Progressive Caucus to present Rescue package at 3pm

[understandinglife]

From Matt Stoller diary on www.openleft.com

U.S. Rep. Peter DeFazio (OR-04), an outspoken critic of the Bush/Paulson bailout, along with Rep. Kaptur (OH-09), Rep. Scott (VA-03), Rep. Cummings (MD-07), Rep. Doggett (TX-25), Rep. Holt (NJ-12), Rep. Edwards (MD-04) and Rep. Hirono (HI-02), will introduce legislation today to address the failures in the financial markets. DeFazio believes that the Paulson/Bush proposal is based on a flawed premise: if the American taxpayers spend $700 billion to buy Wall Street's toxic assets - a plan pundits are calling "trash for cash" - it will create liquidity in our financial markets and will somehow trickle-down to Main Street.

DeFazio's plan is not in any way based on the Paulson/Bush plan. Instead of throwing taxpayer dollars at the program and crossing our fingers that the plan work, the measure will direct the Administration to take five simple steps, suggested by noted economist and former head of the FDIC, William Isaac, to re-regulate the markets and move America towards a healthy financial future.

The legislation will be available at the press conference.

Who: Rep. DeFazio, Rep. Kaptur (OH-09), Rep. Scott (VA-03), Rep. Cummings (MD-07), Rep. Doggett (TX-25), Rep. Holt (NJ-12), Rep. Edwards (MD-04) and Rep. Hirono (HI-02)
What: Press Conference to introduce legislation to fix financial markets
Where: House Radio and TV Gallery
When: 3 pm TODAY

[adamuu]

1. awesome. n/t

[mike_c]

2. can't wait to hear what they propose!

:bounce:

[Eric J in MN]

3. I'm glad someone in Congress is saying the whole idea of cash-for-trash...

..is bad.

[redqueen]

7. Kucinich has been saying it, too.

In fact, he said it first, over a week ago.

[seemslikeadream]

4. EXCELLENT

[EFerrari]

5. Kick

[redqueen]

6. Nice.

Thanks for the heads-up.

[dchill]

8. I am LIKING this plan...

Of course Nora O'Donnell cuts in over it...

[understandinglife]

9. Streaming on www.cnn.com ... now

[Naturyl]

10. K&R

[TahitiNut]

11. Sorry ... but the Chicken Littles are too busy panicking to listen.

People with only a hammer tend to treat everything like a nail ... the "give the companies our money" idiots are running amok ... and the companies are cheering and throwing marshmallows (and calling them pieces of sky).

[mzmolly]

12. I just hope we're coordinated?

But, this of course is too much to ask. When this plan fails to get adequate sponsorship, we'll be divided before an election where progressives were united. People will bemoan "Pelosi and Reid suck!" Nader will cry "Obama supported the bail out!"

I look most forward ... :eyes:

That said, I welcome other ideas and I have kicked and recommended this. I just ask that we not let this situation result in a divided Party.

Here is more on Isaac's suggestion - http://www.latimes.com/news/nationworld/nation/la-fi-cost28-2008sep28,0,1002717.story

Isaac proposes revisiting a 1980s-vintage FDIC program that buoyed problem savings and loan associations by issuing them promissory notes they could use to shore up their capital base, allowing them to start lending to worthy borrowers again.

He also says the banks should get relief from an onerous accounting requirement known as the "mark-to-market" rule, which forces them to declare values on mortgage security holdings that reflect only their short-term worth, which in a troubled market may be far below their real value. The markdowns, he argues, have contributed heavily to major banks' huge reported losses, sapping investor confidence.

[Truth2Tell]

32. Pelosi and Reid can't get on board with this

their corporate masters will not allow it.

[mzmolly]

36. Which ones?

;)

[Roland99]

13. Is there a link to the proposal?

[Blaze Diem]

14. Kaptur was on C-Span this morn. She sounded like the only voice of reason

in thepast few days.
Greateful her for telling the viewing audience that there was another group of Reps. that also had a valid plan to contribute but were not included in the decision making.
She presented a sensible approach to this mess, and said this is not the time to make important decisions because of the high emotional fear factor going on.
This financial decision requires calm, sensible thought.

