From AFP today:
The 700-billion dollar Wall Street bailout plan, put together last week by the U.S. administration, would allow the U.S .Treasury to sell new debt to buy vast amounts of mortgage securities and other “toxic” assets that have clogged the financial system.
That’s just one of the 3,938 results that come up when you do a Google search for “toxic assets.”
It’s the term du jour — a clever way for Secretary of the Treasury Henry Paulson to make his mad scientist concoction seem palatable to the American people.
Like a protagonist on an “ER” episode, Paulson races to save the financial system from a fatal blockage caused by toxic assets. Will the patient make it? Paulson’s remedy is to pump at least $700 billion into the clogged system in exchange for the toxic assets. Kind of like clearing blocked arteries or administering a colonic. You provide the punch line here.
The trouble is, the taxpayers get stuck with the toxic mess. Has it occurred to anyone that this constitutes double jeopardy for Americans who already had to swallow a bad dose of subprime mortgages and then came down with a terrible rash of foreclosures? Now, they’re being asked to eat a hastily concocted Wall St. rescue, despite the fact that policymakers stood by as homeowners suffered the ill effects of the first toxic asset epidemic.
I say let’s get a second — and third — opinion before Congress rubberstamps the legislation Paulson’s trying to push through this week. We need the input of lawmakers who will make sure that the plan includes help for homeowners in danger of defaulting, those who’ve already lost their homes, and the communities suffering from the pain of empty houses draining their quality of life and shrinking their tax base.
The Chinese are getting slammed for their latest poisoning of consumer goods — melamine in baby formula. Horrifying and meriting international outrage. Lots of reasonable people have reacted to poison dogfood, toothpaste, toys, and now baby formula by saying no to Chinese products.
Similarly, Americans may well decide that Dr. Paulson’s bailout elixir may be as hazardous to the nation’s health as the assets he’s trying to purge from the financial system.
Thanks Alice for raising some very valid concerns about this unprecedented $700 billion bailout plan. Jay Leno said it best last night: “When a failed President and a failed Congress put $700 billion of your money in failed businesses, it just can’t fail.”
Americans on behalf of ourselves, our children and our grandchildren should demand to know what exaclty is being done with our money. Who gains, who pays?
When the American Housing Rescue and Foreclosure Prevention Act was approved in July 2008 (this law provided for an unlimited line of credit to Fannie Mae and Freddie Mac), why did Treasury not know that just 2 months later, these companies would fail entirely? Who was hiding the information about the capital position of these companies? The companies themselves? If so, they should be held accountable for criminal dishonesty.