Bailout deal collapses, Democrats try to blame McCain
posted at 8:07 pm on September 25, 2008 by Allahpundit
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Down goes Frazier. I missed the report on Fox earlier but Ace says it sounds like the Dems are trying to shift the blame for it from the House GOP to Maverick. Fair or no? Let’s see. Dodd lands the first blow:
Republican presidential nominee John McCain was blamed for de-railing negotiations by blindsiding lawmakers with his support for an alternative plan.
The ‘very contentious’ meeting broke up after Republican leaders said they had to go back to their rank-and-file to discuss the new proposal…
After the hour-long White House meeting, [Dodd] said: ‘What has happened here is that we have spent seven straight days to find a rescue plan for the economy.
‘What this looked like was a rescue plan for John McCain. To be distracted for two to three hours by political theatre doesn’t help.’
Democrats said the Republicans were on board with the deal until Mr McCain intervened an injected presidential politics into the situation.
The only problem? According to Marc Ambinder, citing four independent sources, McCain didn’t say much of anything during the White House meeting let alone float any alternative plans. Boehner, apparently, brought up some of the House GOP’s ideas; the Dems claim they got the impression that McCain supported those ideas, but “they concede that he did not raise them directly.” Even Reid, ever sneering, admits McCain played no major role.
Which isn’t to say that he doesn’t, in fact, support the House GOP. Quoth The Hill from an article published earlier this afternoon:
[A] key Republican lawmaker stated that Sen. John McCain (R-Ariz.) wants to explore new ideas, like loaning money to financial institutions or insuring the companies, rather than buying their toxic debt…
Rep. Spencer Bachus (Ala.), the ranking Republican on the House Financial Services Committee, attended the meeting at which some say a deal was reached. But he later issued a statement saying he wasn’t authorized to negotiate or approve any deals for House Republicans…
He added that McCain is interested in using loans or insurance rather than having the government purchase the toxic debts of Wall Street institutions.
“We would prefer a loan or supplying insurance,” Bachus told reporters. “These are the ideas Sen. McCain tried to maximize. He feels strongly we have to design a program where taxpayers won’t lose.”
Bachus, wearing a “McCain-Palin” lapel pin, said he’d talked to McCain on Wednesday night and had breakfast with McCain’s advisers Wednesday morning.
The insurance angle is at the core of the House GOP’s alternative plan. See here for the particulars. In essence, they want to scrap a taxpayer bailout, expand the feds’ power to insure mortgage-backed securities, and lift regulations to encourage private investment and rescue the financial industry that way. As for McCain, it sounds like he’s being coy because he’s not sure yet which way to break on this politically. Better hurry up: If that Hill article I linked is correct, they’re nowhere near the 100 Republican votes Pelosi wants before she’ll send the bill to the Senate and the markets, shall we say, won’t like that. Exit question: If they can’t get a deal done to save the farking economy, will next week bring us Congress’s first ever zero percent approval rating?
Update: For what it’s worth, here’s what HuffPo’s sources are telling them about the meeting:
Towards the end, McCain finally spoke up, mentioning a counter-proposal that had been offered by some conservative House Republicans, which would suspend the capital gains tax for two years and provide tax incentives to encourage firms that buy up bad debt. McCain did not discuss specifics of the plan, though, and was non-committal about supporting it.
Paulson, however, argued directly against the conservative proposal. “He said that he did not think it would work,” according to the source. At another point in the meeting, President Bush chimed in, “If money isn’t loosened, this sucker could go down” — and by sucker he meant economy…
Following the meeting, Democrats stayed talking in the Roosevelt room and Paulson approached them. Speaker Pelosi and Rep. Barney Frank shot back at Paulson that the real problem was with House Republicans, according to sources. Paulson replied, “I know, I know,” as he got down on one knee to lighten the mood. Pelosi joked back, “I didn’t know you were a Catholic.”
Update: An astute point from Baseball Crank. In all the frenzy over McCain, you know whose name you haven’t heard much of at all as mattering to this deal? Barack Obama’s.
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All you mental midget naysayers, watch and learn!
Queen0fCups on September 25, 2008 at 9:13 PM
Terrye on September 25, 2008 at 9:08 PM
Now you see why ron Paul got so many votes. As far as conservatives go they believe that smaller gov is better. I agree with that also just not the steps that some on here are hoping to get here. I understand a collapse will not bring smaller gov. It will bring full 100% socialism into every home in this country. Why do I say that because history proves that EVERYTIME.
unseen on September 25, 2008 at 9:14 PM
Until Congress fixes this problem, no member of Congress should be playing politics, pointing fingers, making threats, trying to sneak in earmarks and money for their contributors or any side-issue.
