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Friday, October 3, 2008

McDermott: My phones were melting!

posted by on October 3 at 12:40 PM

Here are Seattle Congressman Jim McDermott’s remarks to the House of Representatives today, explaining why he switched from a “yes” to a “no” vote on the bailout:

Mr. Speaker,

On Thursday morning, the morning after the Senate passed a very different bailout bill, two things happened.

The filings for new unemployment benefits hit a seven year high, and a number of telephones melted in my congressional office as my constituents called in with their opinions.

By the thousands, the people of the 7th Congressional District are absolutely enraged by what the Senate did.

The rest of the explanation (which gets very… politically intricate) is in the jump.

Senate Republicans blocked Senate Democrats from legislation that delivers for Main Street.

Senate Republicans demanded the pot be sweetened. But they left out the millions of Americans who can’t find a job and are running out of benefits. And they left out a lot of other Americans too.

With economic times getting tougher by the day, Senate Republicans have no problem telling the American people to go it alone.

Last week, the House passed on a strong bi-partisan vote a stimulus package to help Main Street America.

But Senate Republicans said no; they were willing to help Wall Street but look the other way for Main Street.

One caller said they were stunned that the Senate included a call for the Securities and Exchange Commission to alter a fundamental way assets are valued.

It is called mark-to-market accounting and let me quote an NPR report.
“The Council of Institutional Investors and the CFA Institute oppose a suspension of mark-to-market — also known as “fair value” — accounting because, in their opinion, the rule offers investors transparency.

In other words, suspending the rule is like letting the fox into the henhouse.
The other day I said I voted in favor of the House bailout bill because I trusted Democratic leaders who worked tirelessly to represent Main Street.

I still do, but Senate Republicans changed all that.

When Republicans force a bill that ignores the plight of Americans, but includes so-called sweeteners, that is not worthy of support.

When Republicans force a bill that slips in more earmark spending, that is not worthy of support.

When Republicans force a bill through that includes an accounting gimmick, that is not worthy of support.

The Senate dug an enormous ditch alongside Main Street, and they want the House to drive into it.

That is exactly where the President has driven this economy over seven years.

When Senate Republicans set the agenda, that’s just another way of saying they are following the orders of a President who long ago lost the trust of the American people.

That is not how we are going to restore the trust with the American people. And that is why I voted against the Senate Republican bailout.

There is no question that we need a rescue plan, but the Senate has just made matters worse - and that is pretty hard to do in this economy.

Government has a role to play in calming the markets and addressing the economic crisis, but the more we learn, the more convinced I am the latest Senate plan is taking us in the wrong direction.

There are two models that have worked and which should serve as foundation blocks that we can build upon in a short period of time to produce a plan the American people trust and believe in.

During the Depression, President Franklin Roosevelt developed a Home Loan Housing Corporation that stabilized the housing market and helped homeowners work through the crisis.

More recently, in the 90s, Sweden stepped in and assumed temporary control of the financial system, cleaned up the mess and got out.

There are models available that we can use to quickly produce a solution that the American people will actually believe in.

There is a credit crisis in America to be sure, but there is no question today that there is also a trust crisis in America, every bit as damaging and debilitating. We cannot solve the first crisis before we address the second crisis.

Since the current Administration precipitated this, we should be focused on building a foundation for a new Administration to restore the faith and trust of the American people as we work to restore the trust and credit of our financial system.

RSS icon Comments


We now live in a society where zero percent of the population has any idea at all how the world works, and attack their legislators if they do.

Posted by Fnarf | October 3, 2008 12:55 PM

I agree completely - above.

As their jobs end and plants and business close - they will not get it.


The world is headed for the 2nd Great Depression. It won't be pretty, hunger, no money, no jobs, worldwide.

Mid all this there might be a run on the dollar and an attempt to collapse it, thus, changing the balance of economic power for the USA for 100's years. Retailing is all credit supported. Half the retail chains of America will go out of business in two months if this continues, along with auto dealers, construction and a very long list.

Amazing. And by the way, in the last week the central banks of the world have pumped hundreds of billions of short term money into the system and it has not solved the problem. We Must purge the bad real estate paper out of the system into a separate fiscal management system, We must.

Posted by Jack | October 3, 2008 1:17 PM

When you say "retailing", Jack, you're talking about TWO THIRDS of the American economy. And it's all credit-based. Credit floats every transaction in the economy.

The real crisis, though, is coming from the total lockdown in interbank lending. This is where the world really operates: at the level of the LIBOR. Our whole lives shut down if that market is stuffed up any longer.

