Honestly, no one is blameless in the current situation. The Bush administration accelerated a problem that was probably put in motion under Clinton, and then no one did anything to stop it. But finger-pointing is useless (although we'll get a lot of that over the next 36 days).

The current bailout is necessary. Given the speed at which it had to be cobbled together it is better than we might have hoped for. I'm not sure it will be enough, frankly, but I fear that no action would lead to disaster. So I'm in favor.

I wanted to contact my Congressman, Bob Goodlatte, to urge support, since he's one of the Republicans who seems most likely to rebel on this kind of thing. The House.gov website seems to be non-functioning--did they forget to pay the bill?--so I called his office, spoke to a human being, and expressed my wish that the Congressman vote for the bill. Which means he'll probably vote against, since he usually does the opposite of what I want him to do.  

is being required by various offices and persons under this Act; will these actually be done, who will read them, will they be available to the public, and be reported on by the media? We all know how this administration has treated reporting requirements cavalierly, what happens if the reports are not made, or Congress (or someone) objects to something in these numerous reports? Without reading the entire bill, it's hard to get a picture.

Another thing, "Marking to market" (Section 135) and reporting within 30 days on accounting requirement FAS 157, which in a way exposed the entire toxic condition of all those mortgage-backed securities--- once it was shown the securities had no market value, and no one knew what they were worth because no one would buy them, plus the extent to which the financial institutions leveraged the  specious market values of these securities, that's when it all hit the fan.... so we look forward to this report. Should be painful and amusing, since we already have an inkling of the falsely high valuation given to these securities when the financial institutions started buying each other for pennies on the dollar.

I agree, on first reading this is probably better than could have been hoped for. Glad to see the extension of the income tax forgiveness on the cancellation of mortgage debt (Sec. 303), a good thing for the little guy. With all this reporting going on, it looks as though Congress does not consider its job done with this Act, and plans a fuller attack on regulation in the near future. Now all we need is for the President to sign this sucker.

finger pointing is useless, and both political parties have played their own roles in this crisis, there are individuals that have played a direct role in the virtual collapse of Wall St.
Part of any deal reached in a bailout should include the removal of those with a direct tie, although enforced oversite will probably have to suffice.
It is interesting that from the very beginning of our country as we know it, Thomas Jefferson opposed the architect of the American financial system - Alexander Hamilton.

which veto is so much admired by Jim Webb. Our present system came into being in 1913 with the establishment of the Federal Reserve and the income tax, and the dollar has deteriorated consistently ever since. Bob Barr and Congressman Paul are no doubt cackling endlessly over this whole mess. In canvassing for Obama, I did run into one man who said he was voting for Barr, but so far, no one voting for Nader. Interesting.

I haven't been able to tell from the bill or the press coverage if this legislation still makes Henry Paulsen untouchable by the courts?  Is he still completely protected and all-powerful, or has his power been limited further than the bill he originally proposed???

First of all, Paulson will be gone from Treasury in a few months regardless.  Second, if you read this summary, you'll see the phrase "the Secretary is required to" many times.  That's not "all-powerful" right there if Congress is telling him what to do.  Third, there's a provision which "Provides that the authorities to purchase and guarantee assets terminate on December 31, 2009."  And finally, the legislation "Establishes the Office of the Special Inspector General for the Troubled Asset Relief Program to conduct, supervise, and coordinate audits and investigations of the actions undertaken by the Secretary under this Act."

So, Paulson's certainly not "all-powerful."

Having said that, this bill DOES "[establish] the right of the Secretary to exercise authorities under this Act at any time." In other words, the Treasury Secretary will have a lot of power if this passes, but with transparency and oversight I'm hopeful that it will be ok.  Also, we need to consider the urgency of action as soon as possible, and of course the risk of major damage to the US economy and millions of people who did nothing wrong.

