Like many thought, Senators McCain and Obama weren't needed.
Key lawmakers said at midday that few difficulties actually remained.
“There really isn’t much of a deadlock to break,” said Rep. Barney Frank, D-Mass, chairman of the House Financial Services Committee.
Whether George W. Bush's failure to to address the nation up until now is due to an attempt to wash his hands of the situation or an utter failure to understand that this was a serious situation that warranted a national address is still up in the air. At least, he is finally doing it.
I found this particular quote.....precious, for lack of a better word:
Press secretary Dana Perino said the president wants to tell the American people how the crisis affects them and help them understand the depth of the problem.
Suddenly, Hank Paulson calls you up and says, look, no worries. We'll spend up to 50 million to buy those crappy investments off of you, allow you to get back up on your feet and get going again.
This, however, isn't good enough for you. It isn't enough that the government will buy the crappy securities at their nominal market value of $3,000,000 dollars. It isn't even enough that they will buy them from you for a premium, giving you a wash on the deal, at $17,000,000 dollars. Nope, they made the mistake of mentioning $50,000,000.
So now, you get a wink, wink, nudge, nudge from Paulson but that pesky Congress might get in the way. So you, and your other friends in "The Incredibly Poor Judgement Investment Club" who got this offer, now have your lobbyists attack, saying we need whatever we say we need. There can be no oversight. Only we know what can help us. All the while keeping your eyes on that big fat top end number.
That folks is what is happening right now. The banks, having been handed a golden goose, now want a golden calf. And they'll keep the goose too, thank you very much.
It is no longer a question of whether the governent will give it to them. We already have the standard 'pass it or else' line from the White House. The question now is whether Congress will give it to them. Given Congress' record of passing the buck and voting for the allowance of sweeping executive discretion in such things as the war on Iraq and FISA, I, sadly, have remarkably little faith that Congress will do what it should.
I am, also, not alone in either thinking that this proposal from Hank Paulson is both too sweeping and not accountable enough.
Continue reading "Talking your way out of the deal of the century">>
As early as Saturday, as details started leaking out, many started jumping off the ship. Josh Marshall at TPM on Saturday night:Mulling this more and listening to the insights in your emails, the key clearly is how much the government pays for these distressed assets. They may be bad debts. But that doesn't mean they have no value at all. Bought at the right prices and given time on the books -- which the government is uniquely in a position to allow them to do -- the government could even turn a profit on some of them. But the key is at what price they're bought and whose get bought. That seems like precisely the kind of process that requires oversight and accountability to make sure the taxpayer doesn't get fleeced.
Paul Krugman was ambivalent about all of this when I saw him on Real Time with Bill Maher on Friday night. He was no longer ambivalent by Saturday afternoon:Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.
The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.
And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.
Part of the reason everyone is becoming increasingly uneasy is because of things like this in Sunday's New York Times:The scope of the bailout grew over the weekend. As recently as Saturday morning, the Bush administration’s proposal called for Treasury to buy residential or commercial mortgages and related securities. By that evening, the proposal was broadened to give Treasury discretion to buy “any other financial instrument.”
Elrod has a good post on opposition to the MOAB (Mother of all Bailouts) over at The Moderate Voice and Andrew Sullivan is "more than a little queasy."
Meanwhile, neither Obama nor McCain seems particularly enthused by any of this.
McCain seems to be trying to continue to cultivate a persona that is against the grain for him. He is an anti-regulator. He seems to have settled on the idea that he just doesn't trust any Republicans currently in office. He attacked SEC Chairman Chris Cox earlier in the week. Now he doesn't trust Hank Paulson:"Never before in the history of our nation has so much power and money been concentrated in the hands of one person. This arrangement makes me deeply uncomfortable," McCain told an Irish-American group in Pennsylvania, a key battleground state.
I'm not disagreeing with him. I just think he and his campaign are walking a tightrope on this one. His anti-regulation, pro-free market natural approach to things may cause him to mis-step badly here if they don't be very, very careful. Given his gaffes of the last two weeks (we won't count the huge one on August 29), that might be a very dangerous course to take.
This part of that MSNBC article was particularly interesting:In a statement to reporters, McCain urged the creation of a bipartisan oversight board to review the government bailout rather than entrusting Paulson with complete power to craft it. He said the board should be headed by a trusted financial steward like billionaire financier Warren Buffett, and said former Massachusetts Gov. Mitt Romney and New York City Mayor Michael Bloomberg should be involved as well. Both Romney and Bloomberg made enormous fortunes in business ventures before entering politics.
"I believe we need a high level of oversight and an oversight board to impose real criteria for those who need help and those who do not and that we have a careful steward of the taxpayer's dollars," McCain said.
Yup. That will go over real well with Main Street. Get Warren Buffett (I'll give you that the average American probably is OK with him), and add in two independently wealthy politicians who made huge amounts of money on Wall Street to help guard Main Street from getting ripped off here. Yeah, right, we'll get back to you on that one. In other news, people also think McCain has a bridge to sell them.
