HT Sully

In the clip, on August 18, 2007, Ben Stein recommends buying Merrill Lynch (MER) at a “bargain” $76. It’s at $13/share today.

Charles Payne recommends buying Bear Stearns, which is now out of business, and he says “the financials are a great place, absolutely.”

Tracy Byrnes recommends Goldman Sachs (GS), which is the “creme de la creme” and like getting “Dolce & Gabbana on sale”. It was at $175/share in the clip, and is now at $69.99.

In early 2008, Payne recommends buying Washington Mutual (WAMUQ) at $13/share. It is now on the OTC at 6 cents per share. He goes on to predict Dow at 16,000 by the end of 2008.

Peter Schiff recommends Street Tracks Gold Shares (GLD), which was at $83/share, and is now at $72.15.

It’s amazing how patently disrespectful they all are to Schiff.

Let’s recall why our automotive industry found itself hemorrhaging cash and with massive losses. This didn’t just happen overnight when the credit crunch hit. This was many years, and a lot of half-assed design and materials decisions, in the making.

No joke - New York’s Attorney General is looking into whether or not banks are using the receipt of federal bailout funds as part of their yearly bonus calculations.

New York Attorney General Andrew Cuomo is demanding information about executive compensation and bonuses at nine banks that have received federal funds under TARP, the U.S. Treasury’s Troubled Asset Relief Program.

In a letter to each institution’s Board of Directors, Cuomo warns the bonuses could violate New York’s state fraudulent conveyance law.

“Obviously,” he writes, “we will have grave concerns if your expected bonus pool has increased in any way as a result of your receipt or expected receipt of taxpayer funds from TARP.”

In the letter, Cuomo demands information on how this year’s bonus pools were calculated, as well as details on each bank’s 2006 and 2007 bonus payments.

The bailout was very painful and controversial, and the money is to be used for very specific purposes. Bonuses for executives was not among them.

Liz Benjamin at the Daily Politics has the painful facts:

Calling the fiscal crisis facing New York “unprecedented,” Gov. David Paterson today called on legislative leaders to whack another $2 billion from the current budget when they return to Albany Nov. 18 for their second emergency session in three months and stressed that nothing is off the table when it comes to cuts…

…Paterson revealed the state’s four-year deficit projection has grown to a whopping $47 billion from $22.6 billion in July. That is the largest cumulative deficit in state history.

According to the state Budget Division, while the current deficits are the largest in absolute dollars in history, as a percentage of the general fund budget, they are similar to those faced in 2003-04.

In that year, the state closed an $11.2 billion budget gap, which represented 28.4 percent of the then $39.5 billion general fund.

Governor Paterson says that nothing - nothing - is sacred, and everything is up for discussion. Oh, and he’s going up to Capitol Hill to ask for a bailout of New York State. FAIL.

From the New York Times:

But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.

Now 83, Mr. Greenspan came in for one of the harshest grillings of his life, as Democratic lawmakers asked him time and again whether he had been wrong, why he had been wrong and whether he was sorry.

Critics, including many economists, now blame the former Fed chairman for the financial crisis that is tipping the economy into a potentially deep recession. Mr. Greenspan’s critics say that he encouraged the bubble in housing prices by keeping interest rates too low for too long and that he failed to rein in the explosive growth of risky and often fraudulent mortgage lending.

“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”

Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”

Also - he rebutted the notion that the whole meltdown was because of too many mortgages to the unqualified and poor:

“This crisis,” he told lawmakers, “has turned out to be much broader than anything I could have imagined. It has morphed from one gripped by liquidity restraints to one in which fears of insolvency are now paramount.”

Many Republican lawmakers on the oversight committee tried to blame the mortgage meltdown on the unchecked growth of Fannie Mae and Freddie Mac, the giant government-sponsored mortgage-finance companies that were placed in a government conservatorship last month. Republicans have argued that Democratic lawmakers blocked measures to reform the companies.

But Mr. Greenspan, who was first appointed by President Ronald Reagan, placed far more blame on the Wall Street companies that bundled subprime mortgages into pools and sold them as mortgage-backed securities. Global demand for the securities was so high, he said, that Wall Street companies pressured lenders to lower their standards and produce more “paper.”

“The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of the crisis) would have been far smaller and defaults accordingly far lower,” he said.

