The Faces Of A Broken System

Filmmaker Austin Considine has begun a great video series at True Slant letting individuals tell their story of navigating through a broken health care system. These stories leave no doubt that something must be done to change a trajectory of bankruptcy, suffering, and denied care that is a moral outrage, to say the least.

Faces of American Health Care, Part 1 from austin considine on Vimeo.

Considine promises more stories like this. And millions of Americans are going through something similar on a daily basis. With health insurance plans rising and the cost burden increasingly shouldered by the individual policyholder, that number will grow. We cannot continue in this way. It may work for insurance company CEOs, but it does not work for people.

Genetically Modified GM

In just a little over a month, a bankruptcy judge approved the sale of GM to essentially itself, which took effect in a record amount of time.

General Motors Corp. sped toward a record-short escape from bankruptcy protection Thursday when a judge's order approving the sale of most of its assets to a new company went into effect.

The order, delayed four days to allow time for appeals, became effective despite a last-minute appeal from plaintiffs in an Arizona product liability case against GM involving a Chevrolet Malibu.

GM spokeswoman Julie Gibson said U.S. Bankruptcy Judge Robert Gerber's order allowing the sale became effective at 12 p.m. EDT. GM lawyers are working on paperwork to close the sale as quickly as possible, after which GM would leave bankruptcy protection.

Once the world's largest and most powerful automaker, GM will become a leaner and greener company, cleansed of debts and burdensome contracts that nearly dragged it into liquidation.

But it faces brutal international competition and the worst auto sales market in more than 25 years.

Emerging from bankruptcy in 39 days, considering the size of the company and the nature of the tangle of debt, is pretty remarkable. Some predicted 6 months.

The question becomes, "Now what?" Nobody's buying cars, and GM still has some significant legacy costs, particularly in that little thing called health care, which we want to reform so American businesses can actually compete on a global stage. Sadly, keeping the employer-based system largely intact won't do much for GM. Sadly, I don't think Congress is taking into account the importance of how what we'll see on the other side of the health care debate can help businesses and manufacturing.

...the geniuses in Congress want to reverse the closing of thousands of auto dealerships, saddling GM and Chrysler with costs they cannot possibly manage and basically kissing billions of taxpayer dollars goodbye. Great move, guys!

Indiana State Teasurer Harold WATB

Three Indiana pension funds are holding up the sale of Chrysler to Fiat, despite multiple losses in bankruptcy courts. We'll know sometime tomorrow afternoon if they were successful, as the Supreme Court decides whether or not to stay the sale. The Indiana Treasurer uses words like "fiduciary duty" to argue in favor of more compensation for their secured debt:

The appeal heard Friday had been filed by the Indiana funds, which objected to the sale because they sought more compensation for the Chrysler secured debt they hold. A federal bankruptcy court in Manhattan previously approved the sale, which would transfer most of Chrysler’s assets to a newer, healthier company run by a group led by Fiat.

Lawyers for Chrysler and the government argued that the sale to Fiat needed to be completed as quickly as possible to preserve its viability and to save thousands of jobs. Fiat can walk away if no agreement is struck by June 15.
Late Sunday, Judge Arthur J. Gonzalez of United State Bankruptcy Court for the Southern District in New York approved the sale to Fiat, overruling more than 300 objections. On Monday night, he agreed to shorten a customary 10-day stay of the sale to four days, though the Court of Appeals stayed the transaction pending its hearing.

When Chrysler emerges from bankruptcy, a union retiree trust will own 55 percent, Fiat a 20 percent share that could eventually grow to 35 percent and the United States and Canadian governments minority stakes.

Would a collapse of the national auto industry be positive for the state of Indiana? Its pensioners? Furthermore, the Chrysler debt represents less than one percent of the total fund assets. James Kwak explains further:

The pension funds in question bought the Chrysler debt in question last July for 43 cents on the dollar. (They stand to get 29 cents on the dollar in the restructuring.) I guess the difference between that and speculation is that “speculation” is something that bad people do; when pension funds by distressed debt, it’s called “investment.” I have no problem with pension funds buying modest amounts of risky investments, but they are taking the same risks that hedge funds are taking, and if they lose money on bad investments, that’s the fault of the pension fund managers.

Now, the popular defense of the Indiana pension funds is that they have a fiduciary duty to their beneficiaries to maximize the value of their assets. (Hedge funds should have the same duty to their limited partners, unless I’m missing something, but let’s set that aside.) There is a deal on the table worth 29 cents on the dollar. Apparently they think Chrysler can do better by finding a a higher bidder (not likely at this point), or they can get more in liquidation. But that is far from a certainty, and the value of Chrysler is deteriorating as time passes; and if they manage to drag this out past June 15, Fiat can back out of the deal. So it’s not at all clear that their actions have a positive expected value for their beneficiaries.

So what’s going on here? Either (Indiana State Treasurer Richard) Mourdock really thinks that the chances of getting more than 29 cents outweigh the very real risk of getting less (and of blowing up Chrysler in the process). Or Mourdock (and Mitch Daniels, the Republican governor of Indiana?) believes that the order of priority of creditors in bankruptcy is more important than maximizing value for their retirees. Or Mourdock is trying to shift the blame for losing pension fund money on distressed Chrysler debt. Or he wants to score political points and embarrass President Obama.

I think it's the latter. And let's not kid ourselves about this being an example of the "little guy" going up against the big bad gobmint.

There's Bankrupt And Then There's Bankrupt

It was practically the same scene at the White House today, the same anxious tableau behind a President making the claim that the bankruptcy of an American auto giant actually signals a new beginning and a road to profitability and respectability.

General Motors filed for bankruptcy on Monday morning, submitting its reorganization papers to a federal clerk in Lower Manhattan in a move that President Obama said marked “the end of an old General Motors and the beginning of a new General Motors.”The bankruptcy of a once-proud auto giant that helped to define the nation’s car culture and played a part in creating the American middle class immediately rippled across the country, part of a process that the president said would take “a painful toll on many Americans” but lead ultimately to a strong company ready to compete in the 21st century.

Then comes the fine print. General Motors apparently had $82.3 billion in assets and $172.8 billion in debts. $172.8 billion! I don't know how you rack up that much debt without it carrying over through years if not decades.

We're still talking about the closing of over a dozen plants and factories, which will ripple through the supplier market. 21,000 union workers will lose their jobs. 40% of the dealers will close. The retiree health care fund will now be partially composed of stock that right now is trading for pennies.

