What's The Rush?
Chris Dodd, Chairman of the Senate Finance Committee is not going to be rushed into passing some bill written by Paulson on the back of a napkin in four days.
"I suggested strongly to him (Paulson) that he leave this door open, or he is going to find himself facing some significant problems," Mr. Dodd said at a briefing with reporters on Sunday at the Capitol. Mr. Dodd, who met with several of his Democratic colleagues, said that reaching a deal could keep Congress in session past this week, when leaders had hoped to adjourn for the fall elections. "This is of such import that if it takes a little longer to get it right, so be it," he said.
Dodd is not running for re-election and so he can continue to hold hearings right through October. The market players will try and spook him with 300 point down days, but as long as the hope of a bailout is out there, credit will not collapse. He should call the smartest minds in our country into an open hearing and come up with some regulations with teeth and some downside protection for the American Taxpayers. His colleague Jack Reed has already adopted my call for Warrants.
Senator Jack Reed, Democrat of Rhode Island, has proposed a provision that would grant the government warrants to purchase stock in companies that participate in the bailout plan, so that taxpayers might be able to profit should the firms flourish after selling their bad debts to the government.
Dodd and Reed cannot be bullied. I'm feeling better already.
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Dodd and Reed can't be bullied? I hope not but Dodd wasn't able to stop the FISA updates or telecom immunity so I'm not holding my breath on this. Wonder what Obama will do...
September 22, 2008 11:49 AM | Reply | Permalink
Have you considered the possibility that the bailout plan is a trojan horse? McCain appears to have no chance at all to be elected President. This means a disaster to the Republican fat cats who have been sucking up all of our national wealth under Bush. The financial industry is in the pits over the real estate bubble collapse. So, why not use the situation to get McCain elected?
It goes like this: Americans always rally around the President in times of crisis. We also hate to change parties in power when a crisis is underway, but all of the attention now being given to the election is revealing just how shallow and ill prepared McCain is. So, suppose we get the Democrats to pass a bail out plan that angers most Americans, and suppose McCain opposes that plan from the get go?
The crisis continues, of course, as it will no matter what is done or not done. But, now the public is angered at the Democrats for wasting a trillion dollars on a stupid bail out plan. No one is even talking about the election, being worried sick over losing all that we own. November we vote to rally around the Republicans, who, after all, didn't pass that stupid bail out, who will continue to "stay the course", and who will be our "daddies"? Result: Another 4 years for the wealthy fat cats to plunder the national wealth.
September 22, 2008 11:54 AM | Reply | Permalink
You mean our Democratic Senators (Dodd and Schumer) should be doing something other than Wall Street's bidding? My goodness!
Where do you expect them to get the money to build up the Democratic Senatorial Campaign Committee's war chest? We do want to keep them in their lucrative committee chairmanships, don't we?
September 22, 2008 2:59 PM | Reply | Permalink
Ellen,
as I said before;
This financial scandal happened because the Democratic Party has gotten too much like the Republican Party. From the Republicans we get "trickle down economics". From the Democrats we get "trickle down government." This might not have happened 40 years ago when the liberals controlled the Democratic Party. But today, Schumer, Clinton, Dodd, Biden, etc. aren't going to bite the hand that feeds them. I don't even trust Barney Frank anymore.
Both parties serve their masters on Wall Street; the bankers, fund managers, real estate investors, the credit industry, Insurance etc.
No solution to this problem will cause any angst in the finanical community. The Democrats will tell the Bush gang they need to make this "bi-partisan" so they will need a bone to throw to their constituents. The Bush gang will give the Dems some picyune help with people's mortgages or
some inconsequential tax cut and the Dems will fan out in television land and bloviate on the "Bi-partisan" wonders that have been accomplished.
But the people who caused this financial train wreck will pay nothing or next to nothing. The heads of Fannie and Freddie, Merrill Lynch, Bear Sterns, AIG, etc. will walk away with their ill gotten gains and never look back.
AND, look for a truckload of patronage in this package. I think this agreement will eventually make Jack Abramoff look like the Plutarch of Populism.
The "solution" to this tragedy will guarantee the sharks will be back in 10 years and it will be deja vu all over again.
In the words of that glorious paragon of integrity, Democratic Congressman Ozzie Meyers of Philadelphia;
"Money talks and bullshit walks."
September 22, 2008 6:39 PM | Reply | Permalink
Of course you're feeling better, the democrats are well on the way to destroying this deal and the economy with it. Enjoy the food line, idiot. The idea that a bank will 'sell' it's assets to the gov't for pennies on the dollar, then give up an equal dollar amount of their stock, is just insane. In effect they are being asked to just give away billions in asests. Sign me up for that, I'll take a few billion for free.
September 22, 2008 12:13 PM | Reply | Permalink
They are not being asked to give away billions in assets. They are asking the American taxpayer to relieve them of billions in liabilities. If the taxpayer does this, the taxpayer should be paid for it.
September 22, 2008 1:19 PM | Reply | Permalink
math ain't yer strong suit, huh bulldog?
