Latest / Stuff You Should Know / How the Bailout Works

Transcript

How the Bailout Works · Stuff You Should Know

0:00
Speaker 1: Brought to you by the reinvented two thousand twelve camera.
0:03
Speaker 1: It's ready. Are you welcome to Stuff you should know?
0:08
Speaker 1: From how Stuff works dot com. This podcast is brought
0:12
Speaker 1: to you by Audible dot com, the Internet's leading provider
0:15
Speaker 1: of spoken word entertainment. Get a free audio book download
0:19
Speaker 1: of your choice when you sign up today. Log on
0:22
Speaker 1: to audible podcast dot com slash stuff today for details. Hey,
0:28
Speaker 1: welcome to the podcast. I'm Josh. This is Chuck Nothing.
0:32
Speaker 1: I'm here, all right? Sorry? Keep it everyone into Spence
0:37
Speaker 1: is Chuck here? Well, we need to wear the violence
0:40
Speaker 1: of correct um. Chuck. You watch Criminal Minds? I don't.
0:46
Speaker 1: Do you watch Private Practice? I don't Biggest Loser? No?
0:52
Speaker 1: What about okay? This is the fourth and last network.
0:55
Speaker 1: What about Until Death? I've never even heard of it. Okay,
0:59
Speaker 1: I watch comedy, so cartoons. Until Death is a comedy.
1:02
Speaker 1: But had you watched any of these shows, had you
1:06
Speaker 1: been a big fan on Wednesday September, you would have
1:09
Speaker 1: been very upset because they were all preempted. I bet
1:13
Speaker 1: they were all pre empted already. You're well aware that
1:17
Speaker 1: the the economy is in the toilet. All you do,
1:21
Speaker 1: all you want to do, is sit back and watch
1:23
Speaker 1: your favorite celebrities lose weight, or watch Brad Garrett, you know,
1:28
Speaker 1: um tussle verbally with his wife, or you know whatever
1:32
Speaker 1: private practice does. I'm not I'm not fully aware practicing
1:35
Speaker 1: private things. Exactly. You want to you want to escape
1:39
Speaker 1: through these And all of a sudden, here's George Bush
1:42
Speaker 1: laying it out there. This is a president who's avoided
1:44
Speaker 1: using the word recession in public, and all of a sudden,
1:47
Speaker 1: he's basically white knuckling the podium with the presidential seal
1:51
Speaker 1: in front, saying we're all gonna die. Maybe he just
1:54
Speaker 1: wanted to skip straight to depression just for kicks. I guess,
1:57
Speaker 1: you knowid recession go right to the oppression. I don't
2:01
Speaker 1: know that he used the word depression now, but he might.
2:06
Speaker 1: He may as well have. Right, it was bad. He
2:08
Speaker 1: said our entire economy is in danger. Was one quote
2:12
Speaker 1: from that very um, you know, great address. Unusual. He
2:18
Speaker 1: doesn't usually do this kind of thing, right. I think
2:20
Speaker 1: he should have followed that sentence up immediately with with
2:22
Speaker 1: good luck to whoever's coming next exactly. Yeah, yeah, so
2:26
Speaker 1: long and good luck or whatever? Right? Yeah, uh so
2:30
Speaker 1: this is kind of a big deal. And I think
2:32
Speaker 1: Bush addressing on a Thursday for no other reason than
2:36
Speaker 1: to tell Americans that the economy is in danger, it
2:39
Speaker 1: kind of really made it a bigger point. Um. And
2:43
Speaker 1: the reason he went on was because he was trying
2:46
Speaker 1: to garner public opinion for the Pulse and Plan, also
2:51
Speaker 1: known as the seven hundred billion dollar bailout. Ak A,
2:55
Speaker 1: just the bailout. I think people are calling it bailout.
2:58
Speaker 1: It is and it's not hyphenated for our listeners, it's
3:02
Speaker 1: not two words, it's one word. This is this is
3:04
Speaker 1: a p right here, Okay, not us um. So he's
3:08
Speaker 1: on there, he's talking about the bailout. Why would he care?
3:12
Speaker 1: Why would he care what Americans think? I'll tell you why, Chuck,
3:15
Speaker 1: You didn't even let me answer, But he's uh, he
3:18
Speaker 1: has um. Earlier that week, it looked like Congress was
3:22
Speaker 1: going to pass it. Everybody was patting one another on
3:24
Speaker 1: the back bipartisan ship. You know, you remember Senate Democrat Republican.
