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Go Home No Blank Check For Wall Street

THE FLACK SEPTEMBER 20, 2008

No Blank Check For Wall Street

BY HOWARD WOLFSON

It appears all but certain that by this time next week Congress will have appropriated nearly a trillion dollars so the Treasury can begin purchasing Wall Street's bad debts.  Before they hand over a blank check, Democrats on the Hill should insist that major regulatory reforms accompany the bailout.  The bailout is necessary  -- but so are significant improvements in our regulatory regime to ensure that the conditions and abuses that led to this collapse do not recur.

Democrats like Barney Frank have been pushing for such changes before this crisis, but were told that they were unnecessary and anticompetitive. Now that such criticism has been discredited, Democrats should move forward aggressively this upcoming week to link assistance to Wall Street with tougher oversight over how the financial markets function.  They must also ensure that any package includes protections and assistance for homeowners. 

Some will argue that there is not time for this.  Nonsense.  Unless Democrats act now they may not get another chance.  Months from now reform might seem less imperative and opposition to it will regroup.

Democrats and Republicans have been arguing about the necessity of regulation over our capital markets since the New Deal.  Since Ronald Reagan's Presidency the antiregulators have had the upper hand.  This crisis is in part their legacy.

In some countries the government appropriates valuable private property.  Under this deal it's the private property owners that get to dump their devalued debt on the public.  The least Congress can do is insist that some long term reform accompanies the exchange.

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11 comments

The Republicans aren't even effective Socialists, only in America would the government socialize failing industries. Now McCain is championing himself as a fighter against Wall Street. What next is he going to urge the workers of the world to unite? With effective regulation Capitalism is the best system in the world, Republican crony capitalism has gotten us into this mess, now is the time for us to shove it up their collective asses. When Repubicans go Commie you know it is time to dump them.

Democrats in Congress should hold the Republicans feet to the fire, make them admit their failure, let the world see how Bush has put a gun to the head of the Ameircan economy and how he is blackmailing us to bail out his cronies on Wall street.

- blackton

September 21, 2008 at 6:08pm

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Good for you Wolfson - let's hope the Democrats don't fold under the pressure, which they do tend to do.  Cone on Schumer, Webb (he should be out FRONT on this, where is he???) and the rest of you macho liberals - straighten up those troops!  This is no time to go wobbly.  

Republicans are welcome to continue trying to protect bloated, unearned bonuses for the very fatcats who have ruined the economy at Mainstreet's expense.  What else would you expect?  This is who they are.  

But Democrats have the American people behind them on their demands for change. They must act. NOW.  They should also hammer home how much this is going to cost our children while Republicans veto CHIPS and tsk tsk about the cost of health care for all citizens.  This is simply immoral.

The Democrats, if they have the gumption (except for the Clintons, not their forte) they can take on the let 'em eat cake decadence of these shameless crooks once and for all.   Where are  the frgging pitchforks?????????

- Wandreycer1

September 22, 2008 at 5:53am

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Any bail out and reform package should assure that the executives who created the mess don't walk away with bonuses and ongoing big salaries.  Bonuses and big salaries should be for performance, and their performances have been terrible.

I'm self employed.  If I don't produce results, i don't get paid.  Period.  Why should corporate executives live by a different rule at taxpayers' expense?  No reason at all.

- PeteBeck

September 22, 2008 at 11:26am

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Plenty of cronyism to go around, Blackie - just look at the coziness of the Dems with Fannie/Freddie.  How much did Frank Raines get again?  Lots o' money.

That said, I agree completely that CEOs, etc. who helped cause this mess should get zip, nada. They should have saved some of their prior goodies for the tough times.  Which are now.

- butchie b

September 22, 2008 at 1:46pm

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butchie, the buck stops where now? I always thought it stopped at President what is his name agains desk, you know the guy who is supposed to be President instead of our new Co-Presidency of Bernanke and Paulson. Let me guess, it stops at Nancy Pelosi's desk, right? Or how about the junior Senator from Illinois, the one who has no Washington experience but has somehow managed to cause all of our present troubles.

Now Paulson expects to be given a trillion dollar blank check, far more than the entire GNP of China during Chairman Mao's time. I guess we should call him Chairman Mao Paul Son, so much for Government is the problem.

You want to know the scary thing? Fox and Calderon have done a better job in Mexico than Bush has done in the US, and the Commies in China have also done a better job. When Mexico and China outperform the US it is time to skin a few Newts and Limbaughs and Boeners and send old man McCain to his long overdue retirement, but Americans are way too stupid and racist for that, if McCain wins expect to see capital flight begin in earnest since I can't see everyone else financing borrow and spend republicans for another 4 years for daily losses, why double down on a losing hand?

