An alternative to the bailout.

Replace Secretary Paulson and Suspend Mark to Market
by Newt Gingrich (more by this author)
Posted 10/01/2008 ET
Updated 10/01/2008 ET


Following Monday's failure of the Paulson plan in the House, it is imperative that our leaders not hesitate to bring stability to our financial markets.

We need action now.

The Paulson Plan - is dead. The time has come for Congress to turn its attention to a plan that does the right things the right way instead of trying to fix the wrong way of this monstrosity of a Wall Street bailout bill.

As I said to Fox News' Greta Van Susteren Monday night, and spoke about at the National Press Club on Tuesday, there are two steps that could be taken that would send a needed signal to the world financial markets that America has leaders who recognize the gravity of the crisis and are capable of putting aside narrow partisan self-interest for the good of the country.

Step One: Replace Secretary Paulson
A plan that relies on the former chairman of Goldman Sachs presiding over disbursing hundreds of billions of dollars to Wall Street is a terrible concept and inevitably will lead to crony capitalism and the appearance of - if not the actual existence of - corruption.

The American people understand this and they don't trust the Paulson plan. Congress should never have been faced with this as its only option to solve the financial crisis. Congress never should have been confronted with this bill. And one man, above all others, is responsible.

That man is Henry Paulson, who may have been a great deal maker for Goldman Sachs, but has been an utter failure during this economic crisis.

It's time - passed time, in fact - for President Bush to fire Secretary Paulson.

President Bush should replace Paulson immediately with someone more capable of forging a deal that the American people can trust. Secretary Paulson's Deputy at Treasury is Robert Kimmitt. He does not have the Wall Street background that made Secretary Paulson so difficult to trust as a negotiating partner and should be much more open to alternatives because he has less invested in the "Paulson" plan.

Kimmitt need not go through the actual confirmation process to immediately take over negotiating with Congress. The sooner Paulson is replaced as the chief negotiator for the administration, the sooner we will have a deal the American people can support.

Step Two: Suspend the Mark-to-Market Accounting Rule
The second thing our leaders should do immediately is simple and uncontroversial: Suspend the "mark-to-market" accounting rule that is exacerbating this crisis.

Under this artificial rule, the value of assets of banks moves up and down with economic conditions, regardless of their underlying worth. So in a time of economic crisis - such as the current subprime mortgage crisis - the value of bank assets gets caught in a downward spiral, causing investor panic and a drying up of credit.

In 2004, the European Central Bank issued this now eerily prescient opinion of the mark-to-market rule:

"With a real estate crisis or a stock market crash... [a bank] under [mark-to-market] accounting might aggravate the effects of the shock. Banks may be encouraged to react by panic selling and tightening lending standards, thus contributing to a further deepening of the crisis."

A Smart First Step
I've spent the past few days talking with businesspeople across the country - from Oklahoma, Georgia, Nevada and California - and they agree: this artificial accounting rule is needlessly making the financial crisis worse.

On Monday I appeared on Fox News' On the Record with Greta van Susteren and called for mark-to-market to be suspended.

I also wrote this op-ed yesterday for forbes.com urging the same course of action.

I gave a speech at the National Press Club in which I discussed in depth the need to end this problem now. You can read the text and view it here.

Then, later that afternoon, the Securities and Exchange Commission took a smart first step by issuing a "clarification" giving companies more leeway in estimating the value of mortgage related investments. You can read more here. Securities and Exchange Commission Chairman Chris Cox deserves credit for recognizing how this accounting requirement is needlessly exacerbating our current financial difficulties.

The Bush Administration's Expensive Legacy
Taking these two steps - replacing Secretary Paulson and suspending the mark-to-market rule - are absolutely necessary right now to give Congress the breathing room to develop a plan to replace the Paulson Plan and to re-establish trust with the American people.

The Bush Administration has now provided three case studies that have badly damaged the cause of conservatism.

First there was former FEMA head Michael Brown during Hurricane Katrina, whose incompetence convinced Americans that Republicans can't be trusted with governing.

Then there was Ambassador Jerry Bremer in Baghdad, whose decisions as the head of the American occupation of Iraq convinced Americans that Republicans can't be trusted to manage foreign policy.

And now we have Secretary Paulson at the Treasury, whose intransigence during the worst financial crisis since the Great Depression has convinced Americans that Republicans can't be trusted with their money.

It's a tragic and very expensive legacy. No conservative and no Republican should doubt how much it has hurt our cause and our party.

Rebuilding Public Trust with a Work Out, Not a Bailout
As I told Greta Van Susteren Monday night on Fox News, the fundamental flaw in the Paulson Plan was that it was seen by the American people as a deal designed by and for Wall Street.

