NYT editorial: Hard Truths About the Bailout

[DeepModem Mom]

Hard Truths About the Bailout
Published: September 19, 2008

....Lawmakers and administration officials must be prepared to tell Americans the full, hard truths about this plan:

¶ What is this going to cost the taxpayers and who decides? It’s generally believed that many of the troubled assets that the government would buy will, in time, be worth more than they can fetch in today’s chaotic markets. That’s far from a sure thing. The assets are tied to housing, so their value will depend on how far prices fall, how many people end up defaulting and how long it takes before housing rebounds — all big unknowns.

For those reasons, it’s important for Americans to know who is going to decide what is the right purchase price for these assets. Wall Street will have a role, of course, but outside experts should be allowed to analyze the results. Americans also need to know how the process will be monitored to ensure that taxpayers’ interests are protected. If the government gets the price right, the upfront outlay could be recouped when it later sells. If it overpays, the taxpayer is stuck with the loss.

¶ How will Congress balance the bailout of Wall Street and the needs on Main Street? If financial markets stabilize, all Americans will benefit. But Congress must do more to provide direct help to struggling American families. Lawmakers should use the bailout legislation to also extend unemployment benefits, bolster food stamps and provide aid to state and local governments to provide health care and other services that are especially important during tough times.

¶ The administration and lawmakers also need to tell Americans that the era of cheap and easy money is over and that there are more tough times to come. Whose taxes will have to go up? How will the government help to create the jobs of the future? How will the most vulnerable Americans be protected? And they need to explain that the cost of the bailouts will compete with other spending.

¶ Finally, Americans need to be told a more fundamental truth: This crisis is the result of a willful and systematic failure by the government to regulate and monitor the activities of bankers, lenders, hedge funds, insurers and other market players. All were playing high-stakes poker with the financial system, but without adequate transparency, oversight or supervision.

The regulatory failure, in turn, was grounded in the Bush administration’s magical belief that the market, with its invisible hand, works best when it is left alone to self regulate and self correct. The country is now paying the price for that delusion.

If lawmakers and administration officials really want to restore confidence, the bailout must be only a first step. The hard work of establishing and enforcing the regulations that are needed for a truly trustworthy financial system, still lies ahead.

http://www.nytimes.com/2008/09/20/opinion/20sat1.html?hp

[MissWaverly]

1. what is the next step

is this yet another bail out for the wealthy elite at the expense of the suffering middle class, will this mean that Bush will leave office with a busted treasury and a $5,000 a minute war paid for with IOUs. Will this put much needed repair of our infrastucture and reform of our health care system beyond reach for another generation.

[DeepModem Mom]

2. As I look through news sources this morning, despite the "bailout,"...

I'm seeing many more questions than answers.

[MissWaverly]

3. would it be cheaper to give debtors a 2nd chance

on their mortgages than to bail out the greedy investment blokes who did the con job in the first place, and give them a fixed rate and let them pay off their mortgages than to hold a fire sale for speculators to gobble up
the mortgages the US has taken and profit off them.

[DeepModem Mom]

4. That does make sense -- and certainly seems fairer. nt

[MissWaverly]

5. where my sister lives, there are 5-6 empty houses

all from people whose lives were shattered, 1 was a plumber whose wife also worked, the problem was that the houses
built 10 years ago, originally sold for $159,000 and then ballooned to $400,000 and people still needed houses to live and got mortgages for these inflated prices.

[CitizenPatriot]

6. no kidding

I've been wondering why only a few banks offered this option. We would all benefit from such a proposal; property values wouldn't plummet, people could stay in their homes which helps stabilize them for work as well as housing, the banks wouldn't have mounting bad debt on the table, etc.

One of the problems I was hearing from realtors was that a house would be put on the market for a quick sale before the people lost it, and the owner of the mortgage would have to agree to the price. However, the owner of the loan was now a bank in china, which had no idea of the reality of the market here and so for a good year wouldn't be willing to come down on the price at all. It amazes me that we pay so much in taxes and there are so many committees and sub committees of cronies running around in Washington and NO ONE can step up to the plate to communicate to the loan holders the change in the market here? No one can step up to suggest alternate ways of handling this debt?

Of course, the states tried but *'s morons at the OCC ran over them and Congress (repub ruled) refused to listen. They took power away from the states, who could see what was happening at the local level and were desperately trying to put an end to the reckless lending....but of course, the OCC pulled a *, signed a new rule into being, and viola! States had no more power over lending....Just cuz * said so.

Too early on a Saturday to think about how spectacularly incompetent and self-serving these failures are. (failures is my new term for * admin and McCain/palin).

[MissWaverly]

7. they could look at the original terms of the mortgage

what was the original rate that the mortgage had, could the loan be reset to that rate. I am leary of paying out to investment banks and foreign investors. I don't think that there will be any "correction" of current practices if they are stripped of their toxic loans w/o penalties.

[CitizenPatriot]

8. if the republicans get their way after this

we are cooked.

even conservative republicans are jumping ship from this catastrophe known as "Free Markets" and "Deregulation".

Why do I assume they will handle this responsibly? This is a time when it becomes clear why we should have impeached Bush. We have no authority in the congress, the DoJ is working for Bush in an illegally partisan way (will Fine ever finish all of those investigations?) and Bush has anointed himself/the exec branch the SOLE power in a state of emergency, which he has declared us to be in for several years now.

As long as he is in office, we will continue to have this utter ineptness, incompetence, greed, waste, and fraud.


How can we be sure this money is being used in a prudent manner when the same people who brought us this mess are in charge of fixing it?

[MissWaverly]

9. there is no oversight, government by one man

only him, who knows if this is another rule by the "gut" moments, he's the same man according to Woodward that lied to the American
people saying that we were winning in Iraq when he knew that we were losing.