Bernanke: Recession more likely without bailout

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  • Nerak
    Sept. 25, 2008 6:58 p.m.

    So our economy is dependant on a few very rich banks? I'm not sure why or how it could be! We've lost thousands of dollars from our retirement fund and we still aren't sure what the hell! And Paulson was a CEO at Goldman Sachs? I want to know how is the US taxpayer going to afford $700 Billion? What would actually happen if we let these huge banks go down? Does anyone know? We need better information about how all of this works! I can't find the answers to these questions. Don't we have a right to know? How much is this going to cost each taxpayer? Who exactly does it help?

  • Stone
    Sept. 24, 2008 10:15 a.m.

    Want someone to blame? Look in the mirror. We voted these people into office. (or didn't vote at all). We stood by and allowed the administration to claim that Enron's manipulation of the energy markets andwas just "the Free Market" and self-blind ourselves to our own economic destruction.

    Side note to lost in DC. You fail to mention that one of the other authors of GLBA was Phil Gramm, until recently John McCain's official main economic adviser. Not disputing that it was bad law designed to benefit corporation over citizen, but at least be fully honest about everyone who created it.

  • Stone
    Sept. 24, 2008 10:15 a.m.

    Oh, there is plenty of blame to go around for both parties, executive and legislative branches and the boys on K Street. Clinton & NAFTA, Clinton and the repeal of Glass-Steagal, Bush and the appointment of industry insiders to oversee their own industries, the continued downward spiral of corporate income taxes - yes, capital gains was reduced - and the transnational corporations immediately invested that money in overseas operations, not in the US. The 1994-2006 *Republican* Congress passed many a bill that facilitated this crisis.

    But at the end of the day? We elected these people, time after time after time - and we knew better. We allowed our own greed and desire for never-ending good times paid by the taxes of the generations to follow us to lure us into the rocks of economic collapse.

  • Three things
    Sept. 23, 2008 9:35 p.m.

    1- I didn't co-sign on your home loan...keep me out of it. I didn't find you creditworthy at the time and don't find you creditworthy now.
    2- This 700B is not directly backed by real estate it is complex financial instruments known as credit swaps which in many cases are bets on subprime failures. If the assets were real estate they wouldn't be unmarketable at 20 cents on the dollar.
    3- Inflation is a growing issues which must be contained. Inflation is much more severe than recession. I think right now they are banking on inflation subsiding which will not be the case.

  • can't
    Sept. 23, 2008 8:17 p.m.

    I can't vote republican any more. I am through with the lies and the rip offs. Period!!!!

    Obama, I will vote for you.

  • Depression?
    Sept. 23, 2008 7:25 p.m.

    People talk about letting it go, maybe a depression would be good for the country.
    My dad lived on a farm during the Great Depression,
    64 percent of Americans lived and worked in agriculture. Which means they canned and grew their own food, they didn't starve. How many Americans live on farms now, maybe 2 percent? If we allow this thing to depress, Millions of people will starve- People living in city's will come into your home and steal your food for themselves and their children. Some people say, "we have guns and ammunition" Well guess what? You don't have enough, get serious and put this mess back together, the other problems will be much greater I can promise you.

  • Re: Congress Better Act
    Sept. 23, 2008 6:28 p.m.

    You liken the current situation to applying a tourniquet to the limb of a severely bleeding person. . .

    I liken this $700 billion bailout to applying a fresh coat of paint (a very expensive coat of paint) to a house infested with termites. "If we cover up the holes, the termites will be gone." Well, the house looks nice, for a little while. The fresh coat of paint does nothing to fix the underlying problem, which could be termed as greed, incompetence, unwisdom (that's the opposite of wisdom), irresponsibility, etc. . . In short, the new coat of paint, no matter how skillfully applied, will not bear the weight of the house. Ignore the termites, and the house comes down. Hard. What the house needs, is fumigation, or bug spray, or something. When we talk about the current crisis, maybe recession and even depression is the fumigation needed to fix this mess and address the causes of the problem.

  • lost in DC
    Sept. 23, 2008 5:54 p.m.

