Well…I suppose the Democrats need to start from scratch now rather than using anything emanating from the Treasury Department. Nothing that smells too much like the Paulson Plan is likely to fare any better than this bill did. We still are staring at the Republican filibuster in the Senate, which means we’re still quite limited in what we can hope to do. The Democrats are in a minefield. The path of least resistance may well be to craft something that can win over House Republicans. But, at the same time, there is a considerable wedge available between the Senate Republicans and the administration, and the House GOP. Finding the seam there will take expert statescraft.
If not for the filibuster, this would be an easy call. Appease some of the 94 Democrats in the House and pass a take it or leave it bill. That may still be the answer. I advocate an approach that seeks to force a Republican filibuster over the administration’s objections. But, for me, this has entered into truly perilous ground. And some very irresponsible people are to blame. No one is more to blame than Paulson, who never, ever should have sent his 3-page plan up to the Hill. There was no recovering from that.
Name names on irresponsible people.
yes, name names.
the first one should be Bush, who has spent 8 years lying about everything and made it impossible for “better democrats” to trust him.
The next should be the list of GOP lock-step loyalists, who discarded integrity for short-term political gain (walater smith, the freedom fries guy).
Next are democrats who decided that being an oppostion party was too hard.
Semi-serious question: if Americans could do a grey davis/california-style recall vote, how many of our congress critters would be left in DC?
In no particular order:
#9 helps explain all the others
Pelosi just spoke. Not once did she mention that the bill is enormously despised by voters. To her, the bill didn’t pass because the Republicans couldn’t get enough votes. But the fundamental reason that the bill didn’t pass is that Republican congressmen listen to the people who elect them more than Democrats do.
And she said that “the President” told them that the crisis is very serious. She is so out of touch! The American people don’t care what Bush thinks.
These Democrats on MSNBC are talking as if there is no such thing as voters; just Washington, DC. Four Democrats have spoken, and not a single one has mentioned that voters are against the bill.
No, Republicans found an opportunity to distance themselves from W and they took it. They don’t really care about America.
I didn’t say they care about America. They care about their seats. They are less confident about being able to endlessly hoodwink their constituents than Democrats are.
nope, all the blame goes on the Republicans, if you do a little research over a big orange. The Republicans were looking for Congresman who would retire to vote for the bailout. Because the Republicans found this as a great opportunity to distance themselves from W.
I say defund the Iraq War, and see how much the Republicans care about spending.
But isn’t the reason that Republicans want to distance themselves from W is because they care about their seats?
I agree. Now we’ll maybe see a real plan like many of us have been talking about.
Consulting a few economists would be nice, for example. Ones that aren’t named “Henry Paulson” and “Ben Bernanke” for instance.
The ideas outlined in Alexander’s recent diary seems like a good place to start, as does Roubini’s ten-step plan that includes a modern version of the HOLC to directly assist American consumers with debt.
I have to admit, DeLong, Krugman and Roubini in a room together for 10 hours would be a nice plan to start from.
I would keep Krugman out. He didn’t come out and write in his blog (as opposed to say in an interview with Amy Goodman) that a plan that used temporary nationalization would be better than Paulson’s plan until the plan was basically finalized yesterday. (But to be fair, at least he didn’t wait until after today’s vote. He said the bill should pass, but that’s a judgement call, so I don’t hold that against him. But come to think of it, since he said the bill should pass, I don’t think he has the required single-mindedness to come up with a good plan.) And he’s still presenting the issue as if only a few economists prefer nationalization, whereas actually there’s pretty much a consensus among economists about that.
He’s a major messenger to the public about how economists think about things, and he did a very poor job on the bailout, equivocating in typical NY Times fashion. He didn’t have to hide behind Brad DeLong’s skirt to argue in favor of nationalization. What we have is a solvency crisis, and all economists know that the standard way to deal with a solvency crisis is through nationalization. The Paulson plan is just typical Bush crony-motivated idiocy, and the American people, from bitter experience, realize that.
