They Blew It

Cheryl, I can tell you why. This misses the point. I down loaded last night from your site immediately once it was posted, and read it. It was pretty much 110 empty pages. Everyone promotes this bill as addressing excessive executive pay. It spoke about it but had a lot of loopholes on that topic. But let's get to the real issues. First, the bill would permit the gov to buy these distressed or bad mortgages (and other debt), to "free up" credit markets. There was NOTHING in this bill that required any institution that participated to use the funds received for new credit. They just go the bad loans off their books. Also, if these mortgages were such as "good deal" as some are proposing, then there should be other investors in the marketplace that would buy these loans at a reduced rate. Let them buy it and not have the gov get involved in the holding of these loans. But the bill did not address the so called fundamental root cause problem; housing market. All this bill does is allow institutions, IF they participate, to move bad loans off their books. That's it. It doesn't address the fundamental housing problems, or other problems for the majority of the americans. Let see, what would have been good to include in the bill: 1. Do something for all americans in regards to the housing market. Instead of just allowing the institutions to offload bad debts, or trouble mortgages, allow any individual to have their mortgage reduced if the market value had dropped and the house is less than the mortgage value. Doing what the current bill did only for institutions is just a bandaid for the institutions not the individuals, and those individuals will continue to be underwater in their mortgages only delaying the fundamental problem even further down the road. 2. With the current bill, people that may be close to foreclosure could potentially have their mortgage values decreased to promote staying in the house and decreasing foreclosures. What about the people who are trying to not get to a foreclosure stage, they get NO benefit. 3. Reversing the bankruptcy laws, especially in regards to credit card debit, the Banks pushed this law thru and benefited from it. 4. NO redirection of proceeds to Acorn, or similar orgs. 5. No "real estate investors" can participate in the saving their property program. Just to clarify this is regards investors who brought property with the intention of flipping and got into exotic loans. They should not be benefiting until all of their investment assets are sold. I'm glad the current bill was defeated becaue i don't believe it is something the gov should be involved in, but if the gov is getting involved this draft of the bill was not the best one to pursue.

"Take one look at small businesses in this country, who cannot get access to credit to pay their employees, to pay the companies they get their supplies from, or to pay their rent, and you are looking at who needs the help." ====> Any company that needs credit to pay employees or pay rent is a company that is not being run very well. Propping them up with more "easy money" is a bad idea. This was a bad bill and it deserved to die.

As I type this, I am watching you on the Bill O'Reilly show. I have no idea why you seem so personally upset by the fact that 71% of Americans (per the poll on Fox Business's website) oppose this bill. I understand quite well that my 401(k) will take a hit if the bill doesn't pass. I'd rather have that than take the $700B to the federal budge, because make no mistake ... the government isn't going to break even, let alone make a profit. The government would take a bath. It's not the American public who doesn't understand; it's you. And by the way I'm an actuary who has taken classes on how to price Mortgage Backed Securities. Do you have a similar background?

I just listened to Cheryl on The O'Reilly Factor and, quite frankly, am offended that she intimated that I don't "get it" when it comes to the economic stimulus package that was voted down in Congress. I have a BS in Economics and an MBA from one of the top 50 business schools in the country so I do, in fact, "get it". I get the fact that I am a Banker on Main Street and I am still lending money to businesses. I get that we have a SERIOUS problem in the economy and that the stimulus package is only a band-aid. I get that if we are going to fix the economic woes of this country, we need to first ensure that both businesses and our government begin operating by both sound business and banking practices and stop gambling with money that is not theirs to lose just so they can get bigger bonuses or bigger campaign contributions. I get a lot of things, Cheryl, and I resent being told by the media that I don't just because I happen to disagree with you.

My leading question over the last couple of weeks is what have I done wrong? I have a 30 yr fixed rate mortgage that has an intereat rate below 6%. I can afford the payments because I bought a modest house. My wife and I are in the process of reducing our consumer debt. We stopped using credit cards over 3 yrs ago and live on the cash we earn while we pay off the rest of our debt. I contribute to my 401K regularly and have a modest retirement savings. What have I done wrong? Why does my money have to bail out more Enrons? And why is there no talk about prosecuting the leaders of the organizations that caused this mess? With regard to small businesses and credit, I work for a small consulting firm in Michigan. It is a cash business. They haven't borrowed money in 6 years. Why do companies need money to meet their payrolls and other obligaitions. Credit in general seems to be the problem. Why can't businesses operate on what they earn? I'll stop blathering, I just wish someone would take the time to explain what is going on. Sound bites will not help those of us that are just trying to live our lives and raise our families. We are not stupid people. Troy T. Wilkinson

