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THIS BAILOUT IS NOT A DONE DEAL! [09/28/2008]

leah's picture
Submitted by leah on Sun, 09/28/2008 - 2:26pm

On Friday, I spent some time watching the Senate session on C-Span. More than a few Democratic Senators were taking the time to express, at length, their skepticism regarding the bailout. Specifically, Brian Dorgan, Tom Harkin, Jon Tester, and others.

Several facts became clear. The feedback from home has been overwhelmingly negative. Every Senator I heard talk about the bailout was setting up absolute criteria for what had to be in the bill for them to vote for it, and I doubt that this agreement is going to pass muster with many Senators and Representative. Also, Democratic Senators are paying attention to the blogisphere, and to the economists who are expressing doubts about the entire structure of the bailout. Harkin and Dorgan were entirely aware of Krugman and even of James Galbraith.

In fact, Dorgan had a great line, from his father, who used to remind him of this worthy thought: Never buy anything from a man who is out of breath. NOW, NOW, NOW is being out of breath.

They know this is being rushed through, and they already have doubts that the "crisis on Monday" mentality.

NOW MORE THAN EVER IS THE TIME TO CALL DEMOCRATIC SENATORS AND REPRESENTATIVES.

Do it today. Many offices won't have staff answering, but fill up their voice mail. I understand that Senator Clinton's was filled up by eight pm last night.

So send emails through their websites.

And then do it again tomorrow.

WE ARE NOT ALONE

The reaction across the blogisphere is the same; go to OPEN SECRET, or Kos, or MyDD, or Newsbusters, of ThinkProgress, or TPM or American Prospect; everyone agrees that the Democratic leadership is in danger of being royally snookered, once again. Matt Stoller has a petition signed by members of the House progressive caucus. I left a comment there and at least two people picked up on it - yes let's try and get Obama to realize that he's watching the near sure failure of the first two years of an Obama administration, happening right before his eyes, and he's doing nothing? At least he's equivicating.

One caveat here: The short version of what Pelosi released, which you can see at Calculated Risk doesn't sound as bad as I might have expected. As many commentators note, however, the devil is in the details.

This in particular interested me:

The government can use its power as the owner of mortgages and mortgage backed securities to facilitate loan modifications (such as, reduced principal or interest rate, lengthened time to pay back the mortgage) to help reduce the 2 million projected foreclosures in the next year.

That could become an HOLC, come January, if Obama wins, and Democrats no longer have to have a sixty margin majority in order to get anything past a Bush/McCain veto.

The problem is we just don't have enough information to know.

Now the message we give is important.

They know we hate this. What they need to know now is that we know what we are talking about. We have to put real fear into the non-leadership - not that we are going to take revenge against them - fear that their own leadership is once again leading them down a path where they are going to end up holding the bag, while the bagmen make out like the bandits they are.

The message, I think, should be SLOW THIS DOWN. There can't be that much of a crisis that there is no time for a hearing on the bill. Not one economist has been consulted. Yes, the oversight sounds impressive: here is how it is described in the Pelosi summary:

# Four separate independent oversight entities or processes to protect the taxpayer

# A strong oversight board appointed by bipartisan leaders of Congress

# A GAO presence at Treasury to oversee the program and conduct audits to ensure strong internal controls, and to prevent waste, fraud, and abuse

# An independent Inspector General to monitor the Treasury Secretary's decisions
Transparency -- requiring posting of transactions online -- to help jumpstart private sector demand

# Meaningful judicial review of the Treasury Secretary's actions

But how is it going to actually work? Do you know, Senator, Representative, how it is actually going to work? Will you know how the prices to be paid for all this leveraged debt is going to be established before you have to vote on this bailout package?

Another clear messsage: We, the taxpayers, want the same deal as Warren Buffet got, because we are being asked to do exactly what he did, fork over our money, so why don't we get the same deal - shares of the company.

Another point - transparency - how has there been any transparency in this entire process? And oversight is meaningless unless there is some attempt to establish what is in those securities so that someone besides Treasury and the seller has some input, or is given some ability to analyze what we are buying.

I'd also add that anyone who lives close enough should get themselves down to Washington and spend Monday in the offices of Democratic Senators and Representatives. Bring your friends, relatives, and signs.

I know that is a difficult suggestion, because it's a lot, probably too much, to ask people to do that outside of an organized effort in which there is some assurance that more than a few people are going to show up. Easy for me to suggest, since I live in California and can't possible do it.

