Not a Dime! Stop the bailout

By
Services for Real Estate Pros

There is currently a horrifying proposal being fast tracked through congress by the President and Treasury Secretary Henry Paulson. Many members of congress have openly admitted they don't understand the situation and they aren't sure what to do.

I've called my senators offices and I was asked to organize people in a calling campaign. They want to hear what we have to say.

What's happening right now in our financial markets is a major event, regardless of what the government does, I feel it's going to have a major impact on us all. However I believe the proposal being fast tracked threatens to make things much, much worse.

I ask that you read the proposal yourself. It is very short. You can also read the analysis I've posted here.

The chances of preventing this are very limited . But after reading the proposal, please call and email your senator, NOT JUST ONCE, BUT A COUPLE OF TIMES A DAY, for all of this week.

Ask them to block or filibuster any bailout legislation. Ask them to vote no. Tell them you don't want to pay for a bailout.

Here's a link to the text of the plan. Click here for contact information for the Senate.

  • The Foxes are in the henhouse. Prior to becoming the treasury secretary in 2006 Henry Paulson ran Goldman Sacks bringing the company to the position it is in now. Goldman Sacks stands to benefit a great deal from this bailout. Furthermore there is a tremendous conflict of interest as Paulson seeks to hire those who helped create this mess to help decide how to use the public's money.
    (2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts; (3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;
  • The budget is unlimited.

    Sec. 6. Maximum Amount of Authorized Purchases. The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.

    700 billion is greater than the Pentagon’s budget for 2009 which was record breaking. And that’s just the amount of purchases that can be held on the balance sheet at any moment.
  • It doesn’t represent the tax payers. This deal is, in many respects, open ended with no safeguards for taxpayers. While the bill gives lip service to the idea of protecting tax payers it specifically avoids accountability and transparency.

    Sec. 3. Considerations. In exercising the authorities granted in this Act, the Secretary shall take into consideration means for– (1) providing stability or preventing disruption to the financial markets or banking system; and (2) protecting the taxpayer.

  • Completely dubious. While it grants extreme powers, there is no review. (this one is really incredible)
    Sec. 8. Review. Decisions by the 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.
  • There are no stipulations for punitive actions. Instead for institutions able to move their bad debt to taxpayers, or able to buy debt at discounted rates this will be quite rewarding.
  • The arbitrary nature of the bailout creates greater uncertainty in the markets. Furthermore some market watchers speculate that this could result in a greater devaluation of U.S. credit as there is fear we’ll nearly bankrupt ourselves trying to take on the debts of these failed institutions. The measure calls for raising the national debt for example.
    Sec. 10. Increase in Statutory Limit on the Public Debt. Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.
  • We already have an excellent solution in place Chapter 11 Bankruptcy.
    In Chapter 11, companies with a solid underlying business generally swap debt for equity: the old equity holders are wiped out and the old debt claims are transformed into equity claims in the new entity which continues operating with a new capital structure. Alternatively, the debt holders can agree to cut down the face value of debt, in exchange for some warrants.
    Luigi Zingales and Robert C. Mc Cormack the authors of the above quote maintain the process would have to be faster than chapter 11 normally takes. But passing a law, especially one of the magnitude normally requires much more investigation and vetting. If we can entertain passing a law of this magnitude this quickly, isn’t there a possibility that an expedited Chapter 11 program could be created.
  • The Mother of All Bailouts. A measure of this level is unprecedented. You may have heard that this isn’t dissimilar to the Resolution Trust Corporation founded in 1989 to help us out of the S&L Crisis. But
    In 1989, there was no choice. The federal government insured the thrifts, so when they failed, the feds were left holding their loans; the RTC's job was simply to get rid of them. But in buying bad loans before banks fail, the Bush administration would be signing up for a financial war of choice. It would spend billions of dollars on the theory that preemption will avert the mass destruction of banks. There are cheaper ways to stabilize the system. (Sebastion Mallaby of the Washington Post)
    And they want to bailout whatever they decide. This will likely include bailouts for foreign businesses as well.
    The U.S. Treasury submitted revised guidance to Congress on its plan a ... Officials now propose buying what they term troubled assets, without specifying the type. (Bloomberg)
  • It goes counter to the spirit of the American free system that maintains those that reap the rewards should bear the losses.

    The basic premise of a free economy is one governed by laws and not men, where property rights are respected, where individuals are free to make contracts with each other, and where honesty and transparency exist in the marketplace.(Mish)

Please contact your senator now and ask them to prevent, block, filibuster, and vote no for any bailout.

