Mark Levin: Thank You, House Republicans
Mark Levin writing in National Review Online’s Conner Blog:
I have read the posts here and elsewhere. Sometimes these things are made to look more complicated than they really are. From an economic perspective, if the problem is liquidity and credit, there simply is no need for the federal government to assume massive amounts of debt on its book by assuming loans in anticipation that their holders or borrowers will default. This seems to me like a brand new expanse of government power that is not justified (if it ever is) by the arguments made on its behalf. The government controls monetary policy through supply and interest rates, among other things. It can further ease money supply and credit, thereby increasing the flow of capital. The government controls tax policy. It can increase liquidity and the flow of new money into the economy both from within the country and from foreign sources by eliminating the corporate income tax and the capital gains tax even on a mid-term basis. No matter what is done, some financial institutions will fail, as they did in the 1981-82 recession and have since. And the Fed and Treasury and other instrumentalities of government will have to determine, on a case-by-case basis, whether to intervene and how to intervene. They will also have to determine whether other policies require modifying, such as the McCain proposal today, in which he suggests increasing federal insurance for individual depositors from $100,000 to $250,000. Other smart suggestions include modifying the mark-to-market rule requiring financial institutions to downgrade the valuation of assets. If the goal is to prevent panic in the economy by investors and depositors, then increase credit, liquidity, and the flow of capital, and deal with problem institutions that are significant enough in size that their demise could resonate to the wider economy. But the Soviet-style, top-down five year plan a la Paulson’s proposal, and to a significant extent the proposal that was voted down yesterday, could easily do more damage to both the economy and our governmental structure. So, in this respect, I must depart from NRO’s editorial. Read the rest…
My personal view is that a bailout of some kind has become a necessary evil… What I am opposed to is the “Paulson Plan”. There a number of things that can be done short of the Treasury using taxpayer dollars buying up billions in bad paper. As Levin points out we can quickly add liquidity to the market by suspending the corporate income tax and capital gains taxes and for example institute a government backed premium based mortgage insurance program. There are no perfect solutions to this problem and regardless of what actions Congress ultimately takes some financial institution are still going to fail.
The New York Sun
What a run… One of last true newspapers in America, the New York Sun, is closing it’s doors today.
I’ve been a reader and a fan of the Sun from the start… Over the last 6 and half years it’s front page has carried everything from photographs of works of art to exposes on corruption at the UN.
The Wall Street Journal writes in an editorial this morning:
How the Sun Shone
Read in precincts high and low, this New York paper has been a model for journalists.
It has been a newspaper whose front page carried photographs of great works of art, muckraking exposes, and not infrequently the paper’s confident editorials. In its six-and-a-half year run, the New York Sun achieved the status any newspaper seeks: It was read in precincts high and low, and it was read every day.
Today amid financial difficulties, the paper’s grand run is ending. Seth Lipsky, the newspaperman who was its founder and editor and also a long-time former Wall Street Journal colleague, knew from the start that New York’s media market was crowded, and that any new entrant faced a challenging future. He believed that a broadsheet that focused on local issues, such as political corruption and taxes, but also brought an erudite sensibility to its arts and books coverage (without political correctness), could fill a niche that the local competition tended to ignore. It might have worked had the daily not launched into the toughest headwinds that have ever faced the newspaper business. Read the rest…
More on the history of the New York Sun here and here.
Crash & Burn: $700 Billion “Crap Sandwich” Goes Down In Flames!
Whoa… I was expecting a close vote on bailout bill but this is a complete shock. The bailout bill has crashed and burned in the House.
The vote was 228 nay to 205 yea with 1 not voting. Democrats supported the bill 140-95, while Republicans opposed it 65-133.
Is this the reason?
Nancy Pelosi’s floor speech certainly didn’t help… I’d like to think the bills failure had more to with a majority of Congressmen being opposed to socializing business losses rather a reaction to the highly partisan nature of her remarks.
The truth is despite all the spin saying this bill needed Republican support to pass Democrats have a sufficient majority in Congress to pass it without Republican support… If just 10 Democrats had changed their votes it would have passed!