    David O, Graham's bill, GLBA, was passed in 1999 when Slick Willy was president. Slick Willy signed it into law (or at least did not veto it). Jim Leach, though a repub (in name, at least) also has his name on it, and he supports BO.

    GLBA did not remove the protections afforded banks from possible abuses by affiliates contained in the Banking Affiliates Act of 1982, which gave us Sections 23A and 23B of the Federal Reserve Act. So even had GLBA passed under Bush instead of Clinton, it still would be a poor example of a bill that removed bank bank regulations.

    Name one existing regulation Bush killed or one proposed regulation passed by congress that he vetoed. Name one, then we can talk.

  • No more Republicans
    Sept. 23, 2008 5:35 p.m.

    We will become the United States of France once after the Bush administration nationalizes our financial system. You can thank the Republican leadership for this complete fiasco.

  • Just Say NO
    Sept. 23, 2008 4:49 p.m.

    This bailout is garbage. The American taxpayer is being lied to once again by President Bush and his boys club.

    Call your Congressman and Senators and tell them to vote NO and oppose this bailout. It will not do what the talking heads on TV are selling. Let the Wall Street ponzi scheme called investment banks crumble. The market needs the correction and the taxpayers are not responsible. This is one of the biggest scams in the history of the world!

  • David O
    Sept. 23, 2008 4:15 p.m.

    For once Utah, do as I am going to do. Don't vote Republican this election. Send the GOP a message that they can't say they are the party of small government. Phil Gramm's name is on the bill that repealed bank regulations and he is on McCain's campaign committee. McCain himself has been a champion for bank deregulation. Stop the insanity.

  • Brother Chuck Schroeder
    Sept. 23, 2008 4:10 p.m.

    The Fed's get a steep discount, considering that many of the mortgages in question are in delinquency or default, in Japan, land sells off at around $8500 a sq foot, now with the Fed's holding some paper, from the $700 Billion bailout paper, THEY COULD SELL OFF those bad loans to them, in the form of real estate / land, where the default properties sit, for say $8000 a sq foot for the land, and same for the home, we would have NEW neighbors, they would own a slice of America, but NOT MUCH of it, pay taxes like we have to pay, plus property taxes also, the Fed's would more than triple our monies back many times over, our National Debt would be PAID OFF IN FULL, and all American's would come out of this mess smelling like a rose, not what's on the bottom of an "outhouse" on the family farm. It's a win / win for everyone. Now, if ONLY the liberal's could think like this, and the Republican's wake up and smell this coffee, and "GIT-R-DONE!", we all could sleep better without this stress, and guessing games on the news BEFORE RECESS.

  • Observer
    Sept. 23, 2008 3:31 p.m.

    More evidence of how Republicans are out of touch with what is going on in the real world.

  • David O
    Sept. 23, 2008 2:46 p.m.

    Thank you Republicans and your deregulation, I have always wanted to live in Socialist France.

  • sushiandcod
    Sept. 23, 2008 2:11 p.m.

    Didn't Bernanke take Econ 101? I thought the rules of inflation were obvious. And he's not following them! In fact, between the stimulus and the bailouts, we are being turned into socialists. Bravo to our legislators (republicans and democrats alike) for being wary of giving up $700 billion of their taxpayers money to bailout people who who lending an dborrowing on nothing. Good for them for ignoring the big bad wolf's door knocking.

  • kathyn
    Sept. 23, 2008 2:02 p.m.

    The departing execs should not get one cent....no severance package...nothing....nada. It's obscene that they can walk away with their millions while the taxpayer has to foot the bill, again.

    I would like to see every single person who is an encumbent thrown out of office this election. A clean sweep couldn't be worse than the way things are now. They have violated the trust of the American people, and I have to wonder if they are knowingly trying to destroy America. They're certainly having great success.

  • Emily
    Sept. 23, 2008 2:01 p.m.

    Free market my butt... This is exactly what happens in a free market... people get greed and the whole system fails! Has anyone noticed how the rich keep getting richer while the middle class starts to dissapear? We better start taking an active interest in politics now and not let another Bush run amuck for the next 4-8 years. Yes, democrats may raise taxes (Obama's plan will lower taxes for me!!), but republicans borrow and put our country in greater risk.

  • Doug
    Sept. 23, 2008 1:55 p.m.

