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$700B Bailout Won’t Be Used As Planned

From an understanding Associated Press:

Paulson says troubled assets will not be purchased


WASHINGTON – Treasury Secretary Henry Paulson said Wednesday the $700 billion government rescue program will not be used to purchase troubled assets as originally planned.

Paulson said the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending.

He announced a new goal for the program to support financial markets, which supply consumer credit in such areas as credit card debt, auto loans and student loans.

Paulson said that 40 percent of U.S. consumer credit is provided through selling securities that are backed by pools of auto loans and other such debt. He said these markets need support.

“This market, which is vital for lending and growth, has for all practical purposes ground to a halt,” Paulson said.

The administration decided that using billions of dollars to buy troubled assets of financial institutions at the current time was “not the most effective way” to use the $700 billion bailout package, he said.

The announcement marked a major shift for the administration which had talked only about purchasing troubled assets as it lobbied Congress to pass the massive bailout bill.

Paulson said the administration is exploring other options, including possibly injecting more capital into banks on a matching basis, in which government funds would be supplied to banks that were able to raise money on their own.

The bailout money also should be used to support efforts to keep mortgage borrowers from losing their homes because of soaring default levels, he said.

A proposal to have part of the bailout funds used to guarantee mortgages that have been reworked to reduce monthly payments for borrowers is an approach the administration continues to discuss, but Paulson did not announce that it would be adopted. Federal Deposit Insurance Corp. Chairman Sheila Bair has pushed for that approach…

Suddenly it’s a bailout of and credit card debt and car and student loans? Oh, and to give people houses for free?

This is insanity.

Socialist insanity.

This article was posted by Steve on Wednesday, November 12th, 2008. Comments are currently closed.

24 Responses to “$700B Bailout Won’t Be Used As Planned”

  1. proreason says:

    This is why we appointed Paulsen king of the world.

    Instead of having Barney Fife, Franklin Pain, and Chris Dud making unilateral decisions that ruin lives, now King Paulsen gets to do it by himself.

    And soon, King Obamy will be able to move the pieces to his constituents to insure his continuing power.

    I thought it would take a few years, but with the willing acquiesance of the compliant masses, there will soon be nothing but compliant masses.

  2. Liberals Demise says:


  3. EvaTheFrisbeeDog says:

    Can someone please tell me why we needed the $700 billion bailout? I recall something about it being an urgent request to save capitalism throughout the world, with little time to actually debate, consider, etc.

    Let me point something out to anyone who cares to listen. Mortgage backed securities, the stated reason why we’re in a financial crisis, are mis-priced. While mortgage foreclosures may be high, 95% of mortgages are being paid and are not in foreclosure. If the par value of all MBS bonds is 100 (ceterus paribus), then with 5% default rate the price should be well above the 22 cents on the dollar Merrill Lynch sold their $30 billion par value MBS portfolio. Granted, the market may be anticipating more foreclosures, but nowhere near 80% that this price represents.

    This is simply a panic, the opposite of a bubble. It doesn’t make sense. What led to this were MBSs disproportionately loaded with sub prime mortgages, but sub prime is a small percentage of the market. Again, 95% of mortgages are not in foreclosure.

    To put it in easy to understand terms, imagine a jar full of jelly beans: You want one, but you know that one out of ten will upset your stomach, so you don’t eat any. Now if the jelly beans are colored red and black, and you know that the red ones make you sick, you’ll avoid them and select the black ones to eat. The problem with MBSs is that traders can’t, or won’t take the time, to distinguish between the good and the bad ones.

    So, again, tell me how the TARP is supposed to solve this problem?

  4. Ravenwood says:

    Wheee….Free money for everyone! Because money is free right? This is great, I can’t wait til they need another 1 or 2 trillion dollars for the next bailout. Let’s spend our way out of debt, that works right?

