Crap Sandwich 2.0: A Trojan Horse for bank nationalization
Imagine if Treasury Secretary Hank Paulson had stood before the nation two weeks ago and called for the forced nationalization of the banking industry.
Think all those House Republicans who caved on Crap Sandwich 2.0 would have gone for this?
CS2.0 was a Trojan Horse. And now the army of government takeover artists are pouring out of the vehicle to claim their prize. Yeah, of course, we should worry about Barack Obama’s plans to “spread the wealth around.”
But like I said last week: Socialism is here and now.
If you don’t feel like throwing up today, you’re not paying attention:
U.S. Forces Nine Major Banks To Accept Partial Nationalization
The U.S. government is dramatically escalating its response to the financial crisis by planning to invest $250 billion in the country’s banks, forcing nine of the largest to accept a Treasury stake in what amounts to a partial nationalization.
…The Treasury Department’s decision to take equity stakes in banks represents a significant reversal, coming just weeks after Treasury Secretary Henry M. Paulson Jr. had opposed the idea. In a momentous meeting yesterday afternoon in Washington, Paulson, flanked by top financial regulators, told the executives of nine leading banks that they needed to participate in the program for the good of the national economy, two industry sources said on condition of anonymity because they were not authorized to speak publicly.
The government’s initiative, which was to be announced this morning before the markets open for New York trading, is part of a wider plan that goes beyond the $700 billion rescue package approved by Congress earlier this month. The Federal Deposit Insurance Corp. is also set to announce today the launch of an insurance fund to guarantee new issues of bank debt. It will provide unlimited deposit insurance for non-interest-bearing accounts, which are widely used by small businesses for payroll and other purposes.
ad_iconIn pressing the bank executives to accept partial government ownership, Paulson’s message was clear: Though officially the program was voluntary, the banks had little choice in the matter. In exchange for giving the Treasury minority stakes, the nine firms would jointly receive an investment worth $125 billion. The government would make another $125 billion available for the next 30 days to thousands of other banks and thrifts across the country.
Federal officials set conditions, telling the banks they could not raise their dividends without government permission and could not offer their executives new retirement packages, though the old packages would remain intact.
I have previously documented and warned about Paulson’s persistent wrong-headedness and flip-flops over the last year.
Add this latest move to the list. As the WSJ notes, he was adamantly against injecting capital into financial institutions before he was for it.
Paulson in September:
“There were some that said we should just go and stick capital in the banks, put preferred stocks, stick capital in the banks. And that’s what you do when you have failures. You know, that’s what happened in Japan. That’s what happened in other spots. And we have dealt with some failures. And we’ve dealt with them where there’s capital. But we said, the right way to do this is not going around and using guarantees or injecting capital, and there’s been various proposals to do that, but to use market mechanisms.”
Paulson today:
“Today I am announcing that the Treasury will purchase equity stakes in a wide array of banks and thrifts. Government owning a stake in any private U.S. company is objectionable to most Americans – me included. … From the $700 billion financial rescue package, Treasury will make $250 billion in capital available to U.S. financial institutions in the form of preferred stock. … Our goal is to see a wide array of healthy institutions sell preferred shares to the Treasury, and raise additional private capital, so that they can make more loans to businesses and consumers across the nation.”
It would be funny if it weren’t so stomach-churning.
***
More nausea: Bush promises that “government’s role will be limited and temporary.”
Double digits on the LMAO Richter Scale.
***
Commenter kwill: “It sure is nice of Bush to pre-socialize our nation before it’s all handed over to Obama.”
See what others have said
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It’s okay, Bush says the government role will be limited and temporary. Nothing to worry about here.
/sarc
I watched them talking about this on Fox News this morning and the expert they were talking to stated that this Socialist takeover of the banks will be very bad for the economy. His number one example was the USSR and how their control of the national banking system caused their economy to be dysfunctional. Just another reason to prepare for the worst folks by doing what you can to make yourself and your family self sufficient should the Socialist destroy the supply/transportation chain in this country.
Welcome to the United Socialist States of America! We’re boned!
whars that dood with mah shirt?
Gimmeh!
There’s nothing to see, please keep up. The tour doesnt stop here.
You can go back to work now.
So the government that can’t keep its own books in order is going to take over our banking system. I can’t wait ’til they take over my health care, too.
Very sad that so many on both the left and right were duped by the charade.
They’ll get out of the banking business as soon as Iraq oil flows into our ports as repayment for their freedom.
Wow, no one saw this coming. /sarc off
What’s the big deal? Dubya told us this morning that “it’s only temporary.”
He… I mean “the people,” only want to own the banks until they are recovered.
Why not believe him? Has he ever lied to us before?
Not all of the crap is in the sandwich, by any means…
Right. Temporary. Like the Federal Income Tax is temporary, like most fuel taxes are temporary. Isn’t it funny how long these “temporary” programs remain in place?
FDR is sitting up and laughing his head off. He’s thinking “Here’s a Republican President bringing about a bigger and better New Deal!”
One step at a time. Just one little step closer to an All Socialist, All The Time Amerika. Makes me sick.
