And the Bailout passes...

With a 263-171 margin. Obama and the Democrats own this one, for better or for worse, and if you read this blog you know which one I think it is.

This was in the comments of another post but I wanted to add here too. Over the next weeks, you're going to hear a lot from Democrats about the concessions that they won, the oversight they'll have, and the fact that they don't have to give the entire 700 billion dollars right away thanks to the new version of this bill.

Yesterday, Henry Paulson (The man who will control the money) was brutally honest in a conference call with investment banks:(summarized here from crappy audio available through the link)

1. The tranching is a mere formality, and the Treasury boys as much as said so. They could take the $700 billion max as soon as the bill has passed,

2. However, they do not plan any action immediately, will wait a couple of weeks. They want to focus their efforts on stronger companies but also made noise about protecting the financial system. This, by the way, is the Japanese convoy system all over.

3. There seemed to be a lot of tap dancing about what price they will pay for assets and no straight answer about their policy on warrants. They did say that if the amount sold was greater than $100 million, they would take warrants. FYI, the current draft allows them to pay up to the price at which the assets were initially booked (yikes) . I wonder if this is obfuscation, if they have an idea of what the plan to do but will not admit it in any public forum.

4. As the person who listened to the call stressed, DealBreaker wasn't clear on the bifurcated process. If you come to the Treasury and you are in trouble, you get reamed. Bear/AIG style treatment, execs probably fired. But if you participate on a voluntary basis, the intent is to make it very user friendly. That is consistent with Paulson's position during the negotiations.

5. The exec comp provisions sound like a joke, They DO NOT affect existing contracts, they affect only contracts entered into during the two years of the authority of this program and then affect only golden parachutes. More detail on that point, but I don't need more detail to get the drift of the gist.

And from Dean Baker earlier:

For the record, the restrictions on executive pay and the commitment to give the taxpayers equity in banks in exchange for buying bad assets are jokes. These provisions are sops to provide cover. They are not written in ways to be binding. (And Congress knows how to write binding rules.)

So Paulson is going go against the provisions in the law, and just about says so in a conference call the day before the bill passes. As 6.54 said in the comments:

"I guess we should know better than to rely on the rule of law when dealing with these people."

The Democrats got what they wanted, which is political cover to make it look like they're doing something about the economy before the election, and Wall Street got what they wanted, which is a former Goldman Sachs CEO giving them hundreds of billions of dollars of your money.
Dean Baker today:

This would be like giving the bank robber who cleaned out the vaults the opportunity to set the banks finances in order -- and letting him keep the loot. Let's hear it for second chances!

Dean Baker channeling his inner Zach de la Rocha is only appropriate considering the Rage pre-game that we have planned for tonight at The Palace. That's some fucking catharsis for you.

"those who give the thieves the key to their homes..."