[Peace-discuss] Democrats sell birthright for pot of message

[E. Wayne Johnson]

Mouse.  Trap.

C. G. Estabrook wrote:
>     Original Treasury bailout plan is dead,
>     but revised plan emerging
>     By David Lightman and Margaret Talev
>     McClatchy Newspapers
>
> WASHINGTON — The Treasury's plan to spend up to $700 billion of 
> taxpayers' money to bail out the nation's financial system was 
> recognized as dead Wednesday as lawmakers in Congress made clear that 
> they're going to make significant changes.
>
> Treasury Secretary Henry Paulson, who has spent two days urging 
> members to pass legislation quickly and cleanly, conceded Wednesday 
> that any bill will have to have limits on executive pay at troubled 
> firms and hinted he would accept other changes.
>
> "The American people are angry about executive compensation and 
> rightfully so," Paulson told the House Financial Services Committee.
>
> His willingness to publicly agree to the pay provision was another 
> strong sign that Congress and the administration were working toward 
> the same goal — enactment of a major financial bailout package, and soon.
>
> "It means we are closer," said Financial Services Committee Chairman 
> Barney Frank, D-Mass. He predicted that House and Senate Democrats 
> would have an agreement by Thursday to present to Republicans.
>
> President Bush was to urge passage of a consensus plan in a nationally 
> televised address Wednesday night.
>
> Republican presidential candidate John McCain said he would suspend 
> his campaign Thursday and head to Washington to help pass a bailout 
> plan. He urged Democratic nominee Barack Obama to delay their first 
> debate, scheduled for Friday night. Obama rejected the idea, saying 
> voters need to hear from the presidential candidates now.
>
> Members of Congress talked privately with administration officials 
> throughout the day about changes to the plan. Several provisions 
> sought by lawmakers from both parties were expected to be added, 
> notably strong oversight of any bailout, more aid to homeowners facing 
> foreclosure and possibly trimming back the cost of the package, at 
> least initially.
>
> "Over the last 24 hours, I've seen signs of greater cooperation from 
> my colleagues in Congress," said Sen. Charles Schumer, D-N.Y., who's 
> on the Senate Finance Committee. "Despite many of their well-founded 
> reservations, (they) recognize the magnitude of the problems we face 
> and the importance of getting something done."
>
> One measure of Congress's disgust with the original Treasury plan came 
> Wednesday when Federal Reserve Chairman Ben Bernanke and Paulson met 
> privately with House Republicans. Afterward, Rep. Tom Davis, R-Va., 
> said that only four members raised their hands at the end when there 
> was a request for a show of hands for support of the original White 
> House bailout proposal.
>
> Instead, members worked to iron out a consensus plan.
>
> Rep. Spencer Bachus of Alabama, the top Republican on the House 
> Financial Services Committee, said that Frank was including him in the 
> discussions and that there was progress toward a bill. "There's a 
> realization that we have to do something and that we can't leave town 
> until we do," Bachus said.
>
> A number of other ideas were surfacing, most aimed at reassuring 
> taxpayers who've been flooding congressional offices with e-mails and 
> phone calls, largely in opposition to the Treasury plan or simply 
> puzzled as to whether or not they'd wind up bailing out renegade 
> companies and executives.
>
> "People are saying what does that have to do with me? The connection 
> has not been made," said Rep. Maxine Waters, D-Calif. She brought 
> together black and Hispanic business and community leaders in 
> Washington to help push for more consumer aid.
>
> House Republican leader John Boehner of Ohio had similar thoughts, 
> saying that Americans are "furious" and are "trying to understand will 
> this plan in fact work."
>
> "Right now what we have before us is a 'trust me' proposal," said Rep. 
> Deborah Pryce, R-Ohio, which she said wouldn't work because Americans' 
> trust in the administration is broken.
>
> "I want you to make the case to me so that I can make the case to my 
> constituents," she told Paulson and Bernanke.
>
> Despite his concession on executive pay, Paulson offered few other 
> compromises to the House committee.
>
> At one point, Rep. Gary Ackerman, D-N.Y., asked if he favored allowing 
> courts to review a government action. The original Treasury plan would 
> have barred courts from reviewing management of the bailout. A 
> proposal authored by Senate Banking Committee Chairman Christopher 
> Dodd, D-Conn., would allow a bailout decision to be overturned if it 
> was "arbitrary, capricious, an abuse of discretion or not in 
> accordance with the law."
>
> Paulson would say only that details need to be negotiated. "We need to 
> get the right balance," he said, without elaborating.
>
> Rep. Carolyn Maloney, D-N.Y., asked Bernanke how he and Paulson came 
> up with the $700 billion figure.
>
> "It's not science to figure out how much is going to be needed to 
> stabilize the firms and the markets," Bernanke said. "But there are 
> various metrics one can use."
>
> Among them, he said, is that "there's about $14 trillion outstanding 
> of residential and commercial mortgages. So $700 billion is about 5 
> percent of that amount, which is similar to some of the loss rates 
> we've seen in some of these categories."
>
> He also said that assets of U.S. commercial banks are "in a similar 
> $10 (trillion) to $12 trillion category," so the $700 billion "seems 
> an appropriate size relative to the scale of the problem."
>
> Many lawmakers were not convinced.
>
> "Would there not be merit in considering an initial set of purchases 
> of certain classes of troubled assets in the amount of, say, $100 
> billion?" asked Sen. Sam Brownback, R-Kan. "Then we could evaluate 
> results, and move on with $100 billion worth of purchases of other 
> classes of troubled assets."
>
> Schumer pressed Bernanke hard on this point, asking him as an 
> economist why $700 billion was necessary.
>
> "You asked me my opinion as an economist," Bernanke said with a smile. 
> "Unfortunately, this is a matter for psychology." A $700 billion 
> federal commitment would reassure global financial markets that 
> Washington was committed to the rescue in a way that $100 billion 
> increments would not, he said.
>
> But $700 billion, Schumer replied, "is an awful lot for psychological 
> reassurance."
>
> Members also were considering relief for homeowners with troubled 
> mortgages, perhaps a multibillion-dollar fund that would allow them to 
> refinance fixed loans that would be guaranteed by the Federal Housing 
> Administration.
>
> Meanwhile, Bernanke offered an unusually dismal picture of the economy 
> in testimony before the Joint Economic Committee.
>
> "Given the extraordinary circumstances, greater than normal 
> uncertainty surrounds any forecast of the pace of the activity," the 
> Fed chairman said, referring to future economic growth. "Financial 
> stress could prove a significant drag on growth. The downside risks to 
> the outlook thus remain a significant concern."
>
> He predicted that the nation's gross domestic product "is likely to 
> expand at a pace appreciably below its potential rate in the second 
> half of this year, and then gradually pick up as financial markets 
> return to more normal functioning and the housing contraction runs its 
> course."
>
> The economy's problems stem largely from the financial crisis, he 
> said, "through several channels, most notably by restricting the 
> availability of credit." He added that households "also appear to be 
> having more difficulty of late in obtaining non-mortgage credit."
>
> Agreement on details of a revised bailout proceeded slowly, and 
> officials were starting to doubt that a package could be approved by 
> the end of the week.
>
> One scenario being pushed was for congressional leaders and the 
> administration to announce an agreement in principle by Friday, and 
> then enact it late next week, after a long weekend to give staff time 
> to craft legislative language and let lawmakers go home to campaign. 
> The November election is less than six weeks away.
>
>     ###
> _______________________________________________
> Peace-discuss mailing list
> Peace-discuss at lists.chambana.net
> http://lists.chambana.net/cgi-bin/listinfo/peace-discuss
>
>