There were things in this bill that were deceptive, dangerous and clearly favored banks that went bust rather than the people who were sold scammed mortgages. The bill was defeated due to the tremendous outcry of the American public, as reflected in the info in the pic, above.I'm not an economic's major but you don't have to be one to see a scam.
Starting off clearly neutral, from the report of the Congressional Budget Office (click link on title, above), it reports that the government would have started to pay interest on deposits they have from banks.
Rather amazing, the government prints the money, gives it to the banks, the bank puts it on deposit with the government and then the government pays the banks interest!?
Another feature against the people's interest and in favor of the banks was the refusal to empower bankruptcy judges to modify home mortgages on primary residences for people in foreclosure, but the judges can only do this for people on their second or third homes, etc.
This keeps a benefit for those who own two or more homes and unfairly makes it harder for those who only own the one home they live in. This benefits the rich as the expense of the poor.
Change the tax laws allowing banks to deduct losses from investments in the bad mortgages of Fannie Mae and Freddie Mac, thus not only is it $700-billion but $700-billion plus ongoing tax benefits to banks.
(The Republicans also want MORE tax benefits for the SuperRich, a reduction in the capital gains tax that folks pay on stock market gains)
Money would not only be handed out to banks (who caused all these problems) but money also given out to county and city governments.
Incredibly, also, Section 112 allows the Treasury Dept. to use taxpayers money to bail out foreign banks !?
Although the Treasury Dept is "allowed," to modify troubled loans there are no standards set for this and he is not "obligated to do anything at all.
In fact there is a provision that makes it clear there are no standards, all previous laws and standards do not apply provision: Section 135.
The Treasury Dept. is also "allowed," to not purchase the bad loans outright, but instead offer to insure them, for a fee from the banks. This was one provision often boasted about, i.e. the government wasn't necessarily going to give money away but instead sell insurance to back up the bad loans.
But what would you or anyone do if they were trying to sell a crippled car? Sell it, or pay insurance claiming to maintain it's value (note: it's crippled value).
There is also the big question of how much does the government pay for these bad loans: 100% of their alleged value? 80-cents on the dollar? What?
Not only can the Treasury Dept. pay any amount it wants but even pay MORE for these bank loans than the banks paid themselves! -- Assets that some banks acquired in a merger or buyout from companies that have filed for bankruptcy, like JPMorgan Chase & Co., can sell these 'toxic debts,' for a higher price than they paid for them.
Another pretense is that the government could ask for warrants that would mean the banks would have to pay up some money if these toxic loans went south, loss even more value than they have already.
But if such warrants were required the banks could add the cost of such warrants to the price of the bad debts it sells the government, like if you buy a car you pay something, but if you buy a car with comprehensive insurance for all damages, you pay more.
So talking about how these warrants make everything ok is deceptive, but sounds good.
Perhaps the clearest attempt to deceive is Congress claiming that half the money would not be given over "subject to their disapproval."
Subject to their disapproval? Who ever heard of such a thing? Normally actions Congress wants to control are said to be "subject to Congressional approval.
What the difference? The difference is Bush can spend the money. Congress may get around to express their disapproval. Problem One: The money may already be spent by the time Congress gets around to doing this. Problem Two: Bush could simply Veto the Congressional act of disapproval.
Subject to disapproval!? Means nothing but sounds good, as if Congress was providing oversight and control.
Also note: Administrative costs are not included in the $700 billion bailout.
Also note: The normal procedure for dealing with this, the lowering of interest rates by the Fed, are not being tried.
Also note: While the claim is that this is only for $700-billion nearly $500-billion has already been spent previously to deal with this to no positive results: Things just kept getting worse.
Also note: The bill would have raised the Debt Ceiling by 1.5 trillion dollars, more than twice as much needed to print the money to pay for this bill; so the debt to the American people would become twice as great.
All this information I believe is accurate and true.
Now...here's just one wild and crazy idea: The government started this bill asking for all this money be given to banks that made bad investments (and also note, the FBI is investigation already 47 cases of bank fraud that may be involved in this.)
That's a wild and crazy idea. (And against the very principles of capitalism: no government interference in business)
So, here the second wild and crazy idea: Let's give all this money to the people.
(See how wild and crazy this all sounds now? Both of these suggestions)
But consider, if people got all this money, they could pay off some or all of their debts, pay off their credit cards, pay off some of the mortgages that have gone bad --- in this way the people would be helped out AND the banks would get cash for these debts, making all these loans less toxic.
Of course, maybe the people would rush out and buy ice cream and cake, cars, or go on trips to Disneyland.
Of course, maybe the banks would do the same thing: They are obligated to do Absolutely Nothing for this cash, meaning all these big bucks handed out have no guarantee of doing anything at all .
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