Bailout vote fails, so what's next? on clarkhoward.com

By now you've heard that the federal bailout plan failed in the House of Representatives. Remember, the first job of a politician is to get re-elected. So it is any wonder that -- weeks before an election -- the pols balked when faced with a bill that was unpopular and little understood by the average person?

Now the inevitable question: What's next? First, Clark believes we are in a recession and it will deepen. Second, this is not the eve of the Great Depression. We may have unemployment, but it will be more like the kind we faced in the '80s -- not the '30s. This is not gloom and doom.

In the post-Civil War years through the turn of the century, we had 8 major recessions in the United States if Clark remembers his history correctly. Then in 1907, we had a credit market failure that had to be corrected by JP Morgan -- the man, not the company.

Any recovery will take a while. We borrowed and spent money that we can't pay back. We have millions of houses to work off as excess. Nothing can recover until the housing market returns to equilibrium.

During the recession in the early '80s, we had mortgage interest rates that were above 20%! But we went through difficult times and recovered. We just have to work off the excess -- too much house, too much car, too much debt, too much government spending.

Working off the excess means our standard of living will be slightly lower for the foreseeable future. So you'll have to live on less of what you make. It won't be pretty or happy, but it is not the Great Depression.

What others are saying

Bottom-up approach
$700 Billion Bailout Plan

Have we looked at all the options?

I will again prefer to have a bottom-up approach. In which Federal Government works with local government, faith and non-faith based organizations, universities/colleges, banks in the communities around the country. We need to understand the real problem America faces today, we should encourage grass-root level community revitalization program driven by the people living in the communities. We can either provide insurance for such buying out of the non-performing assets or match what they can raise or invest in their communities. I have a plan of home-based businesses developing customized products and services and solve problems in the communities around US.

The current form of bail out plan does not have that provision. It gives lot of power to the government and it might result in corruption. Also, banks are better informed about the market value of these non-performing assets and the government is not.

I agree with Mr. Joseph Stiltz the Nobel Peace prize winner. Immediately we can inject capital to the banking system in exchange of preferred shares in the banks. That way American people are not overpaying for these assets, which has very less potential for upside. The other thing I would say that the package should also give some relief to homeowners hijacked by the greedy banks and financial institutions (By unethical lending practices) and immediate relief to the unemployed and invest in workforce development and training for 21st Century.

I don’t know the republicans who believe in free market agree with the package in its current form, why they support the package. If you believe that free market be the solution to everything, you should not interfere. It is difficult to visualize this party follows republican ideology in the upside and change it to big government in the downside of the WallStreet.

I know that we can reach the destination in either ideology. The problem is that we lot of times compromise for the wrong reason and follow the path of convenience.

I know we have a crisis, but it is important to NOT to loose sight and act in haste risking tax payers money. Again, if we take a short-term approach, we would loose everything.
By Sanjib Mohapatro @ 10/01/08 07:16:45 AMreport abuse
Economic Issues
One question I would like answered is WHY doesn't the President bring in Economic Experts from throughout the country and let THEM propose a solution?? I strongly believe that the majority those in Congress has no idea what to do, other than the ever present CYA. I know they must have slept during all their high school history classes, since none of them seem to have knowledge of the past.

Another question I wish someone would answer is: Why can't businesses TRY moving and shipping all their goods via our Railroads??? While it may not be the most convenient and expedient, it certainly would save TONS of petroleum that could be processed for regular gas. In the Atlanta area, tractor trailer trucks seem to cause accidents every day and add to the traffic woes of this area.

To Mia, I think you are forgetting all of the poor middle class people who have their retirement annuities in AIG, like me.

Common Sense has been dead a buried for a long time, I wish SOMEONE or SOMETHING could revive it.
By Puzzled @ 10/01/08 07:04:38 AMreport abuse
My plan for a Citizen's Bailout 2/2
Step Three: When a Soft Second Lien is placed on a property a TAX CREDIT is provided to the mortgage company that refinances, modifies or provides "new" financing on the affected property whilst paying off the FHLB Lien or the Buyer who purchases the property with the FHLB Lien. The amount of the tax credit should be determined by the US Congress.

Step Four: There is an extreme glut of homes on the market in many parts of the U.S. For starters the government would institute a Builder's Permit TAX of 100% of the average sale's price of the home sales in the properties' zip code. Once all FHLB liens have been paid off in an affected zip code this "permit tax" would be terminated.

Under no circumstances would the builder's permit tax apply to properties within a one or two mile radius of a commuter rail station. Other limited exemptions would apply on a case by case basis. The need to stop new building would increase the value of existing properties and pay the FHLB liens off much faster!

Currently, there is a quality of housing issue in this country. There are many homes which are "sub-standard' and in need of updating. Builders would instead of building new homes - invest in renovating the existing housing stock - fueled in part by the purchasing/renovating of properties that have been foreclosed on(tax credits for purchasing and reinvesting in foreclosed properties)

Step Five: There currently exists no market for MBO's to be purchased & sold. The U.S. Government should work with the CBOT, NYSE, NASDAQ, or OEX to formulate a market in which MBO"s can be valued and sold. There is no doubt there are tremendously valuable assets for sale by the major financial institutions - right now, private investors (world citizens including US citizens) can not purchase, sale, or invest in these securities. With a market clearinghouse established, private investors purchasing & selling MBO's, and financial institutions knowing the "market" value of their securities - - Government could bring back the "mark to market" accounting standard.

THIRD – Final Reason: The U.S. Dollar will fall tremendously in value should Henry Paulson’s plan to bail out Wall Street take place. Flooding the market with essentially $700 billion in new U.S. Currency, will make all holders of U.S. denominated assets poorer. The majority of most American’s nest eggs are held in dollar denominated assets.

