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Old 09-28-2008, 04:51 PM
 
Location: State of Being
35,885 posts, read 67,004,073 times
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You can see the full text here:

Bailout Bill: Full Text Of Plan

Yes, there is provision for an "oversight Board" but look at who will be on the board, LOL. Fox guarding the Hen House.
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Old 09-28-2008, 04:52 PM
 
Location: State of Being
35,885 posts, read 67,004,073 times
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Quote:
Originally Posted by saganista View Post
The Comptroller of the Currency has continuous oversight. A Special Inspector General's Office is created. There is judicial review of the Secretary's actions...
Thank you for the info, Saganista. I totally missed that this would be under the OIG. At least that looks viable.

I was looking at Sec. 125 - wh/ establishes an Oversight Panel . . .consisting of 5 Congressmen, who are appointed. What section outlines the Special OIG creation?
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Old 09-28-2008, 05:05 PM
 
Location: Albemarle, NC
7,730 posts, read 12,689,324 times
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Quote:
Originally Posted by saganista View Post
The Comptroller of the Currency has continuous oversight. A Special Inspector General's Office is created. There is judicial review of the Secretary's actions.

Rep. McCotter is full of hot air. There is not a single salient point in that rant.

The government does indeed stand to make a profit on many of these assets. It also stands to take a loss on many of these assets. One thing is certain...at the end of it all, the $700 billion will not cost anything near $700 billion.
Excuse me for not believing that. We were promised the same thing with the Iraq war. You'll have to understand why I'm calling bull**** on the idea that this won't cost us and we'll make money.
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Old 09-28-2008, 05:09 PM
 
Location: State of Being
35,885 posts, read 67,004,073 times
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Quote:
Originally Posted by saganista View Post
The Comptroller of the Currency has continuous oversight. A Special Inspector General's Office is created. There is judicial review of the Secretary's actions.

Rep. McCotter is full of hot air. There is not a single salient point in that rant.

The government does indeed stand to make a profit on many of these assets. It also stands to take a loss on many of these assets. One thing is certain...at the end of it all, the $700 billion will not cost anything near $700 billion.
I am sorry. If there is value . . . then why are we bailing these institutions out? Yes, I know . . . no way to mark to market b/c of devaluation . .. but isn't that the whole point . . . such low (or no) value????

So how do "we" make money off this deal?
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Old 09-28-2008, 05:24 PM
 
19,183 posts, read 28,313,751 times
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Plus or minus, it depends what assets are bought. But there aren't any that are at 0% of their original value. Every time someone does make a mortgage payment that feeds a mortgage-backed security that the USG acquires, for instance, that's money into the Treesury. No way to avoid it. Quite a different story from Wolfowitz's theories about how we were going to take over Iraqi oil. The Treasury will also sell off some of these assets. There were already people lining up to buy them last week. Every sale puts money back into the Treasury. I hear people say the USG could end up making a profit on this deal by five years down the road. I would doubt it, but it's not impossible. Neither is it possible that the net cost will be the sum of gross purchase prices, just as if you buy a million $1 scratch-off lotto tickets, your net cost isn't going to be a million dollars. Lotto has maybe a 50% expected payoff. Nobody knows for sure what the rate will be on these assets, but it's a long way from zero...
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Old 09-28-2008, 05:31 PM
 
Location: State of Being
35,885 posts, read 67,004,073 times
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Quote:
Originally Posted by saganista View Post
Plus or minus, it depends what assets are bought. But there aren't any that are at 0% of their original value. Every time someone does make a mortgage payment that feeds a mortgage-backed security that the USG acquires, for instance, that's money into the Treesury. No way to avoid it. Quite a different story from Wolfowitz's theories about how we were going to take over Iraqi oil. The Treasury will also sell off some of these assets. There were already people lining up to buy them last week. Every sale puts money back into the Treasury. I hear people say the USG could end up making a profit on this deal by five years down the road. I would doubt it, but it's not impossible. Neither is it possible that the net cost will be the sum of gross purchase prices, just as if you buy a million $1 scratch-off lotto tickets, your net cost isn't going to be a million dollars. Lotto has maybe a 50% expected payoff. Nobody knows for sure what the rate will be on these assets, but it's a long way from zero...
I agree w/ your reasoning, and I, too, have heard this . . . but my understanding is that the bailout is for the toxic stuff only. So all those foreclosures w/ upside down mortgages . . . I mean . . . where is the value in that? If the bailout is only for the "quarantining" the toxic stuff . . . ??? See what I mean?

