If Democrats could unify behind their own bailout plan, such as the one which Dean Baker has proposed in his TPM blog, then it could become an effective tool to clean up Wall Street loopholes which game the system. Presenting a unified front on a specific bailout plan puts Democrats in the position of change agents and protectors of taxpayers and consumers.
Thereisnospoon has written a diary outlining the political wisdom of rejecting a rushed Bushco bailout proposal here: here.
Kagro X has written a diary pointing out that a rushed plan allows Congress to abdicate its oversight responsibility:
here.
If a positive narrative for Congressional Dems' bailout plan of representing families and middle-income earners is contrasted to be against giveaways to wealthy Wall Street elites, with Bush, Paulson, and Bernanke as their gimme guys, it could imbue political benefits to Obama and down-ticket Democrats in November.
Achieving Dem Unity at the Congressional level is frustrating and maybe not possible, as we all remember from FISA. However, if the Democratic progressive base can mobilize behind a simply summarized bailout plan, with the legal details provided by allies in progressive think tanks and organizations, then we have an appealing product to sell to Congresscritter Dems.
This unity would require coordinated mobilization. God knows we all are in the midst of election campaigns. What is at stake now, with the proposal of $700 billion bailouts, is the limitation for programs that the next administration can offer. In short, it could put Pres. Obama in a do-nothing box.
I offer this proposal of Democratic Unity for the "Baker Plan", in order to circumvent the above circumstance. And, frankly, to prevent Bushco from lying to and ripping off the public again. I think if Dems can control the media narrative about an alternative bailout proposal, Dems election chances are improved.
It also is a reasonable position to take since the administration has attempted to ramrod their self-dealing plan without sufficient deliberation. Democrats have gained a reputation as being weak and always caving in to the GOP. Standing firm behind a well written plan, with clear goals and objectives, which includes review and transparent decision-making, would, I believe, enhance the Democratic delegation’s image to the American public.
Everyone is rattled right now. Even ordinary folks not particularly into politics and the nuts and bolts of policy, are paying attention to this. At least the media is beginning to grow a pair to give voice to the opposition. The major obstacle for progressives can be found on the contributor lists of Democratic House and Senate members, with Wall Streeters heavily represented. Will they listen to us or to those who have paid to play? I am especially thinking of Sen. Schumer.
Dean Baker, the Co-Director, Center for Economic and Policy Research, Washington, DC, has written a plan for a bailout, published on the TPM Café Blog. It contains an extensive list of immediate and short-term goals and objectives that offer protection for taxpayers. It also requires the necessary oversight that such a massive government undertaking needs, as well as major modifications to the Federal Reserve Board.
Below is the link to the original article.
http://tpmcafe.talkingpointsmemo.com...
A major principle of his proposal is that any bank participating in the bailout must first agree to all its terms and future regulation of its operations. That means if a bank’s management is compensated to any degree, then their operations will be governed by a set of rules and operating procedures by contractual agreement. If written properly, this agreement would then bind future management from excessively risky behavior.
As if this next factor should not already be present in existing law for shareholder and third party protection, management would be held personally liable for attempting to game the system. That means in any bailout auction of assets, the value of those assets are measured according to their performance against other assets of similar investment grade. In other words, any deliberate overpricing of assets for sale to the government allows taxpayers to reclaim that difference in the future against a measurable standard.
Baker’s plan also has provisions for existing homeowners and renters, provisions that will appeal to progressives and social justice advocates.
A bailout plan with all these caveats and protections is necessarily legally tedious.
Baker does not set out the details of an authorizing bailout committee, agency, or method of choosing such adjudicators. However, my position is that it must be free not only of self-dealers, but potential ones, like Treasury Sec. Paulson. He can go back to Wall Street and collect fees from the very funds that he has authorized as bailout payments.
I would welcome as responses how such a committee of adjudicators should be staffed and selected. Whereas Paulson’s proposal prohibited any review of decisions made, I believe that there should be some process of appeal, with a review by independent experts who cannot profit from their decisions. It could be academics, accountants, auditors, former presidential administration members, or judges with a particular expertise.
The details of such plan can be dry stuff. I think it important for a plan which includes this detail not be written vaguely. Protocols for decision-making of this magnitude must be specific and tied to performance standards of those involved, as well as of the types of assets we are talking about.
Taking the time to deliberate is crucial to taxpayer protection. Unifying Dems behind its own plan tells voters we represent their interests, as opposed to the GOP. Standing firm with a proactive proposal can polish (re-create?) an image of Democrats willing to fight for the little guy and gal.