Why do you think .. (4.00 / 1)

most of here only watch the TradMed .. if at all .. for 2 things .. because of KO and Rachel Maddow .. and to laugh at all the dopes

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by: Calvin Jones and the 13th Apostle @ Fri Oct 10, 2008 at 12:58:14 PM CDT

One of the disturbing aspects (4.00 / 3)

of this is impact of the presidential race.  Some rescue effort could've been made weeks or months ago, but all of a sudden it becomes an urgent, must-do-something issue just before the election. With both parties too tied to Wall Street, and eager to appeal to the middle as opposed to their bases, its passage was assured.

Had this come up during the primaries, Obama and probably McCain would've been forced to oppose it.  

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by: david mizner @ Fri Oct 10, 2008 at 13:04:35 PM CDT

Heard the same thing (4.00 / 2)

We actually heard the same thing from sources the day after the Senate passed the bill. We wanted to launch a 2nd wave of protests, but the way it was shoved through the House so fast and so secretly, there wasn't enough time to gain momentum.

From our analysis, the bill's language has loopholes so wide that you can fly an airplane through it. Paulson essentially has wide enough leverage that he can go any way he wants with this bailout, including dropping the whole purchase of mortgage premise and instead (preferably) inject massive amounts of cash directly into the banks in exchange for shares.

If news reports are to be believed, he's tilting in the direction of the latter.

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by: cece248 @ Fri Oct 10, 2008 at 13:38:12 PM CDT

I think they want to rewrite Bretton Woods II (4.00 / 1)

so that it can favor corporations, even more.  The shock doctrine at work.  

For all we know, there is a coordinated dump by big players to force some corporate friendly re-structuring of the financial sector.  In the midst of this chaos, where alot of people are panicking, there are those that are calm and ready to buy, whole countries.

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by: gaspare @ Fri Oct 10, 2008 at 13:42:58 PM CDT

I see similarities in the Shock Doctrine in East Asia (0.00 / 0)

and now.  In chapter 13 "Let It Burn" of her book, Naomi Klein writes about how the IMF intimidated parliaments and presidential candidates.  I wrote a diary and said:

For example, the IMF refused to release the money to help South Korean financial markets unless the four main candidates for president "would stick to the new rules if they won". Those new rules involved the typical free market orthodoxy of privatization of national assets, deregulation, and cutting social spending.  The vultures of Wall Street and multinationals that would have been barred from operating in many of these countries were allowed in to gorge on the entrails at last. GE gobbled up Korea's LG.  JP Morgan and Merrill Lynch swooped in a grabbed huge stakes in Asian security firms.  This while farm girls were forced into prostitution and farm boys into drug selling

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by: FeralCat @ Fri Oct 10, 2008 at 14:38:21 PM CDT

[ Parent ]

Pls stop this self importance theme! (0.00 / 0)

"Writers like Matt Stoller and me did everything we could to push this outrageous news out there before the bailout vote happened, and were met with almost complete silence from the traditional media"

A crying shame! Yeah, they shold have stopped the presses and run the new headline "Sirota believes bailout to be a fraud!" on page one. And this should have been in every evening news, too!

No, seriously, David, scale down a bit, pls. OpenLeft is at rank sevenhundredsomething at Technorati. And there are better known pundits and authors than you. To claim that the "traditional media" should have listened to you is embarassingly ridiculous.

Btw, I don't know if the provisions are unenforceable, but it sure looks as if Paulson voluntarily moved to plan B, investing directly into banks. Based on a provision that is only in the bill becuase the Dems pressed for it. Now, what was yor point, exactly???

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by: Gray @ Fri Oct 10, 2008 at 13:44:03 PM CDT

Troll (0.00 / 0)

You are a troll - and this comment is proof of it. This should have been reported - and it wasn't, until after the vote. That's a travesty - and your insistence on making an ad hominem, off topic personal attack is disgusting.

