Read more at usnews.com ...
Insurance and No ACORN money... Too much common sense for SanFran Nan, and the Quisling.
“Insurance and No ACORN money... Too much common sense for SanFran Nan, and the Quisling.”
It’s also money for LaRaza. It’s a swindle.
National Debt! No charity give a ways to ACORN or any other group.
Who is talking about the Republican plan? Americans are being told the Republicans are just dragging their feet for partisan political purposes. Americans are believing it.
That way or no way!
| But the pigs up at Goldman Sachs want CASH CASH CASH.
We appreciate your sentiments, but ask that you please find out what you're talking about before opening your mouth and spewing nonsensical rant. |
Frankly I’d say let them just swirl down the crapper. No government money. If a bigger fish wants them then let then buy them lock, stock and barrel along with the debt. It would also send a message loud and clear to the survivors ... get your heads out of the government’s *ss and wake up. You are responsibly for your own messing of yourself.
The reason they need cash is not illiquidity, it’s INSOLVENCY.
There is no bank out there that isn’t being held alive by the Fed. And the Fed’s balance sheet shows major problems too.
They do need the cash; however they need to fail and not stick the taxpayers with the bill.
Insurance is shutting the barn door after the horse escaped - all you’re doing is ensuring that the taxpayers will get hit only AFTER the bank fails. And they will fail.
bookmark
If they are clear of the danger, why are GS Employees emailing talking points to Mr Obama to pitch the Treasury plan for $700 billion straight up? Why do they need the bailout?
Make that $700 billion + $670 billion passed TODAY. Oh, and then there’s the payoffs to the 0 mob, the ACORN hush money, etc.
they are going to fail no matter what. The market can let them fail naturally, or the reverse auction will have them fail all at the same time.
The “insolvency†that you note is attributable to the fall in mortgage related asset values. If such assets are wrapped by a federal guaranty, the assets will appreciate considerably and, thus, the insolvency will be mitigated.
From the WSJ Editorial Paulson’s Bailout for Billionaires
Although Congress created the moral hazard that has become the taxpayer rescue of Fannie Mae and Freddie Mac, the Members plan to hold hearings to opine about it anyway. They should put themselves at the witness table. But since they won’t, the least they can do is ask Treasury to explain its bailout for billionaire subordinated debt holders.
We’re referring to the holders of some $11 billion in Fannie and $4 billion in Freddie subordinated debentures. In structuring his rescue, Treasury Secretary Henry Paulson gave a haircut to holders of both common and preferred stock. In the process, he socked it to many small banks that had much of their capital in Fan or Fred shares. He was right to do so, and he should have wiped them out given how much those holders had profited over the years from a government guarantee. But, strangely, Mr. Paulson also decided to give Fan and Fred’s subordinated debt holders an entirely free pass. Why? And who are these guys?
Treasury’s explanation is that it had to do this to reassure the world’s holders of Fan and Fred senior debt. The argument seems to be that if subordinated debt holders took a loss, then senior debt holders might panic and run. And reassuring the Chinese and other holders of Fannie senior debt is the main point of this bailout.
This strikes us as more than a little odd, and a rotten precedent to boot. To adapt Mark Twain, the difference between senior and subordinated debt is the difference between lightning and a lightning bug. Even amateur investors know that sub-debt holders get paid back after senior debt holders, and the Chinese know it too. Fan and Fred sub debt amounts to only about 1% of senior debt outstanding. So it’s also hard to believe that letting holders take a loss would have posed any systemic risk.
The fact is that, under Mr. Paulson’s plan, Fan and Fred subordinated debt investors are getting treatment they have no right to expect. Sub debt has some of the same characteristics as equity, and it is often used in bank capital structures because it’s a little cheaper on an after-tax basis, since interest expense is tax deductible. But this debt also carries a higher risk, which is why it’s often held by deep-pocketed investors who can more easily absorb potential losses. In return for a weaker claims position than senior debt, these investors require a higher rate of return.
With respect to Fan and Fred, sub debt had an added purpose — to allay fears that the government’s implicit (now explicit) backing of Fan and Fred’s obligations was distorting market signals. So in 2001 the mortgage behemoths decided to issue sub debt as a way to appease then-Congressman Richard Baker, who was worried the companies were taking on too much risk. (Man, was he ever right.)