Thanks for the summary Lowell.  One of the things that frightened me, and a lot of people, was the idea that lobbyists may be licking their lips to spread this money around to enrich their friends.  If one man was all powerful, he could spread that money around to other wealthy people who don't deserve it.  We don't know if Paulsen is trustworthy.  After all, he works for the Bush Administration.  That is one strike against him!

Although this legislation is complicated, we all need to be super-vigilant, like much of the blogosphere was about FISA.  We need to follow the money and make sure it DOES help the American people, and not just rich people.  I think the fear going into this negotiation for many of us who are left of center is that Bush is the boy who cried wolf.  He asked for our trust so many times, and then betrayed it.  In Iraq, after Katrina (where they asked for billions of dollars, many of which ended in the hands of contractors who were lobbying for it), well pretty much every time he has asked us to trust him, he ripped us off.  

Of course, thankfully, we have people like you and others at Raising Kaine, as well as folks like Daily Kos, who I know will watch the results of this historic bailout for years to come.

It does what needs to be done, namely, giving Paulson the ability to intervene in debt markets more or less unfettered in real time, but subject to review after the fact.

Everyone should understand, however, that this only buys us time. This will not fix the country's economic problems; hopefully, however, it will allow us to deal with them in a more orderly fashion that minimizes the pain.

Whether those policies will be put in place remains to be seen.

A fairly deep recession is probably inevitable at this point.

There are not enough particulars in here (especially ones that Jim Webb mentioned in his letter the other day) on many of these issues -- I want language that places executive compensation for officials in these companies (in fact, imo, ALL employees in these companies) at federal service levels while the government holds these securities. Money is fungible, so if they're getting federal dollars to take their trash, they should all have to accede to federal pay.

This bailout is unnecessary, in my mind, and is the mother of all moral hazard increasers. There are other actions the Fed and the government can take to ensure a functioning financial environment in this country without putting taxpayers so squarely on the hook for bad decisions by private actors.

I think it's bad policy and terrible politics. The people I spoke to on the phone today were absolutely livid about this -- they wanted to talk about this issue (rare in phone-banking), and this just plays into the general distrust of politics and politicians.

I don't deny that we are in a difficult period financially. I am not against any possible government intervention -- the fact patterns matter. But I am against a massive bailout of the financial elites when no other alternatives have been seriously considered and when the underlying issues have not been properly debated. And if anyone thinks Republicans are going to turn around next year and help re-regulate these markets, uhh, right. The quid pro quo for all this has to be the end of the policies that enabled this situation. That is not occurring.

Bad all around.  

I agree with Krugman on the TARP:

My view is that (1) will be ineffective but also not a bad deal for taxpayers - firms that can afford to will dump their toxic waste at low prices, the way some already have on the private market, and taxpayers may end up making money in the end. Firms in big trouble will probably stay away from the auctions. The plan's real traction, if any, is in (2), which is a backdoor way to provide troubled firms with equity - and the bill seems to say that taxpayers have to own this equity, although I wish it was clearer how much equity will be judged sufficient.

Not a good plan. But sufficiently not-awful, I think, to be above the line; and hopefully the whole thing can be fixed next year.

The plan is not designed to bail anyone out. The plan is designed to restart and provide support to credit markets by mitigating fear.

This plan is, as the saying goes, the absolute worst option there is, except for all the other options out there.

A necessary evil to supporting credit markets may be propping up some firms, although many will not be saved by this. (In fact, this plan arguably makes it easier for the government to tolerate the failure of specific firms since it is now supporting the market as a whole, and can maintain confidence that way.)

I'm not too up on Econ, but I do know markets and I do know what I am seeing with my own eyes. I have read many economic analyses this past weekend about what ails us, mainly from some Progressive economists.  Some are truly brilliant, and have proposed plans that are much better solutions to our fundamental problems, but don't seem to address the immediate problem.Some, in my view (especially those who are pushing the view that there is no crisis), don't know much about how markets operate in the real world.

