Here is the statement by US Secretary of the Treasury, Henry Paulsen as he spoke today in front of the US Senate Banking Committee Concerning the Wall Street Crises. Do you agree with him? What should be the solutions? Discuss them below.
Chairman Dodd, Senator Shelby, members of the committee, thank you for the opportunity to appear before you today. I appreciate that this is a difficult period for the American people. I also appreciate that Congressional leaders and the Administration are working closely together so that we can help the American people by quickly enacting a program to stabilize our financial system.
We must do so in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families' financial well-being, the viability of businesses both small and large, and the very health of our economy.
The events leading us here began many years ago, starting with bad lending practices by banks and financial institutions, and by borrowers taking out mortgages they couldn't afford. We've seen the results on homeowners higher foreclosure rates affecting individuals and neighborhoods. And now we are seeing the impact on financial institutions. These bad loans have created a chain reaction and last week our credit markets froze even some Main Street nonfinancial companies had trouble financing their normal business operations. If that situation were to persist, it would threaten all parts of our economy.
As we've worked through this period of market turmoil, we have acted on a case-by-case basis -- addressing problems at Fannie Mae and Freddie Mac, working with market participants to prepare for the failure of Lehman Brothers, and lending to A.I.G. so it can sell some of its assets in an orderly manner. We have also taken a number of powerful tactical steps to increase confidence in the system, including a temporary guaranty program for the U.S. money market mutual fund industry. These steps have been necessary but not sufficient.
More is needed. We saw market turmoil reach a new level last week, and spill over into the rest of the economy. We must now take further, decisive action to fundamentally and comprehensively address the root cause of this turmoil.
And that root cause is the housing correction which has resulted in illiquid mortgage-related assets that are choking off the flow of credit which is so vitally important to our economy. We must address this underlying problem, and restore confidence in our financial markets and financial institutions so they can perform their mission of supporting future prosperity and growth.
We have proposed a program to remove troubled assets from the system. This troubled asset relief program has to be properly designed for immediate implementation and be sufficiently large to have maximum impact and restore market confidence. It must also protect the taxpayer to the maximum extent possible, and include provisions that ensure transparency and oversight while also ensuring the program can be implemented quickly and run effectively.
The market turmoil we are experiencing today poses great risk to U.S. taxpayers. When the financial system doesn't work as it should, Americans' personal savings, and the ability of consumers and businesses to finance spending, investment and job creation are threatened.
The ultimate taxpayer protection will be the market stability provided as we remove the troubled assets from our financial system. I am convinced that this bold approach will cost American families far less than the alternative a continuing series of financial institution failures and frozen credit markets unable to fund everyday needs and economic expansion.
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Over these past days, it has become clear that there is bipartisan consensus for an urgent legislative solution. We need to build upon this spirit to enact this bill quickly and cleanly, and avoid slowing it down with other provisions that are unrelated or don't have broad support. This troubled asset purchase program on its own is the single most effective thing we can do to help homeowners, the American people and stimulate our economy.
Earlier this year, Congress and the administration came together quickly and effectively to enact a stimulus package that has helped hard-working Americans and boosted our economy. We acted cooperatively and faster than anyone thought possible. Today we face a much more challenging situation that requires bipartisan discipline and urgency.
When we get through this difficult period, which we will, our next task must be to address the problems in our financial system through a reform program that fixes our outdated financial regulatory structure, and provides strong measures to address other flaws and excesses. I have already put forward my recommendations on this subject. Many of you also have strong views, based on your expertise. We must have that critical debate, but we must get through this period first.
Right now, all of us are focused on the immediate need to stabilize our financial system, and I believe we share the conviction that this is in the best interest of all Americans.
