Ohio senator: Phones 'ringing off the hook' against bailout

A key quote in this morning's Senate hearing about the Paulson bailout is worth repeating. This comes from Ohio Sen. Sherrod Brown, a Democrat:

"Like my colleagues, my phones have been ringing off the hook. The sentiment from Ohioans about this proposal is universally negative."

Not "overwhelmingly negative." Not "deeply suspicious." Not "extremely upset." Universally negative.

I'll state the obvious: Members of Congress aren't generally in the habit of passing historic and spectacularly unpopular legislation five weeks before election day. Republicans in Congress hate this bill, and I'm unconvinced the Democrats in Congress will take a bullet, figuratively, for the most unpopular president since the final days of Nixon. (Trivia: Henry Paulson worked in the Nixon administration.)

Watching the Paulson-Bernanke hearing on CNBC, this struck me as news: the suggestion by Sen. Charles Schumer (D-N.Y.) that instead of granting one giant bailout, Congress might instead break it into smaller pieces, giving the administration permission to begin buying securities, but with an initial budget of far less than $700 billion. In other words, let the Treasury go out and buy $50 billion or so worth of mortgage securities and see how it works before granting the authority to spend a trillion dollars or so.

If you want to contact your representative in Congress, click here for contact information for the entire California delegation.

--Peter Viles

Your thoughts? Comments? E-mail story tips to Peter Viles

Photo Credit: Sens. Chris Dodd (D-Conn.) and Richard Shelby (R-Ala.) listen to testimony at this morning's hearing, via Getty Images.
 

Comments

[socalinvestor]

In reading about the financial mess we're in over the last few days, my sentiments on the need for a bailout have begun to change. Ideologically I will always be dead set against it. But I'm starting to wonder if its truly something that might be necessary to avoid a depression like collapse of the credit markets in our country.

I, along with most of the readers of this blog, have been looking for housing prices here in SoCal to fall back to Earth. However, I don't want to see 15%+ unemployment or retirement savings and bank savings of ordinary Americans wiped out. I don't know if that's necessarily the outcome if we don't bailout Wall Street. But I think its wise to assess all the possibilities.

I can't help but think of how Pres. Hoover chose to let the markets work things out and avoid moral hazard before the Great Depression. Once the depression set in, all the programs FDR instituted did little to improve the condition of the economy.

[latinvoter]

We are so screwed. Bush's policys really screwed up this country, and John MCCAIN (my candidate) is just going to extend those policies, I am afraid.

[Tim K.]

Here's the problem with the "bailout" - there is no proof whatsoever that this will benefit anyone except the actual banks whom are trying to offload this debt.

The problem of "seized lending" is one that already exists today - people are wary of lending money, and that is a GOOD thing because really, it's more a reflection that there aren't nearly as many money-lending-worthy ideas as we once thought there were. It's like being sober for the first time, and then complaining everyone is ugly. The answer is NOT to buy more beer, but to realize that you maybe shouldn't have been kissing as many people as you thought you should have.

[Tim K.]

Forgot to add - Paulson and Bernanke are threatening us with fear. They are holding the vague bogeyman of "something worse is going to happen". What, exactly? That's the rub. There is no "worse" that isn't already realized.

Having banks fail and unable to lend is not a disaster. Smaller banks will pick up the slack. Well capitalized corporations with money in the bank will be fine. Companies that depend on debt will not be able to expand. It's NECESSARY. It's not the end of the world, or even the Great Depression.

[AspenFreePress]

The Bush Administration shouldn't action on its proposed bailout for Wall Street to be any faster than its own action in the wake of Katrina.
Sterling Greenwood
Aspen Free Press

[Tim K.]

Hank Paulson is also completely lying to Congress asking for this bailout. Why should we trust him?

Verbally: "We gave you a simple, three-page legislative outline and I thought it would have been presumptuous for us on that outline to come up with an oversight mechanism. That’s the role of Congress, that’s something we’re going to work on together. So if any of you felt that I didn’t believe that we needed oversight: I believe we need oversight. We need oversight."

The actual proposal as written:

"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

Paul Krugman at the NY Times pointed this out.

The Treasury Dept can't be trusted!

Link

[Nelcisco]

Stuttering Hank Paulson gave me no confidence that he and Bernanke know how TF they'll solve this train wreck. Did any of you see this morning how general they were answering?? A question to Paulson and he'd look at Bernanke almost as to look for approval on how he was going to answer questions without saying something without putting his foot in his mouth. This is the best they can give us?Oh Boy...I'm getting ready for the worst time since our last depression.

