I'm beginning to wonder if the "bailout" of the financial institutions is more of a red herring than a reality.  I understand there is difficulty obtaining some loans.  But my neighbor, who works in the commercial loan department for a mortgage broker is still writing notes. Not as many as she did during the housing boom, but she is still writing notes Yes, banks are failing because they bought stock certificates in bad loans.  Programs the current administration inherited from its predecessor, tried to change but couldn't. 

I wonder how an "Agreement in Principle" could be reached in such a short period of time.  Several house members objected several times, but it wasn't reported in detail on any news channels.  Instead everyone blamed John McCain for getting involved.  It wasn't until he showed up and met with the objectors, any dissent was brought to our attention.  I think we were on the verge of having a bailout bill shoved down our throats.  This is one one of the first pieces of legislation I know of to be drafted without hearings in either chamber of congress.  Is there something wrong with this picture?

It is my understanding 20% of the proceeds from the future sale of the notes the government acquires will go to ACORN.  This institution has taken profits from underwriting mortgages and using it to fund questionable voter registration drives, several of which have been found to be fraudulent.  Proceeds of any government operation that generates profits should go back to the people taking the risk, the American Taxpayer. One of the things that bothers me is congress has investigated the White House almost incessantly since taking over two years ago.  were they too busy investigating nothing when they should have been investigating this potential problem? 

One Presidential candidate has worked closely with ACORN, and he supports the current bailout plan.  The other thinks the American taxpayer shouldn't have to foot the bill.

The Inspector General of the SEC said numerous red flags were missed with Bear Sterns.  Christopher Cox said the monitoring system at the SEC for banks is fundamentally flawed, because monitoring of the banks is voluntary.  As soon as the first bank failed, shouldn't congress changed the law or the SEC changed its rules for monitoring of banks to become mandatory.  Somebody was asleep at the switch. 

A large portion of the problem we are in is due to home speculators flipping houses for a quick profit.  As I said in my last blog, I know of three people who collectively own more than 21 residential properties and are struggling to make the payments on each one.  Actually one of the lost four of his five homes.  If the government bails them out, they stand to make very large profits from their risky venture, at the expense of others.  If unchecked, speculators will be able to push the financial markets to the brink once again, by continuing the same practices that got us to this point in the first place.

As with anything that comes out of our current congress, the bill will have earmarks to this group and that.  The "golden parachutes" will still exist no matter what congress puts into the bill. The government will buy the bad debt immediately making the financial institutions profitable.  Higher profits means greater bonuses for executives in those companies.  Will the higher profits for these "troubled" institutions go to offsetting the bad debt the government bought?  I don't think so.   Washington Mutual failed and the outgoing CEO still received millions for his incompetence.  The FDIC, (you and I) insured the deposits for WAMU and helped line the pockets of the departing CEO.  If the FDIC hadn't helped out, JPMorgan wouldn't have stepped in. WAMU paid $24 Million to two CEOs it fired within six weeks.  If they didn't have that liability, would they still be around?

My feeling about several of these financial geniuses that ran the banks into the ground is similar to the computer people of the Internet Boom of 2000.  Unskilled yet motivated people disguised at computer people pumped millions from venture captialists and immediatly lined their pockets.  Once the VCs demanded a return on their investment, the money dried up and we had the tech crash of 2000.  I think many of these bank CEOs worked in the industry for a few years, worked their way up closing lots of profitable loans and jumped from company to company while inflating their resumes and negotiating sweetheart deals.  When real decisions needed to be made they took their bankroll and ran rather than work out the problem. 

We the people elected these representatives to protect our interests in government and they have failed us miserably. And most of the news channels turn a blind eye to the goings on in Congress.  It is a fact the Democrats have enough votes to force any rescue plan through the legislative process.  If it is such a good deal, why do the Republicans object, and why don't they pass it anyway. 

The saddest part of this whole process is we won't be able to review any of it until it has been passed by congress and is on the way to the President's desk.  By then it will be too late, and we will be stuck with the results.  Some government of the people, by the people and for the people.  It always seems like "Take it From the People, Shove it Down the People, and Stick it to the People"

And government only knows one solution.  Like the IBM commercial here  ==> IBM Commercial - Catapult ((Sir Arthur Throw Money at the Problem) Throw money at the problem and it will go away.  The problem is, it's our money.  Experts say there are other things that can be done that cost a lot less money.  Eric Cantor's insurance proposal through FHA costs a lot less.  Changing accounting rules for banks and businesses would help as well.   Sarbanes - Oxley is a nightmare and a big part of this problem as well.  

 I wonder how many hidden mickey's will be found in this bill over time.