Defeat the Cram Down Bullshit Bailout Bill: Emergency Economic Stabilization Act of 2008

Posted on October 2, 2008. Filed under: Blogroll, Comedy, Economics, Investments, Life, Links, Music, People, Politics, Quotations, Rants, Raves, Regulations, Taxes, Video | Tags: , , , , , , , , , , , , , , |

I am still urging all conservatives and libertarians in Congress, Democrats and Republicans, to defeat the Bailout Bill now known as the Emergency Economic Stabilization Act of 2008. 

 Any Senator or Representative that votes for this should be defeated in November.

The bill is just business as usual.

Instead of focusing on the immediate financial crisis, the American elites in Washington have added a long list of provisions that have absolutely nothing whatsoever to do with the financial crisis.

Our so called “leaders ” in Washington are simply not leveling with the American people, shame on them.

Instead of focusing on what the American people will accept, they simply ignore their constituents–the arrogance of incumbency.

Bailout Bill vs. Rescue Economy American People (REAP) Law

They do so at their peril.

Just say no!

If they have time to lard up the bailout bill with earmarks, then we have the time to place the blame on those who really caused the problem–the defenders and protectors of Fannie Mae and Freddie Mac in Congress.

Shocking Video Unearthed Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis

 

Explosive Video, Fannie Mae CEO calling Obama and the Dems the “Family” and “Conscience” of Fannie Mae

 

Obama and Democrats are Responsible: Fannie Mae/Freddie Mac

 

Advice

 

Rein

 

Empty Words

 

Time for the FBI to arrest those at Fannie Mae and Freddie Mac that committed fraud and offer some of them deals if they know of any members of Congress that accepted bribes in exchange for their support.

Vote the bastards out of office in Novmember.
 

The American elites of both political parties shafted the American people once again.

Shame on them!

Any Republican or Democrat that voted for this bill will not be getting my vote.

Time for a revolt and a third party.

The Great American Sell-out (More on the BIG BAILOUT plan)

No Bailout for Jobs hit hard by trade deficit (Lou Dobbs)

Lou Dobbs – Lobbyist Using Scare Tactics to push bailout!

Lou Dobbs – Big Bailout Boondoggle

 

LOL

 

Subprime crisis explanation by The Long Johns

 

Let Wall Street Burn…

 

Government BAILOUT….

 

Background Articles and Videos

Senate bailout bill keeps growing

“…To calm voters fearful of bank failures, the $100,000 cap on federal insurance for deposits would also be raised to $250,000—a concession backed by both parties but also aimed at community banks who can be helpful in building small town support for the larger bill.

With each permutation, the bill has steadily grown in size. Treasury’s initial plan was about three pages long. The House version, which failed, stretched to 110. The Senate substitute now runs over 450 pages. And tucked away in the tax provisions is a landmark health care provision demanding that insurance companies provide coverage for mental health treatment—such as hospitalization—on parity with physical illnesses.

Really a bill onto itself, the mental health parity measure has been a bipartisan priority for top lawmakers in both chambers but has stalled because of disagreements again over how to pay for its estimated $3.8 billion five-year cost. In the current climate, that seems to be no longer a stumbling block, and if the Treasury plan becomes law, it will also. …” 

http://news.yahoo.com/s/politico/20081001/pl_politico/14161

 

List of Earmarks, etc…   [Rich Lowry]

…apparently in the bailout bill (based on a list going around). Pretty outrageous. Isn’t this in John McCain’s wheelhouse?

New Tax earmarks in Bailout bill

– Film and Television Productions (Sec. 502)

– Wooden Arrows designed for use by children (Sec. 503)

– 6 page package of earmarks for litigants in the 1989 Exxon Valdez incident, Alaska (Sec. 504)      

Tax earmark “extenders” in the bailout bill.

– Virgin Island and Puerto Rican Rum (Section 308)

– American Samoa (Sec. 309)

– Mine Rescue Teams (Sec. 310)

– Mine Safety Equipment (Sec. 311)

– Domestic Production Activities in Puerto Rico (Sec. 312)

– Indian Tribes (Sec. 314, 315)

– Railroads (Sec. 316)

– Auto Racing Tracks (317)

– District of Columbia  (Sec. 322)

– Wool Research (Sec. 325)

http://corner.nationalreview.com/post/?q=M2M5NzllNmNlODkyNmU2NzU5NTgwYmIxMDBkNTVmMzg=

McCain will support earmark-stuffed Senate Crap Sandwich; Obama: Me, too!