Right now, only McCain seems to rising above the political storm and focusing on the crisis.
Loxodonta on September 25, 2008 at 9:14 PM
Absolutely not, I am not an Obama fan. I am still voting for McCain. Modern day elections are based on the cliche, “perception is reality”… and Obama, the liberal media have a chockhold on perception in this country – even if it is wrong.
JoeBrooks on September 25, 2008 at 9:14 PM
Reid and Pelosi are idiots. There has been a lot of wool pulled over a lot of eyes, but one thing is absolutely certain: there is NOT a giant groundswell of support for this bailout.
What Reid is doing right now is basically making John McCain look like the center of the Universe.
The average voter doesn’t have a clue how this all started, let alone what to do about it. All they know is that everyone is saying there is a crisis; and there’s ONE MAN who’s stepping up and taking charge.
logis on September 25, 2008 at 9:15 PM
Sitting on Small Street watching Main Street screaming an yelling at Wall Street. At this rate all my popcorn will be gone by Nov 4.
Limerick on September 25, 2008 at 9:16 PM
Yeah. But we’re gonna bash McCain for being willing to listen to the conservatives in the House GOP.
McCain tries to let the conservative fighters in on the deal, and all of a sudden the posters on this “conservative” website scream that he’s going to kill the economy?
Of course if he’d sided with Frank and Dodd right out of the box, you’d all be screaming that he’s playing too nice with democrats.
And it doesn’t bother you that Paulson is apparently best friends with Pelosi and Reid, the three of them, Dodd, and Frank are bashing McCain as a villain, and you are all jumping in on their side? You really want to bet that Paulson, Reid, Pelosi, Dodd, and Frank are better than McCain and the GOP reps from the House?
funky chicken on September 25, 2008 at 9:16 PM
The average voter doesn’t have a clue how this all started, let alone what to do about it. All they know is that everyone is saying there is a crisis; and there’s ONE MAN who’s stepping up and taking charge.
logis on September 25, 2008 at 9:15 PM
Well really three/four…McCain Paulson, Bernake, and Bush
unseen on September 25, 2008 at 9:17 PM
Who could have faith in a credit sector that just required a trillion dollar bailout to stave off a great depression that would send us all to the soup line? The message of the bailout is that you are crazy to have faith in the credit sector.
Buddahpundit on September 25, 2008 at 9:17 PM
BO is invisble? Why would anyone be surprised about that…the room where they met wasn’t large enough for him to have his 300 advisers at his side. The man’s understanding of this can fit inside a nutshell with room leftover for the nut.
jbh45 on September 25, 2008 at 9:18 PM
I want heads to roll. The fox in the hen house must stop now. Any agreement by the Republicans should be based on the immediate resignation and prosecution of Dodd, Schumer, Frank, Gorelik, Johnson, etc.
I’m proud of John McCain for stopping this further insanity, deeper into Socialism. Can it be that John McCain doesn’t want this to happen on his watch? WOW
Go John, I contributed more to your campaign today. I can’t believe I’m actually proud of John McCain…he was on my sh** list for so long!
Go John! Go Sarah!
Clean out that cesspool!
luvstotango on September 25, 2008 at 9:18 PM
Bottom line, vote them OUT stop fugging around with this ash holes, they do very little ast best to promote the american population, whe in the hell-o will we understand this??
foxone on September 25, 2008 at 9:18 PM
I swear, a lot of people are nervous Nellies about this whole thing.
It’s being taken care of. Just hold your hats, and you’ll like what comes.
Sakaki on September 25, 2008 at 9:19 PM
BailoutDome. Two taxpayers enter, one taxpayer leaves. Film at 11.
Limerick on September 25, 2008 at 9:20 PM
If this were a movie, Barney Frank would be the villain, John McCain the hero, and Barack Obama would be Student #4.
thedudesblog on September 25, 2008 at 9:20 PM
The interesting thing to me is that the Republicans are the only ones even seriously talking about what to do and what the long term implications are, and what are the alternatives.
The Democrats are basically sitting around waiting for someone else to tell them what to do so that if things go wrong they can blame that person.