The cost to holders of US dollar denominated assets will be greater than the cost of Paulson’s Wall Street bail out plan! Eventually all tax payer dollars will be repaid by the repayment of the "soft seconds" placed on distressed properties by the Federal Home Loan Bank (FHLB)! Tax payers will loose NO money under this plan and real estate values will be restored
By Cliff ATL @ 09/30/08 10:25:27 PMreport abuse
My plan for a Citizen's Bailout 1/2
FIRST: This tax payer aid should be going to the tax payers for the very simple reason that the root cause of this MBO (Mortgage Backed Security) problem lies in the increased nationwide foreclosure rates and the inability of banks to profit and/or sell REO (Real Estate Owned) properties promptly and for sufficient prices.

Should the government "invest" in MBO's without addressing the underlying foreclosure issue- those MBO investments will fall in value costing the tax payers in the U.S. billions if not trillions of dollars.

SECOND: Bailing out property owners at risk of foreclosure would cost billions less than simply buying all MBO's from financial institutions.

With a projected 2 million foreclosure to take place this year. The $700 billion requested for Paulson’s plan would provide all 2 million foreclosed property owners with a total of $350,000/foreclosure. This plan could restrict the "claim" amount of each property to $50,000.

The plan could be as simple as:

Step one: Banks prior to foreclosing on a piece of property would be allowed to make a "claim" to the Federal Home Loan Bank. The "claim" payment from FHLB would bring the mortgage current and provide three months' payment under the existing terms of that mortgage. This payment would provide the owners of the property with 90 days of which to either:
find a job & get back in financial shape
sell the property
refinance the mortgage debt
modify the mortgage with the existing mortgage company
The FHLB would place a "soft second" Lien on the property which would not need to be paid off with the first transfer (sell or refinance) of the property. This would allow homeowners to sell their homes for less than the mortgage balance and pass the soft second along to the new buyer or roll it into their new mortgage.

Should the 90 day "grace" period fail for the property owners - Banks would eventually foreclose on the property. The Banks could sell the foreclosed property less and pass the soft second to the new buyer.

How would the soft second Lien be paid back?

The soft seconds could sit dormant for a period of 5 years and then be amortized at the current T-bill rate + small % for Primary residential mortgages.
For Investors the soft second placed on the property would immediately be amortized over a period of 10 years at the current t-bill rate + small % for the Government to realize a profit.

Step Two: Since the underlying foreclosure crisis would be averted - financial institutions prior to purchasing MBO's evaluated them based on certain financial criteria considering a certain foreclosure rate.

Simply allow financial institutions to carry the mortgage backed securities on their books at “Mark to Purchase” prices. Any losses or gains would then be realized at the sale or disposition of the assets.
By Cliff ATL @ 09/30/08 10:24:49 PMreport abuse
bailout
America! please stop getting stuff with your credit cards!!! If you can not afford it-stay away!
I am happy, fat cats can not be saved for now.
Most of us leave paycheck-to-paycheck, why do we care, if they lost big buks...
By Mia @ 09/30/08 10:11:42 PMreport abuse
Bank Bailout
I think this should not be a bailout. It should be a loan by the US Taxpayers to these corporations.
The stipulation of tighting these lending practices up. Simply put old school you need 20% down and not even the 80/20 or 90/10/10. NO more PMI. No borrowing more than 80% of the house's value. Even on 2nd mortgage. Houses are like stocks they don't always go up in value.
By BBK @ 09/30/08 07:47:38 PMreport abuse
I'm glad the bail out failed!
I already live below my means. Thanks to God, we can tithe and save and still have food on our table.

The bail out is wrong! WRONG! WRONG!!!

The rest of America, starting with the government, needs to learn to live below their means.

MAY GOD SAVE THE USA!
By Regular Guy @ 09/30/08 06:37:32 PMreport abuse
I'm just plain Tired
of the last week of fear mongers, people who have never taken basic economics classes, and chain e-mails preaching doom. I've told several people to keep their $200 in the bank, it's safe there. NO one is going to disappear with it in the night. I'v e told several that a recession is not a bad thing. When lower and middle class America is spending $2000 on televisions, which they then turn around and pay $59.99 a month to watch, and eat out regularly, as well as drive $50,000 vehicles, I say it is time for a good recession to get some priorities reset.

We complain about crooked commercialism, but what about incompetent consumers! A recession will get things straightened out, and is not the end of the world. Oh, my, we will only be able to go out to eat every couple of months instead of every other night. Big whooop. We might even have to pay off that new vehicle and keep it instead of trading it in on more new car smell. Just wash the car and keep it.

Maybe some one in the family will actually have to learn how to cook. Scary. The more responsible we are, the more stable we make the economy. When we have the money, we spend it on what we really need (lights, heat, clothing, etc) or save it, but we don't waste it. And, we don't spend what we don't have so we can watch the movie at home on a tv as big as a theater screen. That is the financial foundation that makes our US economy great. It has been forgotten for the last 20+ years.
By It's Z @ 09/30/08 06:37:12 PMreport abuse
Re: Alternative to AIG Bailout
Bob - You may want to recheck your math. $85 Billion divided by 200 million people is NOT $425,000.. its $425.