By Michelle Malkin
“…McCain has made his battle against earmarks the hallmark of his campaign. He couldn’t stop talking about them for the first half of the last week’s first presidential debate.The Senate bill is stuffed with earmarks to grease its passage. I repeat:

– Film and Television Productions (Sec. 502)

– Wooden Arrows designed for use by children (Sec. 503)

– 6 page package of earmarks for litigants in the 1989 Exxon Valdez incident, Alaska (Sec. 504)

Tax earmark “extenders” in the bailout bill.

– Virgin Island and Puerto Rican Rum (Section 308)

– American Samoa (Sec. 309)

– Mine Rescue Teams (Sec. 310)

– Mine Safety Equipment (Sec. 311)

– Domestic Production Activities in Puerto Rico (Sec. 312)

– Indian Tribes (Sec. 314, 315)

– Railroads (Sec. 316)

– Auto Racing Tracks (317)

– District of Columbia (Sec. 322)

– Wool Research (Sec. 325)

McCain supports them all.

Business as usual.

No earmark left behind. …”

Why I Oppose the Wall Street Bailout

Dick Armey

“…This week, Congress will vote on the largest federal bailout in history—$700 billion in spending authority to purchase the troubled assets of Wall Street’s major investment houses.  As a free market economist I unequivocally oppose this legislation because it violates the basic working tenets of free market capitalism and individual responsibility.  Equally important to me, it likely violates our Constitution and stands in direct contradiction to the founding principles of our great nation.  

Granting the Treasury broad authority to buy troubled assets from private entities poses a significant threat to taxpayers and fundamentally alters the relationship between the private economy and the federal government.  Despite the sweeping breadth of the proposed bailout, there is virtually nothing in the bill that addresses the underlying problems that created the housing bubble and the oversized and over-leveraged financial services sector that grew with it.  Taxpayers have become Wall Street’s newest financier, with little more than a promise—and a report to Congress on “regulatory modernization”—that Congress will not let this happen again. …”
 
 
 

 

“…Despite the publicly-voiced concerns of many of us – both in and out of government – about Fannie and Freddie, the GSEs’ defenders in Congress turned a blind eye to the inherent weaknesses in the system.  The financial system held together as long as housing prices continued to increase.  As the housing market weakened, it became evident that the value of mortgages underlying the new financial instruments was too low to meet the necessary financial obligations.  As the true market value became evident, the market for these mortgage backed securities (originated by Fannie and Freddie) dried up as investors triggered a flight to safety.  Considering the fact that many of these firms were leveraged by as much as 30-to-1, the retrenchment was severe.The large government intervention that Congress is proposing would create changes whose effects will linger long into the future.  The Treasury plan would fundamentally alter the workings of the market, rewarding poorly run investment firms at the disadvantage of prudent ones, and transferring the burden of risk to the taxpayer.  At the same time, the $700 billion proposal does not offer fundamental reforms required to avoid a repeat of the current problem.  Congress has been reluctant to reform the government sponsored enterprises that lie at the heart of today’s troubled markets, and there is little to suggest their resolve to pass the necessary reforms will increase in the wake of a bailout.

     
 
 

 

In addition to the moral hazard inherent in the proposal, the plan makes it difficult to move resources to more highly valued uses.  Successful firms that may have been in a position to acquire troubled firms would no longer have a market advantage allowing them to do so; instead, entities that were struggling would now be shored up and competing on equal footing with their more efficient competitors. The financial services sector is over-leveraged and too large.  Winding this down will, indeed, impose painful costs.  Congress is seeking to explicitly transfer these costs to taxpayers, who will underwrite a new government plan devised to correct the old government plans.  Taxpayers are being called upon to make a significant sacrifice, with little evidence to suggest that the troubled markets will be settled.  In fact, there is evidence to suggest that the latest intervention will delay the required adjustments in the financial services sector.  The $700 billion intervention is just the largest, latest in a series of failed bailouts with no guarantee that the desired outcome will even be achieved. …” 

 

 

 

 

SUMMARY OF THE “EMERGENCY ECONOMIC STABILIZATION ACT OF 2008”

I. Stabilizing the Economy

The Emergency Economic Stabilization Act of 2008 (EESA) provides up to $700 billion to the

Secretary of the Treasury to buy mortgages and other assets that are clogging the balance sheets

of financial institutions and making it difficult for working families, small businesses, and other

companies to access credit, which is vital to a strong and stable economy. EESA also establishes

a program that would allow companies to insure their troubled assets.

