Secretary Paulson Re-Strains Credulity

What in the World Can One Make of Treasury Secretary Henry Paulson? We mean this without rancor or sarcasm, and with all respect due to a member of the cabinet of a sitting president of the United States.

But What Can Anyone Make of It?

Back in September, Channeling Barack Obama™ addressed the confusion created when Secretary Paulson’s testimony before the Senate Banking Committee directly contradicted the contents of his short proposal for bailing out Wall Street. In that circumstance, the man said that his proposal did not try to prevent oversight of the Treasury Department. But the wording of the proposal clearly did just that.

See our previous posting, from 09/24/08, here:

“Treasury Testimony Baffles the Nation”

Either Secretary Paulson Lied, or he is incompetent at understanding the English language. (Which incompetence would beggar belief.)

Now Secretary Paulson, speaking yesterday before the House of Representatives, says that to use the Troubled Assets Relief Program (TARP) for limiting mortgage foreclosures “would violate the intent of the rescue approved by Congress.”

Congressman Barney Frank challenged Secretary Paulson on this statement, pointing to TARP language that allows Treasury to, “use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.” [Source: The New York Times, 11/19/2008, p. A30]

So What’s Going On? Why does Secretary Paulson's testimony once-again seem to contradict the facts?

What Is the Difference Between capital injected into banks indirectly to encourage “loan guarantees and credit enhancements to facilitate loan modifications” and similar loan modifications made directly to homeowners to facilitate their staying in their homes and paying off their mortgages?

TARP Funds for Homeowners Rather Than to Banks

One Proposal for Mortgage Modifications would place a TARP agency in an intermediary position between homeowner and mortgage-holder. The agency would extend the term of the original mortgage to a greater length, lessening the homeowner’s monthly payments, while yielding a greater total payment over all. The agency would collect the homeowner’s monthly payment, add to it the difference between this payment and what the mortgage-holder gets, and make the full, original payment.

The Basic Premise Underlying this proposal is that, over time, the underlying value of the home will appreciate in value above what is owed, including any additional principal resulting from the TARP contribution. At sale or transfer, the American taxpayer is made whole—including a profit on the additional money.

This Proposal Allows More Americans to stay in their homes and protect their own financial interests, as well as those of the taxpayer.

The Fewer the Foreclosures, the higher the “floor” that is placed under the prices of American houses overall. Which leads to a shortening of the current economic recession and credit crisis.

How Does This Proposal Mesh with Secretary Paulson’s ideas for loaning funds to troubled banks, so that they in turn can buy up other distressed banks? Under the Paulson plan, housing prices will continue to go lower for quite a while, and it is the banks—not the risk-taking American taxpayers—who benefit the most from the taxpayers' risk.

We Are Looking for Some Guidance, some evidence of any kind, to show that current Secretary of the Treasury Henry Paulson is neither a flagrant liar nor a profoundly incompetent public servant.

Here, We Invite Secretary Paulson to contact us and explain the apparent discrepancies between his previous testimonies in relation to the Troubled Assets Relief Program:

Secretary Paulson, the Floor Is Yours.

And Regardless of Any Appearances to the Contrary, we appreciate your service efforts on behalf of the American people.

ASP: The American Shareholder Plan

The News out of Washington, D.C., Today came from Secretary of the Treasury Henry Paulson. Among other information contained in the Secretary’s report on coming government actions related to the troubled international crisis, one thing stood out:

The American Taxpayer Is about to Become a Major Shareholder in the securities of troubled financial institutions. According to Secretary Paulson, in the appropriate or necessary circumstances, the taxpayers, through the agency of the national government, will receive actual shares of stock in the troubled banks and other institutions.

The Distribution of These Shares was not mentioned in the Secretary’s press conference, but we would like to suggest once again the possibility of an actual distribution of these shares into individual accounts for each individual shareholder.

Under the American Shareholder Plan (“ASP”), accounts can be opened for each American citizen and taxpayer, using the information on record with the Social Security Administration. These shares can then grow in the individual’s ASP account, for a wide range of purposes, such as home purchase, college tuition, health care, or retirement.

So Long as the Shares Are Kept in the ASP Account, their value will not be taxed, and nor will any dividends or other distributions be taxed. Just as with IRAs and Health Savings Accounts and other tax-advantaged investment plans, the ASP beomes the individual’s private investment acocunt, to use as he or she sees fit.

Under the Prospects of the ASP, the American taxpayer, currently bailing out Wall Street with tremendous sums of money, at a time of great financial duress, will stand to benefit completely from the eventual recovery of the financial markets. Whether the companies involved are banks or other types of businesses, the variety of income and capital return that each citizen might earn may eventually compensate the American taxpayers for the economic pain and suffering and risk that is currently underway.

