September 21, 2008, 1:57 pm New Yor

Will a Crisis Create a Scandal?

I’ve been out of town, and have not studied all the available details of the Bush administration plan. But I have a few observations.
1. I suspect that Hyman Minsky, the economist who wrote that stability can be destabilizing, and who I was surprised to hear being quoted by a Bush administration official a few months ago, would have forecast such a massive bailout long before it happened.
2. It is unsettling to see Wall Street firms that only a week ago feared for their survival hoping to get rich off this program. It needs to be carefully monitored to keep it from becoming a scandal of its own.
3. The Bush administration was a little slow to decide this was a massive crisis, but they reverted to form when they did. They want Congress to give them a blank check to do whatever they want, whatever the cost, with no one able to watch them closely.
4. Hank Paulson is a lot more competent than some of the people who gave the Bush administration a reputation for incompetence — remember the stories of being unable to account for suitcases full of cash in Iraq — but it would be no insult to him to insist on better monitoring. If nothing else, he will not be Treasury secretary for very long, since the new president will undoubtedly replace him. Some kind of board should be established, and all the officials on the board should share responsibility for major decisions.
5. This crisis is not so important that a bill really needs to be passed without time for the public to read it and study it. If Congress has to delay leaving to campaign for a few days, so be it.
6. This is not similar to the Resolution Trust Corporation. The assets it liquidated were acquired when failed savings and loans were taken over by the government. There was no question of purchase price. Here purchase price is crucial. What are the safeguards to prevent cronies and contributors from getting favorable deals, either in selling assets or in purchasing them?
7. The prices paid for assets should be transparent to the public, and some way should be found to allow others to bid for them, in at least some cases. That would help to assure that the price being paid was a fair one.
8. The decisions made by the bailout agency will be critical to communities and to struggling homeowners. If the board in lenient in restructuring the millions of mortgages it will control, it can reduce foreclosures, at a possible cost to taxpayers. But the risks that it will be lenient to those with clout are real, and forgiving every loan is not a great idea.
9. Among the worst mistakes made in the savings and loan crisis was to allow the institutions to devise special accounting rules, to make themselves look better than they were and to keep them going when they should have been closed down. You would think no one would want to repeat that, but there are rumors that banks are asking that Congress allow them to stop marking assets to market, on the theory that it was having to tell the truth about their bad decisions, rather than the decisions themselves, that caused this problem.
10. This might not have been needed, at least not now, if the Fed and Treasury had stuck to their own game plan in Bear Stearns, to bail out creditors but not shareholders. We need to learn who it was who pressed to force Lehman to fail completely. That decision led directly to the run on money market funds and to panicked trading conditions for credit default swaps at other brokerage firms.
11. Investors clearly think the shareholders of brokerage firms and banks are being bailed out — not just that failure is being avoided. That should not be allowed to happen. If there is no penalty at all for these disasters, we are more likely to see repeats somewhere down the road. That is far more important than whether a few executives get undeserved bonuses, but the bonuses are more attractive to politicians and may garner more Congressional attention than issues of whether the government overpays for assets.

mments so far...

