The bailout bill needs FULL AND COMPLETE VETTING by Congress
An important topic that has not been covered is precisely what assets the government is going to buy using the $700 billion bailout. "Mortgage-based assets" (as described in the proposed bill) is an extremely broad category. And there are some such securities out there that no one should touch with a ten foot pole (e.g., Interest Only Collateralized Mortgage Obligations, Inverse IO CMOs). If you are interested, a good source for information on these very esoteric securities is Frank Partnoy, who wrote "Fiasco" and "Infectious Greed." As you will learn if you start looking into the securities that our government plans to purchase, very few individuals actually understand how these products work. And the risks involved with some classes of "mortgage-based assets" are so extreme that FINRA (the securities industry's self-regulating organization) requires that they only be traded by sophisticated investors with a high-risk profile. Does that sound like the government to you? Another seemingly ignored bailout issue is that the banks are not being asked to give anything up for the government's largesse. We are simply handing the banks billions of dollars, with no restrictions, no reprimands, and no requirements. Given that the banks went into their decisions to buy risky securities with their eyes open, this is like giving a drunk driver the keys to the police car. It is simply inconceivable that the banks will change their behavior after the bailout; rather, the bailout gives them an incentive to do take the same actions in the future. Bank executives, meanwhile, get to keep their ill-gotten gains, with future bonuses courtesy of the American taxpayer. It is truly Kafkaesque. Finally, someone needs to inquire: Where is the money to pay for this going to come from? We already have the largest deficit in history. And taxpayers do not want to foot the bill to pay for bank executives' lifestyle. Not to mention that the cost per capita of the bailout is $2,000 a head -- which, ironically, I believe is the exact same amount of credit card debt that the average American has. Please do not allow the administration to railroad through a bailout bill that is BAD for taxpayers and only benefits banks!!!