Democratic Candidates Barack Obama and Joe Biden ask for your vote on November 4, 2008. Please help make exciting new programs such as the American Shareholders Program become reality.



[DISCLAIMER: The ASP is not currently endorsed by Barack Obama or Joe Biden, who have not yet read this post.]

Roasting the Chickens

It Has Been One Thing to Poke Some Fun at the Bad Guys during their long years of success, while they remained insulated from the realities that affect the rest of us.

It Is Another Thing When These Chickens Come Home to Roost, and it is our henhouse that they land on—the one that they’ve dismantled for us.


Since the 1980 Election of Republican President Ronald Reagan, the regulations and the treasury of the United States have been under assault by a determined policy of “free markets” and “trickle down” and “supply side.” It will always be folly to run a government into the ground by both lowering its income and increasing its costs.

But This Has Been the Thrust of the Republican “Free Market” Idea. If nothing else results from the current debacle, let us at least hope that the practical lesson, which was somehow not logically clear-enough to the “Show-Me” nation of Americans before, now has been shown. We are actually living out the logical disaster of living beyond our means.

When Treasury Secretary Henry Paulson Came Out to Congress and said, “Listen, you have to fix this thing quickly, and you have to give me $700 billion dollars, with no strings attached, to do it,” much of America doubted the move. Our “Hey, How Hard Can It Be?” President lost almost all of his credibility a long time ago. And now here he comes to terrorize us one more time.

President Bush and the Republicans have deliberately stuck America between a rock and a hard place.

Those Who Were Recently Referred to as the “Revolting Republicans,” get labeled thus because they waited until this last-minute, brink-of-disaster opportunity to speak up and say, “Hey! It’s a bad bill. We’re not gonna do it.”

Where Have These "Revolting Republicans" Been Up Until Now? And what political motive kept them silent before voting time earlier this week?

What Has Been Done Is Despicable. It has been despicable for the entire seven-and-a-half years. And the fact that there’s not much America can do about it right now is as infuriating to all the rest of America, who have the not-unreasonable attitude of, “Why should I bail out Wall Street?”

One Can Hardly Help But Wonder Whether This "Rescue" Request is just a feeble bumbler’s last-chance effort to completely empty out the coffers of the country, on his way out.

But the Current Evidence from the Markets tells us that indeed the President is right this time. At least he is right to the extent that Congress must act quickly. On the other hand, the arguments against this bill—with its made-up cost of $700 billion dollars—remain persuasively disturbing.

Six Years of Unbridled Control of Government, out of the past total of 28 years. That’s how long it took the Republicans to work their damage of de-regulation uncontrol. And this is the result.

Now, Please Listen to the Lesson Learned:

It Is Not Possible To Run Any Endeavor By Constantly Raising Expenses Above Income. Things must be paid for. There's no such thing as a free lunch.

Now That the Republicans Have Seen It, and the rest of us have to help pay for it—

Can We Please Pass the Stupid Bill, and then move on to a reasonable relationship with fiscal reality?

Thank You.

What Are Pelosi and the Revolting Republicans Thinking?

In this Seemingly Endless Epoch of the Republican Meltdown, it is constructive to glimpse how Democratics and Republicans both make a share of the mess, and contribute to the ongoing fiasco of American politics:

What the Heck Was Nancy Pelosi Thinking when she made that highly partisan, anti-Republican speech before the vote was taken on the bailout proposal yesterday? She may have merely been overtired from the long hours, but still she might have shown better restraint.

What Were Those Republican Representatives in Revolt thinking when they bailed on the bail-out? They embarrassed their peers in the House and Senate, they embarrassed their President, and they tipped the financial markets into a freefall.

And What Was Senator John McCain Doing, swooping in and out and around, and postponing the debate without skipping it, and suspending his campaign without suspending it, and then claiming a victory which was thrust into the jaws of defeat? And blaming the whole thing on Barack Obama somehow?


Over the Past Weeks, We Have Witnessed Some Stunning Non-Partisan Displays:

Republican Senator Judd Gregg of New Hampshire gave an exemplary presentation of the Senate bill, explaining the crux of the matter, and complimenting everyone involved on both sides of the aisle, including by name those Democrats who had played substantial roles.

Senator Chris Dodd and Representative Barney Frank have spoken repeatedly to task, without invoking partisan rancor.

President George W. Bush has called on both parties equally to help defend this crisis. Even in the special meeting President Bush called to help move a bailout forward, he flanked himself with Democratic Congresswoman Pelosi and Democratic Nevada Senator Harry Reid.