Most of these derivatives are not backed by hard assets which are causing the trouble.How can taxpayers money be used to buy some crap to restore confidence or greed among Investment bankers? It would have been better if homeowners got the benefit directly through tax cuts.
— Posted by debasism
Remember the dot com bust when it was decided that job loss was good because the market needed to correct itself. It seems there weren’t enough connected CEO’s at that time. If my money is going to bailout CEO with multi-million salaries and packages I would like my voice heard and just not friend of a friend passing public money to around.
  • How about put a cap of 1 million on salaries including expense accounts and bonus packages until all these firms pay back the loans. We’ll probably see the fastest loan payback in history. But it already is looking to late for that since it appears only to take a weekend for everyone to be rewarded for driving their companies close to bankruptcy.
— Posted by ken
These points are very well taken. So what can citizens do to minimize the chance they occur? BTW, at $700 Billion, and a population of 300 Million, that works out to $2,333 per man, woman, and child. Hopefull, we’ll get some of that back. Tax the rich!
— Posted by estele
FN: What are the safeguards to prevent cronies and contributors from getting favorable deals, either in selling assets or in purchasing them?
We need them to get favorable deals - the government needs to move the merchandise. The well-connected will be the “gears” that move us through this crisis.
FN: The prices paid for assets should be transparent to the public, and some way should be found to allow others to bid for them, in at least some cases. That would help to assure that the price being paid was a fair one.
The people who buy and then sell these assets HAVE to make money, or they won’t do the deals. The pain added to the U.S. tax burden is spread over time and people.
— Posted by Sam Sanatogis
Point 10 faults the Fed and Treasury for not bailing out creditors. Excuse me, but Lehman debt was NOT Treasury debt. Neither was GSE debt or AIG debt. Why do you expect the U.S. government to run around guaranteeing everyone’s debt? Holders of the debt were compensated for taking a risk of default that was higher than the risk of a Treasury default. Why relieve them of that risk? Other than to serve some narrow self-interest.
— Posted by Doug
I’m dreaming of a big scandal …
  • Isn’t everything a scandal?
— Posted by anna
Dude, do you understand the gravity of the situation? The bill must be passed, and this has nothing to do with partisan-interests FOR NOW. Want to see what happens when people go to the grocery store and can’t get milk? Can’t get money out of the ATM? It would be anarchy, and THAT is the reality around the corner if the short term measure is not agreed to by TOMORROW. Go do your homework. People should research the “instrument” largely responsible for this mess: Credit Default Swap. New York times article in Feb predicted this to happen.
— Posted by Malbocca
Is it too much to ask for CEOs responsible for this finacial fiasco to give up their bonuses to contribute their fair share to help the United States government cover their greed and criminal actions that got us in this mess? Is prison enough for them? Why wouldn’t they walk the streets with their heads held high? No one has asked anything of them. Instead they use this time to create a row of lawyers to help them stay out of jail.
— Posted by Virginia Palus
Excuse me, but why is the NYT completely ignoring section 8 of the bailout bill?:
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
— Posted by onebackwardglance
A Financial Services Industry > FSI - based solution
 Therefore the US taxpayer should not bail out these entities
  •  The US Treasury plan simply does not address the INESCAPABLE ISSUE -
  • o Real Estate values have been and STILL ARE dislocated from personal incomes
  • o Further – regrettably the US’ jobs picture is negative and getting worse; overcapacity exists in most industries, notably the Financial and real estate related industries.
An FSI – based solution has the best chance of success, in keeping with a self policing / self regulatory regime / market – based approach
  • 1. There is no perfect solution, however, I believe the solution, best use of resources, best free market approach, best chance of success is an industry (Financial Services Industry) solution INCLUDING the credit ratings agencies (S&P, Moodys, Fitch, et al) and hedge funds.
  • a. Temporary, extraordinary waiver of anti-trust regulation is required.
  • b. ALL of those parties need to band together now – as they ALL did in the past in creating this “artificial” market for toxic securities, derivatives and insurance thereon.
2. The FSI collectively is in the best position to price & evaluate risks of RMBS & CMBS and derivative securities.
No one, I repeat no one raised their hand in the past did they?
  • 1. The outsize FSI profits were earned in the full light of day of boards, officers, auditors, regulators and SHAREHOLDERS.
  • 2. Same profits INCLUDED a CEO’s personal certification of internal controls.
  • 3. The above parties, like many at other Investment banks on Wall St. didn’t complain in the past when the paper / model profits were throwing off huge profits.
Closing comment – greed and or failure to admit mistakes, take losses
  • 1. Many have criticized Wall St. CEOs, like Dick Fuld that he could have, in the recent past, raised capital and increased the chance of his firms’ continued survival.
  • 2. Similarly, AIG could have, in the past 12 to 24 months sold off or at least reduced some of its concentrated holdings in its FPG group correct? Rather, once again, predictably DECIDED to hold these contracts; the epitome of self interest, hubris and ultimate greed!
Lastly where is the voice?
  • 1. Those loud voices of SIFMA (the creation of the SIA and BMA), ICI and US Chamber of Commerce NOW?
  • 2. Let them:
  • a. STAND UP
  • i. A more impressive, peerless collection of intellectual capital does not exist.
  • ii. Let’s see if they have, collectively the character to implement a prudent plan of action;
  • Stocks require 50% initial margin; a new margin requirement for MBS and related derivatives needs to be more prudent; just in case the models of the masters of financial universe take a left turn!
— Posted by fiduciaryexpert
The Paulson proposal is a financial Tonkin Bay Resolution.
— Posted by Gordy Ringoen
As usual your comments were superb, but I am amazed that you and yesterday’s editorial (NYT) on the proposed bailout plan did DEMAND that stringent “recourse” stipulations be incorporated into any empowering act to “protect taxpayers interests.” The new federal facility should also be required to retain 15% to 25% of the purchase price to migitate the probability of overpricing and the definite possibility of subsequent asset deterioration during the bailout period. Without tangible recourse, taxpayers will simply not be protected and the bailout plan will be nothing more than institutional fraud!
— Posted by David G. Ward
Although this wide-open plan apparently has a lot of support in Congress, members of the public seem to be overwhelmingly against it (as, in my opinion, they should be - I’ve seen nothing about the plan to suggest that it should be passed). It will be interesting to see if the administration can get it rammed through before public opinion brings it to a halt.
— Posted by Securities Lawyer
It appears to me that there is something eerily reminiscent of a previous emergency in which a president approached congress asking for a blank check to defend the country against a supposedly ominous threat. One wonders if this will work out better than the previous solution.
— Posted by RBW
Has anyone else noticed Paulson’s physical and temperamental similarities to Donald Rumsfeld? Are we being stampeded into a give-away to the Wall Street bankers who got us into this mess the same way we were stampeded into the war in Iraq? Are we being asked for another blank check?
