Don’t Let Them Crash
Posted on September 28, 2008
A scene from the classic movie Airplane keeps coming to my head.
The famous conservative commentator Jack Kirkpatrick, who used to do a Point/Counterpoint segment on 60 minutes said this about efforts to rescue the plane from going down: “Shanna, they bought their tickets, they knew what they were getting into. I say, let 'em crash.”
I was getting a little worried that House conservatives were going to take the Jack Kirkpatrick view when it came to our national fiscal crisis: Wall Street bought its tickets, they knew what they were getting into. We say let it crash.
But, of course, by letting our banking system crash, our whole economic system would crash. House conservatives know that. While they didn’t like the Treasury package, they also knew that they could play a positive role in making that package better. And thanks to John McCain, whose dramatic gestures made a deep impression on just about everybody, the House GOP got their chance to make their case.
The media and the Democrats have been trying to spin that John McCain pulled a “political stunt”, to suspend his campaign and come back to Washington and rescue the rescue package.
It was no political stunt. Without McCain, a deal may have happened, but without the input of House Republicans, and without their votes. But without the House GOP, the Democrats would have had to buy votes with who knows what kind of garbage. And even with the garbage, it is unclear if Nancy Pelosi has the votes.
Harry Reid said himself that he needed McCain’s vote on this thing, and Pelosi has said that she needs a certain number of House Republicans to be able to pass it. It is still unclear to me whether she needs the GOP votes in order to cover the rear-end of her caucus, or because she actually needed the votes because of a rebellion in her own ranks.
Without McCain, there would be no deal with House Republicans. And according to Nancy Pelosi, without House Republicans, there would be no deal at all.
So, what exactly did the taxpayers get for the efforts of the House GOP? Here are some examples:
- The establishment of an insurance guarantee program that in lieu of purchasing assets with taxpayer funds is available to insure assets at no cost to the taxpayer. Costs would be fully paid for by participating companies (i.e. those receiving the assistance). Assets insured by the program would count against the total funds the Secretary would otherwise have available to make purchases.
- A requirement that, if after five years, the government has a net loss as a result of the purchase program, that the President submit a proposal to recoup those losses from the entities that benefited from this program.
- A requirement that provides for warrants of non-voting stock in companies receiving assistance so that taxpayers have an opportunity to recoup any losses.
- Of the total $700 billion provided, $350 billion is only available after Congress has the opportunity to rescind the funds.
- Established a bipartisan Congressional Oversight Panel to insure that partisan politics stay out of this program.(Democrat proposal was a 5-2 partisan panel).
- Established a Special Inspector General to monitor the program, required the Government Accountability Office to review and audit the program
- Required a study on the role of the mark-to-market rules and their impact on the current financial crisis and authorized the SEC to suspend the mark-to-market rules.
- Established workable executive compensation limits to ensure that bad actors who contributed to this crisis are not rewarded with golden parachutes or severance pay.
There will also several things that the House GOP got out of the package that the Democrats wanted in there:
- Provision to provide unions and other activist groups with proxy access for corporate boards.
- Provision to mandate shareholder votes on compensation issues, which was union priority.
- Diversion of funds into a housing fund to support left-wing activist groups like ACORN.
- A provision to allow trial judges to arbitrarily adjust mortgages, creating bonanza for trial lawyers.
- A provision to require the government to sell to state and local governments at a discount homes the government acquires as a result of foreclosure.
House Republicans can also be proud of the things they got in the package specifically for the mythical “Main Street”.
- A provision to allow community banks to take capital losses on GSE assets against ordinary income, providing much needed relief for local banks.
- And a better provision to authorizes government agencies that hold mortgages to do work-outs with troubled borrowers provided such workouts do not harm the interests of taxpayers.
All in all, House conservatives made a remarkable contribution to the final package. House Republican Leader John Boehner and House Majority Whip Roy Blunt deserve great credit for working with their team, including Eric Cantor, Jeb Hensarling and Paul Ryan, to make the most out of a very difficult situation.
John McCain also deserves credit. Without him risking his entire campaign on the proposition that House Republicans needed to be heard, they would have been ignored. And had they been ignored, they would have vote en masse against the final product. Had that happened, the package might not have passed at all, and had it passed, it would have included a bunch to garbage put in there to get Democratic votes.
This isn’t a pretty process. But it is not a pretty situation. Some people still say let them crash. But hopefully, because of the efforts of the House GOP and John McCain, that number will grow steadily smaller. We shouldn’t let them crash, because that will mean that we ourselves will crash. And nobody really wants that. I don’t think.