Way to go Dems.. now those same folk are on Obama's team.
Go figure.
gosh, congressman blunt, like dude
this happened so fast!
/s
p.s. i get the wall street journal for $80.00 per year.
‘“Republicans in the Congress feel like we could have had and should have had more information sooner,” Rep. Roy Blunt of Missouri’
What a clown. He and most of Congress allowed the Fed to go unchecked, and now he has a problem with them.
There is no constitutional basis for the Federal reserve, they answer to no one.
CNN Money has this over at yahoo
How We Got Here: It’s Housing, Stupid
http://finance.yahoo.com/banking-budgeting/article/105782/How-We-Got-Here-It-Is-Housing-Stupid
excerpt
The reason housing is wreaking havoc even on insurers like AIG and big investment banks, who do not make mortgage loans, is that during the boom, trillions of dollars of mortgages were packaged together into securities that promised to pay investors with the proceeds of those loan payments.
Those securities paid better rates than other types of assets during the boom years. So many investors from around the globe poured as much money as they could into those securities.
Faced with this demand, lenders starting making more loans to riskier borrowers, including people who might not be able to afford their mortgage payments in the future and even many with no proof of income.
Then they are useless and all need to go.
Oh man! I so need a FreeRepublic fix!
My husband and I ate supper in a restaurant tonight and the man behind him was a democrat organizer from Florida who had arrived in southwest Virginia to teach the locals how to run their campaign for Obama. He spend a good deal of time explaining how John McCain had helped cause this mess and how Obama would fix it. GAG! I have indigestion.
The legislators have a modestly legitimate beef with this “bailout”, but on the other hand, the seriousness of the situation demands the attention of actual adults with functioning brains and who can get something rather complex done under a tight deadline = days, hours. This automatically rules out Congress.
Let me restate what I’ve said on a few other threads: This is no “bailout”. This is an EXTREMELY harsh, near-mafia grade bridge loan to AIG. IMO, today’s DJ -450 market reaction was in response to AIG. There is NO PREDICTING whether this “bailout” can be pulled off, most simply because it’s not going to be easy for AIG to pay 11.3% interest in a 3-4% environment. Simple as that. IF they can not pull it off, then the abyss that the Fed wants to avoid by making this loan will recur. And it ain’t pretty, folks, it WILL be quite serious. Multiply today’s market action by 10. Yeah, 3000-5000 DJ points.
The terms of the so-called “bailout” are pretty vicious:
1: AIG pays 11.3% interest LIBOR + 8.5% on the loan for 2 years.
2: The Federal Reserve becomes 79.9% owner of AIG’s total business by inserting their magic “warrants” into the chain of ownership. This collateralizes the loan. AIG was as high as 70 last year, with 2.7 billion shs outstanding, and has been a $60 stock for about 5 years. Let’s call a nominal value 40, times 2.7 billion = $108 billion x .80 = about 86 billion, roughly the amount of the loan.
3: AIG has to trim itself down considerably. AIG is a massive, massive company and has lots of good businesses under its umbrella. It’s obviously going to have sell a good slug of them, and it has to sell for cash, not debt, because only cash will extinguish the loan from the Fed. This isn’t exactly the optimum environment to sell businesses, with credit so constricted.
4: As AIG sells good businesses, the toxic crap they took on their books becomes a bigger and bigger portion of their “book”, and the market for that stuff is much worse than it is for actual functioning businesses.
I am not advocating sympathy for AIG, they brought this on themselves and sold credit default insurance with wild abandon. But, this is no cakewalk they have going, there’s no certainty they’ll be able to pull it off.
The reason the market sold off so violently is this move by the Fed is ANYTHING BUT a bailout, it is more accrately paraphrased as “You got yourself in, you get yourself out. You want our help, it will cost you almost as much as your company is worth. If you can do it, maybe you get a company when you’re done. If not, tough. WE’RE OUT OF BAILOUT MONEY”
AS I PASS through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.
We were living in trees when they met us. They showed us each in turn
That Water would certainly wet us, as Fire would certainly burn:
But we found them lacking in Uplift, Vision and Breadth of Mind,
So we left them to teach the Gorillas while we followed the March of Mankind.
We moved as the Spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place,
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.
With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.
When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: "Stick to the Devil you know."
On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: "The Wages of Sin is Death."
In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die."
Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.
As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool's bandaged finger goes wabbling back to the Fire;
And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will bum,
The Gods of the Copybook Headings will with terror and slaughter return!
Why does the media call this a giveaway?
The Feds are loaning the money secured by warrants to keep AIG afloat...and I will go on record now as one who thinks it will work.
The ramifications of letting AIG collpase would be worse than the 85B.
It’s not a giveaway.
That 85B loan automatically gives value to the warrants.
Freddie and Fannie are more of giveaway but they were always claimed to be government backed so there was never really any other choice than to have reeled them in years ago.