[The End Is Noir]

Tim K., great analogy.

[Ward Steever]

I believe it was Clinton who started this whole shebang. And if we'd have listened to Bush in 2002 and brought in the reins a little, we wouldn't have had this problem.

[andy]

This is not a free bail out as the media or democrates would like to show.
this is a loan that is needed to keep our economy afloat.
If investment banks goes down, what do you think it will do to all ohio people's 401K and retirement money?
if banks fail, how do Ohio people get home loan and car loans? student loans? People don't think how it affect them when they see bail out because it sounds like a free gift to the rich...but the thing is that these companies controls your loan and your retirement money and the loans to your city, government, school districts and personal loans to you. without them...your community won't function. That's why to a non educated lower class...this sound like a bail out for fat cat but it actually helps them. If stocks fails like the great depression...
do you think you will actually have a job when your boss go broke or he can't get loan to run his company?
most companies are running on loans to make money to pay you. Not every company has billions like microsoft to run on cash.
So spare me the election year politic and bail them out so we can have a job to pay for our salary.

[Larry Clifton]

the deomocrtas see this bail-out as an opportunity to purchase votes from various blocks. bush should play this straight, and tell the american people that the dims are playing russian roulette using your head (economy). That way the blame for a failure in this massive tax-funded givaway will be on their doorstep when it all unravels and we plunge into a depression.
http://americanpoliticalblog.wordpress.com/

[Michael Snyder]

Phones ringing off the hook? Really now; this is a surprise? Maybe worth a bi-line? I for one have called all of my representatives local and Washington offices and e-mailed the lot of them.

Once again Sen. Charles Schumer (D-N.Y.) proves he's an idiot. What makes cyanide less deadly in low doses? What's more the larger markets are not buying it. So he can put our cheque book away.

Now I really don't care who's hit squad Hank Paulson has to stare down with his "determined steely gaze". (have you ever noticed the bulging veins in this guy's forehead?) He doesn't get to spend more of our money to bail his stones out of the fire. Enough already!

Bernanke's threat of a recession comes about a year late, once again underscoring the disconnect between the Fed & Main St. It's piques my incredulity when I here the likes of Paulson & Bernanke bemoaning the moral hazard in their actions. Let's just call it like it is boys; blatant brazen corruption at a level once unthinkable in the United states. To give one more cent to these thieves is simply compounding a decades old betrayal of trust.

[Jack Kinch (1uncle)]

This banking failure business is an extension of 'The Great Society' Which has already cost us a tremendous amount of money,as much or more than the bailout. This failure is for providing homes to people who cannot afford them. It was 'Sick Willie'. It was not Bush. It was democrats buying votes with our taxes just like 'The Great Society'. Bush has said several times that Fannnie Mae and Fredy Mac are in trouble. Congress did nothing probably on purpose to create more socialism- a proven failure,but the continued welfare will keep them in office..
The banking commitee should never have allowed the megers to get businesses to obig to fail. More pols should speak up or get out.

[alex]

This WILL lead the a depression if the proposal is not passed. Period, end of story.

Not to say that is the worst thing that could happen, in maybe 10 years things would shape up and will have been fixed by themselves. Don't forget it would be a worldwide depression of epic magnitudes.

Banks will fail across the nation, the idea that regional banks wil "pick up the slack" is mind-bogglingly false. Many are in the worst shape of all, tons of debt, no real deposit base, they are SCREWED.

People should take some responsibility for "Wall-Street's greed," how self-righteous. Nobody was complaining when they bought fancy cars and big houses on tons of credit with low interest rates. Or when their 401k's doubled and tripled, not a whisper from the peanut gallery.

Understand that this is a complete transformation of our financial system and economy.

DEPRESSION DEPRESSION DEPRESSION, the reason its not talked about is because nobody wants there to be massive panic. But thats the deal folks, depression or higher taxes and the feeling you got F'ed in the A by wall street.

You choose, IT'S EITHER YOUR PRIDE OR YOUR WELL-BEING, SWALLOW YOUR PRIDE.

[CommonSense]

Ward Steever said: "I believe it was Clinton who started this whole shebang. And if we'd have listened to Bush in 2002 and brought in the reins a little, we wouldn't have had this problem."

Lawls, whatever helps you sleep at night buddy.

[MyLessThanPrimeBeef]

I just want to add to what Tim K. said about other banks ready to step in.

