IMF Scared Congress May Cause Another Crash

International Monetary Fund Managing Director Christine Lagarde is warning Congress that the debt ceiling must be raised. Immediately.

“The government shutdown is bad enough, but failure to raise the debt ceiling would be far worse, and could very seriously damage not only the U.S. economy, but the entire global economy,” Lagarde said in a speech in Washington to students at George Washington University. “So it is ‘mission-critical’ that this be resolved as soon as possible.”

The Treasury Department is worried that not raising the debt ceiling would cause an international credit freeze.

The United States has never defaulted on its obligations, and the U. S. dollar and Treasury securities are at the center of the international financial system. A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse.

The last time there was an international credit freeze was when Lehman Brothers declared bankruptcy. The result was the worst economic crisis since the Great Depression. The TARP program was created to get money moving in the banking system again. Republicans in Congress may start another crash if they don't give President Barack Obama a clean CR bill to sign.

Seriously, Erin Burnett

Cenk Uygur takes Erin Burnett to task for her smug on-air report about the Occupy Wall Street protest. Burnett used to worked for Goldman Sachs and the horrible CNBC. Her love of Wall Street is not surprising. However, it is shocking when the Wall Street friendly Forbes took down Burnett's coverage of Occupy Wall Street.

Erin Burnett was way too dismissive and condescending of these protesters. Who proclaimed that only people who live in caves and don’t use bank machines can show up to protest on Wall Street?

Burnett comes across as the Rachel McAdams in Mean Girls. Seriously, should I care that I'm more popular than you.

Why Goldman Sachs is Not A Job Creator

Republicans will argue that corporations must get tax breaks and cuts because they are the job creators. The media should ask these same Republicans what they think about Goldman Sachs' upcoming layoffs.

Goldman Sachs (GS: 132.53, +3.27, +2.53%) may lay off as many as 230 employees, according to a filing with the New York State Department of Labor.

The filing dated June 29 cites economic reasons for the potential layoffs, which could begin in late September and extend through March 31, 2012.

State law requires that businesses with 50 or more employees notify the Labor Department when significant layoffs are planned. In the filing, the job losses are described as a “plant layoff.”

Goldman Sachs report 90 percent increase in profits in 2010. The Securities and Exchange Commission charged Goldman Sachs with $1 billion in defrauding investors last year. 953 Goldman Sachs employees received $1 million or more bonuses after receiving bailout money. I am willing to bet those Goldman Sachs employees that received huge bonuses will not get laid off.

Why Geither & Obama Econ Policies Aren't Progressive

Neil Barofsky was the inspector general of the Troubled Asset Relief Program from 2008 until March 30, 2011. Barofsky declared TARP a "failure." Barofsky accused Sec. of Treasury Tim Geithner of refusing to protect homeowners and reform financial institutions. These accusations are coming from someone who was in charge of oversight of TARP.

Treasury Secretary Timothy Geithner has acknowledged that the program "won't come close" to fulfilling its original expectations, that its incentives are not "powerful enough" and that the mortgage servicers are "still doing a terribly inadequate job." But Treasury officials refuse to address these shortfalls. Instead they continue to stubbornly maintain that the program is a success and needs no material change, effectively assuring that Treasury's most specific Main Street promise will not be honored.

The "Main Street" promise is to keep Americans from losing their homes. Geithner and President Obama won't lift a finger to help homeowners. They will support the Federal Reserve buy toxic mortgages from banks. Americans are being forced into homelessness by banks setting up rocket docket courts around the country.

Geithner has also allowed banks to repay meney owed to TARP by tapping into the small bussiness fund. Banks are repaying money owed with taxpayer money meant to be used to give loans to small businesses. Small businesses end up not getting the loans they desperately need.

The Obama administration is a DINO administration. Americans are suffering and their only priority is protecting financial institutions responsible for the 2008 crash.

TARP Making Profit: True

This is bound to drive Republicans using the "Obama is a socialist" attack. Politifact checked President Obama's statement that the federal government made a profit off the loan money being repaid by banks.