— Posted by Dan Barton
Live by the sword; die by the sword.
People who had no business getting a mortgage should not be saved from foreclosure. Fraudsters giving mortgages need to lose their shirts.
Are any of these people aware of the massive amount of damage their actions initiated? Do they care? Will they be paying extra or anything into this mega-fund “bad bank” sewage dump that the world is heading towards creating as a way of disposing of toxic derivatives, etc.
Without the sub-prime mortgage market, the rest might not have developed (or been found out one could argue).
The American Government (and others) will now expect the poor to bail out the (formerly) arrogant and sneering rich. Possibly for the rest of their lives to the cost of a healthy economy.
Every ‘bonus’ in every bank in the world should be cancelled this year and for the foreseeable future and the cash used towards this “bad bank” that will soak up the toxic debt. Lucky they keep their jobs I say. No bonus. Serious humble pie is in order here.
SERIOUS humble pie throughout that “greed is good” world they all chose to go and work in with a view to getting rich themselves one day.
And Serious humble pie should be on the plates of the financial press who were notably silent over the past 10 years of this hubristic blowout forming.
Why was Warren Buffet ignored when he called derivatives ‘weapons of mass destruction’. Why did Nouriel Roubini draw laughter on Sept. 7, 2006 when he unfurled his view of the road ahead? What was going on in Greenspan’s head in 2003 when he puzzled about why the housing market was still rising in price when it should have stopped already. He could have engineered a quiet end to the inflation of house prices and overbuilding of them. That is what the Fed is for. To steer the financial market away from the rocks, to cool and heat up the activity to keep things sane.
Hasty decisons now must be reversible in six months time or loose enough to be tinkered with when the flaws show up. Like the Hadron Collider, whatever is engineered, it might not be perfect and need to be shut down in a hurry.
— Posted by Valerie Paynter, UK
Thank you Mr. Norris for the recommendations that you outline for Congress to consider as part of the proposed Treasury fund.
The fund in intended to purchase “corrupt” assets from US and foreign financial institutions.
I am drafting some recommendations for Congress to consider as part of the legislation.
My focus is to encourage Congress to incorporate some important elements of transparency into the Treasury’s authority.
The Credit Crisis of 2007-2008 began and accelerated in large measure due to lack of transparency and misvalued assets.
If the Treasury plan is adopted as currently proposed its actions will continue the opacity and deny market participants the ability to establish marks for assets they own or would consider purchasing.
The global fixed income and derivatives markets have long been characterized by a lack of transparency.
The actions of the US Treasury should move boldly to help establish new and important transparency for global markets.
Draft recommendations for Congress…
    • The US Treasury must disclose the price and terms of the assets which it purchases and report on the cost to taxpayers of the ultimate disposition of these assets.
    • The US Treasury must disclose the terms and compensation of the renumeration granted to all private parties that participate in the disposition of the assets.
    • The identity of all institutions which sell assets to the US Treasury must be disclosed.
    • The Congress must require the SEC to develop a consolidated trade reporting system for all over-the-counter securities including MBS and CDS. This reporting system could be developed as an expansion of the FINRA TRACE system (Trade Reporting and Compliance Engine).
    • A central clearinghouse for credit default swaps must be established and operational by January 2010.
    • The Congress should direct the CBO to report on an annual basis the quantity of US financial liabilities held outside of the nation. The general terms of this foreign indebtedness should be illustrated for purposes of understanding the potential call on the nations patrimony.
— Posted by Cate Long
The questions of oversight and conflict of interest that swirl around the Bush administration’s ballooning bailout program for financial institutions (the TARP, Troubled Assets Relief Program, or MRI, Mortgage Resolution Incorporated, as it has variously been called) can be partially addressed in the manner that TARP/MRI is paid for. The question of who shoulders the cost is a pivotal one as there is a strong sense for many that TARP/MRI is meant not only to resuscitate our now very reluctant credit markets, but also to save the skins of an elite wealthy few that have recklessly gambled with our economic future while raking it in for themselves (with the raking-in being, of course, the whole purpose for their egregious, you might even say criminal, astronomically leveraged gambling). Maybe if some of these wonderful folks who brought us this mess actually had to pay to clean it up, then besides being just downright fair, their unexpected burden might offer, if not penance, at least some protection from TARP/MRI turning into just yet another government feeding trough (in this case, jumbo-sized) for this coddled coterie, and might even, now don’t count on this, discourage these citizens of questionable character from engaging in future activities that might lead to a TARP/MRI II (that would probably actually be TARP/MRI III if you consider that now rather quaint looking Savings and Loan Debacle we ran into a couple decades ago).
  • So, here’s the suggestion. TARP/MRI will be funded not out of a general pool of taxpayer money, but by targeted taxes beginning with a special tax to fund TARP/MRI that will be paid by those earning over $300K a year. The TARP/MRI reserves would be further bolstered by a Windfall Salvage tax - a targeted special tax of at least 25% on earnings over $500K for those employed in the financial services sector. Maybe even a 1% asset tax on all those who worked in the capital markets for at least 3 of the past 10 years (assess the tax on all capital markets participants of the past 10 years, and then let those who think they don’t qualify produce affidavits to that effect; but no exceptions - penalties for non-compliance should include mandatory jail time and additional monetary penalty).
  • If the government taxed in this manner, then primarily the folks that gambled, personally gained and then handed us the bill might actually have to pay some of it. And if this TARP/MRI thing actually happens to turn a profit, then a tax rebate to all those folks that paid in. Now, with these kinds of incentives in place, you might even imagine TARP/MRI negotiating wisely on asset prices with the financials, along with potentially the appearance of an assortment of otherwise not to be expected good behavior. Heck, this thing might even have a chance of breaking even in the long run, which looks pretty darn good from where we sit now.
  • In the parlance of The Street: bottomline, let’s get these financial terrorists where it hurts - their pocketbook. And let the American taxpayer get on with productive work on Main Street, without the burden of Wall Street’s shenanigans.
— Posted by George
I’ve read the comments, but shouldn’t someone
  • be going to jail over all this…. they all
  • knew.. or kept it form being known..
  • b
— Posted by brian
  • Do you know how much and what kind of money was moving into and out of the 3 month last week. Was it prop desks, banks, mutual funds?? Could banks have pulled the trigger on their own bailout? How much money did it take to create those massive fluctuations? Come on journalists, we’re counting on you!
— Posted by trblmkr