3:30
Speaker 1: The leaders are saying, we're passing this right and uh,
3:34
Speaker 1: it starts to go into the House and they bring
3:36
Speaker 1: it to a vote, and all of a sudden, these
3:38
Speaker 1: rank and file Republicans stay just revolt and they're like, hey,
3:42
Speaker 1: how about this. We've got another plan and it's nothing
3:44
Speaker 1: like yours. So ultimately the House defeats the bill something
3:51
Speaker 1: like that. I think it was good exactly that you're
3:54
Speaker 1: really good. It's right in front of me, a memory
3:56
Speaker 1: like a bear trap there should um okay, So the
4:01
Speaker 1: House defeats the bill. It looks like it's sunk. There's people,
4:04
Speaker 1: you know, screaming in teror dogs and cats living together
4:08
Speaker 1: mass hysteria. Right um, and Bush has already played his
4:14
Speaker 1: one ace in the hole by addressing the the nation.
4:17
Speaker 1: The only thing next he could do would be like
4:19
Speaker 1: to kneecap somebody, maybe a figure skater on public television
4:23
Speaker 1: to get our attention. Who would do that, though? I
4:26
Speaker 1: don't know. Terrible, terrible. So it looks like the bill
4:28
Speaker 1: is defeated, and all of a sudden, here comes the
4:31
Speaker 1: Senate on the white Horse exactly. You know, the House
4:34
Speaker 1: is usually kind of the the the congressional body that's
4:38
Speaker 1: known for shouting down things and you know, trying things
4:42
Speaker 1: on the sly, and the Senate is supposed to be
4:45
Speaker 1: wise and sedate and calm, and all of a sudden
4:48
Speaker 1: they're taking up a failed House bill basically sweetening it,
4:54
Speaker 1: like they attached a very popular mental health bill. Did
4:57
Speaker 1: you know that now U healthcare providers have to treat
5:01
Speaker 1: mental health like they treat physical maladies. Well, that's good. Yeah,
5:04
Speaker 1: it is good, which is one of the reasons why
5:06
Speaker 1: they put it in this bill. So they passed. There's
5:08
Speaker 1: also a lot of pork in there, though. There are
5:11
Speaker 1: manufacturers of wooden arrows that I think boy Scouts favor
5:15
Speaker 1: get some subsidies out of that. Yeah. Um. And then
5:18
Speaker 1: there's the extension of expiring tax breaks for the wealthy,
5:23
Speaker 1: although there's also some tax relief for the middle class,
5:25
Speaker 1: new tax relief in their right, and I know they
5:28
Speaker 1: One important thing that did was raised the fd I
5:30
Speaker 1: S S insurance coverage for people's banks accounts. Yeah, which
5:33
Speaker 1: is huge because banks like Wacovia and Washington Mutual are
5:36
Speaker 1: going under. And I mean these are neighborhood branch commercial
5:40
Speaker 1: banks where you keep your money and all of a sudden,
5:43
Speaker 1: oh wait, the bank's front door is locked, and you
5:45
Speaker 1: know two pm on a Tuesday was one of them. Really,
5:49
Speaker 1: not one of the banks, but one of those institutions.
5:51
Speaker 1: I'm not going to divulge too much, but Yeah, that's good. Well,
5:55
Speaker 1: I'm not going to name my bank either, but I'm
5:58
Speaker 1: very confident in it. Recently purchased countrywide um, among other things.
6:03
Speaker 1: So I'm feeling pretty good about my bank, which is
6:05
Speaker 1: your under your mattress. Knock on wood there. I don't
6:09
Speaker 1: want to attempt the gods. Uh So, Okay, the Senate
6:13
Speaker 1: takes up the bill and they add the sweeteners, and
6:17
Speaker 1: they cough up Senate Amendment fifty five, which is the
6:21
Speaker 1: pulse and Plan with the mental Health Bill, the f
6:23
Speaker 1: d i C Increase Plan Plus is what I like
6:27
Speaker 1: to call it. It's a great name for it. You
6:29
Speaker 1: should have called it that. This is the same day
6:31
Speaker 1: they passed it, the same day that they took this up, right,
6:34
Speaker 1: but the Congress never acts this fast. Even more amazing,
6:38
Speaker 1: two days later the House gets it. That day they
6:42
Speaker 1: pass it. I think they passed it at like twelve
6:44
Speaker 1: thirty and they started deliberating on it at ten in
6:46
Speaker 1: the morning. They passed it two and a half hours later. Yeah,
6:49
Speaker 1: I wondered when it happened. If no one really knows this, probably,
6:52
Speaker 1: but if it was the sweeteners actually, or if the
6:55
Speaker 1: House kind of ended up with some egg on their
6:57
Speaker 1: face with the first vote and realize said everyone was
7:00
Speaker 1: really freaked out by the fact that they defeated it. Well,
7:03
Speaker 1: I think number one. I think Bush's address actually did
7:06
Speaker 1: have a real impact. I watched a lot of CNN.
