I watch the re broadcast of the hearing last night...

Paulson and Berneckie are playing a very suspicious game. They need the whole 700 at once to make it work. A payment plan will not work, the process and path to buy the nasty paper is unexplainable(reverse auction), it needs to be done pronto, they allow oversight, however, there is to be no legal or court review of exactly what they are doing.

FWIW...

"The reason Secretary Paulson is asking for a $700 billion bailout package for the banking system is basically because he's holding onto a dream, trying to put off the day of reckoning the Wall Street Elite and certain Congressmen, from both parties, who put this in motion years ago.

1. Wall Street with help of the Clinton Administration pushes for and gets repeal of Glass-Steagall Act of 1933. This allows retail and investment banks to exist under one roof, a big no-no since it allows them to lend to themselves. The Bush Administration follows suit by putting Wall Street loyalists in key positions in government; the result was Fannie/Freddie became a piggy bank while rendering the SEC virtually toothless.

2. Investment banks use their position to create and market mortgage backed securities, while the retail end of their businesses relax lending standards in order to create the mortgages that back the securities, and they make fees the whole we up and down the chain. A virtuous cycle of paper creates a deluge of capital into real estate, and prices go up. The retirement systems, pension funds, private funds, central bank reserves, hedge funds, and all manner of financial wealth from around the world are invested in these mortgage-backed securities, as mainstream financial institutions recognize these instruments as valuable and relatively liquid. As the pool of buyers begins to dwindle, more exotic instruments are created, and debt is reorganized again into collateralized debt obligations, and an alphabet soup of different bonds.

3. Eventually, as always, the market takes it's course, and we run out of buyers. In the end, people were getting loans by simply filling out the forms saying the right things, and even then sales slowed. Speculators were selling to each other and were now holding houses while new ones continued to be built. THE VALUE OF THE LAND, WHICH IS THE COLLATERAL BACKING THE MORTGAGE BACKED SECURITIES, BECAME WORTH LESS THAN WHAT WAS SPENT ON THOSE BONDS. This means that everyone is holding paper that is worth less than what it says it's worth, and if that's true, what is it worth in the first place? Fear began to set in.

4. Starting in August of 2006, investment banks stopped buying the mortgages that subprime lenders were issuing. This meant that instead of selling the mortgages they wrote, keeping the fees, and writing more, they had to hold the mortgages they had on their books. As these went bad, subprime issuers began to flounder. Countrywide narrowly missed complete catastrophe by selling to Bank of America. As the subprime lenders floundered, banking institutions became less able to hide their losses. The losses in their balance sheets from the writedowns in mortgage backed securities ate all profits from 2007, with no end in sight. Throughout 2008 this process has continued, to the point that banks are failing if they can't gain access to loans from the Federal Reserve, which really just make it worse by creating more debt, but for those who can get those loans, it buys time. With the restriction in credit that accompanies this, the real economy is hurt as the banks don't have the ability to lend at all levels. In the end, these losses from these mortgage backed securities are so huge that they will deplete the FDIC, and will effectively double the national debt if Congress votes to for the bailout.

5. The alternative to the bailout is to let the holders of the mortgage backed securities lose their money, like the Enron shareholders, for example. Wall Street is claiming that this is a threat to the entire financial system, which is not true. The truth is that the thieves who started this whole thing by lobbying government be selling junk paper are trying to find a way to find a way to paper over this whole mess.
The scale of this thing is huge!
The boys on Wall Street have ripped off the entire world, and cronies in Congress, on both side of the aisle, helped them do it, and now they want to complete the scam buy pawning the whole debt off on the American people.

That's what this bailout is about. The parasites on Wall Street have sucked their hosts dry and want a donation from the American people."

doni