Chris Todd just said on MSNBC that the reason the bailout bill failed is that the American people don’t trust anyone anymore, meaning I think anyone in the Bush administration and the Democrats who collaborate with it.
No we need to consult the business community, not economists.
We ain’t got time for that.
Wait for the lay offs over the next few days. The markets are frozen. Over 700 points off the Dow, just think, and short selling on 800 companies not allowed.
Is that snark? The relevant businessmen to consult would be ones working in the finance industry, like Paulson, and they’re exactly the ones who got us in this mess in the first place. What we need is people who have historical knowledge of how these kinds of crises have been dealt with in the past, and the “business community” doesn’t have that kind of knowledge.
cut off the remaining blood flow then.
The credit markets are frozen and will do the shoving. Banks will be cutting lines of credit and credit card limits so you won’t be able to buy or charge anything….and no money at the ATM, or get paid, buy gas to get to work either. It’s a plastic card ATM society.
It was a flawed Bill but the market is fragile. One trillion wiped off. And you’ll never get a perfect Bill. That’s a dream.
What of the baby boomers and 401Ks.. pensions…and people losing their jobs. This is not just a Wall Street rescue.
Six months from now, there’ll be CONSEQUENCES for these delays. OTC derivatives are ripping at the seams of global financial institutions. the same OTC derivatives created and exported by U.S. This spectacle today does not elevate. Investors will be more reticent to lend us daily funding.
Nouriel Roubini writes that Goldman Sachs and Morgan Stanley are shaky and should merge with a foreign bank ASAP (“no US institution is sound enough and large enough to be a sound merger partner”).
Ten years from now, the markets will be back, higher than ever. And, no, I’m not being blase about this. I’m only three years from full retirement, so my IRA dropping 30% is of enormous concern. But not to the point where I will believe Bush or any Bush appointee. This is a trickle down solution. We need a base up solution.
Dow is over 720 down as I write. Over $1 trillion wiped off.
We’ll soon see that
Wall Street affects Main Street
The coffin is there. It’s filled with what’s left of the ashes of our economy.
Those who rejoice in the failure of that bill should note that the subhumans at Free Republic.com are rejoicing also. These are the grassroots with whom the nay-saying scum in House are supposedly so well in touch.
Enjoy the global depression.
Ceterum censeo Americanem esse delendam.
And you should also note that the Dem leadership is siding with Bush and Paulson and the other criminals that got us in this mess.
That wold be you and you conservative Dems that always side with corporate Republicans.
Please. You conservative Dems are the subhuman scum that have created this problem.
You are Bush’s yes men. Bush’s lackeys. How dare you blame the nay votes for this mess.
It’s all on you and Bush. You guys sold out America to our corporate overlords. Don’t try to play like you’re a responsible steward of the economy when you side with Bush to “fix” our economy.
That’s your problem.
Hey SFHawkguy, tellus how you really feel! 😉
I largely agree with you by the way, except for the fact that I believe a good portion of those GOP “nays” were to tie this one on the democrats’ necks.
The GOP naysayers have their own political motivations to be sure. As does everyone. This whole thing is injected with politics and confusion; that’s the intention. It’s Bush financial weapon of mass destruction. Bush is very effective at blowing shit up and turning the most serious matters into the worst form of political “debate”.
Lol. I’m not even part of your bizarro shithole country, so you’re barking up the wrong tree there.
The politics are bizarre. People seem to be jumping from bedfellow to bedfellow and in the end we have all caught herpes.
But I find it crazy and disheartening that so many progressive are still being manipulated by Bush’s acts of political terrorism. You and Booman are focusing your anger on the wrong target: progressives voting nay on this bill. Giving in to Bush on this bill and letting him lead the national debate on how to “fix” the economy are the real crimes in all this.
The United States is not the only country that will act crazy during the global recession. But remember that Bush is still in control of the military and he has one more card up his sleeve that he could play if he chooses.