The government will drop another $30 billion into the car company on top of the $20 billion already dropped, winding up owning 60-70% of the company, and while officials predict a recoup of that investment within five years, I don't think anyone would stake their life on that. With a collapse in wages and wealth, and no more home equity ATM, new car sales just won't rebound without serious prodding from government (like a cash for clunkers deal).

This has been coming for a long time, of course. Michael Moore, who owes a lot of his prominence to GM, in a weird way, with his first major film Roger & Me about the shuttering of a plant in Flint, warned about this 20 years ago.

It is with sad irony that the company which invented "planned obsolescence" -- the decision to build cars that would fall apart after a few years so that the customer would then have to buy a new one -- has now made itself obsolete. It refused to build automobiles that the public wanted, cars that got great gas mileage, were as safe as they could be, and were exceedingly comfortable to drive. Oh -- and that wouldn't start falling apart after two years. GM stubbornly fought environmental and safety regulations. Its executives arrogantly ignored the "inferior" Japanese and German cars, cars which would become the gold standard for automobile buyers. And it was hell-bent on punishing its unionized workforce, lopping off thousands of workers for no good reason other than to "improve" the short-term bottom line of the corporation. Beginning in the 1980s, when GM was posting record profits, it moved countless jobs to Mexico and elsewhere, thus destroying the lives of tens of thousands of hard-working Americans. The glaring stupidity of this policy was that, when they eliminated the income of so many middle class families, who did they think was going to be able to afford to buy their cars? History will record this blunder in the same way it now writes about the French building the Maginot Line or how the Romans cluelessly poisoned their own water system with lethal lead in its pipes [...]

Let's be clear about this: The only way to save GM is to kill GM. Saving our precious industrial infrastructure, though, is another matter and must be a top priority. If we allow the shutting down and tearing down of our auto plants, we will sorely wish we still had them when we realize that those factories could have built the alternative energy systems we now desperately need. And when we realize that the best way to transport ourselves is on light rail and bullet trains and cleaner buses, how will we do this if we've allowed our industrial capacity and its skilled workforce to disappear?

Moore has some very smart suggestions, including one I've made for a while - converting the auto production lines to create clean mass transit vehicles and high speed rail cars, fighting climate change while funding a real economic recovery that is tangible and creates infrastructure. Other factories could be retooled to produce wind turbines and solar panels. He wants a massive increase in the gas tax to pay for it, but we could do just as well using the $30 billion we're about to dump into GM and profiting from the economic growth of added production and jobs.

To the extent that there's any hope from this bankruptcy, it's that we can at least start to move away from the obsessive car culture that has poisoned our planet and cannot sustain itself. Any increase in economic activity will be accompanied by a spike in oil prices - heck, we're already seeing a spike because of less bad economic news. We need to start adjusting away from the oil-based economy, and the collapse of two major car companies can provide at least an impetus.

The Bondholders Crack

Looks like GM's bondholders jumped aboard at the last minute:

The revised offer to the holders of $27 billion in unsecured GM bonds amounted to a take-it-or-leave-it ultimatum: Go along with what the government auto task force's proposal or be left holding the assets a new GM doesn't want — ones with presumably little value at all.

In addition to the 10 percent of the stock in a newly formed GM that was originally rejected by bondholders, the new offer would give them warrants to acquire an additional 15 percent stake at a deep discount. That would come only if they agree to support selling the company's assets to a new company under bankruptcy court protection.

Basically, the government made them an offer they could not refuse. I think they got a worse deal than Chrysler's bondholders.

As long as I view this as basically an extension of the stimulus package, I think I can live with it. But I still worry about the autoworker pensions coming out of these bankruptcies. That hasn't been well-defined just yet. And this isn't pleasing:

"We will come out of this rid of some of the historic legacy costs that have been dragging us down for the last 20 years or so," GM Vice Chairman Bob Lutz said Thursday at an Automotive Press Association luncheon in Detroit. "We will come out of it with an all new focus on product development."

I guess the retiree health fund gets a piece of the company in this deal, so maybe they can save something for the workers. But really this is just a bad scenario, especially if it fails to save GM or Chrysler. It's hard to feel good about these deals.

The GM Bankruptcy

The offer to GM's bondholders was even punier than the offer to Chrysler's. And the bondholders predictably rejected the offer. So off we go into another bankruptcy. Under the terms of the deal, the government would take a much higher stake than they did with Chrysler.

The latest plan for the troubled automaker, which is expected to file for bankruptcy by Monday, calls for the Treasury Department to receive about 70 percent of a restructured G.M.

Including the more than $20 billion that has already been spent to prop up G.M., the government will provide G.M. at least $50 billion to get the company through Chapter 11, people with direct knowledge of the situation said Tuesday. By some estimates in Detroit, tens of billions beyond that amount may be required.

The United Automobile Workers, meanwhile, will hold up to 20 percent through its retiree health care fund, and bondholders and other parties will get the remaining share. Shareholders would be virtually wiped out.

Because of the publicly traded nature of the company, this will be a long and complex bankruptcy filing, unlike Chrysler, which appears to be moving right along. The government would be a silent partner, hoping to sell their shares as soon as the carmaker gets back on its feet.

Taxpayers will have invested around $50 billion into GM before this is over. I'm trying to understand how this makes sense. That's a lot of money to put into the hopes of the Chevy Volt. Maybe you can see this as an extension of the stimulus, saving another million or so jobs by keeping the architecture of the auto industry, and its suppliers, in place. That's about the only way I can stomach it.

The Next Auto Bankruptcy

As soon as I heard that GM and the United Auto Workers reached a deal similar on the merits to the Chrysler/union restructuring deal, I knew that the bankruptcy filing wouldn't be far behind. WaPo says next week, but more interesting than that, they claim that Chrysler will come out of bankruptcy as GM goes in:

The Obama administration is preparing to send General Motors into bankruptcy as early as the end of next week under a plan that would give the automaker tens of billions of dollars more in public financing as the company seeks to shrink and reemerge as a global competitor, sources familiar with the discussions said.

The move comes as the administration prepares to lift the nation's other faltering car company, Chrysler, from bankruptcy protection as soon as next week, industry sources said.

The shifts into and out of bankruptcy are landmarks in the Obama administration's attempt to broker a historic restructuring of the American auto industry in the space of months.

We're looking at $45 billion in loans, making it the largest investment in any company outside of AIG, I think. And the government would take 50% ownership in the deal. And the government is probably buoyed by the success and speed of the Chrysler bankruptcy, where virtually all the bondholders were eventually crammed down and the bankruptcy judge has expedited the process. Presumably they believe the same will happen with GM.