II. Homeownership Preservation 

EESA requires the Treasury to modify troubled loans – many the result of predatory lending

practices – wherever possible to help American families keep their homes. It also directs other

federal agencies to modify loans that they own or control. Finally, it improves the

HOPE for Homeowners program by expanding eligibility and increasing the tools available to the

III. Taxpayer Protection

Taxpayers should not be expected to pay for Wall Street’s mistakes. The legislation requires

companies that sell some of their bad assets to the government to provide warrants so that

taxpayers will benefit from any future growth these companies may experience as a result of

participation in this program. The legislation also requires the President to submit legislation

that would cover any losses to taxpayers resulting from this program from financial institutions.

IV. No Windfalls for Executives

Executives who made bad decisions should not be allowed to dump their bad assets on the

government, and then walk away with millions of dollars in bonuses. In order to participate in

this program, companies will lose certain tax benefits and, in some cases, must limit executive

pay. In addition, the bill limits “golden parachutes” and requires that unearned bonuses be

returned. 

V. Strong Oversight

Rather than giving the Treasury all the funds at once, the legislation gives the Treasury $250

billion immediately, then requires the President to certify that additional funds are needed ($100

billion, then $350 billion subject to Congressional disapproval). The Treasury must report on the

use of the funds and the progress in addressing the crisis. EESA also establishes an Oversight

Board so that the Treasury cannot act in an arbitrary manner. It also establishes a special

inspector general to protect against waste, fraud and abuse.

 

 EMERGENCY ECONOMIC STABILIZATION ACT OF 2008

Oct 1, 2008 –

EMERGENCY ECONOMIC STABILIZATION ACT OF 2008
Oct. 1, 2008—
The latest version of package legislation which includes the Emergency Economic Stabilization Act can be found here: Click link
For one-page summary of the EESA: Click link
For section-by-section analysis of the EESA: Click link 
 
 
 

Emergency Economic Stabilization Act of 2008

“…OpenCongress Summary:The bailout would allow the government to use up to $700 billion in taxpayer money – $350 billion initially, and the rest with Congress’s approval – to buy troubled assets from struggling financial institutions. It would also establish a program whereby the government would offer insurance to companies for their assets rather than buying them. Additionally, the bill establishes “appropriate standards” for the compensation of executives at companies that sell assets to the government, creates a congressional oversight panel and requires the government take equity stakes in bailed out companies. …”
 
 
 

Emergency Economic Stabilization Act of 2008 

Dick Armey speaks at ALEC Part 1

 

Dick Armey speaks at ALEC Part 2

 

Dick Armey speaks at ALEC Part 3

 

LOL

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Bailout Bill vs. Rescue Economy American People (REAP) Law

Posted on October 1, 2008. Filed under: Blogroll, Economics, Investments, Life, Links, Politics, Raves, Regulations, Resources, Taxes, Video | Tags: , , , , , , , , , , , , , |

Charlie Rose – Al Hunt & Floyd Norris

Bush Implores Congress to Act to Rescue Markets

 

Financial meltdown timeline

 

“Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously.”

~ 2 Corinthians 9:6

Forget about Treasury Secretary Paulson’s bailout bill that Congress voted down on Monday.
The Treasury does not need to purchase from financial institutions assets whose current value is temporarily depressed due to the decline in real estate prices. There are alternative courses of action to get liquidity or capital to financial institutions whose capital structure is impaired. Either loan money or invest funds in the financial institutions for up to five years. Let the financial institutions keep and sell the assets themselves when real estate prices recover. Then have the financial institutions repay the loan or buy back the preferred stock. There is no need for the Federal Government to purchase these assets. I know it, the American people know, and so does the Treasury Secretary and the President.

What will the American people support to rescue the economy?

1. Increase the Federal Deposit Insurance Corporation (FDIC) from $100,000 to $250,000.

2. Increase the Securities Investor Protection Corporation insured ceiling from $500,000 to $1,000,000 per customer and increase the maximum of $100,000 for cash claims to $250,000.

3. Decrease the capital gains tax from 15% to 0%.

4. Repeal the mark to market accounting rules.

5. Allow financial institutions facing severe liquidity problems to borrow funds from the Federal Reserve for up to five years at an interest rate equal to prime plus three percent to encourage early repayment of the loan.

The greed, arrogance and stupidity (GAS) of the American elites in Washington and Wall Street needs to stop.

The American people no longer trust the American elites of both political parties and have lost confidence in their ability to either tell the truth or understand what urgently needs to be done.