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by: David Sirota @ Fri Oct 10, 2008 at 15:28:48 PM CDT

[ Parent ]

Quite to the contrary, (0.00 / 0)

Actually it's your name calling now that violates the guidelines, right? And my comment focussed on that statement in your story, which sounds as if the important point was that the media ignored you - instead of that the media ignored the issue. So, this is not off topic at all. And I'm not the first one at all to post such a criticism, based on something you wrote. I'm sry if you misunderstood this as an ad hominem attack. This was intended to focus on this unfortunate, unintentionally (?) pompous sentence.

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by: Gray @ Fri Oct 10, 2008 at 19:05:47 PM CDT

[ Parent ]

The Facts Tend To Suggest Praise (4.00 / 2)

If I understand correctly, David is suggesting that he, Matt, and bloggers at Naked Capitalism, tried to get the traditional media to report on the Treasury conference call. Why? Because that call was highly relevant to the debate over the merits of the bailout, whether it had any teeth.

Remember Gray, it was Matt who posted the conference call story at DailyKos, which made it on the rec list for most of that day.  It was seen by tens of thousands of people.  

And whatever you think of it, DailyKos IS influential and DOES seed stories into the traditional media. (Why? Because DailyKOS is now major competition for the trad med...if big stories are found only there, then this fact will become widely known, and trad med will lose viewers...so they do look to DailyKos for stories.)

Also, apparently David...who does have a nationally syndicated column in the trad med...and is now a regular interview on MSNBC, etc...tried to promote the story in these venues as well. David then indicates that their efforts "were met with almost complete silence from the traditional media that was shamelessly pushing the bailout package."

Your response to these facts, I think, misapprehends David. He is not suggesting that the trad med should have reported: "David and Matt believe the conference call underscores the fact that the bailout bill is toothless." No, they are saddened by the fact that their efforts were not successful in getting the basic story of the conference call itself into the trad med.

I do not think in this particular fact setting (maybe in others?) pomposity is really a fair criticism. As I see it, David and Matt, using the venues available to them, did good work. As I see it, the facts tend to suggest that praise is in order.  

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by: Demo37 @ Fri Oct 10, 2008 at 20:20:08 PM CDT

[ Parent ]

OK, that's an important point. Sorry, David! (4.00 / 1)

Yes, I missed this. Of course, it's something different if you write a blog post at one of the smaller liberal blogs, or if you do that at the number one left wing blog. I didn't remember this, and I'm sure I haven't seen this way back when because I don't read DKos regularly. Of course, this puts the "complete silence" statement into a different light for me.

My apologies, David! I can see now that my criticism was over the top. I don't have any good excuses, except maybe that the economic crisis is tearing at my nerves, because I have plans for getting a better job next year and it increasingly looks like the recession may prevent this from happen. This makes me behave grumpy and erratic now, I guess. Again, sry!

And thx for taking the time to show me the larger picture, Demo! I very much appreciate this.  

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by: Gray @ Sat Oct 11, 2008 at 03:18:35 AM CDT

[ Parent ]

One point David, I think it's important (0.00 / 0)

if the bailout vote failed, and all this chaos ensued, the failure of the bailout vote would have taken all the blame for the current market chaos.  The bailout passed, it's weaknesses are being exposed and not only that, specifically the tools placed in by Democrats are being ignored and dismissed, willfully and purposefully.

So, we must make the case as progressives, that look, you got what you asked for, the bailout package passed and was signed into law and things are still tanking, so no more.  

Next, block any further allocation after the initial authorized $350 Billion, and if we can't block or at least steer more effectively the initial $350 Billion we should do that to.  

We can also use politics to embarass and keep the spotlight on those initial companies that receive the first installments of these loans.  As we have seen with AIG and there $400k spending spree, there will be alot of opportunity to hold these companies feet to the fire.  The bailout can come with strings!!!

I mean, I called both my Senators to vote NO on the bailout.  But we must use the passage of bailout as an effective tool and counter-measure.  I hope I made my point clear, let's make the vote work for us.  McCain is trapped by it.  I guess I'm looking for a silver lining or at least an argument to say, hey wait a minute, you screamed for this bailout or else the economy would tank, you got what you wanted rushed through, and things are still coming apart, in fact they are getting worse.

