Did John McCain Help Main Street in the Bailout Bill? hmm, Not So Much

A short while ago I wrote a blog post for those of us who weren't financial analysts or bankers about the simple things I would look for in an acceptable legislative bailout proposal.

I said we needed some equity for the taxpayers in any investment the government was going to make so that if these bad assets became profitable we would benefit. We needed executive compensation in these firms to be limited, we needed strong oversight of the Treasury Dept activities, and we needed additional help for folks on main street who were concerned about their mortgages and their jobs.

I think there are still lots of Democrats who should and will vote against this thing. After all the Republicans created this mess and the Democrats willingness to step to the plate here isn't quite sacrificial but it is risky. Overall, I think the Democratic leadership and Chairman Frank and Dodd did pretty well in getting the Treasury to agree to their terms. I am hopeful that real help will be given to the folks on main street for mortgage assistance and more but the reality is that the decision to help is on an individual bank basis and is left up to the discretion of the Secretaries of Treasury and Housing through the Federal Housing Administration. For now, we look to good faith. And in January, we look to Barack Obama to implement it right. By insider accounts, it was the best deal that could get done. In large part this is because Democratic negotiators were being held hostage by the votes of House Republicans led by John McCain.

What??? I thought that John McCain was charging into Washington last week to save main street - to help the people. My Goodness, he even suspended his campaign to do so.

At the infamous White House meeting, John McCain said he wanted some oversight but most importantly, he wanted the House Republicans to be an equal participant at the table. That is how he would make a difference in this important effort.

Well they were there all right. So what DID the House Republicans and John McCain add to the Bill?

Well, for two days they demanded additional tax cuts so that banks and other institutions could buy up the bad assets rather than the government. Of course, that meant that they would also benefit from any increase in value to those assets. What? John McCain and the House Republicans wanted to add tax cuts for profitable businesses to a bailout bill??? Shocking, I know. That was too greedy even for Hank Paulsen who is used to being surrounded by a high level of greed.

Finally, in an effort to get a deal done, Paulsen and the Democrats agreed to the final McCain/House Republicans additions to the bill. They agreed to let the McCain club devise a way for the private sector to profit without getting additional tax cuts in the process. In other words, they could profit only once, not twice.

The legislation creates authority for a federally backed insurance program that would make the so called "bad" mortgage-related securities, salable to the private sector. How? By making them a good deal for them and reducing risk, obviously. The compromise reached would require Paulson to "establish" such an insurance alternative, but he is not compelled to use the insurance option.

Oh, by the way, the McCain/House Republican additions to the bill also include $3 billion to help small community banks (not their mortgage holders or depositors) take a deduction for losses from their investments in Fannie Mae and Freddie Mac, since taken over the government this summer.

John McCain went back to Washington to save main street from Wall Street. The problem is, his "main street" ran through a pig's trough. Will he take credit for that?

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Comments

[MrCommonSense]

Oh Hillary..you remind me of the other "Hillary" with your obvious spin on things. I just watched a video on NewsMax.com of Democrats in 2004 telling Congress that there was nothing wrong with Freddie Mac and that they were doing a great job. Those Democrats were criticizing Republicans who wanted more regulation over those financial institutions! Geeeze! There is "blame" to go around for both parties and Wall Street and people who bit off more than they could possibly chew!

[othella1083]

Hillary, I've been watching you appear on Larry King and CNN on behalf of Obama for the last two weeks. Please, Please, you have got to do a better job of holding your own with these republicans. Rather than laughing when they something incredulously wrong about Obama, how about countering right back with the facts in a persuasive and excited manner. You take wayyy too long to make the talking points you seem to want to make AND you let the republican liars go unchecked at the same time! I love where you're coming from, but you have GOT to bring a better game as a talking head for the campaign. Thanks for all that you do!

[TXSassy]

The only tape I want to see is Bush boasting when he thought the cameras were off proclaiming "Wall Street got drunk". That will wake up the politicians Dems and RePubs!

[Star2000dancer]

Anyone who agrees to this phoney bailout is wrong! If Pelosi & Bush want it, you know it's a con, Pelosi needs to go.

