What Did Your Representative Vote On the Bailout Bill?

10 Comments on What Did Your Representative Vote On the Bailout Bill?

Wm Tanksley on September 30, 2008 | permalink

 

I'm probably misreading this, but the title of that page you linked to is "To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes."

Is that the correct vote?

john on September 30, 2008 | permalink

 

i know it's historic vote and all, and i bet you're a smart cat (you're on my list of "faves" blogs), but should any bailout be opposed? that's insanity, because a loss of credit markets would be enormously destructive. yet i don't see strong substantiation for your view. and i conclude, at least until you educate me otherwise, that you're taking an extremely risky view informed by little more than ideology?

john on September 30, 2008 | permalink

 

here, consider real discussion on a terribly important matter.

[Edited for formatting.]

right side of the river on September 30, 2008 | permalink

 

i'm also interested in knowing why you oppose the bill. i read your posts pretty regularly and value your opinion.

TFB on September 30, 2008 | permalink

 

Wm Tanksley – I'm not sure why the roll call had such a weird title, but I'm pretty sure it's the right one. The bailout bill has nothing to do with members of the uniformed services, volunteer firefighters, and Peace Corps volunteers. Here's a different link for the same votes.

John and Right Side – I will post something tomorrow on why I oppose the bailout bill. The short answer is I don't buy the "must do it NOW" argument. That's high pressure sales tactic like "you must buy it today because the sale ends tonight." For a serious matter like this, Congress should hold hearings and listen to expert witnesses from all sides. Is the problem as serious as some claimed? If it is, is the solution the right course of action? Congress should not legislate by looking at the daily ups and downs of the stock market. I agree with this letter signed by more than 200 economics professors, including 3 Nobel Laureates. They are much smarter than I am.

Dante311 on September 30, 2008 | permalink

 

If I may say my two cents for why I oppose the bill.

1. Rushed decision — I have heard this story before (2003)
2. No guarantee that it will work. We have already pumped a lot of money into the system previous to this bill without result.
3. Common sense. They are supposedly passing the bill for the American people yet 100 to 1 are calling telling their representative no to the bill as I heard on Yahoo! finance.
4. Bigger picture. What will happen to the dollar and inflation if we continue to monetize huge amounts of money? We can not stay a debt state forever. In the long term in is not viable.
5. Unfair. Why should the American public OVERPAY for assets! I don't get how they can make ridiculous profits on these securities over the years and then resell them to the public for more than they are worth. Sounds like win/win for banks.
6. Conflict of Interest. Paulson, the original pusher, if I recall correctly, was the CEO of Goldman Sachs in 2007 and worked there for many years. I have no doubt he has many banker friends and personal investments tied up in financial stocks. Is he really not looking out for numero uno?

Just a couple reasons I can think of.

-Quentin

JC on October 1, 2008 | permalink

 

TFB,

You're using support that was of Paulson's plan, as of the 24th. As quoted in the link you gave…

"(This letter was sent to Congress on Wed Sept 24 2008 regarding the Treasury plan as outlined on that date. It does not reflect all signatories views on subesquent plans or modifications of the bill)"

This is NOT the plan the House voted on Monday, nor is it the plan that the Senate will be voting on today.

Why don't you check out things like the LIBOR, which is the lending rates most people get (plus a percentage, obviously), and see for yourself how this is freezing credit and moving rates up daily for everyone trying to get a loan.

This isn't about the stock market, this is about the availability of credit and confidence in the market.. and by market, I mean credit market, not stock market. Passing a bill will go far to helping that confidence, eliminating some of the problems by themselves.

People are acting like this only matters to the people on "Wall Street" but in reality, go ask your car dealer or realtor what they think about it… they are the people on "main street" that are being directly effected by this… and when you want a loan for something.. it will directly affect you.