Paulson Anticipates Buying Stakes in Thousands of US Banks
(hurl)
denver republican you are right on with your comment. In 1990 I was medically disqualified from flight duty and drug kicking and screaming into the wonderful world of government accounting and finance. In 1991 the Air Force Accounting and Finance Center folks from Denver went around telling all the bases how they would centralize the accounting functions from each base reducing manpower and providing for auditable financial statements. At the time I told them they were out of their freaking minds if they thought this would work. I was told to shut-up and color because I was new to the career field and did not understand.
Defense Finance Accounting Service (DFAS) stood up on 1 Oct 1993 and has been a failure since day one. I now work for the Air Force as a civilian Budget Analyst and thanks to the inept bureaucracy of DFAS a great deal of my job is to correct the accounting errors they make for the O&M budget I oversee for my Commander. It didn’t help when they got rid of all the GIs in DFAS before they brought in trained civilian employees to take their place. Now we deal with DFAS-Limestone (used to be Loring AFB, Maine) for our Wing and most of their employees are potato farmers from the local area that don’t know the first thing about the screwed up world of government accounting that work off of a checklist they don’t have the technical expertise to deviate from to correct the most basic error on a funding document. Needless to say DFAS continues to prove me right and barely manages to function and has yet to meet the goal of providing auditable accurate financial statements. Just think what Big Daddy Government can do for our banking industry!
Welcome to the United Socialist States of America! We’re boned!
WHAT CAN WE DO?
No, seriously. Can we do anything?
Michelle… Shhhh… Don’t question Chancellor Paulson’s wisdom or you’ll be rounded up and re-educated.
And consider this… they are just getting started. 6 months from now, what they’re going to do will make this stuff look like capitalism.
And remember, while congress can review what Paulson does, no one has any authority to stop him. They would have to change the law to stop him or issue an executive order. The latter’s possibility a joke in any scenario after the election.
Nice country we got here huh?
I’m starting to like Ted Nugent’s manifesto more and more.
uh…. no.
seriosuly… other than that “Well Regulated Militia” thing.
It sure is nice of Bush to pre-socialize our nation before it’s all handed over to Obama.
[rimshot] !!!! ROFL
And why exactly does the left hate Bush so much? Is it the R after his name? He’s done more for their agenda than Clinton.
Next Step:
pray for the rapture to occur before they make us get the mark to buy and sell…
fixed it!
I still wanna know where my bail out is?
OK, I’ve tasted CS2.0 and had a bite, now where’s my money!?!?!?
(…and I have obeyed the law, been responsible with my finances, etc.)
Unfortunately, I have to think yes. Judging from the congressional e-mails I received (I found myself on a number of lists from the drill here, drill now campaign, which seems like decades ago) and the comments at the NRO Corner, there was a consensus that “We’ve got to do something, anything, this is the best we can hope for, you free-market, limited government idiots!!!”
One letter to the the NRO I thought got it right, however: “this is an Austrian economics problem that we are address with a Keynesian solution.” And so it is. Moreover, this action sets a very bad precedent and we can all be sure the democrats are watching and taking notes. When they take over with their crushing majorities next year, the economy of this country will be at risk like no one can imagine now. And anyone who thinks: “Well, just wait until the 2010 elections” might be in for a big surprise. An ACORN on steroids will “fix” that problem.
For sure and I don’t doubt that something would be done about that pesky two presidential terms limitation thingy.
drill here, drill now
Unfortunately, that phrase now has new meaning, and it may hurt.
And if the banks are nationalized how long before those holding our money hostage will be able to mandate our speech?
(gulp)
ok, so, we can’t put pressure on our elected officials and they now cannot do anything to reverse this?
If not, is there a country to move to where this isn’t a problem? I’ve been thinking of Switzerland, but, it seems like they are now trying to take guns away over there.
Everyone really seeing a one-world government forming? Just curious.
Well, that explains some things.
A few years ago, I voluntarily gave up my Military Disablity Rating (pension) since I felt that my disabilty was not worthy of the IED wounds that our guys were experiencing.
The VA in its infinite wisdom decided it was then going to come after me for previous payments but sent my 30-day appeal notice to a 10 year old address. It took 3 years for the debt collectors to find me and they wanted FULL payment immediately (typicial) or they were garnishing my wages.
Everytime I try to help out the government (DITY move, disability, taxes, etc) I get screwed. Now Im about to get it again…
The only thing I have going for me government-wise is that I receive child support. It blows the bureacrats and the courts minds that a supposed dead-beat dad has full custody of his kids.
Does anyone know where we can see a copy of the actual bailout bill? What were Paulsons powers? Were they amended from the first CS1.0 at all? Ugh.
I must not have been paying attention. I heard nothing in the debate on this bill indicating buying stock of companies. I thought the $700B was to be used to purchase “toxic mortgages” off banks books solely. Now the gov’t is buying stakes in the companies? To make it worse, I understand it will be Preferred stock with no voting rights. Umm, so how do we ensure these “honest CEO’s” don’t turn around do the same things that got us into this mess in the first place? Little by little, inch by inch we move closer to full socialism.