I recently took a look at my retirement finances, in 8 years I have not made one penny from my investments in the market during Bush's tenure, and that was before this recent crisis. Eh well on the up side, the beaches down here are as nice as ever and I have long accustomed myself to living below my means (hey, the beaches are free and gas is $2 bucks a gallon, it ain't hard).

Now where did I lay my fiddle so I can play with it while America burns?

- blackton

September 22, 2008 at 3:09pm

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The thing I find exasperating is that so many Republicans are now trying to make the claim that this financial disaster only started two years ago when the Democrats took office after 12 straight years of Republican control of the Congress and presidency.  What?  Are you kidding me?  Frat Boy George has now caused a run on the bank and "we" need to socialize our entire banking system to save him and his cronies from themselves  And, he'll walk away, once again, Scott-free from the disaster that he and his frat buddies have created.  No blame, no accountability, no loss of assets or income, nothing.  This has been the story of his entire life.  Since going AWOL in the Texas Air Guard, through his numerous failed businesses, to his budget-busting tenure as Governor of Texas, he's NEVER, EVER been held accountable for the wreckage he's created.  And now, the republicans want to turn over the entire economy to this guy as he's going out of office?  These guys have had an open bar for 12 years, and now that the booze has run out, the car is wrecked and they're getting evicted from the apartment, what is their solution?  We're out of booze, so have home delivery bring more to the party!  Put it on Daddy's credit card.  We'll explain it all later.

- desertdog

September 23, 2008 at 10:19am

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Not that I don't disagree with Howard here, 7 with a lot zero's behind it should, as he says, trump any complaints the opposition has.  But, Roger Lowenstein is suggesting we, the middle class taxpayer may be getting fleeced more than is being suggested.  That Paulson is playing chicken little when he may just be helping his friends out in the banking industry, because 'they don't like the price buyers are offering for their securities'.  But, unlike other periods in history where intervention was needed to get things going, it may not be needed now.  As I said, if the bailout is truly needed, then it's needed.  But maybe the rush to get it past congress is part of the (bad) plan, and slowing things down would be better for everyone.

- jet

September 23, 2008 at 10:36am

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Paulson was in charge a few years ago when Goldman decided to double down on mortgage back securities, causing the rest of Wall Street - especially Lehman - to do the same.  Now he's Treasury Sec in charge of cleaning up the mess he created.  Kind of interesting.

Anyway, the guy looks like someone who is cleaning up a disaster he created and he's doing OK as far as I'm concerned.  I am uncomfortable with the finger pointing while there is a lit match and a bomb sitting next to my Mom's retirement money.  Screw it, lets stop the bleeding and finger point later.  Its obvious that deregulation failed, so we Dems opposed to the whole fundamentalist mindset of it can feel smug today - so what.  

My Mom is genuinally scared after working hard and saving her whole life, that its all going to evaporate because of Alan Greenspand and Phil Gramm making a bitch out of Bill Clinton ten frigging years ago,  

Enough!  Fix the problem now!

- Wandreycer1

September 23, 2008 at 12:23pm

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Paulson is a Wall Street crook, an overpaid bastard. The fact he is a secretary at all is a scandal.

- sleepyavl

September 24, 2008 at 2:58am

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I've said it before and I'll say it again.  The Wall Street bailout is NO bailout.  The gov't is buying debt at pennies on the dollar and guaranteeing a stoploss.  As soon as the craziness ends and the assets go back up to their real intrinsic value, the gov't stands to potentially gain billions.  Additionally, the loans to AIG must be REPAID.  Effectively, the gov't just bought AIG.  Until they pay back the gov't every red cent, they are not an independent company and the gov't owns them.

- jwl2672

September 24, 2008 at 3:39pm

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Wandreycer

Hey, have you ever looked at the historical trend of economies? There are peaks and valleys.  There are bubbles that burst.  No amount of regulation or deregulation is going to change that (unless you go the way of USSR type socialism where EVERYONE is poor ALL the time.)  In the 90's it was the tech bubble.  Now, it's the finance bubble.  So long as Americans everywhere continue to pull their weight and work, we'll all be fine in 5 years or a decade.  During the tech bubble, everyone thought the sky was falling.  Consider yourselves lucky in that it's only the finance bubble so far and not other major industries.

- jwl2672

September 24, 2008 at 4:04pm

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