Bailout/No Bailout

Looks like there's no agreement, after there was an agreement. And it's obviously time for more finger-pointing:

In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to “blow it up” by withdrawing her party’s support for the package over what Ms. Pelosi derided as a Republican betrayal.

“I didn’t know you were Catholic,” Ms. Pelosi said, a wry reference to Mr. Paulson’s kneeling, according to someone who observed the exchange. She went on: “It’s not me blowing this up, it’s the Republicans.”

Mr. Paulson sighed. “I know. I know.”

It was the very outcome the White House had said it intended to avoid, with partisan presidential politics appearing to trample what had been exceedingly delicate Congressional negotiations.

Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Senate banking committee, denounced the session as “a rescue plan for John McCain,” and proclaimed it a waste of precious hours that could have been spent negotiating.

But a top aide to Mr. Boehner said it was Democrats who had done the political posturing. The aide, Kevin Smith, said Republicans revolted, in part, because they were chafing at what they saw as an attempt by Democrats to jam through an agreement on the bailout early Thursday and deny Mr. McCain an opportunity to participate in the agreement.

Strange, isn't it? A year ago, Bush's word was law in Congress, and now he can't even get his own party to fall into line. And I find it instructive that the Republicans are whining about not giving McCain and chance to "participate" in the agreement. He hasn't voted on anything since what? March? April? And suddenly he's got to be involved -- in an area where he admits he knows nothing? But it's the Democrats playing politics, for sure. Here's Barney Frank's comment on McCain's intervention, from Politico:

Frank bashed McCain for becoming involved in the bailout talks, suggesting he was doing it only for political gain in the presidential race.

"I think Sen. McCain was hurting politically on the economic issue," Frank just told reporters. "I think this was a campaign ploy for Sen. McCain. I think they then had this problem that there might not have been enough of a deadlock for him to resolve. I don't know what motivated what, but the next thing we know, he's in a position, frankly, where he's making it harder to get things done rather than negotiate differences.

"He's slowed it down, I don't know whether he caused it or what," Frank said. "We are trying to put it back together."

Keep in mind that, by all reports, the Republicans claim to have an alternative but they haven't offered anything for consideration.

Frank gave reporters copies of the House Republicans’ set of principles, and he said that their primary goal — insuring bad bank loans, rather than buying them — had already been rejected by Paulson as unworkable. He noted that no House Republicans raised the insurance idea at a House hearing yesterday; if anyone had, he said, Paulson would have rejected the idea out of hand.

Now, just who is playing politics? Another article from Politico gives an idea:

t was McCain who had urged Bush to call the White House meeting but Democrats made sure Obama had a prominent part. And much as they complained later of being blindsided, the whole event turned out to be something of an ambush on their part—aimed at McCain and House Republicans.

“Speaking professionally,” said one Republican aide, “They did a very good job.”

I didn't know the Democrats had it in them, but it looks like they ambushed the ambushers.

And from Crooks and Liars, it seems that economists aren't convinced that it's really that urgent:

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America’s dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.

And yet the president says we must act immediately -- but he always says that. Wonder why?