I do hope that there is value and this is not as bad as it has been described . . . but I just can't get past what I understand - that we are essentially bolstering assets w/ negative valuation and no liquidity whatsoever.

I will be happy if I am wrong, LOL. I am still trying to sort all this out and understand what has (and is) transpiring here.
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Old 09-28-2008, 05:32 PM
 
Location: Albemarle, NC
7,730 posts, read 12,689,324 times
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Quote:
Originally Posted by saganista View Post
Plus or minus, it depends what assets are bought. But there aren't any that are at 0% of their original value. Every time someone does make a mortgage payment that feeds a mortgage-backed security that the USG acquires, for instance, that's money into the Treesury. No way to avoid it. Quite a different story from Wolfowitz's theories about how we were going to take over Iraqi oil. The Treasury will also sell off some of these assets. There were already people lining up to buy them last week. Every sale puts money back into the Treasury. I hear people say the USG could end up making a profit on this deal by five years down the road. I would doubt it, but it's not impossible. Neither is it possible that the net cost will be the sum of gross purchase prices, just as if you buy a million $1 scratch-off lotto tickets, your net cost isn't going to be a million dollars. Lotto has maybe a 50% expected payoff. Nobody knows for sure what the rate will be on these assets, but it's a long way from zero...
Still, even with all this, the current plan doesn't address the problem. People can't afford their homes and the credit already extended. Unless the government is just willing to wipe all that away too, these loans are going belly up. People will lose their homes, some cars, credit cards etc. Our economy is based on spending. I don't see how this plan addresses the fundamental problems. I believe it's a band-aid solution. Eventually, it will come off.
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Old 09-28-2008, 06:09 PM
 
19,183 posts, read 28,313,751 times
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Quote:
Originally Posted by anifani821 View Post
I agree w/ your reasoning, and I, too, have heard this . . . but my understanding is that the bailout is for the toxic stuff only. So all those foreclosures w/ upside down mortgages . . . I mean . . . where is the value in that? If the bailout is only for the "quarantining" the toxic stuff . . . ??? See what I mean?
Certainly, but these are different/related aspects of the problem. Upside down mortgages are an issue to homeowners if circumstances force them to sell, otherwise it doesn't matter. Foreclosures damage the neigborhood, damage the tax base of the local government, damage the lien holder who gets to take over the property, and damage some part of one or more asset-backed securities somewhere. It's the damaged (toxic) securities that Treasury would be acquiring, but no one foreclosure makes very much difference. Even though foreclosures have increased by factors of 3, 4, 5, or even more in some communities, they are still a very small fraction of all mortgages, meaning that nearly every mortgage-backed security retains some very signfiicant portion of its cash value. Over time, either by selling the asset or simply by collecting whatever receipts come in on it, Treasury will be recouping at least a part of what it paid to acquire the securities.

Upside down mortgages are a result of the credit problem, in that so few potential home buyers can qualify for the credit necessary to buy one. This essentially creates a false shortage of buyers and the decreased demand causes prices to fall. If Treasury can pull enough junk off the credit system's books and a resulting return of confidence in value means money begins to move again, the supply of money to lend will increase, the number of home buyers who can qualify for credit will increase, and the price of houses will increase. That's part of the Main Street benefit people speak of.
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Old 09-28-2008, 06:12 PM
 
19,183 posts, read 28,313,751 times
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Quote:
Originally Posted by anifani821 View Post
I was looking at Sec. 125 - wh/ establishes an Oversight Panel . . .consisting of 5 Congressmen, who are appointed. What section outlines the Special OIG creation?
121. Judicial review is in 119 and the Comptroller General in 116.
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Old 09-28-2008, 06:16 PM
 
Location: State of Being
35,885 posts, read 67,004,073 times
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Quote:
Originally Posted by saganista View Post
121. Judicial review is in 119 and the Comptroller General in 116.
Thanx for the info - on this post and the preceding one.

You are very informative - nice to have your input.
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