Here are a few treasures I found this morning:
Kathryn Jean Lopez on National Review Online points out that some of the 20% of the profits (a floor) recovered from the bailout would go to voter-fraud-ACORN!!! (See Hans’s post below and here and here and here on ACORN.) (A commenter notes that if most purchases lose money but one makes money, the taxpayers eat the losses while the slush fund gets the profits.)
John Paulson, not to be confused with the former Goldman CEO, suggests in today’s WSJ that the government buy preferred stocks of failing companies, as they did with Chrysler, AIG, and Fannie and Freddie. “Invest the $700 billion of taxpayer money in senior preferred stock of the troubled financial institutions that pose systemic risks. Let’s call this the “Preferred plan.” In fact, it is the Fannie Mae and Freddie Mac model — which the Treasury Department has already endorsed and used in practice. It is also the approach Warren Buffett used for his investment in Goldman Sachs.” Clean and simple, but doesn’t benefit the other Paulson’s friends.
The American Spectator claims Paulson and Wall Street leaked the House plans to Obama to derail House opposition. Isn’t President Bush becoming suspicious yet that Paulson may not be out to serve the Administration’s best interests?
A CNN story is titled, ” The credit crunch: Loans out of reach” but check out the subtitles: “The littlest guys are still lending” and “Regional banks tightening their standards” but “Turmoil at the top of the heap.” Doesn’t sound too bad to me. Colleague Iain Murray suggests that making payday loans, etc is even more essential for those whose financial situations are not ideal.
And why there won’t be a run on the banks, at least for those deposits under the $100K limit–the explanation of how FDIC works: As the FDIC noted in an open letter to Bloomberg News posted yesterday: “The fund’s current balance is $45 billion – but that figure is not static. The fund will continue to incur the cost of protecting insured depositors as more banks may fail, but we continually bring in more premium income. We will propose raising bank premiums in the coming weeks to ensure that the fund remains strong. And, at the same time, we will propose higher premiums on higher risk activity to create economic incentives for poorly managed banks to change their risk profiles. The fund is 100 percent industry-backed. Our ability to raise premiums essentially means that the capital of the entire banking industry – that’s $1.3 trillion – is available for support.”