Yes, taxpayers were blindsided by Hank Paulson’s bailout proposal last week. Yes, taxpayers remain angry. But, if you watched any of the proceedings in the Senate over the past few days (without talking heads at C-Span), then you might have realized that just as many senators and congressmen - Republican and Democrat - were as blindsided and angry as you. But, they spent the past few days asking questions, getting answers, forging compromises and putting together a package that would diminish the rewards to corporate CEOs who were responsible for this mess and that would protect the American taxpayer as much as possible.

Still not convinced that this new package might protect you? Think about this: Last night, Washington Mutual (WaMu), the country’s largest savings and loan institution, was seized by regulators after the markets closed.  JP Morgan picked up on the WaMu deal, and customers should see little change in how their accounts operate. At least, until JP Morgan tells those customers how different those accounts might be within their policy realm.

It’s a good thing for WaMu checking, savings, IR and 401k customers that JP Morgan stepped in at the 11th hour, as - and this is the part that should frighten you - the FDIC’s fund for paying out-of-pocket depositors, $53 billion before the crisis, is fast becoming depleted. The FDIC guarantees $100,000 on checking and savings accounts and $250,000 on most retirement accounts should a bank go belly up (those guarantees may fluctuate, depending upon whether the bank in question says your checking or savings accounts are one or two accounts, btw). But, that guarantee is nebulous - which should frighten you even more.

In reality, according to William M. Isaac, former FDIC chairman, the FDIC fund is pure fiction [PDF] :

The reality is that there is no FDIC fund. Anything the FDIC lays out to handle a bank failure must be borrowed by the Treasury, which adds to the federal deficit. The total amount of the current outlay is charged against the federal budget even if recoveries are expected in the future, as problem assets are collected by the FDIC. That’s the case whether the FDIC’s nominal balance at the Treasury is positive or negative.

According to Treasury Secretary Don Regan in 1981, “The banks have been paying money to the FDIC, the FDIC has been turning the money over to the Treasury, and the Treasury has been
spending it on missiles, school lunches, water projects, and the like. The money’s gone.” Nothing has changed since 1981 - the money the banks thought they were storing up for the past half century – sort of saving it for a rainy day – is gone. “If a storm begins brewing and we need the money,” Isaac said, “Treasury will have to borrow it.”

This is the crisis that Paulson is talking about - although it hasn’t been said in so many words. Why? Because a run on banks would deplete the treasury ’system,’ and bank failures would bankrupt the country. Really bankrupt the country, as the Bush administration has dented this country’s finances with its Iraqi war expenditures of over $500 billion. Any money we print now will be worth only the value of the paper that it’s printed on, but it’s a bargaining tool nonetheless.

This is why you want the bailout. But, you want a bailout with caveats to protect the American Taxpayer and that eliminates financial nods to CEOs and that totally eliminates Section 8 in that proposal, which reads: “Decisions by the [U.S. Treasury] Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” This is one of the sentences which made Nancy Pelosi state that the original bailout plan was “almost laughable.”

Your thoughts?

Posted by ewoman at 11:05 AM PDT

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I had mentioned some time ago that I was miserable about the lack of protest in this country as compared to the 1960s - and I attributed this malaise to the number of individuals on anti-depressants. But, it appears that more than one person forgot his/her meds, as the protests across the nation are gaining momentum as I write.

“Protest What?” you might ask; and, if you do ask this question, then you’re overly medicated. Protest about the $7 trillion + bailout, mainly. But, your sign can say anything you want. What’s not to protest at this point? We’re standing on the precipice, according to Paulson, Bernanke and Bush.

One of the best sites to find a current protest includes True Majority, where you can find a protest by zip code. You might be surprised at where some of these protests are being held, too. From the Hickory Record, Linda Osbon (on the behalf of True Majority) writes:

Among the events taking place across the country: In New York City, nearly a thousand protestors [sic] will gather at 4 p.m. on Wall Street to engage in a demonstration fueled entirely by viral, word-of-mouth Internet activism. In Connecticut, activists will gather from 4 to 6 p.m. Thursday in front of AIG company headquarters, 1 State St. in Hartford. In Minnesota, activists will gather at 5 p.m. Thursday in front of the Federal Reserve Bank of Minneapolis at 90 Hennepin Ave.