7:09
Speaker 1: I actually watched CNN live as the House was voting
7:12
Speaker 1: on this UM, this amendment and UM. There were a
7:16
Speaker 1: lot of congressmen who are congress people who said that
7:20
Speaker 1: they switched their vote because the calls that they were
7:23
Speaker 1: getting from their office changed from you know, I don't
7:26
Speaker 1: like this bailout package to you've got to vote for
7:29
Speaker 1: this bailout package. And that actually changed votes. And you
7:32
Speaker 1: can probably directly link that to Bush, you know, looking
7:35
Speaker 1: very tired and haggard and scared on you know, Wednesday,
7:38
Speaker 1: September four. So I think that's one of the reasons
7:42
Speaker 1: why the House actually passed. You know, my uncle's a
7:44
Speaker 1: former congressman. I should give him a call and see
7:46
Speaker 1: what he thinks about the whole thing. Where is he from. Yeah,
7:49
Speaker 1: he's a congressman in Tennessee to two or three terms.
7:51
Speaker 1: I think that's great. Yeah, good for him. Okay, so
7:55
Speaker 1: it passes right, right, and it's actually no longer a
7:58
Speaker 1: seven billion dollar bailout, the bailout seven hundred billion, but
8:02
Speaker 1: this bill actually hiked it up to an eight hundred
8:05
Speaker 1: and ten billion dollar bill. Did you know that? You know,
8:08
Speaker 1: I didn't know that all that all that, like it matters.
8:13
Speaker 1: And the weird thing is, as taxes these days, you
8:16
Speaker 1: you don't you don't really feel a pinch like you
8:19
Speaker 1: think about the government showing out seven hundred billion dollars?
8:23
Speaker 1: How how how are we going to feel that pinch?
8:26
Speaker 1: And you know, actually for every American that's I think
8:29
Speaker 1: twenty three hundred dollars a person, every American taxpayer. Non,
8:35
Speaker 1: so we're gonna feel a pinch somewhere, or are we.
8:39
Speaker 1: Let's get into this bill, Chuck, Let's get into the
8:41
Speaker 1: meat up. Let's do it. So you want to you
8:43
Speaker 1: want to lead off with what are some of the
8:45
Speaker 1: things that are inside? I see by you burying your teeth,
8:48
Speaker 1: are you? Are you cool? Well? No, I know that
8:50
Speaker 1: it's that one of the things they signed off one
8:53
Speaker 1: was an immediate three hundred and fifty billion. They kind
8:55
Speaker 1: of did it in stages, which I'm not a I'm
8:58
Speaker 1: no economists, but seems to be kind of the smarter
9:00
Speaker 1: way to go. Three D fifty billion upfront and taxpayer money,
9:05
Speaker 1: and then the new newly created Office of Financial Stability,
9:10
Speaker 1: which we hope it ends up living up to its name.
9:13
Speaker 1: Another three hundred and fifty I'm sorry, another hundred billion
9:16
Speaker 1: after that, and then another two fifty after that. But
9:20
Speaker 1: both of those need approval by Congress. Yeah, and I
9:22
Speaker 1: think the first one, the hundred billion, has to get
9:25
Speaker 1: approval from the House, and the second two fifty billion,
9:30
Speaker 1: uh is is contingent upon some approval I think. But
9:35
Speaker 1: either way, yeah, Congress has to approve these, and they
9:38
Speaker 1: have to. They'll approve them if this whole thing is working.
9:41
Speaker 1: I don't see them saying no though. No, I don't either.
9:44
Speaker 1: I mean, I think in for three billion right plus,
9:49
Speaker 1: it would be it would kind of be a sign that, hey,
9:52
Speaker 1: we did the wrong thing by allowing this first three
9:54
Speaker 1: hundred and fifty billions. I don't think they would do
9:56
Speaker 1: that yet. Yeah, I agree, I agree. So um, like
10:00
Speaker 1: he said, this, this bill establishes a brand new office.