Secretary Henry Paulson and Fed Chairman Ben Bernanke made their appeal to our government, and singled out no side for blame.

Democratic Presidential Candidate Barack Obama offered up supportive words for those hard at work to rescue the economy. And he did this from an appropriate distance, as one not directly involved in the challenging negotiations across party lines.


Desperate Times Call for Desperate Measures. The current fiasco has shown numerous members of our government—and in particular, members of the United States Congress—rising to put national service before partisan obstacles.

This Is the Kind of Leadership the American People Want to See. We want a government that works for each and every one of us, regardless of political party. Once a politician is in office, that person’s previous party affiliation must fall away for the duration. This is what we want to see.


It Is Up to Congress to Explain What’s Going On. Congress must convey, in clear and honest communication, what is at stake here, and what must be done. No more partisan politics, the continued politicization of a crisis caused by failed regulation.

No Bill of Goods May Be Sold to the American People by a government that knows not what it does. We depend on the wisdom of such honest congressional leaders as Judd Gregg and Barney Frank to see us through.


But as for Nancy Pelosi and the Revolting House Republicans, and others who would put party above constituents, there is not much more for us to say. Other than:

What the Heck Are You Thinking?

NEWS FLASH! America’s Financial Crisis: Fortune 500 CEOs Respond

Channeling Barack Obama™ has received the following open letter to the American people:

Dear Fellow Americans:

We, the Undersigned CEOs of Companies on Fortune Magazine’s list of the 500 largest American companies, have stood quietly on the sidelines while Congress and the American people debate the solutions to the overwhelming crisis of our national economy. We understand that many citizens do not fully understand the exact nature the crisis, nor how we—each of whom makes a salary of tens of millions of dollars—screwed it up.

But That’s Just What We’ve Done. We’ve screwed it up.

And Now We Come to the American People with our hats in our hand. We need your help.

Treasury Secretary Henry Paulson, on Our Behalf, has asked Congress to put together a plan to take away the obstacles that are shutting down the credit markets and making it impossible for businesses to continue doing business, and for citizens to buy houses or cars, or to use credit cards.

If Congress Does Not Act—and Quickly—the entire credit system of the United States will stop. What we will have is a major disaster. And so we need Congress’s help, and the resources of the United States Treasury—which money ultimately belongs to you.

To Show Our Understanding of What the American Taxpayer Faces with such a large plan, we would like to make the following accommodation, out of respect for your great sacrifice:

Effective with the Signing of the Economic Rescue Package, we, the undersigned CEOs, will voluntarily reduce our own salaries to a number that is 14 times the average pay of each company’s salaried employees.

Whole Foods, Inc., the Nation’s Largest Organic-Grocery Market, has used this salary cap for years. It has served Whole Foods well. This cap serves as an ideal guideline for how American corporate leaders should be compensated in the future.

In the Meantime, All Salary Above This Cap, until our salaries are renegotiated, we will give to the United States Treasury, to be used as will best serve America’s financial needs right now.

America Is in Crisis. We, the undersigned CEOs, appreciate the willingness of the American people to step up. The extra millions of dollars that we CEOs have at our disposal are the least we can offer, in gratitude for the generosity of the American people.

To Our Fellow American Citizens, we say:

Thank you, and God Bless America.

(Signed)

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A Man Rushes Out of a Burning Building.....

.....Carrying a Five-Gallon Can of Gasoline and a Lighted Match. He screams to the gathering crowd, “Quick! Quick! The barn is on fire! Everybody, quick! Give me all of your money so that I can go buy some water to put it out!”

Somebody Steps Forward and Asks, “But it's a fireproof barn. How can this be happening?”

The Man Shouts Backs, “Will nobody listen to reason? There's no time to waste! Hurry! Hurry! We've no time for mistakes!”

Someone Else Asks, “How about if we all bring our hoses and buckets out and put out the fire ourselves?”

“No, No, No!” Screams the Man. “I want to buy all your hoses and buckets. Then everybody turn around, and I'll put out the fire. But hurry! There's no time to waste!”

“But Why Should We Give You All Our Money, to buy our hoses and our buckets from us, so that you can go put out the fire......that you just started?”

Don't You Wish That All Analogies Were Better Than This One? The details don't match the current economic crisis facing the United States. And certainly neither Treasury Secretary Henry Paulson nor Federal Reserve Chairman Ben Bernanke created this "barn fire."

It Was “Free-Market” Ideology that failed in this situation. According to Republican testimony, the only way that Freddie Mac and Fannie Mae could get mortgages to poor people was to get rid of regulations that governed mortgages, and then sell to poor people mortgages that they could not afford.

