Simon - I have mixed feelings about this.  The way I understand this is that banks have stopped lending to banks and they are holding on to cash, completely stifling credit to businesses, homeowners, car buyers, etc.  We are on the verge of a total meltdown of our financial system. In my view, this has been a long time coming - ever since political correctness forced lenders to loan to people who were risky borrowers for the sake of promoting home ownerships for all. This re-enforces my main theme of liberalism - Liberalism always produces the exact opposite of it's stated intent. Of course, after doing this for years, these institutions realized the profits to be made and obviously expanded these poor practices with even more creative financing.  I am not sure what the answer is, but I do believe the government must step in some regard to free up capital.  There may be better ways, but time is not our side.  Eliminating Capital Gains would be a good start! The difference between Obama and McCain is that Obama, should he be elected would keep control of these institutions forever, loving the socialism it brings to our country.  McCain has always shown he is a capitalist and I feel confident he would find a good way to turn this back over to the free markets where it belongs. But for now, we just need to get money moving again.

Simon - while I agree with you, failure is an option, I have mixed feelings about this. Without it, the economy is in grave danger of collapse because of failure of congress to act to prevent this type of scenario. If done correctly, this will cost taxpayers little or nothing (ala the Chrsyler guarenteed loans of the late 1970's). Do I have confidence that it will be done correctly, well, no, I do not.

Some will use the backing to turn their businesses around and not require a cent of it. However, their will be others that will take advantage of it and try to milk as much out of it as possible.

Worse, I believe some in congress will add so many unrelated ammendments and earmarks to it that it will increase another $100 billion or more, agains displaying the disregard that "august" body has for the rest of us.

It is a damned if you do damned if you don't scenario, Simon.

Simon ~ Yes, I am being a little conservative these days...lol. What is Bill Schwent venting now, can he read? Never can the liberals answer the question how Obama receives money from Fannie Mae and then cries foul.

Ann -Marie ~ Again, you don't do your homework before bashing and blaming Bush. It was Bill Clinton under his administration that deregulated the quidelines on approving low income loans to high risk borrowers. It was Barney Frank a democrat that forced banks to do the same. It was Charlie Rangel who introduced the bill to provide loans to high risk borrowers, please do the research. But with those liberal glasses on, it is hard to see the forest for the trees.

Every incumbent should get "the boot" during this election, whether Republican, Democratic or Independent. 

The HOUSE & SENATE & PRESIDENCY NEED CLEANING OUT...

Hi Nicholas,

  Keep in mind that yes Clinton was president, but the Republican Congress created the DEREGULATION law...  

                                       ;>)

Ann-Marie - actually it was Jimmy Carter with the  Housing and Community Development Act of 1977 included the Community Reinvestment Act for banks. Clinton posed modifications which "urged" the banks to further loosen requirements for both mortgages and business loans, making them more available to lower income applicants. This under threat of regulation that would have required it.

Apparently George Bush now thinks he is Franklin D. Roosevelt.  What a big mess?  The Fannie and Freddie thing I can maybe understand, but all this private bailing out is just plain ridiculous.  If that is the case, why don't they bail out some realty companies like yours and mine.  I could use a million or so dollars in extra capital to keep my business afloat too.

Rob,

Not to bash ya,  but I think this is a common business problem.  Good business owner's who manage their balance sheets properly don't need to be bailed out.  I have an emergency fund for my personal finances and an emergency fund factored into my business plan.  America needs to stop the blame game.  What we need is accountability, personal & professional.

Okay since most don't know when the banks were deregulated.   Here's a site that indicates that it was 30 years ago, making it 1978, when the banks were 'DEREGULATED".  When Clinton was president, and the Congress was Democratic...  Very interesting article, please read it when you have time...

It's titled:

30-year deregulation era dies a sudden death

Here's the link from MSNBC:  http://www.msnbc.msn.com/id/26774653/

Ann - Marie -actually, that was only part of banking deregulation. There was an earlier piece passed in 1994 when it was Clinton in the presidency and the house and senate were run by democrats. Additionally, in 1999, when the act you refer to was passed, it passed in the senate 90 - 8. There was near unanimous support. Voting in the house was similar.

30 years ago Carter was president. He initiated deregulation by deregulating the airlines.

In 1988 Reagen was president and Congress was democrat controlled with Robert Byrd the Senate Majority leader and James C Wright Jr speaker of the house.

maybe you should reread the article.

