Bailout Voting

[HHM]

I am not sure where I come down on the bailout. From a strictly moral point of view, I say let them fail. They made bad decisions, and should be subject to the consequences. But from a practical point of view, that position would likely hurt too many innocent people. Letting the US financial system temporarily crumble is not a good thing.

One problem is most people really don't understand what is going on, and the media is no help. There are two sides of a bank, assets and liabilities. The bail out is focused on the assets, buying the mortgage backed securities etc from which banks generate cash flow. The assets of the bank is what is used to fund liabilities. And guess what a bank's liabilities are, yours and mine deposits sitting in checking, savings, CD's, money markets accounts etc. The cash flow banks generate from their assets is what allows us to withdraw money from our accounts. Strictly speaking, the money you deposit with a bank is a "loan" you make to the bank. A checking account is nothing more than a debt that is owed to you by the bank. Thus, if a bank fails, (or goes bankrupt), if the bank can't pay you, you don't get your money. Granted, for most people, our funds are guaranteed by the FDIC, but still, your checking account is a debt owed to you by the bank...and since this is a BK forum, you all know what happens to debts in BK.

Thus, the bail out is designed to generate capital to allow banks to continue to operate. Should we do the bail out, I don't know. It seems like all the institutions that are going to fail, have done so. My other concern is the emergence of near monopolies in the national banks...after all, who is left standing, JP/Chase, CititGroup, BofA, and Wells Fargo. They are going around buying-up all the failed banks. Granted, there are plenty of local and regional banks.

[car67]

I am glad the bailout failed..... These banks knew they were making risky loans.
Our country has a bankruptcy system these companies should file like the rest of
us. No bailout for corp greed period. If there is a bailout be fair to everyone! Everyone
should get a splash of cash and new credit scores...... Not just the suits on Wall street!
I say send people home and let the system melt down... Its easier to rebuild over time and you know quite frankly more wealth will be built when the rebuild process starts. What goes up must come down. I am sick and tired of corp greed and overpay! These wharf rates gettting huge payouts and then complain they are losing money and need help............. What about the rest of us! Be fair to all or dont help none! Call your congressmen and tell them no bailout......Let the dust settle the strong will survive and the weak shall perish!

[Mi Bankruptcy]

I am not sure where I come down on the bailout. From a strictly moral point of view, I say let them fail. They made bad decisions, and should be subject to the consequences. But from a practical point of view, that position would likely hurt too many innocent people. Letting the US financial system temporarily crumble is not a good thing.

One problem is most people really don't understand what is going on, and the media is no help. There are two sides of a bank, assets and liabilities. The bail out is focused on the assets, buying the mortgage backed securities etc from which banks generate cash flow. The assets of the bank is what is used to fund liabilities. And guess what a bank's liabilities are, yours and mine deposits sitting in checking, savings, CD's, money markets accounts etc. The cash flow banks generate from their assets is what allows us to withdraw money from our accounts. Strictly speaking, the money you deposit with a bank is a "loan" you make to the bank. A checking account is nothing more than a debt that is owed to you by the bank. Thus, if a bank fails, (or goes bankrupt), if the bank can't pay you, you don't get your money. Granted, for most people, our funds are guaranteed by the FDIC, but still, your checking account is a debt owed to you by the bank...and since this is a BK forum, you all know what happens to debts in BK.

Thus, the bail out is designed to generate capital to allow banks to continue to operate. Should we do the bail out, I don't know. It seems like all the institutions that are going to fail, have done so. My other concern is the emergence of near monopolies in the national banks...after all, who is left standing, JP/Chase, CititGroup, BofA, and Wells Fargo. They are going around buying-up all the failed banks. Granted, there are plenty of local and regional banks.

Well said HHM. A part of me wants these institutions to fail because only then will a lesson be learned by our congressmen/women representing us in the house and the senate.

I am learning through my bankruptcy. Unfortunately I think the people of the United States and congress need to learn the same lesson I am learning
(holding congressional leaders accountable).

I am worried about the elderly and the people who were responsible with their investments and retirement accounts. However, I have faith that our country would help these people if things were to fail.


Available Credit from an investment side.

My company is having difficulty securing additional loans from our bank to bid on contracts where we would definitely have a excellent chance to win. Since these contract revolve around state and federal contracts we must have enough capital on hand or in company reserves if we bid and win the contract.

The issue my company ( company I work for) is that we are having to use our own capital to secure these contracts. Now, lack of credit prevents us from bidding on other contracts because we don't have the capital or a line of credit to back another project we want to bid on and more than qualify to bid on.

People need to look at it like this.. If You plan to buy a home for 50-200K or what ever you able qualify for. However, having a letter of approval for a housing loan for this sum provides proof or confidence to the realestate agent you not only qualify to buy the home you are looking at.. Chances are high you will be able to purchase the home

If this financial sector fail.. They will experience a decrease of credit available to companies for new ventures(in their sector). Just like letters for homes companies will not be able to get these letters of credit to reinvest and create jobs in their area of expertise.

[justbroke]

I ilke what HHM has written.

The not so funny part of all this. We'll end up spending quite a bit more than $700B if a couple of more MAJOR BANKS fail (of the Wachovia and Bank of America sizes).