If anything this vote is a complete repudiation of Pelosi’s leadership… She simply couldn’t hold her caucus together, let me say this again Democrats have the votes to pass this pig without Republican support and Pelosi couldn’t get it done - 95 members of her caucus voted against it!
The Good, The Bad and The Ugly…
The Good (H/T: MM): Congressman Jeb Hensarling (R-TX), Chairman of the House Republican Study Committee, today issued the following statement on the agreement reached by House and Senate negotiators on the Paulson plan, and his intentions on the final bill:
“My top responsibility as an elected official is to protect the families and people who trusted me to represent their interests in Washington. I do not take lightly the critical nature of the credit crisis that our capital markets face today and the grave situation that every American will face should our credit markets freeze and remain frozen. Inaction has never been an option, but the Paulson plan should have never been the only option.
“In my heart and in my mind, I believe that this plan is fraught with unintended consequences, would force generations of taxpayers to pick up the tab for Wall Street losses, and could permanently and fundamentally change the role of government in the American free enterprise system. Once the government socializes losses, it will soon socialize profits. If we lose our ability to fail, we will soon lose our ability to succeed. If we bail out risky behavior, we will soon see even riskier behavior.
“I also believe that this Congress, in a rushed effort to provide stability to a troubled credit market, did not adequately discuss or investigate potential alternatives that would have constituted a work out and not a bail out. Even at this moment, it still remains more important for Congress to do it right than to do it fast. I stand ready, as do many of my colleagues, to stay here for as many days as it takes to do this right.
“For the last week, House conservatives have fought to protect innocent taxpayers from an unprecedented government raid on their wallets to bail out Wall Street from their bad decisions and financial losses. Principled Republicans like Paul Ryan and Eric Cantor helped improve the legislation before us by adding increased taxpayer protections and additional Wall Street accountability. But mere improvement is not the test for support. The test is whether, after weighing both the good and the bad, you believe that the plan ultimately leads America in the right direction. Using that test, I cannot in good conscious support this legislation.”
The Bad: Just were did the Treasury Department come up with that $700 Billion bailout figure? They made it up… From Forbes:
“It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”
Presumably they picked a frighteningly large number in order to scare Congress into acting quickly without thinking the matter through.
The Ugly: From Today’s New York Post:
O’S DANGEROUS PALS
BARACK’S ‘ORGANIZER’ BUDS PUSHED FOR BAD MORTGAGESBy STANLEY KURTZ, New York Post, September 29, 2008
WHAT exactly does a “community organizer” do? Barack Obama’s rise has left many Americans asking themselves that question. Here’s a big part of the answer: Community organizers intimidate banks into making high-risk loans to customers with poor credit.
In the name of fairness to minorities, community organizers occupy private offices, chant inside bank lobbies, and confront executives at their homes - and thereby force financial institutions to direct hundreds of millions of dollars in mortgages to low-credit customers.
In other words, community organizers help to undermine the US economy by pushing the banking system into a sinkhole of bad loans. And Obama has spent years training and funding the organizers who do it.
THE seeds of today’s financial meltdown lie in the Commu nity Reinvestment Act - a law passed in 1977 and made riskier by unwise amendments and regulatory rulings in later decades.
CRA was meant to encourage banks to make loans to high-risk borrowers, often minorities living in unstable neighborhoods. That has provided an opening to radical groups like ACORN (the Association of Community Organizations for Reform Now) to abuse the law by forcing banks to make hundreds of millions of dollars in “subprime” loans to often uncreditworthy poor and minority customers.
Any bank that wants to expand or merge with another has to show it has complied with CRA - and approval can be held up by complaints filed by groups like ACORN.
I wish I had something intelligent to say but the only words that come to mind all contain four letters and are not generally used in polite company.
Bailout Deal Reached?
The Wall Street Journal is reporting that lawmakers reached a tentative bailout deal overnight:
Top U.S. policy makers emerged from hours of tense negotiations with a clear message just after midnight Sunday morning: A deal to bailout U.S. financial markets has been agreed on and all that remains to be done is to commit the legislation to paper.