I heard Cheryl's comments on The O'Reilly Factor tonight and, quite frankly, I am offended by them. Cheryl stated that we, the citizens of the U.S., do not "get it" when she was referring to the overwhelming majority of Americans that called their Congressmen and told them that they were opposed to the "bailout". Well, Cheryl, I for one do "get it". I get that I am a professional Banker on Main Street. I get that I and my bank are still doing loans to small businesses on Main Street. I get that the proposed stimulus package was a compromise and that it was not perfect. I also get that it was a band-aid on the problem and was not a "fix". We have Paulson sitting in a meeting and deciding that AIG would get "bailed out" while the CEO of Goldman Sachs, who has a substantial stake in AIG, was present at the closed door meeting. Can you say conflict of interest? I also get that I am tired of the media as a whole telling me that I don't "get it" and that I don't know what is good for me. I have a BS in Economics and an MBA from one of the top 50 B-Schools in the countryand I do, as a matter of fact, "get it". What I get is that we have a systemic problem in this country when it comes to the economy and throwing money at the problem won't fix the economic woes of the country. Our economic problems won't be fixed until we start the root cause of the problem, which is we need to start operating by sound banking and business practices from the top down and stop letting Wall Street and the U.S. government gamble with money that is not theirs to gamble with. Yes, Cheryl, I do "get it" and I am angry and insulted that you portend to tell me otherwise.

Dear Cheryl, Your condescending tirade makes the assumption that those of us who opposed the bailout did so without knowing what was in the bill and the effect that passage or failure would have on the economy. You are wrong. Perhaps in your world it makes sense to spend $100 to save a $50 investment, but in our world it doesn't. Perhaps in your world it makes sense to allow the Secretary of the Treasury broad discretion to bailout cities and other entities in the "public interest", but in our world it doesn't. Perhaps in your world you can depend upon the good judgement of an unknown Treasury Secretary who will be selected by the next President, but in our world it doesn't. Perhaps in your world it makes sense to defer the pain for a few more months wishing and hoping that the politicians and organizations that got us into this mess can get us out of it, but in our world it doesn't. The bottom line is that this first band-aid was designed not to correct the problem but to allow us to continue as we were for a short time and thus avoid the inevitable pain. Those of us who saw this coming and had moved our assets around are fine. Those who did not will benefit from the fact that the government isn't hampered by an additional trillion dollars in debt and the pain may only last 3-7 years provided the government doesn't keep interfering. We're not as stupid as you think. We saw a money pit and chose to avoid it.

Cheryl, I AM the American public who dared cry out loud. Why should we believe people like Frank, Dodd, Pelosi, or anyone else involved in "The Sky Is Falling" mentality? While I do know something HAS to be done, I am sick to my stomach of hearing "bailouts" and "buy-ins" from people who say they can fix something when they were the ones that PUT US THERE.

Lets get onboard......suspend the market to market trading practice first then work on the bailout proposal. Get rid of Paulson period.

I'm with you. It is very scary that the people in Congress are trying to fix something that 1) they created and 2)they have no idea how to fix. I heard quite a bit of the 2004 Congressional hearings on Freddie Mac and Fannie Mae today on Rush and on Hannity. The Dems denied anything was wrong over and over. These people should not be taking any campaign contributions from the banking industry or Fannie or Freddie when they are on the banking committee. They should be prosecuted and looked into by the FBI.

I would have to think Japan is in better shape than the USA, after all, are they not the ones who do the lending?

I oppose this kinda of legislation just cause I would rather go thru a depression and filter out all the corruption in this market and government, than to give them one red cent. Yes let the whole system fail. This Country needs a Enema!

Cheryl, this is the first thing they've gotten right in a long time. I'm sorry you can't see that. I'm sorry some of your friends on wall street may end up losing their jobs. I'm sorry your portfolio is taking a hit. Can't you see that providing liquidity (printing money) has done nothing for our economy but create misallocations of capital, asset bubbles, inflation, and a bigger role of government in our supposed free market system? If there was any chance for the tax payer to make money on this deal, why hasn't someone in the private sector bought all of these mortgage backed securities? This would have been a bail out whether you like the term or not. Why is it so critical to steal the savings of the middle class to preserve investment banks that levered up 30:1 on subprime debt? Come on. If I levered up 30:1 on oil when it was trading at $146, could I expect the federal government to provide me with "liquidity" (inflation)? Contrary to your view of the United States going the way of Japan, I think this was the first positive step in avoiding that path. We need an abrupt end to the largest credit bubble in history in order to put a firm bottom in our market, get rid of the excess, and get back to an economy that isn't based on how much people spend. And quite honestly, even though your portfolio is suffering, the fact that we didn't print money is good for the strength of the dollar.

Thats because it IS a bailout of wallstreet. Let them take their losses and then things will start to recover. I'm not saddling myself or my children with this debt!

They did NOT blow it. They did the right thing. This plan would socialize a very large part of our economy. There is a very simple fix that could be done tomorrow, with no input from Congress.... first Sec Paulson should be fired. Second... remove the mark to market accounting rule. It would have an immediate effect of infusing value into the market.