Dont believe chain emails.
By Marty Gusyer @ 09/30/08 03:24:56 PMreport abuse
more stupid people
Bob Pominville wrote that we should not bail out AIG...well bob, it's too late we already did. Secondly your math teacher should be slapped, either get a calculator, or stop smoking rope, your numbers don't come close to adding up. Thirdly if we gave everyone the money you suggest they wouldnt spend it on the things you state, see my other post about stupid people. The real numbers are like this: the current 700 billion figure proposed for the bailout would come to $2,295 per taxpayer...remember the 165 billion stimulus check deal, that was $600 per taxpayer, and all it did was help pay for the oil companies record profits on us. when the government gives us money they have to borrow it from somewhere, as you might know we have about a 10 trillion dollar debt as it is, so its not like we have extra to throw around. even the government has to pay some kind of interest on this money they borrow to give us. I wonder how much in daily interest we would have to pay on 700 billion? ...didn't your mama tell you "there ain't no free lunch?" as someone who pays thier bills, and tries to save some money, i would rather see the economy helped so my 401k doesnt get killed and i can get a decent rate on cd's again...if banks start lending, maybe mortguage rates will come down, and someone will buy the house we have been trying to sell for the last year. I may just have to turn it into a rental for the greedy, stupid, people who got foreclosed on and cant get loans anymore...so they will have a place to live while they wait on thier handouts.
By Dave @ 09/30/08 03:22:37 PMreport abuse
Bail Out
Paulson and Bernechi(sp) preached panic and now can't understand the panic withdrawal of funds. I'm not on their 1st phone list, it might be more prudent to encourage forethought instead of gimmee the taxpayer's money now.
By Ronda Michael @ 09/30/08 03:17:34 PMreport abuse
Re: Alternative to AIG Bailout
Great idea.
By Michael Smith @ 09/30/08 03:09:36 PMreport abuse
Bailout dividend debunked
Check it out on Snopes.com the facts and figures in that we Deserve It Dividend e-mail are incorrect.
By sickntiredofu @ 09/30/08 02:46:01 PMreport abuse
Alternative to AIG Bailout
I'm against the $85,000,000,000.00 bailout of AIG.

Instead, I'm in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.
To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18+.
Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up... So divide 200 million adults 18+ into
$85 billon that equals $425,000.00.
My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.

Of course, it would NOT be tax free. So let's assume a tax rate of 30%.
Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000 right back to Uncle Sam.
But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00.
What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage - housing crisis solved.
Repay college loans - what a great boost to new grads.
Put away money for college - it'll be there.
Save in a bank - create money to loan to entrepreneurs.
Buy a new car - create jobs.
Invest in the market - capital drives growth.
Pay for your parent's medical insurance - health care improves.
Enable Deadbeat Dads to come clean - or else.
Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at
Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces.
If we're going to re-distribute wealth let's really do it...instead of trickling out a puny $1000.00( "vote buy" ) economic incentive that is being proposed by one of our candidates for President.
If we're going to do an $85 billion bailout, let's bail out every adult U S Citizen 18+!
As for AIG - liquidate it . Sell off its parts. Let American General go back to being American General. Sell off the real estate. Let the private sector bargain hunters cut it up and clean it up.
Here's my rationale. We deserve it and AIG doesn't.
Sure it's a crazy idea that can "never work."
But can you imagine the Coast-To-Coast Block Party!
How do you spell Economic Boom?
I trust my fellow adult Americans to know how to use the $85 billion We Deserve It Dividend more than I do the geniuses at AIG or in Washington DC .
And remember, the plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.

Ahhh...I feel so much better getting that off my chest.
By Bob Pominville @ 09/30/08 02:28:52 PMreport abuse
Goverment banks
This problem begins with fanny and Freddie. They were commissioned to give government backed loans. The people running fanny and Freddie got greedier and greedier giving more risky loans. Then you had the GOVERNMENT and Special interest groups like ACORN compelling other banks to give out sub-prime loans. So you have the housing market being flooded with buyers. That inflates the value of houses. when it all hits the fan and the house bubble pops and fanny and Freddie go under. Then the insurance companies that insured the loans, i.e. AIG have to pony up, they go under.

The conclusion is the government got in the way of the free market. If you want to blame anyone, blame the congress who caused the problem and who is about to rob us all blind!
By Julian Bouchard @ 09/30/08 01:02:33 PMreport abuse
Recession is natural
Recessions are a natural process of captialism; this however does not remove the fear and angst that we may experience. We can sit down and point the finger at how this recession happend, but it won't change it now, nor will it prevent the next recession we have in the future, which will be caused by some other means. Rarely do we here of a recession caused by "good honest people". It is fun to blame, and easy in the case, but I don't think this is a Clint Eastwood movie with Good guys and Bad guys. It is what it is.
By Marge @ 09/30/08 12:54:27 PMreport abuse
dumb people
This situation was caused by dumb greedy people, not just the investment banker types but mainly the public. the ones who signed up for loans they knew would explode in thier face unless they refinanced or sold the houses they couldnt afford, the greedy investors buying second homes in bubble markets hoping to get rich, even the guy that bought a new $30,000 car instead of a used one he could afford. these are the same stupid, greedy people who are on these boards wanting big stimulus checks. Face it these people wouldnt pay down a mortguage or put money in the bank, they would buy flat screens, beer, and nascar tickets...sortta like when they gave Katrina victims $1000 walmart giftcards and then when they looked at what these poor victims bought, they found some bought champagne, jewelry and sexy nighties for thier girlfriends. people seldom do whats good for them with a big windfall, and frivilous spending and bad judgement is what got us here. So for all you people wanting the government to send you money insted of the frozen credit markets..Shut up and go pay some bills, and stop looking for a handout.
By Dave @ 09/30/08 12:28:49 PMreport abuse
Bail-Out
You got to love Congress. They work all weekend to bail out a bunch of crooks and thieves while telling us our future depends on it. Yet, in the last 25 years we haven't had any viable energy policy. Congress has shown they don't care about the people who elect them, they worry about the fat cats on Wall Street who contribute mightily to their campaigns.
By cruzin @ 09/30/08 12:24:19 PMreport abuse
A SOLUTION TO MAKE ALL HAPPY
The government give all taxpayer 20,000. If you feel the big multi million dollar big wigs on walssteet deserve it send it back.
By Bill @ 09/30/08 11:51:45 AMreport abuse
Live on less?
How about letting all the greedy government people, loan officers, brokers, builders, realtors, CEO's and Board of Directors of these large companies that made millions pay "penalty” taxes instead of sticking it to the people who lived with-in their means. I’m tired of paying for other’s parties and yachts! I’m 53 I have worked my whole life to pay off my mortgage and I have lost $209,000 in my 401K/IRA since 2003. I guess I will have the “opportunity” to work so this debt can be paid, while those that are responsible sail off into the sunset with a smile on their face. Capitalism without a conscience = Ivy League America
By Leah Green @ 09/30/08 11:24:23 AMreport abuse
SOLUTION
All I can say is FAIRTAX. I am very proud of Amercians for speaking up. Obviously some of the politicians are listening. SPEAK UP AGAIN...send emails, letter and phone calls for FAIRTAX. Now there is a bailout!
By PG @ 09/30/08 10:56:42 AMreport abuse
vote to cure the problem in washington
One way to cure the problem in washington! Vote any incumbent out and let a new bunch of idiots try their hand at ruining the country.

