The Eternal Recurrence of the Bailout Bill

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The New York Times reports:

Senate leaders scheduled a Wednesday vote on a $700 billion financial bailout package after accepting tax breaks and a higher limit for insured bank deposits in a bid to win House approval and send legislation to President Bush by the end of the week.

Top lawmakers said the Senate proposal, worked out after a day of behind the scenes maneuvering, would include tax breaks for businesses and alternative energy and higher government insurance for bank deposits.

Two responses:

1. What does alternative energy have to do with any of this?

2. "A higher limit for insured bank deposits"? Apparently, the Senate learned nothing from the S&L debacle. But hey, if you're already creating moral hazards, why stop?

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  1. At least they left off the provision to provide $30 million of taxpayer money to support the perverted arts.

  2. I prefer to call it a “Takeover”

  3. 1. What does alternative energy have to do with any of this?

    It’s for the Polar Bears, Dave. Jeesh!

    Sometimes I wonder where your head really is when you are reading your own ‘blog.

    Side note: Thank goodness my return to the Beltway has prevented the Congress from doing anything crazy, or anything at all. Now we have corporate tax reduction on the table!

    Yes, my work on this Earth is not done . . .

  4. Didn’t you get the memo? The bailout of mal-ivested hedge funds, investment banks, and foreign capital is dead in the water. They decided the right thing to do is rescue everyones jobs and savings instead.

  5. What the heck does a higher FDIC insurance limit have to do with anything? It sure doesn’t address the fundamental problems with the bailout.

    The fundamental problems, of course, are:
    1). Who pays for this mess?
    2). How do we keep this from happening again?

  6. If those who voted against it before don’t do so again, they are crazy. This is the same bill.

  7. Epi,

    They can say they voted against it before they voted for it, thus distancing themselves from Sen. Kerry.

    Bramblyspam,

    I suspect the FDIC thing is confusion with HFCS, a clever ploy to disguise this thing as a farm bill.

  8. What does alternative energy have to do with any of this?

    It’s all about compromise, and bipartisan consensus. And bribery.

    My ass is starting to hurt.

  9. My ass is starting to hurt.

    I agree. If Congress is going to do this to us so brutally, can they at least do us the courtesy of adding a “reach-around” provision?

  10. What does alternative energy have to do with any of this?

    Silly rabbit. Oil companies are evil. They live on Wall Street?. We are “addicted” to their product. They force us to buy it. This extorted cash would be better spent on Main Street?, where The American People are desperate and look to Congress for salvation. Windmills will deliver this salvation. Also chicken poop and french-fry grease.*

    * Henceforth to be known as freedom-fry grease.

  11. What the heck does a higher FDIC insurance limit have to do with anything?

    Increasing the limit increases depositor confidence with the banks. This would allow the banks to retain more capital than they are now.

    Of course, the moral hazard question is still in play, but this is better than a whole-hog bailout.

  12. The FDIC provision is there to prevent runs on commercial banks by panicked account holders. It really doesn’t do much except reassure Nervous Nellies. I for one certainly wouldn’t waste $250K in a freaking savings account, when some very good buying opportunities are bound to come out of this market, but to each his own, I guess…

  13. Feed Me…polar bears.

  14. /facepalm
    /knew this was coming
    /I need more lube

  15. 1. What does alternative energy have to do with any of this?

    It’s all very clear to me. The alternative energy they’re talking about is the heat that will be generated by directly converting all those dollars they just printed up, by burning them instead. This will then be used to heat the Senate steam room.

    The Senate figures it will be just about as effective as a bailout, so they might as well get some shweaty balls out of the deal.

  16. I think truer words have never been spoken than Lewis Black’s observation of how our government works:

    Republican: “I have a really bad idea!”

    Democrat: “And I can make it Shittier!!!”

  17. The fundamental problems, of course, are:
    1). Who pays for this mess?
    2). How do we keep this from happening again?

    Ideally, the lenders/investors who gambled on home prices increasing enough to cover up shoody lending practices “pay for this mass”. That means no fucking bailout.

    After they are done selling the Malibu beach house, and Manhattan 3000 sq ft apartment, other investors will hopefully learn from their dumbass mistakes.

    Make no mistake though, financial bubbles will happen again and those who follow the herd in pursuit of easy profits will get burned again.

  18. “I’m gonna fuck you in the ass without a condom.”

    “No way!”

    “Well, how about if I give you a lollipop afterwards?”

    “OK.”

  19. The FDIC coverage increase is something that gets proposed fairly frequently. It’s been at $100K for most deposits for quite a while, with no adjustment for inflation. I’m not advocating the bailout or an increase in FDIC coverage, but I assume this is being done to reduce any chance of a run on deposits. Not that that many people have more than $100K at any given bank.

    I recall that IRAs and certain retirement accounts are insured up to $250K, too.

  20. FOOL! without enough liquidity I will never get my polar bear.

  21. The FDIC started, IIRC, in 1933. $100,000.00 1933 dollars would be about $1,585,796.67 2007 dollars, according to a widely used inflation calculator. Gee, the Fed has been SOO responsible over the decades, eh?

  22. What the heck does a higher FDIC insurance limit have to do with anything?

    Increasing the limit increases depositor confidence with the banks. This would allow the banks to retain more capital than they are now.

