October 2, 2008

We're Being Had and Here's the Proof - Call Congress and Tell Them - No Bailout!

Hat tip Politics After 50

Verification of the con game being run on the American taxpayer by Paulson and his Wall Street cronies comes via the contents of a secret conference call meeting on Sunday, Sept. 28th between Treasury Department officials and some 800 financial services industry insiders where they talk about how the additions to the bill that the Democrats "fought for" are just shams (CEO pay caps, metering out the $700 billion in smaller chunks, etc.). They can ALL be ignored or worked around.

Notes compiled by the blog Naked Capitalism are below on the call. Also, give THIS a read, watch the video below and then CLICK HERE TO SEND A LETTER TO YOUR CONGRESSMAN RIGHT NOW and tell them no way on this bailout con job.

The call:

Memo found at: http://dealbreaker.com/2008/09/treasury-to-hold-conference-ca.php
TO: SIFMA Government Reps Committee
FR: SIFMA Washington Office
DA: September 28, 2008
RE: Conference Call w. Treasury / 9:00PM TONIGHT

At 9:00pm tonight, Sunday, September 28th, there will be a call with Treasury officials
to discuss the Troubled Asset Recovery Plan. This call is specifically for analysts.
Please distribute ASAP to analysts in your firm who might be interested in participating.
We have also distributed this call notice through various SIFMA Committees to solicit analyst

Please find the conference call information below:
Date: Sunday, September 28th
Time: 9:00PM ET
Toll-free Dial-in: 1-866-843-0890
Entry Code: 1812173#

Download the bit torrent recording of the call. The call has also been posted to Youtube in five parts.

There is a live blogging recap of the call at Dealbreaker.

Notes on the call from courtesy of Naked Capitalism

1. The tranching is a mere formality, and the Treasury boys as much as
said so. They could take the $700 billion max as soon as the bill has

2. However, they do not plan any action immediately,
will wait a couple of weeks. They want to focus their efforts on
stronger companies but also made noise about protecting the financial
system. This, by the way, is the Japanese convoy system all over.

3.There seemed to be a lot of tap dancing about what price they will pay
for assets and no straight answer about their policy on warrants. They
did say that if the amount sold was greater than $100 million, they
would take warrants. FYI, the current draft allows them to pay up to
the price at which the assets were initially booked (yikes) . I wonder
if this is obfuscation, if they have an idea of what the plan to do but
will not admit it in any public forum.

4. As the person who
listened to the call stressed, DealBreaker wasn't clear on the
bifurcated process. If you come to the Treasury and you are in trouble,
you get reamed. Bear/AIG style treatment, execs probably fired. But if
you participate on a voluntary basis, the intent is to make it very
user friendly. That is consistent with Paulson's position during the

5. The exec comp provisions sound like a joke,
They DO NOT affect existing contracts, they affect only contracts
entered into during the two years of the authority of this program and
then affect only golden parachutes. More detail on that point, but I
don't need more detail to get the drift of the gist.
Additional notes from the call compiled by Naked Capitalism:

1) If even the Treasury is saying tranching is a formality, then it really is nothing. Not sure why Dems fought so hard for a fig leaf.

2) Waiting a couple of weeks because no one has any idea when or where the next bomb will blow up. In other words, all their doomsday scenarios about Black Monday were B.S. They screamed the check had to be written by Monday, but now they're saying they actually have a few weeks before they need to cash it. Plus, this will allow them to "seek guidance" from GS, JPM, and other selfless public servants about where the money should be funneled.

3. The tap dancing is because they don't want it to get out that they'll be giving a sweetheart deal. The public won't be following each individual transaction to see exactly what price is being paid. So ridiculously overpriced asset sales can be hidden in the details, and by the time some reporter (or blogger :-) combs through and analyzes the transactions, the deed will have been done. But if Paulson makes a statement that assets will be bought at par before the bailout's even begun, that will be reported and might kill the deal.

4. In other words, we need to sweeten the pot to encourage banks to come "voluntarily". Pardon my ignorance, but why the hell should we be begging banks to borrow from us? I thought a bailout should be the absolute last option for a bank. I.e., it should be so unpalatable, so unprofitable for a bank and its executives that they exhaust every private means of survival before coming for their public "reaming". I wonder if foreclosed homeowners would rate their foreclosure process as "user friendly".

5. Of course the exec comp provisions are a joke. Who do you think is going to be hiring all those banking cmte staffers and newly retired congresspeople next year during the inevitable post-election turnover? Do you really think they're going to vote to limit their salaries?