Despite his chagrin over the mortgage mess, the former Fed chairman proposed only one specific regulation: that companies selling mortgage-backed securities be required to hold a significant number themselves.

It would have been nice if he had said some of this stuff, you know, earlier.

After underscoring the fact that the “the question isn’t just ‘are you better off than you were four years ago?’, it’s ‘are you better off than you were four weeks ago?’”, Obama lays out his blueprint for digging out of the economic hole in which we find ourselves.

We’ve already lost three-quarters of a million jobs this year, and some experts say that unemployment may rise to 8% by the end of next year. We can’t wait until then to start creating new jobs. That’s why I’m proposing to give our businesses a new American jobs tax credit for each new employee they hire here in the United States over the next two years.

Read the rest of this entry »

This story pretty much defines the words “outrage” and “unbelievable“:

Days after it got a federal bailout, American International Group Inc. spent $440,000 on a posh California retreat for its executives, complete with spa treatments, banquets and golf outings, according to lawmakers investigating the company’s meltdown.

AIG sent its executives to the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy. The resort tab included $23,380 worth of spa treatments for AIG employees, according to invoices the resort turned over to the House Oversight and Government Reform Committee.

The retreat didn’t include anyone from the financial products division that nearly drove AIG under, but lawmakers still were enraged over thousands of dollars spent on outing for executives of AIG’s main U.S. life insurance subsidiary.

“Average Americans are suffering economically. They’re losing their jobs, their homes and their health insurance,” the committee’s chairman, Rep. Henry Waxman, D-Calif., scolded the company during a lengthy opening statement at a hearing Tuesday. “Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation.”

In the late 80s, early 90s, the US underwent an earlier set of bank failures, fraud, and bailouts. Ladies and gentlemen, John McCain and Charles Keating.

Very convenient of Mr. Lee not to say a single. solitary. word. about the fiscal meltdown and bailout 1.0 or 2.0 until after the passage of the latter.

And spare me the trite observations about him being a “frontrunner” who doesn’t need to opine or expound on issues facing Americans today. That’s beside the point.

The point is that he’s the self-anointed “businessman” candidate du jour. He has made himself out to be Chris-Collins-goes-to-Congress. The only problem with that is that Chris Collins is a clever, self-made millionaire. Chris Lee’s cleverness hasn’t yet been tested, as he hasn’t bothered to debate anyone yet (see frontrunner discussion, supra), and his millions came after the family sold off the company rather than have him run it.

The Batavian caught up with Lee today:

Republican congressional candidate Chris Lee told me this afternoon that Congress should have passed the “stabilization package” (he doesn’t like the word “bailout”) on Monday.

He said what Congress passed Friday, with it’s millions of dollars in pork spending, demonstrated that some members are “more concerned with saving their seats than with doing the right thing for the country.”

When I asked him about how Democrats blame deregulation, and Republicans say there are still too many regulations — such as Sarbanes-Oxley, which did nothing to help matters — Lee said, “We have all of these new exotic financial instruments, so we need updated regulations to ensure we have control.”

“There have mistakes made, and I don’t like to point fingers,” said Lee, adding again that both Republicans and Democrats share the blame. “I don’t care about any of that. I care about getting to a solution and protecting taxpayers.”

Oh, hi, Chris. Welcome to the discussion that, like, all of America has been having for several weeks now.

This struck me as amusing:

I brought my video camera and wanted to get his answer on video. This is an important issue, and I thought it would be a fairer bit of journalism to let Lee answer it in as an unfiltered way as possible. To me, it’s for Lee’s own good to speak right to the voters and say what he wants to say.

Lee’s campaign manager Nick Longworthy did not want me video taping the interview. I pushed the issue a little bit with Lee, but he wanted to go along with his campaign manager’s advice, and I’m not here to be a jerk and insist on having my way. I’m not Mike Wallace playing “gotcha journalism.” Also, I get Nick’s concern. It would be very easy for the opposition to take a quote out of context and use it in a negative ad.

What difference does it make is Owens gets the quote verbatim in print or videotapes it? What is Lee afraid of? As the business candidate, is that the best he can do?