Plenty of Ways Exist to Make Mortgages Available to low-income borrowers. But we took advantage of ignorance and greed, and put the entire American economy at risk.

As Chairman Bernanke Himself Has Not Said, “The American barn is on fire.” And we know who lit the match.

So Now What Do We Do?

What If We Guaranteed Troubled Mortgages by taking a shared equity position and extending the mortgage payments to compensate the Treasury's contribution? What could be simpler, and fairer both to the troubled homeowner and the underwriting American taxpayers?

Meanwhile, Back at the Burning Barn, government representatives of the folks that set the thing on fire are still out there, shouting:

“Hurry, Hurry, Hurry, Before the Barn Burns to the Ground, and There Is Nothing Left for Us to Sell.”

Treasury Testimony Baffles the Nation

In Secretary of the Treasury Henry Paulson's testimony before the Senate Banking Committee yesterday, he directly contradicted his “simple proposal”:

Secretary's Testimony Before the Senate Banking Committee on Tuesday:
“We gave you a simple, three-page legislative outline and I thought it would have been presumptuous for us on that outline to come up with an oversight mechanism.”

Secretary Paulson, Again in Yesterday's Testimony:
“If any of you [Senate Banking Committee members] felt that I didn’t believe that we needed oversight, I believe we need oversight. We need protection. We need transparency. I want it. We all want it.”

BUT:
Secretary Paulson’s Text of the Three-page Bailout Bill Presented on Friday, Just Four Days Earlier:

“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency...”

No Wonder So Many Americans Are Confused. What do we make of such contradictory statements? We don't like to believe that people lie, and yet such contradictory statements as Secretary Paulson made within a few days of each other represent either:

Lies or Senility or Merely Incompetence

How Can This Man Be Trusted? Whether the Secretary is senile or dishonest or merely incompetent, the contents of the United States Treasury should not be put at his disposal. We must not place our trust in this self-discrediting man.

Better Thinking Must Prevail. In terms of additional "bailouts" or other solutions to the current economic crisis, clearer thinking and more-responsible options must be examined—by more creditable people—and then pursued.

Congress Must Not Rushed Into Foolhardiness Yet Another Time.

As President Bush Himself Once Put It So Well, “Fool me once; shame on you. Fool me twice.....and you won't fool me again.”

In for a Penny, In for the Whole United States Treasury

At Least Federal Reserve Chairman Ben Bernanke had the decency today to say that he has made plenty of mistakes. Has anyone else in the Bush Administration ever apologized to the American people? Has anyone else in the Bush Administration said anything even close to this?

For the Rest of the Bush Administration, right now it's “Empty the rest of your wallets, step aside and shut up, or the whole ball of wax goes up in flames.” This may be as close to an apology as we citizens of the United States are likely to get. For any or all of these messes.

The Free-Market Ideology, the Great Experiment, is now the experiment that has failed. It has failed American Conservatives in particular, and it has failed the American people overall.

Over the Past Eight Years, We Have Seen what the decades-long dismantling of essential regulatory measures has done to the economy—from the savings and loan industry back in the 1980s, all the way through to the banking and mortgage and investment fiascoes of today.

President Bush’s Appointees, Treasury Secretary Henry Paulson and Fed Chairman Bernanke, offer absolutely no assurances as to why we should trust them now, in the face of their long series of failures. If a bailout is necessary, it seems prudent to look for someone different to give the thing a try.

It Is Common to Resist Changing Horses in the Middle of the Stream, even if the horse you’re on is crippled and drowning. That fear of changing “horses” is part of what re-elected President George W. Bush in 2004. As some Conservatives said, “He got us into it; he can get us out.”

Well, It Seems That This Horse Can’t Get Us Out, and indeed his people have continually made things worse. And now his people come to Congress, hat in hand, and beg for the American worker to bail the Wall Street bankers out.

Secretary Paulson Says That If We Try to Limit the Bailout, such as by asking for equity positions in the risky investments that we buy—or by limiting the multimillion-dollar CEO salaries of the companies involved—why, these firms—these CEOs—might just turn us down.

That’s Right: the CEOs of These Desperately Troubled Firms might just say to us, “Thanks....... But no thanks.”

And Then Where Would We Be?

If We All Go down the Financial Tubes Without Their Bailout, at least they won’t be taking $700,000,000,000 more of our money with them when we all go. At least they won't be “laughing all the way to the bank” without us.

The Good News: Exactly six weeks and counting until we vote the current, uh, Free-Market, Anti-Regulation Republicans out.