The stimulus bill that just passed congress is nothing like what George Bush tried to do and failed (by listening to a man who had wall streets interests in mind not the president he was sworn to serve). Mr. Paulson was right when he argued that we must secure the financial system. The saving of CitiGroup, Bank of America, JP Morgan Chase, Wachovia and et al was to stop any run on the banking system which also included local banks, savings and credit unions. The execution of the rescue left a lot to be desired (the understatement of the millennium) when almost a trillion dollars was asked for and given and then stolen. YES STOLEN. The people who helped bring about the end of true capitalism was given money and told I don’t care what you do with it. So Merrill Lynch, Goldman Sacks, Bear Sterns gave themselves a much needed rest in Las Vegas to unwind from loosing, or squandered, or stole (you pick the adjective). It must have been exhausting bankrupting their companies and paying them with your money. I beg you to tell your friends who support this destruction of sanity that President Bush didn’t start the move to socialism. He tried to save you. He tried to protect your country. Why do I say this? I will tell you.

When the subprime mortgage meltdown started and banks with CDO (Collateralized Debt Obligations) MBS (Mortgage Backed Securities) and a half dozen other alphabet securities lost all of their value (partial due to an accounting rule). Can you imagine 25 trillion dollars in total security obligations and debt was caused by an accounting rule? It is true. The rule is called mark-to market. It is an accounting rule that tells holders of asset backed securities that it is better to price at what the current market value is not what you bought it at (FAS 157). The rule, in a nut shell, tells holders of these securities can inflate the value when the price goes up (creating a better balance sheet then what is true) and when the value goes down, maybe a year or six months later, you now have to scramble to find cash to replace the lost value of the asset. If you are leveraged on these assets 60:1 that is nearly (is) impossible (the people who could give you the money doesn’t believe you balance sheet anymore). The point I am making is that if the accounting rule was historical costs (what you bought it at) and since most of the assets are backed by houses, apartment complexes, and even office buildings that are paying their mortgages (95%) and income is coming in the historical costs was adequate. The second point is that most of these assets were booked for long term investments not available for sale (even if they were then changing them to held-to-maturity for the duration of the crisis) and then when there is a market for them petitioning the SEC (Securities and Exchange Commission) to sell them. A better way to fix the financial system and the only money mentioned was the amount in total nationwide investment debt. The uptick rule is another matter it just means that a short sale (betting a stock will go lower) can only be instigated after the stock is bid higher.

Enter President Bush who desperately wanted to stop the collapse so he allowed himself to be snookered by Paulson, Bernake, and Geitner to do this 750bn dollar boondoggle. What he wanted to do was right. He wanted to protect you deposits. The banks I mentioned earlier carry about 40% of the US populations deposits. I just took BofA, Wells Fargo, and Citibank to highlight the difference in cash the banks have on hand to pay checks, close accounts and meet ongoing customer’s payrolls. The amounts are staggering to the untrained eye more in a minute).      

The amount of deposits (book value not actual amounts in the bank) for three of the major banks in this country is almost two trillion dollars. The amounts the banks have to meet day to day operations is less that one hundred billion dollars. The information I just gave you the President had the same information on the other 4,997 commercial and savings banks, and credit unions maybe another 10 trillion dollars of deposits with less than 1 trillion dollars in cash on hand. The FDIC could not print or back even ? of that amount. That boys and girls would be a depression. What would you do? President Bush was not is not and will never be a socialist not even close. The only thing President Bush was was naive to trust Hank Paulson and Ben Bernake. I don’t care how many books the Fed Chairman read. Many people argue that maybe about 300 billion would be needed to back stop some of the assets till a buyer could be found (a year maybe two) for them. How is that idea socialism. I think alot of Sean, Rush, and Glenn, but this time I believe they are wrong about this.