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Paulson, An American King

By
Services for Real Estate Pros with Positive Real Estate Professionals

Earlier today I wrote a post entitled Lions and Tigers and Bears, Just Say No! on one of my outside blogs, Rich Talks real Estate. That post was centered on the reports that came out regarding Secretary of the Treasury Henry Paulson's decision to "redirect" the $350 billion that remains of the $700 billion in rescue funds to help lenders who issue credit cards, auto and student loans. If you read the post I wrote on my outside blog, my anger at this decision will be evident.

I am upset about this "redirect" of the taxpayers' money to help these institutions. It is one thing to buy bad mortgages that are at least securitized by a property and quite another thing to essentially donate money to these consumer loan institutions. By the way, these are the same institutions who, in many cases have outsourced American jobs. This outsourcing ironically may have added to the very defaults that have endangered the viability of these institutions. And another thing, many of these formerly employed taxpayers who defaulted on their credit cards, auto loans, and student loans, will now will be helping to ensure continued employment for the people who now do their old job in a foreign country. Can you see why I am more than a little disturbed by this "redirecting" of the bailout money?

If Secretary Paulson wants to bailout these consumer lenders, that should be done with money appropriated for it in a separate bill. Those same Congressmen and Senators who voted for the previous bailout, many of whom were re-elected, will probably support it. Sorry if a bit of anger and cynicism is seeping through but did I say I am not happy. I know that Paulson has unfettered control of how he doles out these taxpayer dollars, remember our elected officials voted on no oversight, but shouldn't how he spends the money at least be in keeping with the spirit of the bill. Trading taxpayer dollars for bad mortgage debt and equity interest in lenders is bad enough, this is even worse. If you are one of those who actually believed you might get this money back at some point, I'm sorry, it will not happen.

I know the election is over, but please express your feeling on this issue to your Congressmen and Senators. Click either icon below to go to the respective homepages of both houses of Congress. It is very easy to find your Congressman and Senators on those pages.

Comments (16)

Terry Haugen STAGE it RIGHT! 321-956-2495
Stage it Right! - Melbourne, FL

Rich, unfortunately our representatives no longer listen to "the people."  Otherwise the would have heard the public outcry when the bailouts were first proposed.  And now we have Paulson reversing course.  Wonder what debt ridden path he intends on leading us down next?  Its interesting that historially, in other less developed countries, when the outsted administration leaves, they also raid the treasury.  Sounds like that could be happening here.  Leave the country broke so the incoming administration has no hope of repair.

Nov 13, 2008 10:15 AM
Richard Stabile
Re/Max Real Estate Limited - Oradell, NJ
Bergen County New Homes Builder Realtor

Rich: On first blush I agree with you. It should be real estate related. However I guess he worried about collateral damage from these other institution. I am not sure what good it does however to worry about credit cards. They as you say have no collateral and are truly a buy out of bad paper.

Richard

Nov 13, 2008 10:30 AM
Carol Smith
Casmi Photography - Mebane, NC

I sure wish someone would bail out MY credit cards!  But that's my problem - I generated the debt and I have to pay it. 

Is it really so hard to understand that concept?  Must be.

 

Nov 13, 2008 11:21 AM
Danny Thornton
R & D Art - Knoxville, TN
WordPress Guru

Rich, I sat and listen to Ted Turner the other night on David Letterman. As he stated, CNN almost bankrupted him. But, he persevered and look at him today. And to think, no one bailed him out.

Nov 13, 2008 12:44 PM
Rich Dansereau
Positive Real Estate Professionals - Knoxville, TN

Terry - It is sad that they do not listen any longer. In Tennessee we just (I sure didn't vote for him) re-elected long time politician Lamar Alexander. He voted for the bailout and is being talked about as one of the emerging leaders of the GOP.

Richard - In a market that continues to be volatile, this buyout of bad paper with no security instrument to back it up will not help the economy. People might need to pay as they go for a change.

Carol - It really is quite an easy concept but it is rarely practiced today.

Danny - I saw that interview and thought it was quite amusing that he even said that nobody bailed him out.

Nov 13, 2008 01:23 PM
Gayle Balaban
The Best Spot Realty/Waterfront Real Estate/Ooltewah Real E - Chattanooga, TN
E. TN Waterfront Real Estate

Rich I am in total agreement with you.  I heard that too and I went balistic.  My hopes for a strong spring are shaken to say the least.

Nov 13, 2008 01:23 PM
Rich Dansereau
Positive Real Estate Professionals - Knoxville, TN

Gayle - I am very angry about this move by Paulson. It was not popular when it was presented as a bailout for securitized debt and equity interests that held a slim chance of being returned to taxpayers. This "redirect" is sending the money down a rabbit hole. As Terry said above, I really don't think that the majority of politicians even pretend to listen anymore. They take our money (taxes) and give us the finger is what they do!

