The Perpetual Bailout Bill

The Democrats are pushing another piece of complicated legislation in the hopes that we will all wait until it is passed to find out what is in it. The Republicans are blocking it. I say: God Bless James Madison. The recent fiscal crisis certainly calls out for reform. Maybe trying to push through the biggest piece of financial reform before the voters find out what is in it, and especially before the voters get to vote, is not the best way to go about reform.

President Obama explains why we should accept this reform:

A vote for reform is a vote to put a stop to taxpayer-funded bailouts. That's the truth. End of story. And nobody should be fooled in this debate.

Well, what he says three times is true, no doubt. But NPR's Planet Money couldn't find three experts on either side of the aisle who agreed with the President.

We at Planet Money did an informal survey of economists and regulatory experts on the left and the right. We couldn't find any who fully endorse the reforms backed by President Obama and Democrats in Congress. Everyone thinks the reforms just aren't enough to solve the problem.

Here is what GRETCHEN MORGENSON at the New York Times says about the President's favored legislation:

Too big to fail is alive and well, alas. Indeed, several aspects of the legislative proposals sanction and codify the special status conferred on institutions that are seen as systemically important. Instead of reducing the number of behemoth firms assigned this special status, the bills would encourage smaller companies to grow large and dangerous so that they, too, could have a seat at the bailout buffet.

What the Republicans want to do is to revise the bankruptcy laws to make them adequate to the current financial environment. That way, failing banks, large or small, can be taken apart in an efficient manner. What the Democrats want to do is authorize the government to take over large banks in crisis (see: bailout) in order to keep them afloat. Take your pick, but if I was a whiz kid at some major money lender, I would be hoping for the latter. Nothing is more fun than to gamble when somebody is standing behind you ready to cover your losses.

What is certain is that you can't believe a word the President says, especially when he says it three times. If the New York Times and NPR won't back him, up, well I suppose there's always Paul Krugman.

Comments

[Guard]

Don't worry KB, the Reform Bill will be back. This is just a "temporary" halt I've been told...kinda like the "temporary" halt of the Healthcare Reform Bill that eventually passed. It's been reported that this effort will eventually pass too through another bi-partisan effort in Congress, so, I wouldn't get to giddy, yet.

[Scott Overmyer]

Your right-wing rhetoric is expected and doesn't provide any new information for the debate over finance reform. Why don't you add to the debate in some useful (non-Republican, obstructionist) way, rather than just whine like a little girl?

[KB]

Guard: not that it really matters, but you may be right. I rather hope not.

Scott: What do you have against little girls? Are you some kind of misogynous cretin? That Obama's comment is refuted by most experts, according to NPR and the NYTs looks like information to me. But apparently you define "useful" as "non-Republican". It must be comfortable to live in such a simple world.

[George Mason]

The "Reform Bill" does not address the root cause of the problem. That is the interference of the government in private business, in particular the machinations of Fannie Mae and Freddie Mac (and Sally Mae as well) and the requirements of the Community Reinvestment act. This is the Alice in Wonderland world of Washington where you solve problems caused by government interference with more government interference. Putting additional burdens on business will create more "Too Big Too Fail" enterprises as the cost of regulation drives smaller enterprises out of business.

[Guard]

KB, I hate to tell you this, but, its a forgone conclusion that both Right and Left have been and continue to be in bed with the highest bidder. Either side supports the corruption that, in turn, supports them. That's why you don't see me rooting for either side anymore. It's all a game they play and there are still plenty of suckers that keep it going per say in this country. If you think your side, the Republicans are on your side, then, I'm here to tell you that you are being suckered just like the Democrats sucker their people.

[Guard]

BREAKING NEWS: GOP TO END STALL TACTICS & WALL STREET ACCOUNTABILITY ACT NOW MOVES FORWARD...I knew the stalling was temporary, but, I did not realize it would be THIS temporary. The huge Banking Reform Bill now moves forward.

[KB]

Guard: great! Now that this law seems likely to pass, we will finally find out what is in it.

[George Mason]

Guard; You need to do some more reading and not just follow the DNC/MSM/MSNBC line. The Republicans held out to get the $50 Billion(or $150 Billion depending upon the version of the bill) permanent "Bailout Fund" (the dems gift to their Wall Street patrons)removed from the bill. This was a Republican victory, not a retreat.