The loss of 2000 dealerships will really put a cramp on local economies. At least in Southern California, some cities have dozens of dealerships along a particular boulevard, and they account for a substantial portion of local sales tax revenue. These communities have already felt the pinch, but closure would devastate them.

Clearly the Administration has made up its mind that this is the best solution. But this is also why a robust public health care option must be invoked. The government has spent something like $55 billion on GM and Chrysler (with another $10 billion or so on GMAC, the financing arm). It could apply that to health care and suddenly make companies like them, and thousands of others, globally competitive.

Green Shoots, Leaves?

More dour news from the economy, on retail sales and new jobless claims. I concur with John Cole:

I guess we can throw “Sure, we are losing jobs but at least the rate of job losses slowed” out the window. Anyone who uses the phrase “green shoots” should be viewed as a lunatic.

And with 800 Chrysler dealerships about to shutter, more bankruptcies (Wow, Clear Channel, really?) on the way, and CRE loans threatening to take down regional banks as part of a second foreclosure wave, I think the new move from the political leadership needs to be from optimism to pessimism. If we continue to live in a rosy stress test world, we'll end up unprepared for the potential dangers to come. Complacency will sink us - contemporary reports in 1930 featured a lot of hopeful happy talk, too:

I will say that I think the greatest objective economic risk at this point is policymaker over-optimism. We need the European Central bank to continue loosening monetary policy, and it wouldn’t hurt if some of the world’s lesser central banks followed suit. We could use more stimulus in the United States and elsewhere in the developed world. We need corporate executives to understand the main risk to their interests to be coming from a lack of adequate economic recovery efforts rather than from losing small-bore political arguments with congressional Democrats. We need smart growth policy in terms of tax reform and trade. We need, in short, policymakers to continue to be worried. If they’re worried, and if they act on those worries, then more likely than not things won’t stay too bad for too long. But if they feel confident, then we might really be in trouble.

Unfortunately, the policy world has a hard time steering a middle ground between an atmosphere of panic, which is counterproductive, and an atmosphere of overconfidence, which is also counterproductive.

Leave the green shoots at the door and talk straight to the American people. And yes, we need a second stimulus bad.

Stupid Unions, Getting Their Contractually Obligated Retirement Health Care

We have another meme about the Obama Administration's Chrysler deal - they gave the union the farm.

Labor unions usually dread bankruptcy, and for good reason. Their pay, benefits and pensions typically suffer significant cuts, as airline and steel workers can attest.

But for the United Automobile Workers union, Chrysler’s Chapter 11 case, which began in New York on Friday, could turn out to be — if the company survives and thrives — the Cadillac of bankruptcies.

The U.A.W., for example, has received upfront protection from the Treasury Department for its pension plan and the fund that will take over responsibility for retiree medical benefits.

Moreover, that fund, called the voluntary employee beneficiary association, or VEBA, will control 55 percent of the equity in the new Chrysler once it emerges from bankruptcy, and hold a seat on the Chrysler board.

That's because they made a deal with Chrysler beforehand, as did practically everyone but the vulture funds. So this is not a traditional bankruptcy. Emptywheel cuts up this nonsense:

Now to be fair, there is a germ of truth in this article: the poor little hedge funds purportedly being strong-armed by the union do hold debt that takes precedence over the VEBA (retiree health care) fund. In relative terms, a tiny bit of it. But that's their problem, not that the evil union stole their money, but that the larger secured debt-holders have a big enough share of the debt to be able to make a deal without them; as masaccio explains, it's called cramdown, and it's not unusual. The key to Obama's deal is not any allegiance to the union--tens of thousands of jobs are going to be lost in this deal even in the best scenario, and current workers have already made huge sacrifices (see this article for a description of what the Chrysler deal really means for the union members themselves)--but instead due to his leverage over the big banks--JP Morgan Chase and Citi--that have been sucking at the federal teat for the last year, and to those banks' interest in getting the most money out of their investment in Chrysler. I guess those poor little hedge funds should have found stronger big players to associate with, because JP Morgan Chase and Citi's interests are not in the same place as the hedge funds (or weren't after Obama's team started negotiating in earnest). Furthermore, the shills for these poor little hedge funds unions pretend that, without the government intervention they decry, there would be anything left for them to take.

If you believe the unions unfairly got a better deal than those poor hedge funds, you believe that debtholders should be able to take down the economy for their own pleasure and reward. Maybe the bondholder community should take the message before the same thing happens to them on GM as well.

Grading On A Curve

The news leaking out from the stress tests just got worse and worse. First all the banks would be fine, then one would need more capital, then "at least" one, then six. So the banks did the responsible thing - they sought a delay while begging for a second opinion.

Citigroup Inc. may need to raise as much as $10 billion in new capital, according to people familiar with the matter, as the government continues negotiations with banks over the results of its so-called stress tests.

The bank, like many others, is negotiating with the Federal Reserve and may need less if regulators accept the bank's arguments about its financial health, these people said. In a best-case scenario, Citigroup could wind up having a roughly $500 million cushion above what the government is requiring.

The discussions stem from the tests being run by the Fed and the Treasury to assess the health of the country's 19 largest banks. Those results will be released Thursday, later than initially planned.

It's amazing that the banks are somehow allowed to negotiate the test results, like a slacker tenth-grader trying to pass calculus. This undermines the whole credibility of the tests, effectively making them useless. And this is a direct result of the Treasury Department structuring these tests in such a way that assured the banks nobody would fail, and all of them would get whatever funds were necessary, whether through private capital or a virtual government guarantee. It seems to me that the stress tests could have been used as leverage for negotiating Administration priorities. Instead, the opposite is the case.

It's hard to discern at a remove how much of the peevishness is the discovery by banks that they have little to lose in behaving like utter pigs. We saw it today with the failure of the bankruptcy mod bill in the Senate (even after concessions had been offered). Admittedly, Chrysler was a partial exception, since the Treasury made considerable economic concessions, but finally drew the line and put the company into bankruptcy. However. Team Obama wanted to make a show to prevent even worse shenanigans with GM (but the New York Times points out that the pre-pack could take as long as four months, hardly a quick in and out, and some bankruptcy lawyers have pointed out that other deals expected to be fast track have taken a year).