"Several financial institutions are set to pay back $68 billion to taxpayers," he said. "And while we know that we will not escape the worst financial crisis in decades without some losses to taxpayers, it's worth noting that in the first round of repayments from these companies the government has actually turned a profit."

Politifact found the answer to be completely true.



The ten major companiesd are repaying the Treasury Department $1.8 billion in paid dividends from prefered stocks.The short answer is the Treasury became a shareholder and the companies are now repaying with profits from shares. 600 companies have paticipated in stocks and the federal government has received $4.5 billion.

The treasury borrowed money for the TARP loans at a low interest. The loans were less than the returning dividend payments. Simple math equates that to a profit. The federal government has warrants to by stocks as these companies start to rebound. The government would get in as the stock goes up. The Fed would buy enough stocks to boost the price and makes the stocks desirable for investors. The Fed gets out when the stock peaks. More potential profit.

I love how the Heritage Foundation attempts to spin this against Obama.

David John, a senior research fellow at the conservative Heritage Foundation, said that while it's accurate to say the government is turning a profit on these specific transactions, it was so costly to create the TARP that "you can't say the overall program is a money-maker."

John recently wrote a paper at the Heritage Foundation calling for "Allowing American workers to save and invest a portion of their income in accounts." That is the 2005 DOA Bush plan to have people invest money that would be going into Social Security, instead, into the stock market. Conservatives have been trying to kill Social Security by defunding the program.

Other experts disagree with John's economic on TARP. Short answer: the federal government will make a profit.

Still, the public too often tagged TARP as a bailout, said John Hall, a spokesman for the American Bankers Association.

"It's as if people thought money was handed out to banks," Hall said. "It wasn't. And it drove us nuts. The government has turned a profit. It made money plus some."

Bank analyst Bert Ely said while the government may end up losing money on investments in some financial firms, it's likely the entirety of the bank portion of the TARP will ultimately turn a profit.

The 5 percent paid in dividends on preferred stock purchased by the Treasury will certainly outpace the interest rate on money borrowed to finance the program, he said. And the warrants could also prove profitable.

What are conservative going to call Obama if the TARP plan succeeds? Successful Socialist has a nice ring but not a lot of political punch.

TARP Money Being Repayed

Derek Thompson is correct. President Obama should get credit for the TARP gamble.

Half a year ago, our financial system was in catastrophe, and the debate was over how much money it would take to bail them out, or even take them over. Today, the biggest banks are -- or at least appear to be -- on stable footing, and the debate is over how much TARP money they will be allowed to give back. To be clear, this is a statement of confidence from the banks, not evidence that they will be OK in four or six months. But it is still a remarkable turn of events, one we can credit to the Obama administration's overall strategy of ... what again?

The New York Times reports Morgan Stanley, Northern Trust, JPMorgan Chase, Goldman Sachs, American Express, Bank of New York Mellon, the BB&T Corporation, Capital One Financial, State Street Corporation and US Bancorp will start repaying TARP funds. Obama said the taxpayer "actually turned a profit."

“I also want to say: the return of these funds does not provide forgiveness for past excesses or permission for future misdeeds,” Mr. Obama said. “It is critical that as our country emerges from this period of crisis, that we learn its lessons; that those who seek reward do not take reckless risk; that short-term gains are not pursued without regard for long-term consequences.”

The conservative stimulus plan: Rush Limbaugh and Hugh Hewitt are calling on Americans to boycott General Motors. Limbaugh's and Hewitt's plan is to bankrupt an American company, put American workers out of jobs and have the taxpayers lose money for attempting to bail GM out. Limbaugh and Hewitt showed they don't care about fiscal discipline kick-starting the economy. They just want to see Obama fail.

Rudy's Populist Message

I missed Rudy Giuliani. He was a source an endless comedy material for this blog. Rudy boldly predicted he would win Florida. The Sarasota County Republican Party moved a Giuliani campaign stop from the Sailor Circus Arena because they (rightfully) feared the candidate could be lampooned."

My two favorite Rudy moments.

Rudy lapping his campaign bus on the Daytona International Speedway. Look closely and you can see Rudy in the bus waving.