I love my country-but fear the government
By ezrydr @ 09/30/08 09:48:15 AMreport abuse
Lower What
Lower our standard of living while congress spends billions on a war to free the same people who charge us astronomical prices for gas? What's wrong with this picture!
By PJ @ 09/30/08 07:06:50 AMreport abuse
Reinstate the draft
Sorry, I was thinking about withdrawal from 401k, but George still needs to be drafted!
By Grandpa Gene @ 09/30/08 02:44:14 AMreport abuse
Reinstate the draft
I propose that Mr. George Marek be drafted as the next Senator from the Great State of Georgia.
He at least make some sense to me and while your at it George, How about if we do away with the taxes and penalty if someone pays off there home mortgage on primary home that might help Joe Peanut picker out a little.
By Grandpa Gene @ 09/30/08 02:35:26 AMreport abuse
Trust the American People with Their Money
Why not give the $700B to the American people to deposit in the banks as time deposits that the banks can then lend out?

How about this idea for calming the current financial liquidity crisis?

Instead of handing money over to financial institutions directly, return the money to the American people in a manner similar to the recent income tax prebates.

However, this time the money is required to be put in the form of time deposits in banks, much like CDs.

This way the money enriches the American people who are required to keep the money on deposit in banks for a proscribed term. The minimum term can be set to provide the time needed to attain market stability and minimize inflationary affects.

The banks in turn enjoy increased liquidity and are able to lend the deposits out for commerce and industry.

* The banks quickly receive cash to fuel much needed liquidity,

* The banks keep and manage their bad loans thus avoiding all the government bureaucracy otherwise needed to manage all the distressed property, etc.,

* Every American will hold a note that they can redeem for their own enrichment someday,

* Business prospers and Americans keep their money.

Make the deposits tax free and require the banks to pay interest, also tax free.

This could be done quickly using direct deposit for most tax payers. Others can receive a certificate by mail that they can take to the bank of their choice and deposit.

Call it the Finance American Savings Trust Account or F.A.S.T. Account for short.

It needs to happen fast and should be appreciated by the American people more than the current bailout bill.
By George Marek @ 09/30/08 01:12:27 AMreport abuse
What about those...
Who have said no to excessive materialism and living beyond their means. Those who have sacrificed and WORKED to live a debt free life. Is there any opportunity in this mess for us? Needless to say, I have little sympathy for those who are getting stung from trying to "keep up with the Jones" and living excessively on borrowed money. Why bailout greed and poor decision making. Save the banking system some how, but let the CEOs and stupid homeowners who agreed to idiotic loans go down.
By Todd @ 09/29/08 10:48:05 PMreport abuse
deregulation
Until they bring back regulation forget the bailout.
The CEO of Washington Mutual worked 17 days until WAMU went belly up and then he WALKED AWAY WITH $20 MILLION. $20 million for 17 days work, not bad.
By Lou @ 09/29/08 09:55:51 PMreport abuse
bailout
I think we sould give the 700 billion out, but give it to the tax payers to pay off thier loans then after we pay our loans it is in the hands of the institutions and we paid off our loans.
By jeff @ 09/29/08 09:18:17 PMreport abuse
The only people to blame are..
The borrowers who signed the loan payments and then failed to make those payments
By Greg @ 09/29/08 09:09:28 PMreport abuse
free market
"when politicians interfere with free markets." Baloney! The free market greed running wild caused this, while nobody was watching the chicken coop.
By mike @ 09/29/08 08:11:46 PMreport abuse
Oil
The price of oil has drooped $10 a barrel since the bailout failed. This will do me more good than the bail out.
When i can find some that is.
By me @ 09/29/08 07:55:41 PMreport abuse
Easier on some than others
What about those of us who already struggle everyday??? This is horrible news for us!!
By Barb McMullen @ 09/29/08 07:09:39 PMreport abuse
bailout
Thanks for the hopeful update. I am really upset at our leaders in Congress, since I believe the first draft should have included language to work out better bankruptcy policies for homeowners facing foreclosures, also, language included stating that the high powered companies responsible for this crisis should be financially liable by assisting with bailout funds. Congress, stop the bickering and sensitivity - people's stocks are falling by the minute,pension funds are at stake, more jobs may be lost, etc. Stop worrying about re-election, get a bill passed favorable towards the taxpayers.
By nparks @ 09/29/08 04:01:36 PMreport abuse
Sometimes the forest needs a fire.
The bailout failed because Americans said they didn't want it. They instinctively know that the pronouncements of doom from Washington and New York are just a smokescreen to cover the fact that these banks are walking dead. They HAVE to fail if this system is ever to recover and grow again. Strong medicine? Pain on main street? Trillions of dollars lost? You bet, and that is exactly what happens when politicians interfere with free markets.
By Tom @ 09/29/08 04:00:40 PMreport abuse
reality check
No, it's not the great depression at all. This could be the GREATER DEPRESSION.

Not even counting the crap-storm of recent weeks, today's local headlines from the AJC read: Bill Heard closes 14 dealerships, Creative Loafing filed for bankruptcy, some Georgia banks at higher risk (for defaulting), Cobb Energy ailing, bankruptcy filings surge in georgia... and even if we could find gas, paying for it is becoming out of reach!