But let's face it, in a real test, you don't get to score it yourself and then argue the grade. The banks fundamentally don't seem to accept that they are regulated entities and expect to be treated as equal partners. Given the likely decay in employment given the weakening fundamentals, all the Treasury is doing is getting the banks to face the music perhaps six months ahead of time, which is something they should be doing on their own.

The Administration had something of real value, namely information, and they failed to use it. As a result, cramdown dies, thanks to the Mortgage Bankers Association. Foreign banks with substantial ties to the US can refuse to give up tax information on their offshore customers with impunity. And they'll be sure to go after the credit card reform bill in the Senate next week.

With respect to Chrysler, I keep hearing that Obama won a game of chicken with the hedge funds, and granted Cerberus ended up with nothing while Perella Weinberg accepted the government offer at the last minute. But Chrysler sits in bankruptcy, and nothing there is assured except that some of the fund managers will get their CDS paid off.

Geithner decided not to use the tools at his disposal. And I don't think he did that by accident. At this point, I'll have to believe this talk about a new Pecora Commission when I see it.

The Whine Of The Brooks Brothers Suits

Hedge fund managers are awfully steamed about the Snidely Whiplash mustache that Obama hung on them yesterday:

President Obama's harsh attack on hedge funds he blamed for forcing Chrysler into bankruptcy yesterday sparked cries of protest from the secretive financial firms that hold about $1 billion of the automaker's debt.

Hedge funds and investment managers were irate at Obama's description of them as "speculators" who were "refusing to sacrifice like everyone else" and who wanted "to hold out for the prospect of an unjustified taxpayer-funded bailout."

"Some of the characterizations that were used today to refer to us as speculators or to say we're looking for a bailout is really unfair," said one executive who spoke on condition of anonymity because of the sensitivity of the matter. "What we're looking for is a reasonable payout on the value of the debt . . . more in line with what unions and Fiat were getting." [...]

"It sounds like people are being bullied right now," said Ron Geffner, a partner at the law firm Sadis and Goldberg, which represents hedge funds. "To play the 'I stand with Chrysler, I stand with families, I stand with the dealers, I stand with the consumers' -- that's great conceptually, but . . . I stand with the fact that we live in a capitalist society where companies who don't modify their business plans and stay current die and go by the wayside."

It's simply a lie to say they wanted a payout in line with the unions and Fiat. They wanted a bankruptcy so they could cash in on credit default swaps that pay out in the event of a bankruptcy, and make a killing at the expense of Chrysler.

Also, if we indeed do live in a capitalist society, where everyone is treated equally and companies must act within the boundaries of the regulatory landscape, then I expect these hedge fund managers to march en masse to Capitol Hill and demand they be charged the regular marginal tax rate on their income rather than the capital gains rate that allows them to hide billions from the federal government. Surely, because they believe in capitalism and the level playing field so much, they'll get right on that.

I don't have a problem with investors acting purely in their economic interests, but government has a role to play in making sure those interests aren't as perverse as this, where a minority of investors (the bigger banks signed off on the 28 cents-on-the-dollar deal) can throw a company into bankruptcy because of the side bets. And those investors can own up to the fact that their desire for CDS money left them rooting for bankruptcy. It'd be the honest thing to do.

The Hedge Funds Destroy The Economy, Again

Over the last 30 days, Chrysler secured deals with their union. They got the bondholders to take 28 cents on the dollar. They made a deal with Fiat. They lined up pretty much every stakeholder and got them all to share in the pain. And then the hedge funds said no and forced them into bankruptcy.

Chrysler LLC is going to file for bankruptcy, an administration official confirmed to CNN Thursday.

The filing comes after some of the company's smaller lenders refused a Treasury Department demand to reduce the amount of money the troubled automaker owed them.

Chrysler officials had no comment on the bankruptcy report. The company faces a Thursday deadline from the Treasury Department to reach deals with creditors who had loaned the company about $7 billion.

But the filing will not mean the halt of operations or liquidation for the troubled 85-year old automaker. Instead, the administration expects to use the bankruptcy process to join Chrysler with Italian automaker Fiat.

In addition, the United Auto Workers union announced late Wednesday night that its membership at Chrysler had overwhelmingly ratified a concession contract reached between the company and union leadership on Sunday night.

This will be a quick bankruptcy, since most of the deals are in place. But in this case, the hedge funds (they are the "smaller lenders" referenced in the article) are more likely to get a better deal from a bankruptcy judge. And we're certainly going to see if anyone trusts buying a car from a company in bankruptcy. So Chrysler comes out of this, but diminished, because the hedge funds demanded payment.

Now can we tax their income as income instead of capital gains?

...Obama on the hedge funds, just now:

While many stakeholders made sacrifices and worked constructively, I have to tell you, some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them. I stand with Chrysler's employees, its families and communities. I stand with Chrysler's management, its dealers and suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don't stand with those who held out when everybody else is making sacrifices.

Obama had an interesting bit last night where he talked about the enormous scope of the political landscape, and how "I can't get the banks to do what I want them to." It was a telling example.

...By the way, the biggest windfall for the hedge funds is that they bought lots of credit default swaps that they can now cash in on to hedge their investment with Chrysler. They stand to gain much more money with Chrysler in bankruptcy. And ultimately, that was the decision they made. We're talking billions.

Pressured By CA Lawmakers, Obama Expands Mortgage Refinance Program

When the Obama Administration's plan to mitigate foreclosures came out, it was clear that it would be insufficient to deal with the particular challenges faced in California. Initially, the plan would only modify loans where the amount owed was 105% of the home's true value. Given that home prices have collapsed here, this would have helped almost nobody in California. State lawmakers, in particular the Democratic point person on mortgages and foreclosures Asm. Ted Lieu, went to Washington to lobby for changes. And today, faced with a sluggish mortgage rescue program attracting few lenders or homeowners, the Administration expanded the plan.

The Obama administration said Tuesday it is expanding its foreclosure prevention program to cover second mortgages and to direct more troubled borrowers to the Hope for Homeowners program.

Under the administration's new program, the interest rate on second mortgages will be reduced to 1% on loans where payments cover interest and principal and to 2% for interest-only loans. The government will subsidize the rate reduction, with the money going to the mortgage investor [...]

Also Tuesday, the administration said it is now requiring servicers to offer troubled borrowers access to Hope for Homeowners as a modification option if they qualify.

Expanding Hope for Homeowners would address one of the major holes in the original Obama foreclosure prevention plan. It helps homeowners whose homes are now worth far less than their mortgages.

Servicers had balked at participating in the Hope program because it required they reduce the mortgage principal balance to 90% of a home's current value.