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by: gaspare @ Fri Oct 10, 2008 at 13:58:14 PM CDT

The Failure of Trad Med and Illusory Compensation Limits (0.00 / 0)

David is correct. The traditional media inexcusably failed to report on the now infamous Treasury conference call...when it happened.  Did CBS, NBC or ABC report on it?  How about USA Today? The AP? Your local newspaper?

Moreover, the traditional media did an abysmal job reporting on what the bailout bill actually said and did. It was almost as if no reporter in the traditional media actually bothered to read the 101 page bill. Not a one! Was that too much to ask?

David, Matt, and a handful of others in the blogosphere deserve major praise for their efforts in getting information out regarding the Treasury conference call (as well as the specifics of the bill).

With respect to the issue of whether the bailout bill had genuine executive compensation limits in it, again, the traditional media utterly failed to accurately report on this dimension of the bill.  Detailed, informed analysis of these provisions?  They were nowhere to be found in the traditional media, and truly, all the reporters in the trad med had to do was read 2-3 pages! Was that too much to ask?  

For anyone interested, I wrote up a detailed analysis of the bailout bill, and posted it at a number of sites in the blogosphere. FYI, here is the relevant section on executive compensation:

THE LAW DOES NOT TRULY REQUIRE PAULSON TO LIMIT EXECUTIVE COMPENSATION

The prospect of billions of taxpayer dollars under this program flowing to assist companies that pay outrageously inflated executive salaries and/or provide ridiculously large departure bonuses has obvious political dimensions. The voters are not going to like this when it happens, and rest assured, it will happen.  

So, let's get right to it: does the bailout bill actually prevent outrageously inflated executive salaries or ridiculously large departure bonuses for those who participate in the bailout bill? What's your guess?  If you guessed no, you would be correct. Hey, you're learning!

Here is the one section of the bailout bill that deals with this issue, Section 111, in its entirety, with bold that I have added:

SECTION 111. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE

   (a) APPLICABILITY.- Any financial institution that sells troubled assets to the Secretary under this Act shall be subject to the executive compensation requirements of subsections (b) and (c) and the provisions under the Internal Revenue Code of 1986, as provided under the amendment by section 302, as applicable.

   (b) DIRECT PURCHASES.-

   (1) IN GENERAL.-Where the Secretary determines that the purposes of this Act are best met through direct purchases of troubled assets from an individual financial institution where no bidding process or market prices are available, and the Secretary receives a meaningful equity or debt position in the financial institution as a result of the transaction, the Secretary shall require that the financial institution meet appropriate standards for executive compensation and corporate governance.  The standards required under this subsection shall be effective for the duration of the period that the Secretary holds and equity or debt position in the financial institution.

   (2) CRITERIA.-The standards required under this subsections shall include-

   (A) limits on compensation that exclude incentives for executive officers of a financial institution to take unnecessary and excessive risks that threaten the value of the financial institution during the period that the Secretary holds and equity or debt position in the financial institution;

   (B) a provision for the recovery by the financial institution of any bonus or incentive compensation paid to a senior executive officer based on statements of earnings, gains, or other criteria that are later proven to be materially inaccurate; and

   (C) a prohibition of the financial institution making any golden parachute payment to its senior executive officer during the period that the Secretary holds an equity or debt position in the financial institution.

   (3) DEFINITONS.-For purposes of this section, the term "senior executive officer" means an individual who is one of the top 5 executives of a public company, whose compensated (sic) is required to be disclosed pursuant to the Securities Exchange Act of 1934, and any regulations issued thereunder, and non-public company counterparts.

   (e)AUCTION PURCHASES.-Where the Secretary determines that the purposes of this Act are best met through auction purchases of troubled assets, and only where such purchases per financial institution, in the aggregate exceed $300,000,000 (including direct purchases), the Secretary shall prohibit, for such financial institutions, any new employment contract with a senior executive officer that provides a golden parachute in the event of an involuntary termination, bankruptcy filing or insolvency, or receivership. The Secretary shall issue guidance to carry out this paragraph not later than 2 months after the date of enactment of the Act, and such guidance shall be effective upon issuance.

