Bailout Bill Rejected: 40% Dems and 67% Repubs Vote No
Terry Trippany on Sep 29 2008 at 2:35 pm | Filed under: Feature Article, Financial Crisis
Update: Statement by McCain campaign:
“From the minute John McCain suspended his campaign and arrived in Washington to address this crisis, he was attacked by the Democratic leadership: Senators Obama and Reid, Speaker Pelosi and others. Their partisan attacks were an effort to gain political advantage during a national economic crisis. By doing so, they put at risk the homes, livelihoods and savings of millions of American families.
“Barack Obama failed to lead, phoned it in, attacked John McCain, and refused to even say if he supported the final bill.
“Just before the vote, when the outcome was still in doubt, Speaker Pelosi gave a strongly worded partisan speech and poisoned the outcome.
“This bill failed because Barack Obama and the Democrats put politics ahead of country.” –McCain-Palin senior policy adviser Doug Holtz-Eakin
The Democrats apparently tried to do some last minute political maneuvers and close out house Republicans in a move that killed the wall street bailout. The legislation failed with 40% Democrats and 67% of Republicans voting no.
This is a failure of leadership. Instead of passing a common sense bill to address a problem of both liquidity and equity Congress chose to try and play politics while Rome burned.
“As I said on the floor, this is a bipartisan responsibility and we think (Democrats) met our responsibility,” said House Majority Leader Steny Hoyer, D-Md.
Yeah, they met their responsibility all right; the responsibility to lie. Steny Hoyer knows that they don’t need Republican votes to pass this bill. The fact of the matter is that the bill stinks and 40% of his own party refused to go along.
I heard an economist explain things as follows:
When firefighters work to put out a forest fire they don’t put water in the middle of the fire. Why? Because naturally the water will evaporate. Instead they fight the fire at the perimeter, protecting the outlying areas trying to stave off the spread.
He said this is what happens when you try to address today’s crisis by addressing the liquidity without considering the equity problem. You see that is exactly what happens when the government gives a bailout to the big bankers that rolled the dice and actually lost our money by taking on risky assets in an effort to boost their asset sheets.
Update, the economist is Professor Michael Munger of Duke University, and I am paraphrasing.
The solution being currently proposed is to purchase the bad debt, the equity the banks can’t sell because, well it is worthless. It addresses liquidity, at least temporarily, but it doesn’t address the equity problem.
Munger’s solution was to protect the banks and other institutions that invested unwittingly in these larger institutions under the guise that the bigger banks were holding good paper. Why reward the bankers that rolled the dice and lost? Instead put the money to good use by protecting the banks that were unwittingly harmed by investing in the bigger institutions that took on the bad debt.
I personally have read much and there are differing positions. The one thing however that shouldn’t be done is to allow Democrats Congress to use this crisis as a means to nationalize the U.S. financial systems.
“There is no situation so bad that panicky politicians can’t make worse.” - Professor Michael Munger, Duke University
Michelle Malkin has the roll call.
