| | ROBERT BOROSAGE
Gut Check Time: Will Congress Stand up to Wall Street? | | It's gut check time. The attempt by Treasury Secretary Paulson to put a gun to the head of Congress and terrify them into forking over a $700 billion blank check to the Bush administration in 48 hours has failed. Now what? Most Americans would just as soon the Masters of the Universe were allowed to sink in their own folly. They had the party; let them clean up the mess. But, looking at sinking housing values and shaken retirement accounts, most Americans know something has to get done. |  | | WHAT DO YOU THINK? Progressives in Congress are pushing back against the Bush administration's bailout proposal. Do you think they're right to fight for an alternative, even if it takes more time, or is it smarter to compromise to get something done quickly? Sound off in the comment section of our "Bankers Run Amok" page. | | | | | | | Wall Street Pay Targeted | | nytimes.com — The stratospheric pay packages of Wall Street executives have become a lightning rod issue as Congress shapes a $700 billion bailout for financial firms. The moves in Washington mirror the popular outcry — in constituent e-mail messages and postings in the blogosphere — over the prospect of Wall Street’s tarnished titans walking away with tens of millions of dollars a year while taxpayers pick up the bill. But Wall Street, its lobbyists and trade groups are waging a feverish lobbying campaign to try to fight compensation curbs. Pay restrictions, they say, would sap incentives to hard work and innovation, and hurt the financial sector and the American economy. | | | Hedge Funds Take Wall Street | | politico.com — The consensus in Washington is that the Wall Street meltdown means an inevitable resurgence of regulatory authority over the financial sector. But what it may actually portend is just the opposite: the emergence of an almost entirely unregulated financial sector that replaces investment banks that were more rigorously regulated. It has now become very clear to market insiders that the $2.1 trillion hedge fund industry is larger in terms of capital than the remnants of the investment banking sector. And in their understandable focus on the regulatory implications of the $700 billion bailout pending in Congress, policymakers may be missing a far more important fact: The very hedge funds that helped destroy the investment banking sector are the biggest winners in the financial world. | | | Fed Deregulates, Again | | ap.google.com — The Federal Reserve made it easier Monday for private equity firms and other types of investors to take minority stakes in banks, a move that could usher new capital infusions to cash-hungry banks and help them cope with credit stresses. The Fed issued policy guidance that said it will allow investors under certain circumstances to take up to a 33 percent equity stake in a bank without running into regulatory hurdles. The Fed's guidance would apply to all types of potential investors — such as private equity firms, hedge funds, sovereign wealth funds — that might be interested in taking a minority stake in a bank. | | | Congress Scrutinizes Bailout | | guardian.co.uk — The Bush administration's proposed $700bn bailout of cash-strapped Wall Street banks received a rancorous hearing in Congress as lawmakers demand safeguards, extra details and more time to scrutinize the way the Treasury intends to spend the money. Under questioning by the senate banking committee on Capitol Hill, treasury secretary Henry Paulson clashed repeatedly with questioners as he admitted that he only had a rough idea of how his department would price and purchase troubled mortgage-backed securities. Paulson, appearing alongside the Federal Reserve's chairman Ben Bernanke, resisted calls to crack own on excessive Wall Street pay packages but gave ground on providing aid to homeowners and on allowing an independent board to scrutinize the planned fund's investments. | | | Alternatives to Bailout Emerge | | washingtonpost.com — To hear Henry M. Paulson Jr. and Ben S. Bernanke tell it, there is only one plan to save the economy — use $700 billion in taxpayer money to take the worst of Wall Street's assets off its books. But leading economists and financial analysts argue that there are a host of alternatives that would reduce taxpayers' liabilities and perhaps more effectively address the urgent crisis in financial markets. Although these experts concede that the clock is ticking, they say other approaches have been dismissed too quickly. While the government's plan is built around buying troubled assets, other options offer sharply different visions. | | | Affordable-Housing Goals Scaled Back | | washingtonpost.com — The federal regulator overseeing Fannie Mae and Freddie Mac said yesterday that the firms would play a smaller role this year