The Senate, which is the more grownup of our two legislative chambers, passed a modified bailout bill last night 74-25 (only Sen. Kennedy was absent). Both Obama and McCain voted in favor of the package, which cancels out any political hay that may have been made about this on the presidential scene.

the Senate also revised the package to blend in more than $100 billion in popular tax breaks as well as aid to rural schools important to House Republicans. And to build support among small town community banks, the bill raises the cap on insured deposits from $100,000 to $250,000.

“This is not just a Wall Street crisis – it’s an American crisis, and it’s the American economy that needs this rescue plan,” Obama said in a floor speech. And behind the scenes he is making phone calls to House Democrats helping to shore up that vote Friday.

The credit markets have been essentially frozen all week, with banks unwilling to lend to each other, and - in turn - unwilling to extend credit to businesses that need it. You want to talk about trickle down? This is it. The tightening of the credit markets over the longer term would have a devastating effect on businesses and the economy. Some form of a bailout was going to have to pass in order to at least prevent a deeper recession.

Now it moves on to the House, which may decide to avoid idiocy and fits of pique and be emboldened by what the Senate has accomplished.

We already know that businessman Chris Lee has canceled debate appearances with Alice Kryzan, and today we read in the Buffalo News and heard on WBEN radio that he has no comment on the economic crisis and bailout. None whatsoever. Complete silence.

Chris Lee’s continued absence when it comes to the financial crisis is mind-boggling. Either he’s for the bailout that was voted on yesterday, he’s opposed to it, or he’s for something different. He is not courageous enough to tell prospective voters where he stands. How ’bout that.

By contrast, Alice Kryzan has consistently stressed the importance of bringing alternative energy industry jobs to the district, releasing a comprehensive plan detailing how we can strengthen our economy and create jobs, while reducing our dependence on foreign oil and keeping our environment clean.

Despite touting his business expertise, Lee has offered no concrete solutions. Instead, he has argued for a continuation of failed Bush policies, making sure that millionaires get a tax break and that government doesn’t “get in the way.” We’ve seen the results of those failed ideas—financial crisis and more hard-earned taxpayer money going to fix the problem.

For his part, Chris Lee says nothing. He has no plan, no vision, and offers no leadership whatsoever. He does, however, recycle Bush talking points and a poor facsimile of Chris Collins’ winning 2007 strategy.

The financial meltdown and the bailout are difficult issues that further threaten an already reeling economy. I like to see that Kryzan is engaged - talking to voters, offering solutions. Lee? After the bailout bill failed yesterday, I called his campaign office yesterday to ask how he’d have voted for it.

The person on the other end said they’d release something about it “in the next few days”.

It’s been brewing for weeks, and the best they can do is the “next few days”?

How unbusinesslike.

Meanwhile, in Charlotte, Wachovia narrowly averts failure:

Crushed by its disastrous 2006 acquisition of mortgage lender Golden West Financial Corp., Wachovia succumbed Monday to the global financial crisis, agreeing to sell its banking operations to New York’s Citigroup Inc. for a mere $2.1 billion in a deal arranged by federal regulators.

Yes, Bank of America Corp. still stands on Tryon Street and is now one of the “Big Three” U.S. banks. But the Wachovia collapse leaves Charlotte bracing for the worst _ the loss of thousand of high-paying bank jobs that helped turn the state’s largest city into a booming center of the New South.

“We’ve been on the winning end of a countless number of bank transactions over the last 25 years,” said Tony Plath, a finance professor at the University of North Carolina at Charlotte. “And that has translated into new jobs and homes and construction. Now, we’re on the losing end. This is a big loss for the city.”

For years, it was Bank of America and Wachovia playing the aggressor, making deal after deal _ including the 2001 merger of First Union and Wachovia that led to the modern-day bank _ as they worked to create a second Wall Street on Tryon. Wachovia has 120,000 employees nationwide, including 20,000 in Charlotte.

An involuntary Buffalo homecoming in the works, perhaps?

UPDATE: The bailout failed, the Dow, S&P, and NASDAQ are in free-fall, and there’s no word yet on whether McCain will now re-suspend his campaign.

The Albany Project has the New York delegation’s vote on the bailout, and here’s the roll call vote in Congress. Reynolds, Higgins & Slaughter voted in favor of the bailout. Randy Kuhl voted against it.

WTF now? Read the rest of this entry »

The financial bailout and the crisis that led to it is, for all intents and purposes, out of the average person’s hands. I’m no economist, so my grasp of the entirety of the situation is tenuous, at best. This is, however, par for the course, since it appears that even financial experts seem to have a flawed grasp of the issues.

