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Things are obviously moving very quickly, and I'm not sure what the shape of the final bill will look like. I'm hearing rumors that at least three or four moderately progressive House members are wavering on voting for the bailout unless it includes provisions for a revision of parts of the bankruptcy code, specifically to allow judges to include primary mortgages in bankruptcy settlements. Progressives have eaten a lot of shit for this bailout, and they are near the breaking point. Most Republicans won't go for it unless the bill is 'clean' (Paulson's original demand), which means that if enough members band together to stop this train, progressives might end up as a swing bloc and put the brakes on it.
Nancy Pelosi apparently met with 40-50 moderate to conservative Democrats today or last night, and one bone of contention is the bankruptcy provision. Melissa Bean, John Tanner, and the usual Blue Dog suspects are carrying water for the industry, so it should be obvious at this point that a reform of the industry isn't going to happen if it doesn't happen now. Pelosi is willing to strip bankruptcy provisions, while Obama is backing off his earlier statements that he's willing to do that.
Pete Stark is not the only member who thinks this bailout is bullshit, but I don't have a sense of whether there's an organized progressive opposition. A lot is going to depend on whether McCain/Boehner/Bush can round up Republican votes for anything but Paulson's bill.
I don't understand why anyone can even consider voting for this. I mean, Republicans, yes, that's who they are, a corrupt group of organized criminals. And Blue Dogs, sure, they are just a little more whiny and stupid about their corruption. But for your average Democrat, this doesn't make any sense. Wall Street is already saying they'll need an additional $500 billion after the $700 billion.
I'm heading to the protest on Wall Street. There's a labor organized one at noon, and a less tame version at 4pm where people are going to bring their random junk to sell to the government. You can find a rally via TrueMajority, who have done yeoman's work organizing this. And let me just add that labor leaders are much tamer than their members.
Man I wish I had a pitchfork. Even if I couldn't use it for anything, at least I could sell it to the Federal government for a few million (soon to be worthless) dollars. Remember, if we all put our pitchforks together into a pile, that pile can become too big to fail.
UPDATE: Pelosi is collecting a list of members who will vote no on the bailout should bankruptcy provisions not be included. This list will be finalized at 3pm, at which point she will bring it to her negotiations with Bush. One of the reasons the industry is fighting these provisions so hard is that they would in many cases force banks to mark to market the assets on their books, and show some of these institutions as simply insolvent. If bankruptcy provisions are in there, we'll be able to separate the good from the bad banks and let the bad ones go under.
If we know that bad banks are allowed to go under, then this puts more confidence in the good banks remaining. Otherwise, the roulette wheel continues. I think this bailout is utter crap, but at the very least, members should vote no if there are no bankruptcy provisions in there. Because if they vote yes, there will be more and uglier bailouts coming.
Update 2 (Chris): Democrats claim there is a deal, but Republicans deny it. Sure looks like Republicans are preparing to oppose the bailout. It would be political and financial suicide to go through with it now. |