[rdlmorgan]

I think there is a lot of posturing going on on both sides. Be that as it may, if this bail out is a plan that a Republican president put together then why aren't the Republicans backing it?

Could it be that the Democrats are using this situation for party gain and not to help the American people? Why do you think the out cry from the constituents was so loud?

I believe the rush to fix Wall Street is being capitalized on by the Dems and the Reps stopped it. Now it will get fixed correctly but it will take some time. In the meantime the Dem spin machine is out to make the Reps look bad. Nothing new. I hope the truth comes out.

[nobillary1]

Trouble is, there is NO time - we just lost $1.2 TRILLION dollars today! That's almost twice the amount of the Bailout Bill they rejected - and the losses will continue until a bill is finally passed!

Won't happen until Thursday though; Congress is "on break". Some have left for the Jewish Holiday, Rosh Hashanah, and that's perfectly understandable. I have no problem with that at all, but those who left, just to get away from it all for a couple of days, should be ashamed of themselves and they should be rejected on the next ballot their names appear!

Some pundits said today that the House Republicans didn't want to support John McCain's call to vote yea on this bill. Apparently it's because they feel he has abandoned core conservative values in approving some of the stipulations. BTW, do you know that NONE of the Republicans from McCain's own state, Arizona, voted for it either?

I've read many reports that he's not been working in a bipartisan manner on this bill as he claimed he would do, either. The cellphone calls he made Saturday and Sunday when he was most definitely "phoning it in", despite what he says, were ALL to Republicans; no Democrats. Sounds like he was a big part of the problem rather than part of any solution, as he was claiming earlier today before the bill died. Quite frankly, John McCain has shown exceedingly poor judgment too many times for my taste.

[RAFord24]

This isn't a rush to fix wall street. Personal, I just took a hit in my IRA and mutual funds. A big hit! This bill is about the american people investments: ira's, mutual funds, 401K's, stocks, bonds, whatever. The stock market lost 777.68 points that's about 1.2 trillion dollars. The truth is, the House Republicans are up for reelection. They made a choice, the American People or their own ass. The Republicans as always think about themselves.

[killerB]

WAKE UP!!!
The truth is out. The Repubs screwed up for eight years, and intelligent people, even a few Repubs, have recognized that.
Keep listening to FOX," the balanced and fair" channel. DAH!

[dynagirl7371]

"Now it will gt fixed correctly but it will take some time..." Are you high? Is it opposite day? Did you bump your head? Maybe you fell over your big pile of money when you got out of bed this morning...

By the way, it's going to take a long time to fix this regardless of who is in the hot seat when the bill is passed. That's what you can expect when the gov's spending everything we have, and some we don't, to "liberate" people who have their own money. All of us "bad" Americans didn't take the advice to go shopping - that's probably why we're in trouble. Oh, there it is again - opposites day!!!

[boo127tx]

McCain is getting Rove type advice.For him to leave his campaign and head to Washington as our saviour didn't work.

It just made him look foolish at best.

Funny tho...I kind of feel pity for him.Possible at a younger age he would be more sensible and on his game.

[Jewelm]

Sen. McCain's big deal about leaving his campaign, to rush back to Washington, was a total joke. How dumb do his advisers think the American people are! His obvious need for what he thought would be positive attention, was a bad move for every single person in America.
As I watched McCain & Obama in the debate last Friday, I listened to every word and also watched the messages sent. Obama looked at McCain when he spoke to him, & McCain Never looked when he spoke to or about Obama. I took that as a statement to ME, that McCain was a fake at this point, and he should have learned better than that while he was in the military.
My single vote could have gone either way, but watching daily the very negative campaign by the McCain folks have just turned me cold. His campaign has been the most negative, that I have ever watched.
I feel sorry for him also in some ways, and years ago he might have been a great Pres., but it is time to move on.
I think that Barack Obama will make a really great leader, & hope that McCain & Hillary will help.

[keepacoolhead]

McCain who "doesn't understand the economy as well as he should" was playing merely political theatre. He employs the same people who lobbied to get this whole mess started. He's just putting on $5000 political make up.

[Sherryfw]

I wanted to write this for a long time....I think Hilary Rosen is a terrific journalist.

