Top Senators Skeptical Of Bailout Plan

Despite Dire Warnings From Fed Chair, Sen. Dodd Says $700 Billion Plan "Not Acceptable"

(CBS/ AP)  Federal Reserve Chairman Ben Bernanke bluntly warned reluctant lawmakers Tuesday they risk a recession with higher unemployment and increased home foreclosures unless they act on the Bush administration's $700 billion plan to bail out the financial industry.

Despite the warning, influential lawmakers in both parties demanded changes in the White House-backed proposal, and conservative Republicans recoiled at the prospect of federal intervention into private capital markets.

Sen. Chris Dodd, a Connecticut Democrat, said on Tuesday, "What they have sent us is not acceptable."

Sen. Richard Shelby, an Alabama Republican, said, "We have got to look at some alternatives."

Democrats want to limit the multi-million dollar salaries and severance of top executives from any companies which take the government's life line, reports CBS News correspondent Bob Orr.

The other sticking point is relief for bankrupt homeowners and those on the brink of foreclosure, adds Orr.

Six weeks before the elections, both major party presidential contenders also insisted on alterations in the administration's prescription for the worst financial crisis in decades.

Bernanke's remarks about the risk of recession came in response to a question from Dodd, who seemed eager to hear a strong rationale for lawmakers to act swiftly on the administration's unprecedented request.

"The financial markets are in quite fragile condition and I think absent a plan they will get worse," Bernanke said.

Ominously, he added, "I believe if the credit markets are not functioning, that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy way."

GDP is a measure of growth, and a decline correlates with a recession.

Meanwhile, financial markets extended their declines Tuesday as investors worried that lawmakers were beginning to doubt the necessity of the bailout as a way to revive ailing credit markets. The Dow Jones industrials, which had been higher for the first half of the session ended at the lows of the day, tacking a 161-point loss onto a steep drop from Monday.

Separately, law enforcement officials said the FBI had begun investigating four institutions whose collapse helped trigger the financial crisis.

The FBI is looking at potential fraud by mortgage giants Fannie Mae and Freddie Mac, Lehman Brothers Holdings Inc. and insurer American International Group Inc., said two officials, speaking on condition of anonymity because of the sensitivity of the investigations. The inquiries, still in preliminary stages, will focus on the financial institutions and the people who ran them, one senior law enforcement official said.

The legislation that the administration is seeking would allow the government to buy bad mortgages and other troubled assets held by endangered banks and financial institutions.

Getting those debts off their books should bolster the institutions' balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan works, it could help lift a major weight off the sputtering national economy.

The government has to be careful. They can't pay too much for this distressed debt or taxpayers will have a tough time getting their money back. But they can't pay too little or the banks won't get the financial help they need to survive, reports CBS News correspondent Anthony Mason.

The White House and key lawmakers have been in negotiations since the weekend on terms of the legislation. It was not clear what impact the new congressional complaints would have on the discussions.

"Nobody is happy" about the bailout request, said House Majority Leader Steny Hoyer, D-Md., although he spoke of possible passage of legislation by the weekend.

"Nobody wants to have to do this," agreed Rep. John Boehner of Ohio, the Republican leader. He said he was hopeful of a quick agreement.

Presidential politics have become part of the debate.

Sen. Barack Obama, the Democratic presidential candidate, called a news conference to urge changes in what he called the administration's "stubborn inflexibility."

He said Wall Street executives must not be allowed to walk away from the mess with multimillion-dollar severance packages, taxpayers who are bearing the risk of the bailout must benefit if it succeeds and homeowners should be able to get relief from unaffordable mortgages.

Obama's Republican opponent, Sen. John McCain, has also said he wants steps to limit the compensation of CEOs who leave financially wrecked firms.

The stakes were unmistakable.

"I understand speed is important, but I'm far more interested in whether or not we get this right," Dodd said at the hearing.

Later, he told reporters he hopes for legislation soon.

"But it is not going to be a blank check or a simple signing on to a bill that sends a blank check to this secretary or any other secretary." He noted that either Obama or McCain would probably be appointing a new treasury secretary after he takes over in the White House.

[myraruth-2009]

Americans, realizing that our jobs were lost due to NAFTA first and formost. Lawmakers, bring those american companies back to the US or ban them from selling their goods and services to this country. Give inititives to companies to start up the same businesses here, without unions.Wake up bring our jobs back

[bradkaatz]

Post Two:
The next one will dwarf the Hoover Dam project and at the same time save Ford and Chevy. The big project is the Great American Aqua Duct. This project would require 10%u2019s of thousands of people and cost Billions of Dollars, but here%u2019s the kick, economic stimulation.
Stipulations: Project requires use of non fossil fuel based technology. This means once products are delivered to the job site there need to be forklifts, cranes or whatever running on natural gas, battery, solar, hydrogen. Second, the Aqua Duct must be powered by solar, wind, anything that is not fossil fuel or environmentally unfriendly. Third all machinery that rolls should be produced by Ford or Chevy. Bottom Line if isn%u2019t made in the U.S.A then it is not on the project.
Again this is another Economic Boom. I would love to see this happen not only does this repair the housing market and stabilize pricing. It will create jobs, it will help teach Americans how to wean away from fossil fuel and really start focusing on a greener tomorrow. With the aqua duct we can move water from places like Galveston, TX to places like San Diego, Ca as an example. All powered by the solar and wind. This is very possible and again I would love to see it happen. One last bonus would be the extra power created when the aqua duct is not using power.

