Knowing they would get a second act, Congress went into full
turkey mode yesterday, with the House calling a vote on the
Paulson plan when they knew the votes were not there. Ms.
Pelosi alerted all put buyers with her damning speech of GWB
and the gang. With the ensuing big blow down in the market,
the House was looking to scare everyone enough to soften up
the public to make this ugly bill more palatable.
With "only" a 12 vote swing needed to create the new gov.
broker / dealer, they can now add some features ordinary
folk might like and hope they can swing it later in the week.
The same dumb banker guys who gave away money in 2005-
2006 are now in panic mode, sucking their thumbs, pooping
their pants and not lending to anyone. There are also plenty
of bankers just playing possum and waiting to see if an agency
does come along to help them take out their trash.
The SEC and, perhaps, even the accountants, are warming to
the idea that mark-to-market accounting may not be such a
hot idea for assets that have no market. Too bad the horse is
long gone from the barn.
Americans, from left through right are steamed to beat the
band. Passage of the Paulson plan with its enormous
commitment of taxpayer capital, will leave a legacy of
profound bitterness toward the gov. One can only hope the
few smart guys left in banking will take their cue if the plan
passes into law and start lending again to deserving borrowers.
The market recouped some of its losses today on hopes the
bailout plan will pass. The gang will be back in DC on Thursday
perhaps to marshall up the forces for a new vote in the House
on a sweetened deal. That will keep hope alive in some hearts.
I do not know whether this plan's moment has passed or not,
but I do know that we all need to get past it one way or the
other to get back to business.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!