Post reader comments from the Wapo article:

For the most part they agree with comments here.

1. Bear Stearns paid its executives $2.5 billion in bonuses in 2006. Is anyone asking on what basis these bonuses were issued considering that their financial statements and particularly the balance sheet was all bogus? Is anyone asking for those bonuses to be paid back since it was essentially fraudulent?

2. On what basis did the Fed provide a “put option” to JP Morgan? Note that although they claim it was a non-recourse loan it was not a loan since what gets paid back is the net difference on liquidation of the Bear Stearns toxic assets that the Fed has taken on. It is more accurately a put option.

3. Since when is the Fed in the business of providing handouts of taxpayer funds to shareholders and bondholders of specific private corporations? On what basis do they select private investors for such taxpayer largesse?

4. What was the Fed doing when housing prices were inflating and securitizations of all the mortagages were taking place at break-neck pace with no regard for classic prudent lending standards? Ah! Chairman Greenspan was extolling the virtues of financial innovation in managing and dispersing risk.

5. In what way would the financial system have imploded if Bear Stearns filed Chapter 11? Sure, Bear shareholders would have got zero and bond holders and other creditors would have received the liquidation value of Bear assets through a bankruptcy court – which is the proper way to handle such matters legally.

6. What is the rationale for providing financial support to speculators and flippers in the housing market?

7. Should the current policy be extended to all speculators in the US? Can middle class Americans that speculate also avail themselves of taxpayer funds when their speculations have adverse results?

8. Why were Enron style accounting allowed for Wall Street firms to enable them to book profits on derivatives on establishing a position? Yes, we know – it was all about those bonuses. Let’s not forget that in 2006 Wall Street paid out several hundred billion in bonuses to bankers and hedge fund managers.

9. What is buried in the opaque financial statements of banks, insurance companies and hedge funds?

10. Why are firms like Bear Stearns, Morgan Stanley, JP Morgan allowed leverage of 30:1 if their failure would lead to a systemic collapse? With that kind of leverage all that is required is a 3% fall in the value of assets for all equity capital in the business to be wiped out.

Will any of our honorable senators and representatives ask these questions? No way! They are all in the same payola racket of fleecing middle class Americans. At the end the blame rests with the fleeced citizenry since they don’t hold anyone of these charlatans accountable.

1) “billions of dollars in tax rebates to the slumping home-building industry while offering little to homeowners threatened with foreclosure.”

2) “rejects the most ambitious plans for aiding distressed homeowners, including a Democratic proposal to permit bankruptcy judges to modify the mortgage on a person’s primary residence.”

3) “tax breaks worth up to $7,000 for home buyers who purchase foreclosed properties” (mostly rich speculators at this point).

4) “streamline the Federal Housing Administration, one of the top priorities of the Bush administration.” (Can you say deregulation!).

5) “$100 million to expand foreclosure counseling services” (Must be owned by Gooper businessmen!).

6) “Home builders and other businesses suffering losses in the flagging economy, meanwhile, would get the lion’s share of federal spending in the bill: $6 billion in tax rebates.” (More Gooper welfare!).

7) “Senate Majority Leader Harry M. Reid (D-Nev.) lauded the agreement as “a robust package” that is “good news for the American people.” (Hanoi Harry needs to be put out to pasture on his precious piece of dirt in Southern Nevada. He is pathetic).

What I think this legislation proposes is a kind of taxpayers’ guarantee. That is, some mechanism by which a lender reports to a federal agency, with proof that WW mortgages have gone into default and the lender took all the usual and customary steps to prevent or respond to it. The lender gives the documents evidencing the consumers’ debt to the feds and receives cash or its equivalent.

That simplifies a process riven with details that should exist to protect the feds and taxpayers’ money. Like an agreed set of documents and an agreed formula for reducing a mortgage’s multi-year stream of payments into a lump of ready cash. That’s logical, since it’s just another form of government contracting and would involve tens of billions of taxpayer dollars. We all know how well the GSA and DoD handle that.

The fed now has a lot less cash and piles of loan documents on its desk, IOU’s that haven’t been paid. What happens? Collection, with Blackwater mercenary wannabes sitting out front in a dark, tinted-window SUV? That would defeat a major purpose of the bailout. Or a Pythonesque, “Never mind, sorry about your job/family/marriage/health”? That’s one of those pesky details we better have an answer to before Congress gives us one.

We really are fighting the same battles, with the added twist of almost real time computer surveillance [this comment will be available via google in about ten minutes] and – unlike the Europeans and those living in most other developed states – no ability to get at, verify, correct or limit the use of that data. Because to do so would limit the Fat Cats’ (cable, search engines, financiers) ability to profit from our data. Can’t have that. Nope, can’t have that.

If they refinance at the lower amount – presumably requiring them to forgive and forego collecting any loss from the write down – they get insurance that says if that loan goes bad, the fed will cough up and pay for their entire loss. Worth considering. Puts a portion of the loss on the lenders, where it belongs.

eofh, only if you have time or the interest, I am interested in the insurance side of this. My fear is that most of the the insurance claims are worthless, which means borrowers were defrauded on the premiums they paid. Pardon my ignorance, but it sounds more fair to me if the taxpayers do not start paying until we’re 100% sure the insurance is tapped out.

OT, (only if your time and energy allow) given your detailed knowledge of this industry, have you thought about hiring yourself out to FDL to post on this? I have no idea if Jane is looking, but you understand this community and this subject. Or, Jane and emptywheel might appreciate an editor for posts on this subject. Again, I’m getting way way ahead of myself, because I have no crystal ball into what Jane and ew want or need.

http://www.slate.com/features/…..Memos.html

Wall Street wants the taxpayers to insulate them from the consequences of their own greed. The GOP and the Vichy Dems want this, because it means more contributions from Wall Street.

As a very short term communications goal, spotlighting Wall Street socialism for the richest one percent, may be the best place to unify progressives along with the rest of the country. It’s where Wall Street is so exposed, financially and wrt “the discipline of the markets.”

All of this sounds so familiar. Where else can we find oligarchs who don’t want to take responsibility in any meaningful way? Why, how about the White House? Our Preznit believes that taking responsibility means a pat on the back and a promotion. His idea of the balance of powers is where the rich get all the benefits, and the poor get all the consequences. The idea of risk-free capitalism appeals to his inner sense of greed. The “discipline of the markets” is anathema to him.

Bob in HI