The SEVEN HUNDRED BILLION DOLLAR bailout deal is cratering? No worries mate. Conservative Republican Superheroes in Congress have a new improved plan to solve all our financial woes. And I’ll just bet you can’t guess what they propose to do to save the day. Okay, you’re right. I’d lose that bet.
A group of conservative Republicans in the House on Thursday proposed a financial rescue package of tax breaks and a new government-sponsored insurance program for mortgage-backed securities as an alternative to President Bush’s proposed $700 billion bailout of Wall Street.
Instead of the government buying the toxic mortgage securities, banks, financial firms and other investors holding them would pay premiums to the Treasury to finance the insurance coverage. […]
The GOP plan, said House Financial Services Committee Chairman Barney Frank, D-Mass., is “a mortgage insurance approach that Secretary Paulson said does not work.” […]
Robert Litan, an expert on banking and finance at the Brookings Institution, called the framework unworkable, saying it would not achieve the basic goal of creating a market – and establishing prices – for mortgage securities no one’s willing to buy.
“Everything depends on how you value the security,” Litan said. “If you do the deposit insurance scheme, there’s nobody out there to know what the right price is.”
Their plan also includes “temporary tax cuts and regulatory relief for businesses” Which has worked so well in the past to fix our economy. Not.
And guess who’s behind this ludicrous alternative plan as a means of sabotaging the negotiations between Congress and the President? Can you say Johnny “POW” McCain? I knew you could:
Senior Democrats said they came away from the afternoon White House session with the impression that McCain was backing an entirely new Wall Street rescue plan, one differing markedly from a Bush administration proposal under discussion for days.
Massachusetts Democratic Rep. Barney Frank, chairman of the House of Representatives Financial Services Committee and a participant in the White House gathering, said negotiations could be set back by the confusion.
“House Republicans, in some kind of arrangement with McCain, went off to wherever. I don’t know whether they’re ready to negotiate this. Their thing was some totally different mortgage insurance plan … that would clearly delay this for a week or more,” Frank told reporters. […]
Speaking after a meeting of House Democrats where lawmakers were briefed on the White House meeting, California Democratic Rep. Henry Waxman said McCain appeared to have embraced the proposal from Cantor, Hensarling and Wisconsin Rep. Paul Ryan.
“It seems like (McCain) embraced Jeb Hensarling’s position … It’s a completely different approach,” Waxman said. “It’s hard to imagine where we go from here.”
Frank said his committee held a hearing on Wednesday where witnesses included Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, the two officials who have championed the Bush administration’s massive bailout plan.
Frank said Hensarling attended the hearing as a committee member, “but he never mentioned an alternative plan.”
Senate Majority Leader Harry Reid said he was “a little stunned” when he heard talk at the White House about a completely new plan drawn up by House Republicans
McCain’s campaign denies he has backed any plan, yet, but this smells like a doublecross to me, and we all know Steve Schmitt, McCain’s campaign manager is a Rove protege who cares more about winning elections than doing what’s best for the country. This so called plan (outlined on a one page handout given to reporters) is a mere election year ploy so these conservative Republicans and the McCain camp can run campaign ads blaming Obama and the Democrats for not taking action on “their” bailout plan, which they will claim would have cut your taxes.
It’s cynical, its a non-starter with the Bush administration and it has no basis in reality much less any chance of successfully stopping the financial sector bleeding even if it could be passed. Just one example of how ridiculous this approach is: how do you know how much to charge a bank for this insurance program when you can’t evaluate the value of the asset because you don’t know the default risk of that asset? The answer: you can’t.
In other words, this is a a typical right wing Republican solution. A gimmick that places party before country. Expect its proponents to get lots of airtime on the cable news shows, however. After all, these are very serious people with a “plan” to save the world. The fact that they are playing games with your financial future: Priceless.
Yes, but its hard to blame the Democrats for not supporting a plan even Bush doesn’t support. It just shows up how divided and clueless the GOP are – and that they are incapable of Governing. McCain doesn’t know which way to turn right now whilst Obama has at least looked as if he is trying to support a bipartisan approach. It’s great for Obama that he doesn’t have to sign up to a plan that is deeply unpopular with voters whist at the same time the GOP are blamed for the inevitable market collapse.
Yes, but . . .
This is part of the Republican strategy for the election. It lets them run against both Bush and the Democrats. A twofer. They’ve been looking for a way to distance themselves from Bush’s unpopularity for months. Now they have one.
The fact that it shuts down negotiations on a deal to calm the markets? They could care less.
