Sec. Paulson: Taxpayers Will Fund Bear Stearns Buyout

It's official ...

Hoooooray!

The national Treasury will pay for any losses incurrend by the Fed in its bailout of Bear Stearns:

The securities backing a $29 billion Fed loan to Bear Stearns Cos. consist primarily of "mortgage backed securities and related hedge investments," the Treasury Department says.

The disclosure, in a letter to the Senate Finance Committee staff, is the first official comment on the securities behind the controversial loan, made on March 16 to facilitate a takeover of Bear by J.P. Morgan Chase & Co. The Fed made the loan with Treasury’s approval fearing Bear would otherwise fail, causing a serious disruption in financial markets.

...

Treasury also supplied a letter from Secretary Henry Paulson to Federal Reserve Bank of New York President Timothy Geithner, dated March 17, saying, "On behalf of the Department of Treasury, I support this action as appropriate and in the government’s interest, and acknowledge that if any loss arises out of the special facility extended by the FRBNY to JPMCB [J.P. Morgan Chase Bank], the loss will be treated by the FRBNY as an expense that may reduce the net earnings transferred by the FRBNY to the Treasury general fund."

To the victors go the spoils!

To the taxpayer goes the bill.

No word yet on any plans to hold the folks responsible for this mess ...

And no plans to take serious measures to make sure that it does not happen again.

The markets are celebrating, with the Dow up more than 300 points, as institutional traders celebrate the reality that the Treasury and the Fed are looking out for them first.

•  Time to Party

  How you going to celebrate?

  by bink on Tue Apr 01, 2008 at 10:53:57 AM PDT

  •  taking the stimulus check/refund

    and shorting the dollar when its temporary corrective rise ends soon?

    endless war/ huge debts/ falling tax revenues/falling asset prices/ negative real interest rates/ negative job creation/ rising inflation/ stagnant to falling real wage growth/ new addition wall street bailouts!

    Good work guys, that list was a bit on the light side before the bailouts!

    by Redbug on Tue Apr 01, 2008 at 11:04:43 AM PDT

    •  You know your stimulous check comes

      out of your deduction next year.  

      Meanwhile Bear Stearns isn't going pay back their stimulous check and their CEO has walked away with $63 Million!

      LOL

      These people are such crooks.

      by inclusiveheart on Tue Apr 01, 2008 at 11:08:32 AM PDT

      •  I don't think that's true,

        but nothing BushCo^® does would surprise me.

        by PBen on Tue Apr 01, 2008 at 11:20:51 AM PDT

        •  That's what happened with the last one

          in 2001 and it was reported that they are sticking with the same plan on this one too.

          by inclusiveheart on Tue Apr 01, 2008 at 11:26:52 AM PDT

        •  yes he did, he sold his stock for 63 million

          it was worth 1 million until the $10 offer
          then he sold for 63 million....

          http://www.huffingtonpost.com/...

          by Statusquomustgo on Tue Apr 01, 2008 at 11:39:39 AM PDT

          •  Sorry

            I was talking about the effect of the stimulus check on next year's taxes.

            by PBen on Tue Apr 01, 2008 at 01:00:02 PM PDT

            •  that is also true, it will come out of your

              next years taxes too, just like the
              $300.00 did the last time.

              by Statusquomustgo on Tue Apr 01, 2008 at 01:24:58 PM PDT

              •  Where'd you see that?

                by PBen on Tue Apr 01, 2008 at 01:41:39 PM PDT

                •  I was trying to find where I saw it but couldn't

                  so I went to the IRS web site and an hour
                  later I have the info for you... sheesh it
                  is so hard to find anything on that site...

                  Q. Is my stimulus payment taxable?

                  A. No. You will not owe tax on your payment when you file your 2008 federal income tax return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment. In the event you do not qualify for the full amount this year but you do next year, you will need to have the letter as a record of the amount you previously received.  

                  Q. Will the payment I receive in 2008 reduce my 2008 refund or increase the amount I owe for 2008?

                  A. No, the stimulus payment will not reduce your refund or increase the amount you owe when you file your 2008 return.

                  http://www.irs.gov/...

                  by Statusquomustgo on Tue Apr 01, 2008 at 04:46:52 PM PDT

                •  I was wrong by the way... :)

                  by Statusquomustgo on Tue Apr 01, 2008 at 04:47:42 PM PDT

                  •  You were

                    and I think I tried finding the info as long as you did too, with no luck, so thanks for digging it up.

