Monday, October 6, 2008

7 Reasons Why Wall Street Got the Bailout

Having made it through the United States Senate yesterday (October 2, 2008), the Wall Street bailout package sailed through the House of Representatives today (October 3, 2008) with a vote of 263 in favor and 171 against. A total of 58 representatives switched their votes from the Nay to the Yea column. President Bush signed the bill within hours, or was it minutes?

How remarkable was the speed with which the bailout sailed through Congress and across the President's desk? Very fast.

According to one news report, only two other major bills of national consequence have raced through Congress and by American president that quickly. One was the 1941 bill authorizing President Franklin D. Roosevelt to declare war, leading the United States into World War II. The other fast bill was the 1964 Civil Rights Act, signed by President Lyndon B. Johnson.

Here is a rule of life: Whatever people do fast they are likely to do wrong. Stated another way, whatever you do too quickly, you will usually regret. A Liberian maxim says, "Hurry, hurry bursts trousers." And my late father used to say, "The faster you go the slower you get." There are few exceptions to this rule, of course.

So what gave lawmakers the guts to reverse themselves and approve the bailout after they voted it down just days earlier?

Reason #1: Americans can no longer endure a fight that lasts more than two rounds. Prior to the first vote on the bailout, American voters flooded the offices of their representatives with calls largely against bailing out Wall Street fat cats. Those same voters lost steam when the bailout returned for round two of the same economic war. By the way, this same lack of endurance is one reason why America may not win the so-called "War On Terror". Americans are too quick to back down and back off.

Reason #2: Politicians attributed the 777 points stock market plunge on Monday to the failure of the bailout to pass Congress. But the plunge could just as well have been due to uncertainty in the global financial market.

Reason #3: The politicians added to the bailout some "sweeteners" other wise known as earmarks and pork barrel. The bailout became the latest legislative Christmas tree for members of Congress to attach their pet projects. Why do you think the bailout bill is some 450 pages long? It's packed with pork, and yet John McCain voted for it, while he's decrying earmarks on the campaign trail.

Reason #4: Fear mongering by politicians, from the President to the presidential candidates, was the driving force behind the bill. Because we are being punished with lazy minds in public offices, we are stuck with being scared out of our shoes, whenever our non-creative leaders want to shove something down our throats. These weak leaders lack what it takes to motivate those they lead, so fear becomes their weapon of choice. "If we don't do this, if we don't do something, it's Armageddon." Scaring your own citizens is not leadership. It's sick, pathetic, wrong.

Reason #5: Deceptive rhetoric won the day. Our politicians realized that Americans rightly recognized the bailout as an attempt to reward irresponsible behavior on Wall Street. So the sneaky politicians contrived a mantra: "This is not a bailout; it is a rescue. This is not just for Wall Street; it is for Main Street." By intersecting Wall Street and Main Street, the politicians found their winning scheme. It's the political equivalent of "name it, claim it." In American politics, whoever can reframe the issue, owns the issue and wins the day.

Reason #6: Whining by bankers and other credit-based business people helped to tip the scale in favor of the bailout. These quasi capitalists could almost be heard sobbing on the phones as they pleaded with their elected officials. "Ohoh, ohoh. Help us, please. We can't get loans to buy cars to sell, and our buyers can't get loans to buy from us. Please, please help! Bail us out. Will you come to our rescue? How do you think we'll find the money to contribute to your next campaign for re-election, to attend your election fundraising banquet?"

Reason #7: High-pressure tactics by presidential candidates helped in no small way. John McCain placed calls to members of Congress who had voted against the bailout. Good move by McCain, because he stands to gain much from the passage of the bailout. It may help to change the subject, so McCain can talk about other things and regain traction in the polls that have been showing him falling behind.

Barack Obama also made arm-twisting phone calls. It did not matter that the bailout failed to meet one of Obama's key conditions rescue for homeowners facing foreclosure because of the mortgage crisis.

The bailout passed, because too many of our politicians lack integrity, and they are no longer ashamed of it. They flip flop on their principles at the flip of a dime in this case, at the dip of the stock market.

For the most part, the bailout passed for all the wrong reasons. Will it help the economy? May be, but only may be.

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