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Stinger
03-31-2009, 11:33 AM
Beyond AIG: A Bill to let Big Government Set Your Salary

By Byron York
Chief Political Correspondent 3/31/09

It was nearly two weeks ago that the House of Representatives, acting in a near-frenzy after the disclosure of bonuses paid to executives of AIG, passed a bill that would impose a 90 percent retroactive tax on those bonuses. Despite the overwhelming 328-93 vote, support for the measure began to collapse almost immediately. Within days, the Obama White House backed away from it, as did the Senate Democratic leadership. The bill stalled, and the populist storm that spawned it seemed to pass.

But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the "Pay for Performance Act of 2009," would impose government controls on the pay of all employees -- not just top executives -- of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.

The purpose of the legislation is to "prohibit unreasonable and excessive compensation and compensation not based on performance standards," according to the bill's language. That includes regular pay, bonuses -- everything -- paid to employees of companies in whom the government has a capital stake, including those that have received funds through the Troubled Assets Relief Program, or TARP, as well as Fannie Mae and Freddie Mac.

The measure is not limited just to those firms that received the largest sums of money, or just to the top 25 or 50 executives of those companies. It applies to all employees of all companies involved, for as long as the government is invested. And it would not only apply going forward, but also retroactively to existing contracts and pay arrangements of institutions that have already received funds.

In addition, the bill gives Geithner the authority to decide what pay is "unreasonable" or "excessive." And it directs the Treasury Department to come up with a method to evaluate "the performance of the individual executive or employee to whom the payment relates."

The bill passed the Financial Services Committee last week, 38 to 22, on a nearly party-line vote. (All Democrats voted for it, and all Republicans, with the exception of Reps. Ed Royce of California and Walter Jones of North Carolina, voted against it.)

The legislation is expected to come before the full House for a vote this week, and, just like the AIG bill, its scope and retroactivity trouble a number of Republicans. "It's just a bad reaction to what has been going on with AIG," Rep. Scott Garrett of New Jersey, a committee member, told me. Garrett is particularly concerned with the new powers that would be given to the Treasury Secretary, who just last week proposed giving the government extensive new regulatory authority. "This is a growing concern, that the powers of the Treasury in this area, along with what Geithner was looking for last week, are mind boggling," Garrett said.

Rep. Alan Grayson, the Florida Democrat who wrote the bill, told me its basic message is "you should not get rich off public money, and you should not get rich off of abject failure." Grayson expects the bill to pass the House, and as we talked, he framed the issue in a way to suggest that virtuous lawmakers will vote for it, while corrupt lawmakers will vote against it.

"This bill will show which Republicans are so much on the take from the financial services industry that they're willing to actually bless compensation that has no bearing on performance and is excessive and unreasonable," Grayson said. "We'll find out who are the people who understand that the public's money needs to be protected, and who are the people who simply want to suck up to their patrons on Wall Street."

After the AIG bonus tax bill was passed, some members of the House privately expressed regret for having supported it and were quietly relieved when the White House and Senate leadership sent it to an unceremonious death. But populist rage did not die with it, and now the House is preparing to do it all again.

Byron York, The Examiner’s chief political correspondent, can be contacted at byork@washingtonexaminer.com. His column appears Tuesday and Friday, and his stories and blog posts can be read daily at ExaminerPolitics.com.

http://www.washingtonexaminer.com/politics/Beyond-AIG-A-Bill-to-let-Big-Government-Set-Your-Salary-42158597.html

Calcountry
03-31-2009, 11:35 AM
I think Congress has done such a good job preventing us from going into this mess over the past 2 1/2 years, that they should all take minimum wage until they balance the budget.

KC Dan
03-31-2009, 11:38 AM
Income redistribution. This is what they ran on and it is no big surprise. I pray that it fails miserably. This is not the US nor Capitalism in any way, shape or form.

headsnap
03-31-2009, 12:26 PM
Bushies looking into what you check out at the Public Library = BAAAAAD

Wage controls under Obama = :bravo:

Taco John
03-31-2009, 12:30 PM
This is NOT communism! It's happening in America, so it CAN'T BE COMMUNISM!

Garcia Bronco
03-31-2009, 12:37 PM
" It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies."

Article 1 Section 9 bitches. It would be unconstitutional out of the box.

Taco John
03-31-2009, 12:40 PM
The bailout bill in itself is unconstitutional. Article 1 Secon 9 isn't going to stop anybody.

Chief Henry
03-31-2009, 12:52 PM
This doesn't even pass the smell test.

Chief Faithful
03-31-2009, 12:53 PM
Its Bush's fault!

Taco John
03-31-2009, 12:53 PM
This doesn't even pass the smell test.



I've noticed our resident communist sympathizers haven't chimed in yet, but if I were to guess their defense, it would be "since we're giving them taxpayer money, the US government should have the ability to 'regulate' these things."

Taco John
03-31-2009, 12:54 PM
...also, I forgot what appears to be the magic tonic that makes this stuff NOT communism: "These companies weren't forced to take the bailout money." (as though this makes the government intervention into industry any less communistic).

KC native
03-31-2009, 12:57 PM
I've noticed our resident communist sympathizers haven't chimed in yet, but if I were to guess their defense, it would be "since we're giving them taxpayer money, the US government should have the ability to 'regulate' these things."