   (c) SUNSET.-The provisions of subsection (e) shall apply only to arrangements entered into during the period during which the authorities under section 101(a) are in effect, as determined by section 120.

Okay, so under the terms of the law, the executive compensation limitations, such as they are, apply in very, very, very, very limited circumstances. (Get the idea?) Why? Simple:  there are really only two events that trigger application of these provisions:

  1. direct purchases of troubled assets from an individual financial institution where no bidding process or market prices are available; and

  2. auction purchases of troubled assets, and only where such purchases per financial institution, in the aggregate exceed $300,000,000 (including direct purchases).

The first triggering event occurs when Paulson determines that he has purchased a troubled asset that has a market value of zero, zed, nada, zip.  So, in all those other instances, when the asset Paulson purchases has a value to somebody, anybody in the world, of at least one penny, one lousy cent, the triggering event has not occurred, and thus, there is no need for Paulson to even advance to the remaining terms of Section 111.  (Which are hopelessly weak anyway.)

As a practical matter, I would assume that 99% of the assets that Paulson "purchases" under bailout bill will have a value to somebody, anybody, of at least one penny.  A contrary hypothesis seems implausible, for it would envision Paulson spending taxpayer's money on assets that every single person in the world considers to be completely, wholly, and totally worthless. Why would Paulson spend taxpayer money to "purchase" assets that cost nothing?  Bottom line: this triggering event is not going to occur.

So, in truth, we are left with only the second triggering event, wherein Paulson decides to hold an auction, then purchases assets from a seller at his auction, then the total number of assets held from that seller are in excess of $300 million.  Such auctions may happen, or they may not happen. Who knows?

But let us assume that Paulson decides to hold at least one auction, then ends up reaching the $300 million figure. He would then advance to these exciting executive compensation restrictions:

the Secretary shall prohibit, for such financial institutions, any new employment contract with a senior executive officer that provides a golden parachute in the event of an involuntary termination, bankruptcy filing or insolvency, or receivership.

Notice three problems. First, this applies only to new employment contracts. Second, more significantly, what does the term "golden parachute" actually mean under the bailout law? Strangely, the bailout bill contains no definition for this term! As such, a fair question to ask is what dollar amount renders a severance package "golden"?  The law is silent.  As such, what constitutes "golden" would be entirely up to Paulson. Thirdly, the law here does not actually preclude golden parachutes in the event the executive leaves voluntarily (wink, wink) perhaps to spend more time with his family (wink, wink). What?! This is a major loophole.

In a recent article, on this subject, Paul Abrams (JD, MD) examined the executive compensation provisions in even more depth than I have here.  He concluded that that the executive compensation limitations in the bailout bill were weak and pathetic.  I certainly agree with this assessment, but I (and I suspect the American people when they learn about them) would probably take it one step further.  

The executive compensation limitations in the bailout bill are a sham, an utter and complete fraud upon the American people.

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by: Demo37 @ Fri Oct 10, 2008 at 16:43:01 PM CDT

Good article, Demo, but... (0.00 / 0)

let's be realistic, not even the most fireproof provisions in this law could prevent the secretary of the treasury OF THE BUSH ADMINISTRATION from simply disregarding it. With this administration, there is no repsect for the law, there is no accountability, there is no good government. As simple as that. And while it would have been good for their public image if the Dems would have fought harder for tighter provisions against greedy CEOs, the result would still have been the same: Nothing serious would come out of it.

This will only change under president Obama and a stronger Dem Congress. And the economic crisis is a much more urgent issue now, CEO compensations are an almost irrelevant point in relation to the hundreds of billions, if not trillions, that are at stake right now. Legislation to reign in the inflation of manager's boni and golden parachutes can wait. Action to prevent the crisis from becoming the next great depressions can't.  

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by: Gray @ Sat Oct 11, 2008 at 05:37:30 AM CDT

[ Parent ]