Bailout Fails in House
The House defeated the $700 billion Wall Street rescue plan by a 228 to 205 vote. The legislation had been finalized Sunday after exhaustive negotiations, but ample “no” votes came from both the Democratic and Republican sides of the aisle.
But it was clear that lawmakers from both sides of the aisle were skittish about voting on such a dramatic piece of legislation a little more than a month before the November elections. Polls have shown voters are wary of the plan to rescue financial firms by having the federal government buy up hundreds of billions of dollars of toxic assets, and many members described Monday’s decision as a “legacy vote” similar to the decision to authorize the use of force in Iraq.
This morning I talked to Andrew Grossman on the Constitutional issues in the bailout bill but there are many more reasons why the bill should be rejected:
Dale Franks at Q&O explains Why I Oppose the Bailout. It’s a lengthy post but worth reading every word. Money quote (all puns intended)
So we’re in the middle of this crisis because the Government of the United States created the incentives that caused it.
And with all this current talk of making the bad actors pay for their sins, you’ll notice that no one is talking about changing the government’s policies that caused this. It’s never the government’s fault, apparently. They only create the incentives. And hold a gun to the banks head to comply with them. But they don’t actually, you know, sign the mortgage papers, so they’re in the clear. They can just point at the bankers and say, “It’s the greedy capitalists, man!”
Dale’s reasons are:
- It isn’t necessary.
- The bailout will force us all to sign on as crewmembers of Wall Street’s sinking ship.
- It doesn’t avoid the pain.
- It props up the guys who are the biggest problem children.
- The market actually works.
- This isn’t “reform” in any meaningful way at all.
- Ownership warrants are death to capitalism.
- Clear the market.
- Protect the depositors
- Coordinated central bank activity
- Re-examine the CRA
Dick Armey also opposes the bailout, for similar reasons:
Granting the Treasury broad authority to buy troubled assets from private entities poses a significant threat to taxpayers and fundamentally alters the relationship between the private economy and the federal government. Despite the sweeping breadth of the proposed bailout, there is virtually nothing in the bill that addresses the underlying problems that created the housing bubble and the oversized and over-leveraged financial services sector that grew with it. Taxpayers have become Wall Street’s newest financier, with little more than a promise—and a report to Congress on “regulatory modernization”—that Congress will not let this happen again.
Hidden in the bailout bill arcana there’s another issue that Andy McCarthy points out, The Bailout Follies: Taxpayers Will Be Forced to Buy the Bad Debt of LOCAL GOVERNMENTS
So in addition to rewarding irresponsible lenders and borrowers, we taxpayers are now to be “protected” by buying the toxic debt of states, cities and municipalities. It’s one thing to throw a life-line to the credit industry; local governments, by contrast, have the ability to cut spending drastically or raise taxes if their inhabitants want government services. Elected politicians are then accountable for runaway spending and mismanagement. If Detroit or Chicago is sinking because of big-government policies, that’s what the citizens of those cities asked for by voting for Democrats year in and year out. Why should the rest of us be on the hook for that?
A good way to understand a problem is to review how it came about:
Who caused “the biggest financial crisis since the Great Depression?” by Roger Kimball and The Financial Mess: How We Got Here by Abraham Miller are two must-reads.
Matthew Vadum writing at American Spectator looks at Financial Affirmative Action
Last, but not least, ack Obama and the Strategy of Manufactured Crisis
Michael Moore gets results.