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Republicans Itching to Bolt Paulson Plan

By Matt Cooper

Over the weekend, I thought the left-right opposition to the Bush administration's $700 billion bailout plan would grow. Freemarketers didn't like it, and neither did Democrats who saw it as corporate welfare. I was pretty confident it would pass. Now, I'm not as sure, despite the bipartisan leadership of Congress being for the measure.

Republicans are being encouraged to walk away. Patrick Ruffini, the former webmaster of the Bush/Cheney '04 race, and founder of Thenextright.com has encouraged Republicans to vote no and so has Newt Gingrich. Could the president lose more than half his party on this one? In the House, I think so. In the oh-so-adult Senate, I'm less sure but the opposition of Richard Shelby of Alabama, the ranking member of the Senate Banking Committee, might bode opposition from others. I guess I'd still bet that it's going to make it out the door this week, but that's not a totally foregone conclusion. In time, something is gonna pass because the markets will revolt and Congress will get pushed into some kind of measure.

Meanwhile, there are some other ideas in play. I like Sebastian Mallaby's idea of banks canceling their dividends. Shareholders would be screwed but so what? It would give the banks some more capital and ease the situation a bit.

I still don't understand why there's not a global summit of finance ministers to come up with some coordinated solutions here.

And why aren't the bank heads coming forward and saying that they A.) apologize for getting us in this mess; B.) will not use the crisis or any bailout to exploit the situation; C.) stand ready for a new era of regulation; and D.) will voluntarily cut their salaries?

Matt Cooper

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Full post as published by Portfolio.com: Capital on September 23, 2008 (boomark / email).