Is it Recovery or a Dive to New Depths?
by btchakir, Thu Nov 13, 2008 at 05:27:17 AM EST
I learned three things listening to Secretary Paulson on the Bailout program yesterday:
1. Paulson is a worse public speaker than Alan Greenspan (something I didn't think possible), leaving a more confused image of the Bailout Program behind him.
2. Homeowners will now not benefit from any kind of mortgage recovery from the Bailout, as it is now all going to keep banks afloat.
3. Since thee has, so far, been no oversight by Congress over the program, Paulson can do anything he wants without accountability.
In other words, we are screwed.
This morning's New York Times looks at it this way:
The nation's banks and other financial firms also are undergoing a necessary correction for which there is no silver bullet. But that hasn't stopped Mr. Paulson from intervening forcefully -- using taxpayer dollars -- on behalf of an ever-expanding cast of bailout recipients. The tight fist is reserved for homeowners.Paulson, of course, wasn't even in attendance at Bush's Tuesday morning rollout of a new foreclosure prevention plan.
That is a huge policy error. The whole point of the bailouts is to stabilize the financial system. But the system will not stabilize until house prices stabilize, and house prices will not stabilize until the government finds a way to stanch foreclosures on a large scale.
Sheila Bair, the fead of FDIC had made a proposal that (according to Reuters)
would have the government underwrite failing home loans, but Paulson said that kind of aid would break from the rescue fund's aim to stabilize financial markets.So we, as middle class homeowners, can now be aware of the fact that the billions of dollars in mortgaged properties nationwide are not assets. Democratic lawmakers, within hours, started pressing Paulson to change his point of view.
"That is a subsidy or spending program. The TARP was investment, not spending," said Paulson, who holds the purse strings to the Troubled Asset Relief Program (TARP).
"It is my sincere hope that Secretary Paulson collaborates with Chairman Bair to get this program up and running as soon as possible," Senate Banking Chairman Christopher Dodd said in a statement.It remains to be seen what happens next.