The $700 Billion Blunder
Why the Senate’s Bailout Bill Will Fail Our Fragile Economy.
MoneyMorning.com/bailout
It looks like there is going to be some wrangling going on next week in the senate over the Auto
Industry bailout. What I am hearing is that the democrats are talking about carving the $25,000,000,000 to save the auto industry out of the TARP 700 billion dollar bailou…err, rescue plan to save the industry, but it is running into interference from Congressional Republicans. And while there is a plan to try and get the legislation pushed through next week, Senate Banking Committee Chairman Chris Dodd is not confident that the bill will get done. The Bush administration has said it is open to making changes to a bill passed a few weeks ago to help the auto industry build more fuel-efficient vehicles. That bill passed the house with widespread bipartisan support.
But most of what i am hearing, at least in the news on this subject is talk of whether GM will go chapter 11 or chapter 7. And the tenor of the talk implies it is not a matter of if but when, as if whatever legislation goes through, whatever assistance the government gets to them will be too little or too late.
In Other News…
FDIC head Sheila Bair made an announcement that she has a plan to help stave off additional damage from the housing crisis. The Plan, which would be funded by the $700,000,000,000 bailou…rescue plan, would reduce mortgage payments to a maximum of 31% of monthly income, loan servicers would get $1,000 per loan modification, and would cost a total of $24,400,000,000, and would be modeled after the mortgage modifications made to Indymac Mortgages the FDIC acquired when it seized the beleaguered bank earlier this year.
Henry Paulson and the Bush Administration seem to be against this, at least from what I have read. The Bush administration is against using TARP funds to support a foreclosure prevention program. Treasury Interim Assistant Secretary Neel Kashkari has stated in congressional testimony that the TARP funds are designed for making investments in the financial system, not giving aid. He also said that Hank Paulson said that it was an interesting Idea and urged Congress to consider drafting legislation to create such a program.
But why create a program when there are funds already out there in an already existing program that could be used precisely for the purpose of saving the housing market? I wonder what all the Goldman/Washington people are trying to do here exactly. They changed the way they are going to spend the money on tarp, and are now going to focus on consumer credit debt instead of financial institutions exclusively, so why can’t they change it up a little more and include the mortgage industry?
With all the money they have at their disposal, one wonders why they are quibbling over what amounts to 7 percent of the total TARP funds, if you include both the Auto Industry Bailout and the FDIC Mortgage plan. Do they have that money earmarked for other purposes? Have they a hidden agenda to use this loan from the American people for their own purposes?
I make the presumption that they do, and if I’m wrong, I’m wrong. I don’t trust the Bush Administration 
or Hank Paulson here, and the about face they made on TARP spending, and the unwillingness to alter the TARP spending, moving this 7%, this small piece of the pie away from their stated objectives just gives me ammunition for trusting these two Lame dicks ducks even less.
I need more than “TARP funds are designed for making investments in the financial system, not giving aid” Substantially more than that.
A Viddy, A few Quotes, and I am finished.
The Viddy. Rachel Maddow speaking about the reversal of a portion of the tax code in favor of the banks:
