I know I spoke out against bailing out greedy rich Wall Street investors last week, and I still feel that way. But even at that time, I understood that some sort of financial intervention into the economy needed to happen — preferably one that helps the middle and lower classes. I sort of assumed that the bill would actually get passed, and was lamenting that there wasn’t enough there to protect the little guys. But something needs to be done by Washington — a bill NEEDS to be passed, or businesses will start to fail and people will start to lose their jobs.
Treasury Secretary Henry Paulson emerged after the vote and warned of a credit crunch that would affect American businesses and said families would find it harder to get student loans and car loans.
“We need to work as quickly as possible,” he said gravely. “We need to get something done.”
Peter Morici, a professor of business at the University of Maryland, told Early Show anchor Maggie Rodriguez, that the effects of the credit crisis will be felt across the economy, especially since the bailout package failed.
“This impedes the ability of banks to make loans to businesses, to hire people and to just keep their payrolls going,” Morici said. “You know, a lot of department stores borrow money to buy the goods that they sell and pay them back when the goods are sold.
“If people can’t borrow money to stay in business or the cost of borrowing becomes prohibitively high, they lay people off and don’t hire workers, so we’ll see unemployment rise more rapidly than we anticipated as the economy slows and see the slowdown deepen. It’s that simple and as more people lose their jobs it recycles through and you get into the downside of the power curve, so to speak.”
The sense of urgency was not universal. Many opponents of the bill argued that the package amounted to a too-costly commitment of taxpayer money to bail out financial institutions for their own mistakes.
Rep. Dean Heller, R-Nev., offered a typical sentiment. “I cannot with good conscience put Nevada’s taxpayers on the hook for the foolish excesses of Wall Street,” he said. “Congress should pass legislation that protects the taxpayer, assists with bad assets and allows the market to correct itself.”
The problem is that the market CAN’T correct itself, because it’s fundamentally broken right now. It’s true that good debt can be sorted out of the mess and loans that actually have assets will still have value – but the credit crunch is stalling anyone from being able to purchase those. The credit contraction has gone too far; there’s no “reset” button. There does need to be some sort of financial intervention on the part of Washington.
Lawmakers need to start talking about this bill differently to the American people, because the word “bailout” is both a misnomer and a button-pushing show stopper, and they need to get serious about making sure the middle and lower classes are shielded from the effects of Wall Street excess.
That’s what the Democrats want to do — provide mortgage protections for you and me:
When asked by Smith why enough Democrats didn’t vote for the bailout to cover for reluctant Republicans, Moran said, “Speaker Pelosi had said to Minority Leader Boehner, ‘If you can put 110 votes up, we’ll match it. We will at least do half of this task, but we don’t want to own this bill. This is your bill. If it’s our bill, we want to put in mortgage protections to help out the homeowners as much as we do Wall Street. We want to pay for the bill so we can do other initiatives rather than financially strapping the country for the next decade.’
“There are a number of things the Democrats wanted [and didn’t get] but nevertheless they realize the urgency of the situation, so almost two-thirds of it went ahead and voted for it,” Moran said.