After a stunning defeat—well actually not so stunning given the public’s pervasive anger at Bu$hCo and Wall Street—congressional leaders might want to consider the one form of bailout that would make their constituents happy: Take that $700B and give it to homeowners, especially to the homeowners that are facing foreclosure.
If mortgage-backed securities are the problem, then why not recapitalize the market segment by shoring up the assets that underly those securities. Keeping families in their homes would stabilize prices, keep billions of dollars of equity from being flushed down the crapper, and improve local tax bases by keeping the property taxes flowing. Home owners that didn’t need help could be rewarded for their caution with tax credits. A great solution right? The market crisis is avoided, and almost everybody wins..except:
Banks and Investment Houses… The ones heavily leveraged in mortgage-backed securities, would have to bide their time. Returns wouldn’t be realized for years, and these firms already have decided that they want to be forgiven for their folly right now.
Bu$hCo and the GOP… Who won’t be able to take credit if the idea comes from Congress, is passed by Congress, and doesn’t show results until well into the next administration.
And this is why this idea will never, ever come to pass. Democrats don’t have the balls or the votes to override the inevitable Bush veto. And he will veto because, if there is anything we’ve learned from watching Bu$hCo during this ‘so-called’ crisis, it’s that the solution has nothing to do with restoring the health of the economy and less to do with helping ‘Main Street America’.
No…Bu$hCo is trying to fundamentally change the relationship of government to Wall Street. The bailout is about providing ‘indemnification of last resort’ to the people who are really pulling Bu$hCo’s strings, and giving them a tool that they can use to fleece the American people whenever they feel that their profits aren’t sufficient.