10:03
Speaker 1: We're gonna have a brand new office, right, like you said,
10:05
Speaker 1: the Office of Financial Stability. And this is led by
10:09
Speaker 1: the Treasury Secretary, not necessarily Henry Paulson, but whoever is. Well,
10:14
Speaker 1: they just named actually yesterday the new bailout chief. Oh
10:17
Speaker 1: really who Yeah, you don't even know this? No, yeah,
10:21
Speaker 1: his name is Neil kash kash Karai. And this guy
10:25
Speaker 1: is thirty five years old, Holy cow. Yeah, and he's
10:27
Speaker 1: going to be in charge of doling out the cast.
10:29
Speaker 1: He's overseeing the Office of Financial Stability. He was previously
10:33
Speaker 1: a vice president of Goldman Sachs and before his career
10:36
Speaker 1: in finance, he developed technology for NASA space missions. So
10:41
Speaker 1: this guy was clearly doing things in college that I
10:43
Speaker 1: wasn't doing. Yeah, thirty five, that's not a very long
10:46
Speaker 1: existence that he seems to be sharp guy. Okay, so
10:50
Speaker 1: we have a brand new TSAR of Economic Stability. I
10:54
Speaker 1: guess fresh fresh meat. And what with this Oh I'll
10:57
Speaker 1: bet you he ages twenty years over the next months. Um. So, basically,
11:02
Speaker 1: what this guy is going to be in charge of, essentially,
11:05
Speaker 1: UH is buying up terrible investments that that you know,
11:09
Speaker 1: banks and investment banks and and other kinds of firms
11:14
Speaker 1: have on their hands. What a weird job. It is
11:16
Speaker 1: a weird job. It's never been done before as far
11:19
Speaker 1: as I know. Basically, there's certain types of investments that
11:24
Speaker 1: can be bought, and all of them are related to mortgages.
11:28
Speaker 1: You've got like mortgage backed securities. UM. I think collateral
11:32
Speaker 1: debt obligations would be purchased under this and mortgages themselves,
11:37
Speaker 1: which I thought was kind of cool. Yeah, because this
11:40
Speaker 1: is actually one way that it could directly benefit a homeowner.
11:44
Speaker 1: One of the provisions in this act is that when
11:48
Speaker 1: this guy what's his name again, uh Neil kash Karai
11:52
Speaker 1: or Kashkari, I'm not sure you pronounce it, let's call
11:54
Speaker 1: him Kashkari, Okay, when Kashkari is negotiating with these investment
12:00
Speaker 1: banks and other people to purchase their bad securities. UM,
12:04
Speaker 1: he's going to try to force down their throat restructuring
12:07
Speaker 1: of of the mortgages the hope for a Homeowners Act. Yeah. Now,
12:12
Speaker 1: the big problem with that and what it is is,
12:14
Speaker 1: it's it's it's basically congressional support for restructuring loans, knocking
12:20
Speaker 1: down the principle, which is pretty radical. You borrow four
12:23
Speaker 1: hundred thousand for a house you can't afford it, and
12:25
Speaker 1: all of a sudden, we're just gonna pretend like you
12:27
Speaker 1: only borrow two hundred thousands. That's huge. The thing is
12:30
Speaker 1: is it's it's a it's a voluntary program. I think
12:33
Speaker 1: you probably get, like you know, tax rebates or right
12:36
Speaker 1: off if you're a company or a lender that engages
12:39
Speaker 1: in this um, but you can't force anybody to do it.
12:43
Speaker 1: If the US government actually owns your mortgage, chances are
12:47
Speaker 1: they're going to be very hesitant about foreclosing on you.
12:52
Speaker 1: Number one, that's just a huge pain. But number two, um,
12:56
Speaker 1: they actually have a vested interest then to keep you
13:00
Speaker 1: in your house, right, Okay, the reason being the if
13:03
Speaker 1: they can stem the tide of foreclosures, then the market
13:07
Speaker 1: starts to come back up, and these mortgage backed securities
13:10
Speaker 1: and mortgages themselves increase in value all of a sudden
13:14
Speaker 1: They're worth more and the plan works. Right, So if
13:16
Speaker 1: if the government buys your mortgage, you should probably thank
13:20
Speaker 1: your lucky stars. Right then this is all This is
13:22
Speaker 1: all theoretical. None of it's been put into practice yet, right,
13:25
Speaker 1: which is I think why a lot of people are
13:27
Speaker 1: kind of nervous about this bail All right, Right, I know,
13:30
Speaker 1: I am, I do know that that foreclosures Actually nobody
13:33
Speaker 1: wins in foreclosure. It's not like because I did some reason.