This inability to spark some sort of organized action swiftly is my biggest disappointment in the progressive blogisphere. We have shown that in longer-range actions we can organize and get results. The Lamont insurgency against Lieberman in Conn - ACT BLUE, all good things. But going forward, no matter who wins the White House, and even more so, I would say, if Obama wins, we need to be ready to mount intelligent grassroots public action to press an Obama administration and a Democratic congress with a bigger majority to act quickly and decisively for the benefit of their core constituency, which, as it happens, will be the great majority of Americans, the ones who aren't in the top 10 % of income earners. I am including in this category, organized civil disobedience, something which Al Gore mentioned in his speech at the Clinton Initiative conference, in reference to the notion of allowing oil and gas producers to mine oil shale, which produces an even more toxic (with CO gases) version of gasoline.

If it's McCain in the White House, who knows, organized taking to the streets.

So, think about this post as having a farther reach, at least for the sake of discussion, than what is going to happen in congress next week.

However, next week matters.

Those are my best suggestions. What are yours?

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Comments

lambert's picture
Submitted by lambert on

Public Markup should havethe actual text of the bill available, as they did with the Paulson and Dodd proposals.

That seems to me a clear possibility of a "central clearing house" for all commentary, and we should encourage people to post their (thoughtful, informed) critiques there, and, in our emails and calls, get any staffer wonks to look there) -- when the text is available, which it is not yet.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

lambert's picture
Submitted by lambert on

here, so Leah is absolutely right, there's time.

Even though they're (almost* all) as twisty as corkscrews, still, as Leah points out, they will respond to pain.

Even though I hate it, it would be nice if Susan Collins felt any heat from Tom Collins, and took slow down to heart.

NOTE * Jeebus, Barney Frank??? That breaks my heart. Gad. Where's Paul Wellstone when we needed him? Don't go up in any small planes, Bernie!

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

DCblogger's picture
Submitted by DCblogger on

Leah rules
thank you for this first hand report
I wonder it the press barons want it and are blocking out any news that might interfer with a sense of crisis.

lambert's picture
Submitted by lambert on

Haw.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

leah's picture
Submitted by leah on

,,,athough he says that he's being told by Hill staffers that there are changes to the draft

some initial reaction and the link here

There is a comparison of the Dodd/Frank/Paulson plan with the new plan that comes from Blunt's office, so it is aimed at pointing out ways this one is better; there do appear to be several layers of oversight. You can find it here. Take it with a snoot of salt.

Let me make one observation. I don't think it's so bad that Democrats are leaving structural help for the economy and even home owners out of this bill. There is no way they would have been effective and gotten past the Republicans and Bush. They can come back to revisit a lot of what they wanted to do after the election.

I think Lambert's suggestion of using the Markup site as a way to centralize comments and suggestions is terrific. I just checked; they don't have the bill or a draft of it yet, though.

Submitted by jawbone on

improving the 3 page memo Paulson Fix.

Thank you, Sen. Obama. NOT.

Face The Nation was on late today here in NYC area, so I ended up watching Obama's interview w/ Bob Schieffer. No hard questions.

But this answer got my attention--bcz it seemed that Obama was saying that he had a very important role in negotiating the Paulson Fix (Is In), both directly with Paulson and in general.

Does he really want to be tied to this mess, Doing the Hanky Panky? (OMG--I almost used the "tarred with" expression. OMG!)

From the transcript:

SCHIEFFER: Let me ask you this. You and senator McCain took very different approaches to this. He suspended his campaign. He called for a big summit meeting in Washington.

OBAMA: Right.

SCHIEFFER: You -- you stood back a little bit at that point. Now that this -- it looks like they’ve gotten some agreement, should Senator McCain be getting the credit, here...

(LAUGHTER)

... forcing these people back to the negotiating table?

OBAMA: No. Look, here are the facts. For two weeks, I was on the phone every day with Secretary Paulson and the congressional leaders, making sure that the principles that have ultimately been adopted were incorporated into the bill.

I mean, if you think about it, those items that you mentioned at the top of the show, none of those were in the president’s provision. They are identical to the things I called for the day that Secretary Paulson released his package.

That, I think, is an indication of the degree to which, when it comes to protecting taxpayers, I was pushing very hard and involved in shaping those provisions.

But understand this. The important thing here is making sure that we don’t have a photo op session. Because this is serious. We should not have been here in the first place.

And, you know, I think the critical debate that we’re going to have to have between myself and Senator McCain moving forward is how do we prevent this kind of thing from happening again? (My emphasis)

I realize he thinks he's taking credit only for the "improvements," but it does come across that he was intimately involved in pushing forward this sloppy solution to the Big Shit Pile mess.

Mad negotiating skillz. BOHICA.

Earlier I posted a comment with a link to a LATimes editorial which asked this question:

Politically, these developments raise two questions: Which candidate to succeed Bush benefits most by the events of recent weeks? And which candidate, if either, would have the strength to roll back these expansions of presidential power if elected? (|My emphasis)

pie's picture
Submitted by pie on

I don’t think it’s so bad that Democrats are leaving structural help for the economy and even home owners out of this bill. There is no way they would have been effective and gotten past the Republicans and Bush.

