Posted on 09/30/2008 6:53:14 PM PDT by maccaca
A group of House Republicans is cobbling together a proposal to stabilize financial markets that can serve as an alternative to the plan proposed by Treasury Secretary Henry Paulson, legislative sources have told CNBC.
The failure of Monday's vote on the $700 billion bailout packagewhich these Republicans doubt is likely to cause an economic "doomsday" scenarioemboldened the group to press forward with its own plan, sources said.
The group pressing the alternative plan is doing so for largely ideological reasons: They're opposed to the federal government taking a large role in financial markets, sources say.
Components of the alternative plan including the following, according to sources:
Require the Treasury Department to guarantee, at up to 100 percent, bank losses resulting from failed mortgage-backed securities originated prior to the plan's enactment. Such insurance, supporters say, would provide immediate value to the securities and a foundation for which they could then be sold. The Treasury Department would finance that insurance by assessing a premium on outstanding mortgage-backed securities.
Allow companies to carry back losses arising in tax years ending in 2007, 2008, or 2009 back five years, generating a tax refund and immediate capital
Allow a "repatriation window" for profits earned by U.S. firms overseas. Such repatriation amounts would not be taxed if invested in distressed debt (as defined by Treasury) for at least one year.
Allow banks to treat losses on shares of preferred stock in Fannie Mae and Freddie Mac as ordinary losses, not as capital losses
Suspend the capital gains tax rate for two years
Limit backing of high-risk loans by Fannie Mae and Freddie Mac
Schedule Fannie and Freddie for privatization
Suspend "mark-to-market" accounting until the SEC can issue new guidelines that will allow firms to mark these assets to their true economic value
Stabilize the dollar by repealing the Humphrey-Hawkins Full Employment Act, which alternative bailout supporters say diverts the Federal Reserve's attention from long-term price stability to short-term economic growth
...
Yes, Senate and House Dems have agreed to the tax incentive enhancements because they are terrified of the political consequences of their original proposals. Republicans were prepared to run ads against them based on the original bailout.
Pelosi set up her own members for this defeat by not delivering the 12 votes she needed on Monday. She has been hoisted by her own petard and undercut by Reid. In effect, she’s been told she is incompetent.
GOP has won and McCain can take his victory lap.
I sure don't claim to understand the mysterious workings of our government, but this is how it works more or less..The Senate proposed the bill, but the House has to fund it.
So, it appears to me that last week's and this weekend's soap opera unfolded like this...
President Bush/Paulsen sent a proposal to the Senate, about three pages long. The Senate added a lot of pork (ACORN funding, etc) to the proposal, voted on and passed the bill. The House Pubs said not so fast, so they duked it out all weekend on a compromise bill (Dems 9 to 2 Pubs) that deleted a lot of the pork and added some oversight. Lots of phone calls to insure how everyone would vote so the bill would pass the House and get the $$$ to fund it.
BUT...John Q. Smith and Sally Q. Jones burned up the telephone lines and e-mails to their representatives saying “Not only no, but...He@@ no.” So there were some election year jitters, and maybe a few that were true in their convictions.
Right before the vote in the House was to happen, Pelosi slammed the Pubs, hard, again. Net result..The bill did not pass.
Tune in for the next exciting episode of “As DC Turns” tomorrow when the Senate votes on a revamped bill to send to the House.
(I know you asked a simple question and I apologize for my rant. But thanks for listening.) :)
Thanks Perdogg, wish it wasn’t MSNBC reporting but looks like we’ll get a bill tomorrow for distribution and analysis from the Senate website.
...and McCain is asleep at the switch.
Your opinion on the Senate bill?
How about something that puts money in the hands of tax payers to make decisions and let the free market work? Each taxpayer gets $2000. There is $12T in mortgages, with 5% supposedly bad. $600B. Taxpayers can pool their money in Mortgage Mutual Funds. These are tax free. Each bank gets 5% of their mortgages as a "credit" Each credit allows the US BANK to auction off one mortgage dollar to the set of Mortgage Mutual Funds. A bank with less than 5% bad loans can sell credits for whatever the market bears. A bank that needs credits can buy them.