13:37
Speaker 1: Actually I wrote an article on it last year. And
13:39
Speaker 1: it's not like banks foreclosed on people and they're just
13:42
Speaker 1: we kick you out of the house. Banks lose money too.
13:45
Speaker 1: But you know, like we've mentioned before, the mortgage back
13:48
Speaker 1: mortgage backed securities. Sometimes the banks don't even own that house.
13:53
Speaker 1: They turn around and sell it to securities and it
13:55
Speaker 1: gets fractured off. And so maybe that's kind of where
13:58
Speaker 1: the problem is starting. Well, you know who does win
14:00
Speaker 1: in a foreclosure. Someone who's renting right now. If you
14:04
Speaker 1: are a renter and you don't buy in this in
14:06
Speaker 1: this climate, you're you're a total sucker. Yeah, it's probably
14:11
Speaker 1: good time to buy. Oh, it's an excellent time to buy.
14:13
Speaker 1: It's like a fire sale out there. I've said it before,
14:15
Speaker 1: I'll say it again. Get your act together, buddy, get
14:17
Speaker 1: in a house. Yeah. Thanks. Okay, So that's not the
14:21
Speaker 1: only thing that this this cash car he's going to
14:24
Speaker 1: be doing. This guy's got a lot of responsibility. I'm
14:27
Speaker 1: not sure he's he knows what he's getting into. And frankly,
14:29
Speaker 1: I have to say I find a little fishy that
14:31
Speaker 1: Henry Paulson is one of the former high level executive
14:35
Speaker 1: at Goldman Sacks and he taps this guy from Goldman Sacks. Yeah,
14:39
Speaker 1: and you could say, well, he knows him, he's worked
14:40
Speaker 1: with them, he had, he respects him. But I believe
14:43
Speaker 1: he already know that. I like one investment bank being
14:46
Speaker 1: so entrenched in this bail act. Actually I think he
14:49
Speaker 1: actually worked in the office in the Treasury office. Uh,
14:52
Speaker 1: he was previously with Goldman Sacks. But you know, I
14:55
Speaker 1: know what you mean. I got you his influence. Is
14:57
Speaker 1: he like Paulson's protege or something? I don't know. Yeah, Okay,
15:03
Speaker 1: So there's other things that cash Car is going to
15:05
Speaker 1: be in charge of, like, um, when when the government
15:09
Speaker 1: purchases three million dollars or more of bad investments from
15:13
Speaker 1: a lender whoever, Um, they're automatically, they automatically take a
15:19
Speaker 1: warrant in your company. This is a non voting block
15:25
Speaker 1: of shares, just common stock shares, right, And this is
15:28
Speaker 1: actually really ingenious, Chuck. You want to tell everybody why,
15:33
Speaker 1: Well I don't know why. Let me tell you why.
15:35
Speaker 1: All right, You're you're the econ mask. This is straight
15:38
Speaker 1: from Coshkari to me to you. Okay, Uh, actually that's
15:42
Speaker 1: not true at always should probably cut that part out.
