Patterico's Pontifications

9/25/2008

Done Deal or Not?

Filed under: Economics,Government — DRJ @ 12:36 pm



[Guest post by DRJ]

House and Senate banking committee leaders have reportedly agreed on the bailout deal but ABC’s Jake Tapper reports House Republicans aren’t on board:

“A spokesman for House Minority Leader John Boehner, R-Ohio, cautions that House Republicans have not signed on to anything.

Spokesman Kevin Smith said this includes Rep. Spencer Bachus, the ranking Republican on the House Financial Services Committee, who spoke to the press after this morning’s negotiation over the Wall Street bailout bill.

After the meeting, Bachus told reporters, “One thing that I’m encouraged by is something that Senator (Jack) Reed and I have worked on for taxpayer protection, [t]o see that the taxpayer and the Treasury is reimbursed for their expenditures. And I think that was an important step that we all took. And we’re committed to the tax money — the taxpayer being protected. There was progress today. And I felt like the discussions were very open. And we’re all committed to a successful and positive conclusion.”

Boehner issued a statement that he was encouraged by the progress and I agree. It’s refreshing to see legislators negotiating compromises that benefit taxpayers.

I only wish Congress would show the same concern and fortitude after the vote is over. Once the deal is done, I fear many of the politicians who approved this bailout will criticize it as a bad decision. It’s part of the new political landscape where politicians try to have their cake and eat it, too.

— DRJ

34 Responses to “Done Deal or Not?”

  1. Could be worse . . . a bunch of them could vote “present”.

    Icy Truth (5a5985)

  2. Or “not present.”

    Al (b624ac)

  3. I only wish Congress would show the same concern and fortitude after the vote is over. Once the deal is done, I fear many of the politicians who approved this bailout will criticize it as a bad decision. It’s part of the new political landscape where politicians try to have their cake and eat it, too.

    Don’t fear it. Expect it. We’ve already had almost two weeks of Democrats (incl. Speaker Pelosi) blame a piece of legislation they backed for the current problem.

    Karl (f07e38)

  4. It may very well be a bad decision; being the least bad alternative doesn’t make it not bad.

    That said, I would hope people criticizing it in that vein would acknowledge that the other available options were worse.

    aphrael (e0cdc9)

  5. The latest word is here and I don’t like it.

    I don’t like this:

    b. To minimize risk to the American taxpayer, requires that any

    transaction include equity sharing

    and I don’t like this:

    3. Homeownership Preservation

    The first puts the camel’s nose into the tent and creates more GSEs which have just led to this mess.

    The second sounds like mortgage amnesty.

    These are both at the root of the trouble. Peole bought homes with nothing down and incomes that could not repay the loan, plus we had mortgage brokers responding to Congressional mandates to lend to them or else.

    How is this an improvement ?

    I’m hoping that this is Democrat propaganda and the House GOP is still holding firm. So far, it looks like the Dodd Plan.

    Mike K (f89cb3)

  6. In politics, the lesser of two evils seems to always be at the heart of any decision….which might be a succinct commentary on basic human nature – or at least that of pols.

    Dana (b4a26c)

  7. Flush Congress.
    It is time for a State called Constitutional Convention.
    Term Limits for all.

    Paul Albers (0c58f4)

  8. I wonder if the debates are on, now that the deal is at least done in the Senate.

    Michael Ejercito (a757fd)

  9. MAYBE ALFIE HAS SOME ANSWERS?

    What’s it all about, Alfieeee?

    Alfie Elkins pondered that profound question about life, sex, and love in a 1966 movie and today economic novices such as I and most of the rest of us are pondering the same question as it relates to what in the blazes is going on with AIG, Freddy Mac, Fannie Mae, and, mostly, what is going on in Washington.

    There are a host of givens with this crisis. That many people are hurting is an obvious given. That many people screwed up is another. That politicians haven’t the foggiest notion what to do may be the worst.

    Other givens are even more disturbing, such as mushrooming bank failures and word that the FDIC is sitting on a secret list of 117 more banks, big and small, that could go bust unless that bank insurer of last resort gets a quickie infusion of $125 billion: http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=amZxIbcjZISU.

