House to vote on bailout today; please, God, let the Republicans show that they have a spine!

WASHINGTON — The House braced for a difficult vote set for Monday on a $700 billion rescue of the financial industry after a weekend of tense negotiations produced a plan that Congressional leaders portrayed as greatly strengthened by new taxpayer safeguards.

The 110-page bill, intended to ease a growing credit crisis, came after a frenzied week of political twists and turns that culminated in an agreement between the Bush administration and Congress early Sunday morning.

The measure still faced stiff resistance from Republican and Democratic lawmakers who portrayed it as a rush to economic judgment and an undeserved aid package for high-flying financiers who chased big profits through reckless investments.

The New York Times offers, albeit unintentionally, one more reason why Congress should not permit the tax-payers to provide support to the powers of economic centralization:

“Citigroup Buys Banking Operations of Wachovia”

Citigroup will acquire the banking operations of the Wachovia Corporation, the Federal Deposit Insurance Corporation said Monday morning, the latest bank to fall victim to the distressed mortgage market.

[. . .]

The sale would further concentrate Americans’ bank deposits in the hands of just three banks: Bank of America, JPMorgan Chase and Citigroup. Together, those three would be so large that they would dominate the industry, with unrivaled power to set prices for their loans and services. Given their size and reach, the institutions would probably come under greater scrutiny from federal regulators. Some small and midsize banks, already under pressure, might have little choice but to seek suitors.

[All emphasis mine. – Nathancontramundi]

Three banks absolutely dominate the banking industry and the sprawling Federal government finds (Constitutional t)reason to exercise even more power. Ladies and gentlemen, sharpen your pitchforks: The troops will be positioning themselves on native soil and our fearless leaders commit acts that may incite uprising, which the troop shall, doubtless, be prepared to defeat. God. Bless. America.

Update: President Bush admonishes Congress to support the bailout, as “difficult” as the vote may be.

Bush acknowledged that the vote will be “difficult” in the face of opposition from taxpayers and voters but necessary to protect the economy.

“A vote for this bill is a vote to prevent economic damage to you and your community” by stabilizing financial markets and renewing the flow of credit, Bush said, attempting to undercut arguments that the proposed legislation bolsters Wall Street at taxpayers’ expense. “This is a bold bill that will keep the crisis in our financial system from spreading through our economy.”

My own two cents: Part of the fundamental problem is that we incline, all too easily, to think in macroeconomic terms, of “the economy”, rather than of our myriad local and regional economies. Daniel noted, a few days ago, that “[s]mall banks are functioning and even thriving as deposits have started flooding into them, and credit from these banks does not seem as if it will be drying up.” I suspect that the owners of First Farmers Bank and Trust and the First National Bank of Monterey, back in North Judson, even if the woes of “the economy” have hit home (actually, at least as of May, they had, for the better), probably have much less to fear than the shareholders of Wachovia had. These small banks, which serve the people who know the owners and employees of the bank, which serve as an important life-blood for countless small businesses across the country, help to drive our economies; the “too big to fail” banks drive — or wreck, as it were –“the economy”. Our purportedly conservative president wishes to “secure the economy” (to employ the present defensive jargon), rather than to allow our economies to function naturally, without fear (Yes, I apologize, I’ve anthropomorphized things as abstract as the economies.) of disaster caused by intervention. This, Mr Bush, is decidedly un-conservative, as has been most of your presidency.

(Hat tip, on the internal occupation: John Schwenkler)


Congressional Republicans do something (seemingly) sensible, Nathancontramundi asks if sky has fallen

From the New York Times:

But once the doors closed, the smooth-talking House Republican leader, John A. Boehner of Ohio, surprised many in the room by declaring that his caucus could not support the plan to allow the government to buy distressed mortgage assets from ailing financial companies.

Mr. Boehner pressed an alternative that involved a smaller role for the government, and Mr. McCain, whose support of the deal is critical if fellow Republicans are to sign on, declined to take a stand.

[. . . ]

“I didn’t know I was going to be the referee for an internal G.O.P. ideological civil war,” Mr. Frank said, according to The A.P.Thursday, 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.”

[My emphasis. – Nathancontramundi.]

Funny, Ms. Pelosi, we didn’t know that you’re Catholic, either!

Seriously, though, all doubts about the intellectuality of Speaker Pelosi’s alleged Catholicism aside, how can she possibly suggest that the [Congressional] Republicans’ “blowing this up” is bad? President Bush, Mr. Paulson, and the Democrats wish further to make obsolete the Constitution, authorizing Mr. Paulson, an appointed member of the executive branch, to have virtually limitless control over SEVEN HUNDRED BILLION DOLLARS. Presently, it is they, and not the GOP (hardly, on the whole, any better in this situation, I willingly concede), who commit a heinous act of betrayal. (Go figure that Senator McCain refused to take a stand!)

I’m late to commenting on this, but MLB Hall of Famer-turned-junior senator Jim Bunning (R-KY) offered, before the proposed super-mega-colossal bailout, but in the wake of the AIG bailout, in John Schwenkler’s terms, “first-rate” stuff:

Instead of celebrating the Fourth of July next year Americans will be celebrating Bastille Day; the free market for all intents and purposes is dead in America. The action proposed today by the Treasury Department will take away the free market and institute socialism in America. The American taxpayer has been mislead throughout this economic crisis. The government on all fronts has failed the American people miserably.

My great grandchildren will be saddled with the estimated $1 trillion debt left in the wake of this proposal. We have gotten to this point because nobody has been minding the store. Both Secretary Paulson and Chairman Bernanke should be held accountable for their inaction – and now because of that inaction – the American taxpayer is left with bill.

