In the tax someone else mentality that we in the US find ourselves. Why should we care about the craziness that we find ourselves in today.
As we all know the Treasury Secretary Henry Paulson announced the government will lend Fannie and Freddie money, will purchase their mortgage-backed securities, and will buy up to $200 billion in preferred stock to keep the companies afloat. With the Treasury committing up to $200 billion of taxpayers’ money for direct investment in Fannie Mae and billions more for loans to the companies and purchases of their mortgage-backed bonds. Freddie Mac is now asking for an injection of $13.8 billion in government aid after posting a massive quarterly loss.
We were told that TARP was essential if the American economy was to survive. The US Treasury said that it had hired accounting firms PricewaterhouseCoopers and Ernst & Young to help with its emergency buyouts of toxic assets from troubled financial institutions. The contracts were awarded as part of the government's new 700-billion-dollar TARP to bail out financial firms saddled with soured assets related to falling US home prices. The Treasury Secretary announced that he has shelved the original plan to buy troubled mortgage assets via the recently approved $700 Billion TARP. The Treasury said it had selected PricewaterhouseCoopers and Ernst & Young from a pool of bidding candidates and their contracts end on September 30, 2011.
Paulson is absolutely the most powerful person in the country, maybe the world. "In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks," Paulson said. Paulson is considering a new use for the TARP money: trying to resuscitate the market for securities backed by auto, credit card and student loans. Recently Paulson's erratic behavior led to a 180-degree turn with money approved by Congress under the $700 billion bailout bill.
Paulson has the ability to do so because once again Congress has failed to use its congressional oversight to protect the American people. In many ways just like they did on the run up to the Iraq war. In the aftermath of the 2008 congressional race only 21 incumbent members lost their seats in congress.
The situation has once again failed us. Maybe the situation can be summed up by the chinese proverb, "Fool me once shame on you. Fool me twice shame on me."
4 comments:
Jason
thanks to visit us at "Trucks World News", and your "chinese" comment, that have been published by us.
You are well come any time.
Paulson did the right thing, buying bad assets would not have done as much as buying equity stakes. Since banks are leveraged 10 to 1 the equity stakes results in much more bang for the buck.
Also since the TARP requires an insurance program to be set up, the Treasury still has the option to prop up the troubled asset market.
Hey, thanks for stopping by my place.
Mr. Kelly, I'm thinking Mr. O'Neill's idea made a whole lot more sense, making the USG the 'guarantor' of last resort for the debt. One, not all of the debt is going to go bad, is it? Two, the biggest problem is confidence in financial institutions lending to each other and the public in general. If all the questionable loans are backed up, it frees up capital for other loans. The most valuable commodity here is confidence, not capital, and its in scarce supply these days.
thank you for visiting and posting your insights...
"Fool me once shame on you...Fool me twice shame on me..." How true...
there are more than we can imagine who are fed up w/ being lied to...on the part of both parties....
C-CS
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