Sackett on September 25, 2008 at 9:20 PM
funky chicken on September 25, 2008 at 9:16 PM
I am not screaming at McCain in fact I am happy with his conduct. If he can make the deal better all the more to him and Palin. I am worrried that without a deal all hell breaks lose. The Paulson plan was ok not great not even good but would have done the job, the dem plan was total bullsh*t but would have still done the job true with more taxpayer money than needed. The REP plan and newts plan looks like the best. My bet is we get a compromise between the three plans before Monday.
unseen on September 25, 2008 at 9:20 PM
Harry Reid would be the crybaby little sister.
thedudesblog on September 25, 2008 at 9:21 PM
Newt ROCKED H&C – even Alan thought the plan is one the Dems will go for! Shut his smug face right up!
Queen0fCups on September 25, 2008 at 9:21 PM
This bailout was never going to be passed. It was all a political game by the Democrats. If McCain and the Republican House members said their support they were ready to vote NO. Now that McCain and Republican House members are wavering on the bill the Democrats still come out looking like Roses in perception.
JoeBrooks on September 25, 2008 at 9:21 PM
Gingrich just schooled skeletor on Fox. Saying that none of the House Conservatives were in on the “deal”. Hence when it came out it was a no-go. Basically saying that the 2nd level Republican Senators made the deal.
broker1 on September 25, 2008 at 9:22 PM
Even this morning Bill Clinton was talking in a way that led me to believe that the Republican plan will work.
Queen0fCups on September 25, 2008 at 9:23 PM
Democrats are spending time trying to place blame, while Republicans are trying to create alternatives.
Politicians trying to place blame at this point in time is as useful as officers on the Titanic arguing about who hit the iceberg while water is pouring onto the deck.
cannonball on September 25, 2008 at 9:24 PM
Sakaki on September 25, 2008 at 9:19 PM
All due respect…. you seem very upbeat about EVERYTHING – are you some kind of oracle?
Or is it better living thru pharmaceuticals?
tru2tx on September 25, 2008 at 9:24 PM
You know what’s a little twilight zone-ish about all this? My dad and I just landed a 170 ton steel job, with a 400 ton job on the way. Things may dry up, but at least buildings are still being built. This is the best start to a fourth quarter in a long time. I know, I know, without credit there will be no financing for buildings, but I’m not going to panic quite yet.
Weight of Glory on September 25, 2008 at 9:24 PM
SteveMG,
Without dealing in the footnotes can I at least get you, for experimental purposes, to agree to suspend FASB 157 for let us say at least as long as they keep the short sale ban on?
All it takes is a memo.
patrick neid on September 25, 2008 at 9:25 PM
If they do it will be because of all of the fear-mongering emanating from DC as much as anything else. The market is largely driven by perception and psychology. Paulson’s end-of-the-world’s-economy hysterics, meant to force the governments hand to embrace his boneheaded plan without question or hesitation, was a massive gamble on his part, as irresponsible as the credit bubble itself: either we embrace his plan or else any sell off that might occur will only be magnitudes worse as a result of his fear-mongering.
His failure to notice this problem for so long combined with his dangerously irresponsible tactics should ensure his dismissal from his current position in short order, IMO.
His misguided plan isn’t the only possible means of addressing this problem, but we should take appropriate steps to soften the coming correction, and it sounds like some of the Republican’s are on the right track.
FloatingRock on September 25, 2008 at 9:25 PM
Hey – y’all catch Dick Morris following Newt on H&C. He was in ecstasy over this whole shebang.
CK MacLeod on September 25, 2008 at 9:27 PM
Hey, here’s an idea;
Pelosi and Reid should keep Congress in session for how many days it takes to come up with a reasonable and supportable solution. No weekends off to go home and campaign etc. The first vote of everyday should be a by name quorum call so the folks back home will know which politicians are working and which are not. In short, lock the bastards in the Capitol and tell them that we don’t want to see them until they do their damned jobs for once in their pathetic taxpayer-sponsored lives!
highhopes on September 25, 2008 at 9:27 PM
Politics is the art of the possible (not original but it’s the best I can come up with on short notice; plus, I’m on my third drink).
In a perfect world, you and I would run things and everything would be great.
It’s everybody else that is screwing things up.
SteveMG on September 25, 2008 at 9:28 PM
Dick Morris said McCain is brilliant. And the republicans have won the issue.
We’re doomed.
lorien1973 on September 25, 2008 at 9:28 PM
Keep on telling yourself that.
