When I started writing this, I was going to say that we can thank the inimitable Massachusetts Congressman Barney Frank for staving off the unfolding financial crisis whose ramifications we do not yet understand although we know they will be profound. In a triumph of political persuasion, he did get the bailout through the House last Friday and onto the President's desk for his signature. It's the "staving off" part that I'm not so sure of. When we will feel the effects of the bill and how long they will last is another matter. We didn't feel it Monday. In a huge global sell-off, the Dow hit a five-year low Monday afternoon, before recovering part of the loss late in the day.
One thing is certain. Congress is no longer chanting the deregulation mantra. The feet of Alan Greenspan turned out to be clay. The titans of capitalism gratefully accepted a $700 billion government handout to keep the columns of their temples from buckling and the roof from caving in. Anybody facing an election -- that is, the entire House and a third of the Senate -- is in a nervous sweat.
Treasury Secretary Henry Paulson thought he could save the economy by giving himself virtually unfettered, no-questions-asked control over $700 billion, a lot of money even by the rarefied standards of a former chairman and CEO of Goldman Sachs. He put all that in three pages -- a "clean" bill, they called it -- and the White House sent it to the Hill. Congress wasn't buying it. Federal Reserve Chairman Ben Bernanke, who has spent his life studying the Great Depression, had a nightmare vision of banks falling like dominoes as depositors rushed to pull their money out. The President was pretty much looking on from the sidelines, helplessly wringing his hands and leaving the work to his point man, Secretary Paulson, whose stature, according to the Wall Street Journal, was sinking about as fast as the Dow. The two presidential candidates were trying to look seriously presidential but it may have been only a look; they didn't appear to deliver that many votes.
Despite all those power players, at the beginning of last week the House rejected the bill. The shock in the White House and on Wall Street could have registered on the Richter Scale. The House took the next day off.
So the Senate took over and Majority Leader Harry Reid managed -- expertly managed -- to steer the bill through the Senate and ship it to the waiting House. In the process, the Senate cleaned up the original three pages and added some four hundred more containing the oversight and review that the Administration had somehow overlooked when it submitted its bill to the House, threw in a little tax relief, a cap on executive pay for those taking the government handouts, and larded the bill with enough pork to satisfy enough Senators to vote for the tax relief/stimulus/bailout/pork package and send it on its way. Nobody liked it but what else could they do? Nothing was not an acceptable answer.
Enter Barney Frank, chairman of the House Financial Services Committee. In what some thought impossible, he finally got the new Senate bill through the House on Friday. "Do you want to have a look at it," Speaker Nancy Pelosi asked when the dust had settled. She handed him the bill. He opened it, smiled, and handed it back to her, in effect telling her that it was now okay for her to sign. Barney Frank had saved the House and the Speaker knew it.
The final bill passed, the President signed it, and the huge collective sigh of relief went from Washington to Wall Street to the waiting world. It took nearly three weeks of intense briefings on the crisis, the reality of credit drying up, jobs disappearing, and people losing their houses (and the prospect of our elected representatives losing in November) to get the bill through. They realized that this bill was no magic bullet but they had to do something. So they did. And they hoped it would stanch the bleeding.
So far it hasn't. Despite the bailout, the European and Asian markets are in what the Financial Times describes as a "global sell-off" but which less conservative media are describing as a "bailout panic." The Dow has lost ten percent of its value in a week; the broader and more representative S&P is down 15 percent. And you, Joe, surname Six-Pack, and Hockey Mom next door are just beginning to receive your quarterly 401k statements. Brace yourselves. They won't be pretty.
Three men kept this "rescue" bill together: Secretary Paulson, Federal Reserve Chairman Ben Bernanke, and Rep. Barney Frank. But in the end, it came down to Barney Frank. The CEOs who came to his office seeking help, the CEOs who made the desperate phone calls, they knew they were dealing with a gay man, and this time the gay man held the power. Did they care that he was gay? No. He could have been green. They just wanted him to get that bill through Congress, and Barney Frank did just that. In the end it came down to who was qualified and who could get the job done. Which is just the way it should be -- whether you're a Member of Congress, a secretary to the CEO, the CEO himself, or a member of the military. It's not your sexual orientation, stupid, it's how well you do your job.