September 22, 2008 3:15 PM | Reply | Permalink
If their assets are so valuable then the banks should keep them and their liabilites as well. The tax payer need not be bothered with a bail out at all. Then the banks can sell them for whatever the current market will bare. In other words nothing.
September 22, 2008 4:00 PM | Reply | Permalink
theCleverBulldog says:
The economy is already destroyed you UnCleverAsshole!. Its been destroyed by the Conservative principle of less government, less taxes, and less regulation.
The Democrats will hopefully become the opposition party again and try to save the economy while driving the final nail in the coffin of Reaganonomics.
September 23, 2008 10:50 AM | Reply | Permalink
I am not sure if this is a stretch but it would seem to me that one of the failures of the deregulation crowd and much of the Republican capitalist ideology over the last thirty years is a failure to have stable long-term strategies, economically and also in foreign diplomacy. They seem dedicated to spend as much as possible towards so that we use our military might but don't want to face the repurcussions which are inherantly attached to a governmental bureaucracy. Rather they transfer responsability to the private sector then fight like hell to limit their liability exposure. If anything they are taking the road of which lacks much integrity while at the same time the other side of their mouth froths about activist judges and trial lawyers, in my humble opinion.
But it would seem to me that the GOP has lacked long-term strategic thinking and so therefore with this bailout they are playing their usual game of offense, knee-jerk thinking, calling for speediness and haste, while the Democrats are asking for a more deliberate approach where they can see the consequences of their agreements between the Tax-paying public and Wall-street. How can the GOP ask us, the Tax-paying public to open our piggy banks to the same leaders who have lead us down this current path without the thoughtful, transparent, and careful deliberations?
September 22, 2008 2:25 PM | Reply | Permalink
I just scanned Dodd's 44 pages of legalese and my insta-impression is that he is playing good cop to Paulson's bad cop. We being played.
September 22, 2008 4:07 PM | Reply | Permalink
Emma,
the Democrats are now demanding some restraint on executive's compensation, a real winner with the vacuous public. I say:
"Wake me up when someone gets punished."
September 22, 2008 6:42 PM | Reply | Permalink
Emma ,I too scanned it last night and was greatly encouraged.
Instead of windy principles it's a document that could be acted upon. Dodd's put something positive on the table and forced Paulson to explain with what he disagrees.
I see the Krugmann now applauds it.
Ellen,
It seems to me that by the very act of drafting this mark Dodd has taken the sort of step you doubted he would take.
Now that it's out there not only must Paulson
explain his objections, Dodd himself must explain if he backs away.
September 23, 2008 8:45 AM | Reply | Permalink
Seems to me that Krugman and DeLong are patting themselves on the back a bit prematurely.
Dodd has already given away half the store --
1) agreeing to bail out foreign banks without requiring any participation by the taxpayers of the European Union, Switzerland, or Japan; and
2) authorizing Paulson (in consultation with Bernanke) to bail out hedge funds*.
Let's see what else he gives away before we celebrate.
* Definitions: "Financial Institution" -- "any other institution that the Secretary determines necessary to promote financial market stability."
September 23, 2008 9:55 AM | Reply | Permalink
Johnathan Taplin says:
Johnathan, I've been through too many disappointments by Congress to jump the gun here.
Much of what you're seeing is a dog and pony show, strictly for public consumption, wait till you see the finished product.
September 22, 2008 6:48 PM | Reply | Permalink
Apparently one improvement has already been made - the total is no longer $.7 Trillion, but $1.8 Trillion. In a couple of days they will be talking about some real money.
Whoever believes the Democrats will refuse to assume the position for longer than two more days, please......assume the position.
September 22, 2008 8:11 PM | Reply | Permalink
hoppy,
trying to find someone in the public and private sectors who represents the public first is the most difficult task I ever undertook.
What we're going to get here is "supply side Government". After the cretins who caused this debacle are consulted and taken care of, the public will get the crumbs that fall from the table. (read the fine print of the final agreement)
You don't have an opposition party anymore.
September 23, 2008 9:15 AM | Reply | Permalink
JohnW- I understand that you-and many others- object to the whole idea, but I don't agree that no one is representing the public.The Dodd mark represents that part of the public who ,like me, feel that in principle a Bail Out is justified provided the terms are in the public interest.
Take a look at it. Brad deLong has it on his blog. Like Krugmann, Brad likes it.
September 23, 2008 9:21 AM | Reply | Permalink
I should add, if it were the Paulson draft or no Bail Out, then I say no bail out. That also goes for the Paulson draft with a little lipstick on the pig.
September 23, 2008 9:23 AM | Reply | Permalink
flavius,
wasn't there once a principle called "Fiduciary responsibility"? If so, what ever happened to it?
When I see individuals, the cretins that made millions from this debacle, being punished somehow, then I'll know there are some in Government representing the public. But I see no one looking that deeply into this fiasco, no one directing their anger at individuals, and that tells me this shit will happen again.
September 23, 2008 10:40 AM | Reply | Permalink