CONGRESS AND THE BUSH ADMINISTRATION ARE ORCHASTRATING THE BIGGEST RIPPOFF IN AMERICAN HISTORY Congress and the Bush Administration are rushing to pass a bill that will cost each and every household in America almost $10,000 . (this conservative calculation EXCLUDES the fact that over 40 percent of filers pay zero income tax ). The Wall Street PR machines have been working overtime all week trying to set the wheels in motion. The reason: They are afraid of the revolt that would otherwise come out about how reckless they were in participating in the THEFT OF THE AMERICAN DREAM. The reason the bill is being put forth with a specific provision EXCLUDING ANY FUTURE COURT REVIEW OF THE DEALS is because they are afraid of the backlash from the American people that would come from the resulting debate in open court. There are actually less than a dozen politicians in congress that haven’t received campaign money from the all powerful Wall Street Lobby. The truth is that this proposed legislation deserves to be debated in open sessions on the floor of congress. The American people deserve the truth.
The amazing recovery of the markets on Friday proves that any argument that the legislation needs to be passed before the markets open on Monday is false. The truth never needs to hide in the shadows. The markets will respond positively to the Full Open and Honest Debate. Now is the time for every American to take a few minutes to speak up and BE A PATRIOT. Let your voice be heard. If we stand together we can stop the politicians from rewarding GREED and DECEIT. If you honestly believe in your country now is the time to stand up and be heard.
— Posted by George Smith "RadioCeleb99"
How was secretary Paulson able to advocate Thursday’s bailout plan after Lehman and Bear Stearns wipeout and just BEFORE Goldman and Morgan were going into freefall, when Paulson himself stood to lose (according to today’s NYTimes) several HUNDRED MILLION DOLLARS in Goldman stock,and watch is buddies at Goldman lose hundreds of million dollars as well? Isn’t this as large a conflict of interest as possible?
— Posted by Harney
I no longer plan on paying off my credit cards or my mortage I will simply let the Govt. pay it. I am going to retire. GONE FISHIN!!!
— Posted by Mike
I agree with Floyd’s article entirely. Restructuring mortgages is the key to the Treasury adding value to the toxic waste it plans to acquire. Follow Bob Steel’s lead at Wachovia. Paulson needs to break open the MBS and CDOs and work with the underlying mortgages.
Pricing and activity should be published weekly, and a board of governors (as Floyd said) is definitely required.
My blog
— Posted by Click Broker
Here’s a suggestion. The Board of every company offloading their dud securities onto the taxpayer should be dismissed, without compensation. That should be a requirement, before a cent of taxpayer money goes to the company.
Why not? The boards have proven how worthless they are.
— Posted by Dave Mprgan
In my opinion, the reason that Section 8 of the Bailout Proposal is being ignored is that it’s unconstitutional for two branches of the government to vote the other one off the island. What should not be ignored is that the Proposal does not have any regulations on how the money can be spent except that the assets must be “mortgage-related.” You could probably drive all of AIG’s obligations through that hole. Hence, there isn’t anything for a court to compare the Treasury’s actions against.
I, too, have noticed the resemblance of Henry Paulson to Donald Rumsfeld, both in demeanor and the reverence in which he is held. If there are warning signs that the bridge is out and you keep driving 80 mph toward the bridge, you aren’t complimented on your great driving skills when you slam on the brakes at the precipice. Where was Paulson during the last 3 years of warning signs?
— Posted by David
Never let it be said that the Bush administration does not excel in being opportunistic. After not getting their Social Security giveaway to the financial industry, they have found an even better way to get the pesky taxpayer’s money into the billionaire’s pockets! WELL DONE! They really are good at what they do.
— Posted by Jim
There’s a decent column in “The Nation”: “Paulson Bailout Plan An Historic Swindle” by William Greider which proposes a comprehensive program far beyond the current administration’s proposal to leave the situation to the “brain dead lame duck in the White House.” Isn’t it ironic to see all those worshipers of the “invisible hand” clamoring for a handout and the consonant destruction of their “free” markets.
— Posted by Allan Holmes
No to Section 8. Must have bipartisan oversight with teeth.
Govt should receive warrants in any company equal in value to any loss from debt purchase and sale.
— Posted by paul
Apparently, a number of people here are unaware of the section of the United States Constitution which stipulates that “Prices shall only be allowed to move upwards at all times.”
It is the solemn duty of our political leaders–in collusion, er sorry I mean ‘co-operation’–with banking and investment interests, to enforce this rule at any and all cost to the taxpayers who, you may have noticed, are *not* mentioned in the Constitution and don’t have any lobbyists anyway.
Clear now?
— Posted by Marsden
I have a sinking feeling about all of this. There are a few basic tenants of law–no man should benefit from his own evil–like cases should be treated alike. These have been thrown to the wind. Now we are about to create a financial dictator with almost unlimited access to the treasury. This is one of those dark times when ‘necessity knows no law’ becomes the mantra. This will be a great disaster because Congress will rush through legislation which which it does not understand…the financial equivalent of Iraq. The score is zero to zero and Wall Street is ahead as usual.
— Posted by John
I hate this. I hate the fact that since I own a considerable amount of GE common stock that if this disgraceful market manipulation indeed takes place the average American will pay out $2333 to rescue a coven of Wall Street sociopaths…while my GE will recover around $25,000 of value.
— Posted by Hal Smith
Questions to the Congress: WHO IS GOING TO PAY FOR THE SECRET WALL STREET BAILOUT AND THE FAILED IRAKI WAR? There is no free meal. How do you steal 2or 3 or 4 trillions from the pockets of the American citizens? Please, face up to your responsibility and inform us.
— Posted by John de Valois
I think we have time to get the details. We need a hearing in the Senate. It is the Iraq War all over again–lies, incomplete disclosure, falsification–and the American people are being fleeced per usual. The Bush Administration is just giving $1,000,000,000,000 to corporations with no accountability for their greed. America needs to wake up. Congress needs to monitor closely a fair price for the assets and the companies and stock holders need to pay for their stupidity. If I dont have money invested in those markets I shouldnt have to take the hit.
This is the beginning of the biggest scam in American history.
— Posted by bk
I have only one material suggestion to add to the mostly intelligent commentary I’ve read here so far. We clearly have no choice but a govt. bailout of some huge amount yet to be determined. One way to minimize the amount surely has to be the very simple precondition that every entity selling junk MBS securities to the US Govt must, ON THE DAY THE FIRST SALE IS MADE, ADOPT THE SAME SALARY SCALE FOR ALL ITS (DEMONSTRABLY INCOMPETENT) EMPLOYEES AS THAT OF THE FEDERAL GOVT!
— Posted by bob grunburg
Could we require that all Wall Street compensation greater than, say, $200K, be paid in the least valuable mortgage backed securities, credit default swaps, etc., and taxed at their face value.
— Posted by Jim S.
I did not think that in my lifetime I would see Russia become capitalist and the USA become socialist. Imagine that the USA government indirectly now owns 50% of the property in the USA and indirectly many of the Insurance policies and now many of the loans written. Who would have thought?
— Posted by Jon Michael