And of course one thing the general public is probably miffed about is: Why can AIG, etc., etc., etc. get bailed out when people are losing their homes? Fairly simple, those entities can continue to generate additonal capital above and beyond what is happening now. It would be better to look at this process as a Chapter 13 bankruptcy.... I am not sure if it can be applied towards the corporate world, but on an individual basis it can....... But Chapter 13 is pretty much a reorganization of debt with a payment plan... If an individual cannot come up with money to cover its debts, well, Chapter 13 is futile..... In other words, it is a shame a person got into a $250,000 debt asignment when all it could manage was a $90,000.00 debt load..... It is simple math.... It is only going to earn so much, that's it........ And so, I think the misunderstanding among the general public is that the corporate world is going to be given 'free' money under the same circumstances as welfare recipients recieve 'free' aid..... No, these instruments need to be refinanced, and more closely managed...... If Boeing were to go broke tomorrow, do you think the feds would let it? Hell no, where would we get fighter aircraft from? One source and one source alone? Or would we outsource to China or France for tactical fighter aircraft? It is simply another business tangent... Nothing to fret...... Written by
on 9/24/2008
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Really and truly I do not see the big deal over this…. It is simply business…… Keep it in the right perspective and no worries Mate…….. Doest thou forgetith the Chrysler baileth outeth in the 1780’s???? Seriously folks, Lee Iacocca, Ronald Reagan….. I am a huge fan of Lee Iacocca and have been fortunate enough to meet many great people during my lifetime… President Reagan is another…….. Anyways, that was a good deal, folks kept their jobs, Chrysler floated around for a while longer until the mini-van market and the uni-body construction market became saturated, and in the end, it bailed, and sold to Mercedes Benz…… Everyone made out fine…. Including the tax payer……… The only person that really didn’t get everything it wanted was President Reagan…. He wanted to keep the stock options, Mr. Iacocca disagreed, and it was a done deal, everything fair and square….. He kept the government out of Chrysler, but wisely utilized the aid which the taxpayer could provide…. And now AIG………………. It is not bankrupt, it merely isn’t able to pay dividends to stock holders anymore, so, off the board it goes…. Tremendous assets are sitting around in the AIG trunk of goodies…. Entire infrastructures…… Capital generating apparatuses…. Fine, bail it out, and the others also…….. Look into the criminal acts, or negligence, but get over it and provide an economic infusion……….. The source of funding? No, not the federal Reserve…. A guarantee by the U.S. Treasury, so that they can be funded, but finances can be obtained through state sales taxes, a portion thereof…….. The return? Yes, the state hierarchy is going to have to do some real soul searching as they each examine and then reexamine again their programs and of what real benefit or effect they are to the taxpayer that provides for them….. This is one positive influence an approach like that could have…… Now, as for the folks that caused the problems, they are the ones that need to pay for it, not the common joe or jane….. Therefore, a fee, 2%, 3% on each transaction above and beyond on stock purchases across the board on all stocks and commodities…. Until the 750 billion or the 1.3 Trillion or in actuality the 1.8 trillion which is what is really needed is paid off…… With a 2:01 return to the tax coffers………. That is the financing guarantee vehicle….. Then you can focus on health care, housing, crime, etc., etc.,, etc….. Crime……. Freddie Mac, and Fannie Mae…. Predatory lending tactics…. That is one of the crimes…… And it was advocated/provoked /promoted in part and in earnest by the real estate industry…. Every conspiracy has to have accomplices…… Great!!!!! Sit on your ass, flip real estate and make 200K a year…. That’s what the T.V. ads claimed…….. Now everyone can be useless!!!!!!! And it isn’t just those factions, it is the ‘socialist’ government we have in place…. Section 108 housing, more taxes, more taxes, more taxes…….. And the cities and towns fall into decay, and crime goes up, and drugs become rampant…….. And idiots scream for more education dollars to ‘change’ things.. Education is not the problem, there are some real slick and shrewed folks out there that know oh too well how to manipulate ‘the system’……. Meanwhile the immigration problem… I don’t care about the legal, or the illegal of it, it is all the same….. Immigration, period……. But to ad lib anyways, it needs to be fixed, NOW!!!!!! The facts of the matter are we have all of these less than desirable influences assaulting our cities….. And many folks, in desperation to get away from this element take big chances, acquire homes at nothing down just in the hopes to get away from that crowd so they can raise their children in, or enjoy a nice environment…. But we keep importing them by the busload, or by the banana boat load…. And then we have idiots ranting and raving about racism…… Well, any idiot that rants about that, here is the challenge… Open YOUR doors to them, sit them at YOUR dinner table, feed them YOUR food, let them wear YOUR pajamas and slippers, or sleep in YOUR bed and then come back and tell me how YOU feel about the ‘race’ issue then…… I bet you won’t be whistling about Fraunch as much