    The reason for that secrecy? Revealing the bank names could cause a run on them which would result in mobs of depositors descending on them as they did on poor George Bailey’s Building and Loan.

    Meanwhile, McCain and Obama debate whether to debate and gloom and doomers prattle on about the Crash of ‘29 and another Depression. Can mass starvation be far behind? No one is prattling about bank presidents leaping from tall buildings since their golden parachutes would guide them safely to the pavement, anyway.

    Overseas, we can all but smell the glee emanating from European capitals over our multi-multi billion dollar fiscal crisis….

    (Read the rest of this article @ http://genelalor.com/.)

    BERLET98 (c36902)

  10. The sky may be falling, but its the rich and super-rich of Congress and their friends who have a lot more to lose than I or the large mass of unwashed do. The Republicans are always on about how individuals should be allowed to make the decision of how their own (taxpayer) money is spent. So how come no one wants to distribute the $750Billion among the taxpayers? Maybe they will put it into the better banks, better companies, etc.

    Shankar Ramamoorthy (c57c17)

  11. The more this looks like the Dodd plan the less I like it. You could add some “Dodd frosting” to the Paulson – Bernanke plan and it might still work, but having Congress micro-manage this will make it worse, not better.

    htom (412a17)

  12. The Republicans are always on about how individuals should be allowed to make the decision of how their own (taxpayer) money is spent.

    — Provide one example.

    Icy Truth (5a5985)

  13. Once the deal is done, I fear many of the politicians who approved this bailout will criticize it as a bad decision.

    I’m not sure if this exists or not, but there should be transcripts of the dealmaking available online for the entire public to access. No legislator should be able to argue one thing in the session and another in public.

    It’s taxpayer money, and the legislators should have to defend every assertion they make, both during and after the process.

    I want those criticizing the deal to explain to the public not only why they made the agreement, but how they participated.

    Apogee (366e8b)

  14. I am very synical, I think this is going to devalue our dollar to the extent that we will have to go to the new currency that has already been created…the Amero. I personally think that is the plan all along. Why not give us the 700 billion, divide equally, take 30% out for taxes and then we will pay off our mortgages, bad debt, and spend this economy back to health!!! GIVE IT TO US!!!Everyone will win!!!

    Christine Carlton (eaa985)

  15. Christine, $700 Billion divided among the roughly 350 Million people in the US is $2,000 each. Not enough to pay off my mortgage.

    Peccator Dubius (0a6237)

  16. Oh good, a North American Union nut. Added to the liar Ramamoorthy, this thread is shaping up nicely. Jeez.

    Icy Truth (4935fe)

  17. I find it more than a little hilarious that Democrats who claim to want to protect taxpayers also say that they want to make it harder to foreclose on mortgages – which does the opposite by increasing the costs to the taxpayer.

    SPQR (26be8b)

  18. I find it more than a little hilarious that Democrats who claim to want to protect taxpayers also say that they want to make it harder to foreclose on mortgages – which does the opposite by increasing the costs to the taxpayer.

    Why should it be harder to foreclose on mortgages?

    Michael Ejercito (a757fd)

  19. the Amero.

    Uh, which makes you the Americano, I guess – at least in this scenario?

    Dmac (e639cc)

  20. Michael Ejercito – do you mean what about the Democrats’ proposal make it harder or why do the Democrats want it to be harder to foreclose?

    SPQR (26be8b)

  21. Why do the Democrats want to make it harder to foreclose?

    Michael Ejercito (a757fd)

  22. Because they want to promise the little people that the progressive party is protecting their homes from the big bad robber barons.

    Icy Truth (2c3adb)

  23. Michael, because the Democrats think it will make them more popular and because Democrats do not care how much damage they do to the American economy so long as they are elected.

    Except that some of the Democrats realized about this morning that many of their sources of payola are among Wall Street firms. That’s why Democrats are panicked.