That’s why I’m so worked up. I see the worst coming out in American politics and even objective outsiders like you would rather give in to Bush’s financial terrorism.
You ought to check yourself. By your definition, Maxine Waters is a gutless corporatist.
She’s confused, or scared, or I don’t know what. It’s confusing for a lot of us.
We haven’t had an honest political debate about economics for a long time. We don’t even know how to do it anymore.
You want the government to scurry around and throw 5% of our GDP at financial firms to prop up the stock market. That appears to be your argument now. The goalposts and justifications keep moving; just like every other Bush snowjob.
Once again. You are standing with Bush against the American people on this. That’s what you should be recognizing instead of focusing on the fact that liberal progressives found common ground with libertarians and some conservatives. I think it’s actually a much closer fit than you imagine and we may be seeing more of it. Progressives only other option is joining up with Bush conservatives and his enabling conservative Democrats and that option is not any better.
Today you were on the stinky side of this vote–voting for Bush’s plan and against progressives.
Roughly half of the progressive caucus voted for the bill.
We haven’t had an honest political debate about economics for a long time.
Economists don’t have honest debates about economics anymore, either, for related reasons. For example, they are ignoring that the level of debt in this country is crazy, and accept from the ruling elite the assumption that the US can continue to run huge trade deficits indefinitely on account of the dollar being the international reserve currency. (I think they can be trusted on how to deal with the financial crisis, however.)
The party is over. We can no longer rule the world. I don’t see how the rest of the World can continue to finance this Ponzi scheme.
And I have very little hope based on the way this bailout legislation has happened. The “stimulus” package from the Spring was a similar boondoggle.
The government will flail around making a mess to try to prop up the stock market or keep home prices inflated. It’s going to be a mess.
I am surprised you would take that position given the fact that you generally side with the progressive element.
Care to explain?
Don’t know about you, but averting the 1930s Redux is progressive enough for me.
Oh, come on, Sirocco. The greedy bastards are losing money. Why can’t you applaud?
Why not give the 700 billion to home owners?
which one’s? How much do they get?
I’d love to hear some of these people explain their votes.
What I really don’t get is why the blue dogs split. What’s up with the blue dog noes like Stephanie Herseth? They are usually safe votes for anything Bush wants. I don’t see her voting with the repubs for pure obstructionism, nor voting with the progressives who want to screw wall street harder.
What I really don’t get is why the blue dogs split
Dude, think for a second about why the blue dogs vote along side Bush.
They don’t do it because they think he’s a hero, or because they love him to pieces, or because he gives them sexual favors.
They do it because they come from districts that are conservative. And the folks in their districts are closer to Republicans than to other Democrats.
Now, think about how the non-Wall Street financier Republican voters are feeling about this bailout and which members of the Democratic caucus are in the shakiest positions for losing their seats.
Folks like Frank and Pelosi are relatively safe. Folks from conservative districts far from Wall Street – like in South Dakota – are walking a fine line here. No wonder they’re voting like Republicans.
frank was very much in favor of this.
Bailout was kryptonite for vulnerable House members
Frosh Dem Gillibrand explains nay vote
It’s totally in the Dems’ court now. The GOP made itself irrelevant when it only got a third of its House members to support a bill that its president was desperate to get passed.
The Dems surprised me by pretty much sticking with their principles and turning Paulson’s nonsense into something that I could have lived with. Now they have a huge opportunity to own the economic recovery solution by presenting a credible plan that is perceived as fair and effective. I think they have to accomplish 2 things:
— Offer a plan that reflects liberal/left views about the rightful role of government and rejects Reaganist dogma based on the illusory “wisdom of the market”. The plan has to clearly address the whole economy, not just the financial industry.
— And yet keep it slimmed down to the bare essentials, rejecting the temptation to load it down with goodies for every splinter of the coalition. Leave efforts to micromanage until next year. If they succeed with a minimal bill now, they’ll have the leverage next year to do much more to bring economic justice closer to reality.