in supporting affordable housing across the country than they have in the past. The companies missed government-mandated affordable-housing goals in 2007, and "the miss will be larger in 2008," James B. Lockhart III, director of the Federal Housing Finance Agency, told the Senate Banking Committee. The government seizure of Fannie Mae and Freddie Mac left many housing advocates concerned about the fate of the housing trust fund, which Congress set up this year to assist the poor in buying and renting homes. The trust fund was to be supported by the mortgage giants. | | | More Americans Struggle With Housing Costs | | usatoday.com — A growing number of Americans are struggling to pay for housing, despite a steep drop in home prices. Last year, 38 percent of homeowners with mortgages spent 30% or more of their before-tax income on housing — the threshold the government defines as unaffordable, according to an analysis of Census data. And 15 percent of homeowners without mortgages and half of all renters had trouble meeting housing costs, the analysis found. | | | Bush Chides Russia in U.N. Speech | | news.bbc.co.uk — George W. Bush has accused Russia of violating the UN's charter by invading Georgia, in his final speech to the world body as U.S. president. Mr Bush urged world leaders gathered at UN in New York to "stand united in our support of the people of Georgia". In a wide-ranging speech, Mr Bush also urged the international community to continue the fight against terrorism. He also gave an assurance that the U.S. was taking decisive action over the current global economic crisis. | | | Democrats to Let Drilling Ban Expire | | hosted.ap.org — Democrats have decided to allow a quarter-century ban on drilling for oil off the Atlantic and Pacific coasts to expire next week, conceding defeat in a months-long battle with the White House and Republicans set off by $4 a gallon gasoline prices this summer. House Appropriations Committee Chairman David Obey, D-Wis., told reporters Tuesday that a provision continuing the moratorium will be dropped this year from a stopgap spending bill to keep the government running after Congress recesses for the election. Republicans have made lifting the ban a key campaign issue after gasoline prices spiked this summer and public opinion turned in favor of more drilling. President Bush lifted an executive ban on offshore drilling in July. | | | FDA Checks for Chinese Milk Products | | reuters.com — The Food and Drug Administration has expanded its checks for possible melamine-contaminated food products from China to include candy and other items, a spokeswoman said. Chinese authorities are trying to roll back exports of milk products contaminated with the industrial chemical melamine. Infant formula tainted with the chemical has put nearly 13,000 Chinese babies into the hospital with painful kidney stones. Four have died. Melamine, which can be used to cheat quality checks by mimicking food protein, has been found in candy, buns and carton milk sold to other countries and regions, unleashing fear in markets already shaken by a string of "made-in-China" scandals last year. | | | | | | | SARAH ANDERSON AND SAM PIZZIGATI
The Bailout and CEO Pay: What’s ‘Excessive’? | | One bailout proposal would give Treasury Secretary Henry Paulson, who as a Wall Street CEO received stock worth more than $500 million, power to cut "inappropriate" pay for executives of bailed-out companies. Is this the person we want defining what level of executive pay qualifies as “inappropriate”? | | WILLIAM GREIDER
Goldman Sachs Socialism | | thenation.com — Wall Street put a gun to the head of the politicians and said, Give us the money — right now — or take the blame for whatever follows. The audacity of Treasury Secretary Henry Paulson's bailout proposal is reflected in what it refuses to say: no explanations of how the bailout will work, no demands on the bankers in exchange for the public's money. | | ANDREW ROSS SORKIN
A Financial PATRIOT Act | | iht.com — With the passage of the proposed bailout package, the Treasury secretary — whoever that may be in a few months — would be vested with perhaps the most incredible powers ever bestowed on one person over the economic and financial life of the United States. It is the financial equivalent of the Patriot Act, after 9/11. | | THE NEW YORK TIMES
An Inadequate Case for the Bailout | | nytimes.com — If taxpayers do not share in the potential profits from a bailout, someone else will. The Federal Reserve announced that it is relaxing rules that require investors who take large stakes in banks to submit to longstanding regulations on transparency and managerial control. Relaxing the rules invites more of the same type of opacity and risk-taking into banking that caused many of today’s financial problems. Taxpayers are being asked to buy up banks’ junky assets, with little expectation of return. At the same time, private equity firms are being invited to make what are likely to be highly profitable investments in the same banks. | | NOURIEL ROUBINI
