McCain: Extend FDIC, act without Congress

posted at 10:49 am on September 30, 2008 by Ed Morrissey

John McCain talked to Fox News about the financial meltdown and Congress’ failure to pass the compromise emergency liquidity bill. McCain suggested that the Treasury act without Congress within its authority to bolster liquidity by extending FDIC insurance to a greater number of depositor accounts, and also suggested that Henry Paulson doesn’t need Congressional approval to act:

“I have talked to the President this morning and recommended an increase from $100,000 to $250,000 FDIC insurance on deposits. I also strongly recommended that we use the exchange stability fund that the Treasury has available — $250 billion — to shore up these institutions. Also, the Treasury has at its disposal about $1 trillion that they could begin without Congressional authority buying up some of these terrible mortgages and help stabilize the situation. So I’ve talked to the President. I know that we have to act. Even though we failed yesterday, even though I went back and was able to get more Republicans on board or help get more Republicans on board, we will go back to this, and I will be engaged always where I think America needs engagement.”

“We’re going to have to change enough Republican and Democrats’ minds. It was 95 Democrats that voted against it. People’s credit is at risk here — the ability to buy a car, to make your home loan payments, for small businesses to get credit. Look, this is affecting Main Street America. And we’re going to have to resolve it, and we’re going to have to act. One point two trillion dollars of American savings, pensions, IRAs, mutual funds, investments, et cetera was wiped out, and that hurts Main Street. I’ve got a plan for cutting spending, for keeping taxes low, for making sure that people can stay in their homes, and a long-term plan. In the short-term, we’ve got to take these measures I just outlined to you, and let’s go back, and let’s make Americans understand who are opposed. I was watching your program earlier. How this affects not Wall Street, but Main Street and working families of America.”

Republicans are not going to get far on the “95 Democrats voted against it,” and they’re missing an opportunity that the failure provides. In the first place, more than 130 Republicans also voted against it, more that 60% of the House Republican caucus, which provides more of a rebuke to leadership than the 40% of Democrats who bucked Nancy Pelosi. The bottom line of the rebellion isn’t a partisan split or a bad speech by Pelosi right before the vote — although that certainly didn’t help — but overwhelming opposition by voters five weeks before a national election.

The FDIC solution seems to be gaining popularity with Republicans, and that may help keep depositors from starting bank runs, but it doesn’t do much to resolve the real cancer at the heart of this financial crisis.  Congress simply cannot escape its responsibility for its deliberate issuance of junk bonds through Fannie Mae and Freddie Mac based on bad loans, and until Congress acts to provide some sort of rational floor for the MBSs it launched, American credit will have little credibility.  Until enough stability comes back into that market, the negative balance of these American-government backed bonds will continue to sink the investors who bought them, believing that the US stood behind Fannie/Freddie actions.

McCain’s statement raises another question.  Can the Treasury spend $1 trillion without Congressional approval to buy back these MBSs?  If so, then what was the point of the negotiations of the last few days, Paulson coming to Pelosi on bended knee, and the futile vote yesterday — political cover?  Somehow, I find it difficult to imagine that Treasury can indeed act on this scale without Congress.

However, I’ll say this for McCain.  He appears to be actually demonstrating some leadership on this issue.  Where is Barack Obama?


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I would suggest all conservatives watch this C-Span video (Rep Economic Intervention Vote Reaction (Product ID: 281496-1). This is the leadership!

c-span

luckybogey on September 30, 2008 at 12:09 PM

Regardless of the remaining debates, this election is probably over due to McCain being a nice guy who will not fight combined with his mispositioning of Palin who should be with the voters 100% of her time when not preparing for the debate and learning national issues.

McCain is just a VERY poor politician, and the fact he has been easily re-elected to the senate seat from Arizona REALLY shows.

McCain is going to lose because he is NOT a politician. He does not understand what it takes to win an election outside of his good pick of Palin as Veep.

He does not have the vision of how to bring down Obama.

And, the biggest factor, the MSM is overwhelming supporting Obama. The partisanship by the MSM is the worse it has ever been in my lifetime for a presidential candidate.

Obama’s problem is that he is arrogant. He will win, but he does not understand that his term will be a third Bush term due to all the military, economic, and financial limitations we have. He will try to solve the problems with socialism and he and the Dem Congress will make it worse. Disillusionment will set in.

The biggest issue now is:

How much damage will Obama and Congress do in the next 2-4 years that will enlarge government in ways that will not be easily reversed?

