Citing Administration’s Failure and Unwillingness to use funds to Prevent Foreclosures, as Congress Intended

Washington D.C. (November 17, 2008) – Representative Dennis Kucinich (D-OH) today sent a letter to Representative Barney Frank, Chairman of the House Financial Services Committee, recommending that Congress inform the White House that it will not authorize the second $350 billion tranche of the bailout funds to the Treasury Department. The Financial Services Committee is scheduled to hold a hearing tomorrow examining oversight of the implementation of the bailout and of government lending and insurance facilities.

I've never run an investment bank, but obviously I'm a whole lot smarter than former Goldman Sachs CEO Hank Paulson, because I figured this out as soon as he proposed it. So can I be the Treasury Secretary now?

A change in plans

Treasury Secretary Henry M. Paulson Jr. confirmed Wednesday what was already becoming apparent -- that the government will not use any of its $700 billion financial-industry bailout fund to buy toxic assets from banks and other institutions.

Those purchases were the basis of the Troubled Asset Relief Program that Congress approved last month. The argument was that removing distressed assets such as mortgage-backed securities from the books of those companies would ease fears about their solvency, free up capital, encourage lending between companies and thaw a frozen credit market.

Paulson Says Troubled Assets Will Not Be Purchased
Paulson: bailout program won't purchase troubled assets; focus remains on financial markets
By MARTIN CRUTSINGER | ABCNews.com | November 12, 2008

Treasury Secretary Henry Paulson said Wednesday the $700 billion government rescue program will not be used to purchase troubled assets as originally planned.

Paulson said the administration will continue to use $250 billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending.

He announced a new goal for the program to support financial markets, which supply consumer credit in such areas as credit card debt, auto loans and student loans.

From Dennis Kucinich:

WASHINGTON, D.C. (November 6, 2008) — On Friday, November 14, 2008, at 10:00 a.m. in Rayburn House Office Building, Room 2154, the Subcommittee will hold a hearing entitled, “Is Treasury Using Bailout Funds to Increase Foreclosure Prevention, as Congress Intended?” This will be the Subcommittee’s sixth hearing in the 110th Congress examining the foreclosure crisis and its solutions.

By Dave Lindorff

With the polls continuing to show Barack Obama holding a steady or
even growing lead heading into Election Day, especially in the key
swing states of Pennsylvania, Ohio, Florida, Colorado, New Hampshire
and Virginia, and with Democratic challengers looking strong in at
least 10 Senate races and dozens of open-seat or Republican-held House
races, it’s looking like this will be a big win for Democrats, both in
the presidential and the Congressional races.

Hopefully one thing such an across-the-boards win will lead to
would be a withering away of the self-destructive conspiracy-theory
paranoia that has gripped much of the Left over the last eight years.

Every Crisis Becomes a Carnival of Opportunism

October 27, 2008
Robert Higgs

As the financial crisis deepens and widens, a horde of supplicants is converging on the Treasury. Each of them has a story to tell, and although the details differ from one upscale beggar to the next, each one’s tale of woe shares a common theme: help me or systemic risk will bring down the whole economy, with painful losses and injuries to one and all.

Until recently, most people had never heard of systemic risk. It was a term of art for economists and financial theorists. Now every lobbyist in Washington knows how to link his special pleading to the claim that unless he extracts his own pound of flesh from the taxpayer, the entire world will have hell to pay. This not-so-thinly-veiled threat verges on extortion.

Despite Turmoil, Wall Street Bonuses Survive
The Financial Crisis May Yield Better-Than-Expected Bonuses on Wall Street
By Liz Moyer | ABCNews.com

Chaos in the financial system may translate into better than expected bonuses for Wall Street.

Yes, you read right. While the outlook is pretty grim, at least compared to last year's $33.2 billion bonanza, compensation consultants expect a 30% to 50% decline in payouts this year, but billions will still flow.

AIG Has Used Much of Its $123 Billion Bailout Loan
By Carol D. Leonnig | WaPo.com

The troubled insurance giant American International Group already has consumed three-quarters of a federal $123 billion rescue loan, a little more than a month after the government stepped in to save the company from bankruptcy.

AIG has borrowed $90.3 billion from the Federal Reserve's credit line as of yesterday, the bulk of it to pay off bad bets the company made in guaranteeing other firms' risky mortgage investments. That's up from roughly $83 billion AIG had borrowed a week ago, and the $68 billion level it reached a week before that. The news comes as the company's new chief executive warned Wednesday that the government's financial lifeline may not be enough to keep AIG afloat.

The Rescue Plan: What It Will and Won't Do
Experts Say New Rescue Plan May Encourage Lending But Won't Stop Recession
By Alice Gomstyn | ABC NEWS Business Unit | Oct. 15, 2008

When the Bush administration announced its new version of the $700 billion financial rescue plan first approved by Congress earlier this month, many observers cheered and optimism helped drive U.S. stocks to record gains.

Now, as the dust settles, economists and other experts are analyzing how the plan will help the U.S. economy -- and how it won't.