Call the G.O.P.'s Bailout Bluff
The failure to pass bailout legislation reflected a political system as bereft of confidence as the financial markets. President George W. Bush and Treasury Secretary Henry Paulson had no credibility to match the arrogance of their initial demand for absolute power in distributing $700 billion of public assistance (the old synonym for welfare). Many Republicans in Congress lacked the intellectual fortitude to cope with the spectacular collapse of their ideology.
So the rescue of capitalism once more becomes the sole responsibility of the Democrats.
Much can be said about the Democratic Congressional leadership’s fumbling and fearfulness, which have hobbled them ever since they recaptured the majority. Well meaning as they may be, Nancy Pelosi and Harry Reid can bear no comparison with the likes of Tip O’Neill or Lyndon Johnson. But just weeks before a national election, their reluctance to back the unpopular bailout proposed by the Bush White House without substantial support from Congressional Republicans was perfectly sound.
Facing a crisis that Secretary Paulson had outlined in the starkest terms, with his warnings echoed by the Federal Reserve’s chairman, Ben Bernanke, the Democrats tried in good faith to negotiate bipartisan legislation as quickly and prudently as possible. They had no more certainty than their critics that following regular order would not plunge the world economy into profound recession or worse.
When that effort failed by a dozen votes, the Republicans strained credulity by blaming Mrs. Pelosi, who had uttered a few hard and truthful (if politically unhelpful) words on the House floor. (Will the members who voted no because the speaker hurt their feelings step forward to prove that their leaders are right? Didn’t think so.) More likely, the dissident members of the minority were simply unable to abandon the dogma that brought them into public life, no matter how compelling the evidence of its hollowness. And like everyone on Capitol Hill, the Republicans feared the rage of their constituents—who no longer care to subsidize incompetent government and corporate misconduct.
As the Democratic leaders return to the drawing board over the next few days, they must understand that broad bipartisanship cannot be the guiding purpose of their choices. They would do better to try to bring back the dissenters on their side of the aisle, who could not tolerate the paper-thin protections for the ordinary taxpayer and working family in the bill they voted to reject. Unlike the Republicans who joined them to vote it down, most of the Democrats understand that the financial system desperately needs fresh liquidity—and that only the federal government can make those funds available in time.
What might bring back enough Democrats to ensure passage of a new bill? Certainly the Republican proposals for new forms of government financial insurance and lower capital gains taxes are beside the point. Further attempts to placate the confused, dispirited conservatives will only alienate the progressives who have resisted the Paulson plan so far.
Instead the Congressional leaders should restore and strengthen the provisions stripped from the original bill, providing new protections for homeowners and new protections against speculators and predatory executives. Rescuing the families who face foreclosure is just as urgent in economic terms as saving the financial institutions—in fact they are obviously complementary—and is also preferable both morally and politically. A publicly financed homeowners-loan corporation, like the agency that helped millions of families during the Great Depression, would be one means to accomplish that purpose.
Then, as New York University economist Nouriel Roubini and many of his colleagues have suggested, Congress should consider smarter ways to inject money into the banks, including the Scandinavian solution of direct government acquisition of preferred equity. Perhaps the Treasury will have to buy some of the toxic bundled mortgages right away, but a combination of measures designed to benefit taxpayers on the upside of the cycle is essential.
Such measures can only prevent the worst consequences of the recession that is already here. If the Republicans reject them, so be it; the Democratic majority should pass a new and improved bill and send it to the president. Let him whine, because he will sign it rather than leave office with the world in economic shambles.
Should the Democrats need encouragement, they need only look at the latest polls. Voters distrust both the White House and Wall Street, but want action in the public interest. As the Chinese say, while they review our mounting debt, a crisis is also an opportunity.
jconason@observer.com
After the sensational vote against the bill I'm astounded that Dodd and the Dems would only add expensive ornaments to the tree rather than try to accommodate the grassroots's demand for more transparency. If I, who read extensively on national affairs, can't understand what I'm being asked to pay for, how can the lightly educated working people with little time for reading be expected to buy into this?
The Democrats had nothing to do with this mess, right? They didn't create it by pushing subprime mortgages and letting Fannie and Freddie grow fat and stupid while paying Dodd and Obama off? Of course not.
And heaven forbid any of those in Washington actually listen to the people who sent them there. Why in the world would they do that?
Seems "we the people" have had enough! The "Bail out Bill" shoud be a singular Bill, with no "add ons" , but language that protects our collective American taxpayor investment.