NOBODY in the media is mentioning CRA and how it should be repealed and therefore new bad loans will constantly be made and the problem continues.

Get you money out of the US dollar and get your debt in the US Dollar due to the coming inflation.

It’s time to hunker down for the socialism coming.

Sapwolf on September 30, 2008 at 12:09 PM

Let’s face the facts people. American greed, extravagance and ignorance over the past twenty years got us into this mess. I know that many of us have been more reasonable in our personal finances, but too many Americans haven’t been and it looks like we are all going to have to suffer now as a result. Part of that suffering may be to endure an Obama presidency. I sure hope not, but if the Republican base doesn’t get out to vote in record numbers, that is probably where we are headed. The polls won’t matter much, if we take our anger to the voting booth and do our very best to rid the country of the liberal bane that is afflicting it.

NuclearPhysicist on September 30, 2008 at 12:11 PM

NuclearPhysicist on September 30, 2008 at 12:11 PM

Yep. As I have stated before, it’s time to pay the piper.

davidk on September 30, 2008 at 12:14 PM

Who else read this morning (Drudge link 5 hours ago, no longer featured) that the Federal Reserve BEFORE ANY VOTE already began giving billions of dollars to foreign banks yesterday, and is already doing today what they wanted the Congress to legislate yesterday.

The Federal Reserve wants to trump the three branches of our Constitutional government to effectively BECOME ITSELF the “fourth” and only one that matters branch of government. This bill augments the powers they already have and totally demolishes any means to counter them. This all amounts to a horrible ruse.

Repeal the corrupt economic legislation first. Tackle what is appropriately called perverse incentives of government hand-outs.

If anything, I would certainly hope that America realizes the corrupt futility of our government’s welfare programs that further amplify today’s financial debacle. Repeal it all. At least maintain the threat in order to play the legislative poker game vs. democrat slave masters.

maverick muse on September 30, 2008 at 12:15 PM

Let’s face the facts people. American greed Democratic Congressional greed, extravagance and ignorance over the past twenty years got us into this mess.

NuclearPhysicist on September 30, 2008 at 12:11 PM

There, I fixed that for you.

Maxx on September 30, 2008 at 12:15 PM

Now, among all the problems we have currently affecting the market, from bad CRA subprime mortgages to the auto industries demanding blank checks, the stock market is in serious convulsions. For the last couple of weeks, activity has been either sharply up, sharply down, or record inactivity. Just yesterday, we saw a 777 point drop, the largest point drop in the history of the Dow Jones.

For the record, that was a 6.9% drop. That’s less than the first trading day after 9/11. That’s far less than the 1987 crash or the 1929 drops. In fact, it isn’t even in the top 10 crashes percentagewise in history. Now, this doesn’t mean that the drop was insignificant, but keep perspective. As of writing this entry, we’re 250ish points up.

Here is the thing. All investment markets, be they stocks, precious metals, land, houses, or anything else that you can attempt to make a profit off of, have booms and slumps. Very few markets have ever gone to zero, and those that have were niche or novelty markets, such as the tulip craze about 300 years ago.

For example, houses are currently dropping in value. This is primarily due to the fact that their prices have been inflated for the better part of the last decade, and an elastic effect has swung them down. Now, people do need and will always need housing. So, houses will never reach zero. They will eventually reach a bottom in price before they start raising again. Will there be another massive boom like there was in the early part of this decade? Impossible to say right now, but what is impossible is that they will become worthless. Given time, even if we go through a period of economic hardship, people will buy houses again. They will be cheap and plentiful. As people begin to invest, the demand will slowly begin to increase prices. If one group of people are successful in making even a small profit, others will follow. Demand grows, prices grow. Suddenly, the housing market stabilizes at reasonable prices, and the economy starts experiencing real growth.

This whole situation also applies to the stock market. There will always be businesses (assuming the government doesn’t seize control of the economy and centralize it), and they will always need capital. At least some of these businesses will seek capital by selling stock, even if the stock market has lost most of its volume. You’ll have these new businesses looking for investment alongside a number of established corporations who will weather the fallout of a market crash. Nearly all of these shares will be available at rock bottom prices. Very few will go to zero, because even the average joe will note that a profit is likely from buying shares. Remaining investment firms will pick up on renewed interest and buy, albeit at slower rates than before the crash. The American drive to generate profit at all levels is an assurance of this.