  5. GuppyNblue says:

    If I had any sympathy for their argument it vanished the second I heard they were putting pork into the bailout package. There’s no way for me to escape the common sense view of this tragedy. Too many people, especially the mortgage scammers, made stupid financial decisions. Borrowing with an adjustable rate during record highs in the market? Maybe some were stupid but I believe many were just thieves.

    But in this bizarre world those who screwed up will get bailed out by those who did the right thing. What happens if the cost of all this is too high and I lose my home? Until our government is willing to identify and punish the real perpetrators and profiteers I can’t trust a damn thing they do. If I had my way, they would all be contributing their mansions and bank accounts for the effort. They would also spend the rest of their miserable lives making big rocks into little rocks somewhere.

  6. Colonel1961 says:

    Absolute power corrupts absolutely.

  7. proreason says:

    Eva: “This is simply a panic, the opposite of a bubble. It doesn’t make sense. What led to this were MBSs disproportionately loaded with sub prime mortgages, but sub prime is a small percentage of the market. Again, 95% of mortgages are not in foreclosure.”

    This market is being manipulated. As you say, the mortgage “crisis” does not justify a 50% drop in market value. Neither does the underlying economy, which had 3.2% growth in the -1 quarter, and 5% unemployment.

    It’s probably a combination of panic about the takeover of the US government by the socialists, and foreign governments that would love to cause a depression.

    Obamy’s election could be the end of the USA as it has been formulated for 230 years. The radicals who have trained Obamy for 20 years want it. Our enemies around the world want it. And now the envious idiots in our own country with their hands perpetually in someone else’s pocket have found their champion. This is the most perilous moment this country has faced in 80 years. And as a brief history lesson, the Great Depression only ended because of a cataclysmic World War. I’m not saying we are there yet, but if history repeats, the results will be a lot worse this time.

  8. wytammic says:

    Okay, I missed the band wagon of purchasing a home I couldn’t afford. So, can I just consider my student loan paid?

  9. Anonymoose says:

    Paulson said that 40 percent of U.S. consumer credit is provided through selling securities that are backed by pools of auto loans and other such debt.

    Waitaminutenow…….wasn’t what got us into this mess in the first being high risk home loans being pooled together and marketed as securities? So now we have auto loans and “other debt” being used as securities to back credit cards? That makes as much sense as telling someone youi’ll lend them $100 because someone else is supposed to pay you $100 with money they’re borrowing from yet another person.

    Talk about a house of cards……and he wants to keep supporting it?

  10. wardmama4 says:

    These crapweasels have caused this and true to the entitlement mentality that is sweeping this nation – they even got reelected despite causing this, passing a pork filled massive expenditure bill (that will make it worse) and electing a freaking radical who will just continue to make more decisions that will make this whole thing even worse.

    All on the taxpayers back, wallet and dime.

  11. Professor_Repulso says:

    “Banking establishments are more dangerous than standing armies. …The issuing power [of money] should be taken from the banks and restored to the government and to the people to whom it belongs. If the American people ever allow banks to control the issuance of their currency…the corporation that will grow up around them will deprive the people of all their property, until their children will wake up homeless on the land their fathers conquered.”

    Thomas Jefferson

    “You bankers are a bunch of vipers and I will rout you out. If the American people ever find out how you operate, there will be a revolution before morning.”

    Andrew Jackson

  12. DEZ says:

    Whats next, bailing out the “checks for cash” crowd?

  13. BigOil says:

    Paulson worked for and ran a company where they were always considered “the smartest guys in the room.” Now he’s been given the keys to the kingdom and looks like a deer in the headlights. How about a little out of the box thinking Henry. Turn the money back over to the government and cut our taxes about 700 billion dollars.

    Just wait until The One gets his hands on the 700 billion. Once he’s done paying off mortgages held by deadbeats, ACORN and every left wing fringe group will be flush with cash.

  14. Professor_Repulso says:

    Does anyone remember the Community Reinvestment Act?

  15. JohnMG says:

    ….”Does anyone remember the Community Reinvestment Act?….”