CK MacLeod on September 25, 2008 at 9:29 PM
I pray you’re right. For all of our sakes. But it just depresses me how few people understand the gravity of the situation. I’ve avoided most Democratic sites for years. Too much ignorance there. Now its looking like I’m going to have add Michelle Malkin’s site to the list. I didn’t see that day coming. I saw commentaters attacking Paulson for being a sell-out to china for supporting free trade. Besides the massive contraction of money supply, the other major ingredient to the Great Depression was protectionism. And now it seems a great number of rightists are advocating for both these conditions.
phronesis on September 25, 2008 at 9:29 PM
Janos:
Won the election? By looking at the most serious financial challenge in recent memory and saying Screw it, if they die, they die.
I hope you are right, but if this thing goes to hell the Democrats will most likely win. They always do. George H.W. Bush did not deserve to get killed on the economy either. It was actually coming around in the last months of his term, but thanks to a guy named Ross Perot, and public perception that Republicans suck at the economy, Bill Clinton won.
So yeah, I think there is a good chance that Republicans may have lost the election. I hope I am wrong,it would not be the first time.
Terrye on September 25, 2008 at 9:30 PM
That’s all that 99% of America wants. There are a handful of high rollers who’re waiting to rook the government out of another big pot of money, then bail out and leave the rubes holding the bag once again.
I want the government to do the ONLY thing that it’s (at least theoretically) capable of doing. Until I see that, there’s no way in Hell I’m going to support it doing anything else – let alone a breakneck plunge into the most massive socialization program in American history in the name of ‘fixing’ a problem that the same government spent the past ten years creating.
logis on September 25, 2008 at 9:30 PM
I’m upbeat about it because I actually take the time to contact people on capitol hill and other people and get the straight crap from them.
That, and because I saw this stuff coming. The bailout plan fails, the new alternative plan succeeds, and McCain comes out as a leader.
Pessimists need not apply.
Sakaki on September 25, 2008 at 9:31 PM
The market tanking tomorrow will just increase the pressure on the Dems to ACT on the bill the Republicans are proposing!
This is so awesome!
Dems hand-wring and whine – Republicans ACT!
That video of Reed saying “we don’t know what to do” as he hung his head in that sad raspy little voice of his said it all!
Queen0fCups on September 25, 2008 at 9:31 PM
Haha. Funny because it’s true.
Slublog on September 25, 2008 at 9:31 PM
+700 billion.
SteveMG on September 25, 2008 at 9:31 PM
…and the loser gets to keep all of the winners stuff.
FloatingRock on September 25, 2008 at 9:32 PM
WOW! H&C now has Ann Coulter!!!
Queen0fCups on September 25, 2008 at 9:32 PM
CK;
Joe might be right. At least I think the Democrats will come out looking better. At least they are not doing a jig at the idea of the deal failing and the impending recession.
And I am not a Democrat either.
Terrye on September 25, 2008 at 9:32 PM
reality check
DOw futures off 1.05%
SP futures off 1.3%
unseen on September 25, 2008 at 9:32 PM
No, I would make the analogy something like this:
You can take what BO knows about the issue, put it in a matchbox and it would be like putting a BB in a boxcar.
belad on September 25, 2008 at 9:33 PM
I think people do not understand that the taxpayer is going to be picking up the tab no matter what. If this fails, you did not dodge any bullet.
Terrye on September 25, 2008 at 9:34 PM
I think there will still be a deal, but hopefully it will lose much of it’s resemblance to the plan proposed by the incompetent Mr. Paulson.
FloatingRock on September 25, 2008 at 9:35 PM
Sakaki on September 25, 2008 at 9:31 PM
Well, alrighty then!
~~~thumbs up~~~
tru2tx on September 25, 2008 at 9:36 PM
Is Pat Caddell a Reagan democrat? He seems to always debate Alan “The Liberal” Colmes.
jaboba on September 25, 2008 at 9:36 PM
And your bishop is wondering if you are, you silly hag.
AubieJon on September 25, 2008 at 9:36 PM
If that’s the case then let’s spend our money wisely instead of throwing it away on a plan proposed by an incompetent dweeb.
FloatingRock on September 25, 2008 at 9:37 PM
We’re going to get hurt. All americans will get hurt, no matter what.
It is just a matter of degrees. And right now, the alternative plan is by far the better because it reduces the amount of chafing our asses are going to get.
It’s simple. And the alternative plan is better than the current Paulson plan. McCain will win this, and Obama will be rearporked.