    How about some real honesty and integrity in government and in everything else?

    I hope Mitt Romney, Sen. Bob Bennett or someone else with major money skills can step in and help our country. Goodness knows, the Republicans and Democrats in power certainly can't get together in a bipartisan way and solve the major, major problems facing our country.

    I have come to the point where I don't trust any of the politicians at the top now. I don't think Sen. McCain or Sen. Obama are still enough to know what they are doing. Who can we trust????

    I think Americans are beginning to wonder what is going to happen to our country in financial and many other areas.

    Again, I am deeply concerned about the motives of our leaders. Are they concerned about the welfare of our country or are they only concerned about what happens to some big executive and what they might earn or receive in a bailout??



  • Breakin the Rules
    Sept. 23, 2008 1:55 p.m.

    I miss the days when all a guy needed to worry about was not getting caught when he was with his buddies in a jacked-up muscle car, pounding beers, and listening to AC/DC. How did we all got so screwed up over the years? Let's get back to the basics. We all expect way too much these days.

  • Re:Anonymous
    Sept. 23, 2008 1:28 p.m.

    The tax payer is not bankers now. We are just underwriters, for free.

  • Phil
    Sept. 23, 2008 1:24 p.m.

    Burden the next generation with more dept, so you baby boomers might not have to deal with a recession. Kept your houses price's inflated so the next generation can't afford a decent home, because without prices being over inflated you can't pull equity out of your home to buy another boat.

  • Tim Usher
    Sept. 23, 2008 1:21 p.m.

    The FED RESERVE and US TREASURY are trying to scare all of us. Who will benefit most by our country going further into debt?...the FED RESERVE! (private bankers).
    Those who control our monetary system using fear tactics to convince us how badly we need to take this economic shower...in actuality, we are being led to the economic gas chambers!
    America...home of the free...because of the brave.

  • lost in DC
    Sept. 23, 2008 1:07 p.m.

    First of all, any and all suggestions by that idiot Schumer should be totally ignored (he's the idiot who caused the run on IndyMac - not it's failure, but the run).

    Has any attention been paid to the disastrous affect of 'fair value' accounting? It basically says you can't carry an asset on your books for any more than what you could sell it for. Guess what? Even if an asset has economic value, meaning it throws off positive cash flow and you will get back your entire investment plus a return, if no one else would buy it, you have to show your investment in that asset as a loss.

    Many of the assets which have been described as 'toxic' have economic value and the owners would get back their entire investment plus a good return, since there is little to no market for them, they have to charge them off, which feeds a cycle of downward spiraling prices caused by irrational fear and panic. Some bottom feeders are going to buy these distressed assets at ridiculously low prices, and make a killing because they don't have to follow FAS 159's fair value rules.

  • Anonymous
    Sept. 23, 2008 1:03 p.m.

    Wouldn't the government be able to turn around in 5 or 10 years and sell the mortage backed securities they buy up in this bail out, recouping most, if not all their $700 billion investment? It seems to me that the securities are backed by REAL ESTATE, which should hold at least some value. It's not going to go to zero. When they are resold into the public market, maybe the government could even turn a profit (use the profit for paying down national debt, schools, roads, infrastructure, etc.)?

    I'd be interested to know how this plan compares with the bailout of the Savings and Loans in the late 80's. How did that turn out?

  • MetricWrench
    Sept. 23, 2008 12:46 p.m.

    Congress better act!!!! at 12:18. Name one single solitary time when the government was able to through money at something to fix it? This is not the answer. We need to learn a lesson on this one not pick up a bad habit. Let all markets and industries correct themselves even if it hurts.

  • CP
    Sept. 23, 2008 12:25 p.m.

    We are already in a recession. Isn;t that why the $ isn't worth that much now? And I also agree with the person who made the comment at 11:16am!! I don't want 700,000,000,000 of taxpayer dollars to bail out this idiots!!! So what if Bush says, "The world is watching.." Better to use tax payer money somewhere else more beneficial for everybody!!

  • Congress better ACT!!!!
    Sept. 23, 2008 12:18 p.m.

