Wednesday, September 24, 2008

Congress wisely resists Bush hurry-up rush for bailout

The saw that goes, "Fool me once, shame on you; fool me twice, shame on me" applies this week.

President Bush and Vice President Cheney exhausted their shell games with Congress when they rushed through war powers to attack Iraq and eavesdropping measures to root out terrorists.

Now, in rare, sensible objections from Democrats and Republicans, Congress has dug in its heels and refused to be panicked into mindless passage of a $700 billion bailout of Wall Street.

Once again, the Bush-Cheney White House, which has spent two presidential terms finding devious and perhaps illegal ways of expanding presidential powers, wanted Congress to issue a blank check, waive any oversight on how the $700 billion would be spent and forgo any right to judicial recourse if Congress smelled a rat.

Had Congress knuckled under as it did on the war and given Treasury Secretary Henry Paulson Jr. the power he wanted, he would've become a one-man central bank with unchecked powers.

But that's what largely caused the current crisis—oversight and policing in the hands of a few Bush-Cheney appointees who failed to prevent it.

Warnings began years ago. Billionaire Warren Buffett sounded an alarm in 2003 about exotic new types of paper being created on Wall Street. He called them "weapons of financial mass destruction."

Congress and the White House obviously ignored the lesson of the 1980s and 1990s savings and loan calamity—$124 billion ladled out by taxpayers after the failure of 747 financial institutions that had been deregulated to allow risky loans.

Yet, vultures who picked Wall Street financial firms clean for personal enrichment are circling already for a piece of the bailout. Some private financial groups want to manage the auctioning of financial paper; others want Treasury to suspend accounting rules to lessen their losses.

Congress cannot yield. It must insist on oversight, regular accountability on progress, relief for homeowners facing mortgage foreclosures, recourse in the courts if the bailout is mismanaged, limits on compensation for executives using public bailout funds and an end to incomprehensibly complicated financial instruments that are sold and resold for profit without risk to the issuers.

This catastrophe has consequences worldwide. Foreign investors and governments have lost confidence in the Bush-Cheney administration's ability to manage its affairs. The result will be higher costs for borrowing overseas to finance such enterprises as the Iraq war.

Once again, proof that there's no free lunch.

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