Bailout bill gets tangled up in views
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KAI RYSSDAL: About the only thing that’s stayed consistent with this story this week is how quickly it’s been changing. We’re going to talk a little bit about that. About the current state of negotiations. About a little bank failure that happened last night. And a look back at the week that was.
We’ll begin, though, with what you might call a buying opportunity for congressional lawmakers. Whenever a big package makes its way through the legistlative process it inevitably gets bigger. Items get added. New proposals are proposed. And while the stakes may be higher, this time’s no different. Our senior business correspondent Bob Moon explains.
BOB MOON: If the definition of a compromise is that no one walks away completely happy, maybe there’s hope Washington can still find some kind of common ground. But it clearly isn’t easy.
Senate Democratic leader Harry Reid complained today that Republican mavericks need to get real:
HARRY REID: Are they serious about one of the issues that has to be taken care of is lowering the capital gains tax? Is that part of what this is all about?
Here’s an issue that is being taken seriously: The need to help Main Street as much as Wall Street, by helping strapped homeowners make their payments.
John Taylor heads the National Community Reinvestment Coalition, an advocacy group for subprime borrowers:
JOHN TAYLOR: We saw 300,000 foreclosures last month. That’s what we used to get in a year. If you don’t get ahead of that problem, you’re going to continue to have to go back to Wall Street to bail them out.
EDWARD FREDERICKS: The big sticking point has to be, well, what about the little guy? Doesn’t he or she have to bear a little bit of responsibility here?
Edward Fredericks is a finance professor at California’s Pepperdine University. He says sorting out which homeowners really deserve help is tricky:
FREDERICKS: Not everybody was truthful on their mortgage application. There are a lot of people out there that tried to rig the system themselves.
Fredericks also says the idea of simply insuring toxic mortgage-backed securities is much more complicated than buying them outright, as the Bush administration wants. Until those securities are sold, he says, it’s impossible to know how much to insure them for.
Some in Congress and elsewhere are pushing for the federal government to get equity stakes in the companies taking part in the rescue — essentially charging for seats on the lifeboat. But critics argue that could further sap the strength of banks already in danger of sinking.
Professor Fredericks says there’s a danger of trying to do too much. Congress could blunt the psychological impact of sure and swift action.
FREDERICKS: What could happen is then we might slowly kind of just wallow here as we wait for this very dim light at the end of the tunnel to get much brighter.
And Senate leader Harry Reid suggests Wall Street needs action, not perfection:
REID: No matter what we do here will be imperfect, but we have to do something for the American people.
In other words, choose your poison.
I’m Bob Moon for Marketplace.
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