Hope for Homeowners, which began in October, is being revamped in Congress. Servicers would have to reduce the principal to 93% of the home's value. The change would also reduce the program's high fees, which turned off many troubled borrowers.

Loan servicers get a fair bit of cash incentives for participating in the program, which I don't totally support, but if we have to bribe lenders in order to keep people in their homes, that makes more sense than spending the same amount of money on the fallout from a foreclosure. And lenders do take a haircut in the Hope for Homeowners program, the first loss to my knowledge that lenders have been forced to take.

Asm. Lieu responded with this release:

“I am very pleased the Obama Administration today acted on the concerns raised by states such as California and took two steps to expand refinance and foreclosure assistance to distressed homeowners.

First, the Administration announced it would incorporate the Federal Housing Administration’s (FHA) Hope for Homeowners program into the existing Making Home Affordable Program. This is significant because currently, the Making Home Affordable Program has a 105% underwater refinancing cap, which shuts out many Californian homeowners. The Hope for Homeowners program does not have that limitation; instead, the Hope for Homeowners program states that lenders will take a loss on the difference between the existing loan amount and the new refinanced loan, which is set at 96.5% of the appraised loan value.

For example, under the existing Making Home Affordable program, a homeowner whose home is valued at $100,000 but owes $120,000 on the existing loan balance would not qualify for refinancing under the program because the loan is 120% underwater. However, under the Hope for Homeowners program, the homeowner could qualify and the new refinanced loan would be $96,500. The lender would take the loss of $23,500. The Obama Administration would increase the number of lenders participating in the Hope for Homeowners program by offering financial incentives to the lenders.

Second, the Administration announced steps to address the second lien problem. Many distressed mortgages have two liens and often the second lien holder does not want to modify the loan. The Obama Administration will provide financial incentives to allow the second lien to be reduced or extinguished.

These two critical actions will expand assistance to distressed homeowners in states such as California, where many loans are more than 105% underwater or have second liens.”

This is decent news. Unfortunately, the tool that homeowners really need to stave off foreclosure, the ability for bankruptcy judges to cram down the principal of a loan on a primary residence, appears poised for what amounts to defeat in the Senate, a testament to the continued power of the nation's biggest banks.

In order to garner the support of conservative Democrats and a few Republicans, the proposal has been watered down. The bankruptcy legislation will still allow homeowners to renegotiate mortgages in bankruptcy - the so-called cram down provision - but only under strict conditions. The banking industry has lobbied fiercely against cram down, but Durbin said on the Senate floor Monday night that the compromise was supported by Citigroup, which has been at the negotiating table.

"In the past, some of my colleagues understood the need for action but have been uncomfortable with the original language. Let me be clear: this amendment is different," said Durbin. "The amendment I'm going to offer will make a modest change in the bankruptcy code with a lot of conditions. It won't apply across the board. This amendment limits assistance in bankruptcy to situations where lenders are so intransigent that they are unwilling to cooperate with the foreclosure prevention efforts already underway - Obama's homeowner assistance and stability plan and the Congressionally-created HOPE For Homeowners, which this bill will greatly improve." [...]

Meanwhile, the banking lobbyists are furiously lobbying against it and Durbin acknowledges it will be difficult to "muster the votes, although I know it will be hard."

It is "hard to imagine that today the mortgage bankers would have clout in this chamber but they do," said Durbin. "They have a lot of friends still here. They're still big players on the American political scene and they have said to their friends, stay away from this legislation."

We will be in a better position with foreclosures by the end of the week than we were at the beginning, but not where we need to be.

Surgical Strike

I think we can safely say that GM is going into bankruptcy.

The Treasury Department is directing General Motors to lay the groundwork for a bankruptcy filing by a June 1 deadline, despite G.M.’s public contention that it could still reorganize outside court, people with knowledge of the plans said during the weekend.

Members of President Obama’s automotive task force spent last week in meetings and on conference calls with G.M. officials and its advisers in Detroit and Washington. Those talks are expected to continue this week.

The goal is to prepare for a fast “surgical” bankruptcy, the people who had been briefed on the plans said. G.M., which has been granted $13.4 billion in federal aid, insists that a quick restructuring is necessary so its image and sales are not damaged permanently.

The idea, essentially, is to create the GM version of a "bad bank" and a "good bank," with the decent brands quickly spun out of bankruptcy (within two weeks) and into a new organization. The bonholders won't budget, surmising that they would get a better deal in bankruptcy court, so we're looking at a done deal. And it'll be pricey.

The rest of G.M. may require as much as $70 billion in government financing, and possibly more to resolve the health care obligations and the liquidation of the factories, according to legal experts and federal officials.

To say nothing of how many jobs this would cost.

Once again I will ask why we cannot put auto assembly lines to work making high speed rail cars and mass transit vehicles under grants through the current Recovery Act.

The Bondholder's Gamble

President Obama characterized the withholding of funds to GM as a chance to give them 60 days to submit plans for further restructuring, but clearly he has already decided that he would rather try an accelerated bankruptcy to force haircuts on all the key stakeholders. It looks like that will take the form of a good GM and a bad GM.

The Obama administration's auto task force has pressed General Motors to consider a form of bankruptcy that would split the company in two, with one entity containing the unprofitable units and the other in essence becoming the new GM consisting of the company's more successful brands, people familiar with the matter say.

The company prefers not to ever enter bankruptcy because the mere word would stir fear among consumers and further damage sales. But GM will be forced to do so if it fails to win concessions from its bondholders, union and dealers within 60 days. Then bankruptcy court would compel GM stakeholders to make sacrifices, rehabilitating the company by clearing away billions of dollars of debts from its balance sheet.

"They're all options. They're all being studied," Kent Kresa, GM's new chairman, said in an interview. "The preferred [option] is to do it outside of bankruptcy."

You would think this would be the last outcome sought by the bondholders, as their stakes would be crammed down in a bankruptcy court. However, I wondered earlier whether they think they have a better shot from a judge than from a negotiation. And Autoblog reports on another potential reason - they could cash in their credit default swaps.

The bondholders appear to be the biggest obstacle to restructuring. They're not allowing GM to reach its government-mandated target for debt reduction because they would lose much of their investment in the process. According to Denninger, however, the biggest and most savvy of those bondholders could get 100% of their investment back if GM files for bankruptcy. Those bondholders would have had their bonds backed by credit default swaps (CDS), which Denninger supposes would have been written in large part by insurance giant AIG. If that's the case, then we the taxpayers are on the hook to repay 100% of those bonds because the government has agreed to fulfill AIG's CDS collateral obligations.