Treasury Secretary Henry Paulson, House Speaker Nancy Pelosi (D., Calif.), and Senate Majority Leader Harry Reid (D.), were flanked by key negotiators in the Capitol as they announced that a $700 billion plan to have Treasury buy up toxic assets had been all but finalized after hours of exhausting negotiations.
“I think we’re there,” an exhausted Mr. Paulson said, a sentiment echoed in the statements of negotiators such as House Financial Services Chairman Barney Frank (D., Mass.) and Senate Banking Committee head Christopher Dodd (D., Conn.).
Those present said the bailout plan still needs to be drafted in its final form, a process staff members were expected to continue throughout the night in what one aide called a “marathon drafting session” in Ms. Pelosi’s office just off the rotunda in the Capitol building. A formal announcement is scheduled for some time Sunday, though an exact time and location were not immediately available.
A summary of the tentative agreement released by Ms. Pelosi’s office said the plan “gives taxpayers an ownership stake and profit-making opportunities with participating companies; puts taxpayers first in line to recover assets if a participating company fails; (and) guarantees taxpayers are repaid in full — if other protections have not actually produced a profit.” (See Ms. Pelosi’s summary.)
Additionally, the summary said the legislation will expand the range of firms that can sell troubled assets to the government to include pension plans, local governments and community banks serving “low- and middle-income families.”
A House Democratic aide said the government would be able to receive warrants it could hold until maturity from financial firms on assets received either through auctions or through direct purchases.
I’ll reserve comment until I see a markup of the final bill.
Update: Ed Morrissey has more at Hot Air… It looks like House Republicans were able to get most of the pork removed from the bill.
Update (1:50 p.m. eastern): House Republican Whip Roy Blunt’s office has released a side by side comparison of the new bill versus the Paulson Plan and the Frank-Dodd bill.
The new bill does look more palatable but the devil’s in the details… I what to see the final bill and the conference report before I say yea or nay.
Update (4:10 p.m. eastern): N.Z. Bear @ Porkbusters has the draft bill… (H/T: MM)
Update (6:40 p.m. eastern): Michelle Malkin has an updated draft and a quick and dirty analisys of the bill.
This thing stinks to high heaven… Unfortunately I think this bailout has become a necessary evil - the Bush Administration, Congress and the media have painted us into a corner and if this bill doesn’t pass Secretary Paulson’s dire warnings will ultimately become a self-fulfilling prophecy.
Video: In Their Own Words…
Poll Question: Who Won The First Debate
Video: Burning Down The House: What Caused Our Economic Crisis?
This video has been floating around the web for a couple of days… It provides a detailed look at how the Community Reinvestment Act was used to push banks into sub-prime mortgages and how that distorted the housing market… And helped create the bubble that burst.
A couple of caveats though… First it lays the blame solely at the feet of Democrats and while they do have a lot of explaining to do, Republicans are not blameless. They controlled both houses of Congress in 2003 when the Bush Administration proposed new rules to rein in Fannie and Freddy and yet they failed to act. Likewise in 2006 when they failed to fight for the Federal Housing Enterprise Regulatory Reform Act that Chuck Hagel, John McCain, John Sununu, and Elizabeth Dole sponsored.
Second it ignores the role of the Federal Reserve Board and the Bush Administration in keeping interest rates artificially low and weakening the dollar. Which lead to a rise in commodity prices and that I think ultimately helped hasten our current economic problems.
There’s plenty of blame to go around, this isn’t so much a Democrat or Republican problem as it is Washington political culture problem. Yes, Democrats started the ball rolling but we all should have know better…
Crash & Burn: Harry Reid’s $56 Billion Stimulus/Oil Shale Ban Bill Augers In.
Reuters is reporting that Harry Reid’s $56.2 Billion economic stimulus/oil shale ban bill has failed in the Senate:
WASHINGTON (Reuters) - The Senate on Friday blocked a $56.2 billion economic stimulus package that would have extended unemployment benefits, increased food aid and funded new construction projects to create jobs.
The 52-42 vote fell short of the 60 votes needed in the 100-member Senate for Democrats to clear a Republican procedural hurdle and move toward passage of the bill, which backers said would give the ailing U.S. economy a needed boost.