The repubs have gotten their way for eight years with nary a whimper from the dems. I've noticed that the repubs always manage to get their taking points in now. Yes, they're barely a minority, but for crying out loud, they were rubberstamps for Bush for most of his term.

With help from too many dems, I might add.

It's really hard to believe that the dems will suddenly reverse all the bad legislation. I supported them through most of this administration's outrages, making excuses every time when they caved.

Everyone has a limit, and I've reached mine.

lambert's picture
Submitted by lambert on

There, the Democrat Party did not have to choose to reinforce Bush's power, and did not have to grant retroactive immunity. But they did. Same deal here. Nothing will be rolled back, at least voluntarily; Krugman is wrong to think so.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

hobson's picture
Submitted by hobson on

Thank you Leah and Lambert for an urgent but not hysterical call for continued effort to get a satisfactory outcome to this situation. I hope this thread can stay focused on action over the nest few days. There are plenty of posts where people can express their opinions of whether we will succeed or not and why.

Just to reiterate:

Government contact info

pie's picture
Submitted by pie on

There are plenty of posts where people can express their opinions of whether we will succeed or not and why.

Of course, you're right to think so.

Iphie's picture
Submitted by Iphie on

Leah and Lambert. But is anybody getting through? I emailed all my reps last week, and I've been calling intermittently since Friday afternoon - but no luck. I've been getting "voice-mail full" messages or no pickups, but I've yet to speak to anyone or even leave a message. Granted, I'm calling from NY, so sheer volume might be the culprit here -- which is a good thing, but still a little frustrating.

hobson's picture
Submitted by hobson on

Politic is supposed to have the full draft of the bill here. It's a pdf and is supposed to be 106 pages. It's called a discussion draft.

lambert's picture
Submitted by lambert on

Whatever a discussion draft might be, it is surely not what they will be voting on. And I'm very disappointed with Krugman for giving a mere draft a tepid stamp of approval.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

peter's picture
Submitted by peter on

It's pretty amazing where we've come. At the end of President Bush's second term, Democrats are now defying the popular will of the country to do something this president feels he needs to get us through this credit mess. Actions that will effect the next presidency and impact the next president's ability to do what he's offered to do.

No matter who wins in November, they will become the third Bush term. Their success will now cement Bush's legacy. Their failure will also.

amberglow's picture
Submitted by amberglow on

http://www.tri-cityherald.com/1182/story... -- "Democratic Presidential candidate Barack Obama said the fact Congress has to mount a $700 billion bailout for Wall Street was "an outrage, an outrage" - but said he intends to support the bipartisan deal hammered out early Sunday to save Americans' jobs, homes and retirements.

The bailout and the financial crisis were at the heart of Obama's message at an outdoor rally in downtown Detroit that drew an estimated 35,000 people. Economically ravaged Michigan has the nation's highest unemployment rate, at 8.9 percent. ..."

insane

lambert's picture
Submitted by lambert on

Just like FISA. Obama had an opportunity to uphold the Constitution and the rule of law, and voted affirmatively to destroy both.

No matter what noises he makes, it's his vote that counts on Wednesday, not ponies tomorrow.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

peter's picture
Submitted by peter on

Are y'all standing with the Republican Congress now? Hoping they, or enough of them vote against this to cause Pelosi to stop the vote? Can she stop the vote once it starts?

lambert's picture
Submitted by lambert on

Are you demented?

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

a little night musing's picture
Submitted by a little night ... on

Say what?! (I seem to keep saying that today.)

Although, come to think of it, that would explain a lot about the past couple of years...

Submitted by jawbone on

the Paulson Fix (Is In). At You Tube.

She mentions meeting held at 2:00PM to discuss alternative approaches to the mess with people who have managed such things.

Can't find any mention in the news...so far. Anyone?

Found Kucinich's one minute speech from today, where he asks "Is this the US Congress...or the board of directors of Goldman-Sachs? Wall Street is a place of bears of and bulls. It's not smart to force the taxpayers to dance with bears or follow too closely behind the bulls."

Whoohoo!

Submitted by jawbone on

that's $5 Trillion....

Just heard Repub senator saying it couldn't cost anything near $7B--and he was sure taxpayers would actually make money. Maybe not, but everyone he'd talked to said it would work out well.

Faber says things we've read elsewhere, but can hardly be said too often:

“So now they try to solve the problem by having this credit bubble actually extended and I think the $700 billion will be like a drop in the bucket because the total credit market in the U.S. is something close to $60 trillion, then you have the CDS market – credit default swap – of around $62 trillion. Then you have the whole derivatives worldwide worth about a notional $1,300 trillion. So the $700 billion is really nothing and the Treasury is just giving out this figure when actually the end figure may be $5 trillion.”

Turlock