Separate and apart from the entire thread, no seems to be talking about the source of the money for the bailout. They are not going to Fort Knox to cash in some gold, they are going to borrow it. From the CRS report for Congress - China’s Holdings of US Securities: Implications for the US Economy. Jan 2008 - Top 5 Holders of US Securities - Japan, China, UK, Luxembourg and Cayman Island [read the Middle East, and the Oil dictatorships]. China holds about 1 Trillion “with a T” dollars = to about 10% of the total new 11 trillion dollar projected deficit. We fought WWIII and China, Japan and the rest of the world won without a shot. There is more than enough blame to go around for the current situation, but the “rescue” could be even worse. I find Nancy Pelosi’s “stimulus” proposal particularly galling. Even though I am a life long Democrat, the level of contempt her proposal shows towards the intelligence of the American people is numbing. Nancy is telling us to go out and “charge yourself a lollipop, you’ll feel lots better.” … and no one is talking about the 500lb Gorilla in the corner: Consumer Credit card debts = $1.7 trillion … hmmm how about everyone withhold their monthly payment for 30 days and we can watch the bridges all fall down.
— Posted by Alain
Funny how when Goldman stock stock started to get hit hard did Paulson every jump. He probably thought his blind trust was going to loose all of its value. Remember he is doing this for us not his trust account or buddies. Oh by the way was he not the CEO of Goldman as they were packaging these mortgage deals up and selling them off and then his Goldman buddies made such a big proffit from shorting those sells. Ah! shorting was ok then!! Yeah I beat he knows how to fix the crisis now. Made money then and bails his buddies out leaving us all holding the bag.
— Posted by adrena allden
Wait a minute and think twice before rewarding the wall street executives in the name of saving “undeclared consequences foe the Main street” Why? Remember the famous Iraq invasion resolution in 2002 October? It is this same administration asking for a blank check from congress just 38 days before the election in 2008. I smell some thing bad here,because the GOP has played this dirty trick in 2002. I DO NOT TRUST GOP AT ALL.
— Posted by Vikram Patel
Having watched this unfold, I have come to the conclusion that Paulson and Bernanke knew the consequence of letting Lehman fail. They must have looked at its books and must have known that a few money market funds will break the buck. They let it happen, triggered a mini crisis, and used that mini crisis to scare the Congress and the public into giving them a blank check.
If they didn’t understand the consequences of letting Lehman fail, given the Fed’s power to look at Lehman’s books to assess its condition, then we are in bigger trouble. Why should we let these incompetent people control more than a Trillion dollars in bailout.
More importantly, this is the only chance to avoid financial meltdown. Getting it wrong means no second chance. Why the hurry to rush something in a week?
— Posted by rational
  • We have no hope of society gaining access to the oversight and points you write about unless the press reports and pushes for reforms, transparency and protections for the people. In times like this, it is important that the press both enrage and enlighten the public. And, do so as quickly and significantly as possible. In other words, your editors need to make your writings and others on this topic front page material
— Posted by bdg123
It is incredible that a transfer of wealth of this magnitude should be approved in a few days. Shock capitalism once again. Congress must insist on proper oversight procedures. Where is the transparency? I thought that was what we should have had, and now we are not going to have it again. It is, as several have said, like our rush to war, and it is even more expensive. The Bush years have left every aspect of our society in tatters.
— Posted by rachel
Again and Again, Bush administration and their masters in Wall Street uses fair to get what they wanted: this time a blank check without any restriction or invasion of other countries. They think we the taxpayers are all dumb since they do not bother to explain to us what is the alternative, and why and how they can be so sure that the alternative must be worse. I am simply can not trust them anymore since if they can be so sure this time the alternative must be worse, why these same bunch of people can not do anything to prevent it from happening in the first place? I really doubt that they have any intelligent capacity to make any long-term plan except for
  • being good at using all sorts of fears to steal money from we the taxpayer. NO BAIILOUT !!! LET THE MARKET WOKR IT NATURAL COURCE AS THEY PREACHED BEFORE!!
— Posted by taogo
A recent post on the NPR web site indicates that the proposed “bailout” of bad debt includes clauses that apparently give unprecedented unitary powers to the Treasury Secretary and the executive branch, including clauses that state that the Treasury’s actions would not be reviewable by Congress or the courts. e_white_house.html#more
The worst thing that Congress can do in this situation is give the executive branch dictatorial powers. I am suspicious of what Naomi Klein has labeled “disaster capitalism”, using crisis situations to move forward a hidden agenda.
Do we need to act in a hurry? Maybe. And then, given past crises maybe not. But whatever steps are taken should be subject to oversight and review.
We have already seen the downside of the “Patriot Act” and other forms of legislation adopted without adequate scrutiny. The survival of a three-tiered Constitutional government is in grave danger if these allegations are true.
— Posted by Aredee
Your basic premise that someone needs to be punished is a blind as it is ignorant. And if the Fed and Tsy had not stepped in Thursday, you may not have been able to come back from your vacation because most airlines would have had to stop operating by the weekend, unless relevant sovereigns intervened.
So instead sounding so sage and thougtful, why dont you simply say, thank you that we did not face a potential armageddon. 1930’s depression did happen in the USofA, and the opening shot was fired in US financial market.
Sp please, you are not the only smart person who recognizes there have to be some checks and balances. But you actually had the gall to say that Fed and Tsy should have stayed the course of protecting debt holders and burying equity holders. Are you so dense and senile in your old age, it is precisely that action which drove us almost to the cliff. In a game-theoretic sense, the US govt was signalling, equity holders would get slaughtered while debt holders would gain immensely - why? Especially when the market and EVERY American institution is begging for equity capital would the government join all those interested in their demise. Becomes an uncontrollable, irresistable force driving equity to zero. If you dont get this, i dont expect you to since stupidity runs high amongst NYT columnists - ask Riccardo Caballiero or Larry Summers to explain the consequences of introducing moral hazard orthodoxy to realms where they cannot apply.
Simply put, if your son at age 16 borrowed your car, and totalled it and is lying in a ditch bleeding, will you put forth moral hazard to leave him there unattended or are you going take him to hospital and only when has recovered will you try to address the issue with him. That is the correct analogy.
— Posted by raven
Usually when we spend a trillion dollars we get to kill a bunch on people we dont know. Can we at least kill a bunch of bankers?
— Posted by Fred
Big Deal!$700 or so billion? Why ,we incur that much debt with or trading partners every year.How many trillions do we owe them now ? Who knows?,who cares?It seems these suckers will finance our follies and profligate ways forever.However,if they should awake from their long sleep and behold us for the feckless indulgent society we represent then R.I.P USA.Your on your own brothers.
  • Thomas
— Posted by Thomas ,Lima,Peru