    Delay is NOT an option. Delay could mean failure for the US economy. This trillion dollar bail out stinks BUT it is ABSOLUTELY necessary. When you are bleeding to death you apply a tournicate rather than lose your life. You may lose an arm but not your life! Same thing here. The bail out is a tournicate to stop the bleeding in the economy. Congress better not fowl this up because any member of congress blammed for not going along will most certainly lose their jobs in thee next election!!!

  • Watershed moment for all
    Sept. 23, 2008 12:13 p.m.

    This is a watershed moment for all you repubicans. Your man has been president for 7 years, he had congress for 6 years. The executive branch (SEC, etc.) is charged with oversight of financial insitutions, that would be Bush's people, fyi. Behold the results...two wars, with no end in sight, and financial armagedon. You can't dodge this one.

    Can we even THINK of continuing spending money abroad, on two wars, with the type of money we are saying is required to fix this financial problem? Can anyone of good conscience vote for a person or party who still advocates this?

  • My business has tanked
    Sept. 23, 2008 12:00 p.m.

    because of this mess. Who is going to bail ME out? No one, that's who. I still had a family to feed, a home to pay for. And were doing what? bailing out the banking industry. If you were not responsible enough to know you could not afford that car or home, than I should not be assuming you debt. You should get another job, or even two, to pay for YOUR mistake and poor judgement.

    I'm voting Obama for sure now. This idiot McCain can't even remember his own votes, and why were in this mess. He warned us? WHEN?

  • BETTER A RECESSION
    Sept. 23, 2008 11:16 a.m.

    than giving 700,000,000,000 taxpayer dollars to the theives who caused the problem

  • Fear Mongering Strategy
    Sept. 23, 2008 11:02 a.m.

    It is clear to me now that the Bush administration and Republicans in general like to incite the people against democrats based on fear. We are already in a recession, but the bush administration refused to admit, but now at long last they found a way of blaming someone, that is if congress doesn't act to pass this bill, then they are the ones responsible for the USA being in a recession, oh and by the way, what kinda congress is it, oh yeah it is a democrat controlled congress, so by default, democrats will be the ones to blame should this bill not pass and should we go into recession, even though we are already in it. Men!! and you go these God fearing people. Puleasseeee!!!!!!!!!!

  • Earl
    Sept. 23, 2008 10:48 a.m.

    Bernanke says recession like it's a bad thing. A recession is nothing more than an economic correction. The Fed has been inflating the market with devaluing dollars, and a correction is inevitable. Bring it on, Bernake! The sooner the better.

  • Aaargh!
    Sept. 23, 2008 10:47 a.m.

    No one endorsing this bailout may ever again - I mean EVER - refer to themselves as a "free market capitalist" or a "fiscal conservative."

    They may NEVER use the term "socialsim" disparagingly.

    Do you have any idea what this nation could have done with $700 Billion?

    Schools?

    Police & Fire protection?

    Health care?

    Repair of our crumbling national infrastructure?

    R&D for new technologies, including alternative energy research?

    Proper equipment and treatment for our soldiers, both while they're in Iraq & Afghanistan and when they come home?

    Paying down the national debt?

    Bailing out failed banks has instantly become this nations biggest entitlement program. Entitlements for millionaires. What a cruel joke on us.

    This is blatant plutocracy government run for the benefit of the wealthy at the expense of anyone who isnt wealthy.

    Weve just guaranteed that were speedily turning America into a 3rd world country.

    Who on earth would _want_ to be President now that Dubya and his Wall Street cronies have dumped this steaming, stinky pile of Elephant manure on the country?

  • Steve Glaser
    Sept. 23, 2008 10:45 a.m.

    If "all" we have to fear is a recession, I would rather take my chances without a $700,000,000,000 bailout. I certainly take the '91-92 recession. If what Bernanke is talking about is '82-83 or '73-74, I'd have to think about it. I thought the bailout was to keep us from heading into Great Depression II.

    I realize that economic forecasting is hardly an exact science, but it would be nice to have a little more clarification on exactly what it is that Bernanke feared when decided that a family of four should pony up $10,000 for Wall Street.

  • To bad it's not Congress's $
    Sept. 23, 2008 10:32 a.m.

