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Bailout Signed Into Law. Economic Recovery for Workers Stalls |
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The U.S. House reversed course today and approved a $700 billion Wall Street bailout package aimed at calming jittery nerves in the financial markets and reviving the credit markets. The vote was 263–171.
On Monday, the House narrowly defeated a similar bailout bill. The new bill, unchanged from the version passed by the Senate on Wednesday, was immediately signed by President Bush.
But action on an economic recovery package for working families remains stalled. Today’s unemployment numbers—159,000 jobs gone in September and more than 760,000 so far this year—shows the desperate need for Main Street relief.
Says AFL-CIO President John Sweeney:
It is essential that we provide immediate relief to families across the country who are bearing the brunt of our economic meltdown.
While the bailout may provide some immediate relief to a nose-diving stock market and troubled banking industry, it still fails to address the underlying problems at the center of the economic turmoil. Sweeney says:
The roots of our nation’s current economic crisis are decades deep. They reflect a basic elitism that has been built into our economic rules—a philosophy that underpins the Bush administration’s economic agenda and has permeated McCain’s as well for his 26 years in the Senate. These rules favor corporate profits and Wall Street investors over the working people who build our cities, teach our children and nurse our ills.
Dean Baker, co-director of the Center for Economic and Policy Research (CEPR), says the “country’s dire economic situation”
is almost entirely the result of the Bush administration’s policy failures….The Bush administration made the crisis even worse by deregulating Wall Street.
After approving the bailout package, the House passed an extension of Unemployment Insurance (UI) benefits for long-term jobless workers. The bill would provide a seven-week extension for jobless workers who exhaust their benefits—13 weeks in states with high unemployment.
It is estimated that by the end of the year, some 1.1 million jobless workers will run out of both their regular UI benefits and the 13 weeks of extended benefits passed earlier this year.
But Bush has said he opposes an extension, and yesterday in the Senate, Republicans blocked a move bring the UI extension bill to a vote by unanimous consent.
According to the Bureau of National Affairs’ Daily Labor Report (subscription required), Senate minority leader Mitch McConnell (R-Ky.) was behind the move to block the bill. The Senate is likely to take it up when it returns for a lame-duck session after the election.
McConnell is facing a strong election challenge from AFL-CIO endorsed candidate Bruce Lunsford.
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It is to bad that the president of the AFL-CIO and the co director of the CEPR are misleading everyone on this financial “crisis”. Democratic policies are what brought us to this point. It was the Clinton administration’s use of The Community Reinvestment Act that started the sub prime market and ACORN’s tactics against banks that fueled the housing bubble. Fannie Mae and Freddie Mac enabled the process with pressure from the government to take on a higher percentage of risky loans. There were many people over 10 years ago warning of this time, I guess they were right.
Did anyone notice that the 110 page bill that the house rejected grew to 474 pages in the senate? With the democrats having the majority you mean to tell me they didn’t have enough pull to throw in some more UI. They put all kinds of climate change BS in there. Democrats, their for the working man all right!
Check out this link to see exactly what additions the bill includes. Read it very carefully and see how much has nothing to do with any financial “crisis”. This is our government at work folks.
http://sayanythingblog.com/entry/earmarking_while_rome_burns_more_on_the_porked_up_bail_out_bill/
Door,
What’s really too bad is that you are so ignorant of economics that you have to rely on replican talking points for your position on issues. The CRA has been around since 1977. So, this law is apparently so bad that it took 30 years for it to cause a crisis? The CRA does not require banks to loan money irresponsibly. It requires that banks do not discriminate in their practices and they must do so in a safe and sound manner. High-risk loans are not a requirement of the act. You are simply parroting the rightwing backlash that is trying to hide their own blame in this mess. It is the repeal of Glass-Stegall that tore down the walls between investment and commercial banks, walls put up because of the last major housing crisis in the 1920s, thus opening up a wave of accounting fraud that we haven’t seen in 80 years. If you’d read your history, and studied your economics, you’d know this.
Its called a bubble economy when there is a surplus of capital (investment banker money) relative to supply (housing). The securitization of home loans (compiling them into funds) allowed the loan originator (who often was not a bank, but an unregulated broker) to sell off the loan into a pooled fund and hide the risk of the loan. This wasn’t done because the CRA made them do it. They did this because repeal of Glass-Stegall made it possible to hide risk from the purchasers of the loans.
These investment banks also reached leverage ratios of 40 to 1. In other words, they had borrowed 40 times the amount of assets that they owned!!!! They then invested this money into complex financial instruments based on these loan funds of unknown risk. So long as the bubble was expanding, the money (on paper) poured in, but when the Fed reduced interest rates a few years ago to cool off the economy, all those ARM mortgages (most of which were NOT subprime loans) saw increases in their rates. Naturally, foreclosures went up. And like any bubble, it just takes one little prick to burst it. Next thing you know, house prices started falling like a rock, primarily because a house should by a bank sells for at least 20% less than market value. As foreclosures mounted and banks began unloading more and more houses on the market below market price, more people became upside down on their house and the foreclosure cycle fed upon itself. Banks began realizing that all these crazy derivatives that they owned, which were only profitable in an ever expanding ponzi scheme, were suddenly not worth the paper they were written on. It wasn’t real wealth and they found trying to unload assets difficult because EVERYONE else was trying to unload the same worthless paper. Its called a deleveraging spiral and it won’t end until housing prices fall back to a level commensurate with their long term price trend. The bankers created this vortex and now they are stuck in it.
If you have ever taken a class in water safety or rescue, you know about the warnings regarding swimming out to someone who is drowning. Their panic can often take you down with them. This is what the bankers are doing to us.
The fools in the House and Senate have denied the will of the people again.I will say it again go to the the Polls and vote against the incumbent.Get out of the Democratic and Republican Parties,join with the Independents and throw these bums out.This Nation can not stand many more years of the leadership we currently have.You would have thought that responsible leadership would have at least invited a few leading economist to present their views,but no we are in much to much of a hurry to do anything reasonable.Why on earth would anybody believe Pres. Bush or Henry Paulson,Paulson may very well be the worst Sec. of the Treasury we have ever had, and where did he come from WALL STREET.
The phone calls and emails to Congress were 10 to 1 against the bailout. They voted for their corporate paymasters, not the people who put them in office. Time to ratchet up the pressure to keep this bill from being funded.