Rand Paul Doesn't Understand Bankruptcy and says Obama Will Bail Out Detroit ‘Over My Dead Body’

Sen. Rand Paul (R-KY) DOES NOT Understand the Impacts of Bankruptcy and said he will use every resource he has at his disposal to stop President Barack Obama from bailing out newly-bankrupt Detroit because he believes the city can and must save itself and learn from its fiscal mistakes.
“I basically say he [Obama] is bailing them out over my dead body because we don’t have any money in Washington.”

Bailout Fiasco: Billions to Banks, Zilch to Small Business! How One Small Business is Fighting Back!

The news is consumed with talk of our failing economy, Bailouts and Stimulus packages. From Wall Street to Bank Bailouts, the Senate is busy working out the details of the various plans. One example: It has been reported Bank of America received $20B in US government aid and $118B worth of guarantees against bad assets. Meanwhile, small businesses are collapsing across the nation. Will the Stimulus plan now in Congress also include plans for Small Business and Main Street Americans?

Here is the story of how One Small Business is Struggling to stay in business and is Fighting back:
Rogelio Castro is the American born son of Pedro and Lucy Castro who immigrated to the US in 1945. His parents founded La Guadalupana Company in Chicago, specializing in tamales and other home-made products. Over the decades their business grew and prospered. In 1992 Rogelio expanded production and opened a USDA-approved plant, making La Guadalupana products available across the Midwest. By 2003, La Guadalupana had sales of more than $1.5 million. It was no wonder LaSalle Bank (later merged with Bank of America) came calling to win their business. The Bank was full of promises, with offers of loans to help them expand nationally. The wooing worked and Castro switched Banks. The bank’s sales tactics were compelling. Grow, Buy, Borrow to your heart’s content. The Castro’s were convinced to extend themselves beyond their previously set limits and attempted to purchase another business in Ohio. Through this time, the bank merged with Bank of America. As small bank written promises were broken by uncaring national Bank’s policies, not only did the Ohio sale fall through, but the National Bank attempted to foreclose on their business, sending letters to clients and suppliers alike, informing them of their financial woes, disparaging their brand. The bank’s actions violated their agreement, but beyond that, caused the Castro’s to lose market-share from 80% to 50%.
While many small businesses might fold under such pressure from the mighty National Banks, the Castro’s decided to fight back! They took the big National Bank to court and demanded the Bank cease and desist their tactics. An Emergency Temporary Restraining Order Hearing is set for Monday, 2-9-09, at 2:30 central at the Daley center.

This is not the end to this story. Perhaps Castro will be successful in court or perhaps not and his business will fail. His fate, as all of ours, lies not only in the judgement of the courts or in the halls of Congress, but most significantly, in our Country's ultimate economic destiny.

"Republican Past" Coming Home to Roost! Gingrich Backstabs McCain, Boehner & America!

"Republican Past" is coming home to roost! In Public, Newt Gingrich said he supported the Bailout Plan (oops , I mean "Recovery Plan"). In private, he called Republican members of Congress to defeat the bill. Why? Insiders are saying Gingrich wants McCain to lose this year´s election so he can run for Prez in 2012!

Some of these Congressmen who said NO are saying they are fashioning themselves as the next generation of Newt Gingrich’s 1994 revolution. All of this Republican politicizing and backstabbing, at the expense of the American people!

Report: Gingrich Stabbed Boehner In Back, Whipped GOP Opposition To Bailout

Former House Speaker Newt Gingrich was working aggressively behind the scenes to defeat the Wall Street rescue plan minutes before he himself released a public statement in support of the package, NBC's Andrea Mitchell reported on Tuesday. Gingrich was whipping up votes for the opposition, Mitchell said, apparently without the knowledge of the current GOP leader, John Boehner, who was responsible for recruiting enough support from his caucus to help ensure the bill's passage. Ultimately, the GOP was only able to rally roughly a third of its members. "Newt Gingrich," she said on MSNBC, "I am told reliably by leading Republicans who are close to him, he was whipping against this up until the last minute, when he issued that face-saving statement. Newt Gingrich was telling people in the strongest possible language that this was a terrible deal, not only that it was a terrible deal, it was a disaster, it was the end of democracy as we know, it was socialism -- and then at the last minute [he] comes out with a statement when the vote is already in place." Indeed, as Mitchell noted, shortly before the bill's failure, Gingrich "reluctantly" came out in favor of its passage: "Therefore, while I am discouraged at the final collapse of the Bush Administration, and frustrated by the Democrats' passion for the taxpayer's money, I would reluctantly and sadly vote for the bailout were I still in office." The rest of the set of Morning Joe had some interesting takes on the news nugget. Joe Scarborough called Gingrich's backstabbing of John Boehner "undercutting his own." Mike Barnicle offered his own bit of reportorial insight: "Andrea, I could hug you for saying that, because I was told last night by two or they members of Congress that this was the opening salvo of Newt Gingrich's presidential campaign four years hence."