No blank check for Paulson..establish a board of Trustees to over see this 700 billion dollars of taxpayor money..smart guys that have been warning us for yesrs that Wall Street was headed for disaster..might be a good place to start in this selection.
If the American people are going to become "shareholders" then we have every right to expect the highest return on our investment possible...
.
SAY "NO" TO THE BAILOUT.
.
Conason,
Your Democrat appology writings get more rediculous every day.
This problem has more to do with Democrat crooks than Republican philosophy.
The Bailout has more to do with saving Nancy Pelosi's $500,000 and John Kerry's $2,000,000 of investments in these companies gone wrong than with saving "Main Street", the new NOBama war cry.
The simple reason that so many DEMOCRATS voted against this bill, as well as REPUBLICANS, is that it was to save the rich and do nothing for the poor taxpayers who would be footing the bill.
Give the Secretary of the Trasury unlimited power to buy ANY company, FOREIGN or domestic? Why should AMERICAN tacpayers foot the bill to bail out FOREIGN speculators? Or American speculators either!
Nancy Pelsosi and Reid strutting to the podium along with Barney Frank and Chris Dodd, ALL DEMOCRATS, and declaring this bill to be bipartisan! Yes, and I won $10,000,000 in the Publisher's Clearing House Sweepstakes too.
It was so "bipartisan" that Nancy Pelosi kicked all of the Republicans out of the negotiating room and then turned around and accused them of being unAmerican for not being there!
Reid told John McCain, a Senator with just as much right as any other Senator to attend Senate sessions to LEAVE Washington because Ried didn't want any of the "glory" from this Democrat coup detat to spill over from The Messiah to McCain. But his attempt failed since the bill didn't pass and "Chairman" Obama looked like an incompetent fool so they didn't tell the public he had been appointed "Chairman" since that would damage his campaign. Instead they accused McCain of sabotaging the bill. If he did then he is an American hero since the bill needed to be sabotaged.
The only thing bipartisan about this bill was that a few stupid Republicans bought the Democrat propaganda that they would share in the glory of its passing. THAT was dispelled when Pelosi stood up and castigated the very people she asked to help pass the bill.
You bet that swayed some votes because some Republicans finally woke up and realizrd that Pelosi and the DNC was going to use this bill to beat them over the head between now and the Election in November. It was a no-win situation for the Republicans so they jumped off of this run away bus before they crashed in flames.
"MainStreet" is against this bill by about 2 to 1. With an election in 35 days the only people stupid enough to vote for this Democrat givaway will be unopposed Representatives and those in districts that they can't possibly lose.
Anyone in close races will vote AGAINST it until after the election because it is so toxic. If they vote for it, they won't be back in January.
THAT is why Pelosi needs more Republicans to vote in favor. If she used her Democrat majority to pass the bailout, in November that would become a minority because enough Democrats would lose their seats that she can go back to being an ordinary House shrew instead of the Majority SHREW who sabotaged Hillary Clinton so she could remain the most powerful shrew in Washington.
You are talking about the Paulson plan, right?
The one that Mr. Bush (last I heard not much of a Democrat) is insisting must be passed?
You say, "Give the Secretary of the Trasury unlimited power to buy ANY company, FOREIGN or domestic?" You are aware of that person's party affiliation, I trust.
Then again, given the clarity of your thought, perhaps you're not.
You are talking about the Paulson plan, right?
The one that Mr. Bush (last I heard not much of a Democrat) is insisting must be passed?
You say, "Give the Secretary of the Trasury unlimited power to buy ANY company, FOREIGN or domestic?" You are aware of that person's party affiliation, I trust.
Then again, given the clarity of your thought, perhaps you're not.
A whole article arguing the Dems should plow ahead without any Repub support and not a single mention of the Lightbringer's 'post partisanship'. And Joey even mentioned HOLC without bothering to name it's most significant supporter - HRC.
But, Joe's been in the tank for The One for a while.
joe - you are sooooo ridiculous - your logic defies even a democrat to blush - just admit that stealing is the objective - you would get more respect - that's all this election is about - see link below:
http://snipurl.com/3skou
barney frank / chris dodd / obama / and the entire Black Caucus
had a pledge of allegiance from the management of Freddie M & Fannie M - this is all about getting CEO Fred Raines (the Black Shill for Obama) using accounting fraud at FM to get free stuff for Blacks in the past - mortgages they shouldnt have had and then coming up in January - free housing as the mortgages are cancelled - that is why Acorn is involved for the voting fraud registration of the century for their former attorney - Obama - and then their share of the profit from the $700B
The timing of the Panic Platter served by Paulson-Bush just before elections is curious.