The reason why? If they fail... guess who comes in and saves the day? The FDIC. The FDIC isn't all that solvent (can't handle the failure of a really big Bank), so it will run to the Federal Reserve and the Treasury for help. This will come from Taxpayer money in the end... no matter how you slice it. We're spending the $700B.

It's a house of cards. We'll be paying no matter what.

What's even more interesting... the Market lost $1.5Trillion dollars in value yesterday. More than twice enough to have paid for the bailout. Unfortunately this came out of the pockets of many Americans, via their retirement funds.

I personally lost over $10K in my retirement savings yesterday. This is now real personal.

[Mi Bankruptcy]

My father has lost over 50k in the past 6 months. For me and my dad to discuss this is like discussing how much everyone makes at work or talking about having sex with a person you just met within the first couple of minutes.

It's not supposed to happen or is unlikely to happen

another real person. Maybe I should call my dad about yesterday.

[justbroke]

Maybe I should call my dad about yesterday.

I wouldn't call him. Most people haven't even LOOKED at their 401(k)/403(b)/IRA/KEOGH/ERISA accounts yet.

It's not pretty.

Not to mention that what I owe on my house and what it's worth isn't helping either.

[Overmylimit]

Thus, the bail out is designed to generate capital to allow banks to continue to operate. Should we do the bail out, I don't know. It seems like all the institutions that are going to fail, have done so. My other concern is the emergence of near monopolies in the national banks...after all, who is left standing, JP/Chase, CititGroup, BofA, and Wells Fargo. They are going around buying-up all the failed banks. Granted, there are plenty of local and regional banks.

Yes the $$ is for the banks to continue to operate but at the same time if what they have been doing isn't working then why would we want to throw more money into their pot. And you are right about the monopoly...which big bank will wind up being the Wal-Mart of banking? What will happen is the big banks will buy each other out then when all the big fish are caught they will go after all of the local banks, sooner or later we will all bank at the same place.

[Bandit]

Can we put Dodd, Reed and Barney Frank in the corner with them?

Yes, of course The only thing that would be left holding an office is a few honest mayors and aldermen.

[BKOnce]

Bail Out Approved = New Credit Card Approved. ... Spending Spree Saga...

[NowImDownInIt]

I lost 20% of my 401K yesterday and 50% since January. Something has to happen, if not this.

[car67]

MI great post but you know what its time companies and people get back to bidding and working on what the cash reserves will allow. Quit relying on third party money for the risk. Sure we might see less work but you know what if we all took this stance in a short period of time we will only see companies and projects working that are properly funded with ones own cash and efforts. Not investor money. This market needs to crash and let the rebuilding begin. The ones who manage and build properly will last a long time and those who dont well maybe they are not businessmen after all......

[epiphany]

Like HHM, I am not sure where I stand.

I would love to stick it to greedy corporations, especially since I personally (along with many co-workers) have been the victim of a greedy fortune 500 CEO. However, I am not fond of the potential consequences of my vengeful desire. The generated pain from tangible losses may not be worth it in the long run.

Sure I'd love to teach them a lesson, but at what cost? My mutual funds (not a fortune but a lot to me) have already taken a huge crap.

But then I don't trust the promise of regulation and reform. If that could be guaranteed I would definitely be willing to suffer a bit.

I also don't trust that the money will be paid back to the taxpayers even if collected. Promised funds for one purpose are commonly raided for another. Reform that.

What gets me is that you can't really tell where a lot of the politicians stand on this really. Nancy Pelosi was not going to tell the dems to vote for this unless she was promised by the repulicans that enough of them would vote for it too. She did not want the democrats punished for their votes on this by the voters in the upcoming election. So the republicans agree. Then she comes out and makes a stern, comdemning speech. Then the repulicans say that there would have been enough votes if she hadn't ticked them off.

OKAY, What part of that DID ANYTHING to represent our best interests? WAH, I DON'T LIKE WHAT YOU CALLED ME NANCY, SO I AM NOT GIVING YOU MY VOTE, SO THERE!

Correct me if I'm wrong but aren't they supposed to vote what is in the best interest of their consituents? Anyone who changed their vote just because they were insulted by Nancy Pelosi should be outed and voted out of office.

Anyone who thinks that this is not just politics as usual in the most unusual of circumstances is sorely mistaken. They are all just afraid of losing their seats!

And Bush is stupid for coming out this morning and talking all the doom and gloom and catastrophe. He should be saying that they are working on it, etc. Instead he incites more panic.

JustBroke--they are not calling it a "bailout" anymore because the administration started calling it a "rescue". It's a marketing ploy. They assume that if they call a turd "candy", you will go camp out at the candy store so that you can be the first one in line when they open in the morning.

Good luck keeping that candy down.

ep

[Bandit]

Anyone who thinks that this is not just politics as usual in the most unusual of circumstances is sorely mistaken. They are all just afraid of losing their seats!

That and, finding them with their own pants down while getting busted for the doo doo in their own shorts.

[Bandit]

This market needs to crash and let the rebuilding begin.

right...if it does not happen now from some half cocked bailout, it will happen in the next couple of years anyway. that is the false economy we live in.

[epiphany]

That and, finding them with their own pants down while getting busted for the doo doo in their own shorts.

Ha, thanks Bandit...the word doo doo cracked me up...it's like I'm three again!

So what? That would still give me senority based on matureness were I in government at this moment.

Now if you'll excuse me, I'm going to take my ball and go home.

ep