credit crisis

FINALLY!!!

John McCain and Richard Shelby come to their senses:

John McCain and Richard Shelby, two high-profile Republican senators, said Sunday that the government should allow a number of the biggest U.S. banks to fail.

"Close them down, get them out of business," Shelby, the senior Republican on the Senate Banking Committee, said on the ABC television program "This Week With George Stephanopoulos." "If they're dead, they ought to be buried."

While the Alabama senator did not say which banks should shut down, he suggested that Citigroup might be on that list, saying the bank has "always been a problem child."

McCain, appearing on "Fox News Sunday," echoed that sentiment without identifying banks. McCain, who lost the U.S. presidential election in November, accused the Treasury Department of avoiding the "hard decision" to let "these banks fail."

All I have to say is, what in sand hill took you people sooooooo long?  Senator McCain, had you said this last September you'd currently be President and Barack Obama would still be some random Senator.

And yes, before the peddlers of haterade chime in, it's called CREATIVE DESTRUCTION.

The Bargain for the Bailout

The bottom line is it may be impossible for 150 Republicans in the House and 40 in the senate to vote "No" on this bizarre bailout bill.

Evidently Harry Reid and Nancy Pelosi are making clear: No bipartisan cover, no bailout.

As we learned from the 1995 government shutdown, the press can and will blame Republicans for bad consequences, and provide no credit at all for showing any principles. (indeed, a lack of principles is how a Republican tends to get good press).

It's still a miserable deal, since we can be damm sure the Democrats will hang this on any Republican "aye" vote for years, while their people skulk away. and why not--no one on their side took any responsibility for the mess

So, my suggestions is we ask for our own cover.

Some prominent Democrats must demonstrate a level of responsibility for this disaster before Republicans allow themselves to be roped into looking like die hard Dubya loyalists.

The quid: The chairman of the Senate and House Banking Committees---Chris Dodd and Barney Frank--must relinquish their chairmanships as a condition for Republican yes votes on the bailouts.    

And there's a completely nonpartisan reason for demanding this. In 2009 we will have a new President and a new Secretary of the Treasury. The executive branch will have fresh blood who did not create this debacle (perhaps they ignored it, but...whatever) 

The people who are hopelessly compromised by their roles in Congress must step aside as well to demonstrate to America that people on Capitol Hill get the same message 

Everyone---both parties---both branches of government---is going out the door who "managed" the banking system.

For equity's sake, we can have the ranking Republicans on each committee quit too.

America needs a fresh set of folks who will have the responsiblity for getting ourselves out of this mess. It can;t be the same people who created the mess. They now have zero credibility.

And America deserves both parties accepting a share of the blame for what went wrong.

Are the egos of Chris Dodd and Barney Frank more important than our economy's future?

As Spike Lee said, Do the Right Thing

The spectulative frenzy in regulation

Free framing/messaging advice for Republicans: don't let Democrats get away with turning this into conventional wisdom...

[I]t is certainly not too soon to look beyond the current crisis to the flaws and fallacies of the anti-regulatory ideology that has held Washington in its grip since the Reagan years and allowed the financial excesses that are now stressing the system to the breaking point.

Every time somebody cries "if only we had regulated!", they need to be asked two questions...

  1. What regulation would have prevented this economic problem without creating even greater problems?
  2. When, prior to this crisis, did you propose it?

I told you so isn't a very valuable contribution if you did not, in fact, tell us so.

It is particularly dumb to reflexively blame this problem on Republicans, as Nancy Pelos did, or to reflexively assume Democrats must be better, as Paul Krugman does.  Especially when facts like this, from 2003, are readily available...

  • "The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago."
  • "The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken."
  • "[Representative ] Oxley [and] [Senator] Shelby ... announced their intention to draft legislation... [...] ''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing."  [NOTE: Oxley and Shelby are Republicans]
  • "Among the groups denouncing the proposal today were the ... Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing."
  • ''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''"
  • "[Representative Melvin L. Watt, Democrat] 'I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing.""

Republicans advocated reform, Democrats blocked it.   Then there's this, from 2006.

  • "[Fannie Mae and Freddie Mac] are entities that have demonstrated over and over again that they are deeply in need of reform.
  • "[T]he report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.
  • "I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.  I urge my colleagues to support swift action on this GSE reform legislation."

That quote comes from....John McCain.  Barack Obama did not sign onto the legislation.

 

Pin the Credit Crisis tail on the Donkey

Why is this info not in every stump speech McCain makes? The democrats scuttled GOP congressional efforts to regulate these organizations!! and they have the gall to call us the responsible party for this mess??

http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print

New Agency Proposed to Oversee Freddie Mac and Fannie Mae

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

 

The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.

After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.

 

And the democratic response??

 

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

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