Yesterday I posted the news that we had all been waiting to hear. Congress had finally come to an agreement and had settled on a bailout deal to help jump-start our faltering markets.
The price tag? A mere $700 billion dollars.
At the announcement of proposed deal the Dow Jones industrials enjoyed a 196-point gain to close the day.
And then news started trickling out last night that the deal – was certainly no deal at all… yet. From the AP
Sen. Richard Shelby, of Alabama, the top Republican on the Senate Banking Committee, emerged from the session to say the announced agreement “is obviously no agreement.”
House Republicans have been balking at the proposed deal. The deal, they say, is too expensive and it places too much of the weight of the bailout on the taxpayer’s shoulders.
One group of House GOP lawmakers circulated an alternative that would put much less focus on a government takeover of failing institutions’ sour assets. This proposal would have the government provide insurance to companies that agree to hold frozen assets rather than have the U.S. purchase the assets.
Rep Eric Cantor, R-Va., said the idea would be to remove the burden of the bailout from taxpayers and place it, over time, on Wall Street. The price tag of the administration’s plan to bail out tottering financial institutions — and the federal intrusion into private business matters — have been major sticking points for many Republican lawmakers.
When looking at the price tag for the bailout, it does make one wonder why other options haven’t been explored. Why is it automatically assumed that we the taxpayers MUST foot the bill? And is this huge $700 billion bailout really all necessary? Would we be able to give things a helping hand with say – half that amount?
What IS agreed upon is that we have some serious problems right now, and something needs to be done.
There is wide agreement the U.S. economy is in peril, with financial institutions going under or near the edge and recession looming along with the resulting layoffs and increased home foreclosures.
“All of us around the table … know we’ve got to get something done as quickly as possible,” Bush told reporters, brought in for only the start of the meeting. Obama and McCain were at distant ends of the oval table, not even in each other’s sight lines. Bush, playing host in the middle, was flanked by Congress’ two Democratic leaders, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid.
McCain and Obama later said they both still expected an agreement could be reached.
Under the accord announced hours earlier among key lawmakers, the Treasury secretary would get $250 billion immediately and could have an additional $100 billion if he certified it was needed, an approach designed to give lawmakers a stronger hand in controlling the unprecedented rescue. The government would take equity in companies helped by the bailout and put rules in place to limit excessive compensation of their executives, according to a draft of the outline obtained by the Associated Press.
What form would you like to see any proposed bailout take? A $700 billion taxpayer financed bailout where the government takes over troubled assets, or something more along the lines of the government providing insurance to those companies willing to hold onto the assets?
I was glued to the TV last night, I found it great to see the political machine working well IMO.
Here is my take :
Bush/Paulson were pushing a really crappy plan were it seemed the Fed gets a free check to bailout out whatever companies they deemed worthy and companies got free money and didn’t have to take responsibility. The tax payers got a huge tax liability with which they will buy overpriced junky assets.
Democratics and some republicans agreed with GW in principle, but changed a crappy bill to make it less crappy but putting some more oversight giving smaller blanks checks to the fed so they could periodically check in and then taking profits from the company and giving it back to tax payers and limiting executive pay. Tax payers are still left in similar boats.
The house republicans are looking for a plan that doesn’t make taxpayers pay for the mistakes of huge financial companies. They are saying that 99-1 calls to their office are saying no bailout, they want to get reelected in Nov, so they are listening. That is how the system is designed!! People should have power.
I would like to see a solution that puts more responsibility on the people involved and less on the innocent bi-standards. I would like to see a plan that encourages the private sector invest and one that allows the housing market to correct to a level that Americans can really afford. That includes each of us taking responsibility for not ‘needing’ a 3000 square foot home that we can’t afford. I want the Fed to have less power and I don’t want them printing money to devalue the dollar any further.
From this point, I hope that we get a small plan that holds things over and takes into account more market based solutions rather than socialized solutions and then they will figure the rest out later.
Well said. I am leaning towards something that puts more responsibility on these companies, and not on the taxpayers. I definitely don’t like the $700 billion bailout, and I don’t want the treasury to have free rein to do what they want without oversight – that is key.
I think the Fed’s power and tinkering is part of the problem that caused this mess. We as people(consumers and business) have the energy, determination, brains, and motivation to figure out solutions. Government should be enabling people and solutions not taking control, printing money, wildly changing markets and interest rates, spending much more than they have, etc.
The entire Paulson bailout plan is a bad idea and I hope it never passes. We should let some of these organziations fail and talk to the leading economics in the nation about alternative plans. It the stock market is going to tank, the best thing just may be to let it go and begin rebuilding the economy – rather then slowly bleeding for the next decade.
Curts last blog post..McCain Tried the Reform Freddie and Fannie In 2006