Progressives in Congress show the right way to ‘right the market’.

October 1, 2008

Dear Democratic Colleague:

The House of Representatives rejected the $700 bailout yesterday. Distinguished economists across the world have stated it would not have solved the problem at hand. However, we can potentially solve this liquidity problem at little cost to the taxpayer. I am proposing that Congress drop the Paulson Plan, and instead pass the No BAILOUTS Act. The No BAILOUTS Act provides an alternative to the Paulson Proposal to address the current credit crunch. Once Congress addresses the liquidity shortfalls in our financial markets, a Democratic Congress can turn to Democratic solutions to address the broader economic crises we face today. Specifically, Congress can work to resolve the housing crisis across the country and pass effective job stimulus, which is the response Main Street America expects and deserves.

While Democrats and Republicans may disagree on the underlying solutions to solve the economic crises we face, the No BAILOUTS Act – a regulatory based proposal – has the potential for significant bipartisan support.

The Paulson Premise Flawed

Simon Johnson, a former chief economist as the International Monetary Fund, stated today in the New York Times of Paulson’s plan, “It’s our view that this package, in a fundamental sense, will not solve the problem.” Other economic analysts noted yesterday that the credit markets around the world were almost entirely dysfunctional even when political leaders and investors assumed that Congress had reached a deal and would easily approve the bailout. There is no reason to believe Paulson’s plan will work.

Alternatives

We have credible alternatives to the Paulson/Bush $700 billion gamble. William Isaac, the chairman of the FDIC during the previous worst financial crisis in the United States during the 1980s, believes Congress can address the current crisis with simple changes to Securities and Exchange Commission (SEC) rules. Mr. Isaac points out that while we face serious financial challenges today, many banks are still in good shape. This allows Congress to take swift, uncomplicated steps to ensure the financial markets return to working order. After that, we can work to resolve the housing crisis and pass effective job stimulus.

Today I am offering an alternative to the Wall Street bailout that will correct the capital shortfalls experienced by many financial institutions and help protect the integrity and quality of the securities market. My plan could be implemented promptly meeting the demands of the Bush Administration to act immediately without putting the American taxpayer on the hook for billions of dollars.

No BAILOUTS Act

Bringing Accounting, Increased Liquidity, Oversight and Upholding Taxpayer Security

1) Require the Securities and Exchange Commission (SEC) to require an economic value standard to measure the capital of financial institutions.

This bill will require SEC to implement a rule to suspend the application of fair value accounting standards to financial institutions, which marks assets to the market value, no matter the conditions of the market. When no meaningful market exists, as is the current market for mortgage backed securities, this standard requires institutions to value assets at fire-sale prices. This creates a capital shortfall on paper. Using the economic value standard as bank examines have traditionally done will immediately correct the capital shortfalls experienced by many institutions.

2) Require the Securities and Exchange Commission to restricting naked short sells permanently

This bill will require SEC to implement a rule that blocks naked selling, selling a stock short without first borrowing the shares or ensuring the shares can be borrowed. Such practices many times harm the companies represented in the sales and hurt their efforts to raise capital. There is no economic value produced by naked short sales, but significant negative effects.

3) Require the Securities and Exchange Commission to restore the up-tick rule permanently.

This bill will require SEC to implement a rule that blocks short sales without an up-tick in the market. On September 19, 2008, the SEC approved a temporary pause of short selling in financial companies “to protect the integrity and quality of the securities market and strengthen investor confidence.” This rule prevents market crashes brought on by irrational short term market behavior.

4) “Net Worth Certificate Program”

This bill will require FDIC to implement a net worth certificate program. The FDIC would determine banks with short-term capital needs and the ability to financially recover in the foreseeable future. For those entities that qualify, the FDIC should purchase net worth certificates in these institutions. In exchange, these institutions issue promissory notes to repay the FDIC, counting the amount “borrowed” as capital on their balance sheets. This exchange provides short term capital, with not cash outlay. Interest rates on the certificates and the FDIC notes should be identical so no subsidy is necessary.

Participating banks must be subject to strict oversight by the FDIC including oversight of top executive compensation and if necessary the removal of poor management. Financial records and business plans should be subject to scrutiny while participating in the program.

In 1982, Congress approved a program, known as the Net Worth Certificate Program, that allowed banks and thrifts to apply for immediate capital assistance. From 1982 to 1993, banks with total assets of $40 billion participated in the program. The majority of these banks, 75%, required no further assistance beyond the certificate program.

5) Increase the FDIC Insurance limit from $100,000 to $250,000.

The bill will require the FDIC raise its limit to provide depositors confidence that their money is safe and help eliminate runs on banks which are destabilizing to the industry.

Sincerely

Peter DeFazio

Member of Congress

Call your congress person and demand they support this instead of George The Robber and Nancy the Fluffer’s giveaway to the rich. It’s your’s and your grandchildren’s money they want.

Tell them NO!

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Essential Reading for all Democrats….

August 10, 2008

Is this site operated by The Denver Group. You will be hearing about them once the convention starts. Probably you will be hearing a lot.

Just keep in mind that according to it’s rules the Democratic Party despite what Obama and the corporatist press who so love him are acting like has not, in fact, elected a nominee. No voter by the delegates has been taken. None.

