The entire financial sector is about to get a bailout.
U.S. Treasury and Federal Reserve officials are considering a ``permanent'' plan to address the financial crisis, said Senator Charles Schumer, who proposed a new agency to pump capital into troubled financial companies.It's nothing short of the nationalization of the whole financial sector.
``The Federal Reserve and the Treasury are realizing that we need a more comprehensive solution,'' Schumer, a Democrat who chairs the congressional Joint Economic Committee, told reporters in Washington today. ``I've been talking to them about it.''
Schumer proposed an agency to inject funds into financial companies in exchange for equity stakes and pledges to rewrite mortgages to make them more affordable. His remarks indicate momentum is building for some wider plan after the Fed and Treasury's takeovers of Fannie Mae, Freddie Mac and American International Group Inc. this month.
Discussions with the Treasury and Fed focus on ``trying to do something more permanent'' after the series of government interventions, the New York senator said. For the Fed, ``it's hard for them to do monetary policy, which is their primary task, and then run all these businesses,'' he said.
It will take trillions and trillions of dollars to do this. This is the endgame, folks. If this goes through we'll be on the hook for millions of dollars for every single American. It will wipe the country out.
This is downright terrifying...and it's being proposed by a Democrat.
[UPDATE] Bonddad takes this idea out back and shoots it.
Why is this a dumb idea? Let me count the ways.Agreed wholeheartedly.
1.) Where is the money for this going to come from? I've detailed the proposed spending plans we've seen so far. They total $900 billion. Now we're going to pump more money into the system from some as yet unknown source.
2.) Just what will the government do with these interests? They're going to wind up the majority shareholder in some of these institutions -- and a minor big holder in others. Who will decide the government's policy?
3.) What is the criteria for investing in a company? If ever there was going to be a highly politicized process this is it. I can see it now ... "Senator from big important district gets huge cash infusion not because it's a good investment but because the Senator is in a close reelection bid and needs votes.
4.) Will the government ever get out of these companies? Will there be a time limit?
5.) Will there be a time limit for this entity's duration? Will it go on forever?
6.) Will the government become intimately involved with the company's internal deliberations and policy? Will Congressmen sit on various boards?
I could go on, but you get the idea. This is a disaster waiting to happen.
The problem is the Dems will jump on this and pass the thing. They now have to. There's a reason the stock market shot up 400 points. Wall Street is posititively giddy about the prospect of being able to unload trillions of debt onto the American taxpayer. You thought moral hazard and Too Big To Fail consolidation was bad before?
Republicans will be crowing. The party of "fiscal conservatism" and "small government" will immediately fall in line behind this program because now they can say the Democrats are preventing this vital solution from reaching Preznitman's desk, and they will lay every second that this Uberagency doesn't exist at the feet of Barack Obama, Nancy Pelosi, and Harry Reid. You'd better believe the marching orders are being put out right now, and that this is how the GOP plans to take control of the "it's the economy, stupid!" argument.
Absolutely bet on it. Wall Street has spoken. Everybody will want their piece of this multi-trillion dollar bailout, and they want it NOW. The lobbyists are already working the halls of power.
You will hear McSame call for this legislation to be passed as early as tomorrow. You will hear Obama call for this legislation to be passed as early as tomorrow. You will hear Preznitman call for this legislation to be passed as early as tonight.