It's 4:42 AM.
I've been up since 4:00, scouring Google News for the latest headlines on the bank bailout bill.
Here's the latest:
- Everyone hates investment bank executives, so executive pay will get clipped in some way under the plan.
- Mr. Paulson, the Treasury Secretary, will not get the blank check he asked for over the weekend. Rather, he will have to answer to Congress on how he spends taxpayer money.
- The government will take debt and equity positions in banks it bails out. This means that Mr. Paulson will buy mortgage backed bonds, as well as stock and "warrants" (special equity positions with repayment protections built in). The rationale is that taxpayers stand a better chance of recovering most or all of the money put in if the banks' stock value rises after the bailout.
- The government will require help for homeowners in junk loans.
We should know more later today, as Congress, Treasury and the Administration continue negotiations.
Here's what's still unclear:
- How homeowners will be helped under the plan,
- Whether the final plan will include Bankruptcy Code changes to allow the court to modify a home loan (something taken away as part of the 2005 Bankruptcy Act in a 1993 Supreme Court case), and
- Whether the government will pay hedge-fund prices (20 cents on the dollar) or 1980s government contract prices (12,800 cents on the dollar - remember the $640 toilet seat?) or something in between for distressed bank debt and assets.
Stay tuned, folks. This should get even more interesting as the day progresses.
I dont mind RTC's only if it truly helps and they sell these deals for pennys on the dollar and recoup some of the lost money, but who knows with our government anymore.
Ther is a great blog here suggesting the money go to the home owners which solves the problem and does not give it to the banks
I'm staying tuned for further information. Right now I am very suspicious of giving anyone $700 BILLION dollars to bailout Wall Street.
This stuff keeps me up too......but not at 4.00am. I think that the fat cats of the companies should NOT be paid until this mess is sorted out.
I think we the people, lose - no matter what happens. Greed has become a way of life, accountability is not for the likes of Washington. This mess is depressing and I'm not hearing any solution which demands accountability....what you mentioned above sounds like more lip-service. Sorry, but I am very cynical over the whole debacle.
Remember under the Reagan administration there was a movie starring Michael Douglas as Gordon Gecko a Wall St Financier. His famous line in the film was "greed is good". Well now hopefully we all can see that it is not. Enough of voodoo economics, enough of letting rampant exuberism destroy the middle class. It's time to speak out and take back this country before it's toolate.