Rachel Maddow asks whether it is the automotive companies at fault, or if the crisis where buyers can't get credit are at fault for the current crisis the Big-3 is facing. Rachel discusses whether we need a bottom-up rather than top-down solution to the problem with Sen. Sherrod Brown since the banks still are just not lending money even after the huge infusion of cash the taxpayers gave them.

   Bloomberg:

The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

The Fed's expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone. Read on...

I'm not an expert on the economy or Wall St., but this sure looks like an end-around by the Bush administration to give away hundreds of billions of dollars without the approval of Congress. 

As Barney Frank announces that he's pulled together a deal that will get the votes needed to pass through Congress, economists from some of the top schools in the country ask, "What's the hurry?": 

To the Speaker of the House of Representatives and the President pro tempore of the Senate:

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers' expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.

As the Wall Street meltdown causes John McCain to throw in the towel and George Bush attempts to pull off the biggest heist in history, it's becoming clear that pushing any bailout legislation too far, too fast, could be a total disaster for our country.  The Democrats need to listen to people who really know economics, keep a tight leash on Henry Paulson and Ben Bernanke, say no to Disaster Capitalism and take the time to get this right the first time. 

The list of economists who signed the letter is below the fold.

Continue reading »

  The Washington Post:

Senator John McCain's campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.

Mr. McCain, the Republican candidate for president, has recently begun campaigning as a critic of the two companies and the lobbying army that helped them evade greater regulation as they began buying riskier mortgages with implicit federal backing. He and his Democratic rival, Senator Barack Obama, have donors and advisers who are tied to the companies.

Incensed by the advertisements, several current and former executives of the companies came forward to discuss the role that Rick Davis, Mr. McCain's campaign manager and longtime adviser, played in helping Fannie Mae and Freddie Mac beat back regulatory challenges when he served as president of their advocacy group, the Homeownership Alliance, formed in the summer of 2000. Some who came forward were Democrats, but Republicans, speaking on the condition of anonymity, confirmed their descriptions. Read on...

Barack Obama and Joe Biden need to jump on this story and keep hammering away until the corporate media can no longer ignore it.  The U.S. stands on the brink of the next Great Depression thanks to Bush/McCain deregulation policies and now we find out that the man who runs the McCain campaign was paid handsomely to lobby for these fatal policies on behalf of Fannie Mae and Freddie Mac, even as he repeatedly tries to tie Obama to those companies. Voters need to know how we got into this mess and who is responsible. It was John McCain, his elite lobbyist cronies and the Republican party. I agree with John:

There should be a campaign to demand that McCain's campaign manager, Rick Davis, give ever penny back to the American people. There had better be an ad about this out by COB Monday, and calls for Davis' resignation. 

The McCain campaign thinks we're a nation full of whiners and cowards who should just STFU, take a second or third job and cancel our vacations and be thankful for what we're fed. The lack of respect is stunning -- is this the kind of leader you want?