Congress needs to go back to the drawing board and develop, not just a financial markets rescue bill (which should be a work out, not a bailout) but also an economic growth bill.

This economic growth package should do two fundamental things:

First of all, it needs to provide relief for our financial markets that is based on lending troubled institutions the capital to restore our credit markets, rather than buying their bad assets. The taxpayers should be asked to extend these institutions a line of credit until they can get back on their feet, rather than blindly acquire these institutions' toxic paper. This is the essential difference between a workout and a bailout.

Second, the plan should stop the flow of $700 billion each year out of our economy and into the coffers of foreign dictators by achieving energy independence. Not only would our national security be improved, but this much new energy income would cause our economy to boom and government revenues to grow.

A Final Warning: Don't Allow the House Democrats to Move the Plan Left
A lot of people are scratching their heads over what would cause House Speaker Nancy Pelosi to deliver such a bitterly partisan speech minutes before the House voted down the Paulson Plan - a plan she purported to support.

I think it's likely that Speaker Pelosi deliberately delivered her highly partisan speech at the last minute to get precisely the result that she got - the defeat of the Paulson Plan. The danger now is that she and the liberal Democrats in the House will spend the next couple days re-loading the bill with all the leftwing pork projects that Senator McCain and the House Republicans were able to remove from it.

This danger makes it imperative that Republicans unify behind Minority Leader John Boehner in resisting moving any rescue plan to the left. The stakes are too high for the American people to allow liberal Democrats to use the current crisis to line the coffers of their special interest allies.

Aaron,

It seems to me, that nobody is using this crisis more effectively for his own "special intersts" than Newt Gingrinch.

While I agree with him that Paulson needs to go and rules need to be changed, mark-to-market isn't the only one and disagree with the notion of loaning insolvent institutions taxpayer money.

The suggestions Gingrinch proposes do nothing to correct the three core underlying problems. Nothing will be "fixed" and it is unlikely we'd ever recover most, if not all, of the money loaned.

No, mark to market isn't the only one. But considering it accounts for about 70% of the crisis, it is a biggie.

And I would rather loan insolvent institutions taxpayer money, and subject them to FDIC rules which Newt discussed with George Snuffleupagus Sunday, then to give away $700,000,000.00 taxpayer dollars.

I'm not exactly sure what three underlying problems you're talking about so I can't comment on them.

Sherm thinks that because I'm against the bailout, I'm against goverment intervention and nothing could be further from the truth. I realize some taxpayer money is going to have to be infused into the market.

But I think it should be done only after the government seizes institutions, gets rid of management under FDIC rules, solidifies the assets and once the institution is stable, sells to a private entity to recoup taxpayer dollars.

That is a huge part of what I believe should happen.

"It seems to me, that nobody is using this crisis more effectively for his own "special intersts" than Newt Gingrinch."

I agree with that.

Besides he is not the one who originally proposed that so-called "mark to mkt." stuff anyway.

He is grandstanding and posturing trying to position himself for the next presidential race.

In my opinion.

sodbuster wrote:
He is grandstanding and posturing trying to position himself for the next presidential race.

In my opinion.

Yeah, that's why he turned down initial commitments alone from supporters of $50 million to run for President this year. Whatever you say Sherm.

And for the record, I agree with you and Stephanie. He is using this crisis, as well as our energy crisis to promote his agenda.

Why We Are Doing It And What We Hope To Accomplish

We recently launched American Solutions for Winning the Future, a unique non-partisan organization designed to rise above traditional gridlocked partisanship, to provide real, significant solutions to the most important issues facing our country.

Read the rest of the letter and how to end the partisan politics that are failing America HERE.

sodbuster wrote:"It seems to me, that nobody is using this crisis more effectively for his own "special intersts" than Newt Gingrinch."

I agree with that.

bullshidt, Obama beats him by 10,000%

Besides he is not the one who originally proposed that so-called "mark to mkt." stuff anyway.

He is grandstanding and posturing trying to position himself for the next presidential race.

In my opinion.

bullshidt again, ..... you both are just using that as an excuse too badmouth Newt.

It really pisses me off whenever someone offers sensible, logical solutions to a major problem ....... and losers like you launch a personal attack and criticize them solely because of your partisan personal reasons only.

And that is a fact ......... because you offered no comment about Newt's offered solutions.

Yes, losers like you ...... because you are not competent or capable of offering a solution to anything ...... and that is why you have not done so.

Your type would rather see the US sink into a Mother of all Depressions rather than give someone you dislike the credit they deserve.

If Pelosi or Reed had stolen Newt's "solutions" and offered them as their own ......... you would be touting their praises forever and ever.