NEWT is now poo-pooing the facts and now claiming bias my MSNBC.

Gingrich Rips MSNBC

(The Politico) Former Speaker Newt Gingrich strongly disputed Andrea Mitchell's report on MSNBC this morning that he had privately moved to dissuade House Republicans from voting on yesterday’s bailout bill while publicly endorsing it.Speaking before the National Press Club today, Gingrich called MSNBC a “stunningly dishonest network.” While critical of many parts of the proposed legislation, Gingrich said he had nevertheless supported its passage and made that clear to Minority Leader John Boehner and others in the House.Still, Gingrich said that there was good that could come from the bill failing and encouraged what he regarded to be the long-run view of the matter stating, “Do you really want to get over a headache by giving yourself cancer?”

The Bailout, the Economy and Immigration! Why the Republicans are Primarily Responsible!

As I have written in previous blogs, Immigration is not the root cause of the economic disasters our country faces today. The Primary Issue is the Global Economy. Lupita, an old friend of many of the members of this blog said about the US economy, "Our economy is just an illusion of economic growth. Big business has partnered with the Administrations from Reagan forward to develop a method to expand our labor force, push wages down and increase corporate profits." She often predicted we would face economic disasters due to our greed. Lupita´s words came back to haunt me this week as I saw news of the bailouts.

Here are the recent headlines of this crisis:

U.S. Drafts Sweeping Plan to Fight Crisis

Treasury Announces Plan To Buy Troubled Mortgage Assets

"WASHINGTON -- The federal government is working on a sweeping series of programs that would represent perhaps the biggest intervention in financial markets since the 1930s, embracing the need for a comprehensive approach to the financial crisis after a series of ad hoc rescues. Treasury Secretary Henry Paulson announced plans Friday to quickly set up a "bold" government program to take over troubled mortgage assets from financial institutions, along with other efforts to step up the purchase of mortgage-backed securities. "The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy," Mr. Paulson said in prepared remarks for a press conference."

I tend to agree with Lupita. The blame for this economic downfall is Greed, good old fashioned American Greed! Here is my view of why we are in the mess we are in. From 2002 to 2007, countless mortgage companies, many of them "no-name", mailed me and everyone else I know mortgage offers. "Refinance Now!" read the headlines. TV and Radio ads heralded the same "Refinance Now!" Remember the annoying Ditech commercials? Everyone was pushing these loans. I remember my daughter in law speaking of a friend of a friend who was in the mortgage game and selling mortgages from her house. She said anyone could afford a house now and if we were ever in the market for a new mortgage or refinance, they would get us a good "deal." (Everybody and their brother had a friend of a friend like this pushing and pushing these predatory loans).

I also remember a peer from work who lived in a pricey California neighborhood. She and her new husband decided to purchase one of those "interest only" loans for her very pricey $400K, 2B condo. I asked how she could do that. Why didn´t she try to move to a more affordable location. She said her mortgage person persuaded her it was affordable and with property being so valuable in that area, reselling would be easy. I told her I was nervous for her and I would never buy a home without a conventional mortgage. She called me a worry wart. Now I think about her and that balloon mortgage. How many others are foreclosing now because now they can´t refinance their ballooned mortgages and they can no longer afford their tripled or quadrupled monthly rates?

I remember the phone calls from the telemarketers. They were relentless in trying to sell, sell, sell these new mortgages. My mailbox was always full of offers. Again, this started in 2002-2003. I ask everyone to use their own memory on when these changes happened. Don´t rely on someone else who wants to scapegoat.

Why is it important to remember what happened and the timing? Because then you can pinpoint for yourself who is primarily accountable. (besides our greedy selves).

Politicians from both sides are busy trying to point fingers at one another. The most ludicrous accusations were from Republican politicians who pointed to legislation from the Clinton era stopping the heinous act of "redlining." Redlining, for those who may not know, is the practice of denying or increasing the cost of services to residents in certain, often racially determined, areas. The most devastating, mortgage discrimination. So the right wing nuts try to point to the anti-redlining legislation as the root cause. Ludicrous.

