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First, President-elect Obama gives the Democratic weekly address on YouTube, something that will be a regular occurrence once he assumes office:
Next, Rep. Elijah Cummings of Baltimore tears into Neel Kashkari, head of the Wall Street bailout program, over reports of AIG handing out multi-million dollar executive bonuses even after AIG was nationalized:
UPDATE: Shoulda done a quick Internet "news tour" before hitting Save - bill has passed. Title updated, otherwise too busy now to tidy up original text accordingly; consider it a(n) historical diary/post, or something...
UPDATE #2: Just took a look at the roll call. In the Maryland CODEL, only Roscoe Bartlett (MD-06) stayed with his original opposition, voting against this new version as well. Previous opponents Donna Edwards (MD-04) and Elijah Cummings (MD-07) voted in favor this time. Ugh...
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As widely reported, some version of the "Bailout Bill" close to that passed by the Senate will likely pass in the House soon. There is a full-court press on for its passage, including personal calls from Obama to various Democratic Congresscritters. While some of the major lefty economists and economic populists still oppose the latest versions (Dean Baker, Ian Welsh, David Sirota, and William Isaac were among them, last time I checked), big names like Paul Krugman, Robert Reich, and Joseph Stieglitz are falling in line, though very unhappily so.
While the "Skeptics Caucus" headed by Brad Sherman (D-CA) and Peter DeFazio (D-OR) continues to voice opposition from the left side of the political spectrum, theirs is likely a lost cause for the time being. From Brad Sherman's Website comes a 7-page criticism (.pdf) of the bill; a decent alternative would have been nice, but given the breathtaking speed at which events have transpired, it would have been a huge effort to put something decent together in so short a time. These criticisms will hopefully be taken seriously and considered during the development of responsible legislation under what will hopefully be an Obama Administration.
To wrap up, here is a You-Tube video of Brad Sherman on the House floor (0:48), providing further indication of just how hard arms are being twisted up on the Hill.
The House bill that was voted down Monday wasn't great, by any means. Although it included a number of things that I thought were necessary to keep the bailout package from being simply, well, a bailout for Wall Street, the basic premise of the plan -- that the Treasury should buy up all the mortgage-backed securities that went sour, then sell them if and when the housing market recovers -- was intact. It's a flawed premise, especially with $700 billion on the line, but with the concessions made to congressional Democrats, I thought it was better than nothing. But, of course, the House voted it down, thanks, in large part, to a revolt from Republicans. Although many Democrats, including Donna Edwards and Elijah Cummings, also voted no, the divisions within the GOP have been much more significant, with the ostensible leadership of the Republicans, from George W. Bush to John McCain to John Boehner, unable to persuade enough of their rank and file that simpleminded free-market rhetoric won't get us out of this mess.
As for the "No Bailouts" plan put out by Edwards and other House progressives, I'm actually a little underwhelmed. For starters, it's less an alternative proposal than a list of things they would like to include in a financial rescue package. Second, most of the agenda items aim at speculation in financial markets, which I think has had little to do with the financial crisis. (Short explanation: short-selling and other speculative attacks may seem bad, but they only work if there are underlying weaknesses in the institutions under attack.) Third, I'm surprised that these progressives didn't propose outright nationalization of the financial sector, as was done in Sweden during its financial crisis in the early 1990s, and which has been endorsed by such worthies as Brad DeLong and Paul Krugman.
In the end, I don't think we're likely to see anything like an optimal solution emerge this week, as the looming credit crunch is likely to scare enough Congressmen into voting for a revised bailout plan. What we should hope for is that the final product can be revisited by the next administration and the next Congress; since it seems pretty likely at this point that we're going to have a Democratic trifecta next year, the important thing is that this bailout plan not permanently tie our hands.
From Tuesday afternoon's press conference by the House Democratic progressives caucus offering their bailout alternative, here's Donna Edwards (1:30):
From the Website of Peter DeFazio (D-OR), after the jump comes the text of a "Letter to (his) Democratic colleagues", and the text of the proposed Act itself. And, if you have the appropriate software - Real Audio, I think - you can watch video of today's entire press conference (57min) from DeFazio and cosponsors, via cspan.org - you can try this direct link to see if it works; since I don't have the necessary Real Audio software, I was unable to check out the direct link myself, to see if it works.
UPDATE: I finally got into Donna Edward's {house.gov} Website, as well as Elijah Cummings'; hopefully the House server continues to stay up. Here is a statement Edwards released yesterday on the bailout, and Elijah Cummings also released a statement yesterday; although relevant, they are separate and distinct from today's just-announced DeFazio bill these two MD Dems are cosponsoring (see below). Both announcements have been inserted in this post - after the jump, at the bottom...
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There has presumably already been a press conference on this (scheduled for 3pm today, according to Stoller), but I am TV-less, so here is the information from SEIU's Website:
New Plan Would Protect Taxpayers, Tighten Regulatory Safeguards
WASHINGTON, DC - The two million-member SEIU (Service Employees International Union) is backing the plan announced today by Rep. Peter DeFazio and other Members of Congress to restore confidence in the financial markets. The new bill, called the "No BAILOUTS Act" (Bringing Accountability, Increased Liquidity, Oversight, and Upholding Taxpayer Security), is being introduced by Rep. DeFazio (OR-04), with Rep. Kaptur (OH-09), Rep. Scott (VA-03), Rep. Cummings (MD-07), Rep. Doggett (TX-25), Rep. Holt (NJ-12), Rep. Edwards (MD-04) and Rep. Hirono (HI-02).
[continued...]
The rest of SEIU's announcement is after the jump (along with Edwards' and Cummings' press releases from yesterday)...
