Update: After the fear of economic collapse was put into them by the Regime's financial experts congressional leaders have apparently reached agreement in principle on a gigantic bailout of the Street of Broken Dreams. 'Mo Money will arrive with some conditions attached such as controlling the lavish compensation packages of CEOs participating in the bailout, but fundamental reform of the credit markets probably will not be among the provisions. Politicians in Washington are good at performing symbolic acts, but impudent when it comes to making legislation that solves real problems. The current financial crisis was twenty-five years or more in the making, but the solution being proposed is a merely another temporary fix[1]. John McBush, one of the "Keating Five" but cleared of any wrongdoing, used the crisis as a timeout from the election campaign which is taking a turn towards his Democratic opponent. Not even naive Americans think a suspension of campaigning will help the situation because they understand that McBush is a symptom of the corruption in our political process, not a solution. They found out Sunday that his top campaign staff person, Rick Davis, was not long ago paid $2 million by Fannie Mae to lobby Senator John McCain against 'government intrusion' a conservative synonym for government regulation. According to the Senate Lobbying Database, the lobbying firm of Charlie Black, another of McCain's top aides, made at least $820,000 working for Freddie Mac from 1999 to 2004. The McCain campaign's vice-chair Wayne Berman and its congressional liaison John Green made $1.14 million working on behalf of Fannie Mae for lobbying firm Ogilvy Government Relations. The list of influence peddlers goes on.[1] the Regime's draft proposal is just three pages long. See it here. The banking industry lobbying group, Financial Services Roundtable, is playing a major role in the negotiations. Democratic Senators like Christopher Dodd are resisting a quick fix without addressing questions of social equity. Dodd wants bankruptcy judges to be able to reset mortgages terms on a primary residence, something they can only do now on vacation homes and yachts. But the Roundtable says including relief for homeowners would be a "deal breaker".
(9/23/08)Lawmakers on Capitol Hill are having second and third thoughts about the repercussions, political and economic, of the enormous bailout under construction for the financial sector. Not since the Depression has the federal government undertaken on such a scale to manage capital markets that again proved unable to regulate themselves. Some Democratic congress members want a quid pro quo for the massive amounts of taxpayer dollars that will be needed to bring stability to shocked international markets in which commodity prices are rising and stock prices are falling. And well they should ask for some control of corporate governance. Heretofore "out of bounds" to regulators under socialized capitalism, it was out of control executive compensation that fueled the drive to originate imprudent home loans, create more securitized mortgage instruments, and take on more derivative risk in the lust for profits. Will the 'party of the people' sell out the middle class and cave in to what amounts to economic blackmail by the rentier class and its slavish adherents of discredited "Reganomics" in Washington? Or will they at last show some spine and demand debt relief for homeowners, re-regulation of the financial sector, and a government say in corporate governance, if not an actual equity stake in companies taking public money? Congress should ignore desperate pleas of failing speculators, proceed with deliberate speed, and get the bailout policy right because all of our fortunes depend on it. Put some social justice in American socialism by investing in real infrastructure and human resources not paper dreams.