With Reps trailing in polls in most races, something had to be done.
If a very unpopular bailout plan could be attributed to a Democratically controlled Congress, the Republicans could profess that they did not have enough votes to stop it even though they wanted to be in the citizens' corner. This could translate to more votes for Reps.
Their hopes were dashed in the House, but alas and alak, the Dems in the Senate might come to their rescue with a newly named RESCUE PLAN. The public is still opposed.
Dems have a knack for shooting themselves in the foot and snatching defeat from the jaws of victory.
Joe, while I basically agree with you, there is one problem. It takes 60 votes to bring it to the Senate floor --the Dems have 51, and they include Joe Lieberman.
So, Joe, let's see if I understand your logic.
Regardless of the plan that emerges, you want the same Barney Franks and Chris Dodds and Maxine Waters and Greg Meeks of the world (the "What, Me Worry?" Gang)who got us into this mess to be the ones who devise and oversee the cleanup?
Please. A little intellectual rigor there, Joe. If we are going to have stupid, foolish people in charge, why don't we just get the original Afred E. Newman?
joe you have been a Clown ACT for the social democrats since 88' - your piece is nonsense in the "extreme"
The Social Democrats spawned the MORTGAGE MESS (a 3 step FRAUD):
Step 1 -- "Redlining" -- Fake outrage over lenders NOT lending money to those who can't repay.
Step 2 -- "Predatory Lending" -- Fake outrage over lenders lending money to those who can't repay after you force them to do so.
Step 3 -- "Community Reinvestment Act" -- Establish FEDERAL LAW empowering race hustling activists to dictate lending practices to banks.
....Because, bait, the 22nd Ammendmenet precludes it.
Good analysis, Joe. Makes sense in light of the facts that we do know.
I noticed that your critics have a blind spot as big as an elephant.
Blinded by ideology.
Running through Gwen Ifill's mind about now:
Let's see - I have a book that is due to be published on Inauguration Day, January 2009, largely about one of the candidates. If one candidate wins, I make at least half a million dollars and the book sits on the top of the New York Times Bestseller List; if the other candidate wins, I can't cover cabfare home from the publisher and the book goes straight to the remainders bin.
And she doesn't understand why people don't perceive a sense of impropriety or conflict of interest?
I just laugh at the different comments defending either political party.
The fact IS, both parties take campaign money from Wall Street and corporations. Both parties vote for legislation favoring those big money contributors. Why would these facts then become a partisan issue? Because for some reason people feel a need to follow a team. It doesn't matter if the team is corrupt (both Reps and Dems are corrupt), it just matters that a person feels needed. The feeling isn't mutual, your measly vote is ignored after the election.
The saying that goes with every transaction in America is "let the buyer beware." So, we've been warned to beware, yet we don't. The people following team Republican are buying what their leaders say, the people following team Democrat also bought the lies. And what have the followers bought? A failed democracy and a failed economy, good purchase people.
JB, Amen to your statement, AMEN!
JB - read it and weep - Fred Raines and Maxine the screamer - you and Joe boy - could rationalize anything even murder!
What They Said About Fan and Fred Article
House Financial Services Committee hearing, Sept. 10, 2003:
Rep. Barney Frank (D., Mass.): I worry, frankly, that there's a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios. . . .
Rep. Maxine Waters (D., Calif.), speaking to Housing and Urban Development Secretary Mel Martinez:
Secretary Martinez, if it ain't broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals?
* * *
House Financial Services Committee hearing, Sept. 25, 2003:
Rep. Frank: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. . . .
* * *
House Financial Services Committee hearing, Sept. 25, 2003:
Rep. Gregory Meeks, (D., N.Y.): . . . I am just pissed off at Ofheo [Office of Federal Housing Enterprise Oversight] because if it wasn't for you I don't think that we would be here in the first place.
Fannie Mayhem: A History
A compendium of The Wall Street Journal's recent editorial coverage of Fannie and Freddie.
And Freddie Mac, who on its own, you know, came out front and indicated it is wrong, and now the problem that we have and that we are faced with is maybe some individuals who wanted to do away with GSEs in the first place, you have given them an excuse to try to have this forum so that we can talk about it and maybe change the direction and the mission of what the GSEs had, which they have done a tremendous job. . .
Ofheo Director Armando Falcon Jr.: Congressman, Ofheo did not improperly apply accounting rules; Freddie Mac did. Ofheo did not try to manage earnings improperly; Freddie Mac did. So this isn't about the agency's engagement in improper conduct, it is about Freddie Mac. Let me just correct the record on that. . . . I have been asking for these additional authorities for four years now. I have been asking for additional resources, the independent appropriations assessment powers.