Following up on his statements at Romenesko (Poynter.org) and Nieman Watchdog, former NYT economics/business journalist David Cay Johnston* has continued to beat the drum for journalists to do proud by their profession, rather than being stenographers, or fan boys/girls and cheerleaders for our national political leadership. I heard him on NPR's On The Media, and have seen him widely cited in various online forums.
*Some biographical information here; some links to his writings here and here.
DCJ is continuing this campaign over at TPM Cafe. He is up to part 3; I don't know whether more posts are coming. A listing (with links) of his posts at TPM Cafe can be found here. Following is a list of the individual posts:
Some of the comments over there are informative as well. A good example of providing comments and criticism without becoming a troll* is provided by commenter "Ellen". Here is an extended quote from her comment in the Part 1 post, following her quote (in italics from something in the post):
*(although she comes awful close sometimes, especially when she opts for being cryptic over being informative)
Is Purchasing $700 billion of Toxic Assets the Best Way to Recapitalize the Financial System? No! It is Rather a Disgrace and Rip-Off Benefiting only the Shareholders and Unsecured Creditors of Banks. Nouriel Roubini 2008-09-28 09:03:01
Roubini links to a timely IMF working paper[note: goes to a .pdf document/mg] which lists how governments bailed out their financial systems in 42 countries.
Only 7 purchased toxic assets: Mexico, Japan, Bolivia, Czech Republic, Jamaica, Malaysia, and Paraguay.
I'm sure that select club will be happy to let the good old U.S. of A. in; but if we've fallen that low, I guess I'm with Groucho: "I don't care to belong to any club that will have me as a member."
Not being an economist myself, but seeing this awful monstrosity moving so quickly, I've been desperate for information from honest analysts who could make some sense of it. I'm grateful to David Cay Johnston for coming out of retirement to sound the alarm, and also grateful to economists and those who follow them, for providing timely and useful analysis.
In the following clip (3:34), we learn from CNBC commentator Larry Kudlow that, in some rare and specific cases - specifically, when he and his Wall St. pals' financial holdings are at risk - socialism isn't so bad after all. Interviewee Sen. Bernie Sanders (Independent-VT) clearly finds this discovery worthy of further exploration.
The take home lesson here, kids, is that if you want to succeed in cable "news", unbounded hypocrisy and utter shamelessness are essential character traits for success.
It seems that the Bush Administration, Congressional Democrats, and Senate Republicans were close to completing a deal to save the financial system -- one that, at least in principle, allowed for oversight and protections of taxpayer money. Then John McCain decided to go all prima donna on us, barged into the negotiations, and sided, kinda sorta, with the House Republicans' deeply unserious proposal to cut capital gains taxes as a way to solve the crisis. (Because the problem with Wall Street is that all those mortgage-backed assets on their books have gained value lately.) In any event, it looks like McCain's antics have brought negotiations back to square one, with the economy still in crisis. Now that's leadership we can believe in.
Of course, it may not be such a bad thing if Congress takes a little more time to hash out a solution. Why $700 billion is needed, now, to save the financial system still doesn't make sense to me. And if alternative proposals, like James Galbraith's, get more consideration in the meantime, that's hardly a bad thing.
I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.
I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.
I AM WORKING WITH MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR, YOU MAY KNOW HIM AS THE LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE 1990S. THIS TRANSACTIN IS 100% SAFE.
THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN SO THE FUNDS CAN BE TRANSFERRED.
PLEASE REPLY WITH ALL OF YOUR BANK ACCOUNT, IRA AND COLLEGE FUND ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN TO WALLSTREETBAILOUT@TREASURY.GOV SO THAT WE MAY TRANSFER YOUR COMMISSION FOR THIS TRANSACTION. AFTER I RECEIVE THAT INFORMATION, I WILL RESPOND WITH DETAILED INFORMATION ABOUT SAFEGUARDS THAT WILL BE USED TO PROTECT THE FUNDS.
I'm willing to accept that some kind of major government intervention is necessary to prevent the US financial system from collapsing utterly -- though there is reason to believe that Treasury Secretary Hank Paulson, in keeping with Bush administration practices, has been exaggerating the nature of the crisis. What I'm not willing to accept, however, is a no-strings-attached bailout that goes beyond protection from financial meltdown and in fact protects Wall Street executives from the consequences of their own bad decisions. Fortunately, it seems that most members of Congress, Democratic and Republican, feel the same way.
To me, the important thing now is making sure that any bailout package has strict controls on how the Treasury and the Federal Reserve spend any money it gets to do the bailout. In particular, if the government is going to pay above-market rates to take mortgage-backed assets off the hands of the banks, as Fed chief Ben Bernanke acknowledged yesterday, we had better get some kind of equity stake in the companies that receive taxpayer money. Otherwise, it's not at all clear how taxpayers would ever recoup their investment.
We also need to make sure that the underlying cause of the financial crisis -- the collapse of the housing market -- is addressed, through letting bankruptcy judges modify mortgages so that homeowners can afford to make payments and stay in their homes.
There are other things that need to be considered, such as limits on executive pay and a second economic stimulus, but equity stakes and help for struggling homeowners should be non-negotiable.
With this in mind, Barack Obama's statement on the proposed bailout, as well as Sen. Chris Dodd's counterproposal, sound very good, though I'm not prepared to sign off on anything yet. See also Ed Paisley's proposal for a progressive approach to the financial crisis, and also the Great Orange Satan's words of skepticism.
UPDATE: Check out David Leonhardt's column in the New York Times today, which also emphasizes the importance of having the government take equity in any company that is bailed out.