No, it's that we're all tired of discussing this with idiots who have no idea of what communism really is. If you don't want to be the government's bitch then don't take government money. Is that simple enough for you?

Garcia Bronco
03-31-2009, 12:57 PM
...also, I forgot what appears to be the magic tonic that makes this stuff NOT communism: "These companies weren't forced to take the bailout money." (as though this makes the government intervention into industry any less communistic).

AIG might not have been forced to take TARP money, but solvent big banks were forced to take TARP money. Banks like BB&T.

Garcia Bronco
03-31-2009, 12:59 PM
No, it's that we're all tired of discussing this with idiots who have no idea of what communism really is. If you don't want to be the government's bitch then don't take government money. Is that simple enough for you?

This bill, according to the article, would apply to more than just TARP funded institutions. It could apply to wide range of business. Until we see a finale bill we don't know, but it could apply to business that take governemnt insured small business loans and so on.

KC native
03-31-2009, 01:03 PM
Beyond AIG: A Bill to let Big Government Set Your Salary

By Byron York
Chief Political Correspondent 3/31/09

The purpose of the legislation is to "prohibit unreasonable and excessive compensation and compensation not based on performance standards," according to the bill's language. That includes regular pay, bonuses -- everything -- paid to employees of companies in whom the government has a capital stake, including those that have received funds through the Troubled Assets Relief Program, or TARP, as well as Fannie Mae and Freddie Mac.

The measure is not limited just to those firms that received the largest sums of money, or just to the top 25 or 50 executives of those companies. It applies to all employees of all companies involved, for as long as the government is invested. And it would not only apply going forward, but also retroactively to existing contracts and pay arrangements of institutions that have already received funds.


This bill, according to the article, would apply to more than just TARP funded institutions. It could apply to wide range of business. Until we see a finale bill we don't know, but it could apply to business that take governemnt insured small business loans and so on.


You should really work on your reading comprehension because it specifically says in the article "companies in which the government has a capital stake". That means any company that has taken government money.

KC native
03-31-2009, 01:04 PM
AIG might not have been forced to take TARP money, but solvent big banks were forced to take TARP money. Banks like BB&T.

If they don't want to abide by these regulations and if they're so healthy then they can pay the money back and then they won't have to deal with this.

mlyonsd
03-31-2009, 01:04 PM
I've noticed our resident communist sympathizers haven't chimed in yet, but if I were to guess their defense, it would be "since we're giving them taxpayer money, the US government should have the ability to 'regulate' these things."

Heh, boy you nailed that one.

Taco John
03-31-2009, 01:05 PM
No, it's that we're all tired of discussing this with idiots who have no idea of what communism really is.


Well, you guys are clearly the experts...

Garcia Bronco
03-31-2009, 01:07 PM
If they don't want to abide by these regulations and if they're so healthy then they can pay the money back and then they won't have to deal with this.

You don't understand. They forced them to take it and they can't give it back.

Garcia Bronco
03-31-2009, 01:08 PM
You should really work on your reading comprehension because it specifically says in the article "companies in which the government has a capital stake". That means any company that has taken government money.

And taking a loan that's government insured can be considered as taking government money.

Chief Faithful
03-31-2009, 01:09 PM
This bill, according to the article, would apply to more than just TARP funded institutions. It could apply to wide range of business. Until we see a finale bill we don't know, but it could apply to business that take governemnt insured small business loans and so on.

The way the article reads it seems they are after any company that has government contracts. That would include companies like Haliburton or Martin Marietta that live off government contracts.

mlyonsd
03-31-2009, 01:15 PM
I don't know if this is the pure definition of communism but in the least it's as sinister.

Changing the rules after the fact isn't fair, and eventually will drive these companies out of buisiness anyway. Who would want to work for a company run by that POS Frank?

mlyonsd
03-31-2009, 01:17 PM
I wonder if Frank will include a clause limiting the amount of money an employee of one of these companies can contribute to political campaigns.

Naw, silly me for even considering it.

KC native
03-31-2009, 01:17 PM
You don't understand. They forced them to take it and they can't give it back.

I would hardly say forced when I can dig up this news article.


BB&T to get $3.1 bln from Treasury's capital program
12:51p ET October 27, 2008 (MarketWatch)
SAN FRANCISCO (MarketWatch) -- BB&T Corp. on Monday said it will get $3.1 billion from the government as part of the Treasury Department's capital purchase program aimed at bolstering liquidity at the nation's banks. In exchange, the Treasury will get BB&T preferred stock at a 5%annual dividend rate for the first five years. BB&T will pay a 9% dividend from the sixth year until the 10th if the shares are not redeemed. The Treasury will also get 10-year warrants to purchase shares of BB&T common stock. "For us, the additional capital will not only extend and strengthen our lending capacity, but provide other strategic options as well," said BB&T Chairman and Chief Executive John Allison in a statement.

KC native
03-31-2009, 01:19 PM
And taking a loan that's government insured can be considered as taking government money.

Because it is government money. JPM got a $29 Billion non-recourse loan from the fed to purchase Bear Stearns. That means JPM shoulders the first billion in losses and then the government is stuck with the rest of the losses.

