Economy -- Conservatives' Bailout Blame Game

September 30, 2008

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, and Ryan Powers

ECONOMY

Conservatives' Bailout Blame Game

Yesterday, in a 205-228 vote, the House failed to pass the Wall Street bailout package, leading to a 777 point drop in the Dow Jones Industrial Average and an overall nine percent drop in stocks -- "the worst single-day drop in two decades." Despite the passionate urging of House Minority Leader John Boehner (R-OH), Republicans voted nearly two-to-one against the deal, dooming it to failure. The New York Times reports that "lawmakers on both sides pointed to an outpouring of opposition from deeply hostile constituents," as "House members in potentially tough races and those seeking Senate seats fled in droves." The vote "marked a dark moment in a month that has shaken the financial system to its core and forced the government to take a host of ad hoc measures to shore up confidence." Yesterday evening, the Australian stock market plunged more than five percent in the first 30 minutes of opening, to close with a $55 billion loss. Immediately following the House vote, the minority leadership held a news conference to start pinning the blame, pointing the finger at House Speaker Nancy Pelosi (D-CA) for allegedly making an overly "partisan speech" on the floor before the vote. The move followed a pattern conservatives have adopted of blaming everyone from illegal immigrants to community organizers -- all while refusing to acknowledge the role that conservative deregulate-at-all-costs policies played in creating the financial crisis.

BLAME IT ON PELOSI: Immediately after the failed vote, some House conservatives declared the failure Pelosi's fault. "Right here is the reason why this vote failed," Rep. Eric Cantor (R-VA) said, holding up a copy of the speech before the television cameras. "[T]his is Speaker Pelosi's speech that, frankly, struck the tone of partisanship that was inappropriate in this discussion." An aide to Sen. John McCain (R-AZ) called Pelosi's floor speech "one of the most reckless acts I've seen from a congressional leader in twenty years on the Hill." In fact, Pelosi condemned the "unbridled" free market that "some in the Republican party, not all" support and also praised her "Republican colleagues" for working so diligently on the bill. Rep. Barney Frank (D-MA) ridiculed the blame game: "Because somebody hurt their feelings, they decide to punish the country." Frank added, "I'll make an offer. Give me those 12 people's names and I will go talk uncharacteristically nicely to them and tell them what wonderful people they are and maybe they’ll now think about the country." Other conservatives also rejected the idea that Pelosi's speech colored their votes. "We are not babies who suck their thumbs," Rep. Michele Bachmann (R-MN) said. Rep. Darrell Issa (R-CA) called the idea that Pelosi's speech changed votes "ridiculous."

BLAME IT ON THE CRA: For weeks, conservatives have blamed the 1977 Community Reinvestment Act (CRA), a bill aimed at helping minorities and low-income Americans obtain mortgages, for somehow causing today's crisis. Blaming the CRA has become a favorite conservative talking point, peddled recently by Charles Krauthammer, Fox News, the Wall Street Journal, the Washington Times, and the National Review. Conservatives often move from blaming the CRA to blaming minorities themselves. Fox News's Neil Cavuto faulted the CRA's encouraging of "loaning to minorities and other risky folks." Bachmann last week criticized attempts to push "homeownership as a way to open the door for blacks and other minorities to enter the middle class." In response, Rep. Keith Ellison (D-MN) and other Congressional Black Caucus members wrote to Boehner asking whether all conservatives believe that "it was lending to minority communities that caused the financial crisis." Ellison also pointed out that the CRA applies only to commercial banks, not independent mortgage companies, which created the majority of subprime loans. "The fact is, CRAs probably reduced the impact of this problem because they limited the ability for a subprime loan to be issued through banks because they were regulated," he said. As the Center for American Progress's Robert Gordon has noted, "[T]he real problems came from the institutions beyond the reach of the CRA." CRA institutions engaged in less dangerous lending, as independent mortgage companies "made high-priced loans at more than twice the rate of the banks and thrifts."