The fact is that bids for U.S. corporate debt have completely evaporated for the past three weeks. We haven't felt it too directly here on Main Street yet, but it is not a sustainable state of affairs, and eventually it would have translated into lost credit, lost jobs and a severe downturn.

The patient is having a heart attack. First, we need to address that, then we can diagnose the problem and hopefully fix it, but if we don't deal with the coronary, well, the rest is irrelevant.

Doesn't anyone here watch "House"?

It's coming out now that Paulson, et al., do not plan on intervening for a few weeks even when (if?) the plan passes (see, e.g., here) -- so all this talk about immediate action needed NOW NOW NOW or we'll spiral into a [insert horrible event] is another dishonest ploy by this administration to get the outcome they want (after saying until a few weeks ago that everything was fine, no regulatory or legal changes were needed).

This is a blank check without real consequences or even real transparency. Where are the hearings explaining to the public how the credit markets go so FUBARed? Where are the hearings explaining how we expect these financial institutions to fare with these securities and derivative obligations going forward as the real estate market continues to shed value? Where are the hearings explaining this to the people?

If this is such a crisis, then why is Congress trying to adjourn today? If they thought it was such a horrible crisis that the need for action trumps everything else, then forgo campaigning for re-election and tend to the national need.

This is the worst style of legislating, a hallmark of all the bad legislating that this and the last few Congresses have engaged in. No committee hearings at all; very little time to read the bill, much less debate it fairly -- and all to give enormous power to individuals that are beyond suspect.

The 'warrants' that we the taxpayer are to receive for the bailout are nebulous in the language; it does not say dollar for dollar (why don't we get the kind of deal that Buffett got for investing in GS?). The exec compensation language is a joke -- taxpayer money will be used to pay multi-million dollar salaries and bonuses to top executives in these firms (maybe even their lobbyists!). Transparency is not increased, and mark-to-market rules can be suspended by the Treasury Secretary if he deems it necessary to protect bank balance sheets.

There are more transparent, better, and less costly ways to recapitalize banks. There are a myriad of other options out there to do so, but somehow we have been forced into this false dichotomy of the Paulson-Dodd plan, or nothing.

It's amazing to me at this late date of this administration that our Congress would be willing to give blank check authorization to a member of this President's cabinet to spend $700 billion and expect it to end well.  

but I reach a different conclusion. This isn't simply a matter of believing what Bush and Paulson say. I can see with my own eyes what is happening in capital markets.

You know, when it came to Iraq, we had no way of evaluating, independent of what the government told us, about whether Iraq had WMD. In facct, I believed they did have some such weapons (although I disagreed with the Bush Administration that Sadaam would ever use them, but that'
s another argument).

Here, we don't need to take anyone's word for it. Credit spreads and market bids are about as transparent as you get.

It seems academic anyhow, as the plan is looking like it will go down in failure.

Wheeee!

But why is it that you and I on this blog have had a better, deeper conversation about this than frankly the entire US Congress?

I don't mind coming out on the losing end of votes, or having our elected leaders make tough calls that I disagree with. But the process matters, and I'm just sick and tired of the damned laziness of our political institutions and the arrogance of the leaders involved.

Re: the credit markets, again, I am not against intervention to prevent an economic meltdown -- I don't want to see peoples' investments hammered, jobs lost, and a spreading, deepening pain. I also do realize that there are two basic camps here -- the 'liquidity is the problem' camp, and the 'solvency is the problem' camp (where I fall) -- so perhaps it's unlikely I'll ever be mollified by this type of action. And I admit that there are many smart, informed, good-willed individuals (like yourself and tx2vadem and a number of my friends that I've talked to) that make a good case for this plan (or a similar plan), including Paul Krugman.

But there are also models that have worked for similar crises in the past (the Swedish model, principally) that look much different, much less risky, and might be feasible. In the interim, if the Fed needs to help get good credit paper moving, then expand their authority to do so so that this problem doesn't spread to the entire economy.

But yes, I have been shocked at the low level of the debate the nation has had on this issue.