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A $700 Billion Bailout? It's Neither One, says Edelman

For Immediate Release
October 02, 2008

"While I have praised all of the previous actions of Treasury Secretary Henry Paulson, he made a major misstep when he presented the plan as a 'bailout' and emphasized the need for $700 billion in funds," said Edelman. "This proved to be a public relations disaster and has been largely responsible for the delay in getting the proposal approved by Congress."

The government proposal is more accurately described as a rescue plan for the American consumer and taxpayer, said Edelman. "It hardly 'bails out' Wall Street, as many of the companies involved have declared bankruptcy, been taken over by the government, been reconstituted as banks, or been acquired. The shareholders of various companies have lost all or almost all of their investments, and some CEOs and boards of directors have been fired. The FBI has launched more than 50 investigations, and dozens of people may find themselves going to prison as a result of this fiasco. Wall Street is not getting a bailout."

Further, said Edelman, the ultimate cost is likely to be nowhere near $700 billion. Under the rescue plan, the government is acting as "the buyer of last resort" -- for pennies on the dollar -- of some of Wall Street's exotic investment products, he said. "It appears that nobody currently knows what these securities are worth. Later, when the markets stabilize and investors regain confidence that these assets are continuing to perform, the government will sell them back into the marketplace. It could earn a potentially huge windfall -- as much as $100 billion or more."

Edelman, whose company is one of the largest independent financial management firms in the nation, said the House must move expeditiously to approve the rescue plan. "Without it, banks will have difficulty lending money to American consumers and small businesses. Unable to make payroll, companies will struggle -- and tens of millions of citizens may lose their jobs. We've already experienced large numbers of foreclosures. In the absence of this rescue plan, millions more could lose their jobs and their homes."

Edelman called on the administration and Congress to begin to correctly characterize the Paulson Plan for what it truly is: a Rescue Plan for America, not a bailout for Wall Street. "Presented accurately, the rescue plan will be acceptable to most Americans and they would happily encourage their representatives in Congress to approve it immediately," Edelman said.

Fairfax, Va.-based Edelman Financial manages $4 billion in assets for individuals and families nationwide. Ric Edelman is consistently rated by Barron's and other industry publications among the country's top financial advisors. He hosts The Ric Edelman Show, a nationally syndicated radio program, and is the author of six books. Edelman's current best-seller, The Lies About Money, will be released in paperback later in October.

Advisory Services offered through Edelman Financial Services LLC. Securities offered through Sanders Morris Harris Inc., Member FINRA/SIPC.

Ric Edelman is Chairman and CEO of Edelman Financial Services LLC. He is also President and Director of Sanders Morris Harris Group. Ric is an Investment Advisor Representative and offers advisory services through EFS an SEC-registered investment advisor. He is also a Registered Representative of and offers securities through Sanders Morris Harris Inc., an independent broker/dealer, member FINRA/SIPC.

The opinions expressed herein are those of Ric Edelman and not SMH Capital Inc, or Edelman Financial Services.