The Dems’ job now is really communication. They need to show the left that something has to be done, and that their new plan addresses the perceived flaws in the one that just failed. I don’t think it would take very deep changes to accomplish that but the initiative has to come from them, not the administration, and not “centrists”. This is no time to buy into the non-partisan bullshit. Now is the time for the Dems/liberals/left to do some teaching about how this crisis is the direct result of Bush/GOP ideology, and how Dems intend to do things differently.
I think if they come up with a proposal that ideological Democrats recognize as their own, they can get it passed with only a few GOP votes. Dems are now in a position to flay Republicans for standing by while the economy crashes. By creating an answer that grows out of traditional Dem principles as expressed in the New Deal, they have a chance to do historic service both to their country and their party.
The Dems surprised me by pretty much sticking with their principles and turning Paulson’s nonsense into something that I could have lived with.
They stuck to their “principles”, but not in the way you mean:
Congressional Charade: Changes in Bailout Bill Cosmetic, and Everyone Knows That
If not for the filibuster, this would be an easy call. Appease some of the 94 Democrats in the House and pass a take it or leave it bill. That may still be the answer. I advocate an approach that seeks to force a Republican filibuster over the administration’s objections.
I advocate this approach.
Actually, I’d go further. Because in a few days to a week or so we’ll be able to tell first hand if Bernanke panicked or if his predictions of doom-and-gloom were accurate.
If they turn out to be accurate, we’ll be in a true financial panic by next week. Which means that the voters are going to turn on a dime and demand that “something be done.” At that point I’d hope that the House is smart enough to wheel out a plan based on the Swedish model or on Roubini’s ten point plan. And, if needed, pass it with solely Democratic support at this point.
Then send it to the Senate. And if the Republicans want to filibuster it then by all means let them. But if I were Reid I’d be damn sure to make them filibuster it for freaking real – make them stand at a podium all night long giving speeches. That would actually stop them from filibustering it immediately, I would think, because hot damn would that get folks mad. If Reid can’t force the filibuster issue, then he needs to take to the airwaves and just say “look, they’re filibustering, and we can’t go forward with anything until they give us enough votes for cloture – they don’t even have to vote for it, just give us an up or down vote.” They’d fold if we were in the middle of a financial crisis – the Senate is more owned by Wall Street than the House is.
Then send it to Bush. Take it or leave it. Let the world crumble or sign this damn thing. It’s your only option because your damn party is fucking broken, and so you have to let the adults take over.
He’d sign it. He’d probably be crying when he did it, but he’d sign it.
OTOH – if things don’t get that bad over the next couple of weeks, then Bernanke was screaming Chicken Little after all. I don’t think this is a likely possibility from what I’ve read so far, but I suppose it could be possible. If so then doing nothing until the new administration is in place is the right course to take anyway. Not only for a better deal, but hopefully Obama would appoint a better Treasury Secretary than Bush has. (I’d also ask Bernanke to tender his resignation if I were Obama in this case – the President can’t fire him, but he could request a premature exit. And if Bernanke was contributing to a Chicken Little panic while sitting at the head of the Fed, he should be gone.)
We’ll see. Either way, I wouldn’t want to be one of those House GOPers who voted No on this if it actually does turn out to bring about a credit crash. They may think this was good politics, but if it turns out to be a credit crash they’re going to be hurting.
Then send it to Bush. Take it or leave it.
Sure that’s the thing to do. The Democrats would need to change their DNA to do it, though.
Does anyone think that this would be a good time for Obama to start talking about a new plan? It would make sense. The public understands by now that the economy needs fixing. And we learned today that public distrust of the current order in Washington is sufficiently strong to stop a stupid Bush-style approach to the problem.
I think the public yearns for a leader to guide us out of this mess. Obama is well positioned to play such a role. Will he rise to the occasion? So far, we haven’t seen much indication that he will, but you never know.