Sakaki on September 25, 2008 at 9:37 PM
Queen of Cups:
Are the Republicans proposing a deal? So far I have heard that McCain had some ideas, but most of the Republicans I have been hearing about are not wanting to do much of anything. That is what I am pissed about. I don’t care if it is this particular plan, if they can come up with something better that can pass a Democratically controlled Congress..fine and dandy. I would be much relieved.
Terrye on September 25, 2008 at 9:37 PM
phronesis on September 25, 2008 at 9:29 PM
Funny you should mention china. this bailout would help china alot. china holds a lot of MBS. If the MBS fail China is going down the tubes, Russia too but its wealth of natural resources would support it some what. CVhina on the other hand will be hit with a double punch its cash reserves will be destroyed and its manufacturing will sink as America is no longer able to buy its goods. China goes down all of Asia will follow since all of Asia is invested heavily in the “China miracle”. India should be ok most of its trade rev is in service but it will still be impacted. european banks are up to the gills in MBS so Europe already facing a recesion will be hit hard. England is toast. Brazil might be the biggest gainer from this problem. It’s strong balance sheet, plenty of natiural resources and quasi capitalistic gov should be a safe haven during the coming depression.
unseen on September 25, 2008 at 9:37 PM
It can’t be easy for Alan to come in every night and get his behind handed to him.
tru2tx on September 25, 2008 at 9:38 PM
I’d like to see that. This is one of the rare times I wish I had TV.
FloatingRock on September 25, 2008 at 9:38 PM
If that’s the case then let’s spend our money wisely instead of throwing it away on a plan proposed by an incompetent dweeb.
FloatingRock on September 25, 2008 at 9:37 PM
Well the tab for the bailout is $700b
for a depression $30 trillion.
you make the choice which you would rather spend.
unseen on September 25, 2008 at 9:39 PM
That’s a bit harsh. Paulson did run one the most successful investment companies in the country, and did quite well at it. That he’s now advocating a course of action many may disagree with seems like an inadequate justification to call his abilities into question.
Slublog on September 25, 2008 at 9:39 PM
I agree that Paulson’s doom saying was inappropriate. However, when major institutions fail, people lose faith and react. The market already had a significant decline, and some banks were already in trouble before Paulson spoke. Unless the Bush administration and leaders in Congress from both parties are lying about this being a crisis, there would have been further erosion anyway and a cascade of bankruptcies that could cause a real panic with grave consequences.
We still need a solution soon. I hope the outcome is a good, clean bill that can draw support from a majority within both parties.
Loxodonta on September 25, 2008 at 9:39 PM
Instead of a bailout they’re offering some sort of mortgage insurance plan/option for the institutions.
No followup questions allowed ’cause I have no idea as to what it means.
SteveMG on September 25, 2008 at 9:40 PM
Okie:
I am sorry I did not answer your question. I think the Republican Congressman who chaired finance was Oxley, and you are right, even when the Republicans were in control they did not jump on this. Even with McCain pushing it and Bush wanting more oversight from Treasury. I think everyone just kind of kicked it down the road.
Terrye on September 25, 2008 at 9:40 PM
You know what’s a little twilight zone-ish about all this?
I heard the newsreader guy on the radio try to intone in his most solemn, horrified tone that “the housing inventory is at its lowest level in over a year” or some such.
What a maroon—that would be GOOD news for the housing market and economy, because it most likely indicates that repos are being purchased so homes are going off the market. I heard that’s happening in CA…can’t remember where.
funky chicken on September 25, 2008 at 9:40 PM
“An astute point from Baseball Crank. In all the frenzy over McCain, you know whose name you haven’t heard much of at all as mattering to this deal? Barack Obama’s.”
‘Mattering’ is a funny word. Not sure why.
Kevin M on September 25, 2008 at 9:40 PM
FloatingRock on September 25, 2008 at 9:35 PM
Let’s hope.
On a brighter note my investment in canned goods is paying great returns 30% as of today spot price in store shelves…
unseen on September 25, 2008 at 9:41 PM
You know what’s a little twilight zone-ish about all this? My dad and I just landed a 170 ton steel job, with a 400 ton job on the way. Things may dry up, but at least buildings are still being built. This is the best start to a fourth quarter in a long time. I know, I know, without credit there will be no financing for buildings, but I’m not going to panic quite yet.
Weight of Glory on September 25, 2008 at 9:24 PM
Congratulations! That’s great news, and I hope it continues for you.
I’ve been fairly glum about all of this because my work necessitates following the news constantly. But I’m with Sakaki. We’ll get through this. There will be some pain, for sure, but we’ll do it.