    Whats a principled conservative to think of the Bush administrations proposed $700 billion authority to allow the U.S. Treasury buy illiquid securities? On the one hand it would appear to be a necessary step to solve a systemic crisis in the U.S. banking system. On the other, it promises to be an enormous expansion of government power and commitment of taxpayer dollars. To arrive at a principled view on this intervention, we must answer three critical questions, Is it necessary? Will it work? And even then, is it morally justifiable? Even if you grant that this really is a crisis, and that it justifies an extraordinary intervention, there can be no doubt that the $700 billion authority being sought for the purchase of distressed mortgage-related securities is far too great an amount. Of the $1.26 trillion in non-prime mortgages that is, sub-prime and Alt-A mortgages $743 billion is already either owned or guaranteed by Fannie Mae and Freddie Mac, companies that were shored up by a government rescue earlier this month. That leaves $521 billion, which means the Treasurys $700 billion would be more than enough to buy them all at a steep discount.

  • Brother Chuck Schroeder
    Sept. 23, 2008 10:17 a.m.

    Stocks held steady in pre-noon trading on Wall Street as Treasury Secretary Henry Paulson told the Senate Banking Committee that quick passage of the administration's plan is "the single most effective thing we can do to help homeowners, the American people and stimulate our economy." But even before Paulson could speak, lawmakers expressed unhappiness, criticism of the plan and in the case of some conservative Republicans outright opposition. Key details remain unresolved, although President Bush predicted the Democratic-controlled Congress would soon pass a "a robust plan to deal with serious problems." He was speaking to the United Nations General assembly. The Senate hearing unfolded as Vice President Dick Cheney and Jim Nussle, the Bush administration's budget director, met privately with restive House Republicans. Some members of the GOP rank and file have expressed concerns about the bailout proposal, either because they view it as an unwarranted government intrusion into the financial markets, or because the $700 billion price tag gives them pause. Just because God created the world in seven days doesn't mean we have to pass this bill in seven days, said Rep. Joe Barton, R-Texas.

  • Anonymous
    Sept. 23, 2008 10:13 a.m.

    congratulations to all tax payers, we're all Wall Street bankers now.

  • Bro Chuck's Rant N Rave
    Sept. 23, 2008 10:08 a.m.

    The men and women who blew up Wall Street, left us to clean up the debris, will now move on to other places where life will continue to be rich. For example, the average annual salary at Goldman Sachs, which has yet to go bust, is $521,000, including secretaries. The chairman took away $38 million last year, and bonuses of $2 million, $5 million and $10 million are the norm. The New York employees of bankrupt Lehman Brothers will share a bonus pool of $2.5 billion in assisting in the destruction of the company. Barclays Bank PLC of London, which is buying the rubble, says the New York staff will nevertheless get their bonuses. Barclays is even negotiating with 30 top Lehman executives to hire them for jobs at Barclays paying millions of dollars a year. Executive salaries in a private business are the legitimate concern only of the stockholders; if stockholders want to pay ridiculous salaries and bonuses instead of taking the profits as return on their investment, they're entitled. (Bonnie and Clyde would have been ashamed of such greed.) When taxpayers are abused by having to pay for a bailout, we're entitled to take charge.

  • This should tick U off even more
    Sept. 23, 2008 9:28 a.m.

    In the dark of night over the weekend when most people were snoozing, the Treasury dramatically expanded its bailout plan to include buying student loans, car loans, credit card debt and any other "troubled" assets held by banks. The changes, which were included in draft language that also opened the bailout program to foreign banks with extensive loan operations in the United States, potentially added tens of billions of dollars to the cost of the program. Although it was a major addition to what was already the nation's largest-ever bailout, it did not become part of the debate between Democrats and the Treasury over details of the program. A Monday counterproposal by Senate Banking Committee Chairman Christopher J. Dodd included such consumer loans as well as mortgages, just as the Treasury's draft did Saturday night. The costs of the bailout will be significantly higher than originally considered or acknowledged," said Joshua Rosner, managing director of Graham Fisher & Co., who charged that the Treasury and Federal Reserve have not been "forthright" about the ultimate cost to the public. The plan gives Treasury the discretion to buy the non-mortgage loans and securities in consultation with the Fed.