If we can move this rapidly to fix our financial system, it would seem possible to fix the health care system. The number of uninsured will clearly climb in the coming year and bad debt will force many health institutions towards bankruptcy from serving those without coverage.
— Posted by Bradford Kirkman-Liff
1) Without knowing the size of the problem it would be impossible for Congress to determine if a bailout will work. Because of the use of leverage huge losses have taken place. These financial institutions have been able to keep the extent of their losses secret. The first step should be to force anyone wanting to be bailed out to declare within 72 hours the nature and full extent of their losses. 2) An independent panel of experts (no not Cramer and Maria) needs to decide on a case by case basis what would be in the interest of the taxpayer bailout or bankruptcy. 3) Taxpayers needs to be payed back first with interest before shareholders and bondholders. 4) A retroactive 100% tax on all profits and salaries above a certain level (for example, Bush’s salary)for the bailout institutions needs to to be enacted.
  • What we have here is a huge segment of our financial industry that have profited wildly from the fraudulent activity of lending money that they knew would never be payed back and then selling the junk paper back into our pension funds. If we put up with that, then What’s Next! Its very interesting that we are on the verge of complete financial destruction and yet CNBC and the Tokyo Roses of the Financial reporting business haven yet to admit that we have even entered a recession.
— Posted by Pete Fontaine
We face another shocking development. Legislation will very likely pass that will provide Treasury Secretary Paulson (former CEO of Goldman Sachs) with “non-reviewable” powers to expend more of the public’s money than was spent on the Vietnam War or on actual combat operation of the Iraq War. And this, we are informed, has to be wrapped up by Thursday or Friday next.
If our mature Legislators have any sense of reality, then they might retain a certain individual freedom of choice, and that is not to
  • participate in this obscene and anti-American answer to a real problem that has much better solutions. This is a scam people to be dropped over common people like some fishnet.
— Posted by On the plantation
Does Paulson had conflict of interest in Goldman- IE- he was chairman & CEO in 2006 & should know all
  • the potential bad bets before became Treasury Secretary. & GS’s stock had dropped more than $72 in 1 week.
  • Secondly. when B of A was foreced to buy MER @ $27 on Sunday (09/14/2008) knowing how bad MER’s books
  • were & should have waited 1-5 days before picking
  • up a bargin ($3-10)for MER. Some thing smells not right.
— Posted by Big.Red.Machine.1970
raven @#41:
Your analogy is not valid as you proposed it. The 16 year son lying in a ditch bleeding is the global financial stability. Yes, that should be rescued immediately. But what you are forgetting is that the mechanics who were aked to maintain and fix Dad’s car completely messed up the car with incompetence and greed, which resulted in the car crash. Didn’t matter whether it was an experienced driver or a hot head behind the wheel.
What Paulson is proposing is bailing out the incompetent, greedy mechanics who are currently facing the consequences of their greed. Helping the son bleeding in a ditch equals to helping those at the verge of losing their homes and helping those of us suffering the consequences of Wall street’s greed. Paulson is not helping the son in the ditch. He is demanding that we take care of the mechanics who got him into the ditch in the first place.
— Posted by rational
Too complicated for this old man to understand the all-imporant details (that’s where the devil resides).
I think we will be lucky if less than 50% of taxpayers money is stolen by the irresponsible executives, some of it paid back to the ‘regulators’.
Some say that the current ‘troubles’ are rooted in a law signed by Clinton in 1999 allowing comingling of all kind of financial activies by banks - comingling previously banned since the Great Depression.
McCain now complains that the lobbyists did it. Not without Clinton’s signature and, more importantly, the professed ‘benign neglect’ of Bush administration and Greenspan who admitted openly on 60 minutes that he ‘did not get it’. I read somewhere that Volcker had much more responsible attitude.
Was it all predictable? Possibly by people like Norris. Great majority of us, young and old, had no clue how bad capitalism can get. And now we will have to pay for it with news about everyday scandals and shenanigans filling pages of the newspapers. TV talking heads will a lot to talk about other than OJ’s trial and that poor girl that disappeared in Florida.
We are for a bumpy ride - our government/regulators failed us and we have to pay for it. How much is going to be outright stolen is everybody’s guess. My is about 50%…
— Posted by Ladislav Nemec, CA
I don’t know why but all these developments move me to sing:
  • Allons enfants de la Patrie
— Posted by anna
According to 1ceoCA01ready.html Mr Paulson has lost $286 mil of his own money since January. He clearly stands to make money if the bailout works. It seems reasonable to ask for some kind of oversight if only to prevent the appearance of a conflict of interest.
— Posted by Tom Webb
If Paulson is serious about taxpayer protection, he should insist that banks pay back the loan plus interest in future as was done in AIG bailout. Until then, there should be a cap on executive pay and dividend freeze in these companies.
— Posted by HL
The system is broken when bankers and others have every incentive to make highly risky decisions, knowing that if they were wrong, they can still keep their salaries, retirement benefits, and other benefits. This bale-out must have some very clear and strict limits that prevent those who got us into this mess from benefiting.
  • One more point: when the executive is given a blank check and Congress is cut out of the process, the results are often disastrous. Anyone remember the Gulf of Tonkin resolution that got us into Vietnam? Many other examples could be cited.
— Posted by Ole Holsti
Has everyone lost their collective minds? I do not believe in consperacy but I do believe in history. In the pursuit of the mighty dollar we all loose perspective. I have done it myself. We can bail out Wall Street but we can not protect our children from pedifile’s? I do not have health insurance but I have to bail out greedy, reckless companies? My children can not go to music lessons, dance or learn finance because we can not fund our schools? My friend who is smarter than 95% of Wall Street can not get a job because he is black and from Africa? Who can tell me Americans are not corrupt? We are always pointing the finger at other countries about corruption, are we not the most? I owe the IRS money from listening to my broker in 2000. Did I get a bail out? Watch Zeitgeist it is not as far off as I thought it was the first time I saw it. This like everything else will be looked at as a blunder but what can we do? We can stop this before it happens. We have to ourselves, the people! No politician is going to fix this. Use your voice and stop this now!
— Posted by Bill Dobwagle
The Democratic Congress is kind of disgusting. They roll over if Bush looks at them sideways.
Of course, Bush is basically a Fascist. That is simply an objective observation and has nothing to do with whether or not I like him personally.
The prognosis for the long term well-being of our country is not good.
The heart of this problem is the fact that Americans panic at the drop of a hat. This and a weak Congress is what allowed Bush to attack Iraq and will next week probably give him a trillion dollar blank check.
It makes me sad that people in this country have become so nervous and seem this ignorant. Few seems to remember that the primary directive of our leaders is supposed to be defending the US Constitution.
That’s right. The American Way is that Freedom is more important than Safety. When people forget that the open the doors to totalitarianism.