There are too many foreign investors involved (for better or worse depending on one’s opinion) to allow an economic free-fall.
What I want to see are plans for an economic recovery beyond this program.
Cody1991 on September 25, 2008 at 9:41 PM
funky chicken on September 25, 2008 at 9:40 PM
also in naples FL. The market is working..as long as credit is available for these repos the market will continue to work and we should grow our way out of the recession in 6months to a year. The problem is credit..
unseen on September 25, 2008 at 9:42 PM
It means that companies use their own capital to work their way out; but if mortgages go under, they can be insured through the government.
it limits the exposure of tax payer dollars.
lorien1973 on September 25, 2008 at 9:44 PM
Steve:
yes, but is the GOP House in on that, or is it just some idea McCain has come up with that they will refuse to support when he needs them to? In other words, do we know if it has broad support?
Terrye on September 25, 2008 at 9:46 PM
The boy has been pawned. Obama will follow the path of least resistance and do as he’s told. It’s his customary role to hang back and observe.
JiangxiDad on September 25, 2008 at 9:46 PM
Yes, you can breathe! It’s more involved, but it boils down to proposing a loan from the Feds instead of a bailout. Also some capital gains tax suspensions for Wall Street to buy out the. It went by too fast to repeat it competently, but it looks like a winner that Americans will go for. It even shut Alan Colmes up. Newt spelled it out, and Boener is meeting with Pelosi now. I bet we have a deal tonight. Even if we don’t, we have a better plan, and if McCain debates Obama, he will massacre him with it.
Queen0fCups on September 25, 2008 at 9:48 PM
unseen:
My brother lives near Lawton, Oklahoma. The last time I talked to him he said that houses were still selling if folks could get money. But there are a lot of military there thanks to Fort Sill and that might make a difference.
Terrye on September 25, 2008 at 9:48 PM
WASHINGTON — Wall Street powerhouse Goldman Sachs has a long list of alumni who have gone onto government service, and it looks like it’s about to give up one more of its protégés with the nomination of Chairman and CEO Henry M. Paulson Jr. to head the Treasury Department.
The move won’t be uncommon for Goldman Sachs employees. At least among its financial competitors, Goldman Sachs appears to be head and shoulders above the rest when it comes to putting former employees into the halls of government. For years, résumés around Washington have sported the company name, and those with the job experience have gone on to positions as Cabinet officials, agency analysts, advisory board members and even U.S. lawmakers.
“I don’t know of any other company in the United States who has quite this tradition. Certainly not on Wall Street,” said Stephen Hess, a senior fellow at the Brookings Institution, a liberal-leaning Washington, D.C., think tank.
With the ease of an Internet search, it’s easy to cobble together a list of Goldman Sachs current and former executives, partners and board members who have moved on to serve in the public sector. Most of the job posts involve economics, but some have broadened their professional portfolios by serving in an array of other government policy positions.
A the top of the list are names like New Jersey Gov. Jon Corzine, White House Chief of Staff Joshua Bolten and former Treasury Secretary Robert Rubin. Corzine was CEO of the brokerage before he won a Senate seat in 2000. Until taking up work with the Bush-Cheney campaign in 2000, Bolten was executive director for legal and government affairs at Goldman Sachs International in London. Rubin was co-chairman of Goldman Sachs until 1992, when he was confirmed for his Cabinet seat in the Clinton administration.
But company officials have filled in heavy-lifting posts in less visible areas, too.
The Goldman Sachs’ alumni who have served in government include Deputy Secretary of State Robert Zoellick; former president and chairman of the Export-Import Bank of the United States Kenneth D. Brody; chairman of the President’s Foreign Intelligence Advisory Board and former director of the National Economic Council Stephen Friedman; Reagan Deputy Secretary of State John C. Whitehead; and Reagan Assistant Secretary of State for Economic and Business Affairs Robert Hormats. Goldman Sachs’ graduate James Johnson served as president and CEO of quasi-government housing lender Fannie Mae.
http://www.foxnews.com/story/0,2933,197554,00.html
funky chicken on September 25, 2008 at 9:48 PM
reality check TED spread hitting 3. Very bad news people very very bad
http://www.bloomberg.com/apps/cbuilder?ticker1=.TEDSP%3AIND
unseen on September 25, 2008 at 9:49 PM
Queen:
I hope you are right. And I hope Wall Street can breathe too.
Terrye on September 25, 2008 at 9:50 PM
THIS ENTIRE MESS IS WHY ALL ELECTED OFFICIALS SHOULD HAVE A TWO TERM LIMIT.
