Call Congress, Now More Than Ever
This bailout is not yet a done deal; I don't care what Barney Frank or any other Democrat says.
But it is clear that the administration, which now has McCain on its side, is gunning for the same kind of unconstitutional, unsupervised executive branch power that it did in the Patriot Act and in all of its dealings in and about Iraq.
There is still awareness among Democrats that this bailout is unpopular, despite some confusing polling. Even people convinced there is a real crisis, and let's remember that even someone like Krugman admits there are some very real problems, still hate what is happening.
Another complicating factor, many Republicans are talking about not supporting any sort of final bill, and Democrats are making it clear that they won't vote for something that makes them responsible for the bailout.
On the other hand, even with Republican votes, unless Dems hammer home and get real provisions which provide real oversight, real help for homeowners, or at least a promise to provide such in a future bill, and all the other bells and whistles that have been discussed, they will essentially find themselves carrying Bush's piss water, yet again.
McCain is playing a very tricky game. Here's what he had to say at the Clinton Initiative conference; read it; it says all the right things about oversight, protecting tax payers and home owners, all very populist.
But guess what: here's the joint statement from McCain and Obama:
“The American people are facing a moment of economic crisis. No matter how this began, we all have a responsibility to work through it and restore confidence in our economy. The jobs, savings, and prosperity of the American people are at stake.
“Now is a time to come together – Democrats and Republicans – in a spirit of cooperation for the sake of the American people. The plan that has been submitted to Congress by the Bush Administration is flawed, but the effort to protect the American economy must not fail.
This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe. Now is our chance to come together to prove that Washington is once again capable of leading this country.”
And before any of you assume that the complete lack of substance therein was Obama's choice, according to Marc Ambinder, Obama tried, to no avail, to get McCain to agree to the following principles to be included in the statement:
First, there must be oversight. We should not hand over a blank check to the discretion of one man. We support an independent, bipartisan board to ensure accountability and complete transparency.
Second, we need to protect taxpayers. There should be a path for taxpayers to recover their money, and to turn a profit if Wall Street prospers.
Third, no Wall Street executive should profit from taxpayer dollars. This plan cannot be a welfare program for CEOs whose greed and irresponsibility has contributed to this crisis.
Fourth, we must help families who are struggling to stay in their homes. We cannot bail out Wall Street without helping millions of families facing foreclosure on Main Street.
Fifth, we both agree that this financial rescue package should move on its own without any earmarks or other measures. We have different views about the need for other action, but this must be a clean bill.
This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe. This is not a Democratic problem or a Republican problem - this is an American problem. Now, we must find an American solutions.
They are almost exactly what McCain says in his Clinton Initiative speech, so why didn't he want to include it in his joint statement?
McCain is putting his thumb down heavily on the panic/crisis button, whether to avoid a debate or not doesn't interest me; what is clear is that nothing in his background or leanings or record suggests that he will not be serving the interests of the Bush administration, Paulson and all the rest of them, even while he is claiming to rescue the plan from both defeat and from the Bush administration overweening grab for power.
The only way for Democrats, and Obama, too, not to play on McCain's playing field is for congress to hang tough on real changes to the plan that meet the criteria laid out by liberal economists and commentators everywhere across the blogisphere and the media.
Here are a couple of excellent new ones - both from James Galbraith.
Here he is in The Nation outlining clearly the clauses that need to be part of any deal, and the important reasons they have to be there. Here are two of his "clauses" (bullet points) that I haven't seen laid as clearly anywhere else:
5) An arbitrage clause. One big danger of Paulson's plan is that non-US institutions, hedge funds and others will seize the chance to sell their bad holdings to eligible US institutions, replenishing the swamp just as the Treasury seeks to drain it. All US financial institutions should be required to provide baseline information on their mortgage-backed securities and other eligible holdings as of September 15, 2008.
8) A modification and disposal clause. As foreclosures mount, Treasury will end up in control of physical properties, which degrade rapidly if not sold or rented and occupied. To prevent this, a new agency should be established to rapidly modify existing mortgage contracts, to manage rental conversions and to lease, sell or demolish vacated homes. This agency can be run as draft boards were in wartime, by citizens in each community under federal guidelines.
And Galbraith says that's only a beginning.
When you call or email, you should emphasize the disaster of failed confidence in Democrats they will have set up themselves if they allow themselves to be stampeded into finishing the package this week, just because they want to get home to campaign. On something this big, they can stay another week.
Now that all five big investment banks -- Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs and Morgan Stanley -- have disappeared or morphed into regular banks, a question arises.
Is this bailout still necessary?
The point of the bailout is to buy assets that are illiquid but not worthless. But regular banks hold assets like that all the time. They're called "loans."
With banks, runs occur only when depositors panic, because they fear the loan book is bad. Deposit insurance takes care of that. So why not eliminate the pointless $100,000 cap on federal deposit insurance and go take inventory? If a bank is solvent, money market funds would flow in, eliminating the need to insure those separately. If it isn't, the FDIC has the bridge bank facility to take care of that.
Next, put half a trillion dollars into the Federal Deposit Insurance Corp. fund -- a cosmetic gesture -- and as much money into that agency and the FBI as is needed for examiners, auditors and investigators. Keep $200 billion or more in reserve, so the Treasury can recapitalize banks by buying preferred shares if necessary -- as Warren Buffett did this week with Goldman Sachs. Review the situation in three months, when Congress comes back. Hedge funds should be left on their own. You can't save everyone, and those investors aren't poor.
Read the whole thing.
When you call any congressional office, be polite for insistent and tell the receptionist you want to make sure thatt so and so reads a particular editorial, like Galbraiths, or Krugman, or whatever.
Call Dodd, Schumer, Reid, Pelosi, Barney Frank, and anyone else on either of the two committees handling this. Ask for more hearings - Get some economists in to testify. Most of all, emphasize, what if this doesn't work? Are you really going to hand this kind of money over to the administration who has misplaced billions in Iraq?
Another biggie - From Think Progress:
The Congressional Budget Office director yesterday told Congress that the proposed bailout may worsen the current financial crisis. “Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values,” Peter Orszag said. “Establishing clearer prices might reveal those institutions to be insolvent.”
Let anyone whom you call know that you and everyone you know is following what is happening closely and you want to make sure that Dodd and the rest of them are taking due note of what their on CBO is saying.
Hillary might be worth calling as well.
Call. Send Emails.
This isn't over, unless we let it be over.