— Posted by ralph tyler
I’m feeling less like a human being, and more and more like a Sim. Anyone else get that?
— Posted by B. Mull
In order to bail out these institutions (if any remain to be bailed out), toxic assets will have to be purchased at a value far higher than fair market. Fair market valuation would only reduce their capital, making them less stable.
It is clear that taxpayers are being asked for a capital contribution. Generally, when an entity contributes capital, that entity receives equity stock.
In the nineties, when the RTC “resolved” S&L’s, they took over entire institutions, with all the good and bad assets, and the shareholders were, appropriately, left with nothing. The FBI and the regulators swooped in on Friday night, with guns, to make sure that the assets were protected. The RTC used the good assets to resolve the bad, and it was only through this mechanism that taxpayers were protected.
I would advocate, therefore, is for the government to create a government operated facility that would take a preferred stock position in any bank from which it purchases toxic assets. Thus any going-concern value could be preserved. Current shareholders would be deep-rocked (no dividends until after the preferred), but would retain potential residual value if the bank were to make itself profitable. This feature should appropriately deter use of this facility and mitigate the colossal moral hazard that the current bill would create. (BTW, under accounting rules, warrants can have an adverse impact on capital, which might negate the resolution.)
Another intriguing solution I have seen advocated is to let them fail, and capitalize the FDIC. A fund would have to be set up to cover settlement risk (overnight and short term debt), but I suspect that would be much cheaper than what has been proposed. There are only two major unregulated (investment) banks left, and they apparently have protected themselves pretty well, so the problem may not be as big as it seems.
This bill is an audacious request for a blank check by an individual largely responsible for creating this mess in the first place. It creates a giant put for bad assets, enriching the very banks that contributed to this mess. And, to top it all off, it spits in the face of the Constitution.
— Posted by R West
This is some of the best commenting on a NYT article I have ever seen.
Some have suggested, however, that the bailout is an act of socialism. FAR FROM IT! In socialism, actions are, theoretically at least, taken to benefit the many. This bailout, on the other hand, will protect the assets and compensation of the priveleged few, while the many will continue to face foreclosures, job losses, inflation, etc. The bailout is a classic case of transfer of wealth from the poor to the rich.
It is corporate welfare in its most egregious form: no financial oversight by democratically elected representatives, no legal recourse for future bad actions (indeed, it provides incentives for future bad actions as it does not punish and in fact rewards the unethical and incompetent financial decision-making of the past), and no guidelines for recovering or restricting compensation and perks for the bad actors who got us into this mess in the first place.
The final lesson here is that the neoconservative free market ideology of the last 28 years has proven itself to be an empty shell completely bereft of even the slightest amount of truth or fairness. Moral bankruptcy always translates into financial bankruptcy sooner or later. Alas, this bailout does nothing to acknowledge that fact or correct the behavior of those who deny it. Moral hazard, indeed.
— Posted by Anthony
Once Wall Street is bailed out, how will this new debt affect our economy? It seems to me it will drive down the dollar, increase inflation, hurry a deeper and longer recession, which in turn will cost jobs and force more people out of their homes. Isn’t that where we are now? Other than the greedy bankers, who wins?
— Posted by Steve B
This feels like blackmail. “Pass this now without looking at it too carefully or else the whole country goes down.” Isn’t that “stick ‘em up” line straight out of an old-time Western?
How is it that 8 out of 10 guys on the street saw this coming two years ago but Paulson just noticed it sometime Thursday morning? I’m done with being financially responsible. I’m henceforward modeling myself after a corporation: I’m not paying any more taxes, not paying my loans back, not worrying about it either.
I’m going fishin’ with the guy in comment 23.
— Posted by pam
One thing I must give GW Bush credit for, is his consistency in running to the ground everything he has touched, oil&gas companies, sports teams and now the US economy!!!!
The toxic debt should be rated according to the degree of toxicity and auctioned off and have private parties bid against the government. They could range from tranches going for 20 cents on the dollar to 50%…. This would create the much needed transparency and may end up costing the taxpayers much less….
In the meantime, we need to look at all securitization market for consumer/commercial mortgages, credit card loans, car loans, student loans and whatever else that these felons have bundled up; in order to get to the bottom of this catastrophic mess….
As far as the notion that the shareholders of the financial intermediaries are being bailed out is concerned, I think not, as the mark to market losses will wipe out the lion’s share of the shareholder equity and that they all better start thinking NOW (I sound like a broken record) and raise capital before getting caught with their pants down one more time!!!!
The next shoe, I don’t know how many shoes have dropped and/or will drop…, to drop is the $5 Trillion off Balance sheet items that FASB has postponed its disclosure for several more years….
Cate Long, sounds like you have been giving a lot of advise to the Congress since January 2008, see where we ended up!!! You still think this is a matter of transprency/misvauation, it is time to end your BS, this is pure fraud and incompetence par excellence….
We need to go back to Glass-Steagall type of an arrangement, bring back the Uptick Rule, Regulate the Derivatives markets and reform the SEC and put people in charge who are proactive, will defend the rights of the investors and effectively police the system.
— Posted by Hassan Azarm
I will vote against any elected official in my congressional district that votes FOR this plan. I am becoming a one issue voter with this terrible bill.
I encourage everyone else who cares to act similarly.
— Posted by J Yung
How are we ever going to price these “toxic assets” that the Treasury if going to buy? The core issue is that there is no market for these “assets” (hah).
If mortgages are the underlying issue, why can’t we spend a ton of money resetting the mortgages, and keeping homeowners in their homes? Yes, lenders are going to need to write-down the assets — but the repricing can happen “bottom-up”, not top down.
An excelent article — thanks.
— Posted by Michael Schaffer
So we’re faced with yet another “crisis” in which the President demands that Congress cede its power and write him a blank check, without time to consider the condequences. Can you say “Iraq?” What about “Patriot Act?”
Can’t teach an old new tricks, but he sure can do those old ones.
— Posted by Rick
I have no pity for the players of the financial shell game that that caused this insanity. I recoil at tax payer funds being used to bail out investment bankers. I am ashamed of the state of this country.
— Posted by H. Staub
This is being done so hastily. It may prove to be an enormous rip off of vast proportions. Nobody really knows. Committing this much of our countries wealth should NEVER happen without time to carefully craft a plan. What more is to be said? Down the road, it looks like we will have a serious economic contraction and at that point need money that will have been already squandered.
Andrew Peck
  • Woodstock, New York
— Posted by Andrew Peck