BLAME IT ON UNDOCUMENTED IMMIGRANTS: Perhaps the most absurd finger-pointing came from far-right commenter Michelle Malkin, who insisted that "illegal immigration, crime-enabling banks, and open-borders Bush policies fueled the mortgage crisis." She continued, "Half of the mortgages to Hispanics are subprime (the accursed species of loan to borrowers with the shadiest credit histories). A quarter of all those subprime loans are in default and foreclosure." She quoted a Washington Post report noting that "Hispanics...have been courted aggressively by real estate agents, mortgage brokers and programs," implying no difference between Hispanics and undocumented immigrants. Rep. Virgil Goode (R-VA) declared "the most important thing" the "government needs to do to stop the financial crisis...is to 'stop encouraging loans to persons who cannot afford to pay them back' -- including illegal immigrants." The Center for American Progress's David Abromowitz slammed Malkin's ridiculous claims. He pointed out that 56 percent of subprime loans went to non-Hispanic whites, while "Hispanics constituted 14 percent of the borrower community and received 20 percent of the subprime loans." "In other words, the vast majority of borrowers getting subprime loans -- and therefore most of those going into default -- were not Hispanics, let alone illegal immigrants." Abromowitz concluded, "This predictable 'blame the Hispanics' rhetoric would all be so laughable if we didn't have an astoundingly dangerous economic situation rooted in plunging home values and foreclosures facing America today."

JUSTICE -- WHITE HOUSE PRESS CORPS IGNORES REPORT ON U.S. ATTORNEY SCANDAL: After an 18-month investigation, the Office of Public Responsibility and the Department of Justice Inspector General (IG) released a report yesterday finding that the firing of nine U.S. Attorneys was "fundamentally flawed" and in some cases, governed by politics. The report said former attorney general Alberto Gonzales and other DOJ officials made "inconsistent, misleading, and inaccurate" statements about their reasons for firing the attorneys. But despite the IG's finding of White House efforts to stonewall the investigation, the White House press corps did not ask one question about the investigation in yesterday's press briefing. Reacting to the report, Senate Judiciary Committee Chairman Patrick Leahy (D-VT) said the abuses documented in the report "are corrosive to the very foundations of our system of justice." He also warned President Bush that "any misuse of the pardon power" to the benefit of administration officials involved will be seen "as an admission of wrongdoing and misuse of power."

IRAQ -- IRAQI GAY LEADER GUNNED DOWN: LGBT publication EDGE writes that in Iraq, "for gays and lesbians at least, times have never been worse." Peter Tatchell of Outrage! reported on the most recent atrocity on Sept. 25, when an LGBT leader was gunned down. "This morning, I received news from Iraq that the coordinator of Iraqi LGBT in Baghdad, Bashar, aged 27, a university student, has been assassinated in a barber shop," Tatchell wrote. "Militias burst in and sprayed his body with bullets at point blank range. He was the organiser of the safe houses for gays and lesbians in Baghdad His efforts saved the lives of dozens of people." In a recent article published in the Guardian, Tatchell wrote that "the death squads of the Badr organisation and the Mahdi army are targeting gays and lesbians, according to UN reports, in a systematic campaign of sexual cleansing." Newsweek also reported on the sexual cleansing campaign last month, noting that "nobody wants to talk about gays in Iraq, much less who is killing them." Iraqi LGBT, a London-based NGO, says that more than 430 gay men have been murdered in Iraq since 2003.

ADMINISTRATION -- MEDIA SAYS BUSH IS THE 'PICTURE OF A BEATEN DOG' ON FINANCIAL CRISIS: In the wake of yesterday's congressional meltdown over the bailout bill, President Bush gave a speech this morning meant to reassure the public and the volatile financial markets. Just four minutes long, the address expressed disappointment in Congress and warned that "the consequences will grow worse each day if we do not act." But Bush's speech is unlikely to have much of an effect. Immediately following the address, MSNBC turned to New York Magazine's John Heilemann, who commented that Bush "was the picture of a beaten dog. That was the picture of presidential impotence right there." The Washington Post writes today that yesterday's failed bailout vote "marked the biggest legislative defeat of Bush's tenure and underscored the vanishing influence of a president who could once bend a pliant Congress to his will on wars, taxes, surveillance and a host of other high-profile initiatives." Coinciding with these developments, Gallup has released a new poll today showing that Bush's approval rating has dropped to the lowest point in his tenure, 27 percent.

