First, the newest news from the DeFazio office--the place from which a progressive alternative to the Paulson bill now appears to be coming:
U.S. Rep. Peter DeFazio (OR-04), an outspoken critic of the Bush/Paulson bailout, along with Rep. Kaptur (OH-09), Rep. Scott (VA-03), Rep. Cummings (MD-07), Rep. Doggett (TX-25), Rep. Holt (NJ-12), Rep. Edwards (MD-04) and Rep. Hirono (HI-02), will introduce legislation today to address the failures in the financial markets. DeFazio believes that the Paulson/Bush proposal is based on a flawed premise: if the American taxpayers spend $700 billion to buy Wall Street's toxic assets - a plan pundits are calling "trash for cash" - it will create liquidity in our financial markets and will somehow trickle-down to Main Street.
DeFazio's plan is not in any way based on the Paulson/Bush plan. Instead of throwing taxpayer dollars at the program and crossing our fingers that the plan work, the measure will direct the Administration to take five simple steps, suggested by noted economist and former head of the FDIC, William Isaac, to re-regulate the markets and move America towards a healthy financial future. [emph mine]
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UPDATED--
CSPAN has the video of the presser, viewable from this link. Wish I could embed it. It's about an hour long, and has some of the most responsible and thoughtful discussion on the crisis from any party I've heard speak. These are some rising stars in the House, particularly Marcy Kaptur and Donna Edwards. If all they accomplish is auguring for a fresh approach and driving the eventual bill further to the progressive side, they'll be successful. But we can do better--what if Democrats actually ASSERTED THEIR MAJORITY, and passed a bill over Senate filibuster and dared Bush to veto a bailout? Imagine.
The Paulson plan is dead, and I fully agree with Devilstower that progressive members of Congress need to seriously take up a bill that Democrats own, and let the GOP do what they will. That DeFazio and others like the recently heroic Marcy Kaptur are quickly moving on and producing more sensible legislation, means the progressive movement needs to get behind them immediately and start the work of persuading the rest of the country to buy in.
We'll know more about their plans later today; their announcement is scheduled on Cap Hill in about 45 minutes. But I also wanted to share with you some of the unsparing criticism of Paulson by Rep. DeFazio as he did several big interviews yesterday. You may have heard his excellent representation on NPR yesterday, where he took some shots--but he got even more detailed (and more angry at Paulson) while talking to CBC, the Canadian Broadcasting Company. Here's the audio from their site, but I've transcribed some of the better parts:
Today I was stunned. I never thought Congress would be able to stand up to the combined might of the executive branch...and our own Congressional eadership. But the House did, and I think it's a proud day for the House.
40% of the Democrats voted no because we question the basic premise: that we need to give Henry "Hank" Paulson, former Goldman Sachs CEO, $700 billion that he uses with tremendous discretion to buy bad debts from people on Wall Street. We question whether dumping that money in at the top on Wall Street would help with the bank liquidity issue--we particularly questioned whether that would help with any of the underlying problems: deteriorating housing values, job loss and income equality, and the answer on that was clearly no.
Then DeFazio compares the response to this crisis with what FDR faced, and why this was nothing more than a stopgap:
If FDR had followed the Paulson model instead of having the WPA and building hydroelectric projects and roads and bridges and putting people to work, he would have dumped money into Wall Street hoping it would get down. Instead he rebuilt the real economy and that filtered up to the financial economy. So I think there are ways to stem the crisis, financially, that aren't as expensive, don't put us at as much risk, and that are being proposed by people much smarter and more credible than me.
I call this a financial surge. I figure if we'd passed this, the market would burble up for a little bit, but again: every economist I talked to admitted that bailing out out these big firms on Wall Street and taking their bad debt was not sustainable, was not long term--and if housing continued to go down there'd be more bad debt and there'd be another bailout, and wasn't getting at the roots of the real economy.
Finally, he puts his foot directly up Paulson's butt:
I think it's unbelievably irresponsible for a Secretary of the Treasury go out and say the sky is falling and start using wild ...I heard in a number of caucuses, from some of the most prominent members of my caucus, this may not have been this big a problem and we wouldn't be in this corner--except Henry Paulson said it was, and now it is, and it can become a self-fulfilling prophecy. I think it's really time to consider whether or not having a Master of the Unvierse from Wall Street, who got rich creating this stuff, that he now says threatens the entire world, is the guy to solve the problem.
I think this could well be the group that gives us GOOD bailout legislation; keep an eye on whether the House leadership recognizes it.
(This story adapted from an earlier piece at Loaded Orygun, Oregon's Progressive Community)