Why is everyone blaming this on deregulation? I've worked in the banking industry and it is extremely regulated! When you think of it, these institutions were only doing what they were told - making risky loans to people who, for the most part, could not afford them....

Simon- Free markets need to prevail and in the end I have faith they will.

Go Sarah! Finally someone like me and all my friends and all their friends, all the way to the White House. McCain is giving her the task of getting rid of wasteful spending, creating efficiencies and the energy crisis.

Capitalism is the true American way. While all the other countries in the world have discovered socialism does not work and are embracing Capitalism, Americans think that socialism is going to create some sort of Shangrala. Did I spell that right?

Katrina - Shangrila, but you got the rest of the sentiment correct.

Opps!!!  Okay, my mistake, I corrected my last comment.  I did find another site, that shows many of the laws Congress passed. 

Here's the link:   

                         http://www.nextgen-politics.com/presidentialcongressional-control-and-legislation-1952-2007/

Sorry Mike, my mistake....

                   ;>)

Simon--- Good post. 

Like Mike said above, damned if we do, damned if we dont.   I am reserving my judgment until I see how the bailout plan works.   

If you believe Bush, Paulson and Bernanke, our entire economic system was hanging in the balance.   If that is the case, then they did the right thing.  And if they are right, this is not a partisan issue.  This is a disaster like 9/11, Katrina, or Ike, but on a far greater scale.  

One, like Pat Buchanan wrote this weekend, not only threatens our standing as the world's superpower but could mark the beginning of the "fall of the empire."

The one thing we can all be certain of is that when you add this all up, $700 billion here, $80 billion for AIG, $300 billion Fannie / Freddie, we will have spent $1.1 TRILLION for this so far. 

The final cost to the government, many are saying tonight, will be closer to $2 trillion when all is said and done.  That's 10 times the cost of the S&L crisis.

I don't care what Obama says about "tax increases only for those over $250K" or what McCain says "tax cuts for everyone,"  regardless of what happens November 4, we are ALL getting a tax increase for this for many years.

Good Morning Simon:

   After reading your post and another, I agree and disagree with you.  In a perfect economic world, the government wouldn't have to "bail out" the financial institutions.  Unfortunately this isn't a perfect economic world since the government interceded into the private sector some time ago.  An earlier post referenced the deregulation that occurred in the banking sector that occurred around 1978: the beginning of government interjection into the private sector.  Since the 1978 deregulation, the government has continued to intercede into the private sector.  The intercession (in my opinion) was the result of politicians pandering for votes while using private sector money. 

   Suffice it to say, I am not a fan of the government bailout in a perfect world.  Unfortunately, because of the way things have been structured, there does not appear to be an alternative to this bailout.  However, in order to avoid a repeat of this debacle, wholesale reform needs to occur in Washington D.C..  Our so called leaders have been playing "kick the can" down the street for years and years relative to our economic problems.  We are just about out of street, and it's time to reform both Wall Street and Washington D.C.  so that we don't have future bailouts. 

Simon: This "bailout" stinks. We are going to witness the greatest shift of our tax dollars going into the pockets of Wll Street...with no oversight. This is a sham.

McCain is the champion of deregulation. His hands are all over this. Good thing the republicans didn't get their hands on Social Security.

Simon: I agree with you completely. What I think is being missed here is the fact that the government is involved in the guarantee of mortgages through Fannie/Freddie in the first place.

All of this would have been prevented if not for their involvement. The Wall Street publicly owned companies WOULDN'T EVER have lent money to a great very many of the borrowers that they did but they had everyone on Capitol Hill and in the government whispering in their ears to go ahead and make these loans. We'll lower the interest rates to free money! Open up programs that have been around for years but were established for certain areas of workers and borrowers! We'll guarantee them which allowed them to be packaged and sold in as little as 30 days which provided the original originator out of the loan and off to the next owner of the loan.

What I'm saying is that it's government involvement in the first damn place that has gotten us in this mess. It's really much more about that then too much or too little regulation, or even Democrats or Republicans. There is certainly political opportunities for the GOP and maybe some for the Dems but I'm firmly in the corner of NO MORE FANNIE/FREDDIE. We should have sold them off and privatized them so as to never have the federal govt. guaranteeing mortgages.

Simon:  Take a look at the Enabling Act of 1933 for fun.

Also... here's a quote I thought you might like:

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.--Thomas Jefferson