[bradkaatz]

Here is Economic Stimulus
If I was President of the United States
By: Brad Kaatz
I have a two step process the tasks are possible and the economic repair would be on an epic scale. The first item has to do with the $750 Billion Bailout. I have three actions.
One, Use the 750 Billion and have a home owner lottery for the 750 Billion.
Stipulations: One, property to be paid down to 65% LTV (Loan to Value). Two, home Owner can not apply for refinance until property value 35% ltv and in loan for at least 7 years.
Part Two of One force a lock on all loans to be 30 year fixed. This means if you have a 5 year fixed with a 25 year adjustable, you get a 30 year fixed. This is the lenders punishment for stupid lending. In some economic cases a 40 or 50 year fixed. Bottom line keep the home owner in the house!
Economic stimulus, this is a gold mine! I asked many people what if you had your house paid down or your loan locked. The answer in all cases was, spend more money luxury items. Go get a manicure, get a car wash, buy a new car, and get a fancy dinner. The list goes on and on. This is the stimulus you are looking for.
Part two in post two

[jd2408]

This "trust me" President has NO credibility. Why is Congress rushing again ? They need to look into this, take their time, and make sure this is all true and not just another lie as so many other lies. This country will not go broke in a week. Friday deadline is just plain nuts. Maybe there is a better way than bailing out crooks. Greenspan knew and agreed with the subprime loans all along, and so did the administration. Now, just two months before the election we must "trust" this administration and must act NOW. They have never lied or were wrong before. Right ???

I just don''t have a good feeling about this. I think I have lost faith in all of them.

[bostonblakie-2009]

Another reform I propose to add to the "bailout" is the elimination of the tax code, to be replaced by a flat 10% tax on all income regardless of its classification. Whether it''s 50 million or 50 thousand you pay 10%. Old age pensions (persons 65 or older) under $100,000 (subject to adjustment) would either be tax exempt or taxed at a flat 5%. This could be called the Main St. payback provision.

[mideastern]

how dare all those people in wah. looking out yet again for the big guy and not the the little man
my husband lost and 90% of the people working with him at this plant that i wont even say their name but they lost their jobs out of nowhere... and this company is shutting down plants and cutting jobs left and right.... companies taking jobs out of the country..companies cutting jobs due to the economy... we lost out home because he lost his job.... with no warning.... what so ever... you work your *** off for a company for 10, 15, 20 years and what ... there IS NO SUCH WORK OR THING AS HAVING JOB SECURITY.... NOT IN THESE TIMES.....but they want to pay the people running these companies all sorts of out standing money.... who is this going to help me and my family... and all the other families alike... how about helping out those of us that need it... going from having great credit to in the trach credit.... then you have companies filing for bankruptcy protection.... what about all the stock that we and others had in the company.... gone i guess... there is not one person in wash... that will look out for hte middle class and others.....

[starleo146]

We have to send a letter to our congressmen and senators to let them know how we feel NO BAIL OUT

[starleo146]

I''''''''''''''''m a die hard Republican. I don''''''''''''''''t agree with basic Democrat philosophy. However, as a person with a brain, how could I vote Republican?

Posted by RepForBarack at 05:42 PM : Sep 23, 2008

I am an Independent, and I will not vote Republican, because of there dirty tricks, over, and over. We have to CHANGE. Greed of the republicans are forcing us to Change. I commend you intelligence to look at this with integrity.

[starleo146]

Paulson has been scared into compliance, just last Friday he was "absolutely against" using taxpayer money, now he has learned something he apparently didn''''t know last Friday.

Close this barely legal ponzi scheme down. Let them fall, don''''t bail them out, then we can build a new economy, that works for the average American, without the detritus of the old corrupt ways hindering the progress.


Posted by brianbwb at 08:05 AM : Sep 24, 2008

Yes, and who came out of his hiding place, Cheney with that sly grin on his face, throw them in Prison. All of them. Make them Pay Dearly for all they have done to this country. Now that Shell Oil Co. is operating in Iraq and only 4169 of our finest have given there lives for a lie, oh yes, begone you devils. Your lying days are over.