Nothing screams presidential then Rudy's infamous Christmas ads. Rudy woos voters by promising Christmas gifts of fruitcakes and strict-constructionist judges. Every family child wants his or her very own Antonin Scalia.



Rudy returns to the political landscape with a message that will lead the GOP out of the political wilderness. Rudy's crafts a message is that will resonate with voters during these difficult economic times. Rudy's message is tax dollars for CEO bonuses is good for the economy.

"If you somehow take that bonus out of the economy, it really will create unemployment," he said on CNN's "American Morning." "It means less spending in restaurants, less spending in department stores, so everything has an impact."

That should play well in middle America.

It's America Man

The first scene from the brilliant television show The Wire explains the stupidity of the government bailout out AIG. AIG in turn used the money to reward bonuses to the executives that helped sink the company.

Det. Jimmy McNulty questions a young black man about the murder of Snot Boogie.

McNulty: Every Friday night your boys would shot crap, right? And every Friday night you pal Snot Boogie, he'll wait until there was cash on the ground and then he would grab the money and run away?

Young black man shakes his head yes.

McNulty: You let him do that?

Black male: I mean we catch him and beat his ass but ain't nobody ever go past that.

McNulty: I got to ask you. If every time Snot Boogie would grab the money and run away why did you even let him in the game.

Black male: What?

McNulty: If Snot Boogie always stole the money why you let him play?

Black male: Got to. This America man.

AIG waited until the federal government gave out $170 million in bailout money. AIG rewarded executives with $165 million in bonuses. It's America man.

The Federal Reserve owns 80 percent of AIG's stock. I haven't heard anyone about using the majority stock ownership to leverage AIG. That is a better option than Harry Reid's idea of taxing AIG bonus money.

Sens. Ron Wyden (D) and Olympia Snowe (R) wrote an amendment to the TARP bill that would "clawback" any bonus money over $100,000. CEOs voiced their disapproval. Republicans backed the business community and Democrats backed out down under the pretense of "legal concerns." The clawback amendment was killed. It's America man.

Bailout 2.0

John Marshall interviews Nobel prize-winning economist John Stiglitz explains Barack Obama's bailout plan. Stiglitz wants greater oversight and punishment to the bankers for not playing by the rules.

Stiglitz calls the government owners of bailout banks with "no control." It is a foolish policy to give billions to banks and then not have a say on how that money is spent. A perfect example is lending institutions using bailout money to lobby for more bailout money. I would laugh if the economic situation wasn't so dire.

Sec of Treasury Tim Geithner unveiled the Financial Stability Plan.

The core program elements include:

A new Capital Assistance Program to help ensure that our banking institutions have sufficient capital to withstand the challenges ahead, paired with a supervisory process to produce a more consistent and forward-looking assessment of the risks on banks' balance sheets and their potential capital needs.
A new Public-Private Investment Fund on an initial scale of up to $500 billion, with the potential to expand up to $1 trillion, to catalyze the removal of legacy assets from the balance sheets of financial institutions. This fund will combine public and private capital with government financing to help free up capital to support new lending.
A new Treasury and Federal Reserve initiative to dramatically expand – up to $1 trillion – the existing Term Asset-Backed Securities Lending Facility (TALF) in order to reduce credit spreads and restart the securitized credit markets that in recent years supported a substantial portion of lending to households, students, small businesses, and others.
An extension of the FDIC's Temporary Liquidity Guarantee Program to October 31, 2009.
A new framework of governance and oversight to help ensure that banks receiving funds are held responsible for appropriate use of those funds through stronger conditions on lending, dividends and executive compensation along with enhanced reporting to the public.

"Legacy assets" translates into garbage assets. I am curious how the Term Asset-Backed Securities Lending Facility will jump start lending. Banks do not want to lend and the White House needs to get credit moving. Immovable object meets the unstoppable force. The White House and banks are in for a fight.

Private capital could later replace federal government capital. What Geithner is addressing is stocks. The idea of the Treasury Department on the hook for an Enron-like company is frightening.