Garcia Bronco
03-31-2009, 01:21 PM
I would hardly say forced when I can dig up this news article.


BB&T to get $3.1 bln from Treasury's capital program
12:51p ET October 27, 2008 (MarketWatch)
SAN FRANCISCO (MarketWatch) -- BB&T Corp. on Monday said it will get $3.1 billion from the government as part of the Treasury Department's capital purchase program aimed at bolstering liquidity at the nation's banks. In exchange, the Treasury will get BB&T preferred stock at a 5%annual dividend rate for the first five years. BB&T will pay a 9% dividend from the sixth year until the 10th if the shares are not redeemed. The Treasury will also get 10-year warrants to purchase shares of BB&T common stock. "For us, the additional capital will not only extend and strengthen our lending capacity, but provide other strategic options as well," said BB&T Chairman and Chief Executive John Allison in a statement.


Trust me. They were forced to take it.

Garcia Bronco
03-31-2009, 01:23 PM
Because it is government money. JPM got a $29 Billion non-recourse loan from the fed to purchase Bear Stearns. That means JPM shoulders the first billion in losses and then the government is stuck with the rest of the losses.

Well that could apply to a small business loan. So what happens here is less small business growth. Of course the governemnt has been trying make the private sector cost prohibitive anyway so this is part of the plan.

KC native
03-31-2009, 01:24 PM
Trust me. They were forced to take it.

So, you want to offer some proof or you going to pull BEP tactic of "I know a guy who.."

Garcia Bronco
03-31-2009, 01:27 PM
So, you want to offer some proof or you going to pull BEP tactic of "I know a guy who.."

I can not give you names, dates, or any other information around what happened. I can only tell you the results. It would however be like you pissing on Obama's leg and him having the IRS give you a body cavity search.

KC native
03-31-2009, 01:28 PM
I can not give you names, dates, or any other information around what happened. I can only tell you the results. It would however be like you pissing on Obama's leg and him having the IRS give you a body cavity search.

Ah, so you are resorting to the "I know a guy who..." tactic. Awesome! ROFL

alanm
03-31-2009, 01:35 PM
This is NOT communism! It's happening in America, so it CAN'T BE COMMUNISM!Obamaism?

alanm
03-31-2009, 01:36 PM
" It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies."

Article 1 Section 9 bitches. It would be unconstitutional out of the box.I don't think they give a f*ck about the constitution.

Garcia Bronco
03-31-2009, 01:39 PM
I don't think they give a f*ck about the constitution.

I have faith in John Roberts.

Taco John
03-31-2009, 01:53 PM
Obamaism?



I prefer Obamunism.

Taco John
03-31-2009, 01:55 PM
I don't know if this is the pure definition of communism but in the least it's as sinister.

Changing the rules after the fact isn't fair, and eventually will drive these companies out of buisiness anyway. Who would want to work for a company run by that POS Frank?


If government calling the shots for industry isn't a "pure" enough definition of communism for people, then I don't know what is. It sure as hell isn't the free market. So if it's not the free market, than WTF is it?

Calcountry
03-31-2009, 02:05 PM
If government calling the shots for industry isn't a "pure" enough definition of communism for people, then I don't know what is. It sure as hell isn't the free market. So if it's not the free market, than WTF is it?Sometimes I feel like I just woke up and realized, that this is the "real world" and I have been living in a socialist/communist matrix all of my life.

mlyonsd
03-31-2009, 02:07 PM
If government calling the shots for industry isn't a "pure" enough definition of communism for people, then I don't know what is. It sure as hell isn't the free market. So if it's not the free market, than WTF is it?

I'm not as into labels as some on the board.

I'm more into pointing out what our elected official like that F'ing fag Frank are doing to ruin the country.

Taco John
03-31-2009, 02:14 PM
I'm not as into labels as some on the board.

I'm more into pointing out what our elected official like that F'ing pillowbiter Frank are doing to ruin the country.



Labels are nothing more than tools. You're not afraid to call a thing a "saw" when it acts like a saw, why should anybody be afraid to call these measures "communism" when they act like communism?

I promise you this: the best thing you can do to aid Barney Frank is give him ground on the battle for vocabulary. Calling this stuff for what it is is the only power that Conservatives will have for a good long time. Give away that power at America's peril.

Taco John
03-31-2009, 02:22 PM
Sometimes I feel like I just woke up and realized, that this is the "real world" and I have been living in a socialist/communist matrix all of my life.

Have you read this book yet? (http://www.amazon.com/Revolution-Manifesto-Ron-Paul/dp/0446537519/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1238527290&sr=8-1) Every American bothered by what they see really needs to take a look at this book.

BucEyedPea
03-31-2009, 02:28 PM
Income redistribution. This is what they ran on and it is no big surprise. I pray that it fails miserably. This is not the US nor Capitalism in any way, shape or form.

I knew it was coming, but I never in my wildest dreams thought it would be this extreme.

BucEyedPea
03-31-2009, 02:31 PM
I'm not as into labels as some on the board.

I'm more into pointing out what our elected official like that F'ing pillowbiter Frank are doing to ruin the country.

Mylonsd, what is that?

Really read Orwell's treatise on the use of language to change the masses. It's a political tool. Newspeak is calling something a better sounding "name" (label) so it's not thought of as bad. It's corruption of the language when a label is inaccurately used by politicians.

