Bad, in more ways than one.
1) the reasoning was built on the false premise that Banks were unable to lend money now because of the coming to light of this scandal.
In fact what the proponents of the bill actually were saying is that banks were not lending money right now (extending credit). Notice, it’s not that banks could not led money right now, they simply would not lend money now because they were waiting to see how a bailout might help their situation, and credit as a secondary issue.
Subtle, I know. But the point is that capital had not dried up. The freeze in lending resulted from the arbitrary decision simply not to lend money right now, for the above reason. Had capital in fact really dried up as a result of the rude awakening of yet another government slush fund of malfeasance and bribery, and the two year cover up that worsened the fallout? I don’t think so. Once fire broke out in the public view, then other factors came into play to help exaggerate the point (Stock Market drops and rises, 700 pts down, 500 up the next day), I can see the direct relationship of Frannie Mac and feddie Mae to Banks and lending, but to “Wall Street”?. Sure there’s greed on Wall Street, but what direct relationship did that have to what went on as per executive orders from, first the Carter administration, the Clinton admin. and specifically, Jamie Gorelicks Justice Dept’s extortion of private capital to potential deadbeats? to the tune of 5% of moftgage holders.
I say banks could lend money to folks all during the last few weeks, they just didn’t want to.
2) Bad timing. All the usual Congressional shenanegans in the Bill. Any true independent should have stood his ground and said we will deal with this matter after the election, despite what party leadership says. Incumbent Dems in Senate voted agsinst it for obvious reasons and in the House, the bill is an incumbents nightmare. Easy to rail against the 700 billion when you back to district to campaign, coz you voted no, and blame Bush economy etc instaed of those responsible. Lots of Dems saw the expediency of this. Our People should have kept saying No No No. Not Now. No way No how.
3) the 700 Billion: Paulsons office said the figure was “picked out of the air”. No process to establish the cost.
Good. In one respect:
1) by buying the bad paper, the value of the assets can return to their real value, you just have to evict the squatters in there now. Is our compassionate govt policy capable of this kind of “cruelty”? Can it reverse couse like that? The “good intentions” of this vote buying scheme with private capital are truely criminal. And require prosecution. And what have these rules changes done to render the application of the law impotent in pursuit of justice, in these cases. Its all out of whack now. The Bill only skews it worse in the wrong direction. And we all know why. So the good effect of the govrnment boost in capital is effectively nullified.
