Paulson Shifts Focus of Rescue to Consumer Lending (Do these guys have ANY clue what they're doing?)

[GliderGuider]

Paulson Shifts Focus of Rescue to Consumer Lending

Nov. 12 (Bloomberg) -- U.S. Secretary Henry Paulson plans to use the second half of the $700 billion financial rescue program to help relieve pressures on consumer credit, scrapping an effort to buy devalued mortgage assets.

``Illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards,'' Paulson said today in a speech at the Treasury in Washington. ``This is creating a heavy burden on the American people and reducing the number of jobs in our economy.''

Treasury and Federal Reserve officials are exploring a new ``facility'' to bolster the market for securities backed by assets, Paulson said. Officials are considering using a portion of the bailout money to ``encourage private investors to come back to this troubled market,'' he said.

Buying ``illiquid'' mortgage-related assets -- the reason the Troubled Asset Relief Program was established a month ago -- is no longer being considered, he said.

It's mid-stream! Quick, change horses!

The mind reels.

[GodlessBiker]

1. Taking money under false pretenses is a crime. He lied to Congress about what he was going to do.

[kirby]

3. Not really...

Congress passed a law which gave him BROAD authority. They probably knew and expected that talking about helping main-street was just a sales job tactic.

[GodlessBiker]

9. I remember his constant drumbeat was that he needed money to buy up bad loans...

to free up money to business make new loans. He hired some bit hotshot Wall Street guy to decide which loans to buy.

Now we hear that he is going to "invest" in the companies and let the companies pretty much do what they want with the money, including buying other companies.

[lligrd]

7. Not Really False Pretenses

I think it was pretty obvious from the start that he didn't know what the f*** he was doing.

[dixiegrrrrl]

28. He knew damn well what he was doing when he asked for and got a blank no oversight check.

First he gave OUR money to investment banks ( including his own, G.Sachs) so they would not be harmed by their investments crashing. He claimed it was because there was a "credit squeeze" and an "liquidity crisis" and the banks needed money to lend out to "get the economy unstuck".
Instead, the banks grabbed the money, gobbled up weaker banks, therefore making themselves even richer, and lent out no money.
Now he wants to do the same for the car loan/student loan/ credit card companies
( including American Express, which the Fed allowed to become a "bank")
so that these companies do not have eat THEIR bad debt.

There was never any intention of helping out the "taxpayer".
Hasn't been for 20 years.
Or more.

[LittleApple81]

2. He is still being shown on MSNBC, TOTAL INCOMPETENCE!!!!! nt

[lifesbeautifulmagic]

4. The change will come when they shift focus

to creating family wage permanent jobs

[aquart]

13. Well, the Bush administration can't do that. They have zero experience.

Their economic model doesn't even include jobs.

[GliderGuider]

14. I guess you don't need jobs if you have a strong economy...

:sarcasm:

[phantom power]

5. No, they really seem to be out of their depth.

That scares me more than anything else. Our economy is being managed by Lt. Gorman.

[gravity]

6. Paulson knows what he is doing

for being in the Bush administration, the guy has been surprisingly competent. He changes his position with the facts, which is why he decided to take a different approach with the money. This situation is very complex and someone has been flexible with dealing with the problems.

[GliderGuider]

8. I don't have as big a problem with the fact that he changed his mind

As with the fact that they couldn't forecast the situation correctly in the first place. Given that failure, who can have any confidence that this shift is the right one? Or the next shift? or the one after that?

This is really a testament to the fact that the whole thing is now officially out of control.

[gravity]

10. Most people didn't forecast this to begin with

and the ones who did were screaming that the sky was falling for the past 10 years. There wasn't a consensus that this crisis was going to occur. These things are too hard to predict.

I give Paulson credit for realizing his free market ideology was flawed and decided that the government intervention was the best way to solve it. He is smart enough to understand the problem and the actions needed to be taken to prevent from collapsing. He might not be perfect, but for a Bush appointee, it could be a helluva lot worst. Imagine some fool still screaming that we need less regulation to solve the market.

