Democratic Congress Forced To Enter The Republican Wall Street Debacle Cleanup "Discussion"
Bernanke at the Fed and Paulson at Treasury met with Congressional leaders regarding the largest bailout ever, an historical first, following this mortgage and financial catastrophe.
We are witnessing and involved in another Bush failed legacy disastrously impacting American taxpayers and the nation.
From the NYTimes: "While details remain to be worked out, the plan is likely to authorize the government to buy distressed mortgages at deep discounts from banks and other institutions. The proposal could result in the most direct commitment of taxpayer funds so far in the financial crisis that Fed and Treasury officials say is the worst they have ever seen.
"Senior aides and lawmakers said the goal was to complete the legislation by the end of next week, when Congress is scheduled to adjourn. The legislation would grant new authority to the administration and require what several officials said would be a substantial appropriation of federal dollars, though no figures were disclosed in the meeting.
"Democrats, having their own desire for a second round of economic aid for struggling Americans, see the administration’s request as a way to win White House approval of new spending to help stimulate the economy in exchange for support for the Treasury request. Democrats also say they will push for relief for homeowners faced with foreclosure in return for supporting any broad bailout of struggling financial institutions.
"One model for the proposal could be the Resolution Trust Corporation, which bought up and eventually sold hundreds of billions of dollars’ worth of real estate in the 1990s from failed savings-and-loan companies. In this case, however, the government is expected to take over only distressed assets, not entire institutions. And it is not clear that a new agency would be created to manage and dispose of the assets, or whether the Federal Reserve or Treasury Department would do so.
"The bailout discussions came on a day when the Federal Reserve poured almost $300 billion into global credit markets and barely put a dent in the level of alarm."
Sid McSame, by the way, voted against creating the RTC and was involved in the Keating Five Scandal during the Reagan regime whose dergulatory policies made the S&L debacle possible and for which the American taxpayers were paying for 20 years later during the current criminal regime.
The Times continues: "The scale and complexity of the project are almost certain to create huge philosophical differences among the parties, which could make negotiations difficult to say the least...
(Will the majority Democrats again cave to Bush and the deregulatory Republicans?)
"But whether a legislative consensus could be found remained an open question, and members of Mr. Bush’s own party were among those who were most critical of the increasing federal intervention in private markets."
Absolutely no surprise there.
Meanwhile, Paul Krugman at the NYTimes offers a warning: "We don’t know yet what that “comprehensive approach” will look like. There have been hopeful comparisons to the financial rescue the Swedish government carried out in the early 1990s, a rescue that involved a temporary public takeover of a large part of the country’s financial system. It’s not clear, however, whether policy makers in Washington are prepared to exert a comparable degree of control. And if they aren’t, this could turn into the wrong kind of rescue — a bailout of stockholders as well as the market, in effect rescuing the financial industry from the consequences of its own greed.
"Furthermore, even a well-designed rescue would cost a lot of money. The Swedish government laid out 4 percent of G.D.P., which in our case would be a cool $600 billion — although the final burden to Swedish taxpayers was much less, because the government was eventually able to sell off the assets it had acquired, in some cases at a handsome profit.
"But it’s no use whining (sorry, Senator Gramm) about the prospect of a financial rescue plan. Today’s U.S. political system isn’t going to follow Andrew Mellon’s infamous advice to Herbert Hoover: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” The big buyout is coming; the only question is whether it will be done right."
Democratic leaders should remember that forewarned is forearmed and if they mess it up by caving to the Republicans their leadership positions and perhaps their seats may be kaput, courtesy of the Democratic base.
Comments