Monday, September 29, 2008

"The Emergency Economic Stabilization Act of 2008"

Only one more day to go in September, and 40 days until Agnes and I leave for our long-anticipated vacation. I'm just hoping we get there before my head explodes from frustration about current events or Agnes decides to do something to some idiot (other than me) that attracts the attention of the coroner. Keep your fingers crossed.

Agnes's parents return home this afternoon. They've spent the last two weeks with us getting their great-grandchild fix with Leya and forcing me learn all sorts of new things...such as (courtesy of technically adept son-in-law Vin) how to locate streaming German TV on the internet, then connect the laptop to the big screen television for a wider variety of entertainment than the measly three channels of German TV for which I'm paying Dish Network through the nose. Sigh.

And so our lives and schedules will return to normal, or whatever passes for normal here. The local commuter bus drivers are still on strike, so my commute will remain longer and more expensive than usual, which is okay, because it just helps stoke my general curmudgeonly rage over my favorite topic...the economic bailout plan.

You didn't think I'd go a day without fulminating about that, did you?

The draft of "The Emergency Economic Stabilization Act of 2008" was released yesterday...all 110 pages of it. You can download and read it here, and this CNN article gives an overview of its key provisions. As with most legislation, it's written in dense language, and makes frequent reference to other laws and documents to which the casual reader is unlikely to have ready access. Here are my thoughts...

Yesterday, I reported on my daughter's rage over proposals she'd heard about bailing out homeowners who had taken out mortgages they couldn't afford. Here's what the bill says on page 28, in Section 111a(2)(B):

"MODIFICATIONS. In the case of a residential mortgage loan, modifications made under paragraph (1) may include: (A) reduction in interest rates; (B) reduction of loan principal; and (C) other similar modifications."

The key words here are "reduction of loan principal." If, as my daughter raged yesterday, people facing foreclosure are allowed to refinance a lower principal amount, this provision is grossly unfair to those who responsibly bought houses they could actually afford.

I also noted yesterday my consternation about provisions for an oversight board staffed by the same people whose lack of foresight and oversight contributed to the economic meltdown in the first place. Well, it's true. Section 104 of the bill establishes a "Financial Stability Oversight Board" whose membership includes the Fed Chairman, the Secretary of the Treasury, the Director of the Federal Home Finance Agency, the Chairman of the Securities and Exchange Commission, and the Secretary of Housing and Urban Development. Section 125 of the bill also establishes a 5-person Congressional Oversight Panel which may procure the "temporary and intermittent services" of "experts and consultants" (section 125(d)(2)). I think it will be very important to keep an eye on who is appointed to the Oversight Board, and who that board hires as its experts and consultants...images of foxes guarding henhouses come to mind.

Of course, opinions on this legislation are like navels...everybody has one. Some expert economists (whatever they are) think the legislation is flawed; others think it's great. Some experts predict that the government could actually make money in the long term as the economy recovers; others think it will lose its fiscal shirt. Congress continues to run scared at having to actually take some action for which it might be held to account.

Okay, I'm done with this for now. I'll spend some more time reading the draft legislation and listening to the arguments and deciding how I really feel. But I think my fundamental concerns will remain unchanged:

1. Those who created the crisis will go unidentified and unpunished;

2. Oversight of the recovery will be in the hands of the same people who created the crisis in the first place;

3. In a misguided attempt at fairness, people who took out mortgages they couldn't afford will receive economic assistance they don't deserve; and,

4. The average taxpayer will pay the bill.

And that pretty much sums it up.

Have a good day. More thoughts tomorrow.



The Mistress of the Dark said...

Let's just say ARGH and call it a day.

Bilbo said...

Good morning, Andrea! You're up early...I guess the kittens are doing their job. Let's share an ARGH! and face the day, eh?

Amanda said...

Y'know, all the way on this side of the world, my mother and I had a similar conversation about why those people should be bailed out. I guess its no clearer for you and your daughter even though you're right there in the midst of things.

KKTSews said...

I am so appalled at the idea of lowering principal on mortgages, I cannot coherently speak. That is completely outrageous. I also am not seeing the dire "no credit available" warnings that are being batted about. Why do I keep getting offers for more credit cards and un-asked-for increases to my credit line. Oh I know---it's because I actually PAY my obligations. What a smuck I am!

Bilbo said...

Katherine - you sound just like my daughter, except with less volume and vituperation. I've also thought about the alleged drying-up of credit when compared to the continuing flood of credit card offers. I don't think we'll EVER get the straight story of what has gone on here. Amanda - you and your mom would just love being here and trying to make sense of the whole thing...

Mike said...

"(B) reduction of loan principal"

We could start a new version of the WPA where these people can work off their newly aquired debt to society at minimum wage.

Now I have to go look up 'vituperation'.