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.
