In a change from the original proposal sent to Capitol Hill, foreign-based banks with big U.S. operations could qualify for the Treasury Department’s mortgage bailout, according to the fine print of an administration statement Saturday night.
The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States.
Treasury Secretary Henry Paulson confirmed the change on ABC's "This Week," telling George Stephanopoulos that coverage of foreign-based banks is "a distinction without a difference to the American people."
"If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said.
"That's a distinction without a difference to the American people. The key here is protecting the system. ... We have a global financial system, and we are talking very aggressively with other countries around the world and encouraging them to do similar things, and I believe a number of them will. But, remember, this is about protecting the American people and protecting the taxpayers. and the American people don't care who owns the financial institution. If the financial institution in this country has problems, it'll have the same impact whether it's the U.S. or foreign."
The legislative outline that went to Capitol Hill at 1:30 a.m. Saturday had said that an eligible financial institution had to have “its headquarters in the United States.” That would exclude foreign-based institutions with big U.S. operations, such as Barclays, Credit Suisse, Deutsche Bank, HSBC, Royal Bank of Scotland and UBS.
But a Treasury “Fact Sheet” released at 7:15 Saturday night sought to give the administration more flexibility, with an expanded definition that could include all of those banks: “Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets.”
The major change in the suggested eligibility requirements is the biggest change that Treasury publicly made after a day of briefings and conversations with Capitol Hill, and is likely the first of many.
Aspects of the $700 billion, two-year proposal that are still under negotiation include what, if anything, will be added to the administration’s simple but sweeping proposal. And the parliamentary route, such as what committees or hearings might be involved, has not been finalized.
House Financial Services Committee Chairman Barney Frank (D-Mass.) has a hearing scheduled for Wednesday that is likely to focus on the proposal.
Under what congressional officials called a likely scenario, the measure could go to the House floor on Thursday, with passage expected the same day.
The Senate could take the package up as soon as Friday and send it to President Bush for his signature, although the Senate schedule is less predictable and had not been determined.
Officials expect passage by huge margins in both chambers because Paulson and Federal Reserve Chairman Ben Bernanke have told congressional leaders the country’s financial stability depends on it.
House Democrats plan to insist on adding protections for homeowners facing foreclosure. They also want to add a measure to help homeowners facing bankruptcy and an executive compensation restriction designed to prevent golden parachutes for the heads of troubled institutions.
Sen. Barack Obama (D-Ill.), who was supportive of the bailout concept in a statement released Friday, believes that “whatever gets done in Congress has to protect Main Street,” senior adviser Stephanie Cutter said on MSNBC on Saturday.
On “Fox News Sunday,” Paulson told Chris Wallace that he would resist the Democrats' desired limits on executive compensation.
The Middle Class taxpayer is no longer capable of funding on this scale. If foreign interests are to be included, then the tax burden should be shared by those international partners and their respective countries.
Mr. Phil Gramm has the power to recapitalize the USA by opening up the Swiss Bank he is vice chair of and hides uber-wealth of Americans and Corporations from taxation. Since he bears a huge responsibility by his massive liberalization of banking, lending and trading in legislation during his tenure as Senator-this is the least he can do in a quid-pro-quo to the taxpaying public.
Those of us in the Middle Class who did not buy into the excesses of easy credit look like fools. We have lived within our means, paid our taxes and our bills. I would love to have a home that has all the luxury amenities but couldn't afford it-so my lifestyle is modest. I should have bought that big home I wanted as now I'm going to pay for it and get nothing in return. I should of run up my credit card bills and bought that boat we wanted on credit, have a nice clothes, fancy dinners out, social events, big screen tv's and beautiful furniture for that house with the whirpool tub I really NEED now that I'm ill and can't work anymore. I should have bought that 50,000 car that my credit score said we could have. Now I'll pay for everyone elses luxury lifestyle.
When I am old, gray, sick and alone-will anyone bail me out and help me after my savings from decades of work is depleted? I seriously doubt it.
FREE TRADE, YES!! SLAVE TRADE, NO!! My Destiny: A human pop-sickle in January 2009.
The Swiss people's trust in the country's banking giant UBS has been eroding following the subprime crisis, a survey commissioned by Swiss tabloid newspaper SonntagsBlick indicated Sunday.
Only 35 percent of Swiss people surveyed on September 19 said they still trusted UBS, compared to 41 percent of those polled in early February.
Some 60 percent now said they did not trust the bank, while in February, the corresponding figure was 48 percent.
The survey contrasted with the level of confidence in Swiss banking overall, as three in four people said they still trusted Switzerland's banks in general.