I think a lot of people are, to put it mildly, nervous. Even though Buffalo never really reaped the rewards of the latest bubbles and booms, and the landing may be softer as a result, the tightening of credit will most likely cause a downward spiral of sorts across the board. At least for a while.

But even though I’m not religious in the slightest, I have faith that the country will come out of this crisis stronger, and hopefully with some positive changes on the other end.

From a Presidential political perspective, I have to say I feel far more comfortable with Obama at the helm than McCain. You may recall during the debate, there was some back-and-forth about tactics vs. strategy. McCain has been all about tactics; the Palin pick, the non-suspended “suspension”, and whatever other poorly thought-out snap decision he can make without much contemplation for the long term, focused primarily on short term gain.

On the other hand, Obama is all about strategy. Is there anything he changed in response to McCain’s erratic twists and turns? Nope. They have a plan, and they’re sticking to it. He is talking about issues that regular people are also talking about, and he’s free from pronouncements about the economy being fundamentally strong even when a former Fed chief calls what’s happening a once-a-century crisis.

Hope may not be a plan, but it’s a start. Here’s to hope.

HT Be the Change.

Politico details the fact that introducing presidential politics, uninvited, into the bailout negotiations was batshit insane - just the latest batshit insane decision John McCain made impulsively lately. Or else it was just a silly stunt to try and look like a consensus-builder.

Paulson arrived near 8:40 p.m. but without Federal Reserve Chairman Ben Bernanke, who supports the secretary but appears to want to stand clear of the negotiating session. Democrats could very well feel stronger, and more united after the session. But the wild session left doubt about the ability of Congress to move quickly on the matter, even after leaders of House and Senate banking committees reached a bipartisan agreement Thursday on the framework for legislation authorizing the massive government intervention.

Democrats may feel stronger and more united after the White House session. But the wild session left doubt about the ability of Congress to move quickly on the matter, even after leaders of the House and Senate banking committees reached a bipartisan agreement Thursday on the framework for legislation authorizing the massive government intervention.

The whole sequence of events confirmed Treasury’s fears about the decision by Bush, at the urging of McCain, to allow presidential politics into what were already difficult negotiations. And while the markets were closed by the time the meeting ended, Friday could bring turmoil, and there will be immense pressure now by Treasury to get back on track before Monday.

McCain could feel that same pressure. Having called for the meeting, he will have to show if can deliver the votes of House Republicans, many of whom have been leery of him in the past. Mindful of this, the senator’s campaign issued a brief statement an hour after the breakup of the meeting.

Oh, and the whole “suspension” of the campaign? Yeah, that never happened. It was just McCain’s newest lie.

Barack Obama on his involvement in dealing with the economic crisis. You might note that Senator Obama takes questions:

A series of clips of John McCain contradicting himself on the economic crisis:

Note at the very end that McCain canceled his appearance on Letterman, claiming he was rushing back to Washington. Actually, he was prepping for an interview with fellow CBSer Katie Couric.

The misconception I heard on WBEN yesterday afternoon is that there’s some sort of big deal going on in Washington on Friday night at 9pm. There’s no congressional debate or vote scheduled for that time, and there is simply no reason to shut that debate down.

There is a businessman who is running for congress in NY-26 who wants to run government like a business in as businesslike a fashion as a businessman might experience when running a regular business.

Business.

Businessman Chris Lee’s businesslike website has recent press releases posted to it, and the most recent one is four days old. Businessman Chris Lee took a business trip around the district asking people about health care and suggested that we ought to stop suing negligent doctors who maim, injure, or kill patients, and also recommended deregulation and a “free market system” for healthcare, so that average people who can barely afford to pay their utilities can have a choice between doctors from whom they can’t afford treatment.

In a businesslike fashion, I examined businessman Chris Lee’s businesslike website to determine what he, as a businessman with loads of business experience in the business community might have to say about the epic fail on Wall Street over the past week or so. You know - that crisis that everyone’s talking about, that Congress is considering throwing almost a trillion dollars at, that threatens to burden taxpayers either with greater government debt or an economy that spirals out of control? Yeah, that crisis. The one created and nurtured by businesslike businesspeople who are far more savvy and influential businesspeople than businessman Chris Lee ever was.