BucEyedPea
03-31-2009, 02:32 PM
If government calling the shots for industry isn't a "pure" enough definition of communism for people, then I don't know what is. It sure as hell isn't the free market. So if it's not the free market, than WTF is it?

If they still own the place it would technically be fascism. Not that socialism isn't fascist either. But, here they own the place in name only.
Since ownership is the right to control something.

Taco John
03-31-2009, 02:42 PM
If they still own the place it would technically be fascism. Not that socialism isn't fascist either. But, here they own the place in name only.
Since ownership is the right to control something.


It's a technicality since government owns people's production in and of itself via the income tax system.

mlyonsd
03-31-2009, 02:49 PM
Mylonsd, what is that?

Really read Orwell's treatise on the use of language to change the masses. It's a political tool. Newspeak is calling something a better sounding "name" (label) so it's not thought of as bad. It's corruption of the language when a label is inaccurately used by politicians.

It was a TIC reference to the sentence that directly preceded it.

Garcia Bronco
03-31-2009, 03:17 PM
Mylonsd, what is that?

Really read Orwell's treatise on the use of language to change the masses. It's a political tool. Newspeak is calling something a better sounding "name" (label) so it's not thought of as bad. It's corruption of the language when a label is inaccurately used by politicians.

Shell Shock> Battle Fatigue> Post Tramatic Stress Disorder

BucEyedPea
03-31-2009, 03:17 PM
I can not give you names, dates, or any other information around what happened. I can only tell you the results. It would however be like you pissing on Obama's leg and him having the IRS give you a body cavity search.

I read in the news that they were too. I also read that they were cajoled to lend it. It was over at Lew's with links several months ago. But I'm not gonna go look for it and lose an hour.

BucEyedPea
03-31-2009, 03:22 PM
It's a technicality since government owns people's production in and of itself via the income tax system.

I don't disagree but I think the two ideologies or socio-economic systems do that. There's an overlap. The thing is the businesses are still owned, in name only, by the owner but in a way they don't really own it.

BucEyedPea
03-31-2009, 03:25 PM
Originally Posted by KC native View Post
You should really work on your reading comprehension because it specifically says in the article "companies in which the government has a capital stake". That means any company that has taken government money.
Well look who's calling the kettle black here. You flame me for use of anecdotal data, ( eventhough you haven't seen most of my posts to claim I use it all the time). Yet you consistently used snide personal put downs and ad hominem on other posters. Someone needs some social skills including manners. LMAO

Iowanian
03-31-2009, 03:27 PM
Its just a good thing the Comradeocrats are in control of the house, senate and executive branch, or our freedom might be infringed upon.

Chief Henry
03-31-2009, 03:32 PM
Its just a good thing the Comradeocrats are in control of the house, senate and executive branch, or our freedom might be infringed upon.

Popov with crnberry goes down easy. But you are right. One party with all that control is not good.

KC native
03-31-2009, 03:49 PM
Well look who's calling the kettle black here. You flame me for use of anecdotal data, ( eventhough you haven't seen most of my posts to claim I use it all the time). Yet you consistently used snide personal put downs and ad hominem on other posters. Someone needs some social skills including manners. LMAO

I can see another person needs reading comprehension work too. Also, it would be nice if you could post where I used anecdotal evidence to support my argument (I know it won't happen bc I don't but you can try anyway)

First,
This bill, according to the article, would apply to more than just TARP funded institutions. It could apply to wide range of business. Until we see a finale bill we don't know, but it could apply to business that take governemnt insured small business loans and so on.

Then I wrote


Originally Posted by Stinger View Post
Beyond AIG: A Bill to let Big Government Set Your Salary

By Byron York
Chief Political Correspondent 3/31/09

The purpose of the legislation is to "prohibit unreasonable and excessive compensation and compensation not based on performance standards," according to the bill's language. That includes regular pay, bonuses -- everything -- paid to employees of companies in whom the government has a capital stake, including those that have received funds through the Troubled Assets Relief Program, or TARP, as well as Fannie Mae and Freddie Mac.

The measure is not limited just to those firms that received the largest sums of money, or just to the top 25 or 50 executives of those companies. It applies to all employees of all companies involved, for as long as the government is invested. And it would not only apply going forward, but also retroactively to existing contracts and pay arrangements of institutions that have already received funds.
You should really work on your reading comprehension because it specifically says in the article "companies in which the government has a capital stake". That means any company that has taken government money.

BucEyedPea
03-31-2009, 04:00 PM
Did you say something?

Calcountry
03-31-2009, 04:03 PM
I can see another person needs reading comprehension work too. Also, it would be nice if you could post where I used anecdotal evidence to support my argument (I know it won't happen bc I don't but you can try anyway)

First,


Then I wroteNo, I think BEP is spot on with respect to your arrogance.

KC native
03-31-2009, 04:04 PM
Did you say something?

Do you enjoy sticking your head in the sand and ignoring reality?

Also, I like how you claim to have me on ignore and then selectively respond to my posts. That's real mature. :thumb:

Calcountry
03-31-2009, 04:04 PM
Its just a good thing the Comradeocrats are in control of the house, senate and executive branch, or our freedom might be infringed upon.You forgot the Judiciary and the media.