Thus, these particular bondholders would have no reason to help GM stay afloat by reducing its debt obligations. If GM goes under, they would just wait for checks from the government to be made whole again. Denninger goes on to say that in such a scenario, these bondholders could make even more than 100% of their investment back because the government backing takes place "even if the bonds have a recovery in bankruptcy." The only way to stop this would be for the government to decline to back any more AIG obligations, which could then bankrupt the "too big to fail" AIG depending on its ultimate exposure, but would save GM. Decisions, decisions...

Wow. Just, wow.

Not A Threat But A Promise

bAs I see it, the point of President Obama's plan for GM, at least, is to force the bondholders and the dealers to take losses by offering the prospect of a "quick-rinse" bankruptcy. The bondholders are decidedly unhappy.

During the next 60 days, G.M. and its stakeholder have the last opportunity to save the company — or risk letting a bankruptcy judge do it for them. To do so, G.M. will almost certainly need concessions from two groups: workers and bondholders.

The workers, represented by the United Automobile Workers, have made concessions already. And the president said they need to make even more, as painful as it will be. The workers — despite often appearing recalcitrant — have the most to lose. If G.M. falls into bankruptcy protection, they could lose not only their jobs but also much of their retiree health care plan.

Then there are the bondholders. Their motivation is very different. For them, this is not about keeping their jobs or, frankly, about patriotism. It is about dollars and cents. And, according to some analysts, there is a chance they would actually do better in bankruptcy court than they would negotiating against G.M. or the government, which is seeking to reduce G.M.’s debt by two-thirds.

“If I’m a bondholder, the best forum for me is in front of a judge,” said Daniel Alpert, a founding managing director of Westwood Capital, an investment bank. “Let’s face it: the biggest problem at G.M. is still its cost basis, and that’s chiefly labor,” he added, suggesting a judge would look at the situation dispassionately.

80% of these bonds are held by large investors and hedge funds, and the hedge funds at least have been doing quite well of late. They want the best deal, and if they have to drive GM into bankruptcy to do it, they will. In fact, the new head of GM seems resigned to it.

General Motors's new chief executive told CNBC that filing for Bankruptcy may be the best option for the struggling automaker.

In a taped interview to be aired tonight on NBC Nightly News, Fritz Henderson said that because of greater demands from the Obama administration to restructure, GM is considering the bankruptcy option. The auto giant previously had ruled out such a move, saying it would discourage people from buying GM cars [...]

Henderson told reporters that the company would still prefer to restructure outside of court, but the level of support Washington is offering would help the company quickly restructure through bankruptcy.

In the event of a quick bankruptcy, the bondholders would certainly get paid at a higher rate than, say, the pensioners. The legacy contracts would probably be ripped up (but I thought contracts were sacred!). The good news about that is that most of Rick Wagoner's $20 million dollar pension could be wiped out; only $833,000 is protected. The bad news is that everyone else wouldn't have a pension, and keep in mind that the PBGC just gambled away a fortune on Wall Street at precisely the time when they would be a backup on these funds.

I think the White House views the 60-day window before bankruptcy as a threat; the bondholders might see it as a promise.

Ellen Tauscher's Insatiable Appetite For More Homeless People

Late last week, Democrats temporarily shelved a bill that would allow bankruptcy judges to modify the terms of mortgages on primary residences (also known as "cram-down"). Moderates who put the hold on this legislation, particularly former Wall Street investor Ellen Tauscher, crowed about it to the media.

This hardly amounts to a breakthrough win for party moderates — or a major concession by the speaker. But it was a consequential moment in the minds of moderate leaders who often find themselves marginalized in a caucus dominated by liberals.

“It shows we have bench strength, and it shows we can flex,” said California Rep. Ellen O. Tauscher, who chairs the New Democrat Coalition and played a central role in negotiations over the bankruptcy bill [...]

Moderates worry Pelosi is routinely staking very liberal positions to push House versions of big bills as far to the left as possible to enhance their standing in negotiations with the historically centrist Senate. This might be a smart tactic, but it often hurts Democrats who rely on Republican votes to win reelection. Put bluntly, it makes them look too liberal [...]

That prompted lawmakers, like Tauscher, to limit the scope of the bankruptcy bill as much as possible, even though this measure is only loosely related to the president’s broader proposal.

Tauscher’s New Democrat Coalition teamed with their natural allies in the Blue Dog Coalition to impose 10 significant changes, including requirements that bankruptcy judges use federal guidelines to determine the fair market value of a home and that modified loans must be “unaffordable and not just underwater” to prevent wealthy homeowners from taking advantage of the process, according to a widely distributed e-mail from Adam Pase, executive director of the New Democrat Coalition.

This, of course, angered some liberals. “The New Dems’ position is the banks’ position,” a senior Democratic aide involved in the bankruptcy negotiations complained on Friday. “New Democrats are shills for the banks.”

It's confounding that any New Democrat thinks their constituents give a ring-a-ding about banking industry concerns, and are not in fact the very people struggling to keep their homes that this legislation would help.

When Chris Bowers used Tauscher as the face of the moderate backlash against working people facing foreclosure, her office responded by saying they supported the rule on the bill (HR 1106), and that their changes would "strengthen" the bill, and that they didn't meet with anyone in the financial services industry about it. But David Waldman explains why that, simply put, is a crock - she voted for the rule because it incorporated the changes she wanted to make. And if that was the only hurdle, why didn't the legislation get a vote last week?

Now, that amendment was approved by the Rules Committee last Wednesday night, the 25th of February, and the rule was adopted on Thursday morning, the 26th. That locked in place that the voting on the bill would include a vote on an amendment incorporating Tauscher's list of changes.

So why, if she supports the bill, would work on it be suspended on the afternoon of Thursday, the 26th? She "supports the bill," and voted for the rule that locked in a shot at making the changes she proposed to the Judiciary Committee, and yet here we are, waiting over the weekend for... what, exactly?

Ellen Tauscher supported the rule because it made an amendment in order that would incorporate her list of demands. That's all. But she must clearly want more changes, because even after winning these concessions, the bill is still stalled, and the news reports on the stall have Tauscher's name all over them.

