So here’s what I watched happen today: “WASHINGTON — The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support.
‘If money isn’t loosened up, this sucker could go down,’ President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room.” (NY Times)
Wha, wha, WHAT? When I tuned on the news this morning a bunch of Democrats were standing around saying they were close to an agreement that would save our economy, under the following conditions:
- The $700 billion be released in tranches (or installments)
- That the use of every dollar be over seen by a bipartisan committee
- That NO EXECUTIVES from firms taking the money be allowed to make more than the President ($400K for the year)
- That the government get an equity stake and warrants (the option to by more equity at a discount at a future date) in all of the companies it bails out
This was a GREAT DEAL!!! Don’t trust me? Even, Warren Buffet said this was a “great opportunity.”
“The government has a great opportunity. If they buy things at market prices with the government’s cheap funding, they should make a lot of money.” The Sage of Omaha (aka Warren Buffet).
So what happened?
“The smooth-talking House Republican leader, John A. Boehner of Ohio, surprised many in the room (the negotiating 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.”(NY Times)
Here’s my theory, and this is just a theory, but a theory coming from a moderate, realist:
John McCain has two motivations in this situation.
- He had absolutely no part in the compromise that was crafted. McCain wants his name on the bailout legislation so he hold it up and townhall meetings and say, “I was saving the economy while Obama just wanted to talk.” This part of the theory is backed up by Kevin Smith, Boehner’s aide who indicated that “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.”
- McCain is not ready to debate on Friday night. In practice sessions this past week his team hit him hard with questions on the economy and he crumbled.
In response the McCain campaign declared that the Maverick would not debate until a deal was done to save the economy. Well, a deal was about to be done this afternoon. But a done deal would have sent McCain to Mississippi to face off with Obama with nothing to tout. To avoid this fate McCain allied himself with Boehner’s hard headed refusal to compromise.
The result of this is that the market will capsize at the open.
To make matters worse Washington Mutual collapsed tonight.
There is still hope. I firmly believe the $700 billion deal is the best choice given our situation. We need the government to get past electoral politics and make a deal happen.
If this deal does not get done, at least in part, because of McCain I will do everything in my power to make sure he is not elected.