The bailout plan that was proposed last week to purchases defaulting mortgages using up to $700 billion from the US Treasury is being debated this week. Newt Gingrich in an interview today on NPR came out firmly against the idea of a bailout.
Much of the partisan debate is about how to add to the bill, how to limit executive pay, how to help families with foreclosures, whether to add subprime mortages, how to oversee the bailout, how to help struggling homeowners.
Newt Gingrich calls for a debate first on whether this bailout is necessary and wise.
The market response has not been so good so far. Stocks down, bond market down, oil up. Adding $700 billion to the economy must have an inflationary impact.
I am generally in favor of this move, but it seems to me that the debate needs to be held on the plan's merits, on other options, and on the specifics of the debt to be purchased, the oversight, limits, and control needed over the new agency.
Other issues need to be off the table with this bill.
Here is the link to Gingrich's remarks, on the merits of the plan.
UPDATE 9/23 - Rep Barney Frank said "We don't have a choice now of debating whether this is a good or a bad thing."
What else should they debate?
Whether corporate pay limitations should be added to the bill???
They only want to discuss whether to add legislation to the bill, not whether the bill needs to be approved.
It seems to me that this debate has not focused on the right topics and has not considered the full implications and alternatives.
I am leaning in favor of the idea of the bailout plan, but I would be hesitant to vote for it so quickly with so little real discussion, without fully understanding the impact of an additional $1 trillion. I really do not trust the people making the decision.
Why do we have to do this? What are the consequences of doing this? of not doing this? What are other choices?
Richard Smith
American Acceptance Mortgage, Inc
Toll Free 888-474-9920 Cell 423-280-0345
Home financing in Tennessee, Georgia, and Alabama.
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I'm against the bailout its just like Gingrich said Paulson has been wrong for more than a year. We have a problem that cannot be fixed with money. These large banks must fail in order for the market to correct. The government is giving these companies cash and the companies are giving the government the same loans that caused them to need a bail out. How does thats solve anything? Thanks for the link.
Hi Richard;
Very nice post and very informative. I thank you for sharing..............
Anthony
The thing that Gingrich said that bothers me, it the idea that the Treasury might purchase assets at a premium rather than a discount.
MSNBC indicates an agreement is close.
Include mortgage help for struggling homeowners (what does that mean?), deny provision limiting executive pay, deny bankruptcy judges to lower mortgage payments, possibly include other debt than mortgage debt, possibly include stock warrants to the government, include oversight board, differences over how long the program would last.
It is a scary proposition.
http://www.msnbc.msn.com/id/26835745/
Richard
Richard - I have to admit that I am not convinced that it is a good idea to use taxpayer dollars to bail out big banks. I realize that it is a very big picture, and that I may not understand all of the ramifications of Not bailing them out. Thanks for the link.
I think the Feds have no choice but to buy them at a premium. Requiring the banks to write down the value before the transfer would result in more huge losses.
While I'm thinking, why don't we add another $100B to that and divide it equally to every adult. They could tax it and require mortgages to be paid down, Federal debt paid. We could just start all over again with a booming economy.
Republicans introduced a new theory last night but I didn't get a chance to digest it. Have you?
Rick,
I did study it a little - It really does not address fundamental problems, I don't think - no foreclosure relief, nothing to help homeowners, probably too little to impact liquidity.
It is a response that leaves room for later action. The $700 billion does not leave any more ammunition.
The Republican offers tax incentive for the banks to respond. I will likely post on it today, but the developments over the day will probably change things before I can post.
Interest times.
Richard