Jane Hamsher has a lot more on Tauscher, who is clearly putting banking industry interests ahead of her constituents'. She doesn't have to necessarily talk to anyone in the financial services industry personally, because Adam Pase, the chairman of the New Dmocrats, works out of her office:

Pase is is a former lobbyist for the Twenty First Century Group, whose client, the Coalition for Fair & Affordable Lending, is an astroturf group, financed by the banking industry, that lobbied on behalf of. . . you guessed it. . . sub-prime lenders. Contrary to what you might hear on Morning Joe, it was national civil rights leaders who joined together to fight the Coalition's predatory lenders as they tried to pass the Ney-Kanjorski bill, which would have enabled banks to get around predatory lending laws and make more bad loans. This they justified based on the oh-so-high-minded need to provide loans to low income and minority borrowers. It was true scumbaggery.

Pase was also the senior policy adviser for Dennis Moore when Moore organized Blue Dogs to oppose mortgage write-downs on behalf of the banking industry in 2007, and he is evidently the one driving policy on this one for the New Dems. But one has to wonder -- what is Tauscher thinking? Her district is one of the hardest hit by the mortgage crisis, as you can see from the map. Why is she trying to limit mortgage write-downs to subprime loans only, on behalf of banks, when every foreclosure brings down the value of all houses in a neighborhood? Her claim to care so very much about people still struggling to pay their mortgages rings hollow.

Shaun Donovan, the HUD Secretary, is headed to the House today to whip support for the bill. This legislation would save perhaps 800,000 families from foreclosure without one penny of cost to the taxpayer. All the bill would do is give leverage to homeowners who have been screwed by their lenders at practically every step of this process.



Homeowners burned by Blue Dogs and New Dems like Tauscher are not likely to forget the treachery. Firedoglake has some action items.

We're asking you to do two things:

Write a letter to the editor of your local papers (just enter your zip code) saying you expect your Member of Congress to represent you, not the banks, and you'll be watching to see if they oppose Tauscher and her bank lobbyist cronies.

Sign a petition to Nancy Pelosi telling her not to "buckle" to pressure from bank lobbyists working through greedy corporatist Members of Congress, and to act swiftly to give judges the authority they need to write down mortgages. The banks must take responsibility for their own bad judgment; taxpayers shouldn't be expected to pick up the tab.

These same people killed efforts in 2007 to allow bankruptcy judges to write down mortgages at that time, which could have helped us from ever getting to this place. It's time they stop pretending that they care about their constituents when they're only being tools of the banking lobby.

I think it's more about telling Pelosi we'll have her back if she stands up to these cretins. You know what to do.

Still A Working Conservative Majority On Some Issues

The proposed cram-down provisions that would allow bankruptcy judges to modify terms of primary residences, the way they can on secondary residences and yachts and all kinds of other assets, are a perfectly sensible way to give homeowners who might otherwise be out of the street after foreclosure a modicum of leverage in the process, freeing up lenders to perform loan modifications on their properties. In the end, nobody is served by millions more homes on the market and millions more homeless. But the banksters don't want to do it. They have spent millions lobbying against it because they would rather pretend that they have larger assets than they do. Perversely, a loan that will go unpaid means more to them than a modified loan that would get paid. So they are desperately trying to add loopholes and conditions and restrictions.

And because we have this group of "New Democrats" who basically parrot whatever corporate lobbyists tell them, it is a successful gambit.

House Democratic leaders have abruptly canceled votes on legislation to let bankruptcy judges reduce the principal and interest rate on mortgages for debt-strapped homeowners.

The measure, backed by President Barack Obama, is the most controversial part of a broader housing package that was expected to pass on Thursday.

It hit a snag after a group of moderates expressed concerns in a closed-door meeting of House Democrats about how the bill would affect homeowners who are still struggling to make their mortgage payments.

The banking industry has lobbied hard against the measure, mounting a successful multimillion-dollar effort last year to kill it. The House is debating the measure and leaders hope to reschedule votes for next week.

It's just revolting. The concern of "moderates" is simply a lie. Homeowners who are struggling to make payments would benefit from having their lender be more inclined to give them a lower payment. After all, we practically own the banks at this point. The least they could do is act in the interest of the majority of Americans. It's not like they'll be hurting for cash, given what is coming out about the Geithner plans for essentially unlimited refills.

This is a structural problem, where incumbents well-heeled with campaign cash have more to fear from industry and multinationals than their own constituents. A new progressive group called Accountability Now is seeking to change that dynamic.

Some of the most prominent names in progressive politics launched a major new organization on Thursday dedicated to pinpointing and aiding primary challenges against incumbent Democrats who are viewed as acting against their constituents' interests.

Accountability Now PAC will officially be based in Washington D.C., though its influence is designed to be felt in congressional districts across the country. The group will adopt an aggressive approach to pushing the Democratic Party in a progressive direction; it will actively target, raise funds, poll and campaign for primary challengers to members who are either ethically or politically out-of-touch with their voters. The goal, officials with the organization say, is to start with 25 potential races and dwindle it down to eight or 10; ultimately spending hundreds of thousands on elections that usually wouldn't be touched.

This will be looked at with an eye toward district realities. There are too many members of Congress representing deep-blue districts who equivocate to powerful special interests. There needs to be a countervailing force, and Accountability Now can become that.

The New York Times has more, although they kind of botch the story. This is a good development for the progressive movement.

ACTION: Ellen Tauscher Needs To Work For People And Not The Financial Services Industry

Chris Bowers advises that the House will be going ahead with housing legislation tomorrow that would allow bankruptcy judges to modify the terms of mortgages to reflect current home values and allow homeowners to avoid foreclosure (commonly known as "cram-down". As I discussed with Rep. John Conyers, the author of this bill, this would not encourage bankruptcy but help people avoid it, giving them a level playing field to get banks to follow through with loan modifications. While practically every other property someone owns can have the terms rewritten by a bankruptcy judge, primary residences are excluded. That is arbitrary and wrong, and changing it would reduce foreclosures and homelessness and bring some stability to the housing market. This legislation is supported by the President and included in his housing plan, but a change in the law like this should be passed by the Congress to make it a federal statute.

Bowers writes:

Tomorrow, the House will vote on Representative Conyer's bankruptcy cram down. The whip count is unclear right now, but some Blue Dogs and New Democrats, including Melissa Bean (D-IL), Dennis Moore (D-KS), and New Democratic chair Ellen Tauscher (D-CA), are working on behalf of the financial services industry to water down the legislation. Tauscher in particular is problematic, both because of her leadership role in one of the ideological caucuses, and also because rumors are that she has organized up to two dozen members thus far. It is about time that Tauscher, and the Representatives she is organizing, stop listening to industry lobbyists who do not have the public interest in mind.