.

Ah, I know I am now at the pile of a dung heap.

Stephanie wrote:It seems to me, that nobody is using this crisis more effectively for his own "special intersts" than Newt Gingrinch.

I don't care what you say or think about it. I was the original poster of that statement and I stand by it. Sure, Obama is trying to capitalize on it, and that is repugnant. However, no more so than when Gingrich does it.

Gingrich has the knowledge and the experience to actually probably have a clue. That is why his failure to acknowledge the fact that SOMETHING NEEDS TO BE DONE ABOUT THE FED is so offensive to me.

Something needs to be done about the Federal Reserve. They manipulate the markets, tinkering with interest rates. They print more money backed by absolutely nothing than Parker Brothers. They are a private bank making a total mess of our economy.

Then there is the fact that Newt has said nothing, absolutely zilch, about the investigation and prosecution of those members of congress who aided and abetted these criminals. Of course he's not going to because he's got too many skeletons ratteling around in his own closet.

His plan is to "loan" insolvent institutions taxpayer money. They would still own whatever assets they have. There is no mechanism in place to go after the CEO's and CFO's and other executives who have made millions, tens of millions, by lying, and cheating and outright stealing.

Finally, although I am far from an expert in economics, and don't pretend to be one, there are other "rules" that have been instituted or abandoned in the not so distant past that need to dealt with. The "uptick" rule is one of them.

So sure, fire Paulson. I'm in favor of that. Abolish mark-to-market. For crying out loud don't "loan" these theiving bastards 700 billion dollars now that they've driven their financial institutions to ruin with our economy hot on the trail.

Screw them. Let the FBI and the courts, criminal, bankruptcy and civil, deal with them.

Stephanie wrote:Ah, I know I am now at the pile of a dung heap..

Now it is not that bad.

I was replying to Sherm's post and you are right, I did not know he was quoting AND AGREEING with you.

Stephanie wrote:

Stephanie wrote:It seems to me, that nobody is using this crisis more effectively for his own "special intersts" than Newt Gingrinch.

I don't care what you say or think about it. I was the original poster of that statement and I stand by it. Sure, Obama is trying to capitalize on it, and that is repugnant. However, no more so than when Gingrich does it.

Gingrich has the knowledge and the experience to actually probably have a clue. That is why his failure to acknowledge the fact that SOMETHING NEEDS TO BE DONE ABOUT THE FED is so offensive to me.

Something needs to be done about the Federal Reserve. They manipulate the markets, tinkering with interest rates. They print more money backed by absolutely nothing than Parker Brothers. They are a private bank making a total mess of our economy.

Then there is the fact that Newt has said nothing, absolutely zilch, about the investigation and prosecution of those members of congress who aided and abetted these criminals. Of course he's not going to because he's got too many skeletons ratteling around in his own closet.

Stephanie, now is really not the time for people like Newt to be bitching, complaining and accusing those who caused the problem.

For them to do so would be equivalent to the EMT personnel bitching, complaining and accusing those drivers who were party to a horrible accident ....... rather than said EMT personnel attending to the injuried victims of said accident.

At this stage of our economic "meltdown" it is more important that the economic hemmoraging be stopped, slowed up and/or bandaged ..... before the patient dies.

One can always accuse, arrest and convict to guilty parties after the really important things have been stabilized.

.

"Yes, losers like you ...... because you are not competent or capable of offering a solution to anything ...... and that is why you have not done so.

Your type would rather see the US sink into a Mother of all Depressions rather than give someone you dislike the credit they deserve."
Lol steph.

He got into one of his rants and forgot or did not realize it was you who made the original post.

welcome to the club...

Yeah, I noticed he changed his tune when he realized the object of his rath was Stephanie and not Sodbuster. It kinda makes one wonder ...................

Ah, Sammy has nailed my hide to the wall more than once in the past. Do you gents remember the time I thought he should apply for a position at FOX as an on-air bloviater? OMG if I'd been before him he would have ripped of my head and well....you know down my neck.

Sam treats me as I treat him, with courtesy and respect. He's my buddy, even when we disagree, as we frequently do.

sodbuster wrote:"Yes, losers like you ...... because you are not competent or capable of offering a solution to anything ...... and that is why you have not done so.

Your type would rather see the US sink into a Mother of all Depressions rather than give someone you dislike the credit they deserve."
Lol steph.

He got into one of his rants and forgot or did not realize it was you who made the original post.

welcome to the club...

ziggy wrote:Yeah, I noticed he changed his tune when he realized the object of his rath was Stephanie and not Sodbuster. It kinda makes one wonder ...................