Her group will present today some very well thought out proposals, and without the fear mongering, political finger pointing, and blank check insanity we have heard of late.

I was relieved to see some true leadership on this matter.
She made perfect sense.

[Virginia Dare]

15. Wonderful! Too bad it doesn't have a snowball's chance in hell at passing..n/t

[MzNov]

16. FYI, here's the entire member list of the Progressive Caucus

oops, link not working, BRB



:bounce:

Go Progressives!!


http://cpc.lee.house.gov/index.cfm?SectionID=4&ParentID=0&SectionTypeID=2&SectionTree=4

[KamaAina]

21. They need to update that list

Hon. Stephanie Tubbs Jones (OH-11)

:cry:

[KamaAina]

17. Mazie's first appearance on the national scene!

Not entirely surprising, since she is, after all, a freshman rep. We'll be watching this closely.

[slipslidingaway]

18. K&R and thanks n/t

[WhaTHellsgoingonhere]

19. on C-SPAN now

[EFerrari]

20. Thanks! n/t

[WhaTHellsgoingonhere]

22. DeFazio, Kaptur

DeFazio: "if Paulson wants to place a $700B BET" 3x!!! Bailout = BET, Brilliant!

Kaptur: "SOX has created FALSE credit crisis"


"if Paulson wants to place a bet" COUNT: 10

[crispini]

23. I look forward to the details!

:kick:

[WhaTHellsgoingonhere]

24. FINALLY!!! The voices I've been waiting to hear

Kapur: "this frenzy has got to stop, it's not helpful"

DeFazio: "support from Issa" 2x WOW!

Cummings: "I spoke with the head of Legg Mason, and he said, 'I get it.'"

[WhaTHellsgoingonhere]

25. on FDIC

DeFazio: "I can not determine at this time whether the FDIC is helping to create the crisis."

[ProgressiveEconomist]

26. Press release on 5 provisions of DeFazio's NO BAILOUTS bill is at LINK on his website:

http://www.defazio.house.gov/index.php?option=content&task=view&id=441

[Ichingcarpenter]

27. Thank you for the link... I hope congress listens

I'll do what I can with my rep.

[ProgressiveEconomist]

29. Uh-oh. DeFazio's #1 is the same as House Rs #1: a return to ENRON ACCOUNTING.

DeFazio's economic guru Bill Isaac was flogging this proposal on the evening news shows.

Section 132 of HR3997 (voted down yesterday) merely "authorizes" the SEC to relax crucial accounting rules for banks. But this is a power the SEC already has but (wisely IMO) refuses to use.

DeFazio's/Isaac's proposal, which is the same as what the "maverick" Rs in the House demanded, would relax accounting rules by law. IMO such a law would be an extremely serious mistake, accelerating our progress toward the same kind of decade-long financial debacle Japan experienced. It would be the essence of what Paul Krugman calls "crony capitalism", further undermining confidence in a credit system now facing an unprecedented crisis of confidence.

Here's what a couple of the best finance blogs have to say about this accounting issue:

From http://nakedshorts.typepad.com/nakedshorts/2008/09/feel-free-to-make-up-numbers.html :

"Feel free to make up numbers September 29, 2008

... Bye-bye 157. The Andy Fastow Rules are back

SEC.132. AUTHORITY TO SUSPEND MARK-TO-MARKET AC-COUNTING. ..."

And, from http://bigpicture.typepad.com/comments/2008/09/fed-treasury-ne.html :

"That seems to be pulled straight from the Bank of Japan's playbook: Take the right downs later rather than sooner, once the market returns to normalcy. That's a deeply flawed philosophy.

Former SEC Chair Arthur Levitt lectures the Congress on why mark-to-market is so important. "That's why it's both dismaying and puzzling that as Washington debates the Treasury's bailout proposal, some of the largest banking and financial services trade groups are aggressively lobbying the SEC to suspend the mark-to-market, or fair-value, accounting standard currently in place, and to oppose any expansion of it.