I've also enjoyed watching occasionally on the cable networks.

Keep it going girl!

[anniegirl9]

Not sure how related this is, but I really want Obama to hammer this home in the next debate. He mentioned it Friday, but didn't do it hard enough and McCain actually used it as a sound bite in his favor. Yes, we have one of the highest business tax rates of any country ON PAPER! But the real rate that companies pay is one of the lowest and has been for years. Many pay NOTHING! If keeping their rates low is supposed to keep jobs from leaving and help all of us - why have we lost so many jobs????

Because it doesn't!!! It isn't the tax rate that saves companies so much money - it is the labor rate. We can not compete when companies move to China or Mexico and pay less than our minimum wage here, do not have to comply with age requirements and other labor protections, or environmental protections.

We need to require that for companies to import goods into the US, they must maintain the same MINIMAL protections that they would here. In other words, they could not pay less than the equivilant of our minimum wage, they could not use child labor, and they could not pollute. Also, they need to be held accountable for the safty of the products that they bring back here. If contaminated foods or lead paint can be traced back to a company, that company should pay heavy fines. Only then can we have Fair Trade!

[JamesAnneCurring]

Wow. Rock on, girl.

[Star2000dancer]

My little kitten died from the recalled pet food......how are you going to pay for that and all the others? Plus all the sick & dead children. We need our products made here with our regulations. NOW!

[avraamjack]

.
Would it not be cleaner to create new banks with the .7 trillion ?
.
You could create 20 hefty banks and in 5 years sell the stock to the public.
.
No moral hazard, increased lending competition. All stated goals are met.
.

[RRonin]

Why not create a National Bank owned and operated by the taxpayer? It would buy up the "bad" paper, and the first rule would be NO FORCLOSURES. Work with the homeowners to re-write their mortgages and in time the mortgages would be "AAA rated". Everyone wins.

[dynagirl7371]

Keeping people in their homes would just be too complicated to explain to the American public... McCain would say that we "just don't understand how it works..."

[FirstShirt]

"Overall, I think the Democratic leadership and Chairman Frank and Dodd did pretty well in getting the Treasury to agree to their terms."

Nice spin. Doesn't work. Pelolsi and Reid were all sweaty to agree to Bush's panicked bailout. It was House republicans who nixed it after getting ripped by their conservative constituency.

Dodd, the top receiver of donations of special interests, was front and center salivating at the bailout.

Nancy Pelosi said it was the administration's plan. Guess that says it all.

The democratic "leadership" of the Congress...your elected representatives there to protect you from executive excesses..­...failed. Your presidential candidate has come up with a 4 point plan, no surprise there.

[anniegirl9]

I guess we just don't watch the same coverage. Yes, Paulson called Reid and Pelosi into an "emergency " meeting, and it was evident that the information they recieved form the Sec and the White House motivated them to a call of action, but they were already saying the Paulson plan would not go through as asked immideatly after the announcement.

Every Senetor and Rep got heat from thier constituents. And if house Rep's didn't believe something drastic was necessary, why are they now voting for it even with thier additions?

Because they know that if they killed this plan and Paulson's prediction held true - throwing us into a Depression - the constituents would turn and the blame would stand at the House Reps feet.

[Unrepentant]

We will all lose if the restructuring of the financial markets doesn't happen. Do you understand what a liquidity crisis is? That means there is no money in our financial system! No one knows what is in these mortgage backed securities because of the deregulation of the industry by Phil Gramm and the Gingrich's contract on America made it unnecessary to disclose to banks and consumers what was in these loans. Good loans and bad loans were mixed together and untill there is transparency and accountablility our financial system is crippled. This bill will give us the transparency we need to ease the money supply. If you believe this is a "bailout" of banks you don't understand the problem.

[Myshkin57]

Ironically, there was no public oversight regarding the infamous meeting including McCain and Obama. Why shouldn't something like that be broadcast on C-SPAN so that we can see who's posturing and who's trying to get something done? The thing was already a political stunt. At least let us see if there's a grandstanding idiot in there.

[JamesAnneCurring]

Because then McCain would never get around to ever saying anything, and Obama would take center stage, and McCain would then try to take the credit. Whereas in this scenario, McCain and Obama really do get something done, and you still have to deal with McCain trying to take the credit.