Clark, we know you have stock left in our great country (as we all do), but it's time to start looking for a lifeboat instead of going down with the ship like you did for Wachovia.

P.S. I sincerely hope I'm wrong, but I'd rather be ready.
By Al @ 09/29/08 03:58:25 PMreport abuse
bailout failed
Thank you for easing my fears. Do you think Mutual funds are still safe?
By debby durica @ 09/29/08 03:11:45 PMreport abuse

Bottom-up approach

$700 Billion Bailout Plan

Have we looked at all the options?

I will again prefer to have a bottom-up approach. In which Federal Government works with local government, faith and non-faith based organizations, universities/colleges, banks in the communities around the country. We need to understand the real problem America faces today, we should encourage grass-root level community revitalization program driven by the people living in the communities. We can either provide insurance for such buying out of the non-performing assets or match what they can raise or invest in their communities. I have a plan of home-based businesses developing customized products and services and solve problems in the communities around US.

The current form of bail out plan does not have that provision. It gives lot of power to the government and it might result in corruption. Also, banks are better informed about the market value of these non-performing assets and the government is not.

I agree with Mr. Joseph Stiltz the Nobel Peace prize winner. Immediately we can inject capital to the banking system in exchange of preferred shares in the banks. That way American people are not overpaying for these assets, which has very less potential for upside. The other thing I would say that the package should also give some relief to homeowners hijacked by the greedy banks and financial institutions (By unethical lending practices) and immediate relief to the unemployed and invest in workforce development and training for 21st Century.

I don’t know the republicans who believe in free market agree with the package in its current form, why they support the package. If you believe that free market be the solution to everything, you should not interfere. It is difficult to visualize this party follows republican ideology in the upside and change it to big government in the downside of the WallStreet.

I know that we can reach the destination in either ideology. The problem is that we lot of times compromise for the wrong reason and follow the path of convenience.

I know we have a crisis, but it is important to NOT to loose sight and act in haste risking tax payers money. Again, if we take a short-term approach, we would loose everything.

By Sanjib Mohapatro @ 10/01/08 07:16:45 AMreport abuse

Economic Issues

One question I would like answered is WHY doesn't the President bring in Economic Experts from throughout the country and let THEM propose a solution?? I strongly believe that the majority those in Congress has no idea what to do, other than the ever present CYA. I know they must have slept during all their high school history classes, since none of them seem to have knowledge of the past.

Another question I wish someone would answer is: Why can't businesses TRY moving and shipping all their goods via our Railroads??? While it may not be the most convenient and expedient, it certainly would save TONS of petroleum that could be processed for regular gas. In the Atlanta area, tractor trailer trucks seem to cause accidents every day and add to the traffic woes of this area.

To Mia, I think you are forgetting all of the poor middle class people who have their retirement annuities in AIG, like me.

Common Sense has been dead a buried for a long time, I wish SOMEONE or SOMETHING could revive it.

By Puzzled @ 10/01/08 07:04:38 AMreport abuse

My plan for a Citizen's Bailout 2/2

Step Three: When a Soft Second Lien is placed on a property a TAX CREDIT is provided to the mortgage company that refinances, modifies or provides "new" financing on the affected property whilst paying off the FHLB Lien or the Buyer who purchases the property with the FHLB Lien. The amount of the tax credit should be determined by the US Congress.

Step Four: There is an extreme glut of homes on the market in many parts of the U.S. For starters the government would institute a Builder's Permit TAX of 100% of the average sale's price of the home sales in the properties' zip code. Once all FHLB liens have been paid off in an affected zip code this "permit tax" would be terminated.

Under no circumstances would the builder's permit tax apply to properties within a one or two mile radius of a commuter rail station. Other limited exemptions would apply on a case by case basis. The need to stop new building would increase the value of existing properties and pay the FHLB liens off much faster!

Currently, there is a quality of housing issue in this country. There are many homes which are "sub-standard' and in need of updating. Builders would instead of building new homes - invest in renovating the existing housing stock - fueled in part by the purchasing/renovating of properties that have been foreclosed on(tax credits for purchasing and reinvesting in foreclosed properties)

Step Five: There currently exists no market for MBO's to be purchased & sold. The U.S. Government should work with the CBOT, NYSE, NASDAQ, or OEX to formulate a market in which MBO"s can be valued and sold. There is no doubt there are tremendously valuable assets for sale by the major financial institutions - right now, private investors (world citizens including US citizens) can not purchase, sale, or invest in these securities. With a market clearinghouse established, private investors purchasing & selling MBO's, and financial institutions knowing the "market" value of their securities - - Government could bring back the "mark to market" accounting standard.

THIRD – Final Reason: The U.S. Dollar will fall tremendously in value should Henry Paulson’s plan to bail out Wall Street take place. Flooding the market with essentially $700 billion in new U.S. Currency, will make all holders of U.S. denominated assets poorer. The majority of most American’s nest eggs are held in dollar denominated assets.

The cost to holders of US dollar denominated assets will be greater than the cost of Paulson’s Wall Street bail out plan! Eventually all tax payer dollars will be repaid by the repayment of the "soft seconds" placed on distressed properties by the Federal Home Loan Bank (FHLB)! Tax payers will loose NO money under this plan and real estate values will be restored

By Cliff ATL @ 09/30/08 10:25:27 PMreport abuse

My plan for a Citizen's Bailout 1/2

FIRST: This tax payer aid should be going to the tax payers for the very simple reason that the root cause of this MBO (Mortgage Backed Security) problem lies in the increased nationwide foreclosure rates and the inability of banks to profit and/or sell REO (Real Estate Owned) properties promptly and for sufficient prices.

Should the government "invest" in MBO's without addressing the underlying foreclosure issue- those MBO investments will fall in value costing the tax payers in the U.S. billions if not trillions of dollars.

