As more and more information becomes available about the meeting yesterday at the White House and the Republican revolt against the bailout plan, it is more and more obvious that political gamesmanship is what has occurred during his week and not any kind of “successful negotiations!”
It first appeared that John McCain’s announcement to come to Washington had caused the Democrats and Republicans to find a compromise. I thought that’s what had happened when Chris Dodd announced about noon yesterday that an agreement in principle had been reached.
It appeared then, that the White House meeting would be nothing more than a bunch of handshaking and self congratulations amongst the Washington political leadership from both sides.
Instead, according to various articles, Republicans announced that they were not supportive of the amended proposal and argued for a different plan.
How do I know that the entire negotiation was just a political manuevering? This quote from an article by the “News Agency Who Shall Not be Named:”
The Massachusetts Democrat said leading Democrats on Capitol Hill were shocked by the level of divisiveness that surfaced at Thursday’s extraordinary White House meeting, leaving six days of intensive efforts to agree on a bailout plan in tatters only hours after key congressional players of both parties had declared they were in accord on the outlines of a $700 billion bill.
(emphasis mine)
How do you negotiate one of the largest, market impacting deals ever, announce you have a “deal in principle” and then get “shocked by the level of divisiveness?”
Simple, the “negotiated” plan was never negotiated. As the Dems have done time after time, they decided what they wanted to do, found a couple of invertebrate Republicans to pick off to perform ventriloquist acts with and announced “an agreement in principle” that never, ever was agreed to.
The Dems are now grousing that without Republican support, they won’t pass the bailout bill! Why not? If they’re so sure that what they’re doing is the right thing, do it! They have the votes in both chambers and the support of the President. Nothing prevents them from passing their bill immediately!
Nothing that is except for a complete lack of leadership and spine. The Democrats are great at sniping and Monday morning quarterbacking but don’t have the courage of their own convictions when real leadership is required!
We haven’t dragged this out for a while but it seems appropriate. This is a video that describes what the Dems believe leadership to be:
It’s time for some leadership. The public has not been convinced that a bailout needs to occur. Someone needs to chart a course of action and convince both Congress and the American People that it is the right thing to do. If John McCain and Barack Obama want to be the next President, now is the time for them to show their ability to lead. I’m still convinced that this is the gunfight at the OK campaign.
Americans are hungry for leadership on this issue. Will we find any leaders, anywhere, in Washington?
I am one of those that needs to be sold on a “rescue” package, especially one that puts into the government’s hands trillions of dollars of real estate less than 116 days before, at least potentially, an unreconstructed Socialist takes the oath of office to become President. If it were 2005, or perhaps 2006, I would have a lot more faith that this would follow the Resolution Trust Corporation playbook, with the government only holding onto the troubled assets until such time the private market has recovered enough to reabsorb them.
One thing I haven’t really seen discussed; how much in “distressed” loans are we talking about? I recall seeing something on CNBC during the noon hour yesterday putting the $700 billion in up-front costs at about 5% each of total market capitalization and total value of real estate, but I know enough that since we’re talking about “distressed” loans, those loans will be bought at a fraction of the value of the loan.
Oh, I’m with you. I still can’t tell what the right thing is. I know damn sure that all the crap that has been put into this bill doesn’t need to be there. If you think this is the right answer than do it but you don’t need to feather the nest of Acorn, force renegotiation of mortgage terms etc. If you think those need to be done, deal with them separately.
Yes, I’ve heard the $700B is 5%. I’ve heard that the estimate is that the loans would be bought anywhere from 10% up to 40% of par. That seems like a really big range but could be true. Paulson originally said he wanted to pay nearly par for the loans. That had me rigid against the approach. Brhenanke later said it would work via an auction…that makes me more hopeful.
The net of all of this is that there doesn’t seem to be any other options being discussed other than doing nothing. Nothing so far, has not been a solution. Of course the guys who told you that Bear Stearsn, Fannie and Freddie and AIG would work…and haven’t, are also telling you this is needed.
It’s a tough issue which brings me back to my final point…someone needs to show leadership, propose a course and make it plain to the public why that course makes sense. That hasn’t happened yet.
I haven’t checked the details of the House Republican plan yet (I should because Paul Ryan’s the main sponsor), but from what little I know of it right now, it’s more of an insurance plan than a direct purchase.
With a straight bailout, we’re talking about government assuming ownership of between $1.75 tillion and $7 trillion of assets. Given that, combining real estate and stock market capitalization, there is something around $30 trillion of publicly-purchasable assets, that is a staggering amount of assets that suddenly jumps into the government’s grasp.
I just heard Boehner. Yes, sounds like an insurance plan. I’m not sure how that helps as I thought that the bulk of these bonds were insured. Isn’t that why MBI was having so much trouble a while back? I’m confused!
Judging from the release from Ryan, only about half of the of the MBS are currently backed by the federal government. The plan would allow the feds to back the other half, with premiums paid by the holders (slight problem; they don’t have the cash to do that).
In order to free up that cash, as well as cash to restart the credit market, there would be as-yet-unspecified regulatory and tax relief.
As with any Dem proposal I’ll side with Groucho.