If one were to point towards any legislation that most contributed to this turn of economic events they would point to the "Commodity Futures Modernization Act of 2000." This legislation provided certainty that products offered by banking institutions would not be regulated as futures contracts. This law creates a LOOPHOLE for many GOP cronies (e.g. Enron) which exempts most over-the-counter energy trades and trading on electronic energy commodity markets. The "loophole" was drafted by Enron Lobbyists working with Senator Phil Gramm (Sen. McCain´s best friend) seeking a deregulated atmosphere for their new experiment, "Enron On-line". The act specifically banned regulation of credit default swaps. These unregulated instruments, insurance policies against default on risky investments like mortgage backed securities.

This is very important to understand. Mortgage companies were NO LONGER REGULATED nor were they accountable for risky mortgages. They often sold these "risks" to foreign lenders.

HR5660 and S.3283 were introduced in December 2000 by Republicans: Sen Phil Gramm, Sen Charles Hagel, Sen Peter Fitzgerald Rep Tom Ewing, Rep Tom Bliley, Rep Larry Combest, Rep James Leach, with some Dem support including Rep LaFalce and Sens Harkin and Johnson. These bills were NEVER debated in the House or the Senate. Since then, several attempts have been made to overturn them. While these bills were championed by the Republicans, they did have some support by some Democrats, so we cannot point blame at one party. Since then however, several attempts (championed by the Dems) have been made to overturn this act. In fact, an attempt to repeal the policy was vetoed by President Bush in 2008.

However, beyond legislation, the plain facts are, the primary root cause is Greed and Corruption. Here is what Robert Reich said about Fannie and Freddie:

Fannie and Freddie, as Predicted

"Apologists will say that Fannie and Freddie exist to make housing loans to low-income Americans, so it was inevitable that the two giants would get caught in the quagmire of the housing burst. But the fact is, Fannie and Freddie -- and the executives who ran them and still run them -- have been out to maximize profits. Period. Just the same as every other mortgage and investment bank. High-risk sub-prime loans offered a higher rate of return, so Fannie and Freddie went into them big time. And because of the implicit government guarantee, Fannie and Freddie could take on even more risks and make even more money. Until now. It's another case of socialized capitalism, folks. The largest, yet. Along with making lots of money for investors and their executives, Fannie and Freddie corrupted our political process. They blocked any attempt to reign in the risks. Their lobbyists were and are the most sophisticated and among the most ubiquitous in Washington."

On Fannie & Freddie Accounting Gimmicks

Accounting gimmicks first came to light at Fannie and Freddie in 2003, at which time Fannie's and Freddie's former CEOs were sacked. Why, then, did they continue for another five years, even under new CEOs, even after policymakers first learned of them? Three reasons: (1) Top executives and shareholders continued to profit from them so there was no incentive to stop them, (2) everyone involved kept expecting home values to continue to rise -- or, when they fell, rise again soon enough -- to make up for the accounting shortfalls, and (3) Fannie and Freddie continued to be in bed with Congress and the administration. Democrats and Republicans alike have been complicit in this outrage.

Now, we are told, we have no recourse but to rescue these companies, otherwise we risk a Depression far worse than the Great Depression of the 1930s. The $700B plan Secretary Paulson is championing should be reviewed by every American. This Rescue Plan will bill the American Taxpayers trillions of dollars. This bail out for $700 BILLION dollars (probably trillions) our children and our grandchildren will be in debt for the next several decades. Additionally, the initial draft of this proposal is only bailing out the companies and their investors, NOT the citizens with mortgages. The Dems are asking that the citizens (who took these risky loans) be bailed out as well. The plans are being put in place now. We ALL should study them so we know what we are asking our grandkids to support.

Final Note:

I find the timing of these events incredible. These crises happen just months before the end of the Bush Presidency. He is bailing out his friends and his cronies now, before the Republicans are out of office. How many more of these type of coincidents will we see?

Bush Legacy:

1. Mortgage Co. Bailout

2. Gas prices through the roof ($5)

3. Nafta-Cafta extended to other countries

4. (I am sure there are many more... we should start a list.)

References:

Commodity Futures Act

Redlining

Robert Reich´s Blogs

U.S. Drafts Sweeping Plan to Fight Crisis