SECOND: Bailing out property owners at risk of foreclosure would cost billions less than simply buying all MBO's from financial institutions.

With a projected 2 million foreclosure to take place this year. The $700 billion requested for Paulson’s plan would provide all 2 million foreclosed property owners with a total of $350,000/foreclosure. This plan could restrict the "claim" amount of each property to $50,000.

The plan could be as simple as:

Step one: Banks prior to foreclosing on a piece of property would be allowed to make a "claim" to the Federal Home Loan Bank. The "claim" payment from FHLB would bring the mortgage current and provide three months' payment under the existing terms of that mortgage. This payment would provide the owners of the property with 90 days of which to either:
find a job & get back in financial shape
sell the property
refinance the mortgage debt
modify the mortgage with the existing mortgage company
The FHLB would place a "soft second" Lien on the property which would not need to be paid off with the first transfer (sell or refinance) of the property. This would allow homeowners to sell their homes for less than the mortgage balance and pass the soft second along to the new buyer or roll it into their new mortgage.

Should the 90 day "grace" period fail for the property owners - Banks would eventually foreclose on the property. The Banks could sell the foreclosed property less and pass the soft second to the new buyer.

How would the soft second Lien be paid back?

The soft seconds could sit dormant for a period of 5 years and then be amortized at the current T-bill rate + small % for Primary residential mortgages.
For Investors the soft second placed on the property would immediately be amortized over a period of 10 years at the current t-bill rate + small % for the Government to realize a profit.

Step Two: Since the underlying foreclosure crisis would be averted - financial institutions prior to purchasing MBO's evaluated them based on certain financial criteria considering a certain foreclosure rate.

Simply allow financial institutions to carry the mortgage backed securities on their books at “Mark to Purchase” prices. Any losses or gains would then be realized at the sale or disposition of the assets.

By Cliff ATL @ 09/30/08 10:24:49 PMreport abuse

bailout

America! please stop getting stuff with your credit cards!!! If you can not afford it-stay away!
I am happy, fat cats can not be saved for now.
Most of us leave paycheck-to-paycheck, why do we care, if they lost big buks...

By Mia @ 09/30/08 10:11:42 PMreport abuse

Bank Bailout

I think this should not be a bailout. It should be a loan by the US Taxpayers to these corporations.
The stipulation of tighting these lending practices up. Simply put old school you need 20% down and not even the 80/20 or 90/10/10. NO more PMI. No borrowing more than 80% of the house's value. Even on 2nd mortgage. Houses are like stocks they don't always go up in value.

By BBK @ 09/30/08 07:47:38 PMreport abuse

I'm glad the bail out failed!

I already live below my means. Thanks to God, we can tithe and save and still have food on our table.

The bail out is wrong! WRONG! WRONG!!!

The rest of America, starting with the government, needs to learn to live below their means.

MAY GOD SAVE THE USA!

By Regular Guy @ 09/30/08 06:37:32 PMreport abuse

I'm just plain Tired

of the last week of fear mongers, people who have never taken basic economics classes, and chain e-mails preaching doom. I've told several people to keep their $200 in the bank, it's safe there. NO one is going to disappear with it in the night. I'v e told several that a recession is not a bad thing. When lower and middle class America is spending $2000 on televisions, which they then turn around and pay $59.99 a month to watch, and eat out regularly, as well as drive $50,000 vehicles, I say it is time for a good recession to get some priorities reset.

We complain about crooked commercialism, but what about incompetent consumers! A recession will get things straightened out, and is not the end of the world. Oh, my, we will only be able to go out to eat every couple of months instead of every other night. Big whooop. We might even have to pay off that new vehicle and keep it instead of trading it in on more new car smell. Just wash the car and keep it.

Maybe some one in the family will actually have to learn how to cook. Scary. The more responsible we are, the more stable we make the economy. When we have the money, we spend it on what we really need (lights, heat, clothing, etc) or save it, but we don't waste it. And, we don't spend what we don't have so we can watch the movie at home on a tv as big as a theater screen. That is the financial foundation that makes our US economy great. It has been forgotten for the last 20+ years.

By It's Z @ 09/30/08 06:37:12 PMreport abuse

Re: Alternative to AIG Bailout

Bob - You may want to recheck your math. $85 Billion divided by 200 million people is NOT $425,000.. its $425.

Dont believe chain emails.

By Marty Gusyer @ 09/30/08 03:24:56 PMreport abuse

more stupid people

Bob Pominville wrote that we should not bail out AIG...well bob, it's too late we already did. Secondly your math teacher should be slapped, either get a calculator, or stop smoking rope, your numbers don't come close to adding up. Thirdly if we gave everyone the money you suggest they wouldnt spend it on the things you state, see my other post about stupid people. The real numbers are like this: the current 700 billion figure proposed for the bailout would come to $2,295 per taxpayer...remember the 165 billion stimulus check deal, that was $600 per taxpayer, and all it did was help pay for the oil companies record profits on us. when the government gives us money they have to borrow it from somewhere, as you might know we have about a 10 trillion dollar debt as it is, so its not like we have extra to throw around. even the government has to pay some kind of interest on this money they borrow to give us. I wonder how much in daily interest we would have to pay on 700 billion? ...didn't your mama tell you "there ain't no free lunch?" as someone who pays thier bills, and tries to save some money, i would rather see the economy helped so my 401k doesnt get killed and i can get a decent rate on cd's again...if banks start lending, maybe mortguage rates will come down, and someone will buy the house we have been trying to sell for the last year. I may just have to turn it into a rental for the greedy, stupid, people who got foreclosed on and cant get loans anymore...so they will have a place to live while they wait on thier handouts.

By Dave @ 09/30/08 03:22:37 PMreport abuse

Bail Out

Paulson and Bernechi(sp) preached panic and now can't understand the panic withdrawal of funds. I'm not on their 1st phone list, it might be more prudent to encourage forethought instead of gimmee the taxpayer's money now.