Our expectation is that the capital provided under the CAP will be in the form of a preferred security that is convertible into common equity, with a dividend rate to be specified and a conversion price set at a modest discount from the prevailing level of the institution's stock price up to February 9th, 2009. This security would serve as a source of "contingent" common equity, convertible solely at the issuer's option for an extended period of time.

The instrument will be designed to give banks the incentive to replace USG-provided capital with private capital or to redeem the USG capital when conditions permit. In addition, with supervisory approval, banks will be allowed to apply to exchange the existing CPP preferred stock for the new CAP instrument.

The Public-Private Investment Fund will aqquire garbage real estate assets. This is allow companies to reduce bad assets. The federal government may end up buy many forclosed homes. There could be a return when the real estate market rebounds.

The Term Asset-Backed Securities Lending Facility will provide loans for small businesses and college students. I am rather uneasy about TALF getting into credit cards. We want credit moving. Not more people in debt.

The Financial Stability Plan will have inspector general and Congressional oversight.

Going forward, the Financial Stability Plan will call for a new level of transparency, accountability and conditionality with tougher standards for firms receiving exceptional assistance. These stronger conditions were informed by recommendations made by formal oversight groups – the Congressional Oversight Panel, the Special Inspector General, and the Government Accountability Office -- as well as Congressional banking oversight leaders.

Use of government-provided capital and impact on lending

Recipients of capital provided under the CAP will be required to submit a plan for how they intend to use this capital to preserve and strengthen their lending capacity – specifically, they will commit to increase lending activities above levels relative to what would have been possible without government support. This plan will be submitted during the application process, and the Treasury Department will make these plans public upon distribution of the capital investment to the firm.

These firms must submit to Treasury monthly or quarterly reports on their lending by category. This report will also include a comparison to estimates of what their lending would have been in the absence of government support. For public companies, similar reports will be filed on an 8K simultaneous with the filing of their 10Q and 10K reports. All these reports will be put on the Treasury website.

The oversight is good. The risk is great. I'm trying to figure this out and economics is my beat. Paul Krugman doesn't know what to think. Wow.

Just a bit of complaining...

Let me preface this rant with yes, I know we need a bailout. But...

President Obama has promised to make government more open, a task which shouldn't be too difficult in the computer age where information can be digitized, indexed, and searched with querying assistants like Google. So for the bailout, Obama has launch "Recovery.gov" for government openness on how the bailout money is spent.

There's one problem, though: Recovery.gov currently contains none of that information, just a message which says "Check back after the passage of the American Recovery and Reinvestment Act to see how and where your tax dollars are spent."

How about I know what the bailout wants to do with my money beforehand?

Afterall, the government stating where the money goes beforehand could help guard the bailout bill against attacks from the seemingly anti-economy right. And not to echo their talking points, but a column about the bailout in today's Wall Street Journal that the starboard side is yammering about does have me worried.

We've looked it over, and even we can't quite believe it. There's $1 billion for Amtrak, the federal railroad that hasn't turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.

In selling the plan, President Obama has said this bill will make "dramatic investments to revive our flagging economy." Well, you be the judge. Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There's another $40 billion for broadband and electric grid development, airports and clean water projects that are arguably worthwhile priorities...

Another "stimulus" secret is that some $252 billion is for income-transfer payments -- that is, not investments that arguably help everyone, but cash or benefits to individuals for doing nothing at all. There's $81 billion for Medicaid, $36 billion for expanded unemployment benefits, $20 billion for food stamps, and $83 billion for the earned income credit for people who don't pay income tax. While some of that may be justified to help poorer Americans ride out the recession, they aren't job creators.

On the last point the WSJ makes, they are correct -- Medicare is not a "job creator". Of course, I (as well as anybody else on the left, I imagine) would argue that such social safety nets are need to keep money in American's wallets. One thing that knocked the recession of the late 1920s into the Great Depression is that money dried up -- period. People literally didn't have a cent. And when you don't have money, you can't purchase anything, so the business sector stops producing, more people lose their jobs without government benefits to fall back on, so more people have not a cent... You can see how it snowballs. Indeed, the "safety net" is no joke -- social programs help keep recessions as recessions.

