The United States Senate last night approved the $700 billion “bailout” package 74 to 25. Senators John McCain, Barack Obama and Joe Biden all voted in favor of helping our failing banks. Obama called the bill “necessary but not sufficient,” while a resigned McCain said, “Inaction is not an option.” The legislation now goes back to the House, which voted against the bill earlier this week. [HuffPo]
Money Bags!
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Matt
I guess I’m voting for 3rd party b/c there were plenty of other ways to bail out the economy that doesn’t cost tax payers anything.
CNN said, Why not just take the people that are being foreclosed on and set them back to their original teaser rate and wrap the late fees into the back of the loan. Cost to tax payers would be zero.
Here are a few other ideas.
I. INSURANCE
A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market effect all over the world, creating immediate and needed liquidity.
B. In order for a company to accept the government-backed insurance, they must do two things:
1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.
a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while
working with the borrower—again limiting foreclosures and ruined lives.
2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.
C. This backstop will cost less than $50 billion—a small fraction of the current proposal.
II. MARK TO MARKET
A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.
B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.
III. CAPITAL GAINS TAX
A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.
B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down.
Matt
Oh and another thing. I saw a Rebulican saying that he was voting for the bailout even though his constituents were calling him telling him no. He said he was doing what was right even though it wasn’t politically correct for him to go against his constituents. What a twit!! I mean we elect you and then you don’t do what we say when we call you and tell you what, we the people, want. How dumb. I’m sick of the whole lot of them. Democrats and Republicans.
Woof
How come Palin didn’t vote…oh wait I forgot the twat isn’t a Senator…she is a nobody soccer mom Governor of a slab of ice.
ggreen
I like these Ideas much better
From Michael Moore at HuffPost:
1. APPOINT A SPECIAL PROSECUTOR TO CRIMINALLY INDICT ANYONE ON WALL STREET WHO KNOWINGLY CONTRIBUTED TO THIS COLLAPSE. Before any new money is expended, Congress must commit, by resolution, to criminally prosecute anyone who had anything to do with the attempted sacking of our economy. This means that anyone who committed insider trading, securities fraud or any action that helped bring about this collapse must go to jail. This Congress must call for a Special Prosecutor who will vigorously go after everyone who created the mess, and anyone else who attempts to scam the public in the future.
2. THE RICH MUST PAY FOR THEIR OWN BAILOUT. They may have to live in 5 houses instead of 7. They may have to drive 9 cars instead of 13. The chef for their mini-terriers may have to be reassigned. But there is no way in hell, after forcing family incomes to go down more than $2,000 dollars during the Bush years, that working people and the middle class are going to fork over one dime to underwrite the next yacht purchase.
If they truly need the $700 billion they say they need, well, here is an easy way they can raise it:
a) Every couple who makes over a million dollars a year and every single taxpayer who makes over $500,000 a year will pay a 10% surcharge tax for five years. (It’s the Senator Sanders plan. He’s like Colonel Sanders, only he’s out to fry the right chickens.) That means the rich will still be paying less income tax than when Carter was president. This will raise a total of $300 billion.
b) Like nearly every other democracy, charge a 0.25% tax on every stock transaction. This will raise more than $200 billion in a year.
c) Because every stockholder is a patriotic American, stockholders will forgo receiving a dividend check for one quarter and instead this money will go the treasury to help pay for the bailout.
d) 25% of major U.S. corporations currently pay NO federal income tax. Federal corporate tax revenues currently amount to 1.7% of the GDP compared to 5% in the 1950s. If we raise the corporate income tax back to the level of the 1950s, that gives us an extra $500 billion.
All of this combined should be enough to end the calamity. The rich will get to keep their mansions and their servants, and our United States government (“COUNTRY FIRST!”) will have a little leftover to repair some roads, bridges and schools.
Bill Perdue
The parties that voted for the bailout and deregulated the speculators in the predatory banks, mortgage lenders and credit card companies are already extinct. They’re just too dumb to know it.
Both Democrats and Republicans have done all they could to create conditions favorable to corporate predators and both looked the other way as corporations exported good jobs and hid their money overseas.
Carter deregulated S&Ls and Reagan encouraged speculative abuse. In the end working people ended up paying $1.4 trillion dollars in taxes to cover the debts of the rich. (One of the Bush boys, Neil, walked off with a gift, from us, of $25,000,000.00.)