The hope was that subordinated debt would add to Fan and Fred capital and better reflect the risks the companies were taking. And indeed, as investor anxiety grew this summer over the fate of the two companies, the spread between the price of Fannie subordinated debt and U.S. Treasurys widened enormously. Investors feared a sub-debt wipeout.
With the weekend bailout, however, those investors can buy another vacation home, or three. On Monday, yield spread premiums on Fannie Mae subordinated debt maturing in 2011 plunged by three full percentage points to a bid of 3.50 points. Investing rarely gets better than this: Buy paper you know carries a higher risk but also a higher return, and then have Uncle Sugar eliminate that risk so you also make a windfall profit.
At the very least Mr. Paulson could have gone to these investors with a restructuring proposal, asked for some cash and given them a new piece of paper. Instead, the Treasury Secretary has set a terrible precedent, leaving subordinated debt holders at other large financial institutions to calculate that they too will receive a government bailout if they stumble.
Both Treasury and the Federal Housing Finance Agency said they don’t know who now holds Fan and Fred sub debt. But it’s a fair guess it is mostly some of the world’s richest people and largest financial institutions. Pimco’s Bill Gross, who manages the world’s biggest bond fund, had been agitating for weeks for a bailout. Asked about his Fannie and Freddie positions, a spokesman told us, “we don’t discuss our holdings.” Our guess is Mr. Gross is a lot richer after the bailout than he was last week. Ditto for Goldman Sachs, which also declined comment and where Mr. Paulson used to work.
We hope someone on Capitol Hill asks Mr. Paulson for a list of these big winners, so taxpayers can understand who is getting richer on their dime.
Nick Danger may want to check this out as well. Goldman Sachs takes great pride in the fact that the firm alumni are very influential. It would be absolutely ignorant to believe that they don’t exercise that influence to come out smelling like roses every time the excrement hits the fan.
Many average folks think that wall street is a bunch of pubbies that just want low taxes. It is quite the opposite, just a bunch of libs working the system.
The large majority are Dems
No one was saying that Goldman -needed- CASH to avoid failure. They were saying Goldman -wanted- CASH. I believe that CASH (and bank consolidations and Democrat political wins and the Presidency) are key motives of Paulson and his friends, leftists and bankers.
One can be greedy even if one is not broke.
What about nationalizing the FED?
OK I have a thought: Let’s see if we can get a map of the physical locations of the homes involved in the sub-prime mess. Anyone think it would line up pretty closely with Democratic “Urban Centers”?
Hmmm?
How about a deal whereby each State determines how many subprime borrowers are in trouble, and work with Paulson’s new entity IN PARTNERSHIP?
That way the states that benefited the most by the Racketeering, Fraud and Abuse by Democrats would have to help dig their own citizens out of the pickle.
Can’t wait, uh, FOR, the exciting Presidential Debates THAT, should be starting in about 2 hours WHEN, uh, you know, you have pocorn and beers ready.
Not just that, but reports are that Paulson and the libs are opposed to the insurance idea, “because it won’t work.” However, the fed initially was looking at the program as an insurance program.
They are trying to spike the insurance plan, because that doesn’t give them free cash for the trash investments they have. The insurance is/will be based on performance of the assets. Non performers still sit in the circular file. Their value equal to 0bama’s qualifications to be president.
Open Republicans seats from retirement combined with enough political suicides totaling 110 less Republican House seats should comfortably give the Democrats a veto proof majority next term.
I agree with you. It is the Republicans who are improving the plan and safeguarding the taxpayer interest.
My initial concern was that some seemed to be reflexively saying we didn’t need a bailout at all. We do, or we do now that our government has said we do (for confidence reasons). But now that that page has been turned, it’s time for Republicans to talk about the changes they have made.
Moreover, the Rats could have passed any plan THEY wanted-—they have majorities. But, as usual, they are too cowardly to take a stand and take the heat for what they supposedly believe in.
That’s very likely.
One of the many excellent points in the article you posted that bears repeating.
Nancy is insisting upon her own "insurance." She views this as a way to inoculate the Rats from any blame. The Rats do not have the courage of their convictions. They claim that the Republicans are holding up the show, but they steadfastly decline to put their votes on the line and pass the plan they supposedly are "for."
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Goldman Sachs had steered clear of this whole mess and consequently is not one of the troubled institutions. In fact Warren Buffet just bought in for five billion.