This is not a matter of the agency engaging in any misconduct. . . .
Rep. Waters: However, I have sat through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke. Housing is the economic engine of our economy, and in no community does this engine need to work more than in mine. With last week's hurricane and the drain on the economy from the war in Iraq, we should do no harm to these GSEs. We should be enhancing regulation, not making fundamental change.
Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals. . . .
Rep. Frank: Let me ask [George] Gould and [Franklin] Raines on behalf of Freddie Mac and Fannie Mae, do you feel that over the past years you have been substantially under-regulated?
Mr. Raines?
Mr. Raines: No, sir.
Mr. Frank: Mr. Gould?
Mr. Gould: No, sir. . . .
Mr. Frank: OK. Then I am not entirely sure why we are here. . . .
Rep. Frank: I believe there has been more alarm raised about potential unsafety and unsoundness than, in fact, exists.
* * *
Senate Banking Committee, Oct. 16, 2003:
Sen. Charles Schumer (D., N.Y.): And my worry is that we're using the recent safety and soundness concerns, particularly with Freddie, and with a poor regulator, as a straw man to curtail Fannie and Freddie's mission. And I don't think there is any doubt that there are some in the administration who don't believe in Fannie and Freddie altogether, say let the private sector do it. That would be sort of an ideological position.
Mr. Raines: But more importantly, banks are in a far more risky business than we are.
* * *
Senate Banking Committee, Feb. 24-25, 2004:
Sen. Thomas Carper (D., Del.): What is the wrong that we're trying to right here? What is the potential harm that we're trying to avert?
Federal Reserve Chairman Alan Greenspan: Well, I think that that is a very good question, senator.
What we're trying to avert is we have in our financial system right now two very large and growing financial institutions which are very effective and are essentially capable of gaining market shares in a very major market to a large extent as a consequence of what is perceived to be a subsidy that prevents the markets from adjusting appropriately, prevents competition and the normal adjustment processes that we see on a day-by-day basis from functioning in a way that creates stability. . . . And so what we have is a structure here in which a very rapidly growing organization, holding assets and financing them by subsidized debt, is growing in a manner which really does not in and of itself contribute to either home ownership or necessarily liquidity or other aspects of the financial markets. . . .
Sen. Richard Shelby (R., Ala.): [T]he federal government has [an] ambiguous relationship with the GSEs. And how do we actually get rid of that ambiguity is a complicated, tricky thing. I don't know how we do it.
I mean, you've alluded to it a little bit, but how do we define the relationship? It's important, is it not?
Mr. Greenspan: Yes. Of all the issues that have been discussed today, I think that is the most difficult one. Because you cannot have, in a rational government or a rational society, two fundamentally different views as to what will happen under a certain event. Because it invites crisis, and it invites instability. . .
Sen. Christopher Dodd (D., Conn.): I, just briefly will say, Mr. Chairman, obviously, like most of us here, this is one of the great success stories of all time. And we don't want to lose sight of that and [what] has been pointed out by all of our witnesses here, obviously, the 70% of Americans who own their own homes today, in no small measure, due because of the work that's been done here. And that shouldn't be lost in this debate and discussion. . . .
* * *
Senate Banking Committee, April 6, 2005:
Sen. Schumer: I'll lay my marker down right now, Mr. Chairman. I think Fannie and Freddie need some changes, but I don't think they need dramatic restructuring in terms of their mission, in terms of their role in the secondary mortgage market, et cetera. Change some of the accounting and regulatory issues, yes, but don't undo Fannie and Freddie.
* * *
Senate Banking Committee, June 15, 2006:
Sen. Robert Bennett (R., Utah): I think we do need a strong regulator. I think we do need a piece of legislation. But I think we do need also to be careful that we don't overreact.
I know the press, particularly, keeps saying this is another Enron, which it clearly is not. Fannie Mae has taken its lumps. Fannie Mae is paying a very large fine. Fannie Mae is under a very, very strong microscope, which it needs to be. . . . So let's not do nothing, and at the same time, let's not overreact. . .
Sen. Jack Reed (D., R.I.): I think a lot of people are being opportunistic, . . . throwing out the baby with the bathwater, saying, "Let's dramatically restructure Fannie and Freddie," when that is not what's called for as a result of what's happened here. . . .
