Punishing The Country And Not Wall Street

First, let’s get past the name “bailout.” The $700 billion plan to rescue our nation’s financial system is not a giveaway to Wall Street fat cats who contributed to our fall into this economic abyss.
But the average taxpayer looks at it this way. And until this debate is framed in such a way that the average Joe can understand the implications of inaction, certain congressmen and women will hide behind their angry constituents and vote no on what should be a bipartisan rescue bill.

This bill is needed immediately – not to reward Wall Street for its unbridled greed and myriad failings but to save us all. If we don’t restore liquidity to our financial system and free the flow of credit, taxpayers will come to regard the $700 billion plan as a pittance compared to what this calamity ultimately will cost this nation.

Consider Monday’s “no” vote: The market dropped 778 points and lost $1.2 trillion in value – or nearly double the bailout proposal. That money came from your 401(k) and investment portfolios.

It will only get worse. If companies can’t borrow money to meet payrolls or to expand or to generate other kinds of cash flow, then those companies will have to lay off workers.

“Polls show that this move is extremely unpopular politically,” says Alexander Green, investment director for the Oxford Club. “But the average man on the street has no idea what is at stake here. The nation’s credit markets are completely dysfunctional right now. Last week major banks were unwilling to even lend to each other. This is the biggest financial calamity in more than 70 years. And anyone who thinks this virus won’t affect Main Street has his head in the clouds ... or the sand. Yet the Bush administration and Congress have done a terrible job of explaining why this rescue package is necessary – and why the ultimate cost will be far less than the headline number.”

Congress cannot possibly craft a perfect bill. Many details will have to be worked out. There will be valuable omissions and onerous admissions to any bill. But something needed to be done yesterday – before the market lost $1.2 trillion in value and before tomorrow could bring worse.

There is plenty of blame to go around – first-time homeowners who bit off more of the American dream than they could afford; real estate speculators who rode the housing bubble without regard for the consequences of a crash; lenders who doled out cash regardless of recipients’ ability to pay it back; Republicans who deregulated the financial markets or failed to enforce existing oversight laws; and Democrats who in their zeal to reverse age-old discrimination insisted on easy mortgages for unqualified buyers.

Now is not the time to play the blame game. It’s not the time for Nancy Pelosi to make partisan speeches on the House floor criticizing President Bush. It’s not the time for Bush to appoint a treasury secretary as king and to give him unfettered access to $700 billion with no oversight or accountability for what he does with it. It’s not the time for presidential candidates to swoop into Washington to try to make political hay with a rescue deal. And it’s not the time for Congress to point fingers.

It is the time for Congress to return to D.C. and not leave until a deal is ironed out. Then every member of the House of Representatives should vote for it. (Rep. Rick Boucher, D-Va., voted yes on Monday, while Rep. David Davis, R-Tenn., voted no.) They should explain to taxpayers that the term “bailout” is a misnomer: Any government plan would purchase worthy investments mixed in with the toxic ones. Those good investments would be available for pennies on the dollar with the possibility of high returns to the U.S. Treasury, and to taxpayers.

Previous so-called bailouts of Chrysler, the airlines, and the savings and loans institutions ultimately paid for themselves.

No one knows what the end game is here, but a continuing credit crunch most certainly will collapse our economy.

Congress should check partisanship and grandstanding at the cloak room door and come together to pass a rescue plan. Now.