Must-listen: Karl Rove on how Obama and Pelosi blew the bailout

Apparently neither one of them lifted a finger to pressure their toadiest toadies, which means either they’re not taking this seriously or they’re too stupid and/or gutless to lean on their colleagues effectively. You’d think The One at least could flip 12 Democrats by promising to swing by their districts while he’s on the road and turn some water into wine or whatever to help get them reelected. After all, if the polls hold, this is going to be his mess to clean up come January. Waiting only makes it worse. Grab a mop, Messiah. Click the image to listen.

Update: Most members of the Congressional Black Caucus, many of whom come from safe districts and aren’t at risk politically, voted no. Good work, Barry.

Will Pelosi’s second attempt at a bailout include ACORN? Update: Dow loses 777 points, more than on 9/11; Update: $1.1 trillion in market value lost

Why not? She tried a bipartisan bill and got nothing for it. What’s stopping her from turning it into a Christmas tree for the left and passing it on a strict party-line vote? Bush will sign it regardless and Senate Republicans will be under tremendous pressure to decline a filibuster with the Dow down 600 points today and god knows where tomorrow. This is the flaw in the “if the majority thinks it’s so important, let them pass it” approach: They will pass it, on their terms, and they’ll point to Republicans like Gingrich and Paul Ryan and the Journal — and Paulson and Bernanke, of course — who’ve acknowledged this is an emergency to take credit for rescuing the economy. All they have to do is wait a few days until the public’s good and terrified and the polls on the bailout start to reverse. They’re reversing already.

A number of Republican House members and staff, along with others who are plugged in, are telling me that Nancy Pelosi and the Democrats will come back with a new bill that includes all the left-wing stuff that was scrubbed from the bill that was defeated today in the House.

As this scenario goes, the House Democrats need 218 votes, and they have to pick up a number of black and Hispanic House members who jumped ship because the Wall Street provisions, in their view, were too benign. So things like the bankruptcy judges setting mortgage terms and rates, the ACORN slush-fund spending, the union proxy for corporate boards, stricter limits on executive compensation, and much larger equity ownership of selling banks through warrants will all find itself back in the new bill. Of course, this scenario will lose more Republican votes. But insiders tell me President Bush will take Secretary Paulson’s advice and sign that kind of legislation.

Update: This is day one.

The Dow closed the day down 777.68 points, or 6.89 percent, beating its previous record for an intraday drop of 721.56 points, set during the first trading day after the Sept. 11, 2001, terror attacks. Still, in percentage terms, the decline remained well below the more than 20 percent drops seen on Black Monday of October 1987 and the Depression.

“This is panic, and fear is running amok,” one trader told CNBC. “We are in a classic financial meltdown, and it’s panic-based. We’re seeing panic selling.”

Update: The wealth lost today on the market — just today — exceeds the cost of the bailout considerably.

Buzz up!

McCain radio ad: “Stem Cell Response”

Unfortunately, this ad doesn’t explain the more basic dishonesty in Democratic attacks on this issue. Obama and the Democrats keep talking about research bans, but no bans on research ever existed.  The Bush administration only blocked federal funding for human embryonic stem-cell (hEsc) research, but never outlawed it at all.  In fact, California spent billions of state money on hEsc research.

In truth, no one opposes stem cell research in general, not even those bitter, Bible-clinging Republicans.  Most don’t oppose federal funding for it, either, although a few conservatives do on general federalist principles.  The only significant opposition arises when human embryos are destroyed for experimentation, and even then is only politically expressed in terms of federal funding for that research.  No one proposed banning it altogether.

What does a community organizer do? Pressure banks to make bad loans

Maxine Waters: Through nearly a dozen hearings, we were frankly trying to fix something that wasn’t broke.  Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Franklin Raines.  [Raines would barely avoid prosecution for fraud.]

Gregory Meeks: … I’m just pissed off at OFHEO [the regulators trying to warn Congress of insolvency at the GSEs], because if it wasn’t for you, I don’t think we’d be here in the first place.  … There’s been nothing that indicated that’s wrong with Fannie Mae, Freddie Mac has come up on its own … The question that then comes up is the competence that your agency has with reference to deciding and regulating these GSEs.

Lacy Clay: This hearing is about the political lynching of Franklin Raines.

Barney Frank: I don’t see anything in this report that raises safety and soundness problems.

In 2005, Fortune published a lengthy anaylsis of the impending crash of Fannie Mae, and included this altercation between OFHEO and Congress:

Two weeks later Falcon and Raines faced off against each other in a hearing before the House subcommittee on capital markets, which was chaired by Baker. Consider the circumstances. Falcon was Fannie’s regulator and had leveled serious charges, amounting to fraud, against Fannie Mae. Most CEOs would have seen the wisdom of humility at this point, but Raines showed little. “These accounting standards are highly complex and require determinations on which experts often disagree,” he said, adding that “there were no facts” that supported OFHEO’s charge that Fannie executives had deferred an expense in 1998 to earn bonuses.

And most of the Democrats present agreed with him. “This hearing is about the political lynching of Franklin Raines,” said Congressman William Lacy Clay of Missouri. Massachusetts Congressman Barney Frank said, “I see nothing in here that suggests that safety and soundness are an issue.” Other Democrats complained that the mere fact of releasing the report could increase the cost of home-ownership.

“Is it possible that by casting all of these aspersions … you potentially are weakening this institution in the market, that you are potentially weakening the housing market in this country?” Congressman Artur Davis of Alabama demanded. When Falcon tried to answer, Davis acted like a prosecutor grilling a hostile witness. He wanted a one-word answer: yes or no. “Is that possible?” he asked again.

“I have never seen anyone treated as disrespectfully as Armando Falcon was by the Democrats and by Franklin Raines,” recalls one congressional aide. Adds Andrew Cuomo: “I credit him for not folding and not caving and not running, because he took a tremendous beating.”

Unfortunately for the Democrats at this hearing, Raines then doubled down and demanded that the SEC give a second opinion on his business practices.  After an investigation, the SEC agreed with Falcon and demanded that Fannie Mae restate its earnings all the way back to 2001 — at which point Raines’ fraud got uncovered.  OFHEO had been correct, and the Democrats in this committee meeting had done their level best to interfere with the regulator to cover up for Raines’ fraud.

“Without McCain, they would have run over me like a freight train”

Before McCain arrived in Washington, the Senate and the House Democrats figured they could force the Paulson plan down the throats of House Republicans. Afterwards, Nancy Pelosi and Harry Reid had no choice but to deal with Boehner and the conservatives, and making changes to the package to get their support. Also, Boehner announced that McCain has begun making calls to get Republican votes for this bill, which shouldn’t surprise too many who had listened to McCain over the weekend.

Are House conservatives happy? Not really, but it looks like they have done the best they can do to keep the long-term costs to taxpayers as low as they can.

Video: The pork stylings of Biden

How much do you want to bet that John McCain will use “The Bridge to Two Nowheres” in the next debate? Sarah Palin may get to it first on Thursday. Certainly, the McCain/Palin campaign has worked with Palin to put these projects at the forefront in her debate with Biden.

Biden may have more to explain on Thursday. Last week, USA Today reported that Biden has $51.5 million in earmarks in the continuing resolution bill meant to keep government operating in lieu of an actual budget, which Democrats don’t want to produce before seeing who wins the presidential election. Obama suspended his earmark requests, but Biden has no such discipline. Of course, he’s also running for Senate and needs to bring home the pork in order to justify his existence.

The Bridge to Two Nowheres, brought to you by the Ticket of Two Non-Reformers.

Video: Newt gives a reluctant “yes” to bailout