Posted on 09/18/2008 10:16:16 PM PDT by Chet 99
The Bush administration is urgently preparing a massive intervention to revive the U.S. financial system, including a plan to sweep away the unpaid loans that are choking banks and blocking the flow of money to borrowers.
Congressional leaders gave bipartisan support to the administration's efforts after a meeting last night with Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke.
Paulson and Bernanke presented a "chilling" picture of the state of the financial system, according to a participant in the meeting who spoke on condition of anonymity. Lawmakers were told that the consequences would be grave if they failed to pass legislation by the end of next week. Sen. Harry Reid (D-Nev.) and Rep. Nancy Pelosi (D-Calif.) committed to meeting that deadline.
The plan involves using hundreds of billions of dollars in government funding to buy bad loans, leaving banks with more money and fewer problems, according to two sources familiar with what was said at the meeting.
After the meeting, Paulson told reporters the proposal was "an expeditious solution that is aimed right at the heart of this problem."
Also last night, the Fed was considering offering backing for money-market mutual funds, which have had massive withdrawals in recent days, said a source familiar with the discussions.
(Excerpt) Read more at washingtonpost.com ...
Monetizing all of the toxic bank debt is pure socialism. Unreal.
I believe I am one of the few fans of W on this board, but his actions this past week have me shaking my head.
We are so screwed....
What will be more unreal is to allow our banking system to collapse.... President Hussein Obama and a Congress with 2/3rd Dem Majorities will remake American society in ways you don’t want to imagine.
I’ve always wanted to like W and have had a soft spot for him many times, but he doesn’t have a fiscally conservative bone in his body.
Do you think the Feds should stand back and let the banking system collapse (and our economy with it)?
“leaving banks with more money and fewer problems,”
They created their problems. Now we the taxpayers bail them out.
You act as if that's the only alternative to socialism.
While I understand your point (I think), the system will NEVER function properly unless it is allowed to rise and fall (and fail) based on market principles. The moral hazard created by this “solution” is beyond comprehension.
Speaking of worthless paper: if the government buys up all the worthless mortgage paper in the economy, who owns the house next door? Uncle Sam?
If this thing isn’t plugged up and put to bed, Hussein is president. Simple as that.
The RTC in the 80s worked about as well as it could have IIRC. It would appear the private sector can’t do it alone now; once MM funds start breaking the buck then it’s about rock bottom, right ?
If I sold all my MM holding, where would I put it, local bank - they say FDIC’s getting low, so what then ? Sock under the bed ? Gold ? Silver? etc(Just see what their prices would rise if everyone tried that).
Right now just sitting tight.....
Silly.
We haven’t had laissez-faire capitalism by any means. Fannie Mae and Freddie Mac were quasi-government organizations. They got so far ahead of themselves because of the implicit govt backing. Banks were forced to give loans to uncredit worthy persons because of rules and regulations from the govt.
Government has been very much a part of this mess.
If this happens, it doesn't matter who wins the election, whats left of capitalism in this country will be completely discredited and socialism is just around the corner.
What does ‘sweep away the unpaid loans” mean in this context?
I don’t know if it will stop it, but it will plug things up for a couple of months anyway. Then let President McCain deal with it.
The idea that this will permanently reshape American society seems far fetched - we recovered from the S&L bailout in not too bad of shape.
Hugo Chavez did not nationalize a fraction of the private assets/debt that the fed has in the last 1 week.
I guess it might be time to buy more gold. The goobermint is just going to have to print money night and day to keep bailing out failing entiities, and that brings on banana republic type rampant inflation.
The car companies are next, and after that, the airlines.
As a poster said earlier, we are so very screwed ... and the pooch too.
“Gold ? Silver? etc(Just see what their prices would rise if everyone tried that)”
You will, soon enough. That market is small enough that when the historically inevitable flight to gold and silver takes place, the rise will be breathtaking.
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