So, let's make Representative Tauscher listen to someone else right now. Contact Ellen Tauscher, and urge her to stop organizing other Democrats to water down HR 200. She needs to listen to honewoners, not to the financial industry that got us into this economic disaster.

Here is the contact information:

Email form (California residents only)
D.C. office: 202.225.1880

Ellen Tauscher's New Democrat ways haven't surfaced much since the threatened primary challenge in 2007, but torpedoing this bill would bring that back all over again. She needs to know that people are watching her and want to be sure that she is protecting homeowners and not the big banks and lenders.

Please contact her now or in the morning.

The Rise Of Bad Post-Partisan Obama

It was a good week, with a lot of progress packed into it, and hopefully that will be the pattern of this next Administration. However, there's enough data to map out an alternate scenario, one where President Obama tries to keep his personal approval ratings high by placating Republicans and stiffing Democrats.

First we have the pre-compromised stimulus package, which is about to get more compromised thanks to a GOP hissy fit.

House Democrats are likely to jettison family planning funds for the low-income from an $825 billion economic stimulus bill, officials said late Monday, following a personal appeal from President Barack Obama at a time the administration is courting Republican critics of the legislation.

Several officials said a final decision was expected on Tuesday, coinciding with Obama's scheduled visit to the Capitol for separate meetings with House and Senate Republicans.

The provision has emerged as a point of contention among Republicans, who criticize it as an example of wasteful spending that would neither create jobs nor otherwise improve the economy.

The report is that Obama personally called Henry Waxman, who has jurisdiction over the provision, and told him to ditch it. So now we're listening to Republicans who have no imagination and don't understand the economy. Family planning is a demand-based service that requires staffing. That means jobs. Jobs that now won't be created or will be eliminated by the states because it makes Republicans feel icky.

Then there's the mortgage provisions which Democrats would like to put in the stimulus bill that would allow homeowners to get their principle reduced by a bankruptcy judge, but which Obama wants out of it because big business and their Republican puppets might get mad at him. And once again, the President is prevailing.

Sen. Dick Durbin, D-Ill., the chief Senate sponsor of the bill, said Obama persuaded him in a White House meeting Friday to remove the bankruptcy proposal from an economic recovery package -- to ensure it doesn't jeopardize the stimulus bill. But Obama pledged his support for the bankruptcy solution, Durbin said.

Obama said he would work with Durbin to attach the proposal to other ''must pass'' legislation -- with the hope that supporters of the overall bill would not vote against it because of the bankruptcy provisions.

Right, and then that "must pass" bill, like the stimulus, runs into trouble because of the cram-down provision, so it's removed, and on, and on, and on... Chris Bowers notes that future passage of cram-down is not going to be easy, considering that 11 Democrats voted against it the last time it came up. So hundreds of billions of dollars for financial interests, but no sensible reform which would actually clarify their balance sheets and keep people from going homeless. All in the name of bipartisanship.

And then there are lingering concerns, like the ineffective corporate tax breaks still embedded in the bill.

At least $23.8 billion in corporate tax breaks have been included in the $825 billion economic recovery package in order to win backing from key business groups and their Congressional allies, even though the team that put the legislation together believes the breaks have little value in stimulating the economy and creating jobs.

Top beneficiaries include banks, telecommunication companies, railroads and oil, hotels, casinos, and both commercial and residential real estate firms.

"Everyone knows these provisions are not going to do much, but some members of Congress need to be able to say 'the bill has a business tax cut.' So we put them in," said an Obama transition team architect, adding that the corporate breaks were carefully written to be temporary so that the drain on the treasury will be brief. According to another source: "This is just one of those things that you do to get a bill passed. It may not be pretty. We are talking about billions, but in reality it's only a tiny fraction of the whole bill."

That's a bit of honesty there. They're including ineffective giveaways to industry for no reason but to seem bipartisan. By the way that bipartisan support won't be coming, leaving a bunch of tax breaks in there for no reason. And there is a cost. By contrast, mass transit and rail spending really IS a tiny fraction of the whole bill, in fact pathetically tiny, at a time when ridership is up but funds are down.

The dramatic spike in gas prices that began in 2005 sent Americans flocking to trains, buses and subways, a trend that appears to have held up even as gas prices have dipped. But 2009 could be a year of crisis for the agencies that run them -- a time of more riders but much less money.

Some new funding could come as part of House Democrats' proposed $825-billion stimulus package, which, in its current form, sets aside $9 billion for public transportation. But all of that money would be used for new capital projects, not operating costs. And it is operating budgets -- the money agencies need to run the systems they have now -- that are getting hammered.

If service cuts or increased fares become widespread, transit operators around the country fear they will drive away the new converts they picked up when gas prices were high.

Operating existing transit and rail lines keep jobs intact and reduce carbon emissions, as well as regularize mass transit as a factor in people's lives.

The stimulus isn't a horrible bill, and there's a lot to like in there, particularly in the energy and health care provisions. But it's certainly Chamber of Commerce-friendly at a time when their member organizations are laying off tens of thousands. Obama has maintained this sugar plum fairy vision of bipartisanship, yet his bill manifestly does NOT value "what works" over ideology. Quite the opposite. It makes room for ideology, conservative ideology, and pre-empts provisions that would work much better in bringing back the economy. Despite a mandate for major new social and economic programs from the public, Obama is still playing small ball. He's responding to Republican hissy fits and teaching them that all they have to do to wring a concession is scream for a day or so and let their media allies whip up a frenzy. He's offering half-measures when they won't do the job.

If this bill is a blueprint for the next four years, it's going to be a missed opportunity. Also painful.

UPDATE: Good thing all that nastiness was taken out and those nice corporate tax breaks put in. It's really seemed to bring everyone together.

President Barack Obama is coming to the Capitol this afternoon to curry favor with congressional Republicans. But it appears GOP leaders have already made up their minds to oppose his $825 billion stimulus plan.

House Republican Leader John A. Boehner and his No. 2, Whip Eric Cantor, told their rank-and-file members Tuesday morning during a closed-door meeting to oppose the bill when it comes to the floor Wednesday, according to an aide familiar with the discussion. Boehner told members that he's voting against the stimulus, and Cantor told the assembled Republicans that there wasn't any reason for them to support the measure, according to another person in the room. Cantor and his whip team are going to urge GOP members to oppose it.

Ahh, post-partisanship.