The control all 5 branches of government.

OHHHH, I have a tingly thing going up my leg.

mikey23545
03-31-2009, 04:07 PM
Chains you can believe in.

Calcountry
03-31-2009, 04:07 PM
I'm not as into labels as some on the board.

I'm more into pointing out what our elected official like that F'ing pillowbiter Frank are doing to ruin the country.He really is a pillowbiter isn't he. I mean damn, Ultra peanut can only immagine the things that have been shoved in that mouth to gratify him.

KC native
03-31-2009, 04:09 PM
No, I think BEP is spot on with respect to your arrogance.

Wow, I was under the assumption she was going to try and show that I used anecdotal evidence because her post was

Well look who's calling the kettle black here. You flame me for use of anecdotal data, ( eventhough you haven't seen most of my posts to claim I use it all the time). Yet you consistently used snide personal put downs and ad hominem on other posters. Someone needs some social skills including manners. LMAO

I use snide remarks with her because she thinks she knows economics but is completely and totally clueless. I was respectful of her until she tried to say I was wrong without justifying her arguments and suggesting I was indoctrinated. I've given her several times to try and justify her economic stances but every single time she runs from the question. When she actually shows some gumption and attempts to answer questions I propose then I won't be so derisive torwards her.

wild1
03-31-2009, 07:08 PM
the "communism" threads are officially no longer hyperbole

Radar Chief
04-01-2009, 10:22 AM
You forgot the Judiciary and the media.

The control all 5 branches of government.

OHHHH, I have a tingly thing going up my leg.

Don’t say that too loud, it’ll be retroactively taxed at a 90% rate.

Simplex3
04-01-2009, 10:39 AM
I would hardly say forced when I can dig up this news article.

This crap again?

Paulson made it perfectly clear to solvent financial institutions that they were to take bailout money even though they didn't need it. They were to use it to buy troubled institutions or make loans to undeserving people and institutions. I'm not sure if you've dealt with government regulators on a business level, but you don't piss down their leg when they 'strongly suggest' that you do something. You're one license renewal away from being out of business.

KC native
04-01-2009, 01:56 PM
This crap again?

Paulson made it perfectly clear to solvent financial institutions that they were to take bailout money even though they didn't need it. They were to use it to buy troubled institutions or make loans to undeserving people and institutions. I'm not sure if you've dealt with government regulators on a business level, but you don't piss down their leg when they 'strongly suggest' that you do something. You're one license renewal away from being out of business.

Paulson wanted everyone to participate so that no one would be able to tell which banks where close to insolvency.

What I find really funny about the complaints about TARP is that none of these bankers complained until they found out that tax payer money came with strings. If these banks don't need the money then they can repay it. There's already been at least 1 bank that has repaid it (a Louisiana bank named Iberia Bank). Northern Trust (who wasn't in trouble either) is supposedly about to repay anytime now.

Simplex3
04-01-2009, 02:44 PM
So the bankers took money, in the form of a loan, that they didn't really need, under the assurance that it didn't have strings attached. Then they did what the government asked (just short of demanded) them to do with the money, which was to loan it out or purchase entities with it.

Now the government has rewritten the rules of the game mid-stream and it's your opinion that the bankers don't have a right to be pissed off?

Garcia Bronco
04-01-2009, 02:46 PM
So the bankers took money, in the form of a loan, that they didn't really need, under the assurance that it didn't have strings attached. Then they did what the government asked (just short of demanded) them to do with the money, which was to loan it out or purchase entities with it.

Now the government has illegally rewritten the rules of the game mid-stream and it's your opinion that the bankers don't have a right to be pissed off?

My first ...FYP

Baby Lee
04-01-2009, 02:49 PM
Don’t say that too loud, it’ll be retroactively taxed at a 90% rate.

Gahh, the tingle stops at my ankle now!!!

Simplex3
04-01-2009, 02:54 PM
My first ...FYP

Yeah, I probably should have known that wouldn't be obvious to some people.

KC native
04-01-2009, 02:56 PM
So the bankers took money, in the form of a loan, that they didn't really need, under the assurance that it didn't have strings attached. Then they did what the government asked (just short of demanded) them to do with the money, which was to loan it out or purchase entities with it.

Now the government has rewritten the rules of the game mid-stream and it's your opinion that the bankers don't have a right to be pissed off?

It was never assured that there would be no strings attached.

No, they don't have the right to be pissed. The banks are a major reason we're in this mess so I have no sympathy for them. If you blow up the financial system due to your incompetence then you don't have the right to bitch when the government says you phucked up, now you have to play by our rules.

Edit: These aren't loans in the traditional sense either. So far they've been capital infusions.

Simplex3
04-01-2009, 03:01 PM
It was never assured that there would be no strings attached.

No, they don't have the right to be pissed. The banks are a major reason we're in this mess so I have no sympathy for them. If you blow up the financial system due to your incompetence then you don't have the right to bitch when the government says you phucked up, now you have to play by our rules.

Edit: These aren't loans in the traditional sense either. So far they've been capital infusions.

Weren't we talking about the banks who *didn't* have financial problems here?

KC native
04-01-2009, 03:04 PM
Weren't we talking about the banks who *didn't* have financial problems here?