The Shadow Banking System is Unravelling | | ft.com — The first stage was the collapse of the entire conduits system once investors realized the toxicity of its investments and its very short-term funding seized up. The next step was the run on the big US broker-dealers: Bear Stearns, Lehman Brothers, Merrill Lynch, Morgan Stanley, and Goldman Sachs. The third stage was the collapse of other leveraged institutions that were both illiquid and most likely insolvent given their reckless lending: Fannie Mae and Freddie Mac, AIG and more than 300 mortgage lenders. The fourth stage was panic in the money markets. The next stage will be a run on thousands of highly leveraged hedge funds. | | JASON SNYDER
The Next Dominos to Fall | | open.salon.com — The next component of the financial system to go into complete meltdown mode will likely be hedge funds. This will matter to you even if you don't know what a hedge fund is. | | ROBERT SCHEER
A Fox to Protect the Henhouse? | | huffingtonpost.com — Does it really matter which party is in charge when it comes to bailing out the Wall Street hustlers whose shenanigans have bankrupted so many ordinary folks? Not if the Democrats roll over and cede power to the former head of Goldman Sachs, the investment bank at the center of our economic meltdown. | | ROBERT B. REICH
The Bailout To End All Bailouts | | tpmcafe.talkingpointsmemo.com — Bailing out Wall Street's bad debts when millions more Americans can't pay their bills is like bailing out a rowboat springing more leaks while the ocean is rising. Many of the average taxpayers being asked to take on Wall Street's bad loans are the same people whose incomes are dropping, which means they're struggling to pay their debts and potentially creating even more bad loans. | | DEAN BAKER
Wall Street Free Traders Become Wall Street Protectionists | | tpmcafe.talkingpointsmemo.com — As Wall Street free traders, these folks argued that we should get the government out of the economy. They wanted to remove the trade barriers that obstructed the free flow of goods and services (especially goods). If this meant that workers had to lose their jobs, so be it. Because they were nice guys, they promised benefits like job training and wage insurance. But now the Wall Street crew no longer wants to leave things to the market. | | ROB SHAPIRO AND SIMON ROSENBERG
Keep People in Their Homes | | ndnblog.org — We need a broad plan that will actually work to restore financial and economic stability. But those who have had little or no hand in it — America's taxpayers and most Members of Congress — should not be steamrolled into giving a blank check to those in the Administration who failed to head off this crisis. There are three primary reasons this plan is the wrong solution to the problem. | | | | | | | | | BILL SCHER
Coastal Drilling Ban Is Dead: A Post-Mortem | | Congressional leaders have backed down to conservatives and will let the current federal ban on most coastal drilling to completely expire. What does this mean for our energy policy? What does this say about the congressional leadership and the progressive movement? | | RICK PERLSTEIN
Masters of the Universe Fight Back: The Race Angle | | Let me take you through the sewer our right-wing friends are navigating to try to win this election. Specifically, this: the right-wing crusade to blame the Negroes for the financial meltdown continues apace. And by now, it's getting into Protocols of the Elders of Zion territory. | | | Plenty of Conservatives Enraged by Wall Street Giveaway | | One of the right-wing think tanks I monitor is the Center of the American Experiment (yes, that's the correct name). Here's what they have to say about the bailout. | | TERRANCE HEATH
Opportunity "Jacked" | | Unless Congress stands up to Henry Paulson and Wall Street, Americans are — in the vernacular of the street — about to get "jacked." | | DAVID SIROTA
Bank Lobbyists Laugh At Congressional Dems | | In a story about Banking Committee Chairman Sen. Chris Dodd's admirable efforts to amend bankruptcy laws and put limits on executive compensation (ie. what should be the absolute minimum in any bailout), Roll Call reports that the financial industry is openly laughing at him and fellow Democrats. | | | Obama's Bailout Statement: Not a Home Run, But a Solid Double | | Let's see if Barack Obama backs up his latest statement on the bailout with a demand for airtight legislative language. | | | | | | | |  | Bush's Economic Delusion
When President Bush talks about how strong the economy is, most Americans think he's out to lunch.
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