Aye, was talking about this yesterday. It’s a pretty good plan politically. It’s financial suicide, but it’s politically brilliant.
Not only does it allow them to run against Bush and Nancy and Harry, it allows them to run “against” Wall Street as well.
Steven is right however, this is what we should have expected from the GOP: more of the same sold under a fantastic lie (in this case “Wall Street pays for it”) by the noise machine, and they are counting on the Dems folding once again just like they’ve been doing on everything else.
McSame will swoop in when the time is right and back this bold plan.
Obama’s got maybe one day to stop it. This morning on NPR I heard Barney Frank playing right into the GOP hands, complaining of the “House Republican revolt against Bush.” The narrative is turning into the “Bush-Pelosi-Reid bailout plan versus the Republican alternative” at lightning speed.
Methinks that was the plan all along.
Ultimately there is no substitute for Obama coming up with his own plan that is neither Bush nor wingnut. But does he have the balls?
He has the plan, the balls, and the opportunity (tonight). Let’s see what he does. Take a look at my three links to Robert Reich (one of Obama’s chief advisors) in comments to the following post (“Bailing Out the Bailout”). I expect Obama will come out with something close to what Reich’s been saying the last few days.
Robert Reich (one of Obama’s chief advisors)
Can you provide a link that says that Reich is a “chief advisor” with Obama?
The name I keep hearing is Robert Rubin – who I don’t trust. His Goldman-Sachs, pro-deregulation ass is part of the reason we’re in this mess. Only part, but still – I’d feel much better if I knew that Reich was being given more credence than Rubin in this matter.
Yes.
http://www.pbs.org/nbr/site/features/special/subdir/economic-choices-2008_obamas-economic-advisors/
Obama’s up to speed because he’s been conferring with these guys for the last two months, not just the last week.
http://www.godlikeproductions.com/forum1/message578909/pg1
http://www.dailykos.com/story/2008/7/28/7202/73828/272/558055
You’re right he does have Rubin and Volcker too, but Obama’s obviously a guy who likes to hear more than one kind of analysis so he can make up his own mind.
Reich does not have a degree in economics; that’s probably a good thing.
Christ, haven’t we had enough testosterone based leadership the past 8 years?
Dems need to walk away from this for two reasons:
1. This is Repubs devouring Repubs. Why do we need to get in the middle of this family tussle…in the end, they can do nothing without us.
2. McCain wants to ride into Oxford with a plan in his hand to tell Jane and John Q. that he busted some ass and got a deal done. If Dems give him that opportunity, I might just sit out the election. Talk about bailouts! It would give McCain the cover he needs to save face in Oxford.
Look, right now McCain is facing two very poor choices. He can go to Oxford, even though there is no framework for an agreement, or he can not go, and give Obama 90 minutes to explain to the public what the Dems are going to do, in spite of Repub opposition, to bailout the economy (no more mention of Wall Street bailout.)
In the end, why not pass a $50b bill that provides short-term economic protection that allows us to get past the election. It is the cloud of the coming election that casts a huge shadow over this circumstance.
“Yes, but its hard to blame the Democrats for not supporting a plan even Bush doesn’t support.”
Unfortunately, by the same token, it’s easy to blame the Democrats for supporting a plan that even Bush DOES support. You see, Bush is not all that popular.
How can a hero like Johnny Mac even consider a debate when such weighty proposals to save the universe need hashing out?
The Yahoo Finance guys smell what the Maverick is cookin.
Obama needs to have that better bailout plan, and he’d better have it tonight.
Zandar, I believe within the first 24 hours of the development of this “crisis” nearly a week ago I saw a number of predictions around the blogosphere that this was how the whole things was going to be gamed out by McCain and the Republicans. This was before any framework of a “bipartisan agreement” was in the works. People still were figuring out the probable chain of events. And it is surreal sitting here watching the GOP try and make this take the desired shape for the greatest political advantage. This whole kabuki by McCain just validates my cynicism about the state of the whole political process and the depths to which Republicans will stoop to regain power. It just feels like a treasonous act.
Obama has to find a way to short circuit this whole narrative which McCain and his GOP buddies are trying to get rolling.
Anonymous Liberal has a good post today on what the House Republicans may (or may not) think they’re doing.
http://www.anonymousliberal.com/2008/09/house-republicans-are-different-breed.html
The comments are worth reading too.
I think Ruben Navarrette has succeeded in penning maybe the stupidest f#%$ing column of the last century.
McCain has his priorities straight