[GliderGuider]

12. Again, that's not quite what frightens me

I'm not concerned about predicting the onset of the collapse. Paulson and crew analyzed the situation after it began, decided how much of your money they wanted and what they needed to spend it on. By that time the facts and figures should have been available to them. The probability wave had already collapsed and they were dealing with an event not a prediction

However, even with the event on top of them and all the facts available they appear to misjudged what to do. There's a world of difference between "buy the banks' toxic waste" and "relieve pressure on consumer credit". One would assume that the signals that say do one would be clearly different from the signals that say do the other, at least different enough that a smart guy who's spent his whole life swimming in that pool should have been able to figure it out.

Of course if the signals were in fact so confused that nobody could read them, then God help us all -- we're in a lot deeper trouble than we ever dreamed.

[Pale Blue Dot]

16. Ahh. I see.

So those of us here who have been predicting this for the last two years, and presented evidence to explain why we thought it would, we don't count because we're "Chicken Littles"? I suppose you also believe that we wanted the economy to fail?

Man, this shit doesn't seem to end. Cognitive dissonance. Look it up.
http://en.wikipedia.org/wiki/Cognitive_dissonance

[girl gone mad]

19. Several economists forecast this crisis.

No, not just the permabears.

[gravity]

21. I agree, but it wasn't the consensous

The problem is that economists all the time predict doomsday scenarios, and it never occurs 90% of the time. It is more like the boy who cried wolf, then chicken little.

In hindsight everything looks obvious, but it is near impossible to predict these events, especially to the extent this one was. There were many people saying we were in a recession, but that isn't the same as saying that the whole financial system was going to collapse because we decided to let Lehman Brothers go under.

At the time there were people saying we should let these banks go under to support free markets, and we did it with Lehman creating a shit storm. So much for all those economists opinions. These things are complex and no one knows for sure what is going to happen next.

If you did, you can make bets on the market and be rich.

[dixiegrrrrl]

29. How could getting a blank check with no oversight possibly NOT be less regulation????

It wasn't "his" free market ideology, it was Greenspan's, and Greenspan sorta drooled an half ass apology for it.
Giving taxpayer money ( really taxpayer DEBT) to banks that don't lend it, does nothing-zip-nada-zilch to help our communities have jobs to pay our mortgages.
Even the banks are laying off people.
But holding onto the money.

Just like the Savings and Loan bailouts did nothing to help depositors in the 80's.

Actions speak louder than words, always.
Who is benefiting?

[soothsayer]

17. OR...they planned all along to misuse this authority and money to consolidate power

and money and companies, just as he got away with in the test case, where he secretly arranged and funded and created the terms for the Bear-Stearns hostile takeover. They just do it so blatantly, right before our very eyes, and we let them. THAT's the amazing part. We let them take over Fannie and Freddie wayyy back in Sept, even though the housing bill wouldn't go into effect until Oct. 1. And we all sit here like jerks, like we did when the SCOTUS handed the election to dubya oh so long ago, and we failed to riot, protest, etc. etc.

Makes me believe the conspiracy folks who say fluoride is added to our water to make us passive.

[girl gone mad]

18. Except he didn't change his position with facts.

He was forced to change TARP by foreign leaders. He's consistently been wrong on the economy, for years now.

[buzzard]

23. This I believe but what are your sources for this, I must admit I have been predicting doom for a

long time now as I could see no way out of the credit crisis that was inevitible given monetary policy.

[aquart]

11. WHAT?????

No, sir. Not without consent of Congress. This man has no clue what he's doing. Has he told us yet who already got money?

ARE WE EVER ALLOWED TO PUT THESE FUCKS IN JAIL?

[GliderGuider]

15. Ah, the picture clarifies a bit...

The switcheroo seems to be in aid of Ford and GM. And here I thought it would be used to help distressed citizens. Silly me!

US scraps plan to acquire banks' toxic debt

Henry Paulson, the US Treasury Secretary, said today that America's Troubled Asset Relief Program (Tarp) would also look at potential bailouts outside the financial sector, raising hopes that the Government will make funding available to the country’s struggling car industry.