Oh, and the Rep plan is the one we should be using.
Frankly, if Congress steals my tax money to pay off their buddies, I’m gonna head down to Washington and ENFORCE some term limits with a freaking 12 gauge. Seems like that’s the only thing these bastards will listen to any more.
wearyman on September 25, 2008 at 9:50 PM
I bet there will be video!
Queen0fCups on September 25, 2008 at 9:50 PM
Terrye on September 25, 2008 at 9:48 PM
I live in NC market still holding up nicely. the problem is credit. banks are afraid to lend so FM and FM and FHa are doing most of the loans which means that for the last couple of months the fed gov has been buying all the home loans in the country. No good.
unseen on September 25, 2008 at 9:51 PM
Just imagine Skeletor saying “stunt” every other word and being smacked around by Newt and Coulter.
lorien1973 on September 25, 2008 at 9:51 PM
Paulson is like some doctor who is yelling at a patient that if he doesn’t take some big collection of new and expensive medicine he will have a heart attack. If someone doesn’t shut him up he may end up yelling and scaring the patient so much that he ends up giving him a heart attack.
MB4 on September 25, 2008 at 9:52 PM
Weight of Glory:
I think that is the point some are missing. When McCain says the fundamentals of the economy are strong and people laugh at him. Really, there is work out there, business is still going on. It is not business per say that has the problem it is the credit sector.
I guess it is like saying the economy is the car and the credit is the gas. The car can be in good shape, but without any gas…
Terrye on September 25, 2008 at 9:53 PM
My impression, FWIW, is that the financial firms ’securitized’ the mortgages, turning them into packages, and then selling paper representing pieces of the packages, or ‘derivatives’. So these derivative instruments could contain bits and pieces of many different mortgages. A percentage of those underlying loans could be bad, but if you’re buying shares of a derivatives fund, you have no idea which bits and pieces are ‘toxic’ and which are not.
What’s happened, if I understand it correctly (a big ‘if’), is that once large numbers of people started defaulting on their mortgages, the poisoned pills in the derivatives started scaring off buyers. Since the paper derivatives are ‘assets’ (so long as they are worth anything, just as stock shares are), if suddently no one wants them, they are no longer assets that have any value.
Suddenly firms that had invested billions in these ‘assets’ found them turning to dust. That left them without capital on their balance sheets, and since they don’t actually do anything but sell capital, that killed their businesses.
Paulsen’s remedy is for the Treasury to buy up a lot of these derivative securities at bargain prices (since they are essentially worthless as long as no one else wants them), and then hang on to them until it becomes clear which ones are toxic and which aren’t, at which point the Treasury will sell them, maybe making a good profit, maybe as much as 10% a year!
What the Republicans want, or should want, is for any profits to be returned to the taxpayers, and not used for Obambi’s social programs at home and abroad. I hope the Republicans (and Senator McCain) stand their ground on this issue.
MrLynn on September 25, 2008 at 9:54 PM
The heart attack started last week. Credit Stopped. It was there for all to see.
phronesis on September 25, 2008 at 9:54 PM
It’s my understanding that these companies don’t know the value of these “toxic” holdings and, because of that, it’s impossible to determine the true value of many of their assets.
IOW, how much are these 12 mortages worth we have from Ames, Iowa? Two million? One million? Half a million?
Until that value is exposed/discovered, everything is frozen. No capital to work with since they don’t know how much capital they have.
SteveMG on September 25, 2008 at 9:56 PM
Luckily, I emptied most of my WAMU account as soon as Bernanke said the sky could fall.
nyrofan on September 25, 2008 at 9:56 PM
The heart attack started last week. Credit Stopped. It was there for all to see.
phronesis on September 25, 2008 at 9:54 PM
Ted at 3 credit stopped again tonight. It’s over man
unseen on September 25, 2008 at 9:56 PM
And the republicans should have used their political capital to produce a clean bill without this stuff. But it doesn’t look like its happening.
phronesis on September 25, 2008 at 9:57 PM
Yes. This is the best explanation so far.
It’s the “unknown” that is causing the credit freeze. How much capital are these “unknown” assets worth?
Until they’re taken off the books, companies are essentially frozen from making decisions. Or getting loans from other companies.
This is why I don’t undertand the insurance proposal.