But what's also needed is job creation. As far as I can see, the $30 billion going to infrastructure repairs is the bulk of the act's job creation -- and that's less than 5% of the bill's money!

And why not put the expenses for different programs in their own bill? Why do we have a 647 page recovery bill in the first place chockful of payments to different programs? While some of this I can agree with, like social programs and aid to keep Amtrak running, other items are bullshit. $650 million for digital TV conversion? Uhm, why? I know in the face of an $850 billion bill, $650 million is a drop in the bucket ... But why?

How many other needless payments are there in the bailout? Damned if I know -- Recovery.org certainly doesn't contain that information!

I haven't looked over the actual legislation documents -- congressional bills and such -- that FDR signed during his first 100 days in office, but they look like single acts; single pieces of legislation. The Civil Workers Administration act setup the CWA and what the organization was supposed to do; the Tennessee Valley Authority setup the TVA, etc. There was no lump sum -- one all encompassing recovery act that included these programs. Back during the Great Depression, we had acts meant to create jobs, provide relief, save banks, etc.

And one thing FDR was successful with doing was getting American citizens to trust the government. Indeed before FDR took office, our government provided virtually no economic protections for citizens -- and many Americans liked it that way. They were proud and didn't want the government paying for them. But FDR developed a relationship with Americans through his fireside chats, telling them about the legislation he signed and how it would help them. FDR told it straight and became a trustworthy figure.

With clusterfuck bills like the Orwellian named "American Recovery and Reinvestment Act", Obama is not following FDR's footsteps. I know people will jump on me for attacking Obama after he's only spent a week in office and he hasn't changed the culture in DC yet, but this kind of government looks the same as the government we've seen for the past two decades: complex legislation with hardly any way to check it unless you have the time to read 650 pages of Washingtonian legalese. I expected more openness from the Obama administration -- I expected better. And yeah, his inauguration is not yet a distint memory, but the Obama administration isn't going to earn the trust of the American people if it keeps this up.

Additional reading and differing opinions:

dday @ Hullabloo points out good parts of the bill, including aid to state (so they can balance budgets) and the poor.

Steve Benen points out that some Democrats do not think the bailout bill goes far enough.

Liberal Oasis points out that most economists support the bailout bill. Libertarians from the Cato Institute oppose the bill, but the last time I checked Ron Paul got .02% of the vote, so nobody gives a shit what they think.

Kevin Drum is another blogger who points out the disappointment over funding for infrastructure repairs provided by the bailout. Given that engineers have given the state of America's infrastructure a near-failing grade of D and...

...estimated that it would take a $2.2 trillion investment…over the next five years to bring it into a state of good repair.”

I think there's room for a lot more than merely $30 billion of infrastructure repair. $2.2 trillion is a hell of a lot of jobs.

Good Idea of the Day

Senator Bill Nelson is sponsoring a legislation requiring bailout recipient to report how the money is spent.

"These guys have been living high-on-the-hog and now they’re subsidizing their lifestyle with public funds,” Nelson said, citing recent reports that just five big banks distributed $17 billion in dividends to shareholders after collectively receiving $100 billion in bailout money. "This practice has got to stop."

Nelson is one of the sponsors of the Troubled Asset Relief Program Transparency Reporting Act.

SEC. 4. REPORTING AND CERTIFICATION.

(a) Report- Each recipient of emergency economic assistance shall file with the Secretary of the Treasury on a quarterly basis--

(1) a detailed accounting of how emergency economic assistance is being used, including an explanation of how such funds have been allocated to stabilize financial markets and increase the availability of credit to consumers and businesses; and

(2) a certification that--

(A) no emergency economic assistance is being used for lobbying expenditures of political contributions in violation of section 2(b); and

(B) no emergency economic assistance is being used in violation of the guidelines issued by the Secretary of Treasury under section 3(a).

(b) Public Availability- Any report or certification filed under this section shall be made publically available by Secretary of the Treasury on-line, and at no cost.

SEC. 5. PENALTIES.

(a) Use of Funds- Any person that violates section 2(b) shall be subject to a civil fine of at least $100,000 per violation.