Yes, people are losing money when the market goes down. The market has been booming for years now. Anyone who has been through an economics 101 class knows that markets go through cycles. Am I saying that we’ve “had too much prosperity”? Not in a sense of entitlement. I’m saying that the natural progression of profit-loss systems balances out. After a time of increased growth, the amount of time before growth stops and goes negative is just a ticking time bomb. It’s going to happen. There will be hardship. However, there is a simple thing that can be done to avoid a real panic and mass hysteria.

Realize that this happens, and that handling it like adults expedites the return of good times. It may sound cliche, but it’s the truth. The media in this country has a more vital role in keeping the economy going than it ever has in this nation’s history. If they report bank runs, mass defaults, and that we are entering the next Great Depression, people will believe it and act accordingly. If they report that we can weather this and that we just need to tighten our belts, the public will be less frenzied and the overall impact will be far less than the former scenario.

Markets bottom out. They do not vanish from the face of the earth. Keep your wits about you, and soon enough you’ll have the chance to make your money work for you at an efficient rate. When others get wind of it, so will they. Failure or success rests in the hands of the American people.

MadisonConservative on September 30, 2008 at 12:23 PM

There, I fixed that for you.–Maxx

Don’t forget when the GOP majority House/Senate ruled with GWBush, individuals (Bush, McCain, et.al.) did address this, but not with CONCERTED effort. And when they failed to get a majority, they failed to keep trying for the required votes. Why did the majority of Republicans fail to give their vote to pass McCain’s and GW’s proposals?

American Greed

maverick muse on September 30, 2008 at 12:27 PM

How about a few months ago when McCain visited LA with Gov Jindal, and (correctly) said that the Bush administration civilian response to Katrina was incompetent?

Just like the “concerned Christian conservative’ that you are, I suppose.

funky chicken on September 30, 2008 at 11:27 AM

First of all, responsibility should start at the local level, then the state level, and finally the Federal. The damage was so great because of incompetence at the local, and then state, level. So don’t go dumping all that crap on the Bush administration. When he first offered federal support, the state Governor REFUSED it.

Second, this goes to demonstrate that government never solves any problem, and usually exaggerates it. If you really cared about true disaster relief, you wouldn’t be advocating for money to be spent on government programs, or even the American Red Cross…

It would be spent at the local church level. I was down there 2 weeks after Katrina. I saw the destruction, and who was actually there providing assistance. It wasn’t government workers organizing the supply lines or food/supply. It wasn’t even state or local workers. And it sure as heck wasn’t the American Red Cross (who was AWOL). (I’ll give blood, but not one dime after what I saw!)

The local churches were running nearly everything… from the food and supply distribution, to crews going door-to-door checking on people and providing water/bleach/food, to the chainsaw crews removing trees so that power could get turned on to houses. Even now, my own cousin has organized over a 1,000 volunteers from Ohio to work muck/cleanout crews on houses over the last two years… adults and teens working a week at a time.

“Concerned Christian Conservatives” don’t throw money to inept blowhards to do an inept job… we go down and get our hands dirty doing the jobs ourselves. So you might want to think a little before you start throwing around accusations. You just look like an idiot to someone who actually got his hands dirty.

dominigan on September 30, 2008 at 12:30 PM

Bear market for personal responsibility

My bailout target?

Personal responsibility.

America is experiencing a collapse of the ethics market. Belief in the notion that people should be responsible for their own actions, or pay their own bills or keep their promises has plummeted. It’s time to pump moral and ethical capital into the idea of individual responsibility.

Is it any wonder that Wall Street is waiting for a bailout? After all, we’ve become a bailout society.

Wall Street bankers who leveraged $1 trillion worth of mortgage-backed securities up to 40 times on the dollar get no sympathy from me. But it is an inescapable – if unpleasant – fact that banks would not be failing or credit markets frozen if borrowers were keeping their word.

This isn’t a failure of finances. It’s a failure of character.

Barney Frankophiles rage against this idea as “blaming the victim.” I ask “victim of what?” The economy?

I’m sorry, but folks who lost their homes during the Depression were victims of the economy. Twenty percent unemployment made it impossible for folks to pay the mortgage.

We are experiencing the opposite: Unemployment has barely hit 6 percent, and yet so many borrowers are walking away from their loans that they might take down the entire economy.

