TURMOIL, FEAR, CRISIS, PANIC, COLLAPSE, SAVING THE ECONOMY, BAILOUT, CONTROL… Notice the progression from left to right.  A few bumps in the road lead to an eventual bailout with control obtained due to matters rushed in a state of panic.  Do people act rationally when they are paniced?  NO  Generally, they look for a solution.  Someone to come along and say “follow me”  I know the way!  This is exactly what is happening with the proposed bailout plan that is thankfully hitting a few speed bumps.  However, Bernake, Paulson, and the Bush administration want to see it passed immediately.

Bloomberg article:    (Emphasis in bold mine)

“I believe if the credit markets are not functioning, that jobs will be lost, the unemployment rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover,” Bernanke told the Senate Banking Committee today. “My interest is solely for the strength and recovery of the U.S. economy.”

Lawmakers have balked at rubber-stamping the Treasury plan to remove illiquid assets from the banking system, with Democrats demanding it support homeowners and limit executive pay, and Republicans resisting the plan’s reach and size.

Bernanke, putting aside his prepared remarks released earlier today, said the Treasury should buy illiquid assets at “hold-to-maturity” values rather than at discounted “fire- sale” prices. The suspension of “mark-to-market” accounting for assets, a change backed by “many banks,” would instead hurt investor confidence.

Let’s get this straight… Markets in turmoil, unknown amount of worthless assets, the banks don’t want to write them off because it will show up on their books, they will need more cash on hand once the bad debt is written off, which they don’t have, Bernake and Paulson want to push this though ASAP, Bernake and Paulson want to pay the HTM (Held to Maturity cost), and not a discounted price.  That is essentially paying for a salvaged car at the price it cost when new and in the showroom.  THIS IS NOT GOOD

HTM securities are those the investor intends to hold to maturity and is able to hold to maturity. Designation of a security as HTM allows the investor to report the security value at historical cost plus accretion or minus amortization. Unrealized gains or losses are not shown on the balance sheet, reflected in reported income, or reflected in reported net worth. 

What I want to know is what we aren’t seeing.  We have a bill trying to be pushed though Congress at a very rapid pace.  Lawmakers are being asked to assume at a minimum $700 billion worth of debt obligations that nobody knows the value of.  No bank in the world or private institution would consider doing such a thing.  However, the rules change when you say that it is in the taxpayer’s best interest in “saving” the economy, but behind the taxpayer’s back you are reaching into their pocket and pulling out hard earned cash.