15:45
Speaker 1: The reason why it's such an ingenious UH provision is
15:50
Speaker 1: because no one has any idea how how to value
15:55
Speaker 1: these mortgage backed securities. I read an article with the
15:58
Speaker 1: guy who who is like this expert at valuing a
16:01
Speaker 1: stock that you found in like your grandfather's closet from
16:04
Speaker 1: nineteen twenty three or something. This guy could value. This
16:07
Speaker 1: guy and everyone else is totally lost at at properly
16:11
Speaker 1: valuing mortgage backed securities and c D e O s
16:15
Speaker 1: and and just all these other bad investments. Right, So
16:19
Speaker 1: whatever the government, whatever price the government sets to buy
16:23
Speaker 1: these at, it could be way too low. So if
16:27
Speaker 1: you are a company selling this to the government and
16:30
Speaker 1: you end up experiencing a windfall profit from the sale,
16:33
Speaker 1: which you're not supposed to be, the government's covered on
16:36
Speaker 1: the back side because they own shares in your company. Now,
16:40
Speaker 1: so if you experience a profit, your your price per
16:43
Speaker 1: share rises, and the government gets something out of it
16:46
Speaker 1: because they own those shapes, and in theory, ultimately the taxpayer,
16:50
Speaker 1: it would come back to us. I'm not holding their breath,
16:52
Speaker 1: but what we want is for this bailout to work. Yeah,
16:55
Speaker 1: and and technically it could work. I mean, if you
16:58
Speaker 1: think about it, right, If the government meant buys up
17:00
Speaker 1: seven hundred billion dollars worth worth of mortgage backed securities
17:05
Speaker 1: or mortgages or whatever, and all of a sudden the
17:07
Speaker 1: market stabilizes because of it, and maybe over the course
17:09
Speaker 1: of a couple of years, maybe a decade, who knows,
17:12
Speaker 1: the market comes back into full swing. These things don't
17:16
Speaker 1: just disappear. They don't just vanish. The government is not
17:18
Speaker 1: going to take these these securities and throw them in
17:21
Speaker 1: a furnace. They're gonna sit on them. Basically, I think
17:24
Speaker 1: it's Bush put it there. The the U. S. Government's
17:26
Speaker 1: the only institution large enough to buy these and sit
17:29
Speaker 1: on them for a while. Um And then once the
17:32
Speaker 1: marketiz it's these things increase in value when the government
17:35
Speaker 1: sells them. And and if they sell them well and
17:38
Speaker 1: not flood the market with these things, then we should
17:42
Speaker 1: as taxpayers see a windfall from that. I mean, even
17:47
Speaker 1: if if the combined value of all these things double,
17:49
Speaker 1: then not all of them are worthless. There are some
17:51
Speaker 1: good mortgage backed securities out there still, but they just
17:54
Speaker 1: have a bad name and no one wants them when
17:56
Speaker 1: they increase in value. I mean, even if they double,
17:59
Speaker 1: that's one point four trillion dollars from from the sale. Uh,
18:04
Speaker 1: and half of that being pure profit. That would be
18:06
Speaker 1: pretty good. It was whether that happens or not, it
18:09
Speaker 1: remains to be seen. You know, what I think would
18:11
Speaker 1: be interesting as if all of a sudden they put
18:13
Speaker 1: out this big plan. Buch says, we're the only people
18:17
Speaker 1: institution big enough to do this, and all of a sudden,
18:19
Speaker 1: like Bill Gates and Warren Buffetts stroll up behind him
18:21
Speaker 1: and say, not so fast, We've got our own plan,
18:25
Speaker 1: and they just bought up, you know, eight hundred billion
18:28
Speaker 1: dollars worth of bad investments. Well, Warren Buffett has been
18:31
Speaker 1: on a buying spree right now. Of course, it's not
18:34
Speaker 1: just it's not just a good time to buy a
18:36
Speaker 1: house or for closed house. It's a good time to
18:38
Speaker 1: buy stocks. Yeah. So again, it's like fire sale out there.
18:41
Speaker 1: It's crazy. But yeah, apparently from what I understand from
18:45
Speaker 1: watching the recent second presidential debate is that Obama may
18:50
Speaker 1: tap Warren Buffett for Treasury secretary. You know, I would
18:54
Speaker 1: be all for it. It makes a lot of sense. Yeah. So, uh,
18:58
Speaker 1: anything else in this provision, maybe of the Golden parachute. Yeah,
19:02
Speaker 1: that's the one thing that I know probably made a
19:04
Speaker 1: lot of people feel a little bit better. Is the
19:06
Speaker 1: gold the famous golden parachute. A lot of times when
19:08
Speaker 1: companies go under, like the big end run thing, you remember,
19:12
Speaker 1: the executives are the ones that come out on top
19:15
Speaker 1: and the investors lose all their money. These executives get
19:17
Speaker 1: these huge payouts at the end and just kind of
19:20
Speaker 1: sneak out the back door and buy their island and
19:22
Speaker 1: you know in the in Bermuda and uh, I know
19:25
Speaker 1: this calls for no golden parachutes. Um, these big multimillion
19:30
Speaker 1: dollar severance packages are not gonna happen. No, and specifically
19:34
Speaker 1: your top five executives. Any any salary over five grand
19:39
Speaker 1: can't be deducted as an expense um. So that in
19:44
Speaker 1: theory should limit companies from doing it. There's some problems
19:47
Speaker 1: with that, though, what's that that's just your top five executives.