What if Buffet starts a bank right now and says to the world, 'hey, there is no toxic stuff in my bank, it's a new bank, but moreover, I am not into that kind of junk anyway,' wouldn't everyone want to put their money in Warren's bank, instead of under his or her own mattress?

[Silverfern]

On a positive note, :-) I'm glad that folks are contacting their congressional representatives and that the people's voices are being herd by said reps. :-)

[anne]

HA HA HA HA H A HA HA HA HA HA

Oh my, Ward, you really don't know what you're talking about do you. That is possibly the funniest thing I've heard since this whole thing begain.

Check your history, buddy. This is the third time republican-led deregulation has led to massive, massive problems in the financial markets:

1) There was McCain's signature scandal, The Keating Five, which resulted directly from deregulation of the Savings & Loans, and led to a $3billion dollar pay out, and where thousands of elderly folks lost their live savings.

2) Then, more recently, the Enron debacle, where deregulation (again led by Phil Gramm - McCain's senior economic advisor) of the energy futures trading led to the largest bankruptcy (unitl now) in U.S. History.

3) And then, finally, this - again led by Phil Gramm's legislation.

OH ho ho ho, hang on, I have to wipe the tears from my eyes.

[MyLessThanPrimeBeef]

I think Dodd said today that the bill was not acceptable in its present form.

For me, that's a good start.

And I am forced to ask this, could the Democrats have the wrong guy running for president?

[BetterAmerica-in-2008]

Nice try, Ward.
Who is "we"? Are you referring to the republican congress that was in power under the republican president at that time?

[Maggie Knowles]

I watched this morning's senate banking committee hearing with Paulson, Barnanke, Cox, and some other guy. They stuck to their script (give us $700B now or else, but they can't say what "else" is, only that it's unknown and very bad). They didn't answer any questions, they just kept repeating their statements. And they were nervous, all three. But that's why they're getting paid the big bucks, to sit there and attempt to hook a siphon up to the American Taxpayer's bank accounts, even future generation's. No oversight, no accountability, no consequences for these thieves.

It was interesting to observe the body language and listen to the statements of the senators, I'm glad I recorded it, plenty of nuance.

On http://www.votesmart.org/issue_keyvote_member.php?cs_id=V2238
or http://tinyurl.com/3f4jp7
- Most of the current banking committee members were in office when they voted on the Financial Services Modernization Bill, Democrats voted No, Republicans and President Clinton voted Yes

[LA-renter]

Everyone sees his own problem.

Each solution leaves the other's problem unresolved.

From my point of view, removing toxic assets and restoring credit markets to "normal" only exacerbates the problem. These are symptoms of the disease: liberal use of debt.

People must first realize that "normal" is unsustainable and foolish. And, ready access to debt is enslaving people, not freeing them.

People may be scared by another Great Depression, but it seems illogical that a serious correction was unavoidable in 1930 as it is now. You can only forestall the inevitable, not stop it.

So, do we deal with it now or leave for later?

[Valerius]

Folks, the bail-out is like chemotherapy. It has harsh effects on the body but its designed to save your life. The cancer is worse. Doing nothing could result in an ecomonic catastrophe I do not think most people understand. If the banks have no money to lend or refuse to make loans to each other for fear of taking a loss if the borrowing bank fails tomorrow, the economy collapses completely. I understand all this talk about let it go and the sooner it collapses the sooner we can get back on to the road to recovery. But this isn't like that. If the entire financial system collapses the consequences are unlike anything you can imagine.

Had the Democrats not blocked reform of Fannie and Freddie over the last 5 years, this bailout might not be necessary today. Had people showed some restraint instead of borrowing money they couldn't pay back to buy houses that were not worth the price, we would not have this problem. Even now as we face a global economic meltdown, Democrats continue to play politics with the issue by blaming McCain and Bush when they actaully tried to get this fixed years ago. We can punish the guilty later. Now we have to resolve the crisis or scores of millions of people will wind up out of work and the cost of taking care of them will be far more in the long run than this bail-out.

$700 billion sounds like a lot. But how much is it going to cost to re-start the economy once its crashes to the ground and burns?

[Anonymous]

Ward -- You can believe that all you want. It won't make it true!

[syscom3]

Wouldnt it be nice if the LAT did the public some service and start naming those democrats (as well as republicans) that are also to blame for this mess?

Of course they wont. They wouldnt let ideology get in the way of reporting facts would they?