Let's Live Blog the Hearing
I assume all interested Cafe-ers are watching the hearing.
I'm experiencing congestion problems so I may have missed something but my big annoyance is that no senator has pressed Paulson or Bernanke on the question of why there's this "crisis" (nothing about last week's "meltdown" threat) which requires immediate Congressional action.
Anyone pick up anything along these lines?
I'm experiencing congestion problems so I may have missed something but my big annoyance is that no senator has pressed Paulson or Bernanke on the question of why there's this "crisis" (nothing about last week's "meltdown" threat) which requires immediate Congressional action.
Anyone pick up anything along these lines?
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It seems to me that Paulson has explained the "panic" is that Congress is going out of town and he's run out of money and would like them to provide a rainy day fund ($700 billion).
He's made no factually based argument why he needs $700 billion and can't get by with $100-150 billion.
September 23, 2008 12:23 PM | Reply | Permalink
Paulson's now saying his first purchase (reverse auction or whatever it may be) would be of an uncomplicated financial instrument (simple MBS?) and presumably, in a small amount.
He doesn't say what date these purchase programs would begin.
September 23, 2008 12:29 PM | Reply | Permalink
For some unknown reason SEC's Cox is there and Senator Carper is asking about short-selling.
What's that got to do with anything?
September 23, 2008 12:30 PM | Reply | Permalink
They all want oversight -- OIGs.
Nobody asks when this oversight body would begin operations.
Methinks the full $700 billion will have long been spent.
Note: Paulson says -- oversight great but "we have to get up and running" -- oversight can come later.
September 23, 2008 12:33 PM | Reply | Permalink
Sen. Dole says that Paulson testified that CDS problems weren't important in the Bear Stearns take over. She wants to know what's happened since to make them so important, now.
Paulson says -- basically -- she doesn't know what she's talking about.
And no one's answering her question.
September 23, 2008 12:41 PM | Reply | Permalink
And her time expired as the four of them bullsh**ed.
September 23, 2008 12:42 PM | Reply | Permalink
What I have gleened so far:
Under the current plan, the fed will be authorized to buy mortgage securities from foriegn banks as well as domestic, so the US taxpayer will be bailing out deutche bank, hsbc, ubs and others.
They are pushing to have no restrictions on the compensation on executives for companies that choose to participate
The biggest red flag, is that Bernanke has stated that he plans to purchase these securities at full price value, not at the discounted current market value. The justification for this is that if, somehow, the fed starts buying up non-performing assets that are overvalued to begin with in a declining real estate market, magically private equity firms will decide to jump into the market and buy the bad debt at full value as well.
Also, no proscription on resold assets, meaning a company that bought distressed mortgage securities at a market discount, say 40 cents on the dollar, can now turn around and resell those same assets to the fed at full value, making what, a 120% profit?
They also want all the money now, even though they admit it will not all be spent right away even though they have no solid formula for how these reverse auctions will work, or what pricepoint they buy at.
This bailout stinks, it is the epitome of socialized loss and privitized profit. It's current structure almost ensures that the fed and taxpayers will lose huge.
September 23, 2008 12:50 PM | Reply | Permalink
Bernanke says they'll buy second liens (HELOCs) which presently have pretty much zero value.
There's not even a suggestion of what he's prepared to pay for them.
Sen. Corker says he's concerned that there's no process described. Why not $50 billion, maybe $100 or $150 billion, to play around with over the next short while.
Paulson says "extraordinary circumstances" -- why he needs $700 billion? Not explained. Congress will have opportunity to operate with new Secretary (apparently, post 1/20/2009).
September 23, 2008 1:52 PM | Reply | Permalink
Sen. Akaka has no idea what's going on but still thinks it's his duty to take up time.
September 23, 2008 1:56 PM | Reply | Permalink
He did ask one interesting question -- bidding for the program management.
Paulson says may need "no bid" contracts 'cause we've got to get this thing going.
The cheers from Goldman Sachs' offices drowned out the New York City taxis.
September 23, 2008 2:00 PM | Reply | Permalink
Bernanke says the beneficiaries from this crisis will be the smaller banks that didn't get into "these sort of problems."
So, why are we bailing out the big banks?
September 23, 2008 2:08 PM | Reply | Permalink
Tester wants to know why other countries are not ponying up, as well.
Paulson says all of them are dealing with their own economies -- all of which are declining.
We're in a recession! Why the hell do we think bailing out these banks will grow the economy.
September 23, 2008 2:11 PM | Reply | Permalink
Thanks for doing this Ellen. Very interesting.
September 23, 2008 2:17 PM | Reply | Permalink
Hey Ellen,
On the off chance your monitoring your own blog, I'm going to ask this question.
Over on Dean's blog about spending, you kept making the point that savings was the key.
I have no idea what you mean by "savings". Can you explain?
I know this is O this T, but I thought this might be a more direct way to ask my question. Sometimes comments get lost in those threads.
November 22, 2008 5:09 PM | Reply | Permalink