That also skips over the fact that, again, in a time of crisis, when leadership is needed, John McCain wants to form yet another time consuming commission.
Obama, according to the piece:Obama ticked off seven conditions that he believed should be imposed on the Paulson proposal, joining some fellow congressional Democrats in raising warning flags and signaling the bailout mechanism might not make it out of the legislature by week's end as demanded by the Bush administration.
Obama said any bailout must include plans to recover the money, and protect working families and big financial institutions and be crafted to prevent such a crisis from happening again.
Again, Obama is offering at least some specific safeguard ideas. McCain is decrying putting too much power into Paulson's hands and recommending a commission of experts (albeit ones who made plenty of money on Wall Street.)
Finally, President George W. Bush, presiding over a financial crisis that rivals Herbert Hoover, had this to say:"Obviously, there will be differences over some details, and we will have to work through them," Bush said, but "the whole world is watching to see if we can act quickly to shore up our markets and prevent damage to our capital markets, businesses, our housing sector, and retirement accounts.
"Failure to act would have broad consequences far beyond Wall Street. It would threaten small business owners and homeowners on Main Street."
Translation: "Let's see if I can pressure Congress into writing one last blank check before I bolt this place for Crawford!"
I think, given the current state of opinion in general, that it is extremely unlikely that the administration, Republican members of Congress and the bankers (notice how all of these groups want the same thing?) will get a "clean" bill free of oversight or regulatory powers. It is also highly unlikely that Treasury will get the get out of jail free card that they wanted inserted with language prohibiting 'judicial review.'
The example I started with remains valid. You have to cut the greed off at the knees. It is ingrained in anyone who works on Wall Street. If there is money there, they are trained to find a way to get it. It is what they do.
That is not what this bailout is about. And that is why some serious oversight is needed if we are to attempt this endeavour. If the oversight is included, give it a shot. If it is not, let them rot. We will probably suffer less long term damage by letting them hang by their own ropes than continuing to let them rob us blind.
The banks, by lobbying hard for a 'free and unfettered' authorization to the Treasury department are making us all look at them even more suspiciously. They are already getting a huge, absolutely massive, undeserved gift. Apparently, it isn't good enough unless it comes without strings. They may well find no gift if they continue this crap.
We can only hope that what does come out of all of this is a) enough to actually stem the tide of this crisis and b) not going to create a crisis of it's own. I share your uncertainty.
Comments welcome,
Pat McGovern
It's got electoral votes. It's what politicians crave.
Karen Tumulty thinks this John McCain ad "played the race card":
Andrew Sullivan disagrees.
I wasn't sure about this claim. After all I don't particularly think that Barack Obama and Franklin Raines look 'sinister' as Tumulty comments. Michael Goldfarb has a rebuttal, albeit tinged with some hysteria, that makes some sense. I'd really like it if someone had a timeline for when the following video, the Jim Johnson ad, was posted, because I swear this video wasn't out until people started ripping into the Raines ad. It appears to have been posted several hours later, not at the same time (and, no, I am not insinuating that Goldfarb said it was the same time).
Either way, I think the "Fact Check" commercial had more racial overtones, as I stated at the time. (Although I still want to know why on earth they would bring up wolves with her record on that, lord only knows.) Here is that video, just for good measure:
Let's just stop looking for the race card. If and when it is played it will not be something we need to work on discerning.
I think it is just stupid that they used Franklin Raines. Listen to their justification on this (from Michael Goldfarb's post):
So we contacted Ms. Tumulty and told her of the multiple sources that tie Raines to Obama, including three separate instances in the Washington Post, none of which was ever challenged by Raines or the Obama campaign until yesterday.
Tumulty also takes Obama’s response, signed by Mr. Raines, at face value.
Great new commercial for Obama. Keeps hammering the "John McCain admits he doesn't understand the economy" theme and combines it with who is advising him:
A fired CEO, an insulting former Senator and George Bush. Hmm... This should get some movement our way.
Comments welcome,
Pat McGovern
It's got electoral votes. It's what politicians crave.
“The Chairman of the SEC serves at the appointment of the President and in my view has betrayed the public's trust,” McCain said. “If I were President today, I would fire him.”
Asked to respond to McCain’s criticism of Cox, White House spokesperson Dana Perino told NBC News, “The chairman has the president's confidence.”
But the president does not have the power to fire the SEC chairman.
Commissioners of the following independent regulatory commissions cannot be removed by the president: the SEC, the Federal Reserve Board, the National Labor Relations Board, the Federal Communications Commission, and the Federal Trade Commission.
The McCain campaign called protests that the president cannot literally "fire" an SEC commissioner "a foolish distinction."
"Not only is there historical precedent for SEC chairs to be removed," said McCain campaign spokesman Tucker Bounds, "the president of the United States always reserves the right to request the resignation of an appointee and maintain the customary expectation that it will be delivered.”