Let me type this one more time for you to get it through your thick skull.

IF THEY DON'T WANT THE RESTRICTIONS THEN THEY CAN PAY BACK THE FUNDS.

KC Dan
04-01-2009, 03:10 PM
Let me type this one more time for you to get it through your thick skull.

IF THEY DON'T WANT THE RESTRICTIONS THEN THEY CAN PAY BACK THE FUNDS.
Actually, you are a little bit wrong on this one. JP Morgan tried to pay them back and the gov't refused to take it until they pass the gov't audit. Plus the bank gets to pay interest while they wait for the "all clear" to give back the money.

KC native
04-01-2009, 03:12 PM
Actually, you are a little bit wrong on this one. JP Morgan tried to pay them back and the gov't refused to take it until they pass the gov't audit. Plus the bank gets to pay interest while they wait for the "all clear" to give back the money.

There's a reason for that. JP Morgan has the most derivative exposure of all the big banks. While they're not in nearly as bad as shape as BofA and Citi they definitely aren't in the clear. Also, JP Morgan got a huge government backstop for the Bear Stearns purchase so they need to make sure JPM can handle paying back that money.

KC Dan
04-01-2009, 03:17 PM
There's a reason for that. JP Morgan has the most derivative exposure of all the big banks. While they're not in nearly as bad as shape as BofA and Citi they definitely aren't in the clear. Also, JP Morgan got a huge government backstop for the Bear Stearns purchase so they need to make sure JPM can handle paying back that money.
So, they should refuse to take back the full loan payment? What if your credit card company refused your payment to pay off the debt on your account and they refused to accept it because they wanted to continue to collect interest?

KC native
04-01-2009, 03:24 PM
So, they should refuse to take back the full loan payment? What if your credit card company refused your payment to pay off the debt on your account and they refused to accept it because they wanted to continue to collect interest?

Red herring. A credit card debt doesn't represent a systemic risk to the financial system. JPM putting themselves in a precarious capital position (which they already have) is a systemic risk. You're completely ignoring magnitude which is the relevant factor here. If there was no question that JPM would be healthy after paying the TARP funds back then they would be allowed to pay it back as the other banks who have received funds and paid them back have.

Edit: Also, IIRC TARP recipients aren't paying interest. They gave up an equity stake in the business for the funds.

KC Dan
04-01-2009, 03:25 PM
Red herring. A credit card debt doesn't represent a systemic risk to the financial system.
This coupled with Wall Street greed and Congressional deregulation caused this mess. The consumer debt is why spending has fallen off a cliff.

blaise
04-01-2009, 03:47 PM
Let me type this one more time for you to get it through your thick skull.

IF THEY DON'T WANT THE RESTRICTIONS THEN THEY CAN PAY BACK THE FUNDS.


So you think it's okay to enter into a deal and then after the deal has been made one party changes the language of the deal?
Wouldn't that be like buying a car, and then three months later having the finance company say, "Well, you can only drive 10,000 miles a year. If you don't like it return the car."
What kind of asinine way to do business is that? And I'm not saying the banks aren't guilty either- they are, but you saying, "Well pay the money back" is ridiculous. If the government didn't put that in writing before they paid the money then it's on them.

KC native
04-01-2009, 04:01 PM
So you think it's okay to enter into a deal and then after the deal has been made one party changes the language of the deal?
Wouldn't that be like buying a car, and then three months later having the finance company say, "Well, you can only drive 10,000 miles a year. If you don't like it return the car."
What kind of asinine way to do business is that? And I'm not saying the banks aren't guilty either- they are, but you saying, "Well pay the money back" is ridiculous. If the government didn't put that in writing before they paid the money then it's on them.

Well when you dance with the devil, you wait for the song to stop. If these institutions had not gotten themselves into the position they're in they wouldn't even have to worry about this.

Simplex3
04-01-2009, 04:07 PM
Yes, because lenders voluntarily started giving $80k home loans to people with bad credit ratings. Government didn't "encourage" that.

Let's also not forget that our entire country is indebted to China thanks to these assholes in Washington. Let's hope the Chinese don't decide that changing the game post-contract is a good idea. After all, we as a country weren't forced to take that money.

KC native
04-01-2009, 04:15 PM
Yes, because lenders voluntarily started giving $80k home loans to people with bad credit ratings. Government didn't "encourage" that.

Let's also not forget that our entire country is indebted to China thanks to these assholes in Washington. Let's hope the Chinese don't decide that changing the game post-contract is a good idea. After all, we as a country weren't forced to take that money.

Oh, so now you're blaming poor people for this mess?

Subprime is but a small part of the pie. This crisis was caused by leverage, lax regulation, and greed.

As far as indebtedness to China, China buys our debt so they can keep their currency artificially low. Right now they are shitting bricks about us devaluing the dollar because of their massive reserve of dollars and US treasuries. China has no say in what we do. They are trying to influence our actions so they don't get dicked by dollar losses. If the Chinese would allow their currency to freely float then their economy would tank because they don't buy the crap they make.

KC native
04-01-2009, 04:18 PM
Yes, because lenders voluntarily started giving $80k home loans to people with bad credit ratings. Government didn't "encourage" that.