Alas, I found not a word - not a peep - out of the purported businessman candidate about a crisis that has the executive branch running to the legislative branch (to which Lee seeks election) with hat in hand, begging for hundreds of billions of taxpayer dollars in order to socialize loss while keeping gain private.

Businessman Chris Lee’s unbusinesslike, unrapid response to this massive economic cluster-eff is not a huge confidence-builder.

Perhaps he’s just giving us the business.

HT Goddard

Yesterday, the President said that Congress should pass his proposal to ease the crisis on Wall Street without significant changes or improvements.

Now, there are many to blame for causing the current crisis, starting with the speculators who gamed the system and the regulators who looked the other way. But all of us now have a stake in solving it and saving our financial institutions from collapse. Because if we don’t, the jobs and life savings of millions will be put at risk.

Given that fact, the President’s stubborn inflexibility is both unacceptable and disturbingly familiar. This is not the time for my-way-or-the-highway intransigence from anyone involved. It’s not the time for fear or panic. It’s the time for resolve, responsibility, and reasonableness.

And it is wholly unreasonable to expect that American taxpayers would or should hand this Administration or any Administration a $700 billion blank check with absolutely no oversight or conditions when a lack of oversight in Washington and on Wall Street is exactly what got us into this mess.

Now that the American people are being called upon to finance this solution, the American people have the right to certain protections and assurances from Washington.

First, the plan must include protections to ensure that taxpayer dollars are not used to further reward the bad behavior of irresponsible CEOs on Wall Street. There has been talk that some CEOs may refuse to cooperate with this plan if they have to forgo multi-million-dollar salaries. I cannot imagine a position more selfish and greedy at a time of national crisis. And I would like to speak directly to those CEOs right now: Do not make that mistake. You are stewards for workers and communities all across our country who have put their trust in you. With the enormous rewards you have reaped come responsibilities, and we expect and demand that you to live up to them. This plan cannot be a welfare program for Wall Street executives.

Second, the power to spend $700 billion of taxpayer money cannot be left to the discretion of one man, no matter who he is or which party he is from. I have great respect for Secretary Paulson, but he cannot act alone. We should set up an independent board that includes some of the most respected figures in our country, chosen by Democrats and Republicans, to provide oversight and accountability at every step of the way. I am heartened that Secretary Paulson appeared to be softening on this position in his testimony this morning.

Third, if taxpayers are being asked to underwrite hundreds of billions of dollars to solve this crisis, they must be treated like investors. The American people should share in the upside as Wall Street recovers. There are different ways to accomplish this, including putting equity into these firms instead of buying their troubled assets.

But regardless of how we structure the plan, if the government makes any kind of profit on this deal, we must give every penny back to the taxpayers who put up the money in the first place. And after the economy recovers, we should institute a Financial Stability Fee on the entire financial services industry to repay any losses to the American people and make sure we are never asked to foot the bill for Wall Street’s mistakes again. We can ask taxpayers to make an investment in the stability of our economy, but we cannot ask them to hand their money over to Wall Street without some expectation of return.

Fourth, the final plan must provide help to families who are struggling to stay in their homes. We cannot simply bailout Wall Street without helping the millions of innocent homeowners who are facing foreclosure.

There are a number of ways we can accomplish this. For example, we should consider giving the government the authority to purchase mortgages directly instead of simply mortgage-backed securities. In the past, such an approach has allowed taxpayers to profit as the housing market recovered. This is not simply a question of looking after homeowners, it’s doubtful that the economy as a whole can recover without the restoration of our housing sector, including a rebound in the home values that have suffered dramatically in recent months.

Finally, the American people need to know that we feel as great a sense of urgency about the emergency on Main Street as we do about the emergency on Wall Street. I have repeatedly called on President Bush and Senator McCain to join me in supporting an economic stimulus plan for working families – a plan that would help folks cope with rising food and gas prices, save one million jobs by rebuilding our schools and roads, help states and cities avoid painful budget cuts and tax increases, and help homeowners stay in their homes.

Let me be clear – we shouldn’t include this stimulus package into this particular legislation, but as we solve the immediate crisis on Wall Street, we should move with the same sense of urgency to help Main Street.

It is absolutely wrong to suggest that we cannot protect American taxpayers while still stabilizing our market and saving our financial system from collapse. We c