SteveMG on September 25, 2008 at 9:58 PM
So so you all know the TEd spread during black monday in 1987 was less than 3 we are not at 3 this is not good.
unseen on September 25, 2008 at 9:58 PM
Unseen: The TED Scale is a farce.
Things will be alright. Sure, we’ll have to take some of it up the ass, but we’re gonna turn out alright.
Give it a few hours, and you’ll see some headway.
Sakaki on September 25, 2008 at 9:59 PM
Yeah, last year I was scared to death that steel price increases were going to decrease the number of the really big jobs being built, forcing some of the larger firms to focus on mid range commercial buildings, which would, of course eat into our work. Then, with concrete being much cheaper I was scared that concrete construction would eat into our market of steel. Funny thing happened though. With the increase of energy prices, the relative cost effectiveness of concrete was more than cancelled out since A LOT more gas is used in concrete of construction ( lots of cement mixers needed to turn and deliver a lot of mix). Thus, though I hated filling up at $4.00 per gallon, that price was allowing steel to be attractive, boosting my personal income. The point of all this is that I was nervous, literally for a year, about steel. And all my fears didn’t solve anything. This is probably going to be much worse, I recognize that, but people aren’t just going to roll over and die.
Weight of Glory on September 25, 2008 at 10:00 PM
No, I know. You’re right. But I’m still not going to panic just yet.
Weight of Glory on September 25, 2008 at 10:01 PM
That is a loaded question, with a big assumption embedded in it, if ever there was one. Actually two big assumptions as it is by no means a certainty, even if your assumption of a “depression $30 trillion” is correct, which I doubt, that letting “them” that let us get into this mess spend another $700b, that we and they don’t really have, will prevent it.
MB4 on September 25, 2008 at 10:01 PM
Greta is doing a play by play!
Queen0fCups on September 25, 2008 at 10:01 PM
Of course they need to blame McCain. Like any of us would expect the democrats to act like adults.
I have $5.00 says Uh-Uh-bama was participating in some fund raiser tonight, even if it was a video appearance.
After all Uh-Uh-Bama knows he don’t know nothing about this stuff.
DVPTexFla on September 25, 2008 at 10:01 PM
MB4:
You are oversimplifying things. The markets were starting to crash and the money was drying up before Paulson came up with anything. His actions are as much in response to the markets, as the markets are in response to him.
Terrye on September 25, 2008 at 10:02 PM
If you look around much, you’ll get details on the Eric Cantor-led alternative.
I heard Rep John Campbell talking about it today on the radio. His expectation was that it would be intensively vetted tomorrow, but, on its face, it appears to circumvent the Paulson plans three biggest problems – 1) making Barney Frank the world’d biggest landlord, 2) turning Wall St execs and brokers into civil servants, 3) having the taxpayer pick up the tab – by creating a government-backed mortgage insurance program similar in concept to FDIC. I’d need to have the details explained to me again, so don’t trust me on the next part, but it can be sold as a plan to have Wall St pay for its own mistakes – since the insured mortgages become valuable and tradable again.
The three live alternatives appear to be 1) modified Paulson; 2) House Republican alternative; 3) hybrid. I don’t believe that more than a handful of people are backing do-nothing/let the chips fall where they may.
CK MacLeod on September 25, 2008 at 10:03 PM
TED is a farce? It is a measure of credit. I don’t care how you slice it a 3 if very bad. It got to 3.13 last week it is now at 3.019. when it got this high last week on 09/18/08 that was the day Paulson panic drove him to washington. It was the day the market would have crashed if not for a hint of a bailout. this is not good.
unseen on September 25, 2008 at 10:03 PM
There goes Pelosi thinking she’s God again. “Let’s hear it for the power!”
CP on September 25, 2008 at 10:05 PM
Hardly. When did Paulson notice this problem, last week? Suddenly he announces to the world that if we don’t implement his socialist plan the American economy is going to crash next week. Thanks to his fear-mongering as much as anything, we’ve got to implement some plan, otherwise his hysterics will cause a self fulfilling prophecy and the markets will crash based on his dire predictions as much as anything else.
If that’s not incompetence, I don’t know what is. I sold my condo three or four years ago because I saw this day coming, and I’m nobody. If I saw it, why didn’t he? He’s definitely incompetent. There’s no way around it.
FloatingRock on September 25, 2008 at 10:07 PM
Unseen: Put your faith in something else, and not credit, you jackassed butt-plug of an Obama supporter.
We’re going to be fine, and we don’t need people like you being “nervous Nellies”.
Sakaki on September 25, 2008 at 10:07 PM
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