They set this up. The 4 banks that are “too big to fail” were the giants of the illegal alien toxic waste end of the mortgage industry. Helped by Fannie and Freddie, they caused a crisis whose flames Paulson - screaming “the sky is falling” - helped fan, while insisting on a “Gimme the money or I’ll blow up the economy” solution. Now that our elected idiots have given away the store, Paulson has helped shore up his cronies while nationalizing as much as he can. Hard to believe he didn’t have this in mind.
Notice him in photos. He uses the “folded hands #1″ position, as a speech teacher I know used to call it. Like he knows someone wants to cut off his privates…
Rabid squirrel sorry to hear about the VA issues. One thing I still tell many of the Airmen, NCOs, and Officers assigned to my unit is never ever try to save the government money by deviating from mandated pay or travel allowance procedures. I have seen too many people get burned trying to be responsible and save the government a couple of bucks only being forced to eat the cost because they violated a rule or regulation.
I guess I will shut-up and color when it comes to the 20% disability I receive from the VA for my service related illness. I have enough challenges in our personal finances without the VA coming to break my legs for wanting to give it back.
Welcome to the United Socialist States of America! We’re boned!
This frightens me beyond belief.
This step brings back so many haunting memories of news reports on Cuba, Venezuela, Soviet Union etc etc etc.
I’m thinking I need to move to a cabin in the woods and load more ammo.
Because I’m not going down without a fight.
Can we do anything?
I know what I’m going to do. Just in case the government decides how much of my money in my account I can access, I will now take careful stock of how much I need to keep in there to pay bills, and withdraw the rest when I get paid. Just in case. And I will continue to do this until the government tells me I can’t anymore.
Paranoid? Not so much, anymore, I think.
amazing is it not, I’ve said it for a few yrs now, why are the lefties so upset about Bush…he is a LIBERAL. Working on being a more liberal president than yimmy.
They want us in more debt to save the economy? WTF??
“The borrower is slave to the lender.” We’re already slaves to the gov’t at least 3 months out of the year just to pay our current taxes. And they want us to slave away even more for them?
And what do you think will happen if you default or are late with payments on a government-owned mortgage, car loan, business line or even just a credit card?
Small well-managed local banks are part of the answer, at least for now. Some big bad banks have been gambling for years and now we are paying the price. Some other large banks are owned (partially) by the likes of Dubai, and the Saudi and Chinese sovreign funds. I would rather do business with my local banker than the Chinese.
P.S. I meant small well-managed locally OWNED banks.
I have been a depositer in one of those for years. Fantastic…… It is healthy as can be. Based on their activity, you would never know there was a financial crisis.
What do you think your account number with the World Bank & the New Unified World currency will be?
Goodbye “My Friends”!
We hoped he’d staighten-up,
but listen-up!
As Republican Goverence ends,
McCain won’t fight…
for what is Right,
Winning isn’t what he intends.
When out-of-sight,
the dream he dreams at night,
is “sticking it” to Patriotic Men.
He’s nurtured since the 2000 run,
A “go to he11!” for everyone,
who was of Conservative taste
ran him out of that Primary Race.
Now, his purpose almost compete:
The Party, dying at his feet.
He spits: “No Earmarks!”
Then he smiles and mocks:
“Except, for the bipartisen ones you Lox!”
Sad. Of course the banks are not going to loan out this money! Why should they? No one yet has been punished for lying on their balance sheets, and not one government official like Raines has been prosecuted for wrongdoing. The fraud is going to continue until we collapse!!
Will any conservative have the guts to sue the government, like they did after FDR formed monopolies?
Will any conservative have the guts to call for prosecution of the wrongdoers like Raines and Johnson to restore trust in the system?
The importance of the bail out isn’t about nationalizing banking (which it doesn’t), but rather it’s the camel’s nose in the door for showing how to nationalize health care, college, preschool, mortgages, retirements, and perhaps even autos.
The plan is, start up an modest feel good program (like easy home mortgages for those who can’t pay for it or health care insurance with a few mandates) that the marketplace can handle. Then slowly add more and more mandates (You’ve got to 10%, then 20%, then 28% of mortgages must be unsupportable mortgages — or health care insurance without preconditions and with gold plated benefit mandates) until the marketplace system collapses because it can’t fiscally make sense.
Then take over the industry.
Weary Citizen #31:
According to the crap sandwich 2.0 legislation Chancellor Paulson can do anything he wants with the money. The only restriction was that he could only ask for $250 billion up front then had to go back to Congress to get more up to $700 billion. So NO he doesn’t have to buy a single bad mortgage he can do what he deems best for the economy because that is his real “mandate”. Accountability??? ABSOLUTELY NONE!! He also wrote that into the legislation as well.
The saving grace for the banks he is strong arming is that the stock isn’t voting stock. Would you really want a Bureaucrat VOTING on the direction of a bank?? Yeah, like that would be a good idea!!
I have my handbasket sitting by the door waiting to travel………