Thursday, September 25, 2008

Bail Out Deal Stalled

House Republicans have refused to support the deal negotiated by the two banking committees. This should give progressive Democrats in the House an opportunity to improve the package on behalf of the American people. Above all, they must insist on tough reregulation as part of the package.

John McCain suspended his campaign--though his ads are still airing here-- and rushed to Washington. It is likely that the House Republicans will hold out until McCain garners publicity as deal maker, selling some sort of package. He brought his cmpaign manager to the meeting of peaders George W. Bush called. Obama brought a legislative aid.

Obama has a history of calling for regulation and should at least insist that the package include repeal of the most dangerous deregulatory provisions of the two "financial modernization" acts that Phil Gramm passed in 1999 and 2000. Obama introduced in 2006 a bill to regulate mortgage lending practives. In March of this year, he brought force comprehensive provisions to regulate financial markets. Of course, the Lying McCain advertisement ignore all this, suggesting he has no position.

If reregulation is not a big part of the package, we would be better off with no bail-out bill. We have seen a series of bail-outs since the mid-1980s because there was no re-regulation. This ruinous cycle must be broken, and Obama should focus the nation's attention on reregulation.

Otherwise, McCain's decision to politicize the financial crisis will bay off big time. Sharp observers believe he is shooting himself in the foot, but most voters are not that sharp. John McCain has a marvelous public relations operation which will
doubtless make him look like an unparalled leder and economic savior. It has shown that it can manufacture facts out of thin air. Just look at all the lying advertisements they have produced and how effective they have been.

It will do Obama no good to criticize McCain's tactics. He must make McCain deregulatory past and present insincerity on the subject a major issue---NOW.

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