Ninety percent of Americans are concerned that the failure of the Wall Street bailout package "could lead to a more severe economic decline," according to a new Washington Post-ABC News poll. In all, 45 percent supported the failed bill and 47 percent opposed it. Sixty-one percent said that "there was insufficient assistance for the general public."

"Sometime between Election Day and early December," NBC News will make a final decision about who will permanently replace Tim Russert as the host of "Meet The Press," the New York Times reports. Though the decision has yet to be finalized, the network is said to be "leaning toward an ensemble of hosts that would be led by Chuck Todd, NBC’s political director, and include David Gregory."

According to data from across 11 networks, the first presidential debate on Sept. 26 drew 52.4 million viewers, roughly 16 percent less than the 62.5 million viewers who watched the first debate between President Bush and John Kerry during the 2004 election.

Kyle Foggo, a former high-ranking CIA official, "pleaded guilty Monday to one felony corruption count, admitting that he had directed CIA contracts to companies operated by a longtime friend," military contractor Brent Wilkes. Wilkes was sentenced to 12 years in prison for bribing former represenative Randy "Duke" Cunningham (R-CA) "who had previously pleaded guilty to corruption charges and is serving an eight-year sentence."

"The House and the Senate conceded Monday that they were in a stalemate over proposals to provide tax incentives for the production and use of renewable energy, leaving the future of the nascent industry in limbo." Tax credits for both solar and wind energy "will expire at the end of the year unless Congress resolves the impasse."

Despite Republican challenges, "state and federal courts have cleared the way for a weeklong period in which new voters can register and cast an absentee ballot on the same day in Ohio." The Ohio Supreme Court and a federal judge in Cleveland on Monday upheld the weeklong voting period which begins Tuesday and ends on Oct. 6.

And finally: CEO Mike Zippelli, head of Classic Sleep Products located in Jessup, MD, wanted Congress to be fully prepared to stay all night working on the financial bailout. Last week, he sent a letter to House Speaker Nancy Pelosi (D-CA) offering to donate 535 mattresses. "[I]t doesn't matter what side of the political aisle you are on, solving this crisis is paramount," he said in a statement. "Congress should be in session 24/7 until this issue is resolved, and I'll make sure we give them tools to take some naps on the Hill."

"The nation's first cap-and-trade greenhouse gas auction raised nearly $40 million that will be spent by Northeast states on renewable and energy efficient technologies."

THINK PROGRESS: On day of U.S. Attorney scandal report, Senate lauds Sen. Pete Domenici's (R-NM) "honesty" and "bipartisanship.'"

WONK ROOM: BBC poll: U.S.'s war on terror losing hearts and minds.

YGLESIAS: Brazilian officials admit that deforestation is occurring at three times last year's rate.

TPM MUCKRAKER: Karl Rove's e-mails spotlight White House role in U.S. attorney firing.

CALIFORNIA: A new law will require California chain restaurants to display calorie counts to the public.

MASSACHUSETTS: People with disabilities get more access at State House.

ENERGY: How college students around the country are coping with high gas prices

"We could have gotten there today, had it not been for this partisan speech that the Speaker gave on the floor of the House."
-- House Minority Leader John Boehner (R-OH), 9/29/08, on the failed bailout package

VERSUS

"That one speech was not helpful but I think you don't want to give too much blame to that speech."
-- House Minority Whip Roy Blunt (R-MO), 9/29/08

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Conservatives' Bailout Blame Game

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