America should be relieved that when Nancy Pelosi hurt the Republican's feelings so badly by pointing out that their deregulation of financial markets brought American financial markets to the brink of ruin. Republicans are so sensitive that they voted against the bailout bill. As it turns out, that may have been a good thing for all the wrong reasons.
As expected, anytime you let lobbyists into the room, they try to steal something. Buried in the bailout bill were the seeds of the final destruction of America's banking regulatory system.
"The original Relief Act of 2006 called for a date of October 1, 2011 to allow banks zero reserves, if the Federal Reserve Board thought it fit. This bill would have moved that up to tomorrow!Daily Kos
Tomorrow people! Do you hear me! Tomorrow we could have all woken up to the possibility of zero holdings in our banks and it being legally allowed!
And you dare cheerlead for this bill?"
This may seem complicated but it isn't. You learned wwhat the reserve holdings in banks were for back in middle school civics...Is civics still taught in school? It is the amount of money a bank has to keep on deposit, in reserve, that it cannot loan out. This is what caused 30% of all the banks in America to fail back in the early part of the 20th Century. It's why we have a Federal Reserve, a Federal Deposit Insurance Corporation, and a U.S. Dollar. Henry Paulson was going to kill all of this yesterday.
Even worse, he was going to place a time bomb into legislation and leave town, much like McCain economic advisor Phil Gramm did with his deregulatory bill in 1999. Gramm baked the cake and hid the file so that Bush and his people could saw through the bars on the bank windows.
That would have meant that your hometown bank could simply tell you that they were out of money when you went to withdraw your life's savings and it would be completely legal.
Listen to me...Throw out the Paulson Bill and start over.
This bill has no guarantees, no protections, and no requirements that anything be fixed. The actual wording is, "The President shall propose..." That would be George W. Bush, at this point, known, loved, and trusted?
I don't think so.
It's just throwing money, America's credit card actually, at the losses of monster financial institutions and speculators, in the hopes that things will work themselves out...It also props up the high price of oil by 40% by propping up Oil specultors. How about that one?
"If speculators were forced to liquidate their positions, oil would easily be $65 to $75 per barrel by the time the liquidation was complete," said Michael Masters, the founder of Atlanta-based hedge fund Masters Capital Management. Tuesday, oil was trading at $108.74 in midday trading in New York
I am beginning to believe that we should take our medicine and let some really big boys get killed by the market. If I could be guaranteed that a sound regulatory system would emerge from the ashes, I would let these people burn.
As it is now, I give you a quote from Republican Minority Leader Boehner, "What we have here is a flawed proposal that may work."
Later he blamed Democrats for the failure of the vote. I want to thank them. Now get the lobbyists out of the room, call in the economists, and give us a rational proposal that is less flawed and far more likely to work.