(b) Future Funding- Any person that fails to comply with section 2(b) or the guidelines implemented under section 3 shall not be eligible to receive any future emergency economic assistance unless the Secretary of the Treasury, in consultation with the Financial Stability Oversight Board, determines that reasonable steps have been taken to bring actions into compliance with and to prevent future violations of this Act.

(c) False Report- Any person that fails to file a report or certification required under section 4 shall be subject to a civil fine of at least $100,000.

The bill is a good idea. Which means it very likely came from one of the bill's five co-sponsors.

Trickle Down Economics Not In Action

Another example that trickle down economics is a myth.

At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.

Talking Business: In Search of One Bold Stroke to Save the Banks (January 17, 2009) “Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”

Banks are not required to explain how the bailout money is being used. Lindsay Beyerstein wrote, "It's absolutely ridiculous that banks aren't required to make more loans as a condition of accepting bailout money." Congress should have written tighter requirements in the bailout bill.

The bailout was needed. Lending institutions going under would have been the economic apocalypse. Let us not kid ourselve that bankers would want to suddenly spread the wealth. That is nonsense.

Porn Bailout

In a moment that defies the laws of stupidity, pornographers Larry Flynt and Joe Frances are asking the federal government for a $5 billion bailout.

Flynt (the "Hustler" guy) and Francis (the "Girls Gone Wild" dude) are asking the government for a $5 billion bailout, claiming the adult entertainment industry has taken a huge shot to the face because of the downturn -- citing the fact that XXX DVD sales are down 22% from a year ago.

"With all this economic misery and people losing all that money, sex is the farthest thing from their mind," Flynt says. "It's time for Congress to rejuvenate the sexual appetite of America."

The adult industry is hurting. Mons Venus is one of the most profitable strip clubs in America. Last summer Mons Venus's business was down by 25 percent. I have a begrudging respect for Flynt's work as a first amendment advocate. Frances a very creepy guy and possibly guilty of sexual assault.

When I talk to Szyszka seven days later, she says she “didn’t quite realize” she was being filmed. “But I didn’t care because I was drunk and who cares?” Then she adds: “It didn’t feel good to me at all, but I was totally faking it because I was on ‘Girls Gone Wild.’”Eventually, Szyszka says, Francis told the cameraman to leave and pushed her back on the bed, undid his jeans and climbed on top of her. “I told him it hurt, and he kept doing it. And I keep telling him it hurts. I said, ‘No’ twice in the beginning, and during I started saying, ‘Oh, my god, it hurts.’ I kept telling him it hurt, but he kept going, and he said he was sorry but kissed me so I wouldn’t keep talking.”

Afterward, she says, Francis cleaned them both off with a paper towel and told her to get dressed. Then, she says, he opened the door and told the cameraman to come back, saying, “She’s not a virgin anymore.”

Nothing would make me happier than to see Frances go out of bussiness. That would be the one upside of the recession.

The Auto Industry Financing and Restructuring Act

The Auto Industry Financing and Restructuring Act passed in the House by a vote of a vote of 237-170. House Speaker Nancy Pelosi outlined the bill's goal.

On Jump Starting the Auto Industry:

“Today we are considering legislation not as life-support to sustain a dying industry, but a jump start for an industry that is essential to our country’s economic health. One in 10 American jobs is linked to the domestic auto industry, and it is a key pillar in an American manufacturing sector critical to our national security and economic competitiveness for decades to come.”

On Tough Love for the Auto Industry:

“This legislation is built on four principles and actually comes down to a question of tough love. Tough love for an industry whose success is essential to our economic success, whose jobs are important to our workforce, whose innovation is essential to our progress, and whose manufacturing, technological, and industrial base is also essential to our national security.”

On Taxpayer Protections in the Legislation:

“When we ask taxpayers to put up money to fund this restructuring, we must have accountability to the American people. The President will designate a ‘car czar’ to oversee the industry’s restructuring. The taxpayers get a return on their investment or are first in line to be repaid.”