On a related note: even people in the American Enterprise Institute have been arguing in favor of a plan that deals with the financial crisis through nationalization. That suggests that if things get sufficiently bad, even a Republican administration could follow that course.
Well, Alexander, I agree with you for a change.
Yes, we need leadership, not caution. McCain understands this. He’s just to stupid/brainwashed to give the right leadership. At the Academies they teach you that in a crisis a leader MUST give orders, even wrong orders. The worst thing to do is to let your troops think you haven’t a clue or are indecisive. Order and discipline will dissolve and be replaced by panic.
Obama has the brains and the instincts to find a solution. But does he have the cojones? That’s what this crisis will tell us.
That’s “too stupid”, not “to stupid”. Mrs. Caldwell, my third grade teacher would be whacking me with her ruler now.
Obama, hello?
Right — how about talking to a few economists whose names are not “Paulson” and “Bernanke” — how about Roubini, Zingales, how about this by Robert Reich.
http://robertreich.blogspot.com/2008/09/bailout-of-all-bailouts-is-bad-idea.html
The nice thing is that Reich, at least, is one of Obama’s advisors.
“No one is more to blame than Paulson, who never, ever should have sent his 3-page plan up to the Hill. There was no recovering from that.”
That is right, Boo. He ought to take a long walk on a short pier. They thought they were so clever waiting till the last minute then coming out with an ultimatum that was more draconian then even they really wanted, thinking they could scare the hell out of everybody and make ’em feel better by accepting some cosmetic tinkering. Well they scared the hell out of everybody all right. After that, it was all — you should excuse the expression — putting lipstick on a pig. All the energy of congress was focused on that, in panic mode, instead of a real plan that actually addresses the causes of the problem and puts in actual regulation. Well, that’s the only thing they can do now that makes any sense.
This is a classic case of what my mother used to call “cutting off your nose to spite your face.” Only in this case, the face is all of us. Dogmatic right-wing Repugs and idealistic and naive lefty Dems forge an unholy alliance and the whole global economy goes down in ashes because of their immaturity and selfishness and demagoguery. This is no laughing matter, and anyone who is happily gloating about some “victory” for having defeated this bill is demonstrating a gross lack of A) understanding of global finances and B) a disgusting disregard for how this will inevitably hurt millions and millions of families here and abroad. Look at the Dow. Don’t you think that matters???
Here’s the statement from my former representative, Congressman Bart Stupak, one of the ‘No’ votes on the bill. While there are some very important issues on which I disagree with Stupak, I think overall he is one of the good guys. Anyway, it makes for an interesting read.
It is alleged that Secretary Paulson changed his mind because his former employer, Goldman Sachs, was AIG’s largest trading partner and its collapse threatened to leave Goldman Sachs with a $20 billion loss.
Just days earlier, the failure of global financial services firm Lehman Brothers became the largest bankruptcy in U.S. history, sending global markets into turmoil. The Secretary refused to assist Lehman Brothers, Bear Stearns and other distressed financial firms.
By the end of that same week, the Treasury Secretary came to Congress with a two-and-a-half page, $700 billion bailout proposal for Wall Street, insisting that the White House proposal must be implemented immediately to avoid a severe financial crisis.
It was against this backdrop, that Secretary Paulson and Federal Reserve Chairman Ben Bernanke insisted Congress grant the administration unprecedented authority and power, essentially asking elected officials to handover the keys to the U.S. Treasury allowing political appointees, like Secretary Paulson, to determine which Wall Street financial institutions would receive hand outs. As greed ran amuck, there was now panic on Wall Street.
It came as quite a shock that Paulson, Bernanke and President Bush – the same men who have for the past year continued to insist our economy is sound and that it would survive the subprime mortgage crisis – were now asking Congress for government intervention unprecedented since the Great Depression. Like many of my colleagues, I did not trust their gloom and doom forecast and wanted time to review the proposal before adding $700 billion to our national debt.