    SPQR (26be8b)

  24. Who’s worried?

    Icy Truth (2c3adb)

  25. Unfortunately, the kind of measure that the House republicans came up with might have worked a year ago, or even six months ago, but its too late for that now. It would take too long to have a positive effect.

    SPQR (26be8b)

  26. Then why not wait until the first draft goes through the rigamarole? What is proposed here is a start, it can be dealt with during the day and it will be a winner in the end.

    Man, you guys really are idiots. And you guys are the ones who want to bankrupt America all because y’all got some stocks in the portfolio.

    Should have sold them and gone into currency.

    Badger (1808e2)

  27. “Harder to foreclose on mortgages.”

    What the Democrats have proposed is to make home mortgages subject to changes approved by a judge in bankruptcy; it’s called a “cram down,” meaning you’re cramming changes to the loan down the lender’s throat. You can do this with most loans in bankruptcy, but not home mortgages.

    That being said, it’s nuts to propose this in this deal because what we trying to create is certainty of the value of mortgage backed securities for investors. Doing that, but then saying, “Oh, by the way, you know the value of that security we just stabilized for you, a bankruptcy judge can change it,” is counterproductive to what needs to be accomplished.

    I’m sure the Democratic leadership understands this, and the bankruptcy rule change, which they’ve sought before, is just a negotiating, political ploy in this deal and I would be very surprised if it didn’t go away before the deal is done.

    Peccator Dubius (0a6237)

  28. Perhaps if we build a large wooden Badger –

    Man, you guys really are idiots. And you guys are the ones who want to bankrupt America all because y’all got some stocks in the portfolio.

    — Us all “want to bankrupt America”? Y’all got any statistics to show that more conservatives than liberals are invested in the market, idiot?

    Icy Truth (06b70f)

  29. (FORTUNE Magazine January 24, 2005) – On a sunny Monday in June 2002, President George W. Bush stood in the St. Paul AME Church in a formerly dilapidated neighborhood on the south side of Atlanta. Sitting in prime seats were Franklin Raines, the CEO of Fannie Mae, and Leland Brendsel, the CEO of Freddie Mac. The President was there to unveil an initiative aimed at helping 5.5 million minority families buy homes before the end of the decade–“Part of being a secure America,” he said, “is to encourage home-ownership.”

    home to roost (34825a)

  30. Ah ha!!!

    Icy Truth (f6198c)

  31. You know it seems that for all the Franklin Raines that get dug up, there’s a hundred shady GOP CEO’s and McCain fundraisers and lobbyists with damning ties to the Republicans who helped to push this mess upon the American people.

    Here’s a good article on McCain ties to the gambling industry that illustrates just that. McCain used the tribes when he needed some quick fundage and threw them overboard when they wanted to open up casinos off the reservation and the big money boys from Vegas opened up their mega deep wallets to McCain and Co. to ensure that didn’t happen:

    http://www.nytimes.com/2008/09/28/us/politics/28gambling-web.html?_r=1&hp&oref=slogin

    Peter (e70d1c)

  32. #31 i See moose:

    Ah ha!!!

    I challenge your Ah ha!! And raise the stakes with:

    EUREKA!!

    Take that.

    Peter (e70d1c)

  33. Corruption makes fiat currency unuseable, when will people realize that?

    If we could set up a truly honest and balanced system of regulation, our notions of credit-based buying power and financial strengh might be feasibly operational, but with the way things work currently, the system is set up for failure as money is hidden and shuffled around, temporarily creating buying power for those who participate in these practices (allowing them to secure themselves assets, mostly real) and leaving the rest to suffer from the inevitable infaltion this creates.

    Sending $700 billion to the same institutions only perpetuates this system a little longer until.. who knows what? Maybe they jump ship, keeping their ownings and transfer to a new market. Maybe all the larger organizations will be left owning a vast majority of companies and real assets. A large part of forclosures in America are simpley becoming bank property. If the currency were to ever bottom out or lose international financial backing (China is already calling for the restructuring of global finance to DISCLUDE America) these organizations are left with real assets that would have tremendous value in any new market.

    Antonio (cbcbf7)


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