You can blame mortgage brokers willing to make loans to any warm body, but every transaction ended with that warm body – presumably a voting-age adult – signing their good name on a pledge to repay the loan.
- Michael Graham

MB4 on September 30, 2008 at 12:38 PM

- Michael Graham

MB4 on September 30, 2008 at 12:38 PM

+1 Exactly right!

dominigan on September 30, 2008 at 12:39 PM

Don’t forget when the GOP majority House/Senate ruled with GWBush, individuals (Bush, McCain, et.al.) did address this, but not with CONCERTED effort. And when they failed to get a majority, they failed to keep trying for the required votes. Why did the majority of Republicans fail to give their vote to pass McCain’s and GW’s proposals?

American Greed

maverick muse on September 30, 2008 at 12:27 PM

No sir, not American greed. When you say “American greed” you are including ME into that mix and I refuse any of the blame, probably just like the vast majority of working Americans.

You are like Allah, you expect Republicans to be responsible enough to cover for both themselves and the Democrats. Democrats go about causing tragic problems on purpose, Republicans try their best to stop it but fail…. thus Republican are responsible. That is a double standard.

We have all been trained like Pavlov’s Dog to never expect any responsible actions from Democrats… Democrats are in charge of screwing things up and Republicans are in charge of fixing them. When Democrats toil for decades to destroy our economy and the walls come tumbling down, Republican had better not get hacked-off that Democrats try to blame them for it, even as Republicans are working hard to fix it.

No Sir…. greed generally speaking is not what caused the problem. Inability to identify the good guys from the bad guys is what caused the problem. And the double standard you now employ of expecting no responsible actions from Democrats and superhuman efforts from Republicans is also part of the problem.

Maxx on September 30, 2008 at 12:47 PM

It’s going to be Obama in November. Then Republicans will make a resurgence. But I’d prefer a Conservative resurgence. I think Obama’s personal narcissism is near total. It’s a benign, friendly narcissism. Narcissism is often attractive on the outside. Charming, charismatic, easygoing, friendly. But ultimately it’s all about him. He’ll be a horrible president. It’s like two trains approaching each other on the track, and there’s nothing I can do about it, but watch. His self-involvement bodes ill for the country. He’s not a leader, and will never be. He was never any kind of leader in the Senate. His idealistic, naive vision will harm the country for decades to come. Robin Hood with a disastrous foreign policy, with great and permanent personal flaws. A low watermark in our history.

Paul-Cincy on September 30, 2008 at 1:07 PM

We have all been trained like Pavlov’s Dog to never expect any responsible actions from Democrats… Democrats are in charge of screwing things up and Republicans are in charge of fixing them. When Democrats toil for decades to destroy our economy and the walls come tumbling down, Republican had better not get hacked-off that Democrats try to blame them for it, even as Republicans are working hard to fix it.

No Sir…. greed generally speaking is not what caused the problem. Inability to identify the good guys from the bad guys is what caused the problem. And the double standard you now employ of expecting no responsible actions from Democrats and superhuman efforts from Republicans is also part of the problem.

Maxx on September 30, 2008 at 12:47 PM

You raise good points.

One thing that the Republicans need to do right now is distinguish themselves from the Democrats.

Two groups voted against this bailout – those who did so out of fiscal responsibility to the voters and those who did so because the bill didn’t have enough pork in it (after the Republicans managed to get some cut out). This morning one of the local Congresswomen (not mine, fortunately, but some illiterate democrat from O.C.) was on the news detailing why she voted against the package. She rattled off a list of 5 or 6 items, most of which sounded suspiciously like populist pandering (I have yet to hear an explanation of what meaningful impact CEO compensation has on any of these bank failures, for pete’s sake).

The Republican leadership needs to pound home the message that they did their best to trim the costs on the bill, as well as to restructure the bailout to put more burden on Wall Street and less on taxpayers, but that many their members could not in good conscience vote for it after hearing from their constituents. Then they need to list by name the Democrats who voted against the bill because it didn’t have enough pork in it, distinguishing those dems from any conservative dems who might have voted against the bill yesterday. Finally, they need to point to those representatives who voted in a block, such as those from the congressional black caucus, and ask why O! did not bother to pick up the phone to ask them to vote for the bill… or raise the real possibility that, in fact, he did call them and asked them not to vote for the bailout that he publicly supported.

The dems and their surrogates in the media have been playing chicken with our economy ever since this election cycle started, trying to will us into a recession and being clearly disappointed each quarter that a recession did not start. It’s time to call them out on it.