Add your comments...

Name RequiredE-mail Required (will not be published)Comment
Comments are moderated and generally will be posted if they are on-topic and not abusive. For more information, please see our Comments FAQ.
external image norris&posall=TopAd,Position1,Top5,SponLink,SFMiddle,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Position1&query=qstring&keywords=?

Search This Blog

All Blogs »

About Floyd Norris

Floyd Norris
Floyd Norris
Floyd Norris, the chief financial correspondent of The New York Times and The International Herald Tribune, covers the world of finance and economics.
<SCRIPT language='JavaScript1.1' SRC=";abr=!ie;sz=336x280;ord=2008."> </script> external image norris&posall=TopAd,Position1,Top5,SponLink,SFMiddle,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=SFMiddle&query=qstring&keywords=?

Monthly Archives

Select MonthSeptember 2008August 2008July 2008June 2008May 2008April 2008March 2008February 2008January 2008December 2007November 2007October 2007September 2007August 2007July 2007June 2007May 2007April 2007March 2007February 2007January 2007December 2006November 2006October 2006September 2006August 2006

Popular Tags

accounting AIG bankruptcy banks Bear Stearns China Citigroup consumer sentiment Countrywide credit crunch derivatives Dow Jones employment Fannie Mae Federal Reserve fraud Freddie Mac gasoline GDP Hewlett Packard home prices home sales housing housing market housing starts inflation Intel interest rates jobs Lehman MBIA Moodys mortgage mortgages Novastar oil options PCAOB recession S.E.C. Sarbanes Oxley SEC short selling stock market stocks sub prime mortgages subprime Tribune universal Express

Recent Posts

  • September 21
Will a Crisis Create a Scandal?
I’ve been out of town, and have not studied all the available details of the Bush administration plan. But I have a few observations.
  • 1. I suspect that Hyman Minsky, the economist who wrote that stability can be destabilizing, and who I was surprised to hear being quoted by a Bush administration official […]
  • September 19
Bailout Nation
It is a fear of every columnist that a column will be overtaken by events before it is even read. That happened to me today.
  • My column discussed the issues that the government would face in deciding whether to bail out failing financial institutions, or let them fail.
  • I also suggested that more money market funds […]
  • September 18
Baloney Out, Baloney In
Dow Jones finally chose a replacement for the American International Group in the Dow industrial average. (A few days ago, they put out a news release saying they were “watching the situation closely,” which we might have taken for granted.)
  • The replacement is not from the financial services industry, which makes sense in this environment. […]
  • September 17
Bear Bites the Real Economy
It is traditional to proclaim a bear market when an index falls at least 20 percent from a high. That has been true for some time in the S.&P. 500, but that was mostly because of the collapse of the financials.
  • That led some people to argue that there was no bear for the […]
  • September 17
Flight to Quality
A money manager advises that the ultimate flight to quality is under way, and he cannot find Treasury bills to buy. He told me that he had to go out to December to find a T-bill that he could purchase with any yield at all, and that was well under one-tenth of a percentage […]
external image blank.gifexternal image dealbook&posall=Top5,Box3,SponLink,SFMiddle,Right,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1B,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3&pos=Box3&query=qstring&keywords=?
The New York Times
The New York Times
external image tech_091608.jpg

Nontechies, this one's for you

Also in Tech:
external image norris&posall=TopAd,Position1,Top5,SponLink,SFMiddle,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Box1&query=qstring&keywords=?



Ads by Google
what's this?

Canton Fair 2008
Tradeshow by China Govt since 1957. Source all kinds of products here.

external image norris&posall=Top5,TopAd,Position1,SFMiddle,SponLink,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,tacoda,SOS,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3&pos=SponLink&query=qstring&keywords=? Home
Copyright 2008 The New York Times Company
external image norris&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Bottom7&query=qstring&keywords=?external image blank.gifexternal image norris&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Bottom8&query=qstring&keywords=?external image norris&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Bottom9&query=qstring&keywords=?external image norris&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Inv1&query=qstring&keywords=? external image norris&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Inv2&query=qstring&keywords=?external image blank.gifexternal image norris&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Inv3&query=qstring&keywords=?external image norris&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=tacoda&query=qstring&keywords=?external image norris&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=SOS&query=qstring&keywords=?