Nov 13, 2008 01:27 PM
Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land a

Hi Rich...At first blush I could not understand the change in direction and from all I've heard (which truthfully hasn't been a great deal) it still does not appear to be the best way to go.

I wish someone could make me feel better by giving us a really good (and truthful) explanation that makes sense.

Kate

Nov 13, 2008 02:09 PM
Rich Dansereau
Positive Real Estate Professionals - Knoxville, TN

Kate - I am with you on the straightforward and honest answers. We are grown ups, we can handle it and deserve to know.

Nov 13, 2008 02:14 PM
Joan Mirantz
Homequest Real Estate - Concord, NH
Realtor, GRI, CBR, SRES - Concord New Hampshire

Hi Rich...I went over and read your other Blog...I couldn't agree more In fact I was just rambling on to my husband about American Express wanting a bailout...pardon my French but didn't they encourage the damn debt?....Unreal!! And I hadn't thought of it brfore but I bet you're right about the Student Loans being attached to that because they may smooth the way!

Wil the corruption never end? When will SOMEONE be made accountable?

Nov 13, 2008 03:39 PM
Terry Haugen STAGE it RIGHT! 321-956-2495
Stage it Right! - Melbourne, FL

Well Rich we should all be very concerned.  First was the financial instutions bailout, which we were against 2-1, and our pleas were ignored.  Then it was extended to foreign banks.  Then extended to AIG, who had two parties totally over half a million dollars as soon as they got each installment.  Now the auto industry wants in.  So Paulson reverses course and no we're not going to buy bad debt.  Frankly he doesn't know what the hell he is doing, and the last two months of the bush administration are going to bring us to our knees.  I forsee people taking to the streets in the months to come.  What we should do is storm the halls of congress and hold them hostage till they do our bidding.  And while we have them captive, bush and his cabal board their respective airplanes and fly out of town, scott free.

Nov 14, 2008 03:58 AM
Rich Dansereau
Positive Real Estate Professionals - Knoxville, TN

Joan - When I first read about this, then heard about this, then thought about this, I was livid, then more livid, then most livid...Paulson must go! It is crazy that he has been given this czarist power. Our elected officials really ceded the whole checks and balances concept on with this one.

Terry - People really should be outraged but with all the slight of hand and misdirection I worry that what is going on is being obscured. I also fear that with all this negative crisis talk that has been going on for 18+ months that people just shut down and stop listening as a defense mechanism. This is the very time we need people to wake up. Let me try to find that old bumper sticker...found it

Nov 14, 2008 12:39 PM
Terry Haugen STAGE it RIGHT! 321-956-2495
Stage it Right! - Melbourne, FL

Rich, I think people are still being held hostage by the "terror, terror, all the time" rhetoric of the bush administration.  When one is afraid, one is unwilling to buck the system.  And quite frankly, where would we begin?  Everywhere I go people are talking about the raiding of the treasury, their savings, their retirement, their job security.  People are frozen in place, terrorized by what is to come.  Its unfortunate to say the least.  In France when the people get pissed they revolt.  Here, well, we're all too afraid of our government.

Nov 14, 2008 01:06 PM
Sandy Noll
(RSVP Real Estate) 425.890.0878 - Gig Harbor, WA
RE Pro Serving Snohomish to Thurston Counties

Rich I have never agreed with bailing anyone out, much less credit card companies!  As you said it's one thing to buy bad mortgages but at least there is something securing that purchase.  The consumers who are defaulting on their credit cards will either file for bankruptcy and never pay a dime on them or they will settle for a fraction of whats owed, just to get the creditors off their back!  The money will NEVER be recouped!  And the question I have is "how exactly is this supposed to help?"  Are the credit card companies being bailed out so they can again offer credit to anyone under the sun......even those who shouldn't have a credit card!!

Nov 14, 2008 04:58 PM
James Wexler
wexzilla.com - Scottsdale, AZ

Rich D, I am in total agreement. I fear the lame-duck Congress and Presidency we will see until Jan 20th. These issues need to be addressed, Most importantly, if these banks take the money, they need to lend it. Otherwise, give it back. It was not meant to sure up balance sheets so stocks would stay up for investors

Nov 15, 2008 10:56 AM
Rich Dansereau
Positive Real Estate Professionals - Knoxville, TN

Terry - And it is actually stated in the declaration of Independence..."That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness."

Sandy - Vicious cycle that flushes taxpayer money down the toilet.

James - I am with you 100% If they take the money, they must lend it to help the economy, not horde it!

Nov 15, 2008 02:11 PM