Latest reports have a haggard Howard Dean not looking very well and seeming to have lost quite a bit of weight. Obama was feeling good enough to play golf today as Russia invaded Georgia and McSame and The Hill were on the campaign trail. The HIll campaigning for Obama.

My personal opinion rendered without any satisfaction is that the wheels are going to come off the Convention ‘Unity Train’. There tension and actual hysteria are building. I’m not even going to report what some are saying the Obama campaign or it’s workers are doing. Not unless arrests are made…which is a possibility.

Old fashioned smash-mouth politics more akin to the 30s that ‘Yes we can!’ so hang on to yer TeeBee remote and stay tuned here also.

Flash Update: Here’s a little something I just tripped over…. So the next time I start ranting about what a lousy campaigner Barky is just think back to this little episode. Or you might find Tweety playing the tape and chortling about what a frikin’ Clown the Barkster is but that will not happen until he does become the nominee. If he does.


A Brief Word…..

August 10, 2008

…..yeah, the revolution will not be televised. Indeed, there looks to be no revolution. With Barky calling for a non-vote Democratic Convention, he won’t get that predicts I, and McSame being…well, more of the same I suppose you could vote for Nader or Barr but neither are viable let’s face it. Sister Beezlebub still has a shot moreso every time Barky sticks his foot in his mouth and hops around going Uh…Uh…Muh! Currently the Bark-O-Meter has him at 1.5 hops per week. But enough of the cheap shots.

The real problem sits on ‘The HIll’ like a horrific knot of toads in human form. 535 elected representatives of the people.

Or not.

Yep, in situation, after issue, compounded by crisis we see that the legislative branch of our government is stuffed to the gills with folks who are one of three things:

Corrupt…the biggest faction. Politicians are trained early that it’s all about the Benjamins as our ‘system’ rewards those who get elected and under the current system you need lots of B’s to get elected…

Stupid…plenty of those after all if you’re buying a Congressperson you don’t need one that’s smart. Just one that loves to follow orders.

Nuts….Yeah, barking mad. These are the ones found in a hotel room with hookers and coke or an underage boy. Significant fraction….

So what to do. First up is very simple.

Get real.

Understand that the level of corruption is now at unprecedented levels. Levels no mere change in ‘party’ will fix. The job is a wholescale clean up similar to Hercules and the Augean Stables. Ever read that one? You should it’s not really about what it seems. Yeah, get real. No one candidate is going to ‘save’ us folks. Most adults realize reality don’t work that way but….

People want to believe.

Well…

Believe this.

If you and I don’t get off our asses and take back our government the future will be very bleak. The tipping point on many problems affecting our very survival as a society is near. I assert that the tools to fix those problems which threaten us most are also hand. Requiring only affordable amounts of money and some intelligent leadership. But with a government composed of the corrupt, the stupid and the barking mad we are not going to be able to use those tools.

What to do?

Look around join up with like minded folks. Stop talking and start doing. You will be noticing some changes around here as I ‘renovate’ my new primary residence. And no I don’t care what the Congressional mortgage lending ‘bail out’ bill says, it’s amazingly stupid go look it up, about how to treat ‘primary’ vs. ‘secondary’ residences.

One signpost to a new way is the widget in the upper right sidebar called: ‘Accountability Money Bomb’.

This takes you to a spot where you can contribute to a fascinating group headed by Jane Hamscher and a bunch of right wing folks. Yep, wingers and progressives…together. Seems there is common cause to be made by all Americans in the face of the Congress’s gutting the 4th Amendment. Here is the link to the statement of purpose from StrangeBedFellows the ad hoc group just beginning to get some traction. I will be blogging about this more as the idea of ‘Accountability for the Asylum (Congress)’ resonates with me.

Hope you will hang around as I am planning some extensive remodeling here and I hope you will find it interesting.


Scott McLellan on Letterman

June 13, 2008
Personally, I think Letterman is missing the point a bit, with his singular focus on Bush, Cheney and Co. The high perpetrators who currently occupy the Executive Branch have been enabled and emboldened by their counterparts in the Legislature — on both sides of the aisle. Our problems are bigger than politics; they are rooted in greed and economics.
My $0.02,
Cyril

McClellan on Letterman: We’re Screwed

video_wmv Download | Play video_mov Download | Play (h/t David)

Former Press Secretary Scott McClellan appeared on The Late Show with David Letterman to hawk his book, What Happened. Once again, Letterman proved that late night comedians have more testicular fortitude than any of the pundit class or corporate media for voicing what is overwhelmingly the public pulse on the Bush administration.

LETTERMAN: My feeling about Cheney–and also Bush, but especially Cheney—is he just couldn’t care less about Americans. And that the same is true of George Bush. And all they really want to do is somehow kiss up to the oil people so they can get some great annuity when they’re out of office. “There you go, Dick, nice job. There’s a couple of billion for your troubles.” ( applause ) I mean, he pretty much put Halliburton in business, and the outsourcing of the military resources to private mercenary groups, and so forth. Is there any humanity in either of these guys?

McCLELLAN: Look, I still have personal affection for the President. I can’t speak to the Vice President’s thinking that well because he’s someone that keeps things to himself and he believes in doing it his way, and he doesn’t care what anybody else thinks. He is going to do the way he feels is best—and that’s not always in the best interest of this country, as we’ve seen.

LETTERMAN: You told me backstage you thought he was a goon.

Full transcripts below the fold:

(Read the rest of this story…)