 

Background Articles and Videos 

FDIC Insurance Explained

FDIC Insurance Fund Under Strain

 

FDIC

http://www.fdic.gov/

 

 

 

Federal Deposit Insurance Corporation (FDIC)

The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation created by the Glass-Steagall Act of 1933. It provides deposit insurance which guarantees the safety of checking and savings deposits in member banks, currently up to $100,000 per depositor per bank. The vast number of bank failures in the Great Depression spurred the United States Congress to create an institution to guarantee deposits held by commercial banks, inspired by the Commonwealth of Massachusetts and its Depositors Insurance Fund (DIF).

The FDIC insures accounts at different banks separately. For example, a person with accounts at two separate banks (not merely branches of the same bank) can keep $100,000 in each account and be insured for the total of $200,000. Also, accounts in different ownerships (such as beneficial ownership, trusts, and joint accounts) are considered separately for the $100,000 insurance limit. The Federal Deposit Insurance Reform Act of 2005 raised the amount of insurance for an Individual Retirement Account to $250,000. …”

“…Insurance requirements

To receive this benefit, member banks must follow certain liquidity and reserve requirements. Banks are classified in five groups according to their risk-based capital ratio:

  • Well capitalized: 10% or higher
  • Adequately capitalized: 8% or higher
  • Undercapitalized: less than 8%
  • Significantly undercapitalized: less than 6%
  • Critically undercapitalized: less than 2%

When a bank becomes undercapitalized the FDIC issues a warning to the bank. When the number drops below 6% the FDIC can change management and force the bank to take other corrective action. When the bank becomes critically undercapitalized the FDIC declares the bank insolvent and can take over management of the bank. …”

http://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation 

 

Securities Investor Protection Corporation

“The Securities Investor Protection Corporation (SIPC) is a federally mandated non-profit corporation in the United States that protects securities investors from harm if a broker/dealer defaults. Investors are not insured for any potential loss while invested in the market.

SIPC was created by the 1970 Securities Investor Protection Act, 15 U.S.C. § 78aaa et seq, but it is not a government agency; rather, it is a membership corporation funded by its members.

SIPC serves two primary roles in the event that a broker-dealer fails. First, SIPC acts to organize the distribution of customer cash and securities to investors. Second, to the extent a customer’s cash and/or securities are unavailable, SIPC provides insurance coverage up to $500,000 of the customer’s net equity balance including up to $100,000 in cash. …”

http://en.wikipedia.org/wiki/Securities_Investor_Protection_Corporation

 

Clark SIPC Explained

Securities Investor Protection Corporation

http://www.sipc.org/

 

Capital gains tax

“…A capital gains tax (abbreviated: CGT) is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.

For equities, an example of a popular and liquid asset, each national or state legislation, have a large array of fiscal obligations that must be respected regarding capital gains. Taxes are charged by the state over the transactions, dividends and capital gains on the stock market. However, these fiscal obligations may vary from jurisdiction to jurisdiction because, among other reasons, it could be assumed that taxation is already incorporated into the stock price through the different taxes companies pay to the state, or that tax free stock market operations are useful to boost economic growth.

http://en.wikipedia.org/wiki/Capital_gains_tax

 

Capital gains tax in the United States

“In the United States, individuals and corporations pay income tax on the net total of all their capital gains just as they do on other sorts of income. Capital gains are generally taxed at a preferential rate in comparison to ordinary income. This is intended to provide incentives for investors to make capital investments and to fund entrepreneurial activity. The amount an investor is taxed depends on both his or her tax bracket, and the amount of time the investment was held before being sold. Short-term capital gains are taxed at the investor’s ordinary income tax rate, and are defined as investments held for a year or less before being sold. Long-term capital gains, which apply to assets held for more than one year, are taxed at a lower rate than short-term gains. In 2003, this rate was reduced to 15%, and to 5% for individuals in the lowest two income tax brackets. These reduced tax rates were passed with a sunset provision and are effective through 2011; if they are not extended before that time, they will expire and revert to the rates in effect before 2003, which were generally 20%.

The reduced 15% tax rate on eligible dividends and capital gains, previously scheduled to expire in 2008, was extended through 2010 as a result of the Tax Reconciliation Act signed into law by President George W. Bush on May 17, 2006. As a result:

  • In 2008, 2009, and 2010, the tax rate on eligible dividends and long term capital gains is 0% for those in the 10% and 15% income tax brackets.
  • After 2010, dividends will be taxed at the taxpayer’s ordinary income tax rate, regardless of his or her tax bracket.
  • After 2010, the long-term capital gains tax rate will be 20% (10% for taxpayers in the 15% tax bracket).
  • After 2010, the qualified five-year 18% capital gains rate (8% for taxpayers in the 15% tax bracket) will be reinstated.