[starleo146]

You say senators, but we just don''t know what will happen world wide. Well the money hungry buzzards all need to fail, and maybe we can get some sense as to what we have to do, and punish every last CEO who took this golden parachute, they were to blame, they were in charge, pay it back to the company they stole from. This is Enron all over again.The workers in these companies lost everything but these CEO''s go home and keep everything plus. NO let them fail every last one from here to timbuckto.GREED, GREED is what it all boils down to, and Bush and Cheney, and there thirst for oil, need to punished as well. Now that Shell OiL Co. is operating in Iraq and victory is in order they got what they wanted all along OIL can they bring the boys home now?

[albrightw]

They screwed the poor people and they should pay for their crimes. They are trying to save a few friends and make the general population save them from themselves. Go to hell !

[starleo146]

I think the banking committee should warn us, and we go get our money, and let it fail. I do not see anyone helping me if I get in trouble. I have to find a way. To expect a blank check out of fear is poppycock, no oversight, just give them 700billion dollars, this is Iraq all over again, and do not buckle, stand up to the crooks and say NO. wWe got here because of their fraudulent practices to the public so what goes around comes around.

[whitemale08]

FORGET WALL STREET!!!!!!

LET''S REBUILD AMERICA WITH A BRAND NEW ECONOMY WITH HONEST AND DECENT PEOPLE!!!!

GIVE THE 700 BILLION IN CREDIT TO HARDWORKING HONEST REGIONAL BANKS AND START UP CAPITAL TO REBUILD AMERICA!!!!

DON''T BE STUPID AMERICA, WE CAN START OVER WITH A BRAND NEW ECONOMY!!!!!!

[whitemale08]

NO DA** BAILOUTS FOR WALL STREET!!!!!!!

THIS IS WHAT THEY DO TO 3RD WOLRD COUNTRIES IS DUMP THEIR LOSSES ON THE PEOPLE LIKE A GARBAGE CAN!!!!!

WE CAN START OVER WITH A BRAND NEW ECONOMY THAT WORKS FOR AVEREAGE AMERICANS!!!!!!

[ofbyfor2]

I''''m a die hard Republican. I don''''t agree with basic Democrat philosophy. However, as a person with a brain, how could I vote Republican?

Posted by RepForBarack at 05:42 PM : Sep 23, 2008

Have you checked out www.republicansforobama.org?

[brianbwb-2009]

No bailout, however it is structured.

The lenders created this problem for themselves through collusion with real estate contractors, and loan shark mortgage terms. Let them fail, it means little or nothing to the average American.

They did this because of the decimation of the middle class as a result of "trickle down" economics, there were no more middle class customers to loan money to, and the rich didn''t pay enough interest, so they turned to feed on the poorer classes, take the down payment, and a few monthly notes, then jack up the payment terms, force them out, and look for new suckers.

Let them reap what they have sown, they had no compassion for those whose hardship caused them to default, so why should we show compassion to them, by allowing them to continue their loan sharking?

Paulson has been scared into compliance, just last Friday he was "absolutely against" using taxpayer money, now he has learned something he apparently didn''t know last Friday.

Close this barely legal ponzi scheme down. Let them fall, don''t bail them out, then we can build a new economy, that works for the average American, without the detritus of the old corrupt ways hindering the progress.

[sleepyric]

Do something for god''s sake...my IRA is twisting in the wind! CEOs and Executives should get ZERO. Got that congress?? ZERO. No compensation. None, Nada. Zip. Put them on unemployment. In fact, don''t even give them that!

[jjp735i]

Congress will do what it has done for the past 8 years. Pretend they are against what the White House wants, get some sound bytes and media time in and then give Bush what he wants.

I trust this Congress about as much as I trust Bush. Not at all.

[whitemale08]

THIS IS DISGUSTING!!!!

TELL CONGRESS TO NOT TAKE THIS JUNK ''OFF THEIR BALANCE SHEETS''!!!!

IT''S DISGUSTING TO HEAR WALL STREET SAY ''WE NEED TO TAKE THESE ASSESTS (LOSSES) OFF OUR BALANCE SHEETS''!!

DO NOT CLEAN OFF THE BALANCE SHEETS OF THESE CROOKED COMPANIES!!!!

HELL NO, NO CLEANUP!!!!! LET EM FAIL!!!

[credibility2]

As much emphasis on the source of cause is being swept under the table and that has to do with the millions who have over extended themselves with their credit card debt, can''t pay and have defaulted; the same with student loans, but especially those who were greedy trying to make huge profits off of homes that have greatly lost their values, or those who were so stupid to actually believe they were entitled to a home, when they hadn''t any money to put down on it, had no income to verify, had dismal credit histories, had a poor debt to credit ratio, etc. That greed on Wall Street plays into this is not being refutted, but the greed on Main Street started the cards falling. Now, those like Obama and other socialist Dems want to protect the very people that also contributed to this catastrophe by including in any bailout assistance for defaulters on things like student loans and mortgages. If I can act responsibly and live within my mens, so too must everyone else. I resent having to bailout anyone, regardless of what street they live on.