                    BTW, what you found had been what I'd been led to believe when it was passed.... I'm glad you were wrong!

                    by PBen on Wed Apr 02, 2008 at 05:17:47 AM PDT

  •  April fools?

    Please? Pretty please? With sugar on top?

    No?

    ...sigh...

    by discocarp on Tue Apr 01, 2008 at 11:16:14 AM PDT

  •  the devil is always in the details

    and lord knows this is the devil

    by gnat on Tue Apr 01, 2008 at 12:11:47 PM PDT

  •  The Federal Reserve bank can not loan

    money to Bear Stearn.

    "The securities backing a $29 billion Fed loan to Bear Stearns Cos. consist primarily of "mortgage backed securities and related hedge investments," the Treasury Department says."

    That language is from the dumbest sob in America our Secof Treas. Paulson. The only entity dumber then him is the Wall Street Journal and the MSM of America.

    Here's another trio of morons,... "Treasury is very supportive of this agreement, as well as the merger agreement between JPMorgan and Bear Stearns," Treasury’s assistant secretary for legislative affairs Kevin Fromer said in a letter to Russ Sullivan and Kolan Davis, the Democratic and Republican staff directors respectively for the Senate Finance Committee. "Among other things, those agreements were necessary and appropriate to maintain stability in our financial system at a critical juncture."

    Was/is it a merger or a sale? Next week it will be a lease with option.

    http://blogs.wsj.com/...

    Duties & Functions

    Bureau of Engraving and Printing

    The United States Government began printing money in 1862, when "greenback" currency was issued to finance the Civil War. Five clerks working in the attic of the Main Treasury Building affixed the Treasury Seal to the bills. The functions of the Bureau of Engraving and Printing (BEP) were formally established on March 3, 1877. It is now administered by the Treasurer of the United States. The BEP's functions include:

    Designing and manufacturing United States currency;
    Designing and manufacturing many postage stamps, customs stamps and revenue stamps;
    Designing, engraving and printing Treasury bills, notes and bonds, and other U.S. securities;
    Designing, engraving and printing commissions, permits, and certificates of awards.

    http://www.treas.gov/...

    The Federal Reserve bank is a private bank and as such is neither Federal or Reserve.

    We use our own ink, paper, presses and labor to create our own currency. The Federal Reserve bank DOES NOT print money, ever.

    The US Treasury issues bonds to act as collateral for the loan of our money via the federal reserve bank. I know it sounds absolutely batshit crazy because it is batshit crazy.

    We make our money, we make our bonds, we borrow our money, we pay interest on our own money because we are the dumbest people in the entire world..

    http://www.factcheck.org/...

    Here's a neat video about money so simple the grandkids understood it.

    http://video.google.com/...  It's called Money As Debt.

    by 0hio on Tue Apr 01, 2008 at 02:18:16 PM PDT

•  Does this mean

  that the checks we are supposed to get in May will be automatically sent to Bear Stearns and we will get a thank you for our charitable donation which is not tax deductible?

  by gchaucer2 on Tue Apr 01, 2008 at 10:55:54 AM PDT

  •  No

    But why not just send a million dollar check to everyone in America.  Wooooooo!  Let's go totally crazy here!

    by bink on Tue Apr 01, 2008 at 10:58:05 AM PDT

    •  Someone on this blog said that

      each American through this bailout now has contributed $225 to Bear Stearns.  When the deal went through, Bear Steans was trading at $10/share.  I want my 22.5 shares.

      by inclusiveheart on Tue Apr 01, 2008 at 11:11:19 AM PDT

•  Privatize the profits, socialize the risks

  The Republican Mantra

  by aprichard on Tue Apr 01, 2008 at 10:59:00 AM PDT

  •  "Socialization"

    So...they label us "the socialists",
    and make it so. (We, collectively, accrue their costs, for the benifit of the few)

    Funny.. the lemming repugnibot voters don't realize they're also a part of the 'socialist' collective. They think they're benefiting from this 'privatization'. Morans

    by Orj ozeppi on Tue Apr 01, 2008 at 11:20:28 AM PDT

  •  fucking rat bastards

    by Statusquomustgo on Tue Apr 01, 2008 at 11:40:55 AM PDT

•  Privatized gains / Socialized losses

  Heads I win / Tails you lose
  Sure Charlie Brown, I'll let you kick the ball

  How many times do we have to relive this one?