By Ronda Michael @ 09/30/08 03:17:34 PMreport abuse

Great idea.

By Michael Smith @ 09/30/08 03:09:36 PMreport abuse

Bailout dividend debunked

Check it out on Snopes.com the facts and figures in that we Deserve It Dividend e-mail are incorrect.

By sickntiredofu @ 09/30/08 02:46:01 PMreport abuse

Alternative to AIG Bailout

I'm against the $85,000,000,000.00 bailout of AIG.

Instead, I'm in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.
To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18+.
Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up... So divide 200 million adults 18+ into
$85 billon that equals $425,000.00.
My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.

Of course, it would NOT be tax free. So let's assume a tax rate of 30%.
Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000 right back to Uncle Sam.
But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00.
What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage - housing crisis solved.
Repay college loans - what a great boost to new grads.
Put away money for college - it'll be there.
Save in a bank - create money to loan to entrepreneurs.
Buy a new car - create jobs.
Invest in the market - capital drives growth.
Pay for your parent's medical insurance - health care improves.
Enable Deadbeat Dads to come clean - or else.
Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at
Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces.
If we're going to re-distribute wealth let's really do it...instead of trickling out a puny $1000.00( "vote buy" ) economic incentive that is being proposed by one of our candidates for President.
If we're going to do an $85 billion bailout, let's bail out every adult U S Citizen 18+!
As for AIG - liquidate it . Sell off its parts. Let American General go back to being American General. Sell off the real estate. Let the private sector bargain hunters cut it up and clean it up.
Here's my rationale. We deserve it and AIG doesn't.
Sure it's a crazy idea that can "never work."
But can you imagine the Coast-To-Coast Block Party!
How do you spell Economic Boom?
I trust my fellow adult Americans to know how to use the $85 billion We Deserve It Dividend more than I do the geniuses at AIG or in Washington DC .
And remember, the plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.

Ahhh...I feel so much better getting that off my chest.

By Bob Pominville @ 09/30/08 02:28:52 PMreport abuse

Goverment banks

This problem begins with fanny and Freddie. They were commissioned to give government backed loans. The people running fanny and Freddie got greedier and greedier giving more risky loans. Then you had the GOVERNMENT and Special interest groups like ACORN compelling other banks to give out sub-prime loans. So you have the housing market being flooded with buyers. That inflates the value of houses. when it all hits the fan and the house bubble pops and fanny and Freddie go under. Then the insurance companies that insured the loans, i.e. AIG have to pony up, they go under.

The conclusion is the government got in the way of the free market. If you want to blame anyone, blame the congress who caused the problem and who is about to rob us all blind!

By Julian Bouchard @ 09/30/08 01:02:33 PMreport abuse

Recession is natural

Recessions are a natural process of captialism; this however does not remove the fear and angst that we may experience. We can sit down and point the finger at how this recession happend, but it won't change it now, nor will it prevent the next recession we have in the future, which will be caused by some other means. Rarely do we here of a recession caused by "good honest people". It is fun to blame, and easy in the case, but I don't think this is a Clint Eastwood movie with Good guys and Bad guys. It is what it is.

By Marge @ 09/30/08 12:54:27 PMreport abuse

dumb people

This situation was caused by dumb greedy people, not just the investment banker types but mainly the public. the ones who signed up for loans they knew would explode in thier face unless they refinanced or sold the houses they couldnt afford, the greedy investors buying second homes in bubble markets hoping to get rich, even the guy that bought a new $30,000 car instead of a used one he could afford. these are the same stupid, greedy people who are on these boards wanting big stimulus checks. Face it these people wouldnt pay down a mortguage or put money in the bank, they would buy flat screens, beer, and nascar tickets...sortta like when they gave Katrina victims $1000 walmart giftcards and then when they looked at what these poor victims bought, they found some bought champagne, jewelry and sexy nighties for thier girlfriends. people seldom do whats good for them with a big windfall, and frivilous spending and bad judgement is what got us here. So for all you people wanting the government to send you money insted of the frozen credit markets..Shut up and go pay some bills, and stop looking for a handout.

By Dave @ 09/30/08 12:28:49 PMreport abuse

Bail-Out

You got to love Congress. They work all weekend to bail out a bunch of crooks and thieves while telling us our future depends on it. Yet, in the last 25 years we haven't had any viable energy policy. Congress has shown they don't care about the people who elect them, they worry about the fat cats on Wall Street who contribute mightily to their campaigns.

By cruzin @ 09/30/08 12:24:19 PMreport abuse

A SOLUTION TO MAKE ALL HAPPY

The government give all taxpayer 20,000. If you feel the big multi million dollar big wigs on walssteet deserve it send it back.

By Bill @ 09/30/08 11:51:45 AMreport abuse

Live on less?

How about letting all the greedy government people, loan officers, brokers, builders, realtors, CEO's and Board of Directors of these large companies that made millions pay "penalty” taxes instead of sticking it to the people who lived with-in their means. I’m tired of paying for other’s parties and yachts! I’m 53 I have worked my whole life to pay off my mortgage and I have lost $209,000 in my 401K/IRA since 2003. I guess I will have the “opportunity” to work so this debt can be paid, while those that are responsible sail off into the sunset with a smile on their face. Capitalism without a conscience = Ivy League America

By Leah Green @ 09/30/08 11:24:23 AMreport abuse

SOLUTION

All I can say is FAIRTAX. I am very proud of Amercians for speaking up. Obviously some of the politicians are listening. SPEAK UP AGAIN...send emails, letter and phone calls for FAIRTAX. Now there is a bailout!

By PG @ 09/30/08 10:56:42 AMreport abuse

vote to cure the problem in washington

One way to cure the problem in washington! Vote any incumbent out and let a new bunch of idiots try their hand at ruining the country.