[PoliticalPartyPooper]

Hillary,

You're naive to think the Republicans created this mess. Bankers created this mess, with help from politicians.

And before you lay claim to a lack of oversight or regulation, this is a conundrum that has been building for twenty years. If I recall, both Political Parties have had their chances to do something about regulation, neither has tried. Why bother when your largest contributors are the very people responsible for this mess?

Don't you find it odd that only now, when things look bleak, that both parties are finally willing to fix it? That both parties can find no reason to accept blame, but are more than willing to point the finger?

Don't be so blind. You're politicians, our elected officials, regardless of whether they are Republican or Democrat, share the blame equally. Are you so naive as to believe that it is only the Republicans who go to Washington and do nothing? Do you believe that in the face of the most recent congress, which accomplished almost nothing?

Hillary, you don't get a nine percent approval rating from the American public unless you have FULLY EARNED IT. Your democrat congress has proven adept at pointing the finger, and totally worthless at passing any useful legislation.

If you are going to write an article that hundreds of thousands are going to read, at least have the decency to leave partisan politics out of it, especially when the party you love is as worthless as the party you hate.

[Jamchinadian]

You miss the point - perhaps deliberately. Mccain barged in to save his campaign, not to "save the day". THAT is the craven political ploy that Hillary was exposing.

[PoliticalPartyPooper]

Would that McCain ploy be any different than the Democratic party's ploy of acting like they actually need the Republican party's agreement to get this legislation passed? It's not like they don't have the votes. But I guess unless they can get the Retards, ahem, repubs to agree to share the blame, they don't want to do anything, in case this doesn't work. After all, if a bill that passed along party lines ended up being a horrible mistake, the Democrats wouldn't have anyone to point the finger at except themselves, would they?

[Housewife]

The latest congress did get real things done, like the minimum wage. What they couldn't get done had largely to do with Bush vetoes, like trying to get a timetable for withdrawal. Let's not re-write history. Republicans screwed*the pooch*by enabling Bush policies for the last 8 years.

[newpantaloons]

"and totally worthless at passing any useful legislation".

And WHY is this so? Republican obstructionaism.

[PoliticalPartyPooper]

Newpants,

That is a pathetic excuse, one I expect a paid politician to make, but not an actual American Citizen like yourself. Come on...stop making excuses for our elected officials. We aren't rooting for a sports team here. Obama isn't pitching in the only World Series your team will ever play in.

This is more important than letting our elected officials off the hook. Don't buy into their partisan politics and thus, partisan excuses.

[Realbluesky]

I have a question I would like someone to answer. Why is no one calling for accountability for this mess? Those individuals who actively pursued the selling and arranging of these sub-prime mortgages would be very easy to find. If not, then why do we have to fill out paperwork and sign things if it cannot be used for accountability? It should be a very easy task to find those who perpetrated these crimes and prosecute them. What am I missing? This is not complicated. Those who dangled the idea of a new home in front of people who they knew could not afford one are the criminals and should be held accountable. I really get tired of hearing people say this is too complicated. There is always a paper trail when it comes to this type of activity.
The criminals also include those who packaged these mortgages. Don't tell me that would be difficult. And the CEO's who traded in them knowing full well how risky they are. Has anyone been fired? I haven't heard of it. Again, maybe I'm missing something.

[lostinNJ1]

I feel & share your pain, I really do. However much we can't stand what is happening and do not trust Bush, I think there is much evidence that we are in a worldwide crisis. Investment banking completely extinct, large banks in the UK & Belgium requiring bailouts, multiple bank mergers here- latest Citibank & Wachovia, liquidity here (?worldwide) is in danger of completely collapsing- Treasury notes are paying close to 0 interest, and could quickly go into negative returns- this is unheard of and will cause everyday banking activities to cease or slow to a crawl. Warren Buffet is 100% convinced that we must act now.

Already, the SEC has admitted culpability for lax oversight of investment banking. It apparantly was a voluntary decision by these banks to be monitored. Unbelievable. The FBI is already investigating the banks as well for evidence of criminality. I bet more info will come out in time. Like when Obama is sworn in as next POTUS! Then focus on fixing the system, if indeed there is even one left!