On Auto Executives:

“We will soon see in a matter of weeks if the executive suites in Detroit are willing to make a choice. Certainly there needs to be retooling of the plants and renegotiating of the contracts. There may have to be reconsideration of the management of these companies if they cannot live up to the standard of this legislation and prove themselves worthy of the taxpayers’ dollar that is being placed there.”

Bailout Bill Passes in the Senate

The Senate passed the bailout bill 74-25. Barack Obama and John McCain voted the Senate bailout package. In the Senate bill, the Federal Deposit Insurance Corporation has been given the authority to raise deposit insurance from $100,000 to $250,000. The FDIC insures banks.Homeowner's insurance or mortgages will not be covered. The problem is this doesn't discourage banks from driving up more debt. What this allows is wealthy people to put $250,000 into different banks. Each account is insured for $250,000.

The Senate bill was filled with amendments.

The approximately $150 billion in new tax breaks, which offer incentives for the use of renewable energy and relieve 24 million households from an estimated $65 billion alternative-minimum tax scheduled to take effect this year, would be offset by only about $40 billion in spending cuts or tax increases elsewhere.

A freeze was placed on the Alternative Minimum Tax. I wonder if the bailout package addresses middle class people needlessly being taxed under AMT. It is time for the ATM to be indexed to inflation.

Side note:

The presence in the Senate of both presidential candidates in the final weeks of the campaign gave weight to the moment. The political tension was clear as Senator Barack Obama walked to the Republican side of the aisle to greet John McCain, who offered a chilly look and a brief return handshake.

McCain really is behaving like a child.

McCain & Palin CBS Disaster

John McCain foolishly blew off David Letterman. McCain suspended his campaign. The problem was he was still campaigning. The Maverick did an interview with CBS News' Katie Couric. Pissing off a late nite talk show host with a huge audience is staggeringly stupid. Only an idiot would do another interview with the same network, at the time of the cancelled interview and not expect Letterman to find out.



Letterman brought Keith Olbermann on to fill McCain's place. The undecided voters tuned in to watch McCain got a noted lefty pundit. The biggest asset to Barack Obama's campaign is McCain's blunders.



McCain personally called Letterman and told him he was racing to the airport. Letterman showed a live feed of McCain being interviewed by Katie Couric.



Obama made a bipartisan effort with John McCain to make a joint statement. McCain responded by rushing out and announcing suspending the campaign. McCain did the Katie Couric interview after the announcement. Campaign offices are still open. The bailout deal was already announced when McCain returned to Washington.

Sen. John McCain returned to Washington on Thursday after declaring that he has suspended his campaign, but he appeared largely detached from the flurry of negotiations on a $700 billion economic rescue package that appeared to be headed to a successful conclusion.

McCain's "Straight Talk Air" landed at National Airport just after noon, and McCain's motorcade sped toward the Senate. But by then, senior Democrats and Republicans were already announcing that a deal in principle had been reached.

Watch CBS Videos Online

McCain had to spin Governor Sarah Palin comparing the mortgage bailout to the depression.

Couric: “But isn't much of this, Senator McCain about consumer confidence?”

McCain: “Sure.”

Couric: “And using rhetoric like the Great Depression, is that the kind of language Americans need to hear right now?”

McCain: “Well, listen, I've heard language from respected people who are staring at the abyss. I've, I've heard all kinds of, of things from people. I don't think we need to scare people. …”


This campaign has officially gone off the rails. McCain used to handle the media with ease. McCain listened to anti-media former Bush campaign advisors. Millions of voters get their news from television. McCain and Palin are projecting a lack of confidence. The GOP candidates are too guarded and revert back to talking points.





Palin was asked about a bailout for the mortgage lending industry. The Governor rambles on about job creation and free trade. The bailout is to stop major lending institutions from failing. The bailout does nothing for health care. As Palin hysterically implied.

Update: Here is the transcript.

PALIN: That’s why I say, I like ever American I’m speaking with were ill about this position that we have been put in where it is the tax payers looking to bailout.