Posted by Fnarf | October 3, 2008 1:30 PM

Hastily pulled off the biggest robbery of the American people in history. You'll see. All this money will be stolen just like the money that was stolen by mortgage lenders who got us into this. And we, the people, will be no better off. Even the Stock Exchange fell after this boondogle was passed.

Posted by Vince | October 3, 2008 1:33 PM

No, no, no.

We're not saying that Congress shouldn't do anything; we're saying that the actions should start with Main Street and not Wall Street and this bill was fatally flawed from the beginning.

1) The financial industry must be re-regulated, especially hedge funds and CDSs have never been regulated and are likely to be the next to blow.

2) Nationalize insolvent firms, period. Punish the people responsible and hold them accountable.

3) Put millions to work through a massive investment in our failing infrastructure and public education.

4) Eliminate the age restriction on Medicare so that all Americans have basic health coverage. Many foreclosures--if not most prior to the credit bubble--are cause by massive medical bills and unexpected illnesses.

5) Require financial companies to hold realistic levels of debt. Leveraging a firm 30 to 1 or FSM help us 40 to 1 is a sure strategy for failure.

The legislation passed will address none of these fundamental issues.

See you in a few months at "Bailout II!"

Posted by Original Andrew | October 3, 2008 1:33 PM

Slog needs to buy itself a failing bank. That way, if the national slowdown in online ad revenue accelerates you have a nice offset from the taxpayer.

Down is the new up.

Posted by tomasyalba | October 3, 2008 1:43 PM

Your proposal, Andrew, would garner the support of about 20 Senators and 100 Congressmen. Meanwhile, some large American cities (maybe including our own) would start to file for bankruptcy -- something that's never happened before.

The "Main Street vs. Wall Street" divide is imaginary; Main Street IS Wall Street. It has nothing to do with "bailouts" and everything to do with opening the credit markets. Main Street absolutely depends on the credit markets, every bit as much as Wall Street does.

And we'll get most of the money back. The cost to the taxpayers is nowhere near $700 billion -- but the cost to the taxpayers of doing nothing is ten times that.

Posted by Fnarf | October 3, 2008 1:44 PM

@ Fnarf,

Again, I'm not advocating doing nothing. I'm stating that there is no chance this bill will accomplish the stated goal, and a solution that starts with the consumer is the approach that will work.

And let's not even get into the obscene conflicts of interest at work here--Hank Paulson, CEO of Goldmine Sachs from 1999-2006, deciding which firms live and die for only one example.

My Super Constitutional Boyfriend, Glenn Greenwald explains far more eloquently than I:

"First, an enormous number of Actual Economists -- as opposed to newspaper columnists -- vigorously oppose the bailout. Professor Nouriel Roubini called it a "disgrace" and has repeatedly argued it will not alleviate the crisis: "the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown."

Second, all sorts of other Actual Experts -- not just Pearlstein's idiot-readers and moron-left-wing-bloggers who have the audacity to object -- have argued that this plan won't work, is deeply unjust, and that far better and more equitable alternatives exist.

Third... "there's an enormous amount of just wrong reporting going on." In particular, Johnston documented the fear-mongering taking place among TV journalists that has plainly put the public into the state of submissive panic that Pearlstein wants them to be in, whereby -- exactly as was true for Iraq, eavesdropping, the Patriot Act and a whole host of other measures -- they come to be convinced that they better unquestioningly and immediately submit to the dictates of the political and media establishment, they better relinquish any belief that they should question what they're being told, lest they suffer imminent, inevitable, catastrophic doom."

Etc, etc, etc...

Posted by Original Andrew | October 3, 2008 2:02 PM

uh, no.

I didn't have any problem with a congressional solution to our financial collapse. I just didn't see why we had to rush into a hastily conceived, probably unconstitutional, doomed to fail, let's just throw a huge shitload of money solution to the problem.

And that's why I emailed all my congressional telling them to slow the fuck down before they commit to bankrupting our future in a lame attempt to save our present.

Posted by michael strangeways | October 3, 2008 2:12 PM

way to do your homework, jim. rather than listening to the volume of yahoos calling, you could educate yourself & do what you think is best for your constituents.

mcdermott is a flibberdigibbet & i'm done voting for him. now he'll only get 84.999999999% of the vote in the 7th. he needs to retire.

Posted by max solomon | October 3, 2008 3:02 PM

McDermott's on acid.

Posted by DOUG. | October 3, 2008 3:48 PM

I may vote GOP this year for Congress, I'm THAT MAD at Jim!

Posted by Will in Seattle | October 3, 2008 7:53 PM

oh, wait, Jim voted AGAINST it the second time.

Never mind.

Posted by Will in Seattle | October 3, 2008 7:55 PM

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