Let's also not forget that our entire country is indebted to China thanks to these assholes in Washington. Let's hope the Chinese don't decide that changing the game post-contract is a good idea. After all, we as a country weren't forced to take that money.

And on the CRA and blaming poor people here's some relevant info.

More CRA Idiocy
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By Barry Ritholtz - December 11th, 2008, 11:05AM

Howard Husock has an exercise in cognitive dissonance in today’s NYT Op-Ed pages titled Housing Goals We Can’t Afford, and it begins:

“The national wave of home foreclosures, many concentrated in lower-income and minority neighborhoods, has created a strong temptation to find the villains responsible.”

What can you say about an Op-Ed whose very first sentence is a giant pile of steaming bullshit? That statement is demonstrably false. As the prior post on foreclosures shows, the concentration is mostly middle class and upper middle class white suburban neighborhoods.

California leads the nation in foreclosures. The state’s foreclosure activity was up 51% from a year ago. These are not CRA communities, they are what were hoped to be surburban bedroom communities east of the major cities (San Diego and L.A.)

Next up is Florida; The state’s foreclosure activity was still up 68 percent from November 2007. The enormous overbuilding of Condos, and not CRA, is to blame. These weren’t inner city loans to minorities, as Dan Gross pointed out, they were “WCI Communities — builder of highly amenitized condos in Florida (no subprime purchasers welcome there)” WCI filed for bankruptcy in August. “Very few of the tens of thousands of now-surplus condominiums in Miami were conceived to be marketed to subprime borrowers, or minorities—unless you count rich Venezuelans and Colombians as minorities.”

~~~

Let’s put some context around what the CRA is and isn’t.

In the 1960s and 70s, banks would redline neighborhoods. They would literally put a map on a wall, and with a red magic marker, draw a redline enveloping certain neighborhoods. If you lived within the redlined areas, regardless of your income, credit score, assets, debt servicing ability, if you were in the redlined area you could not qualify for a mortgage.

Although Redlining was made illegal by the Fair Housing Act of 1968, the practice still surreptitiously continued. The Community Reinvestment Act of 1977 was the next attempt to stop redlining. There were two main aspects of the CRA: First, it required banks to apply the same lending criteria in all communities. Credit Score, Loan-to-value, percentage of monthly take home, etc. had to be the same across different areas.

Second, the Community Reinvestment Act required banks to make good faith attempts to loan the money back to its own depositors. If you open up a branch in Harlem, you cannot suck up all the local business and residents’ cash, and then turn around and only lend it out to Tribeca condo buyers. You must make a fair attempt to loan the money locally. Banks have no obligation to open branches in Harlem, but if they did, they are required to at least try to lend the locals back their own money.

Note that there are no quotas, minimums or mandates. This is a very soft rating system.

~~~

The rest of Husock’s article is filled with the usual dissembling and half-truths. He mentions “in 1995 the Clinton administration added tough new regulations,” but omits any mentions that the Bush administration substantially watering down the act in 2004.

The only testimony adduced from the banking industry in the Op-Ed was“a compliance officer for a New Jersey bank wrote in a letter last month to American Banker.” That’s your inside proof? Meanwhile, since Bear Stearns collapsed in March, there has been a veritable parade of bankers, mortgage originators, lenders, fund managers, and investment banks CEOs all testifying in Washington D.C. about the causes of the crisis. By some strange coincidence, not a single one blamed the CRA (Dick Fuld, CEO of Lehman Brothers was even asked about it). Not a one.

And of course, vast numbers of sub-prime mortgages were written by non-CRA banks. Indeed, none of the 300+ mortgage originators that imploded were depository banks covered by the CRA.

This is a an intellectually silly argument from other perspectives also. Why was there no credit/housing meltdown from 1977 to 2005? Why did 30 other countries, none of which have are covered by the CRA, have a remarkably similar housing boom and bust to the USA? Husock’s arguments not only fail legally and factually, they also fail in terms of time and space . . .

>

Source:
Housing Goals We Can’t Afford
HOWARD HUSOCK
NYT, December 10, 2008
http://www.nytimes.com/2008/12/11/opinion/11husock.html

Subprime Suspects
Daniel Gross
Slate, Tuesday, Oct. 7, 2008, at 2:08 PM ET
http://www.slate.com/id/2201641


Kroszner: CRA & the Mortgage Crisis
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By Barry Ritholtz - December 3rd, 2008, 11:53AM

Sayeth the man:

“Some critics of the CRA contend that by encouraging banking institutions to help meet the credit needs of lower-income borrowers and areas, the law pushed banking institutions to undertake high-risk mortgage lending. We have not yet seen empirical evidence to support these claims, nor has it been our experience in implementing the law over the past 30 years that the CRA has contributed to the erosion of safe and sound lending practices. In the remainder of my remarks, I will discuss some of our experiences with the CRA. I will also discuss the findings of a recent analysis of mortgage-related data by Federal Reserve staff that runs counter to the charge that the CRA was at the root of, or otherwise contributed in any substantive way, to the current subprime crisis . . .

“This result undermines the assertion by critics of the potential for a substantial role for the CRA in the subprime crisis. In other words, the very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis.”