Cheryl; Heard you tonight on The O'rielly Factor, not to mention having read your "They blew it". Wrong!!!!! They got it right! Look, just because Warren Buffet says this is a potential economic Pearl Harbor, hey, what do you expect from someone who faces loosing millions of dollars. Yes, my 401 is probably taking a beating, but at this point in time, this market needs a beat down. Why should we fix that that was broken from certain individuals at differnt financial institutes? They permitted it to happen, they can fix their own failures! Yes, they did it. They could have stood firm and not made poor loan decisions, but hey, it takes loaning money to make money, so off to the money races they where! Those crying the most about this are the very ones that face loosing millions/billions of dollars. I say find a rope, find a ledge, find a bridge, or find a train. There are ways out of this is you can't fix it any other way. Let the chips/stock market/credit market fall where it may!!!!!!!!!!!!!!!!!!!! And for your information, I am a REPUBLICAN, a proud one at that!!!

Are ya kidding? The connection you don't understand is the one between reality and fantasy. Half of the country may be in the stock market but they understand that they can only borrow what they can afford to pay back. When you overextend, bad things can happen. Why is this such a surprise? What if it goes another 777 points? And what if we come out of this with a new appreciation for the tangibles, real earnings, and reality rather than wall street's fantasy. I've never, ever posted to a blog like this. So of course, my post probably won't make it to your page, but I'll give you credit for being provacative. You say: "I believe in free markets and and I have no interest in seeing Congress get involved in our system." Why don't you think about that for a moment? Deep down, you know better. Just like the guy/gal who bought twice the house they could afford on an interest only loan and the banker who sold it to them and the wall street guy who pushed for a quarterly result.

Cheryl: You're pissed? I'm nearly ecstatic! This was and still is a bad idea. Acting on impulse (hardly a serious debate or consideration of evidence), generated by fear (too many Chicken Little's squawking), ramrodded by partisan hacks (Nancy Pelosi just might be the incarnation of the wicked witch of the west), and foisted on the public with guilt and shame (amid pompous statements about how the average American "just doesn't understand this"). I'm sorry, but I can't believe that my country is about to embark on the biggest socialization effort since the New Deal. Let Wall Street figure itself out. Let the "credit crunch" get over its spasms. It may take a week or a month, but it won't last forever. So the Dow dropped 770 points. I've lived through 9/11, and Black Monday, and the Carter regime of 17% prime rate - all were worse. We have gotten through this in the past, and we will get through it again this time. And arguing that we must act or this will have a ripple effect on other economies? Puhleeze - time to let those Euro-snobs, the ones who hate us and talk condescendingly about our politics and yet now are appealing to our "leadership in this crisis", feel the same effects of market forces. I have very little empathy for them right now! Now, lest you think I have nothing at stake - how about two mortgages totalling almost $750,000, a stock portfolio of about $400,000, and retirement accounts of about $350,000? The value of all will surely drop, and we may take a loss on our second home. But most of my losses, like most everyone in the market, are paper losses stemming from years of paper gains. I can ride this one out, and so can most everyone else. There may be a Wall Street banker or two that has to get a real job. Waaa waaa. And there may be some unfortunate folks who are hit hard with no golden parachute. Then it's up to folks like me to reach out and help them. But that's a better course of action than this ridiculous bailout.

I am personally glad that the bill for economic rescue did not pass in the house. I believe it did not pass because the representatives listened more to street level citizens like me rather than a proliferation of experts who of themselves admitted that it was unknown whether the package would actually cure the ills of the economy. Here are my suggestions for what should occur next: 1. Let the stock market bring its own corrections. If other businesses fail, so be it. Businesses apart from Wall Street fail everyday so this is nothing new. I realize the scope is larger but it is a function of our free enterprise system for businesses to either produce a profit or not. 2. One of the greatest concerns is credit. The truth is that we have had too much easy credit on every level. If it is removed our households and businesses will return to a style of life that reduces the potential for over extending ourselves financially which eliminates the potential for bankruptcy which has been prolific and often encouraged. 3. The common American citizens are smarter than they are often given credit for and can be creative economically when needed. Let Wall Street learn from the rest of us instead of vice versa. 4. Instead of increasing the national debt by adding billions to it discover ways to reduce it. 5. If there is still an insistence in spending billions to repair the economy, send $10,000-$20,000 to every family. 6. Instead of Congress voting on a bill, create a national referendum to be voted upon by the citizenry at the same time they vote on the next President.

First, 777 points is less than 7%. Second, the Dow is only 15 stocks, not the entire market. Looking at total market cap, we're down about 2%. In 1987 we dropped 25%. It's a totally different thing. Even including today we're down about 15%. It's important to remember though - it will go back up. You only actually have a loss if you sell (the same is true of a house). Yes the American people understand that we need a fix, and that we're in the market but this bill wasn't it. Here's the steps: 1) Change Mark to Market to a three year rolling average 2) Establish an FDIC/SIPC self-funded (initial ante by the government if necessary) to backstop the CDO and MBS securities that are 'toxic'. 3) Establish accounting rules and techniques to unbundle the mortgage securities - separate the good from the bad. That alone will release the bulk of the illiquid assets. 4) Repeal the Community Reinvestment Act 5) Tell the SecTreas to stop fanning the flames of panic. 6) Get Congress back in session. If it's an emergency, why are they adjourning? We work through holidays in the private sector. They can too. We fought a cold war to defect communism. We don't need to panic and establish it (or socialism) here now. In the language of Atlas Shrugged, we need Hank Reardon, not Wesley Mooch.