So, can a president "fire" an SEC chairman? Not literally, no.
But colloquially, yes.
I have a quibble, and it's similar to my objection to the "George Tenet should have been fired on September 12, 2001!" argument. Even if you can legitimately lay the blame at the feet of the official in question (easier for Cox than Tenet, I would argue) you're effectively promoting that person's lieutenant. This presumes the President doesn't have some perfect SEC Chairman/crisis manager in mind, and even then you've got to get that person through the confirmation process with showboating, table-pounding, preening Senators. You also are ensuring that everyone in the organization in question is focused on covering their butts instead of fixing the problem at hand.
On September 12, I wanted CIA employees focused on tracking down al-Qaeda, and devoting exactly 0 percent of their time to worrying about whether they would be fired or purged.
Let's look back at March, however (Reuters):
Warren Buffett said on Monday that he would be comfortable putting Democratic presidential candidates Hillary Clinton and Barack Obama in charge of running a business..
A top McCain official contacted by CNN said, on condition on anonymity, "No big deal, but not how you get on the surrogate all-star team. Very Biden-like."
“This campaign source said Fiorina would be discouraged from additional media interviews.
Another top campaign adviser was far less diplomatic.
"Carly will now disappear," this source said. "Senator McCain was furious." Asked to define "disappear," this source said, adding that she would be off TV for a while – but remain at the Republican National Committee and keep her role as head of the party’s joint fundraising committee with the McCain campaign.
Fiorina was booked for several TV interviews over the next few days, including one on CNN. Those interviews have been canceled.
A third source said "it was another bad day for her, and important people are mad because the timing is horrible… But I would not necessarily buy the Siberia storyline."
Here is John McCain's new stance on regulation:
There's a problem here for our dear Senator McCain. He's been a passionate deregulator for a quarter of a century! He was still a passionate deregulator last week! From the Washington Post:
In 2002, McCain introduced a bill to deregulate the broadband Internet market, warning that "the potential for government interference with market forces is not limited to federal regulation." Three years earlier, McCain had joined with other Republicans to push through landmark legislation sponsored by then-Sen. Phil Gramm (Tex.), who is now an economic adviser to his campaign. The Gramm-Leach-Bliley Act aimed to make the country's financial institutions competitive by removing the Depression-era walls between banking, investment and insurance companies.
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That bill allowed AIG to participate in the gold rush of a rapidly expanding global banking and investment market. But the legislation also helped pave the way for companies such as AIG and Lehman Brothers to become behemoths laden with bad loans and investments.
McCain now condemns the executives at those companies for pursuing the ambitions that the Gramm-Leach-Bliley Act made possible, saying that "in an endless quest for easy money, they dreamed up investment schemes that they themselves don't even understand."
Well, it's official folks, the Republican party ticket of John McCain and Sarah Palin had exactly two days to celebrate the end of government intervention. They have been beside themselves with glee that the government finally said 'enough' with the Lehman Brothers crisis.
Well, as of tonight (via Reuters):
The Federal Reserve Board on Tuesday, with the full support of the Treasury Department, authorized the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG).
“We need a 9/11 commission, and we need a commission to figure out what went wrong and how to fix it,’’ he said. “And I know we can do it and how to do it.”
And, when possible, hit above the belt. This one counts as one of those left hooks after you've set him up a bit. Whether this commercial helps to start bringing Senator John McCain and his campaign down, well, we'll just a have to wait and see.
Meanwhile, here is what I'm talking about, the latest Obama commercial:
Simple, direct, repeats the gaffe over and over. Nicely done. Don't stop now Obama campaign. We're convinced you guys might be the real thing. Keep at it!
Comments welcome,
Pat McGovern
Sam Stein reports over at Huffington Post that Governor Sarah Palin may have made her first gaffe in policy articulation. As reported by McClatchy:
McCain's running mate, Alaska Gov. Sarah Palin, speaking in Colorado Springs, Colo., said Fannie and Freddie had "gotten too big and too expensive to the taxpayers." The companies, however, aren't taxpayer funded but operate as private companies. The takeover may result in a taxpayer bailout during reorganization.
Check out the grand "I will not do negative campaigning" strategy of the John McCain campaign:
Is this seriously how they expect to win the election. You mean this is how Al Gore should have run against George W. Bush in 2000? No issues? Or at least, no issues represented properly. Blatant lies which have been debunked repeatedly?
Now, at least with George, we wouldn't have had to make stuff up like the "tax increase if you make over $42,000" thing. (BTW, the grand old man from Arizona still has no real plan to reduce the deficit, never mind paying for his own new ideas. Another reason to make this kind of crap. It deflects attention from that.)
Still, I think the high road looks a little better.
After all, in the story, the one taking the low road was drowned in the end.
Comments welcome,
Pat McGovern