I love my country-but fear the government

By ezrydr @ 09/30/08 09:48:15 AMreport abuse

Lower What

Lower our standard of living while congress spends billions on a war to free the same people who charge us astronomical prices for gas? What's wrong with this picture!

By PJ @ 09/30/08 07:06:50 AMreport abuse

Reinstate the draft

Sorry, I was thinking about withdrawal from 401k, but George still needs to be drafted!

By Grandpa Gene @ 09/30/08 02:44:14 AMreport abuse

I propose that Mr. George Marek be drafted as the next Senator from the Great State of Georgia.
He at least make some sense to me and while your at it George, How about if we do away with the taxes and penalty if someone pays off there home mortgage on primary home that might help Joe Peanut picker out a little.

By Grandpa Gene @ 09/30/08 02:35:26 AMreport abuse

Trust the American People with Their Money

Why not give the $700B to the American people to deposit in the banks as time deposits that the banks can then lend out?

How about this idea for calming the current financial liquidity crisis?

Instead of handing money over to financial institutions directly, return the money to the American people in a manner similar to the recent income tax prebates.

However, this time the money is required to be put in the form of time deposits in banks, much like CDs.

This way the money enriches the American people who are required to keep the money on deposit in banks for a proscribed term. The minimum term can be set to provide the time needed to attain market stability and minimize inflationary affects.

The banks in turn enjoy increased liquidity and are able to lend the deposits out for commerce and industry.

* The banks quickly receive cash to fuel much needed liquidity,

* The banks keep and manage their bad loans thus avoiding all the government bureaucracy otherwise needed to manage all the distressed property, etc.,

* Every American will hold a note that they can redeem for their own enrichment someday,

* Business prospers and Americans keep their money.

Make the deposits tax free and require the banks to pay interest, also tax free.

This could be done quickly using direct deposit for most tax payers. Others can receive a certificate by mail that they can take to the bank of their choice and deposit.

Call it the Finance American Savings Trust Account or F.A.S.T. Account for short.

It needs to happen fast and should be appreciated by the American people more than the current bailout bill.

By George Marek @ 09/30/08 01:12:27 AMreport abuse

What about those...

Who have said no to excessive materialism and living beyond their means. Those who have sacrificed and WORKED to live a debt free life. Is there any opportunity in this mess for us? Needless to say, I have little sympathy for those who are getting stung from trying to "keep up with the Jones" and living excessively on borrowed money. Why bailout greed and poor decision making. Save the banking system some how, but let the CEOs and stupid homeowners who agreed to idiotic loans go down.

By Todd @ 09/29/08 10:48:05 PMreport abuse

deregulation

Until they bring back regulation forget the bailout.
The CEO of Washington Mutual worked 17 days until WAMU went belly up and then he WALKED AWAY WITH $20 MILLION. $20 million for 17 days work, not bad.

By Lou @ 09/29/08 09:55:51 PMreport abuse

I think we sould give the 700 billion out, but give it to the tax payers to pay off thier loans then after we pay our loans it is in the hands of the institutions and we paid off our loans.

By jeff @ 09/29/08 09:18:17 PMreport abuse

The only people to blame are..

The borrowers who signed the loan payments and then failed to make those payments

By Greg @ 09/29/08 09:09:28 PMreport abuse

free market

"when politicians interfere with free markets." Baloney! The free market greed running wild caused this, while nobody was watching the chicken coop.

By mike @ 09/29/08 08:11:46 PMreport abuse

Oil

The price of oil has drooped $10 a barrel since the bailout failed. This will do me more good than the bail out.
When i can find some that is.

By me @ 09/29/08 07:55:41 PMreport abuse

Easier on some than others

What about those of us who already struggle everyday??? This is horrible news for us!!

By Barb McMullen @ 09/29/08 07:09:39 PMreport abuse

Thanks for the hopeful update. I am really upset at our leaders in Congress, since I believe the first draft should have included language to work out better bankruptcy policies for homeowners facing foreclosures, also, language included stating that the high powered companies responsible for this crisis should be financially liable by assisting with bailout funds. Congress, stop the bickering and sensitivity - people's stocks are falling by the minute,pension funds are at stake, more jobs may be lost, etc. Stop worrying about re-election, get a bill passed favorable towards the taxpayers.

By nparks @ 09/29/08 04:01:36 PMreport abuse

Sometimes the forest needs a fire.

The bailout failed because Americans said they didn't want it. They instinctively know that the pronouncements of doom from Washington and New York are just a smokescreen to cover the fact that these banks are walking dead. They HAVE to fail if this system is ever to recover and grow again. Strong medicine? Pain on main street? Trillions of dollars lost? You bet, and that is exactly what happens when politicians interfere with free markets.

By Tom @ 09/29/08 04:00:40 PMreport abuse

reality check

No, it's not the great depression at all. This could be the GREATER DEPRESSION.

Not even counting the crap-storm of recent weeks, today's local headlines from the AJC read: Bill Heard closes 14 dealerships, Creative Loafing filed for bankruptcy, some Georgia banks at higher risk (for defaulting), Cobb Energy ailing, bankruptcy filings surge in georgia... and even if we could find gas, paying for it is becoming out of reach!

Clark, we know you have stock left in our great country (as we all do), but it's time to start looking for a lifeboat instead of going down with the ship like you did for Wachovia.

P.S. I sincerely hope I'm wrong, but I'd rather be ready.

By Al @ 09/29/08 03:58:25 PMreport abuse

bailout failed

Thank you for easing my fears. Do you think Mutual funds are still safe?

By debby durica @ 09/29/08 03:11:45 PMreport abuse

Listen Live:

Clark On Demand:

Clark's Advice:

Consumer Action Center:

Quick Links:

Clark Media:

Call The Show:

Sep 29, 2008 -- Bailout vote fails, so what's next?

What others are saying