In Florida, members of the Florida Consumer Action Network will be phone canvassing their members, asking them to call their congressional delegation and urge a “no” vote on the Bush-Paulson bailout. The phone canvassing will occur from 4:30 p.m. to 9:30 p.m. at 3018 W. Kennedy Blvd, Suite B in Tampa.

Other protests are planned by groups such as Code Pink! and in areas such as Washington, DC.

Be safe, be peaceful, be strong.

Posted by ewoman at 4:34 PM PDT

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We’re not talking about “missing” like a kidnapping or an avalanche that wipes out a climbing party on Mt. Everest. Oh, no. We’re talking about a political party that’s virtually jumping ship - or at least appearing to be searching frantically for lifeboats as the wreckage floats ashore.

McCain has proposed abandoning his campaign and calling off Friday night’s debates because of a financial crisis that was just brought to the American attention last Thursday. But, as Ben Smith notes, nothing has changed in the past 48 hours except polling numbers. We say “NO” to this gambit, and so does Obama.

McCain also has cancelled his appearance on Letterman tonight as well. NO COMEDY DURING A CRISIS! McCain’s nemesis, Keith Olbermann, will fill in (this is no joke). Additionally, McCain’s campaign manager, Rick Davis, went AWOL from a reporter’s lunch today after it made news last night that he received monies from Freddie Mac and Fannie Mae between 2005 through to last month. Oh where, oh where is Mr. Davis?

Finally, we all know that Palin is gone with the wind as far as the press and the political circuits are concerned. After a battle between the McCain camp and the press yesterday, McCain no longer is the media darling, and CNN’s Campbell Brown is demanding Palin’s release from McCain’s sexist hold.

If Americans hadn’t been through eight years of a lying, disdaining, conniving and slack-jawed presidency of late, the general public may not have caught on to these escapism tactics. But, thanks to instant news via Internet and Twitter, taxpayers have learned what it feels like to be duped. Duped into a murderous escapade disguised as a war, into a Wall St. ponzi scheme and into a sad and sorry state where very few Americans can trust their representatives.

America is watching, McCain. With a magnifying glass and without a life raft.

Posted by FA Editors at 5:55 PM PDT

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• Warren Buffett’s Berkshire Hathaway Inc. is investing at least $5 billion in Goldman Sachs, with warrants to invest another $5 billion in Goldman’s common stock.
• Goldman also said late Tuesday it would raise another $2.5 billion in its own public stock offering.
• Hank Paulson, a former co-CEO of Goldman Sachs, wants $700 billion from the American public to bail out some financial institutions - who, what, when, where and how are unknown. Why? Because.
• Buffett also supports Paulson’s bailout plan.

Something smells fishy, right? Well, we haven’t got half the story, which is why the stench will get bigger. Half a fish is half as smelly. Howard Rodman has the whole fish:

• Goldman Sachs gives Hank Paulson seven hundred million dollars (that’s seven zero zero comma zero zero zero comma zero zero zero) in salary and bonuses.
• Goldman Sachs lends Hank Paulson to the Treasury (now that he can afford to be a public servant).
• As the Secretary of the Treasury, Paulson insists that we give Goldman Sachs a lot of money, in exchange for a lot of crap. (If not, we all die.)
• Except it’s not Hank Paulson’s money, it’s ours.
• If the crap turns out to be crap, we’re stuck with it. (And by the way: if it’s not crap, why are they so desperate to unload it?)
• In four months, Paulson returns to Goldman Sachs.
• Paulson receives salary and bonuses from the money we just gave to Paulson to give to Goldman Sachs to give to Paulson.
• It’s our money. Or was. But we don’t get preferred shares. We don’t get a ten percent dividend. We don’t even get a free copy of The Warren Buffet Way: Second Edition (Paperback). We get crap.

AH - Now, it all makes sense! Thank you, Mr. Rodman! Screw you, Mr. Paulson!

Posted by FA Editors at 12:30 AM PDT

6 Comments »