Clinton, not to be outdone by Carter and Reagan, supported a Republican measure to terminate all the regulatory safeguards put in place to prevent rampant speculation and another Depression. He did the same with NAFTA and when he embraced and fought for Republican inspired cuts in welfare and other social programs and he and Hillary were adamant opponents of socialized medicine. (He did the same when he championed DADT and DOMA.)
Obama gets far more money from Wall Street than McCain ever dreamed of because they know with a certainty that he’s an opportunist hustler in the mold of Bill Clinton. McCain is weighed down with all the garbage of the Bush years but Obama can pretend to be clean. And some fools will believe him.
Deregulation and the war left us with a public debt of $5 trillion 130 billion dollars on January 1st, and as of yesterday it’d skyrocketed to $9 trillion 210 billion dollars. It’s expected to reach almost $15trillion by the end of the year because of AIG, GM, Ford, Fannie Mae, Freddie Mac, the bailout of the rich, and the war.
The economy will collapse under that weight sooner or later, and probably sooner. The weight of that burden will end social programs for decades, leave us floundering as the environmental crisis escalates in scary new territory and depress our standard of living even more. It will inevitably lead to more authoritarianism, more FISAs, more Paytriot acts.
The Democrats and Republicans are the Parties that will be identified with the rocks and the hard places. The left will make sure of that. They’re already extinct. They’re like dinosaurs, proud rulers of all they see, bellowing as they look up at the new star, slowing growing in brightness in the night sky …
Matt
GGReen,
I think they should be prosecuted but do you think the Republicans and Democrats who contributed to this by listening to lobbyist will really want to go to jail? I don’t think so.
Why should taxpayers making over $500,000.00 pay for it? I make over $500,000.00 and I’m not a Wall Street Fat Cat. I just run a small business with 20 employees. I worked for many years not making a dime hardly because I was trying to grow the business.
Making people pay a tax on stock transactions will discourage the free market. There is already the capital gains tax. So if Joe Main Street sells a losing stock from his 401K he should pay .25% on his loss? That doesn’t make sense to me.
charles
“He said he was doing what was right even though it wasn’t politically correct for him to go against his constituents. What a twit!! I mean we elect you and then you don’t do what we say when we call you and tell you what, we the people, want.”
These are the same constituents who literally believe in the Bible, voted George Bush in twice, and think Iraq had something to do with 9/11. Sometimes, many times the public is just stupid and wrong and the right thing for a politician to do is not listen to them. I shudder to think what this country would be like if politicians just did what the public wanted all the time-we wouldn’t have anything approaching gay rights anywhere for one thing.
That being said, I do agree with the .25% tax on stock transactions-every other country does it. And penalties for some of the people who knowingly made this worse-though that might include people who bought houses and had no business doing so.
Jaroslaw
I like G Green’s ideas except for couples making over a million dollars a year. There is no reason to penalize them for working hard or saving money or whatever. Now perhaps those making over 20 million – there is NO WAY you can make that kind of money without some sort of exploitation nor does anyone need that kind of money.
I also like most of Matt’s ideas too – during the Great Depression, it was illegal to foreclose if the borrower was still employed or could make other arrangements to pay a monthly fee. (eg “rent”) And why should late fees etc. be so crushing? Not saying there should be no late fee – but the late fee shouldn’t be anymore than you could make in another financial instrument for the same period of lateness for the same amount of money…… Make sense?
Jaroslaw
let me clarify about exploitation- there are exceptions where people can make great sums of money – perhaps someone has a particularly novel new product or idea etc. But for the majority, one either contracts out to Jamaica, China (exploiting foreign labor for as little as 19 cents an hour) or doesn’t pay health insurance to employees here at home etc. Yes I understand the competitors don’t pay health insurance either, but as a society we can’t afford 99c double cheeseburgers at the cost of our own health by eating them and the people who are employed serving them who don’t have insurance.
Matt
Charles,
They are suppose to be our voice. How would you feel if Nancy Pelosi all of a sudden said, You know what my constituents want gay marriage but for the good of the country I think it shouldn’t happen? Would that be ok? These people are our voice. They aren’t there own.