Be sure to read the entire speech by the Fed Governor here. He discusses the result of an exhaustive data analysis performed by the various Fed Banks looking into the CRA issue and sub-prime

Of course, now that the election is over, the usual parade of reality challenged nitwits won’t be interested in any hard data or professional analyses. The full 233 page report is available here.

>

Sources:
At the Confronting Concentrated Poverty Policy Forum
Governor Randall S. Kroszner
Board of Governors of the Federal Reserve System, December 3, 2008
http://www.federalreserve.gov/newsevents/speech/kroszner20081203a.htm

The Enduring Challenge of Concentrated Poverty in America
http://www.frbsf.org/cpreport/

Federal Reserve Director on the CRA
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By Barry Ritholtz - October 4th, 2008, 2:00PM

From the Federal Reserve:

"Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution’s individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution’s CRA activities should be undertaken in a safe and sound manner." (emphasis added)

What about mergers or acquisitions — did the CRA get in the way of that?

"Since 1988, there have been more than 13,500 applications for the formation, acquisition, or merger of bank holding companies or state-member banks reviewed by the Federal Reserve Board. Over this time, twenty-five applications have been denied, with eight of those failing to obtain Board approval involving unsatisfactory consumer protection or community reinvestment issues."

Wow, just 8 out of 13,500. That’s less than one tenth of 1%.

What about the methods of forcing compliance?

"The CRA is one of several laws enacted to ensure that consumers and communities have access to financial services and products regardless of location or demographics. Congress sought to achieve that goal not by imposing rigid, prescriptive rules but by charging regulators to use flexible standards that could change, as needed, over time."

Gee, this doesn’t sound too onerous; What was all the brouhaha about?

"The debate surrounding the passage of the CRA was contentious, with critics charging that the law would distort credit markets, create unnecessary regulatory burden, lead to unsound lending, and cause the governmental agencies charged with implementing the law to allocate credit. Partly in response to these concerns, the act adopted by Congress included little prescriptive detail."

What are the requirements of the CRA?

The CRA simply requires the Federal Reserve and the other federal financial supervisory agencies:

• to encourage federally insured depository institutions to help meet the credit needs of their entire communities, including low- and moderate-income areas, consistent with safe and sound operations;
• to assess their records of performance under the CRA during examinations; and
• to take those CRA records into account when evaluating proposals for expansion.

Hey, that sounds pretty flexible. What sort of discretion exists in applying the CRA:

The law gives the agencies considerable discretion and flexibility to fashion programs and procedures to carry out the purposes of the law, to issue implementing regulations that include measures of performance, and to modify those regulations in response to changing markets. This flexibility has contributed to CRA’s relevance and adaptability through times of rapid economic and financial change, and widely differing economic circumstances among neighborhoods.

Wow, this stuff makes the wingnuts and gasbags look pretty foolish. What’s your source for all this?

All quotes are come from the testimony of Sandra F. Braunstein, Director, Division of Consumer and Community Affairs of the Board of Governors of the Federal Reserve System, before the Committee on Financial Services, or from the Federal Reserve website.


>

Source:
The Community Reinvestment Act
Sandra F. Braunstein, Director, Division of Consumer and Community Affairs
Before the Committee on Financial Services, U.S. House of Representatives
February 13, 2008
http://www.federalreserve.gov/newsevents/testimony/braunstein20080213a.htm

See also:
The Community Reinvestment Act: Its Evolution and New Challenges
Chairman Ben S. Bernanke
Community Affairs Research Conference, Washington, D.C. March 30, 2007
http://www.federalreserve.gov/newsevents/speech/Bernanke20070330a.htm

Community Reinvestment Act
http://www.federalreserve.gov/DCCA/CRA/default.htm

The Performance and Profitability of CRA-Related Lending
Robert B. Avery, Raphael W. Bostic, and Glenn B. Canner
Federal Reserve Bank of Cleveland, November, 2000
Economic Commentary
http://www.clevelandfed.org/research/commentary/2000/1100.htm

wild1
04-01-2009, 10:05 PM
So you think it's okay to enter into a deal and then after the deal has been made one party changes the language of the deal?
Wouldn't that be like buying a car, and then three months later having the finance company say, "Well, you can only drive 10,000 miles a year. If you don't like it return the car."
What kind of asinine way to do business is that? And I'm not saying the banks aren't guilty either- they are, but you saying, "Well pay the money back" is ridiculous. If the government didn't put that in writing before they paid the money then it's on them.

muhaha. Dear Leader is altering the deal. Pray he does not alter it any further.

banyon
04-01-2009, 10:22 PM
Wow, I was under the assumption she was going to try and show that I used anecdotal evidence because her post was



I use snide remarks with her because she thinks she knows economics but is completely and totally clueless. I was respectful of her until she tried to say I was wrong without justifying her arguments and suggesting I was indoctrinated. I've given her several times to try and justify her economic stances but every single time she runs from the question. When she actually shows some gumption and attempts to answer questions I propose then I won't be so derisive torwards her.

I would second this.

BucEyedPea
04-01-2009, 10:23 PM
I was talking to a lawyer today who said.....

2bikemike
04-01-2009, 11:18 PM
I am a bit confused. So does this mean that since we are taking money from China and who ever else is buying up all our debt, that these countries will start dictating our wages and policies?