I’d also encourage you to drop me an email or a comment if you make the call.

Thank you.

Caleb
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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Matt Heaton 09/22/2008 11:49 AM
  2. Jeanean and David Gendron 09/22/2008 12:47 PM
Topic:
ActiveRain Community
Tags:
banks
bailout
paulson

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Rainmaker
222,147
Michelle DeRepentigny
Success Realty - Athens, GA
Broker Athens, GA

Caleb, thank you for the concise and on point breakdown of the talking points.  I am now ready to make my call and follow up by email to my senators. The foreign buisness revision just blows my mind.

Sep 22, 2008 10:25 AM #1
Rainer
70,328
Caleb Mardini
Bellevue, WA

Thanks Michelle!  It is mind boggling.

Sep 22, 2008 11:27 AM #2
Ambassador
611,769
Jeanean and David Gendron
Real Living, Real Estate Professionals - Redding, CA
Specializing in Selling Unique Properties

Caleb, I emailed this AM, however you've provided a more impactful way to have an effect. Thank you for this work. I'm flagging for a feature and I pray that this gets a hugh readership with each and every person being compelled to action. Thanks for this leadership!

Sep 22, 2008 12:42 PM #3
Ambassador
508,265
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Caleb,

I also contacted Senator Robert Casey from Pennsylvania about this moments ago.  Thank you for an intelligent and responsible way to look at a situation that is of the utmost importance to our economy and our future.  I'm on your side on this one.

 

Regards,

Jason

Sep 22, 2008 01:05 PM #4
Rainer
70,328
Caleb Mardini
Bellevue, WA

Jeanean and Jason, thank you.  And thank you to those of you who have "reblogged" this.  I'm suprised, I've actually been getting emails from pleople who say they've just contacted their senator.  We want to flood them with calls, so I encourage people to call often throughout the week saying, No bailouts!

It's unlikely that we can block this, but it's looking possible now.

Sep 22, 2008 03:34 PM #5
Rainmaker
1,090,721
Bryant Tutas
Bryant Tutas-Tutas Towne Realty, Inc - Poinciana, FL
Broker/REALTOR, Tutas Towne Realty, Inc

Caleb, I will spend some time in the morning reading this "bailout"plan and getting my head around it. None of this sounds good at all.

Sep 22, 2008 08:16 PM #6
Ambassador
896,988
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Realtor - Ann Arbor Real Estate

Caleb, it is the hen guarding the hen house. I am just shocked they are rushing into this as most of them don't even understand the bill or the implications. Why not bring in some men and woman and do a sit around the conference room table and figure it out. The implications are just too devastaing to consider.

I never thought about Chapter 11, why haven't they, other corporations have used in successfully.

Sep 23, 2008 07:17 AM #7
Rainer
70,328
Caleb Mardini
Bellevue, WA

Bryant, I hope this analysis helps thanks!

 

Missy it looks like they've slowed things down.  I've heard a few in congress talking about the chapter 11 solution, Bernanke when asked about it said The Fed had no opinion either way, and Paulson said no way.  But there is a growing support for that route.

I keep hearing how this "has to be done" to save the economy, but this proposal just makes things worse for the rest of us. As institutions deleverage (and they must) like brining down your credit card balance, this is going to hurt.  There will be a burden to bear for all of us, but that doesn't mean even more of the burden should be shifted toward the taxpayer.

 

Sep 24, 2008 05:37 PM #8
Anonymous
Gary McGowan

Caleb, I hope you have heard that calls to Senators and reps have been running 99 to one AGAINST this insane proposal by the Bush administration. That's certainly no reasion to let up on them -- I would encourage people to keep calling.

Keep up the good work.

Oh. Here's a little gift for anyone with the desire to partake of it:

With the insanity of what our Congress is considering in Washington, I can't think of a more appropriate time to remind Congress, remind the President, remind staffers, remind the voters, and remind the press of this by Davy Crockett.

Not Yours to give, Col Davy Crockett, 1884

http://patriotpost.us/histdocs/crockett_not_yours_to_give.asp

Sep 26, 2008 11:59 PM #9
Rainer
70,328
Caleb Mardini
Bellevue, WA

WE HAVE SUCCESS!  THANK YOU!

Sep 29, 2008 08:03 PM #10
Rainer
19,359
Matthew P. Klein
The Real Estate Corner - Cleveland, OH

The first disaster has been averted but they are at it again. Don't stop calling just because the first one failed!!!!!

Oct 01, 2008 10:54 AM #11
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