    Why would that make any difference? The people I know with lots of cash spread it over enough banks so all their accounts are fully insured.

  23. The American Government: No idea is terrible enough not to vote on multiple times.

  24. Call your Senators today, then call some friends to have them call their Senators.

    The good news is that they need 60 votes to pass it in the Senate.

  25. You can google up lots of reasonable arguments for increasing the FDIC limit. And it doesn’t have the moral hazard issues. These accounts aren’t highly leveraged, risky investments.

    It encourages people to keep their cash where banks can use it. It improves liquidity in the system. These are all consistent with the goals of the bailout.

    Small businesses have bank accounts too. And they may routinely have more than 100,000 in them at any given time.

    You can’t have them worried about their payrolls getting whacked by a bank failure.

  26. Why does a bill have to get bigger, bloatier, and dumber in order to pass?

    Why doesn’t it make sense to avoid debt anymore in this country?

    Why am I told always to keep spending, buy more, get debt, debt good?

    What should I do with my tanked investments? Hold on to them, buy more? Mattress?

    Why won’t a polar bear satiate my hunger?

    Imma go sit in my corner, cover my head, and suck on my lolly.

  27. Our political class is morally and intellectually bankrupt. Even if they knew what to do, which they don’t, they couldn’t do it because they can only vote for things if they are bribed. Every day I become firmer in my conviction that doing nothing, at least at the governmental level, is always the better option.

  28. I believe the FDIC limit increase is designed to grant peace-of-mind to depositors with 100K in multiple institutions, particularly as our banking choices continue to diminish as the FED and treasury play match maker.

  29. Sununu can eat shit if he votes in favour of this thing. If he does help this bailout I will assist Shaheen, who I despise, by giving her my vote.

  30. Troll, just stay away from polar bear livers. They’re poisionous.

  31. C’mon guys, what are we supposed to do? We can’t not spend this money.

  32. Increasing the limit increases depositor confidence with the banks. This would allow the banks to retain more capital than they are now.

    How?

    Most people dont have 100k in the bank anyway. Those that do, shouldnt.

    This seems to help the confidence of the handful of well off (but not uber wealthy) retired people who keep 200k in CDs in their local bank.

  33. The senate is going to pass it with 60+ votes, easily. Do they think they’ll be setting an example for the house members?
    I read an article today that my congresswoman got 800 calls leading up to the vote and 796 of them were against it. She said that wasn’t why she voted against it, but that there needed to be more taxpayer safeguards.
    My hopes are very low that the house will defeat it again – although if the bill fails again, I’m holding a party.

  34. Small businesses have bank accounts too. And they may routinely have more than 100,000 in them at any given time.

    While this is true, a business is going to keep enough cash around to meet its cash needs, regardless of the insurance amount.

  35. I could have sworn I read somewhere that financial bills must originate in the house…

  36. Mick,

    Perhaps you are thinking tax bills? Not all financial bills are tax bills, but there might be some of that in this mess.

  37. OMFG, the crawler on C-SPAN says they’re going to add “mental health benefits” to this abortion now.

    Like the placard said, JUMP!!!

  38. Mick | October 1, 2008, 11:51am | #

    I could have sworn I read somewhere that financial bills must originate in the house

    Article I, Section 7.
    All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.

  39. BAILOUT II: This Time Everyone Dies

    (This clusterfuck has not yet been rated)

  40. I don’t know what makes me more enraged. Congress, or the pedantic media, talking heads, and “experts”, waxing on about how stupid the public is for telling their representatives to not pass the bill. They act like America is a bunch of little children who won’t take their medicine. The discussion isn’t whether or not the bailout is a good idea, but how to use small words and market it right to the drooling masses. Because clearly they’re to stupid to understand such things. That’s why congress is using the term “rescue plan” instead of bailout now. Public concern is seen as just so much whining.

  41. The FDIC started, IIRC, in 1933. $100,000.00 1933 dollars would be about $1,585,796.67 2007 dollars, according to a widely used inflation calculator.

    Federal deposit insurance limits have been raised several times since the creation of the FDIC in 1933. A history of the changes:

    *-* Date Insurance limit January 1934 $2,500 June 1934 $5,000 September 1950 $10,000 October 1966 $15,000 December 1969 $20,000 October 1974 $40,000 November 1978 $100,000 (for retirement accounts only) March 1980 $100,000 (for all accounts)

  42. 1. What does alternative energy have to do with any of this?

    It’s a rider to buy support. The bill also has a rider about mental health and substance abuse insurance coverage.

  43. It’s a rider to buy support. The bill also has a rider about mental health and substance abuse insurance coverage.

    Yeah, its a Christmas Tree Bill.

    Just imagine what it says about the pinhead who changes his vote because of a rider like these.

  44. “1. What does alternative energy have to do with any of this?”

    Nimrod, 3 entries away you’ve got a feature article suggesting that a decrease in oil prices was somehow meaningful. That entire article avoids addressing the real problem to be addressed by the bailout and as such, is able to conclude it isn’t necessary.

    Like if you don’t look at why cancer is a problem, funding cancer research is pretty easy to shoot down.

    If you want to suggest someone doesn’t have clue WTF they are talking about when it comes to the economy, wait a little while until people have forgotten your own adventure there.

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