YADA, ....... YADA, ....... YADA

I don't give a damn who stated said and/or who agreed with it, my statement still stands.

To wit:

SamCogar wrote: bullshidt again, ..... you both are just using that as an excuse too badmouth Newt.

It really pisses me off whenever someone offers sensible, logical solutions to a major problem ....... and losers like you launch a personal attack and criticize them solely because of your partisan personal reasons only.

Most people don't have the nerve or guts to tell someone directly what they think of them .......... so they sneak around behind their backs and launch personal attacks against them by telling lies, untruths, criticisms and anything else they can think up to attack their character and qualifications in order to get others to form a negative opinion or belief about said party.

Such actions should not be tollerated by any civil minded person.

Why personally pick on McCain for ignoring graft, corruption and illegal activity in Federal Government ........ and not give equal time and similary harsh word for those on this Forum that intentionally ignores and/or offers excuses for all the graft, corruption and illegal activity in WV State Government?



,

Stephanie wrote:Ah, Sammy has nailed my hide to the wall more than once in the past. Do you gents remember the time I thought he should apply for a position at FOX as an on-air bloviater? OMG if I'd been before him he would have ripped of my head and well....you know down my neck.

Sam treats me as I treat him, with courtesy and respect. He's my buddy, even when we disagree, as we frequently do.

Be that as it may, I don't think Sam challenged the choices you parents made when he disagrees with your politics- but he certainly has of mine.

SamCogar wrote:

ziggy wrote:

Just why are you stuck on the stupidity of referring to campaign finance laws?

What next, a different CYA such as claiming there is no laws pertaining to queers in congress?

Why are you stuck on the stupidity of referring to queers?.

Only you are so incapable as to be asking such a stupid question for lack of anything intelligent to say. Homos have been known as queers long, long before your mother made a really awful bad choice.

https://gazzfriends.forumotion.com/national-politics-f6/lipstick-on-a-bailout-t1620-45.htm

Before my mother made a really awful bad choice? What choice would that have been?

Stephanie, you say that Sam treats you as you treat him. Maybe so. But I have never suggested that Sam's mother made any "really awful bad choice ".

And yet Sam dares to complain that I lack "anything intelligent to say".

My intelligence or lack thereof speaks for itself.

And so does Sam's.

You guys are on your own. I learned long ago to accept you all as you are. Even Aaron, who I once argued with bitterly, even calling him despicable and upsetting other members in the process, I have learned to accept for who he is.

I think you guys need to do that. However, nobody can "make" you do it. That's on you.

I was just pointing out that your suggestion that Sam treats others like others treat him does not hold water.

Sam's doctrine sems to be similar to that guy who says that we're either with him, or with the terrorists- and with no room for an honest difference of opinion in between.

And I'd bet that his mother was a nice lady who usually made good choices.

You're trying to say you only dish it out because Sam does. I'm not going there. The two of you have been at each other's throats since long before I arrived in Wild & Wonderful West Virginia.

You antagonize each other. That has absolutely nothing to do with me, just as the disagreements Sam has with Sherm or TerryRC have nothing to do with me. I can't make you like each other. That doesn't mean I have to dislike either of you.

I have no reason to doubt that all my fellow members had/have wonderful mothers who were lovely ladies with sound judgement.

ziggy wrote:I was just pointing out that your suggestion that Sam treats others like others treat him does not hold water.

Sam's doctrine sems to be similar to that guy who says that we're either with him, or with the terrorists- and with no room for an honest difference of opinion in between.

Zigster, and why don't you just point out one of your posts where you have offered a reply of an "honest difference of opinion".

And please don't be telling us that all of your "such replies" were posted in previous Forums.



.

All of my "such replies" were posted in previous forums.

ziggy wrote:All of my "such replies" were posted in previous forums.

And that is why you can't cite one of your posts in this forum whereby you offered "an honest difference of opinion", right.

And if your opinions in your postings are not honestly offered, then they gotta be ......... .

And you have the nerve to ask .......

ziggy wrote:Before my mother made a really awful bad choice? What choice would that have been?

in pretense that you don't know what I was referring to.

I personally believe "honesty" is not one of your often practiced attributes.

.

Well, you could have meant her choice in chosing who my father would be, or her choice to carry me full term in her womb, or her choice to have paddled my ass more (or less) in my youthful years, or whatever.

So you want honesty? Then tell us what you meant.

zig when you wrestle with a pig you both get muddy.

Trouble is the pig likes it....

Shhhhh, Sodbuster. Ole' Sam thinks I'm a squeaky clean cityboy. But I was a cleanin' hog crap out of the shed with a manure fork 'afore he ever thought about mud wrastlin'. So it's just like old times for me. Bring it on.