But ultimately, what the bailout does is help those who are concerned about the health care reform that is needed to help shore up the economy– Helping the — Oh, it’s got to be about job creation too. Shoring up our economy and putting it back on the right track. So health care reform and reducing taxes and reining in spending has got to accompany tax reductions and tax relief for Americas. A

And trade we’ve got to see trade as opportunity, not as a competitive scary thing. But 1 in 5 jobs being created in the trade sector today. We’ve got to look at that as more opportunity. ALl those things under the umbrella of job creation.

This bailout is a part of that.

The woman has either been saturated with talking points, is clueless on economic policy or both.

Palin's Interview With Katie Couric

Sarah Palin tells Katie Couric what a Maverick John McCain has been. Unfortunately, Palin can't cite a single instance when McCain stood up to Wall Street.

COURIC: You've said, quote, "John McCain will reform the way Wall Street does business." Other than supporting stricter regulations of Fannie Mae and Freddie Mac two years ago, can you give us any more example of his leading the charge for more oversight?

PALIN: I think that the example that you just cited, with his warnings two years ago about Fannie and Freddie — that, that's paramount. That's more than a heck of a lot of other senators and representatives did for us.

COURIC: But he's been in Congress for 26 years. He's been chairman of the powerful Commerce Committee. And he has almost always sided with less regulation, not more.

PALIN: He's also known as the maverick though. Taking shots from his own party, and certainly taking shots from the other party. Trying to get people to understand what he's been talking about — the need to reform government.

COURIC: I'm just going to ask you one more time, not to belabor the point. Specific examples in his 26 years of pushing for more regulation?

PALIN: I'll try to find you some and I'll bring them to you.

What makes matters worse is McCain chief economic advisor Douglas Holtz-Eakin dropped out of the Stanford SIEPR Associates Obama vs. McCain Debate to brief Palin. This would be hysterical, if Palin didn't have a chance of being a heartbeat away from the presidency.

I don't think Palin is dumb. It's obvious she is a skillful politician. That doesn't mean she has a grasp of the economy.

Update: here is the video. Palin is unsure if Rick Davis was involved in his lobbying firm's dealings with Freddie Mac.

Davis' firm received the payments from the company, Freddie Mac, until it was taken over by the government this month along with Fannie Mae, the other big mortgage lender whose deteriorating finances helped precipitate the cascading problems on Wall Street, the people said.

They said they did not recall Davis doing much substantive work for the company in return. They said Davis' firm, Davis Manafort, had been kept on the payroll because of Davis' close ties to McCain. Davis took a leave from Davis Manafort for the duration of the campaign, but as a partner and equity-holder continues to benefit from its income.

Another gem: Palin on the bailout.

Palin: the interesting thing, in the last couple of days, that I have seen is that Americans are waiting to see what John McCain does on this proposal. They're not waiting to see what Barack Obama is gonna do. Is he gonna do this and see which ways the political winds are blowing. They're waiting to see that John McCain will be able to see these amendments implemented in Paulson's proposal.

Couric: Why do say that? Why are they waiting for John McCain and not Barack Obama?

Palin: He's got the track record of leadership qualities and the pragmatism that is needed at a crisis time like this.

Couric: But polls have shown that Senator Obama has actually gotten a boost as result of this latest crisis. With more people feeling that he can handle the situation better than John McCain.

Palin: I'm not looking at poll numbers. What I think Americans, at the end of the day, are going to be to go back and look at track records.

Palin's message is pay no attention to McCain's shitty economic numbers. My God. The Daily Show could air this entire video uncut.



Update: I have more on Palin's interview and McCain's decision not to appear on David Letterman's show.

Quote of the Year

Nothing this year can top this quote. The Republican platform is ripe with comedy material.

We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself. We believe in the free market as the best tool to sustained prosperity and opportunity for all.

Will someone in the White House press corp please ask Dana Perino why the Bush administration broke the pledge? The non-answer will be priceless.

Quote of the Day

"I hope they are not that selfish and unpatriotic. This is going to be a hard sell to a lot of elected officials even with this."

Barney Frank, on CEOs of bailout companies whom refuse to take a pay cut.

Frank made it clear that CEOs of recipiant companies must take a pay cut. Senator John McCain also wants to limit CEO pay.