This Bail Out is still a piece of shit

Josh Marshall chimes in...a one word synopsis: NO.

Put on the Brakes
As noted in the previous post, I'm quite convinced that some drastic action needs to be taken to avoid a cascading and debilitating series of crises. But the more I look at this plan, the more wrongheaded it seems. But if I'm understanding this deal, the taxpayers are going to pony up close to a trillion dollars to take bad debts off the hands of financial institutions who were foolish enough to make the deals in the first place. And in exchange, I think the tax payers get nothing? Sebastian Mallaby makes the good point that this is radically different than the S&L Crisis RTC which was liquidating the assets of thrifts that had already gone belly up -- paid the ultimate price, as it were. And as the insurer on the accounts, the government inherited the assets anyway. It was just a matter of selling them off. But here the point is to take these bad debts off these companies' hands so they can go back to being profitable businesses. This is moral hazard on steroids if I'm understanding this right.

Also, according to the Journal, finance industry lobbyists are already giving orders to Republican hill staffers not to allow any meaningful reforms or protections for taxpayers. So, just the money. No strings attached.

House Republican staffers met with roughly 15 lobbyists Friday afternoon, whose message to lawmakers was clear: Don't load the legislation up with provisions not directly related to the crisis, or regulatory measures the industry has long opposed.

"We're opposed to adding provisions that will affect [or] undermine the deal substantively," said Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, whose members include the nation's largest banks, securities firms and insurers.

A deal killer for the group: a proposal that would grant bankruptcy judges new powers to lower the principal, interest rate or both on a mortgage as part of a bankruptcy proceeding.

Let me repeat what I said below. NO. Not this bill, not this way. If that's all they can come up with, fine. Let them eat their worthless mortgages. let them eat dollars. If they want a bail out, do it on terms that make sense. Like helping the middle class, stiff financial regulations--ripped apart thanks to such whiz kids as Phil Gramm (the Deregulator in the night), and the million dollar CEOs can start by having their salaries sliced and their golden parachutes turned to lead.