The House of Representatives plans to consider a slightly different stimulus package as soon as Friday afternoon but chances of any stimulus bill becoming law appear slim as the White House has threatened a veto.
The bill would have kept in place a ban on development of domestic oil shale deposits that expires next week.
The Democratic-controlled Congress passed a $168 billion stimulus package in January that relied mostly on tax rebates to spark consumer spending.
While that measure has been credited with contributing to economic growth, consumers have been hurt by rising food and energy prices, a higher unemployment rate and continued home foreclosures.
Democrats said the second attempt would help struggling consumers at a time when Congress is considering an unpopular $700 billion Wall Street bailout shortly before the November 4 presidential and congressional elections.
“What about the honest, hard-working, play-by-the-rule citizens at the bottom of this pyramid left in the ruins after years of mismanagement and outright malpractice by the titans of the financial industry?” said Iowa Democratic Sen. Tom Harkin.
Republicans said they did not have time to review the spending measures properly and the White House said the increased spending could lead to higher taxes or deficits.
Update (H/T: Michelle Malkin): The house votes this afternoon… Call your Representative and urge him or her to hold the line: (202) 224-3121.
Back on the Trail…
Statement from the McCain Campaign on negotiations (H/T: Rich Lowry):
John McCain’s decision to suspend his campaign was made in the hopes that politics could be set aside to address our economic crisis.
In response, Americans saw a familiar spectacle in Washington. At a moment of crisis that threatened the economic security of American families, Washington played the blame game rather than work together to find a solution that would avert a collapse of financial markets without squandering hundreds of billions of taxpayers’ money to bailout bankers and brokers who bet their fortunes on unsafe lending practices.
Both parties in both houses of Congress and the administration needed to come together to find a solution that would deserve the trust of the American people. And while there were attempts to do that, much of yesterday was spent fighting over who would get the credit for a deal and who would get the blame for failure. There was no deal or offer yesterday that had a majority of support in Congress. There was no deal yesterday that included adequate protections for the taxpayers. It is not enough to cut deals behind closed doors and then try to force it on the rest of Congress — especially when it amounts to thousands of dollars for every American family.
The difference between Barack Obama and John McCain was apparent during the White House meeting yesterday where Barack Obama’s priority was political posturing in his opening monologue defending the package as it stands. John McCain listened to all sides so he could help focus the debate on finding a bipartisan resolution that is in the interest of taxpayers and homeowners. The Democratic interests stood together in opposition to an agreement that would accommodate additional taxpayer protections.
Senator McCain has spent the morning talking to members of the Administration, members of the Senate, and members of the House. He is optimistic that there has been significant progress toward a bipartisan agreement now that there is a framework for all parties to be represented in negotiations, including Representative Blunt as a designated negotiator for House Republicans. The McCain campaign is resuming all activities and the Senator will travel to the debate this afternoon. Following the debate, he will return to Washington to ensure that all voices and interests are represented in the final agreement, especially those of taxpayers and homeowners.
Overall I thought McCain won on points… Although it was closer than it should have been. McCain clearly won on foreign policy but on the economy it was at best a draw.
McCain needs to drop the populist rhetoric and stand up for conservative economic principles… In particular he needs to hit Obama on his ignorance of supply-side theory and explain how his tax cuts will, in the long term, promote economic growth and increase revenue to the treasury.
On the credit crisis he needs to make the point, repeatedly, that the Bush Administration proposed legislation in 2003 to rein in Fannie Mae and Freddie Mac and Democrats blocked it… He also needs to remind voters that he cosponsored the Federal Housing Enterprise Regulatory Reform Act along with Chuck Hagel, John Sununu, and Elizabeth Dole that would have tightened oversight of Fannie & Freddie and Democrats blocked it!
He should also hit the Federal Reserve Board and the Bush Administration on monetary policy.
On the stylistic side he needs to make eye contact with Barack Obama in future debates… That’s one thing really bugged me to last night. McCain’s refusal to look at Senator Obama made him look stiff and dismissive of the Senator.