Matt Stoller is corresponding with an angry member of congress about the politics of this 700 billion dollar blank check.
It rings depressingly true:
Here's the industry's play: progressives will approach Nancy with ideas for reform, and she'll agree to push for their proposals, and she'll really mean it. Then industry lobbyists will go to Dennis Moore, Melissa Bean and a few other Democrats, and tell them how dire the consequences of the proposals would be, and that the members who understand how the economy works need to step up to stop Nancy and the crazy liberals from doing something rash. Then those Democrats will go to Steny and tell him how terrible Nancy's crazy ideas would be, and how we can't rush into something like that without much, much more thought. Maybe Barney will try to talk to Dennis or Melissa, but it will become apparent quickly that they have no idea what they're talking about; they're just repeating by rote what the lobbyists told them to say. Melissa may actually be dumber than Sarah Palin. .
Barney will realize he might as well talk to the lobbyists directly and save a step. The lobbyists will agree to something inconsequential, but certainly nothing that would really affect the industry's conduct. Then the leadership will do the math and conclude that because the vast majority of Republicans will vote against any bill, we can't get enough votes without the Dennis and Melissa crowd. The only way, our leadership will conclude, to get anything at all passed is to include nothing more than the inconsequential proposals that the lobbyists agreed to. Then we'll all go along because it would be wildly irresponsible not to act when we're staring over the brink of a complete collapse of world financial markets
The politics of this are as important as the substance. As usual, the conservatives are attempting to steamroll this thing through with as much advantage to their owners as possible. I just watched Barney Frank making the obvious observations that any bail out should include oversight and some kind of feature that will benefit average Americans. The right wingers on the panel all scoffed at such parochial concerns. Needless to say, it's the Democrats who will end up being portrayed as "partisans" if they insist on such things. They should not care.
It's not that some kind of a bail out isn't necessary. It's entirely reasonable that the government intervene in an economic crisis in order to avoid economic collapse. We liberals believe in such things. The question is how it intervenes and who such intervention benefits. That's the argument.
At this point, the Republicans and the Fed have very little credibility and it's entirely their own fault. If they want to reassure both the markets and the people, they need to do far better than "trust us." It's entirely rational for people to reject giving a blank check to those who've proven themselves to be wrong and/or incompetent at every turn for the past eight years. It would be insane to do otherwise.
Insanity: doing the same thing over and over again and expecting different results.