  by Mosquito Pilot on Tue Apr 01, 2008 at 11:00:56 AM PDT

•  Remember how Congress fought against a "minimum

  wage increase"..? You ever try to get food stamps when you were laid off at work and collecting unemployment insurance..(you have to pay taxes on that paltry amount too) I was offered 10.00 a month in food stamps...(I lived on coffee) But, by all means lets keep bailing out the greedy bankers and mortgage companies..and paying for every no-bid, no accountability, no oversight, defence contractor that is friendly (with) or gives campaign money to politicians for war-profiteering....(you complaining?..thats so unpatriotic..so un American...you must be working for the terra-ists)

  by chabuka on Tue Apr 01, 2008 at 11:11:06 AM PDT

•  so what's the total

  for corporate welfare under the repubs now?

  by sc kitty on Tue Apr 01, 2008 at 11:17:12 AM PDT

  •  $380 Billion

    And that is only in the last two weeks.

    by gjohnsit on Tue Apr 01, 2008 at 11:32:41 AM PDT

•  An Analogy

  The Fox knocks on the Farmers door and offers him a bribe if he will give the Fox access to his Chickens.

  The Farmer takes the money and gives the keys to the Hen House to the Fox, who then systematically, over time, gorges himself on the Chickens.

  Then one morning the Farmer goes out to the Hen House and "discovers" that all his chickens are gone.

  He then calls up his insurance company and in a panic says "Oh my God! Somehow, the Fox must have got into my Hen House and devoured all my Chickens!"

  The Insurance Company makes the Farmer whole and makes recommendations on how he should build a more secure Hen House.

  The new Hen House is constructed and the game begins anew.

  see who the players are...

  The Fox knocks on the Farmers door and offers him a bribe if he will give the Fox access to his Chickens. The Farmer takes the money and gives the keys to the Hen House to the Fox, who then systematically, over time, gorges himself on the Chickens. Then one morning the Farmer goes out to the Hen House and "discovers" that all his chickens are gone. He then calls up his insurance company and in a panic says "Oh my God! Somehow, the Fox must have got into my Hen House and devoured all my Chickens!" The Insurance Company makes the Farmer whole and makes recommendations on how he should build a more secure Hen House. The new Hen House is constructed and the game begins anew. see who the players are...

  The Actors in our morality play are now making their curtain call:
  The Fox - played by the Banksters and Wall Street
  The Farmer - played by our elected representatives
  The Chickens - played by the gullible amongst us
  The Insurance Company - played by all the taxpayers
  The Hen House - representing the regulatory framework

  by stillman on Tue Apr 01, 2008 at 11:18:00 AM PDT

  •  oops that formatted wrong

    sorry

    by stillman on Tue Apr 01, 2008 at 11:19:02 AM PDT

•  Should have demanded equity

  I recently went back and looked at the Chrysler bailout. When the government bailed out Chrysler, it gave a guarenteed loan AND got long term stock options which it sold later for a hefty profit.  Apparently this administration doesn't believe in profit...

  by Chrisfs on Tue Apr 01, 2008 at 11:19:01 AM PDT

•  But homeowners are on their own.

  I'll be sure to share this corporate welfare story to some of my more vocal Libertarian friends.

  by beachmom on Tue Apr 01, 2008 at 11:19:41 AM PDT

•  $1,251

  That is your part for the Wall Street bailouts so far.

  by gjohnsit on Tue Apr 01, 2008 at 11:31:37 AM PDT

•  Wow

  so where are the people who were insisting this wasn't a taxpayer bailout?

  by happymisanthropy on Tue Apr 01, 2008 at 11:32:28 AM PDT

•  This is the Shock Doctrine in action

  and all the free marketeers harrumphing about their new "plan" to restructure the regulation of these enterprises is a full frontal Shock Attack.

  they are relying on basically no one knowing heads or tails about the symptoms of the current market conditions, and that saying they are "taking action" they are tricking most Americans (even Barney Frank apparently) into thinking they are on top of the situation.

  by Mike Czech on Tue Apr 01, 2008 at 11:52:55 AM PDT

•  on a related note

  I posted this question on another thread, but have received no response yet. Only on Wall Street can billion-dollar bank losses be a good thing. Any takers?

  by gnat on Tue Apr 01, 2008 at 12:09:44 PM PDT

•  already diaryed...

  here
  .
  .
  .made you look?

  by KenBee on Tue Apr 01, 2008 at 01:10:28 PM PDT