after that…………………… Immigration reform, higher standards, and a lessened willingness to Welfare reform…… Now……………. What to do about the unfit mothers, as well as the ha-ha ‘dead beat dads’…… That is true justice… Go to the hole (no pun intended, ehhh,,, maybe it was though, and that’s up to you to figure out being as you aren’t focused on the subject being written about anyways) to find the source of the problem when you realize your money is disappearing faster than it can be printed…… I believe in equality, and that is a pretty equal measuring stick…. Accountability….. Well, Bobby going to D.C. to beg money while STRONGCONCRETE is overlooked is a prime example of accountability…. There is non, and our leaders are fakirs……. No that was not a racist remark, it is simply another use of words that demonstrates the roots of the problem…… Peace out… Written by
on 9/24/2008
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They are trying to push this bailout fraud through quickly. "They" are members of both political parties, their big banking interest handlers and the mainstream media these banking interests own and control. I do not regret the $1100 I gave to Ron’s Paul’s campaign. His desire for us to return constitutional government, fiscal responsibility, and non-interventionism was a nice dream; unfortunately we will have more of the same - that is, politicians who pretend to support the "little guy" but who in fact march in lock step to Wall Street's beat. Put your (programmed) pre-conceived prejudices aside and check out the link below with it's denunciation of our politicians and their ties to big money. If neither Chuck Baldwin or Ron Paul are your type, imagine Che Guevara, Malcolm X or some other revolutionary expressing the sentiments which appear on this site.
http://www.ronpaul.com/ Written by kpf
on 9/24/2008
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There ARE alternatives which may well be better from the perspective of limiting the taxpayers' exposure to risk. This time, most important, the Bush administration most likely won't be able to get away with their usual tactic of pushing something important through quickly and secretly. If there had been this same kind of public outcry for answers to questions prior to Bush's push to go to war with Iraq I dare say that the taxpayers would have saved themselves hundreds of billions, not to mention thousands of American lives. Written by Richard P.
on 9/24/2008
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But on the bright side, the 750 billion 'bailout' equates to a debt load of approximately $2,140.00 for every person in America.... or about 178 bucks a month, or about 6 bucks a day...... A family of 4? Well, if a person is making 24 dollars an hour, it will take one of those hours each day to satisfy that load....... So, instead of taking it out in taxes, being as the wages are already being taxed enough, I would suppose a temporary contribution of a portion of the sales tax taken in by each state until this is retired might not be that bad of an idea...... I prefer that above and beyond using a portion of the property taxes each State could contribute because in that fashion truely everyone can contribute..... And states will have the opportunity to more fully scrutinize their fiscal policies.... But an equity share standing should be availed to the American citizen, and that is where the 4% investment fee on Stocks and Commodities until the bailout numbers are matched twice over should be instituted... After all, they are a part of the root cause...... Then perhaps something meaningful can be funded...... Written by
on 9/23/2008
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But thanks for the link there KPF.... Pretty much my sentiments exactly, piece by piece only a few days later, and with fewer of the particulars…… The approach to offset the problems are going to be varied, there is no one cookie cutter template….. It is going to require many, many, many approaches, but the mainline train of thought should be that the average taxpayer should not be burdened with this yoke… Perhaps in this upcoming congressional ballot, the voter will realize that change means voting out those that currently occupy office and installing new blood….. And hopefully their decisions are not based on flash and image……… Although some of the choices are dismal at best. Sort of like trying decide whether to use the .22 or the 9mm. to shoot off one of our big toes…… Dayammmmmmmmm……. Speaking of choices and big toes, hopefully we will have a better assortment to choose from when it comes time for our next Governorial picks…. This Bobby Jindal is really only a prop at best……. Written by
on 9/23/2008
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Yeah, and in the future, if someone mows the lawn at those 'troubled assets' for three years, they will be given the title.... Ha-ha-ha-ha-ha!!!!!!!! Just another farce that is attempting to relieve the taxpayers of their hard earned income while some schmuck comes in the back door and makes off with the principle and the associated assets!!!! Sounds sort of like a T-duhhhhhhhbbbbbbb plan to me...... Written by
on 9/23/2008
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Forgive me Stephen for linking to Thomas Sowell's article today on this matter. I do like Mr. Sowell's take on this, different and not nearly as hysterical as much of what one is reading or hearing.
http://townhall.com/columnists/ThomasSowell/2008/09/23/a_political_solution Written by kpf
on 9/23/2008
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