The bill adds new provisions - including raising the FDIC insurance cap to $250,000 from $100,000 - and will be attached to an existing tax bill that the House also rejected Monday, according to several Democratic leadership aides.If the situation were not so serious I'd have to think we were watching a bad soap opera. The revised bill includes not only the original $700 bailout for Wall Street but has tax cuts designed to attract some Republicans who voted against the original bill. At a time when the nation is facing the largest deficits in history and we are considering spending an additional $700 billion of borrowed money what are they thinking with tax cuts? When will our Congress come to their collective senses?
An alternative to the original bailout bill is being floated in the Congress. The new plan
proposed that government funds should be used to recapitalize the American banking system by purchasing equity in banks and investment firmsThis process would capitalize the banking industry and allow the credit markets to begin to function once again. No buyout of troubled securities is proposed in this plan by George Soros. Taxpayer money would instead be used to purchase equity in financial institutions and therefore offer a better chance of not losing massive amounts of money in poor performing securities.
Soros has a reputation among Republicans that is not attractive so the proposal will face major resistance. And yet there is a lot to be said for the plan. Government bailout of the industry by purchasing risky securities offers no future protection against the same recurring episode. At least if the markets are capitalized and return to function there will be time to consider regulation to restore the remainder of the market while the investors who made bad decisions stand the penalty instead of the taxpayer.
We will see how this plays out. It is my fervent hope the Senate will not pass the bill as presented today. If the bill is passed we can only hope the House has the good sense to once again repudiate the mess and continue to negotiate for a real solution in the future.
Peace.
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4 comments:
All I can say, is if they restructure the ridiculous 18% balloons into a reasonable rate people can and WILL pay, they will do more to make this country and its banks solvent than writing a blank check on bad paper on the backs of our citizenry.
I love how you think my dear, and sorry I forgot to re-roll your new blog. I'll put you in the "Contributor" column in hopes that you will cross-post occasionally!
(ok, I hope often, but will settle for when your time allows ;)
diane,
Thanks for visiting and for the kind words. I will visit and post when I am able, but that is not much these days. Life in the fast and furious lane continues in Possum Valley.
Restructuring mortgages should be part of any plan. How to make that work best is the issue. There is a lot to consider in that mess. We must be careful not to restructure people into a loan they are still not able to afford. We must look to increasing the number and pay scale of jobs in addition to working on our financial markets.
Peace, Jerry
Absolutely, what I am thinking is making predatory loans that ballooned to 18% capped to between 8 and 10% retroactively, giving homeowners a month to catch up and pay. I think tied to this should be mandatory foreclosures for those who choose not to catch up within 6 months.
What need to happen here is a chance for people to become solvent.
diane,
OK. That works for me. So long as the system creates fair conditions for all players then all is well. We can punish the ones who took advantage of witless consumers and help consumers at the same time and still be fair.
Peace.
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