Deadline, What Deadline? Congress Could Add Another Bailout to the Stimulus
Brace yourselves, folks, for another financial bailout. Bloomberg reports today (and Politico concurs) that President Obama may be seeking upwards of $50 billion more in bailout cash from Congress by next month.
Leaving aside for a moment the merits of spending even more money to keep the banking industry afloat -- even if it is paired with more foreclosure aid, as appears to be the case -- this presents an immediate political challenge to Democratic congressional leaders. Do they push to pair this new mini-bailout with the stimulus bill, as Bloomberg's report suggests?
After all, House Speaker Nancy Pelosi (D-CA) has set a hard February 13 deadline for passing the massive economic recovery package. There simply may not be time to debate and pass a separate mini-bailout by then. But will the Senate be able to corral its bailout critics to climb aboard a stimulus bill that includes extra help for the banks?
Since before Democrats took control of the Senate, its leaders have long pushed to attach contentious bills of any kind to legislation that's considered "must-pass." (See the expanded hate-crimes ban added to 2007's Pentagon authorization, under current leader Harry Reid, and the overpriced national ID-card bill added to 2005's war spending bill, under Republican control).
That tactic helps neutralize the minority's ability to block the bill being attached ... but it also introduces a host of new political considerations to the mix. Would the addition of $50 billion-plus in extra bailout money alienate senators such as Russ Feingold (D-WI) and Ben Nelson (D-NE) -- both of whom voted against releasing rescue funds to Obama last week?
Pairing more financial industry money with economic recovery money means that the stimulus bill will have to be even more carefully calibrated to reflect the priorities of the TARP program's longtime critics. Anyone in Congress who's buying their tickets home for Presidents' Day recess should hold off.
Josh
Matt
Eric
Will bailout requests ever stop? What happened to the $350B he was just given?
$350B in TARP funds
$800B+ Stimulus package
$50B in additional bank bailout
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$1.2T in taxpayer money
Even if he believes it to be absolutely necessary, I think he is overestimating his pull with Americans if he thinks he can have a blank check.
I don't like the idea of piggybacking contentious bills on the must-pass variety either. Even if that is politics as usual.
January 21, 2009 12:02 PM | Reply | Permalink
A stimulus package focusing on our transportation, energy, and medical networking infrastructures is not a bailout. Furthermore, you ought to give proper credit to your quote: "Will bailout requests ever stop?" I believe Herbert Hoover was the first to say that, back in '31 or so.
January 21, 2009 12:13 PM | Reply | Permalink
Those "toxic assets" are still assets, they are just de-valued.
The taxpayers buying up the loans, rewriting the ARMS into long-term fixed rate mortgages, and managing those loans over a long term, should be the purpose, aren't those the "toxic assets" we are speaking of, primarily?
So how come we have no "toxic" assets to show for our TARP money? Like I said, they may be overvalued, and therefore a loss on paper to someone, but they do not cease to have value, no matter how deflated.
SO, if this was a Toxic Assets buy-out, WHERE ARE THEY? Regardless of how toxic, there still must be something of real value to show for $350 BILLION.
WHERE ARE THEY?
January 21, 2009 2:49 PM | Reply | Permalink
This debate will soon be moot, as US banks will sooner or later have to be nationalized.
They are all insolvent and have been crossing their fingers hoping the economy will recover so the value of their assets will improve.
This won't happen, and eventually smart people will figure out that if you give a bankrupt bank money, it won't lend it out...and that the incremental bailout plans are just putting taxpayers more and more on the hook for a problem that the money alone can't solve.
Time to nationalize.
January 21, 2009 8:48 PM | Reply | Permalink