To ask for a suspension in fair-value accounting is to ask the market to suspend its judgment. These trade groups claim that the fair-value accounting standard has distorted banks' balance sheets, and has contributed significantly to the market's volatility. On the contrary, that gets things backward. It is accounting sleights-of-hand that hid the true risk of assets and liabilities these firms were carrying, distorted the markets, and have caused investors to lose the confidence necessary for our markets to function properly.""

[druidity33]

33. economic-value standard?

Is this the difference you're describing?

Maybe my brain isn't wired for this stuff, but i have trouble grasping the differences in the real world applications of these obtuse Economics terminology.

Why is fair-market standard better/more accepted than economic value standard?

:shrug:

DeFazio's Point 1:

1) Require the Securities and Exchange Commission (SEC) to require an economic value standard to measure the capital of financial institutions.


This bill will require SEC to implement a rule to suspend the application of fair value accounting standards to financial institutions, which marks assets to the market value, no matter the conditions of the market. When no meaningful market exists, as is the current market for mortgage backed securities, this standard requires institutions to value assets at fire-sale prices. This creates a capital shortfall on paper. Using the economic value standard as bank examines have traditionally done will immediately correct the capital shortfalls experienced by many institutions.

Does that mean folk will literally be able to make up any value for anything?

[ProgressiveEconomist]

35. 'Does that mean folk will literally be able to make up any value' IMO YES, and

two of the best financial bloggers agree with me (see the links in post #29 above).

IMO this is exactly what Enron explicitly was allowed to do starting Y2K because of Phil and Wendy Gramm, and exactly what Chris Cox (SEC) let Bear Stearns, Merrill Lynch, Lehman Brothers, Golman Sachs, and Morgan Stanley get away with starting in 2004.

See also two threads with great links and explanations of this accountint issue in GD:P: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x7260588 and http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x7261461 .

[druidity33]

44. thanks PE... nt

[WhaTHellsgoingonhere]

39. AARRRGGGHHH!!!!

I hate getting excited about something I don't understand.

Thank UUUUUUUUU, Progressive. :thumbsup:

[annabanana]

28. Big friggen kick because corpomedia has chosen to IGNORE

what would be good and viable solutions to the problem.

[OPERATIONMINDCRIME]

30. I'm Not Great With Understanding This Stuff, But What I Read Seems Reasonable.

Anyone know the likelihood of it working or what its pitfalls are?

[ProgressiveEconomist]

31. IMO DeFazio's #1 and #5 both are the same kind of accounting gimmicks that got us

into this mess. Both would put off the day of reckoning by maybe a few months at best, and both would make a huge financial mess of questionable assets and unsupportable short-term loans even bigger and more devastatting.

IMO it's time to close the bar and start winding down the big party Rs have been enjoying with our Social Security cash flow and our mortgages since 1980.

[ProgressiveEconomist]

38. Sorry; I meant to oppose #4 (Net worth capital certificates), not #5 (FDIC cap to $250K)

[TexasObserver]

34. Lloyd Doggett is one of the best members of congress.

If Lloyd wants it, he's probably right.

[magellan]

37. Is this the one Kucinich was talking with Rachel about tonight?

:thumbsup:

[ColbertWatcher]

40. Yes! Good! n/t

[WhaTHellsgoingonhere]

41. I found it curious that Kucinich's name wasn't attached...

I heard him on Rachel Maddow and, when asked, he indicated that he supported (certain) elements. Anyone else find his absence odd?

[mhatrw]

42. No, This is a POS bill as well. DeFazio has been sold a bill of goods.

Some good. Some horribly bad.

[Waiting For Everyman]

43. Cool! And I'm surprised to see that 2 of my state's reps are in it,

but what about Kucinich? I'm wondering where he is on this?

In any case, thanks for the "heads up"! I'll be very interested in what they have to say.