Democrats Have A Chance Now To Show How They Can Govern
And the way to do that is to put some progressive teeth into a bailout plan. Devilstower at Kos has some key points.
- Add the ability for bankruptcy judges to review and adjust first mortgages so that ordinary Americans stand a better chance of staying in their homes.
- Put some real teeth in the caps on pay and bonuses so that Americans don’t see this money as patching in the holes on executive’s golden parachutes.
- Make the continuation of payments on this plan require an affirmative vote of Congress after each review, rather than having them continue by default, so we only pay if the plan proves to be effective and continues to be needed.
- Place realistic limits on the power this bill affords the Treasury Secretary, providing for both review and revision.
A WaPo poll out shows that Americans want more consumer protection, so Democrats have a strong hand to play. And with the public and the president clamoring for quick action, another failed bill will be a big upset and negatively affects financial markets. Digby makes a good case for Keynesian economics while invoking Naomi Klein’s Shock Doctrine.
Dean Baker adds some other progressive conditions for a bailout, among them:
- Financial institutions should be forced to endure the bulk of the losses with taxpayer funds only used where absolutely necessary to sustain the orderly operation of the financial system.
- In the case of delinquent mortgages that come into the government’s possession, there should be an effort to work out an arrangement that allows the homeowner to remain in her house as owner. If this proves impossible, then former homeowners should be allowed to remain in their homes as renters paying the market rent. This should be done even if it leads to losses to the government.
- There should be serious efforts to severely restrict executive compensation at any companies that directly benefit from the bailout.
Robert Reich predicts what will happen:
A scaled-down bill will be enacted by the end of the week. It will provide the Treasury with a first installment of $150 billion. Treasury can use it to back Wall Street’s bad debts with lend no-interest loans of up to two years, until the housing market rebounds. Or to invest in Wall Street houses directly, in exchange for stocks and stock warrants. There will be strict oversight. Congressional leaders will promise further installments, but with conditions calling for limits on salaries and relief to distressed homeowners.Click here for reuse options!
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