Sen. Chuck Hagel (R., Neb.): Mr. Chairman, what we're dealing with is an astounding failure of management and board responsibility, driven clearly by self interest and greed. And when we reference this issue in the context of -- the best we can say is, "It's no Enron." Now, that's a hell of a high standard.
The whole country is sinking like a rock and I still end up amazed by the typical ignorant rants by the very same people who voted and supported one of the worst, if not the worst president in American History, George W. Bush. The Republicans and Bush had absolute power for 6 of the last 8 years...now all these ditto heads want to blame Barney Frank. Are you kidding me? Are you serious? Incredible. We are facing one of the worst economic disasters since the Great Depression, and people are still going to vote for a Senator named John McCain who agreed with and supported President Bush, along with his decisions and policies over 90% of the time these past 8 years. It's one thing to be ignorant in the face of irrefutable evidence, but to be willfully ignorant and continue to support candidates with proven failed policies has to be some kind of definition for the truly insane. Respectfully submitted, Dick "just shoot'em in the face" Cheney.
Dear "just shhot 'em in the face",
That is a great screed, and the Republicans are guilty of indifference to the situation, which may be the greater of the two evils.
But, make no doubt about it, from Jimmy Carter to Bill Clinton to Barney Frank, et al, it is proven empirically, with absolutely no doubt at all, that this sub-prime lending fiasco was conceived by the Democrats, pushed by the Democrats and obfuscated by the Democrats.
Please - a little intellectual integrity the next posting.
I got a better argument to help you out Bill08. Let's blame President Clinton for 9-11! In fact lets blame the Democratic Party for all that has gone wrong with this country these past 8 years. Yea, that will work! Americans are ignorant and Karl Rove is smart enough to know how dumb the average American voter is. "Intellectual Integrity." This statement from a person who voted for George W. Bush, twice. Thanks for nothing!
Dear Ranting Maniac, above:
Please see my post above yours, where I assign a great deal of culpability to the Republicans.
But you do not have the intellectual integrity to admit that this whole sub-prime mess was conceived, promoted and hidden by the Democrats.
And who was the greatest recipient of largesse from Fannie Mae over the last three years ($130K)? Who sued lending institutions when they wouldn't make loans to unqualified applicants?
Give that man a cigar if you said "The One".
And you assume facts not in evidence - that I did, in fact, vote for GWB. Have you seen some of my postings here arguing against him?
Freedom.
Anonymous tells me to weep? I guess I don't understand because I said that Democrats are corrupt. And the poster without a name is of course an obvious team Republican as he omits any reference to his home team in regards to the same type of corruption. Loves Kool Aid I suppose.
He/her references Alan Greenspan in his/her cut-up transcript. I'd reference Greenspan as well. It was the "economic genius" Greenspan that publicly told citizens/consumers in Feb. 2004 that house buyers should consider adjustable rate mortgages in a time of very low interest rates where the rate had nowhere else to go but up. This advice ran counter to traditional advice on adjustable rate mortgages to only get those when rates are high and have a better chance of going down.
Greenspan pumped the housing bubble by lowering the Fed rate to near nothing and then suggested home buyers become risky. It was around this time I started telling people not to buy a house because only the economic idiots like me seemed to understand the huge bubble stretching its' limits.
Greenspan complained about irrational exuberance during the Dot.com bubble (although this was misnamed because the major failures were companies like Enron and WorldCom, not internet companies), yet helped create irrational exuberance for the housing bubble. Greenspan is going down the tubes as an historical economic figure.
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In 2005 while vacationing in Boca Raton, FL I stumbled upon a meeting of Hallibuton, KerMcGee, Kellog Brown and Root, KBR and Bank of America. My suspicion then, that the purpose of this meeting was to bury the Iraq war money so far into the US economy that we would never be able to get it out has only been reinforced since. Bank of America bought Countrywide Financial the most egregious of the exotic mortgage financiers. Now the US taxpayer is going to buy those loans from Bank of America and we may never know the exact nature of those loans. This is the Drexel Burnam/Michael Milken scandal without the accountability. What goalposts do I raise my kids by?
Sounds like Barney Frank had a lover at fannie may.
SOOOOO I guess you could say there was a
CONECTION between Fannie Mae and Barney's fanny!!!
Who in the hell thinks that drawing looks like
Pelosie JEEEEEEEEEEEEEEEEEZZZZZZZZZZZZZZZZZ.
I mean were talking about a real live bitch
here.I put a picture of her in my garage,haven't
seen sparrow since!!!
Joe,
I think you should give up your career as a journalist. You're in over your head.
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