ARE THE CHAMBER OF COMMERCE'S POODLES REALLY GOING TO SAY "NO TARP"?
Daniel Indiviglio of The Atlantic explained today that there's a very good chance mortgage-backed securities sold by the big banks will have to be bought back by those same banks. Ezra Klein and Democratic congressman Brad Miller summarize the problem -- but Congressman Miller says the seemingly inevitable solution, another bailout, won't happen:
EK: ... These banks bought the mortgages from individuals, packaged them into securities, and then sold them to investors. But because the mortgage contracts weren't valid, the investor can potentially force the banks to take the mortgages back, thus blowing a new hole in their balance sheets?
BM: Right. They'll have to buy them one mortgage at a time. Someone said there might be a second round of bank insolvencies because of this and there might need to be more TARP. There is no chance that Congress would pass more TARP.
I know Republicans say this. I also know that they're completely -- and happily -- owned by fat cats, even the so-called insurgent teabaggers. I don't really believe they'd let the banks fail.
But if this comes to a head in the lame-duck session, any bailout will be deemed the Democrats' fault. Which is why, in my fantasies, the Democrats would play chicken -- you know, the way Republicans plan to play chicken on the Bush middle-class tax cuts. Just enough Democrats would refuse to support a federal solution to this, so that the only way it could happen is that some Republicans would have to sign on. And some would, even if it killed them, because there's no way they'll let the banks fail, no matter how much teabag blather they utter.
No, I don't want another bailout that sticks it to the taxpayer and allows banks to avoid the consequences of their actions. But I know that's inevitable. I just want the Republicans to share the blame, and get shown up as hypocrites. And yes, I know perfectly well that there's no way in hell that will happen.
Should we really believe that? Because that's what all the Republicans say in order to win teabagger votes and pretend to be populists? I don't buy it. I think they'll find a way to bail out the banks, stick the taxpayer with the bill, and dump all the blame on the Democrats.
But shouldn't we at least put them on record? Shouldn't the press ask prominent Republicans whether they'll pledge, right now, to refuse to engage in any more bailouts? Now that another bailout could really be imminent, would they go for a "Read my lips" moment, swearing that they'll block any and all bailouts by any means necessary?