TFB on October 1, 2008 | permalink

 

JC – The plan the House voted on and the plan the Senate will vote on are not that different from the original plan. My point isn't whether the plan itself is good or bad. Whatever it is, there's no rush.

I looked up the LIBOR by Googling and got this historical LIBOR chart since 1999. Yes, the rate is up, but it's still low historically. LIBOR was much higher as recent as 2006. I'm not even talking about 15-20% interest rates in the 1980s.

People can't get credit as easily as before. I don't think it's necessarily bad. Have you watched the documentary Maxed Out?

JC on October 1, 2008 | permalink

 

The chart you give shows the 3 Month LIBOR rates at 2.8063.. the problem of course, is that is at the end of August. Right now, the LIBOR 3 month USD rate is 4.15.

The LIBOR-OIS spread, which is the difference between the 3 month and overnight rate went to a historical high yesterday. Meaning people will lend money overnight, but not even three months out.

Sure, its not high compared to the 1980's.. but you might recall 1987 crash if you start quoting interest rates. You might also recall that from 1980 and 1994 almost 1600 banks failed or received FDIC help, mostly due to bad housing loans (source: http://www.fdic.gov/bank/historical/history/vol2/panel3.pdf). Until we a) regulated banks in 1989 and b) "bailed out" the S&Ls.. nothing turned around.

The "Lessons Learned" from the source above should give everyone some insight… written by the FDIC chairman from 1985 – 1991, L. William Seidman.

Lesson 1: "…must be that there is no “magic bullet” system that will ensure banking safety and soundness."

Lesson 2: "As Adam Smith recognized, banking is different. Thus, lesson number two must be that financial systems are not and probably never will be totally free market systems."

Lessson 3: "…our third lesson is that the biggest danger for financial institutions is lending based on excessive optimism generated about certain kinds of lending that are the fashion of the day."

Lesson 4: "Thus, based on these insights, our fourth lesson can be that insolvent banks require government action, tailored to fit the individual situation, and the longer the corrective action is delayed the more costly and destabilized the problem will be."

And finally Lesson 5:

"Thus, the fifth lesson can be that our faith in our international system, despite its flaws, actually was enhanced, perhaps to our surprise. Not only was the world financial system able to survive, but during this period international regulation was improved and the supervision of the system was changed in a fundamental way."

Lesson 5, in my opinion, should not be taken without the context of regulation, and action by government of insolvent banks.

Obviously this all rings a bell, as in the early 1980's the S&Ls were deregulated.. then a few years later everything blows up due to bad home loans. This seems to be on familiar ground as we had deregulation.. now a few year later.. everything blows up due to bad home loans.

And to answer your question. No, I haven't watched "Maxed Out" yet, but I can react to it in this way. I agree that people should live debt free.. and with the exception of my 30 year fixed rate loan that I am paying off early, that is how I choose to live my life. But we are in this mess, whether we like it or not. And inaction has cost us, and those in debt, REAL money.. as the LIBOR sets the rates of that debt we hate so much. So everyday it will get worse, until we fix it.

TFB on October 1, 2008 | permalink

 

JC – OK LIBOR is 4.15% now. It was 5.5% in 2006. It was between 5% and 6% in the 2nd half of 1990s. The financial system didn't collapse because LIBOR was 6%. I didn't hear about people were hurting because LIBOR was 6%.

I'm in favor of regulations. I'm in favor of the FDIC process, which is well defined and clearly understood by all parties. Any bank can still use that process today. If a bank doesn't want to lend any more, they can come to FDIC, surrender all their assets, and have FDIC pay out the depositors. The bank's shareholders can divide what's left after FDIC is done. FDIC is quite experienced in doing that. They did it for IndyMac, WaMu and Wachovia this year without needing a separate bailout plan. The operation didn't cause any significant disruption to the customers. Closing down insolvent banks and buying bad assets from banks are two entirely different concepts. Also we are talking about utilizing an established process versus creating something new. Without passing any new law, FDIC will still work as it always has.

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