Thursday
Oct022008
Hoyer: We are in the eye of the storm
Thursday, October 2, 2008 at 12:21PM
House Majority Leader Steny Hoyer (D-Md.) likened the U.S. financial crisis to a hurricane saying that if any bailout bill passes the House it will be "the eye of the storm." He recalled the scenes of devastation left by the recent powerful storms Ike and Katrina, saying that if emergency bailout legislation does not pass there will be broad damage nationwide.
Hoyer began his regular sit down with reporters by summing up the changes made to the bailout bill since it failed to pass in the House on Monday. Hoyer said that the new bill had more transparency and oversight including a congressionally-appointed oversight board. There have also been taxpayer protections added to the legislation. One of these provisions will give equity in any potential payback to the residents of all states equally. There is also an outline for assessment of how the government-owned assets are doing in the market. After five years out, if these mortgages and mortgage-backed securities have not yielded significant returns a fee will be paid by the financial industry at large to cover the government's costs. Hoyer also reassured the press that the portions of struggling companies that the federal government plans to buy will not involve them in any voting on company boards, "We are not going to get into the business of the government running private companies," Hoyer said.
Hoyer said that while calls to his congressional office continue to have three to one of constituent callers against the bailout, the number has gone down from six to one early in the week. Hoyer said people saw the effect of the bill's failure on the state of the market. The significant loss caused people to recognize the downside of not passing some kind of financial intervention. "People saw on Monday the direct impact on them," he said. "Then the wind started to whip up on this hurricane."
The Democratic leader said he didn't expect a vote on this legislation until Friday, as he said there are still discussions of add-ons including increased unemployment insurance, which Republicans oppose. He said that the House continues to listen to constituents. "Most people say we need to act," Hoyer said. " But they are not sure what we need to do. Which would put them in the same position as the Congress."
Hoyer began his regular sit down with reporters by summing up the changes made to the bailout bill since it failed to pass in the House on Monday. Hoyer said that the new bill had more transparency and oversight including a congressionally-appointed oversight board. There have also been taxpayer protections added to the legislation. One of these provisions will give equity in any potential payback to the residents of all states equally. There is also an outline for assessment of how the government-owned assets are doing in the market. After five years out, if these mortgages and mortgage-backed securities have not yielded significant returns a fee will be paid by the financial industry at large to cover the government's costs. Hoyer also reassured the press that the portions of struggling companies that the federal government plans to buy will not involve them in any voting on company boards, "We are not going to get into the business of the government running private companies," Hoyer said.
Hoyer said that while calls to his congressional office continue to have three to one of constituent callers against the bailout, the number has gone down from six to one early in the week. Hoyer said people saw the effect of the bill's failure on the state of the market. The significant loss caused people to recognize the downside of not passing some kind of financial intervention. "People saw on Monday the direct impact on them," he said. "Then the wind started to whip up on this hurricane."
The Democratic leader said he didn't expect a vote on this legislation until Friday, as he said there are still discussions of add-ons including increased unemployment insurance, which Republicans oppose. He said that the House continues to listen to constituents. "Most people say we need to act," Hoyer said. " But they are not sure what we need to do. Which would put them in the same position as the Congress."
Reader Comments (1)
To see a WORKABLE plan to address the financial mess without socializing the markets or providing corporate welfare, see http://starboard.blogtownhall.com .
Before accepting the Paulson Plan, even with congressional tweaks, think about this:
How much is $700 Billion?
More than the government spent COMBINED in Fiscal 2006 for:
Medicaid $180.6 in Billions
Education $118.6
Health $ 63.9
Transportation $ 70.2
Veterans Benefits $ 70.0
Community Development $ 54.5
Food & Nutrition Assistance $ 53.9
Justice System $ 41.0
Housing Assistance $ 38.3
TOTAL:$691.0
Source: Budget of the United States Government, Fiscal Year 2006
According to CNN August 14, there were 750,000 homes in foreclosure. In addition to hurting the homeowners, these assets set the value of the banks' capitol plummeting due to Mark to Market Accounting rules.
$700 Billion divided by 750,000 homes = 933,333 PER HOME!
As ridiculous as this might be, and I'm not actually proposing it (just using it to illustrate JUST HOW bad the Paulson plan is!), why not give each troubled homeowner $100,000 toward their mortgage to keep them in their home and reduce or eliminate their balance? Then refinance any remaining balances for 15 years at 7% fixed. This will cost taxpayers only $75 Billion, the homeowners get to keep their homes and reduce or eliminate their house payments. The banks get instant liquidity. Balances under $100,000 are paid off! The lenders get to convert bad loans over $100,000 balance to smaller, better risk loans at a nice fat 7%.
The only loser... the guy who bought a home he can afford, and who continues making his payments, on time.
This would be an unconscionable giveaway bailout, giving taxpayer money to people who bought houses they couldn't afford; and yet it's more measured, more reasonable and more likely to WORK than the Paulson plan; which does nothing to address the cause of the problem: the CRA, Mark to Market, and corruption at Fannie & Freddie, which MUST be dismantled or at least downsized!