The gov't will set aside $200B to pay banks money for the loans they auction off. The amount they get would be (say) 33% of the difference between the auction price and the book price of the mortgage, assuming it was a "good" mortgage. We assumed $600B in bad debt, and 1/3 of that is $200B.
To appease Obama, 50% of the investors in a Mortgage Mutual Fund must come from those earning less than $250,000. This way, fat cats can't get fatter and we give middle class America a chance to make some money.
People are free to spend their $2000 tax rebate as they see. Some will buy HDTVs, etc., and that will get the economy moving. Some will use the $2,000 plus perhaps more, to invest in this "crisis". Banks that made smart choices on giving out loans are rewarded by receiving cash for their extra "mortgate auction credits." Vice Versa for banks that made poor choices.
And best of all, it keeps the money in the US, and gives the free market a chance to work. Finally, the total cost to the gov't is less than $700B.
but that’s the basic argument of Pelosi’s “buy-in.” I know you’re saying it’s better to have private capital put up for the risk than tax-payer money, I just doubt there’d be many takers for a while, therefore negating the idea there would be a rush of capital that the financial system seems to need.
I've never heard of this "Act," but anything with Hubert Horatio Humphrey's name on it NEEDS to be repealed!
Getting rid of capital gains for two years...excellent....yes, this is a PRIVATE SECTOR SOLUTION.
Also, maybe they could do something about the CRA...
I get so effing tired of this McCain bashing.
It’s still a bailout: “Require the Treasury Department to guarantee, at up to 100 percent, bank losses resulting from failed mortgage-backed securities.”
This sounds very close to the plan the House GOP members were trying to get people to consider before putting up the bill that failed yesterday. If so, then that is something I would support as it doesn’t use taxpayer dollars to reward corruption - at all.
I noticed on my nightly news that Bush is still calling for a bailout - although he has now taken to calling it a buyout plan. Can I assume that this is NOT the same bill Bush is pushing?
I’ve been focused on Obama and his communism today so I haven’t been able to follow all of this, and the only thing I’ve heard was what was covered in 3 minutes on my local news (not very good even though it’s FOX).
I’m definitely curious though as to my question:
What is Bush pushing for now? Is it this plan, or is he still pushing for some of the same things in the failed bill in the house?
Thanks in advance for any answers. Perhaps I should read through this thread BEFORE posting this, but I will read through it now! :)
I think this is straight from Laffer that by lowering taxes it will cause revenue to grow. I am sure there is going to have to be some give and take, but it’s a lot better than last weekend.
There are some here who become suicide bombers if they don’t get everything they want, but we are heading in the right direction.
Heard the banks have spent 250 million lobying these crooks. Not bad for a trillion payout. Wonder how much loot they will kick back to these pirate. DC is starting to look like Port Royal in the old days. This election is looking like a vote on who gets the biggest share of the booty. And it ain’t us.
like..that’s important now?
Go
There a several posters who are trying to distort the facts on which bill this exactly is that will be considered tomorrow.
1. It is NOT the original Paulson, Bush, Reid, Dodd, Pelosi giveaway. Anyone who says this is lying.
2. It IS the compromise bill agreed to by all four parties (Reid, McConnell, Pelosi and Boehner) PLUS additional tax incentives and FDIC enhancements.
3. The so-called House GOP alternative is likely a non-starter, because Pelosi will not allow a vote on it. She cannot expose her members to having to take that vote. The majority party in the House controls the rules.
Is the package under consideration perfect? Hardly. Is it better than the original Bailout? Yes. Are the additional tax cuts worthwhile? Yes.
It will pass the Senate overwhelmingly. The House in my view will still be much closer. Pelosi will have to deliver more RATS, and they ain’t gonna like it.
The GOP is winning this battle by the hour. The RATS want to get out of town.
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