For 10 days, Democrats and Republicans worked with the Bush Administration to craft H.R. 3997, the Emergency Economic Stabilization Act of 2008. I compliment members of both parties involved in these negotiations for their hard work and willingness to compromise to produce a much improved proposal.
I have heard from thousands of my constituents across northern Michigan and have reviewed their messages, emails and letters. My staff and I have reached out to banks, credit unions, small businesses, economists and many constituents across northern Michigan. Most people sensed the urgency of addressing the financial crisis but had many more questions than answers.
While the debates raged over what Congress should do, a consensus on four main principles emerged: there must be transparency on the purchase of troubled assets by the secretary; no windfalls or golden parachutes should be provided for executives; Congress must provide strong oversight; and the taxpayers must be protected. H.R. 3997 falls short in all of these areas.
The bottom line is Wall Street executives enjoyed lavish lifestyles and exorbitant salaries while making risky real estate and mortgage investments. Many of these financial transactions were unregulated and no one exercised oversight of these markets or these individuals. Now the American taxpayer is being asked to bail out Wall Street for such things as NINJA mortgages. NINJA mortgages are those granted to individuals with no income, no job and no assets.
You don’t have to look very hard to find the excesses Wall Street executives continue to enjoy. On September 25, Washington Mutual became the largest bank to fail in U.S. history. Its CEO has been on the job less than three weeks and stands to walk away with $18 million, including a $7 million “signing bonus” just for taking the job. Last year, the CEO of Merrill Lynch walked away with $161 million. The CEO of AIG was offered a $22 million severance package on the heels of the government bailout, but declined to accept it after considerable public pressure. Treasury Secretary Paulson, himself a former chairman and CEO of Goldman Sachs, received a $38 million compensation package in his final year with the company and had a personal net worth of more than $500 million when he became Treasury Secretary!
Although $700 billion is the number being attached to this bailout, even the Treasury Secretary acknowledges the number is arbitrary and was chosen to show the financial markets the U.S. government was serious. No one can tell us the total cost of the bailout, what the taxpayers are being asked to purchase or even if the infusion of $700 billion will solve this financial crisis.
My review of H.R. 3997 shows that the limitations on Wall Street executive pay and golden parachutes only apply if a financial entity receives $300 million in government help; this $700 billion bailout raises the national debt to $11.3 trillion; taxpayers will have no way to recoup the interest on the $700 billion bailout; taxpayers will have to pay for the administration of this bailout; and finally, no one can tell us where or how the United States will come up with $700 billion.
I am concerned $700 billion is just the beginning and additional billions of dollars will almost certainly be necessary. The bailout is likely to go on for more than five years and over that time I fully expect corruption and criminal activity will be found on Wall Street and, sadly, no one will probably be held accountable to the American taxpayer.
I cannot ask American families – who work hard, play by the rules and struggle to meet their own financial obligations – to bail out Wall Street executives for their reckless, lavish lifestyles.
For that reason, I voted “no” on H.R. 3997, the Economic Stabilization Act of 2008. This bailout does not represent our northern Michigan values and it rewards excessive financial shenanigans without any accountability for these irresponsible actions.
The $700 billion bailout failed in the U.S. House of Representatives by a vote of 205-228 on September 29. I expect to be called back to Washington in the coming days to consider an alternative package. I will examine that alternative proposal closely to see that it addresses the concerns I have raised. Congress will do what is necessary to stabilize our economy and restore confidence in the financial markets, but will ensure that protecting the taxpayers is priority number one.
I wish he was my Congressman.
A conference call the Treasury had with analysts has been unearthed. I think the most important revelation is this:
That’s significant because I had been hoping that only $350B would have gone out by the time an Obama administration came in, so that another $350B could have been prevented from going off into the Canary Islands or wherever.
until we get a new administration.
A Bailout We Don’t Need
This is James Galbraith’s column in the Washington Post. Do Pelosi, Reid, and other congressional Dems read the Washington Post?
I’ve updated my diary on an alternative rescue plan to reflect this, with a little more explanation.