Y-not on September 30, 2008 at 1:14 PM

I think Obama’s personal narcissism is near total. It’s a benign, friendly narcissism.

Wow. I find nothing benign or friendly about O! or his philosophy. He preaches class warfare with racist and misogynistic undertones.

If he wins, which I still do not conceded is inevitable (I don’t trust the polls; many people are closet McCain supporters thanks to the viciousness of the Left, whether it be in daily conversations with co-workers or in orchestrated attacks by “truth squads”), I think it will be much worse than Clinton was.

Bill Clinton was a narcissist. He wanted to enjoy the trappings of power and chase tail, but he did not see our country as fundamentally flawed. Obama sees our country as fundamentally inferior to the socialist countries of Europe and intends to drag the country, willing or not, in that direction.

Y-not on September 30, 2008 at 1:23 PM

Y-not on September 30, 2008 at 1:23 PM

Rush just had clips with young children singing the virtues of Osamabama.

Scary stuff.

davidk on September 30, 2008 at 1:52 PM

Rush just had clips with young children singing the virtues of Osamabama.

Scary stuff.

davidk on September 30, 2008 at 1:52 PM

Yeah, the personality cult around O! gives me the creeps.

Y-not on September 30, 2008 at 2:10 PM

Maxx, you write as if still a very young adult. Some of us, however, have been around fighting these corrupt legislative bills as they occurred, sorely disappointed as our entire society (including government and GWBush) has become more and more Progressive (American Marxist). I am in no position to be financially fined for the foolishness of irresponsible citizens, banking industry, our Congress and our Federal Reserve. Even if I had the funds to provide the “bail-out” that would not require me to do so.

“You are like Allah,” LOL! HAHAHAHAHAHAHA!!!!HAHAHA! If you don’t really know better, Maxx, never mind that entire paragraph as well as your final double-standard paragraph as you pronounce its application specifically on me. Paint yourself as perfection if it makes you sleep better. God knows, we all need our sanity.

You and I and so many others are not the responsible parties that created this fiasco. However, COLLECTIVELY, by allowing the legislation that corrupted our banking system, you and I who live within our means are swept by the collective American Greed tsunami. Our Republican majority failed to address and remove this corruption from law even as this tsunami had begun when they indeed had the power to do so. That was then. This is now.

I’ve been calling and writing my Congressman and Senators and Sen. McCain whom I would vote for as POTUS, contacting them of my position to NOT augment our government’s bureaucracy with a stronger Federal Reserve and Treasury Secretary who would elevate themselves as completely untouchable. I have repeatedly asked them to vote NO to any “bail-out” whether it be for bankrupt individuals, families, businesses, or global banking systems. I have always spoken and voted for low taxes and small government. Now is no different.

This particular fiasco is a set-up for sinister events yet to unfold, and passing the $700billion bail-out would not avert what is yet to culminate in our POTUS and Congressional election, in the world of global banking, and the international power play to destroy America. Burdening ourselves prior to what’s coming down would bring whatever “crash” the chicken littles are screaming happened last night.

Maxx, I agree with you that it is not our responsibility to bail-out corruption. For anyone to be so simplistic as to think that Republicans are the Democrats’ Big Brother or Jesus is silly. Since Johnson’s Great Society (if not before) America has seen the ruinous results that legislated “charity” dissolves personal responsibility, be it welfare dole-folk or bail-outs for failed enterprise.

maverick muse on September 30, 2008 at 2:43 PM

maverick muse on September 30, 2008 at 2:43 PM

And you write like a puffed-up liberal that’s trying to say something that sounds profound but can’t find the words.

I would reply to beyond that if I could figure out what you are trying to say. You did your HAHAHA thing to sneer, that’s fine, maybe you should have made a point while you were at it.

Maxx on September 30, 2008 at 3:33 PM

McCain REALLY missed an opportunity here. What he said was not far from the “fantasy statement” I posted yesterday, in which McCain says he has just spoken to the President and told him not to rely on this Congress for anything, but to instruct Secretary Paulson, Chairman Bernanke, and Chairman Bair at FDIC to use all their powers and use his own emergency powers as necessary to get the cradit markets unstuck and save the banking system from imminent collapse. McCain got blindsied by the House Republicans yesterday on this vote, and he should have hung them out to dry along with Pelosi and Reid.

rockmom on September 30, 2008 at 3:47 PM

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