Last Friday's re-vote in the House on the financial bailout (excuse me, rescue/recovery) succeeded because 33 Democrats and 25 Republicans switched their votes from no to yes (one Democrat from Washington state switched from yes to no).
Many members of the Congressional Black Caucus credit the personal intervention of Senator Obama as motivating their switch. Correct me if I am wrong, but even though Senator McCain briefly "suspended" his campaign to deal with the financial crisis, can he actually point to how his efforts facilitated passage of this legislation?
The NY Times has a graphic of all the vote switchers.
Analysis
This bill is painful by any measure. When deciding whom to be angry with regarding this crisis recognize that Congress is only partially responsible for this mess. Congress is somewhat culpable for the bailout - its' policies fed aggressive and irresponsible policies at Fannie Mac - and a Republican-fed ideological call for deregulation, deregulation, deregulation did not properly balance independence for the markets with concern for the public good. Yet, most of the blame for this crisis rests with the private sector.
Let us not forget our own greed in buying homes we could not afford. True, bankers snookered many homeowners with false promise of easy loan terms, but far too many Americans knew they were living beyond their means. The era of personal responsibility is over.
We can be mad at how Congress responds to the near collapse of our financial system, but we should not be mad that it must respond. To not respond would be to invite ruin on the national economy. Ruin because credit will become tighter and even more expensive. Credit is the grease in our national economy and without it, the American economy would ground to a halt. Ruin because rising unemployment will become the de rigueur economic news.
Some will say that we (the average taxpayer) should not have to bail out Wall St. for its' excesses. I agree, but I can think of no better alternative. However, the taxpayer should be recompensed with ownership in these new companies in the form of divided earnings until the $700 bn is repaid (really it is much more when you factor in Freddie, Fannie and AIG).
Finally, there is a reason President Bush fought so hard for this bailout. His reputation is already in the toilet because of the abject failures of Iraq and Hurricane Katrina. When faced with a crisis starting to mirror the Great Depression he did not want to go down in history as the next Herbert Hoover. President Hoover, if you remember, was the president who sat idly by the first three years of the Depression, insisting it was not the federal government's role to maintain order in the financial system.
Nonetheless, comparisons between Hoover and Bush are unfair to Hoover. At least Hoover did not start a war he could not finish.
Tuesday, October 07, 2008
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Actually I don't know if we can put this mess at the doorstep of the current Congress. They have only been in control for two years. Congress was under Republican control for 10 of the last 12 years. The makings of this disaster were created under Phil Gramm, Newt Gingrich, Trent Lott, and Tom DeLay & Co.... all of whom were in the pockets of the Wall Street/banking sector lobbyists.
I don't think that all the foreclosures were due to people who took out loans who couldn't afford them. Surely some of this has to do with bankers not making sure loan applicants had a good income/payment ratio. Republicans are trying to blame poor, lower income folks.... (and their message is racially tinged).... but there are plenty of Middle Class White families facing similar hardship all across the Country. You recently had a man walk away from his children because he could no longer take care of them (left them at a hospital).... you also recently had a man kill his entire family before killing himself, because his out of work status drove him over the cliff...and led him to make irrational decisions.
This is happening because finances have tightened even for families who could afford their mortgages when they started... they didn't take out mortgages they couldn't afford. However, many of these families fell victim to circumstances (often beyond their control) that led to financial hardship... such as the cost of living outpacing income, the unexpected loss of a job, unexpected disability, the high cost of healthcare and prescription drugs, increased cost of employer insurance, etc..... This is impacting folks WHO COULD afford their homes initially, but who later ran into trouble. Medical care still accounts for a high number of foreclosures.
Look at the Food pantries across the Country that serve suburban (mostly white) America. They have reported that they have been as busy as ever over the past few years.... especially in the past year. This is no coincidence.
Yes, foreclosures are impacting poorer homeowners more (the few that there are...because there aren't many of these folks in mortgages to begin with, even though Republicans want to blame them for the crisis)... but they are being hit harder because they were already more exposed to economic hardship. Wealthier folks have more options and can survive longer in tough times. But they are struggling & losing their homes too.
BTW... LOL@ that last line. I might have to borrow that one.
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