We must take care of Main Street. Small businesses in Ashland, Bowling Green, and Paducah are hurting because of high taxes, and energy costs. Those small businesses are the economic engines that fuel our economy. I hope in the closing days of this Congress we can pass legislation to help those good people on Main Street rather than helping the power brokers on Wall Street.

Will, of Dispatches, astutely points out, commenting in reply to John’s post on Bunning’s wisdom, that the senator fails to offer his own proposed alternative. It’s a fair point, but Bunning’s words are no less apt. And, now, Mr. Boehner has offered something. Will offers, at his site, this, “House Republicans Discover the Constitution”:

The only good thing to come out of this mess is Republicans’ renewed appreciation for legislative oversight.

I doubt that this newfound respect for the Constitution will last with a party that has backed its president’s super-Constitutional exercises of power, but it’s nice to see even this slight glimmer. After eight years in power under George “”It’s just a goddamned piece of paper!” Bush, perhaps an internal ideological civil war is just what the Republican Party needs; America, too! However, Ron Paul would be a far better referee than Frank, whose remissness in his duty, doubtless, helped to bring forth the crumbling, and eventually buy-out, of Fannie and Freddie.

Save the banks, screw the people!

WASHINGTON – Struggling to stave off financial catastrophe, the Bush administration on Friday laid out a radical bailout plan with a jawdropping price tag — a takeover of a half-trillion dollars or more in worthless mortgages and other bad debt held by tottering institutions.

A grim-faced President Bush acknowledged risks to taxpayers in what would be the most sweeping government intervention to rescue failing financial institutions since the Great Depression. But he declared, “The risk of not acting would be far higher.”

The administration is asking Congress for far-reaching new powers to take over troubled mortgages from banks and other companies, including purchasing sour mortgage-backed securities. Administration officials and congressional leaders are to work out details over the weekend.

I wonder if I’m the only one who believes that some sort of substantial financial crisis but serve us well, reminding us that living beyond our means is responsible irresponsible, not to mention not a particularly conservative value.

The best candidate gets the job? How novel! How un-American!

The Indianapolis Star reports that the Indianapolis Metropolitan Police Department and Indianapolis Fire Department “no longer must use racial preference in hiring and promotion, prompting public safety officials to announce Friday they will more strictly adhere to a merit-based system that they say will ensure fairness.”

“People have the right to expect that in the Police Department and Fire Department, people will be evaluated in their job, that those evaluations will matter and that the best people will be promoted to positions of supervision,” said Public Safety Director Scott Newman, who oversees IMPD and IFD.

I have no idea why the U.S. Department of Justice concerns itself with racial diversity quotas, rather than, say, doing its job. I mean not at all to suggest the every, or even most, attorney generals, all but two of whom have been white males, have done great, or even good, jobs, but our nation’s two forays into “diversity” at the highest level in Justice brought us Reno and Gonzalez, who were corrupt, villainous officials. Just sayin’.

More on Röpke: Foreseeing the Wal*Mart-welfare state

We can see similar contentions in Belloc, and I’m sure that, somewhere, Hayek provides an argument of such nature in The Road to Serfdorm (on my bookshelf, but, I, shamefully, admit, unread). Röpke is spot-on:

[T]he welfare state itself takes care of a sort of comfortable stall-feeding of the domesticated masses[.] Is this not bound to work to the benefit precisely of existing large firms?
– Röpke, A Humane Economy, “Welfare State and Chronic Inflation”, page one hundred and seventy

Benefit precisely of existing large firms”:

In 2004, a study released the UC Berkeley Labor Center found that “reliance by Wal-Mart workers on public assistance programs in California comes at a cost to taxpayers of an estimated $86 million annually; this is comprised* of $32 million in health related expenses and $54 million in other assistance.

Need I to adduce anything else to demonstrate the clear distinction between a free market and what we call capitalism, which Chesterton aptly called the presence of too few, rather than too many, capitalists? I think not.

*Is this really so hard to get right?

The Nanny State disapproves of the ochre on the living room ceiling.

Thanks to Mr Sullivan for alerting us to this absurd over-extension of the nanny state.

In Alabama it is illegal to recommend shades of paint without a license. In Nevada it is illegal to move any large piece of furniture for purposes of design without a license. In fact, hundreds of people have been prosecuted in Alabama and Nevada for practicing “interior design” without a license.

Say what? I hope no one from Maryland comes knocking on the door, demanding an explanation for the ungodly combination of woods in my ramshackle bedroom. I’ll be returning to jail if that happens.

America?! No, you serve the president.

Having, yesterday, finally, finished The American Republic, I found the head-line article of to-day’s Washington Post, “Internal Justice Dept. Report Cites Illegal Hiring Practices“, to be incredibly apropos.

Under the patriarchal . . . systems, there is, properly speaking, no state, no citizens, and the organization is economical rather than political. Authority — even the nation itself — is personal, not territorial. The patriarch, the chief of the tribe, or the king, is the only proprietor. [My emphasis. – NPO] – Orestes Brownson, The American Republic, page nineteen.

The despot is a man attempting to be God upon earth, and to exercise a usurped power. – Idem, page twenty-three.

The danger that the General government will usurp the rights of the States is far less than the danger that the Executive will will usurp all the powers of Congress and the judiciary. – Idem, page one hundred and seventy-nine.

A sample of what Monica Goodling asked job candidates at the Justice Department: “[W]hat is it about George W. Bush that makes you want to serve him?” [My emphasis. – NPO]

Mayhap, we, in the United States, have reverted to the barbaric constitutions of the ancient world?