posted by Joe Polk at 10:08 AM /
With 1,500 indignant calls and e-mails six weeks before Election Day, there was no mystery left for U.S. Rep. Tim Murphy when it came to how to vote on the Economic Stabilization Act of 2008 -- the one his constituents called simply The Bailout.
"I've never heard someone get to Congress saying, 'Elect me and I'll make sure we have more mortgage-backed securities to base our economy on,' " the South Hills congressman said yesterday. Moments earlier, Mr. Murphy and 227 other House members -- most of them rank-and-file -- turned back the Bush administration's plea for $700 billion to rescue the credit market.
Link: www.postgazette.com/pg/08274/916152-28.stm
Link 2: community.post-gazette.com/blogs/earlyreturns/archive/2008/09/29/altmire-murphy-vote-nay.aspx
"I've never heard someone get to Congress saying, 'Elect me and I'll make sure we have more mortgage-backed securities to base our economy on,' " the South Hills congressman said yesterday. Moments earlier, Mr. Murphy and 227 other House members -- most of them rank-and-file -- turned back the Bush administration's plea for $700 billion to rescue the credit market.
Link: www.postgazette.com/pg/08274/916152-28.stm
Link 2: community.post-gazette.com/blogs/earlyreturns/archive/2008/09/29/altmire-murphy-vote-nay.aspx
Labels: bailout, congressman tim murphy, economy
8 Comments:
I'm sure that all the people with their savings in National City will be comforted by Murphy's stance when the bank goes under.
This anti-bailout sentiment is a massive instance of the sunk-cost fallacy: the profits from risky mortgage speculation have already been disbursed. Punishing the banks now is closing the barn door after the cow has escaped.
As someone said to me in email today, if the rest of the big banks go under, the fat-cat bankers responsible may have to fire their personal chefs,
so we can all laugh at them from the soup line, warmed by the knowledge that justice was served.
The only depositors that are close to being at risk are those with over $100,000 and even that is about to change with the FDIC asking for higher insured deposit limits. Both Obama and McCain favor this increase up to $250,000. Besides that, if the model for any NCC takeover is the same as Washington Mutual or Wachovia Bank, then all deposits will simply be bought by the acquiring bank. Account numbers would stay the same for the time being and everything. No money, even over $100k, would be lost.
The bailout as proposed was a joke. Any time you have language in a bill that gives full power to an individual without even judicial oversight, that is an issue. This issue, along with many others, is why it didn't pass. I suspect the bill that will be up for vote on Thursday will be more thoroughly thought through and have a better chance at passing.
A quote from the original proposal:
“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency,”
That's a sentence that would make even Hugo Chavez blush.
I thought that sunday's compromise had removed the "nonreviewable" clause, as well as adding in CEO pay restrictions and other things.
What I can't figure out is why republican house members, after 8 years of eating the President's and smiling, picked this moment to decide that he might be full of it. Personally, I think that he's finally telling the truth, but he's now the President who Cried Wolf and nobody believes him. He's terrified that his legacy will be to always have his name spoken in the same sentence as Hoover's.
Personally, if it were only Bush and Paulson asking for this, I'd say there'd be no reason at all to trust them. However, after reading a little about (a) Bernanke and (b) the Great Depression, I'm convinced that Bernanke and the Fed have been secretly shitting their pants about the credit situation since the massive interest rate drop in January.
Bernanke is an inflation hawk and nobody could figure out why he would cut rates so much when it was sure to lead to inflation. I think that the only explanation is desperation to avoid a catastrophe.
Inflation is inevitable now, at least until home prices are brought back in line with inflation. Of course, given the amount of personal debt Americans are carrying, maybe inflation wouldn't be such a bad thing.
If its the case that it was such a bad bill, then why did Boehner blame it on the hurt feelings from Nancy Pelosi's speech on the floor of the House? Why wouldn't he just say that it was a bad bill?
It looks more likely that people are just playing dangerous games.
Here is a link to a D from California explaining why he will still vote against it:
http://globaleconomicanalysis.blogspot.com/2008/10/rep-brad-sherman-on-bailing-out-foreign.html
No check of Paulson's power, plus the ability to let foreign banks offload assets to their US subsidiaries which would then be allowed to dump the assets to the US Treasury. Now you know why all the foreign banks and leaders are stepping up and yelling at us to get this passed.
There are no easy solutions but I have to believe there are better ideas out there than this one.
James
The proposition that this is somehow an American crisis, which deserves an American fix that only benefits Americans, is a dangerous fallacy.
The best simple summary of its causes that I've read is this piece by a tax professor. "Bailout" is an unfortunate mis-labeling of the proposal.
Think about this: When the federal government buys up so-called "toxic waste," it's not going to simply own that stuff and wait for things to get better. It's going to find buyers for it -- I mean investors. And where is that money going to come from? Hedge funds and vultures in the US, in part, but the real money is going to come from foreign investors. At the end of the day, it's not the US taxpayer "bailing out" foreign banks; it's going to be foreign investors shoring up the credit markets.
Here's quote from the article that Mike linked that points out the genesis of my "soup line" comment:
But why is the unavailability of short-term money so bad?
Remember what businesses use short-term money for – to meet payroll and put inventory on their shelves. When businesses lose access to working capital, they stop operating, not because there is anything fundamentally wrong with their products or markets or business plans, but simply because they can’t get the cash they need on a daily basis.
You might think of short-term money as the lubricant that keeps the world’s economic engine turning over smoothly. If there’s no lubricant, the engine freezes. No paydays, no goods on the shelves. Seriously.
Something needs to be done, and unfortunately, we're probably going to have to accept some aspects of the bill that we don't like. Or to put it another way: It's a big shit sandwich and we're all going to have to take a bite.
Mike makes a good point. The politicians' first mistake was when they let this plan get branded as a "bailout" instead of what they are now calling it, a "rescue plan." It's too late, it is already branded as "welfare for wall street," which is could have been if Paulson was handed a check for $700 billion with no strings attached. Speaking of Paulson, their second mistake was letting him take the lead on this. I'm not saying he shouldn't be telling the politicians what to do and say behind the scenes, but think about it - the guy is an ex-CEO of Goldman Sachs. During his confirmation hearings the Democrats were concerned of this sort of thing happening - where Paulson would be able to help out his Wall Street buddies. I have faith in the guy, he seems decent and honest (one of the greener R's that I know of), but the public's perception matters more than what I think of him.
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