This is a must read article by Newt and he asks some very pertinent questions that need to be answered before Congress rushes into a possibly disasterous solution. He is right that they need to slow down and be very careful to make sure the taxpayer is protected and not just throw good money after bad to the benefit of a few at the expense of the many. I don't and won't pretend to know what needs to be done, all I can do is hope some cooler heads can prevail.
Imagine that the political balance of power in Washington were different.
If this were a Democratic administration the Republicans in the House and Senate would be demanding answers and would be organizing for a “no” vote.
If a Democratic administration were proposing this plan, Republicans would realize that having Connecticut Democratic senator Chris Dodd (the largest recipient of political funds from Fannie Mae and Freddie Mac) as chairman of the Banking Committee guarantees that the Obama-Reid-Pelosi-Paulson plan that will emerge will be much worse as legislation than it started out as the Paulson proposal.
If this were a Democratic proposal, Republicans would remember that the Democrats wrote a grotesque housing bailout bill this summer that paid off their left-wing allies with taxpayer money, which despite its price tag of $300 billion has apparently failed as of last week, and could expect even more damage in this bill.
But because this gigantic power shift to Washington and this avalanche of taxpayer money is being proposed by a Republican administration, the normal conservative voices have been silent or confused.
A couple of our young conservative guns are throwing up some red flags, Mike Pence and Michelle Bachman and they concur with Newt that opening up our energy market will do more for stimulating the economy than any government bailout plan. Repealing the capital gains tax would also do a lot and would result of a surge of capital into the market improving liquidity.
A reminder that Democrats created this mess and blocked multiple efforts to get ahead of the problem before it exploded. Hattip: Ace
Ed Morrisey has more on that Bloomburg article linked above and adds, more here.
What happened? Despite moves from Republicans such as Chuck Hagel, John Sununu, Elizabeth Dole, and John McCain to get more regulatory oversight on Fannie and Freddie, Congress took no action. Why? Fannie and Freddie had already co-opted Chris Dodd with over $130,000 in campaign contributions over 20 years, and over $120,000 to Barack Obama over less than four years. Hillary Clinton took tens of thousands in eight years, and Chuck Schumer also opposed any new regulation on markets that Congress had forced open.
We can play blame games for the next several months and years, but what would be the point? In this case, there is a point, and it couldn’t be more clear or important. We have two candidates running for President who would bring much different styles to executive authority over regulatory responsibility. Barack Obama and his allies took the money and stayed on the sidelines rather than take proactive action to resolve the credit crisis. McCain and his co-sponsors of this bill had the right idea and instincts, but could not get any cooperation from Clinton, Schumer, or Obama.
And unbelievably socialist Democrat Barney Frank wants to continue the bad lending practices that got these institutions in trouble in the first place.