[anniegirl9]

Unfortunately, thier actions were not "iligal." That is why. There was no crime, so going after them would be futile and waste more money. Now there may have been some other iligal activity at the highest levels of some of these companies. I do believe the FBI is looking into it. Perhaps cooking the books. I guess we will have to wait and see.

The only thing we can hope for is that we can changed the culture of business. Even there I am not so hopeful though. Each time I think that we have finally turned the tide of reason in our favor, I come to see that all we have done is deepen the divide. When gas hit $4, I thought surely now we will realize the need to end our addiction to oil. Instead we said we just need to find more oil. When our financial sector begins to tumble - and most people initially said deregulation was the cause, I thought we would finally wake up to the FACT that free markets only work in models. That greed would always insure that the haves would step on the backs of the have nots and exploit them for profit without safeguards in place that prevent such immoral if not illigal behavor. But it appears now that those who cling to thier Free Market ideology only believe that there we weren't free enough.

[Realbluesky]

How do you know their actions were not illegal?
Have you ever looked at one document? Have you looked at one signature? Have you followed just one paper trail? Have you investigated to see what was said in meetings, looked at memos, letters, etc?
It's easy to say something was not illegal when you don't even know what it was.
But I haven't heard one person in authority calling for one iota of accountability.

[jja]

Someone please explain to me why there is so much talk of the Dems needing Rep cover to pass this bill. I feel as though people are protraiting this as a Dem problem. Is it not apparent that the mess was caused in the first place by Bush and his administration, and now this whole debacle is being saddled on the Dems. I feel like I am watching small children play. They want no restrictions, regulations, or guidance so they trash the house. Then at the end of the day, mom and dad have to come home after a long day at work and set everything right again. I believe we need a solution to the problem and it will require compromise and sacrafice by all parties, I certainly don't want to be stuck with the tax bill. I never voted for Bush. But why aren't more people up in arms about how it got this bad to begin with?

[anniegirl9]

There are four potential outcomes.
1. We pass the bill - thereby averting a Depression (but no one will know for sure if the bill actually stopped the crises especially since there will still be more bad days ahead no matter what)
2. We pass the bill - but it desn't work to stem the problem and we have continued economic meltdown.
3. We don't pass the bill and banks collaps, business shut down and we go into a second Great Depression.
4. We don't pass the bill and the problem doesn't end up as bad as they are predicting.

If Rep dont support the bill, they come out good in 1, 2, and 4. Dems will take the heat from thier constituents in all those situations and Reps will be able to say they opposed un unpopular bill.

Only if #3 happens will the Reps take the heat for not supporting this. The very fact that they are now going along with it with a few modifications though tells me that all of them really fear what might happen if they don't do something. Actually, if #3 happens because the Reps block the bill, it may just be the end of the GOP party for good. Unfortunately, it will be the end of a lot of us.

[Soothsayer08]

Thank you Hillary ! As a member of Main Street , you simplified what the bill is really all about. Thanks for also exposing the phony McCain gambit to appear was though he was solving the crisis himself.

[Erdgeist]

I am still disappointed with Congress, not to mention Paulson's stupidity in trusting Wall Street. I think Congress under Pelosi should do more, for example, they should rescind the Bush tax cuts for the wealthy. Congress should also go after the hedge funds who are still gaming the system. The reason why the price of oil went up so much is because of hedge funds. Period! There is no oil shortage.

[elbzee]

At this point, what we need to do is ensure we have an intelligent thinking president. After Obama is sworn it I will look to him to clean it up and take steps to prevent the bailout to act as absolution of wrong doing. Frankly, I WANT CRIMINAL CHARGES for those who gambled recklessly and lost our economy.

[ijgibson]

It wasn't just gambling - it was also fraud.
When I lend money I don't have - that's fraud
When I record a potential mortgagee's income as higher than it really is - that's fraud
When I pretend that the mortgage rate is 1% knowing it will jump to 8% after the buyer has signed up - that's fraud

Lets at least be honest enough to call it what it is, even if the politicians are dishonest enough to let the criminals off the hook with a publicly funded bail out.