Saturday, December 06, 2008

Of Bailouts and Tarps

A collection of bailout news today.

Damned interesting points from The Legal Infrastructure of Business' You bailed me out, but when it is my turn to bail you out...:
"This reminds me of our class discussion in our last class. Besides the fact that Republic had its own problems with management and frivolous spending, which led them down the road to its shut-down, what is interesting here is that Bank of America, after receiving $25 billion in its own bailout, it won’t extend the credit to bail out its customer. As we discussed extensively in our last class, the purpose of bail-out of the financial industry was so that they can turn around and extend the loan to the people, who ultimately financed the bailout of the banks. As Republic says that the company probably could have survived if it had enough cash in hand, this seems like a classic example of the financial industry getting a bail-out for the purpose of reviving the economy, and yet, all its bailout money is being used for is to pay down its own debt. My understanding of the rationale behind the bailout of financial industry was that the ripple effect would be too great if we did not bail them out – that as a result of the fall of the banks, businesses and individuals who rely on their line of credit from these banks would also go down. Is our bailout of the financial industry really helping the economy?"....

Meanwhile from The Indiana Law Blog comes this:

The GAO has just released a 24-page report, subtitled "Status of Efforts to Address Defaults and Foreclosures on Home Mortgages."

The link to the 1st report, released Tuesday, subtitled "Additional Actions Needed to Better Ensure Integrity, Accountability, and Transparency," is here.

Here's the state of play in the Senate after conversations with staffs on both sides of the aisle about "what's next" on bailing out the automakers. At this point only one thing is clear: the Senate will be in session Monday at 3 p.m.

Senate Majority Leader Harry Reid has instructed Banking Chairman Chris Dodd and his staff to work over the weekend with the hope of presenting multiple proposals to members on Monday afternoon.

Reid will then try to find consensus within his caucus on how to move forward. He'll simultaneously also need to find common ground with Republican Leader Mitch McConnell not only of the substance of any legislative proposals, but equally important, on the process for getting to final votes.

The hope is to have final votes no later than mid-week. There could be votes of different proposals, probably requiring 60 for passage. At this point, it looks like the Senate would act first.

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