The $700 Billion Banking Bailout Bill Passes – Will It Work?


Paulson’s $700 Billion bailout bill passed the House on a 263-171 vote and the President signed it into law. Last week I promised a discussion (assuming Congress would pass the bill) on whether or not the Bill would work. So let’s get to it..

Will the Bailout Bill Work?

First, this is a false question. Paulson and Bernanke scared Congress who in turn attempted to scare the voters by painting a picture of Main Street catastrophe…businesses going bankrupt, unemployment spiraling out of control, and no lending to consumers of any kind.

To discuss whether Paulson’s bailout will work to solve these calamities is to accept the premise they exist.

They do not.

Businesses today have availability of credit. Consumers with decent credit scores can get mortgages, car loans, and credit cards as easily today as last month or last year. Returning to sound credit underwriting principals should not be mistaken for a credit freeze due to lack of liquidity.

As a matter of fact, the only institutions that can’t get credit are commercial banks seeking overnight lending from other commercial banks.

That’s it.

That overnight bank-to-bank lending is the only “frozen” credit market …and many believe it was Bernanke himself who drained the liquidity out of the market intentionally leading up to the first vote so every news story would be about the TED spread and a “frozen banking system”.

Bernanke drained $125 Billion of liquidity as evidenced by the Slosh Report from September 18th to September 24th at exactly the time he should have been adding.


Why would Bernanke do this?

The Fed MANUFACTURED a crisis for Paulson to fix. Fix with $700 Billion of tax payer money that is. The Fed will pump liquidity back into the system once the bill is law.

This bill was nothing more than economic extortion. If I make you think I’ve kidnapped your child when I haven’t (giving you self-created “evidence” to support the claim) and convince you for the safety of your child to pay me a ransom, I’ve committed a serious crime.

Bernanke and Paulson have done nothing less…

If Paulson and Bernanke knew the American economy was NOT headed for collapse but simply used it to lay their hands on $700 Billion, the question arises…

“What is the real reason Hank and Ben want $700 Billion?”

That question will get answered next week….and you ain’t gonna like it!

About Author

Rob K. Blake, a 15 year veteran of the mortgage industry, is a renowned public speaker, author, and former radio talk show host. His blog,, is dedicated to educating mortgage consumers, mortgage providers, and investors about both mortgage and housing markets.


  1. Good cliffhanger and since I don’t know I’ll tune in next week. Thank you for writing this because I am really trying to understand exactly what the hell happened.

  2. What happened to that $700 billion, anyway. This was such an emergency need that surely they must have used a large chunk of it by now in addition to the $400 billion that the Fed send out to foreign banks while Congress was approving the $700 billion. To hear Paulson, Bernanke, and Bush tell it, the banks were all sitting around with their mouths open gasping for air.

    In the meantime, we noticed that Federal Reserve Stock holders Chase and Citigroup are going to make out like bandits buying up assets for pennies on the dollar.

    Now the headline reads, “Housing must mend to see economic recovery”. What was the purpose of the $700 billion?

    We weren’t born yesterday. Washington was and they have been scammed again. As soon as we replace the Congress members and Senators that voted for this bill next month, we need to raise their salaries to say, $1 million so we can attract some talent to the next election.

  3. Has anyone seen the pork that is in this Bill.I would like to know just where did all this money really go.I saw one article that said you can get a $7,500 tax break if you buy a certain kind of electric car.In another place I saw that there was an allotment of $1,000,000 to produce wooden arrows for childrens games.I am not sure how true all of this is but it was on the Web.Does anyone know where to get a copy of the Bill or what the number of it is?

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