    ‘Once upon a time, in a land far, far, away………..zzzzzzzzzzzzzz.’

    A sad commentary on the attention span of the average voter.

  16. RightWinger says:

    Here are the next candidates I foresee in getting a piece of the bailout pies.

    NY Times and every other liberal fish wrap, Err-America, George Soros, Hillary Clinton, AFL-CIO, ABC-NBC-CBS-MSNBC Nightly Propoganda News, Jesse Jackson’s Rainbow Coalition and just about every business that donated heavily to the Dimocrats.

  17. EvaTheFrisbeeDog says:

    Anonymoose: Securitizing debt isn’t a bad thing; in fact, it should be a good thing, i.e. distribute risk, access to investment, etc. The problem is that when the govt backs these securities, as Fannie and Freddy did, there’s not much down-side to making bad loans. If we don’t let businesses fail, i.e. let the market find a bottom, nothing will change.

    Now we hear that “Bush ruined the auto industry!” Recently Holman Jenkins wrote back-to-back Wed columns briefly explain the problem and Paul Ingrassia wrote two in depth articles in the WSJ. You can blame the UAW, poor management, and govt regulations, i.e. two-fleet CAFE standards, but this has very little to do with the current financial panic.

  18. 1sttofight says:

    Most people who buy a new car/truck dont care what the interest, price or number of payments are. All they are concerned about is , What is the monthly payment.

  19. electionhangovervictim says:

    Liberals Demise, I’m wondering the same thing! Seems we don’t matter anymore…who gives a cr*p what the people want? They don’t know what’s good for them anyway. Let the liberal judges and politicians and the ACLU make all the decisions! They know what’s best for us!
    Seriously, what’s the point in putting things up for a vote anymore when things like Prop 8 are being contested and people like Al Franken are gonna re-count their way into office?

  20. MAYIBUDIN says:

    Paulsen is simply incompetent and that is the message he is sending to all the world. Until he resigns or gets replaced by a competent person (here is for high hopes) the world and the american investors will not trust our economy. Don’t forget that Paulsen used to work for an investment bank and all his decisions are based (biased) on making his friends happy. He is even suspected of trading insider information with his buddies by some of the NYC press. All of his actions will do no good to this economy and this country simply because you cannot trust an incompetent fool. Here is a simple plan:
    lets ride this recession, tighten our belts, pay our debts, pick the pieces and get back to work by investing American first, the rest we shall see.

  21. 1sttofight says:

    WTF has changed in the last 3 weeks?

  22. Colonel1961 says:


  23. Grassy Knoll says:

    I was just reading on the ABC News site that if you want some TARP (Troubled Asset Recovery Program) you can go online and apply for some. The government should just get Matthew Lesko to advertise for them: “Want to start your own business?! Get a degree?! Pay for a degree you already have?! Buy some troubled assets?! Want to buy a stake in a bank??! Buy my book! I’ll show you how!” Hey, maybe Lesko could be Secretary of the Treasury? His business plan is: “I get stuff for free and I sell it for as much as I can get.”

  24. proreason says:


    November 13th, 2008 at 1:00 pm
    Paulsen is simply incompetent and that is the message he is sending to all the world. Until he resigns or gets replaced by a competent person”

    The problem isn’t Paulsen, it’s Central Planning.

    We got into the mess in the first place because a handful of idealogues “centrally planned” mortgage breaks for deadbeats. Now we have Paulsen making unilateral decisions. He might as well be playing craps with the wealth of the country. Soon it will be Obamy, who has never held a job, managed an employee, or run a business.

    Markets always beat individual decions because markets constantly adjust to changing conditions. The fools should have not interfered with the mortgage market in the first place, but once the enormity of their folly became apparent, they should have got the f**k out of the way.

    Now we have a disaster. Massive layoffs are beginning. Trillions of wealth has disappeared. We will be lucky to avoid a Depression.

    And a Socialist idealogue will be making the decisions. Gee, I wonder how he will play it.

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