Posted by
Always To The Right on Tuesday, September 30, 2008 11:26:23 AM
The FDIC solution seems to be gaining popularity with Republicans,
and that may help keep depositors from starting bank runs, but it
doesn’t do much to resolve the real cancer at the heart of this
financial crisis. Congress simply cannot escape its responsibility for
its deliberate issuance of junk bonds through Fannie Mae and Freddie
Mac based on bad loans, and until Congress acts to provide some sort of
rational floor for the MBSs it launched, American credit will have
little credibility. Until enough stability comes back into that
market, the negative balance of these American-government backed bonds
will continue to sink the investors who bought them, believing that the
US stood behind Fannie/Freddie actions.
McCain’s statement raises another question. Can the Treasury spend
$1 trillion without Congressional approval to buy back these MBSs? If
so, then what was the point of the negotiations of the last few days,
Paulson coming to Pelosi on bended knee, and the futile vote yesterday
— political cover? Somehow, I find it difficult to imagine that
Treasury can indeed act on this scale without Congress.
However, I’ll say this for McCain. He appears to be actually
demonstrating some leadership on this issue. Where is Barack Obama?
Buzz up