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Presidential Candidates and Short-Term Fixes

posted by Bob Lawless

In this morning's New York Times is a story about Senator McCain's position on the mortgage crisis. With the story is a graphic comparing the candidates' positions on short-term and long-term fixes to the credit problems in the United States. Long-term fixes I get, but here is what I would like the candidates to say about the short-term fixes:

If I am elected president, I would not take office for another eleven months. Our current financial crisis will look very different by then. In eleven months, we could be dealing with a housing problem where the issue is simply ensuring that large numbers of people have the shelter they need. In eleven months, the credit problems could have spread even further to areas like the credit card industry or the student loan market. In eleven months, we may have seen a string of bank failures that will require us to prop up the banking system. Maybe things will go in another direction. In eleven months we may have had more positive outcomes with confidence on Main Street and Wall Street increasing and credit again flowing.

Different experts will tell you what they think will happen, but nobody knows for sure. As president, you should want someone who will be nimble enough to deal with the situation as it will be presented to them next January. If you want to know what I would do if I were in office today, I'll tell you, but don't think these ideas necessarily will be the best solutions one year from now.

Yeah, I know, not going to get said.

Comments

Sen. McCain has Phil Gramm advising him (Enron).

Sen. Obama has Penny Pritzker as his national finance chair (Superior Bank/LaSalle Bank)

Sen. Clinton has JB Pritzker as a spokesperson (Superior Bank)

How can one place trust in ANY of the candidates given the fact that they all choose to associate themselves with, and possibly intend to employ, these people in the government? I heard an interview this morning that Sen. Obama may intend to place Ms. Pritzker - the chair person of a failed federal savings bank - in the Treasury department.

Apparently, Ms. Pritzker is/was on the Board of Directors of LaSalle Bank as well. The same LaSalle Bank named in the $13.5 million racketeering action filed in federal court against them, Select Portfolio Servicing (f/k/a Fairbanks Capital Corp.), Merrill Lynch, and their local legal counsel Harmon Law Offices.

Does anyone REALLY think that the economic situation in the United States is going to get BETTER with any of these people potentially running things?

I think support for an internally consistent Bankruptcy Code that is written by legislative drafting professionals, and that at least attempts to deal fairly with all parties involved in the bankruptcy process - regardless of their political donations - is a platform that won't go out of style in 11 months.

Yeah, I know, not going to get said either.

I listened to the Obama speech this morning and I liked what he said more or less despite my disdain for Fairbanks(Mike). Touched on amending BK laws pertaining to Mortgages and supported new regulatory framework for the evolving credit and financial industry. To say it is one thing and to follow thru is another but at least he is saying something about it and is not saying he wants sit around and watch to see what happens first.

Did he say anything about the Superior Bank depositors who collectively lost and were never reimbursed roughly $50 million when the bank submerged, Patches?

The Pritzker family negotiated a deal with the FDIC whereby the Pritzker FAMILY received 25% (I believe) of whatever monies were recovered from Ernst & Young as a result of Superior tanking. If I remember correctly, that amount came to $125 million. To this day, the Superior depositors have not seen a dime of the remaining amounts owed them. What's $50 million to properly treat customers who trusted enough in your business/bank to deposit their life savings when you've got $39 Billion? I believe the figure I heard regarding Ms. Pritzker's personal worth was $2 Billion. Maybe the question to ask here for a better perspective is "How much did the failure of Superior Bank cost the American taxpayer?"

Regardless of what a candidate - any candidate - says they will do, do we really want them taking someone involved in a Federal Savings Bank failure or an Enron style financial fiasco to the White House with them? It's always a dice roll as to un/little known relationships when someone new comes in anyway but when it's no secret as to who they have professional or personal relationships with....

We get to choose between Enron and Superior Bank failings being represented at 1600 Pennsylvania Ave? Maybe you're right, Patches... I may be looking at this from the wrong angle. With choices like that there may very well be a lot more discussion of bankruptcy reform...At least on the corporate end...

I'm wit ju Mike! I don't know to much about Pritzker but I know a bit about Fairbanks and the way they service home loans.. and .. I no likes. As always I appreciate all of your nuggets of information and people really need to know this stuff in order to make an informed decision. I just think we will have a better chance at getting some consumer bankruptcy amendments and consumer reforms with a democrat in office than a republican. I hope, at the very least, we can fix things like the "hanging paragraph" a/k/a 910 statute, which they have had almost 3 years to fix and have not!

My fear is if McCain is elected we will just have more of the same. Don't get me wrong, Bush being in office was great for our Bankruptcy filings, because there are more of them now, there are locally less bankruptcy firms that do 13's and 7's and we get to charge more because of the additional complexities of the new code. Big business had their day in the sun and what did they do with it? I think its time to get some consumer concessions now.

Obama said something I thought was clever. He said that (not word for word) “the pain the consumers have been feeling have been trickling up”. I guess opening up the theory that all of the deregulation in the financial industry, while providing increased liquidity, opportunity and profits to big biz, have had a negative impact on big biz when they did not pass it on down. Business advocates may say that they did, that they provided a way for people to obtain credit that was unprecedented. They were not good stewards! They made risky bets to further their advantage and they lost. It might not have been so bad and I think it could have been a relative ripple instead of the tidal wave we are feeling now had it not been for the trillion or so we have spent on the Iraq war. Still, today I understand Afghanistan but am still puzzled over Iraq. Sadam was a bad guy and all but he had things under control not that it was ethical. I don’t think we would have had the spike in energy costs that we are experiencing. If people had more in their wallet, it very well could be that consumers could have afforded the payments of the new credit they have received. I know I went a little of subject……

Do some research before you stand in the booth in November, Patches. And make sure you look at what the Pritzker family is doing to the country. You know the Pritzkers even if not by name, they own the Hyatt hotel chain, The Marmon Group, and TransUnion Credit (Equifax, Experian etc.) Even now with THREE candidates currently out there on the stump there is no good choice.

And yet another piece of shrapnel for the hand grenade for you:

"A milestone in the deregulation effort came in the fall of 2000, when a lame-duck session of Congress passed a little-noticed piece of legislation called the Commodity Futures Modernization Act. The bill effectively kept much of the market for derivatives and other exotic instruments off-limits to agencies that regulate more conventional assets like stocks, bonds and futures contracts.

Supported by Phil Gramm, then a Republican senator from Texas and chairman of the Senate Banking Committee, the legislation was a 262-page amendment to a far larger appropriations bill. It was signed into law by President Bill Clinton that December.

Mr. Gramm, now the vice chairman of UBS, the Swiss investment banking giant, was unavailable for comment. (UBS has recently seen its fortunes hammered by ill-considered derivative investments.)
Gramm was an arch-conservative ally of Newt Gingrich and his merry pranksters, haters of government bordering on the sociopathic. Sometimes gov got in the way of raking in the real money like this. Fun for them, while it lasted.

http://toodumbtolive.blogspot.com/2008/03/shadow-banking-system.html "

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

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