The results appear to reflect customers' actions.
In the second quarter of the year, UBS saw net new money outflow of some 43.9 billion francs as customers took their assets elsewhere.
However, Raiffeisen reported during the first half of the year new money inflow of six billion francs. Likewise, Zuercher Kantonalbank reported net new money inflow of 6.7 billion francs.
UBS is among one of the worst-hit banks worldwide by the subprime home loans crisis, having written down some 42.5 billion dollars on its subprime-related assets since the beginning of the turmoil.
The fact that UBS is under investigation for providing a tax haven and for other criminal activity might just have a little to do with the withdrawls as uber wealth seeks another shelter.
If the Swiss want their investment bank to survive, then they can fund it, not the American Taxpayer who didn't play their toxic games. Remember folks, its not just our real-estate market that participated in predatory lending practices, mortgage securities speculation and real estate speculation-the UK and Europe did too.
Is the american taxpayer expected to bail out the world????? You 'free' market capitalists wanted a globalilzed economy-then let the payment be global too then.
FREE TRADE, YES!! SLAVE TRADE, NO!! My Destiny: A human pop-sickle in January 2009.
Bundlers are people with friends in high places who, after bumping against personal contribution limits, turn to those friends, associates, and, well, anyone who's willing to give, and deliver the checks to the candidate in one big "bundle." Even though these donors direct more money to the candidates than anyone else, disclosure can be spotty, with McCain posting bundlers by ranges, indicated in this chart with the "max" and "min" columns, and with the top ranges being simply "$500,000 or more." Together, as of August 18, 534 elites have directed at least $75,750,000 to McCain. Top Industries of McCain Bundlers Securities & Investment $11,350,000 Real Estate $9,500,000 Lobbyists $6,250,000 Lawyers/Law Firms $4,900,000 Misc Finance $4,500,000
The subprime meltdown was caused by investment brokerages who were left free to do what they wanted with Bush appointed business cronies in the SEC. They pushed out money to be loaned by any means necessary - including no money down, no proof of employment, no credit check, all you need is a pulse. Why the high demand? A form of financial engineering called securitization, which allowed many mortgage lenders to pass the rights to the mortgage payments and related credit/default risk to third-party investors via mortgage-backed securities (MBS) and collateralized debt obligations (CDO). Corporate, individual and institutional investors holding MBS or CDO now face significant losses, as the value of the underlying mortgage assets decline. Does this sound like a something Obama did?
How did this happen?
Economist Robert Kuttner has criticized the repeal of the Glass-Steagall Act as contributing to the subprime meltdown.
1. This act had since 1933 eliminated Conflicts of interest characterize the granting of credit – lending – and the use of credit – investing – by the same entity, which led to abuses in 1933 (Great Depression remember?).
2. Depository institutions possess enormous financial power, by virtue of their control of other people’s money; its extent was limited by the act to ensure soundness and competition in the market for funds, whether loans or investments.
3. The act kept banks out of the securities business. Securities activities can be risky, leading to enormous losses. Such losses could threaten the integrity of deposits. In turn, the Government insures deposits and could be required to pay large sums if depository institutions were to collapse as the result of securities losses.
4. The act made sure deposits and liabilities did on get out of balance. Depository institutions are supposed to be managed to limit risk. Their managers thus may not be conditioned to operate prudently in more speculative securities businesses. An example is the crash of real estate investment trusts sponsored by bank holding companies (in the 1970s and 1980s).
Why was it repealed by the Republican Congress in 1999? So it could be replaced by the Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, which allowed banks and insurance companies to do it all, investments - grant credit - lend - and use credit; which led to abuses and the fix we're in today.
Who led this charge of Deregulation? Gramm? That's right, Phil Gramm: Mr. “nation of whiners” who is still advising McCain on economic matters.
