If this story, Deal said near on big financial bailout is correct I think I feel a bit better about the bailout. Not completely better, but a bit.
1) If executives are really limited in pay (and stock) by this deal they won’t be involving their firms unless it is really necessary. They won’t be in it for themselves.
2) If we get equity in the companies that get bailout money then WE profit if they do.
3) It is phased in, so we don’t just dump all the rest of our money onto a few companies at once. Instead we can see if it is working – and a new President can change what is being done.
If we get these things, it’s a start. I think we should get rid of many of the executives responsible. I also think we need to redesign the system from scratch, insist that ALL corporate money be removed from politics immediately, impost a 90% or higher top tax rate and several other things.
And about this meeting with McCain and Obama at the White house today… is it possible they’re going to be injected with something, and then replaced by pod-people?
Update – Through Atrios, here is an example of what we are paying to bail out:
When we the taxpayers foot the bill for the excesses of the bubble, we are bailing out the lenders who enabled the behavior below:
* The house was purchased on 2/6/1998 for $183,000. There was a $173,500 first mortgage and a $9,500 downpayment.
* On 8/21/2002 they refinanced the first mortgage for $165,500. They actually paid down their debt.
* On 3/12/2003 they opened a HELOC for $50,000, just in case… Their first taste of kool aid.
* On 2/13/2004 they opened a HELOC for $226,000. The kool aid is flowing now.
* On 10/22/2004 they opened an Option ARM for $492,000.
* On 5/2/2005 they opened a HELOC for $75,100.
* On 10/21/2005 they opened a HELOC for $126,000.
* On 9/28/2006 they opened a HELOC for $150,000.
* Total debt on the property, $642,000 plus accumulated negative amortization.
* Total mortgage equity withdrawal, $468,500 including their tiny downpayment.
Basically, these people put $9,500 into the property and made $459,000 in 8 years.
. . . If this property sells for its asking price, and if a 6% commission is paid, the US taxpayer is going to lose $209,694.
Note – at the asking price we ONLY lose $209K. But at the asking price the buyer has to come up with $90K AND have an income of $115K for a CONDOMINIUM.
The bailout’s success depends on housing prices not dropping any more.