Technically, a “cost basis” is used, rather than the simple purchase price, to determine the taxable amount of the gain. The cost basis is the original purchase price, adjusted for various things including additional improvements or investments, taxes paid on dividends, certain fees, and depreciation.

The United States is unlike other countries in that its citizens are subject to U.S. tax on their worldwide income no matter where in the world they reside. U.S. citizens therefore find it difficult to take advantage of personal tax havens. Although there are some offshore bank accounts that advertise as tax havens, U.S. law requires reporting of income from those accounts and failure to do so constitutes tax evasion. …”

http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States

 

Capital Gains Tax

 

Mark to Market

“In accounting and finance, mark to market is the act of assigning a value to a position held in a financial instrument based on the current market price for the instrument or similar instruments. For example, the final value of a futures contract that expires in 9 months will not be known until it expires. If it is marked to market, for accounting purposes it is assigned the value that it would fetch in the open market currently. …”

Simple example

Example: If an investor owns 100 shares of a stock purchased for $40 per share, and that stock now trades at $60, the “mark-to-market” value of the shares is equal to (100 shares × $60), or $6,000, whereas the book value might (depending on the accounting principles used) only equal $4,000.

Similarly, if the stock falls to $30, the mark-to-market value is $3,000 and the investor has lost $1,000 of the original investment. If the stock was purchased on margin, this might trigger a margin call and the investor would have to come up with an amount sufficient to meet the margin requirements for his account.”

“…Emergency Economic Stabilization Act of 2008

Section 132 of the proposed Emergency Economic Stabilization Act of 2008, titled “Authority to Suspend Mark-to-Market Accounting” restates the Securities and Exchange Commission’s authority to suspend the application of FAS 157 if the SEC determines that it is in the public interest and protects investors.

Section 133 of the proposed Act, titled “Study on Mark-to-Market Accounting,” requires the SEC, in consultation with the Federal Reserve Board and the Department of the Treasury, to conduct a study on mark-to-market accounting standards as provided in FAS 157, including its effects on balance sheets, impact on the quality of financial information, and other matters, and to report to Congress within 90 days on its findings.[4] …”

http://en.wikipedia.org/wiki/Mark_to_market

 

SEC gives banks more leeway on mark-to-market

“U.S. securities regulators on Tuesday gave the financial industry a reprieve from marking hard-to-value assets down to fire sale prices, throwing a lifeline to an industry beset by strained credit markets and the latest round of bank failures.

The U.S. stock market added to gains on the news, in hopes that regulators’ new interpretation of fair value, or mark-to-market, accounting rules, will slow or reverse the heavy flow of mortgage-related losses on banks’ balance sheets.

In the new guidance, first reported by Reuters, the U.S. Securities and Exchange Commission reminded financial services firms that they don’t need to use fire sale prices when evaluating their hard to price assets.

“This is a significant first step and adds stability, confidence, and liquidity within the capital markets,” said Steve Bartlett, president and chief executive of The Financial Services Roundtable. “By clarifying how to treat assets in an uncertain market, the SEC is continuing to provide transparency to investors and helping institutions to provide credit in periods of market stress.” …”

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20080930&id=9211897

 

Special Report Mark To Market

http://www.youtube.com/watch?v=GL5s1Q7OxlY

 

Subprime Crisis: The Role of Off Balance Sheet Entities

 

Subprime: The Role of Off Balance Sheet Entitities Part 2

 

Subprime: Is Mark to Market Accounting Marking Things Worse


 

Newt Gingrich Bailout Proposal – Part 1

 

Newt Gingrich Bailout Proposal – Part 2


 

Heritage’s JD Foster Explains the Credit Crisis

Three Things to Know About Fannie Mae and Freddie Mac

1) Federal action is needed to restore confidence.
2) The companies are creations of big-government policies.
3) Breaking up the companies is long-term fix.

 

Wall Streets Day of Reckoning: Turmoil in the Global Market

 

Wall Street’s Day of Reckoning: The Fannie & Freddie Bailout

 

Richard Herring on What’s Next for Investment Banks

 

Franklin Allen on Lessons from the Subprime Crisis

 

LOL

Subprime crisis explanation by The Long Johns

 

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Obama Bombs Bailout Meeting–Whitehouse Still Standing–McCain Saved By House Republicans

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