Remember all that faux indignation by the McCain campaign when Obama did not accept public financing? In June, McCain said that Obama's move to drop out of the system "should be disturbing to all Americans…Sen. Obama's reversal on public financing is one of a number of reversals ... that he has taken…This election is about a lot of things, but it's also about trust. It's also about whether you can take people's word. ... He said he would stick to his agreement. He didn't." So if McCain took public financing, why is he still holding fund raisers? In May, John McCain’s campaign devised a new system to increase the maximum amount an individual can donate to the unofficial Republican nominee’s election efforts. The “McCain Victory 08” fund is a joint committee, combining the McCain campaign, the Republican National Committee and four key states under a “hybrid legal structure.” This joint fundraising committee will allow his “publicly-financed” campaign to accept individual contributions as large as $70,000 (now that’s a Republican Donor), an amount that is far in excess of contribution limits for candidates and political parties put in place by McCain's own campaign finance reform law, the Bipartisan Campaign Reform Act of 2002, also known as McCain-Feingold. The Republican National Committee receives $28,500 of the donation. The remaining funds are divided equally, up to $10,000 a piece, among four states the campaign has designated as battlegrounds for November: Wisconsin, Minnesota, Colorado and New Mexico. The campaign also has individual Victory Fund programs in California, Ohio and Florida. Each of those states can also receive a maximum of $10,000 from an individual. Better still, with a little help from Bush cronies at the FEC he won’t even have to disclose who those fat cat donors are until mid-October or even after the election. Over half of the money McCain is spending right now to pay for his ads is coming from these underhanded, nearly unlimited donations. McCain’s willingness to evade the spirit of his own McCain-Feingold “reform” law by exploiting a loophole and reaping huge contributions from wealthy donors shows the full extent of his hypocrisy and sends a clear signal that his campaign’s participation in the public financing system was a hollow political stunt. McCain you hypocrite, you aren’t fooling anyone. http://blogs.wsj.com/washwire/... For a line-by-line rebuke of Gov. Palin's speech -and the McCain/Palin ticket- please visit my thread on Politico at: http://dyn.politico.com/member..."Whenever the people are well-informed, they can be trusted with their own government."- Thomas Jefferson 1789
http://www.opensecrets.org/pre... McCain's top contributors (individuals that we know of): Merrill Lynch $298,413 Citigroup Inc $269,251 Morgan Stanley $233,272 Goldman Sachs $208,395 JPMorgan Chase & Co $179,975 AT&T Inc $174,487 Blank Rome LLP $150,426 Credit Suisse Group $150,025 Greenberg Traurig LLP $146,787 UBS AG $140,165 PricewaterhouseCoopers $140,120 US Government $137,617 Bank of America $129,475 Wachovia Corp $122,846 Lehman Brothers $117,500 "Whenever the people are well-informed, they can be trusted with their own government."- Thomas Jefferson 1789
Meet John McCain's friends and advisors: Keating: Remember him? $2,000,000,000.00 paid by US taxpayers to bail out Keating’s Lincoln Savings and Loan… McCain and Keating were personal friends following from 1981 until HE WENT TO JAIL. McCain received $112,000 between 1982 and 1987 in political contributions from Keating and his associates and wife Cindy McCain and ‘dad invested $359,100 in a Keating shopping center in April 1986. McCain and family made nine trips at Keating's expense on Keating's jet including vacations to Keating's retreat at Cat Cay, Bahamas. McCain met with the federal regulators on Keating's behalf (but not to influence them – yeah right). Confesses McCain, “…it was the wrong thing to do." Yeah, so is voting for you in November. Jack Abramoff: A review of campaign finance filings shows McCain accepted more than $100,000 in “donations” from employees of Greenberg Traurig, Jack’s lobbying firm until HE WENT TO JAIL. Phil Gram: Mr. “nation of whiners” who deregulated oil trading and banking – voila Sub-Prime Meltdown and $150 a barrel oil. He and his wife were big friends of Ken Lay (died just before HE WENT TO JAIL); he collected more than $97,000 in campaign contributions from ENRON. Wendy Gramm was on ENRON’s board and was paid between $915,000 and $1.8 million in salary, attendance fees, stock options and dividends for helping ENRON implode. John Green and Wayne Berman: McCain’s chief liaison to Congress and his national finance co-chairman billed more than $720,000 in lobbying fees from 2005 through last year to Ameriquest Mortgage – big subprime circus - which has since been bought out and was forced to settle suits with 49 states for $325 million. Carly Fiorina: John McCain’s economic brain and the RNC Victory Chair, was former CEO of Hewlett Packard (before she was effectively fired by the board for poor performance). While CEO she fired 25,700 workers in 2001, and saw her pay jump 231 percent, from $1.2 million in 2001 to $4.1 million in 2002, that’s $112.84 for each laid off employee. She’s a real saint and a job creator! Charlie Black and Thomas G. Loeffler: McCain senior advisor and his campaign co-chairman, received more than $15 million lobbying the White House, Congress and others as agents of nearly a dozen foreign clients in recent years."Whenever the people are well-informed, they can be trusted with their own government."- Thomas Jefferson 1789
Well, if there is anyone left out there who supports the actions of this incumbent administration, go ahead and vote for four more years of it by 'Just Saying Yes' on Palin/McCain. But if you do, don't tell your children, grandchildren, great-grandchildren, or their descendants, 'cause when they get the bills, they'll stone you to death.
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