President-elect, Barack Obama, used this week’s meeting at the Oval Office to press President Bush for immediate aid for US car-makers.

General Motors, America’s largest car manufacturer, reported a $2.5 billion net loss for the third quarter, bringing its total losses to nearly $57 billion since the beginning of 2005.
Related Links

Ford Motor Company’s $129 million quarterly loss, meanwhile, brought its deficit to nearly $24.5 billion since plunging into the red in 2006.

For the moment, Mr Paulson said the Treasury would limit its interventions to the financial system, but today's policy shift makes it more likely Government will get involved if necessary.

Dum dee dum dee dum...

[dixiegrrrrl]

30. This move has secret deals behind it.

GM owns 49 percent of the money-losing GMAC, ( auto loans, financial loans group)
with the remainder owned by Cerberus Capital Management LP.

Cerberus also owns a majority stake in Chrysler, and has reportedly been in talks about selling the Chrysler auto operations to GM possibly in exchange for a part of GM's stake in the GMAC business.

Get this:
Nearly $4 billion was tied up in GMAC Demand Notes as of Sept. 30. It's money to use for college tuition, mortgage payments or vacations.
The notes are available to GM and GMAC retirees and employees, and others including GM dealers and stockholders.
The notes are not FDIC-insured. These are short-term, unsecured debt obligations of GMAC LLC. This means there's no property that backs up the debt.

www.gmacfs.com

Ford Co. has same kind of program, ( fordcredit.com)

Bailing out car companies means bailing out their related credit/loan companies.

Bailouts are being used to delay the collapse of many of these companies while the wealthier banks fight for dominance.
When the dust settles, there will be 3-5 world wide banks, which will have monopolies on credit cards, loans, deposits, and writing the rules.

Cui bono

[pscot]

20. I think the collapse of retail sales

took them by surprise. Consumers have been the main economic prop for a generation or more. Without healthy consumer demand, there's no floor under the economy.

[BuelahWitch]

22. WE in the US are the ones who buy their overpriced crap

The $150 sneakers and designer clothes made by low wage workers in Indonesia, China, etc. I've been saying for years that by sending our jobs overseas they're pulling the rug out from under themselves. It would have collapsed long ago except for the easy availability of credit.
Do they think their workers making .25 an hour can buy this shit? How stupid can these assholes be? If I can figure it out, why can't they?
Sorry for all the cussing, but it really gets me when the bigshots are now having this great epiphany when I figured it out over 5 years ago...

[nichomachus]

24. They most definitely know what they're doing

They're looting the treasury and bankrupting the country. That way, they can do away with all government and social programs, under the guise of "we have no choice."

That's been the plan all along. Haven't you been paying attention?

Grover Norquist came right out and told us. He wants to "starve the beast," i.e., leave the government so broke that it can do nothing more than fund the military. Then, they privatize everything else. And we all battle each other for $5 an hour jobs with no benefits.

They know exactly what they're doing.

[formercia]

25. This is an old and well-known scam in DC

I have seen it used often in the black-ops field. Here's how it works:

You have an op in planning but you need funding, so you come up with a cover scenario that will pass muster and present it to get the funding. Later you declare the program unworkable but it doesn't matter because the whole point of the exercise was to get the funding. Then you go and do what you planned in the first place.

[GliderGuider]

26. So it's a bait-and-switch, then?

This bailout isn't black, it's right out there in the open. I just wish the same laws applied to its authors as apply to the rest of us.

[formercia]

27. People are so used to it, that it doesn't even register.

It's like the couple of Trillion that disappeared at the Pentagon. Poof, up in smoke.

It's an art form. People in Congress look the other way because, they know if they play ball, there's going to be a nice cushy job waiting after they leave or retire. Look at Phil Gramm and the nice job he hooked at UBS. Do you think he was offered that position because he was looking out for the tax payer?

Sure, it's bait and switch. As long as there isn't any blowback, everyone goes home happy.