19:51
Speaker 1: Another problem with it is that the cap there's already
19:54
Speaker 1: a cap that exists, but it's a one million. You
19:57
Speaker 1: can't you can't deduct any salary over one million. So really,
20:01
Speaker 1: for a major company, all it's gonna be is two
20:04
Speaker 1: point five million and lost deductions, which is nothing. A
20:07
Speaker 1: second problem The other problem, this is the biggest problem.
20:11
Speaker 1: There is no provision in the Golden Parachute clause of
20:14
Speaker 1: this law, the bailout bill UM that says anything about
20:19
Speaker 1: stock options. So think about it. You let a you
20:22
Speaker 1: let an outgoing ceo go, You're like you, you did
20:25
Speaker 1: a terrible job managing. But here, take all these stock options, right,
20:28
Speaker 1: We're going to value them at today's terrible market price.
20:31
Speaker 1: Just hold off a couple of years. The market is
20:33
Speaker 1: gonna come back and you you cash in your options
20:36
Speaker 1: and you're you're just richer than an astronaut. Right that
20:41
Speaker 1: that's I'm glad you said that, because I didn't even
20:43
Speaker 1: know that. But that's what I was just about to say,
20:45
Speaker 1: is the way these guys operate, I had a feeling
20:47
Speaker 1: there's there's always some back door where they get there's yeah,
20:50
Speaker 1: and and they will There's not gonna be any way
20:52
Speaker 1: of going around it. The the only thing I think, uh,
20:56
Speaker 1: that that we can hope for is that there should
20:59
Speaker 1: be widespread investigation and probably you know, criminal lawsuits against
21:05
Speaker 1: a lot of the people who are running the show. Yeah,
21:08
Speaker 1: I think this will be under the microscope more than
21:10
Speaker 1: other little quieter bills that go through so I think
21:13
Speaker 1: so too. So if you want to know anything more
21:15
Speaker 1: about this, I would strongly recommend you exercise your civic
21:19
Speaker 1: duty and read how will the government spend the seven
21:23
Speaker 1: hundred billion dollar bailout funds? On how stuff works dot
21:26
Speaker 1: com and stick around to find out one more reason
21:28
Speaker 1: why you shouldn't wear a bluetooth headset. But first chuck
21:32
Speaker 1: a message from our sponsor, Josh. What's the first reason
21:35
Speaker 1: that you shouldn't wear a bluetooth headset? I know you
21:37
Speaker 1: don't like the way awkward fashioned. Look, I'm just gonna
21:40
Speaker 1: say it. It's my personal opinion. I know a lot
21:42
Speaker 1: of people like your style right out of the Preppy Handbook,
21:45
Speaker 1: if I may say so, I do my best, which
21:47
Speaker 1: is good. This is a good book. My sister used
21:49
Speaker 1: to have that when I was growing too. Yeah, I
21:51
Speaker 1: did you really? Yeah? I used to read it on
21:52
Speaker 1: the john. It's very cool. It's a cool book, if
21:55
Speaker 1: I remember correctly. She also had how to speak like
21:57
Speaker 1: a valley girl. I think, yeah, let's skip that one
22:00
Speaker 1: for sure. Yeah, that's probably for the best. Uh So. Yeah.
22:03
Speaker 1: The name of the article is how Bluetooth surveillance works,
22:06
Speaker 1: and apparently, if you wear these things, people know where
22:09
Speaker 1: you are, So how Chuck, Well, Uh, if if you
22:12
Speaker 1: have a Bluetooth headset and you have it turned on
22:15
Speaker 1: UM for my understanding, you can get blue jacked. Is
22:18
Speaker 1: that right? Blue jacking? Yeah, blue jacking is the term.
22:22
Speaker 1: And uh, it admits a signal and people other people
22:25
Speaker 1: of Bluetooth can actually tell where you are. So you're
22:28
Speaker 1: you're into privacy. And if you're into privacy, make sure
22:32
Speaker 1: you read how Bluetooth surveillance works on how stuff works
22:35
Speaker 1: dot com for more on this and thousands of other topics.
22:40
Speaker 1: Is that how stuff works dot com. Let us know
22:43
Speaker 1: what you think. Send an email to podcast at how
22:46
Speaker 1: stuff works dot com. Brought to you by the reinvented
22:51
Speaker 1: two thousand twelve camera. It's ready, are you