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Politics | 09/18/2008 10:00 am

GOP Lawmakers to Bush: We Don't Like How You're Handling the Financial Crisis

By The Staff at wowOwow.com
© AP

Even the Republicans in Congress are blasting the Bush administration for its handling of the country’s financial woes.

Politico.com reports that House Minority Whip Roy Blunt, R-MO, said Wednesday that congressional Republicans "don’t feel like they understand the coherent strategy" of the Bush administration — "if there is one."

First, the disgruntled GOPers say that administration officials haven’t done enough to keep them in the loop on its plans for addressing the crisis. But they also don’t like the apparent trend of the administration intervening in the market – such as by helping Fannie Mae, Freddie Mac and AIG. That goes against the party’s free-market stance that taxpayer money isn’t used to bail out banks that may have made bad decisions. They also don’t understand how the government is deciding, for example, that AIG is worthy of a bailout but Lehman Brothers is not.

"There is confidence in [Federal Reserve Chairman Ben] Bernanke, but that reservoir is not limitless," House Republican Conference Chairman Adam Putnam, R-FL, said. "People need to understand what the guiding principles are behind this ad hoc strategy."

CNN also reports that key Republicans are really irate over the Treasury Department and Federal Reserve for not informing them of the $85 billion AIG bailout.

The fingerpointing continues, as Democrats blame the Bush administration for the financial crisis, and the White House points a finger at Congress.

"Once again the Fed has put the taxpayers on the hook for billions of dollars to bail out an institution that put greed ahead of responsibility and used their good name to take risky bets that did not pay off," said Sen. Jim Bunning, R-KY, a member of the Senate Banking Committee.

The Washington Post reports that Republicans in the House have scheduled a news conference Thursday to protest the string of bailouts that began with Bear Stearns.

House Financial Services Committee Chairman Barney Frank, D-MA, and Rep. Henry A. Waxman, D-CA, chairman of the House Committee on Oversight and Government Reform, both plan hearings aimed at exposing regulatory failures and developing a new system for managing the bad assets of financial institutions collapsing from their investments in a plummeting housing market.

36 Reader Comments (so far…) Sign In or Register to comment

Ms. Dee
It’s not the dollar-cost to the taxpayer. It’s the management of these newly acquired assetts that now falls to the federal government that troubles me.
By Ms. Dee on 09/18/2008 9:13 am
Diana T
The problem is that like everything else, Bush hasn’t been involved. Why did he give a 4 minute morning statement when no one’s watching? Why not an evening press conference and/or a formal speech? He just doesn’t respond to crisis in a normal way. One thing that just occurred to me: Remember when the administration wanted to tie Social Security to personal equity investments? And I agree with Ms. Dee; how much will the Federal Government end up owning, so to speak? And, who is the Federal Government, in case you’ve forgotten? You and me.
By Diana T on 09/18/2008 9:31 am
Lucinda Herbert
The reason they stepped in with a lifeline for AIG is because its collapse would have had global ramifications. It is the largest insurance company in the world with 116,000 employees. There are soooo many banks that have a significant exposure to AIG. Further, A.I.G. is also one of the 10 most widely held stocks in 401(k) retirement plans. If it were allowed to collapse, a run on mutual funds could have occured. This could have easily have affected all of us, beyond what we have already endured. It would have been a global house of cards. Its division, based in London, that sold securities tied to the value of homes is what pushed AIG over the edge. The good news is that AIG has solid and profitable susidiaries as is its primary business, general insurance. Edward Liddy may turn out to be a very good choice — at least I hope so. i wonder whether he will include Hank Greenberg going forward. http://www.suntimes.com/business/1168745,liddy091708.article
By Lucinda Herbert on 09/18/2008 11:01 am
Diana T
Lucinda, I understand why they did it; but I’m still concerned about the ramifications of their decision as to whether it will really help or it’s just a finger in the dike. And, it still may be a global house of cards. This thing hasn’t completely shaken out yet. I doubt if Greenberg will be involved; there is some very bad blood there between him and the present powers-that-be.
By Diana T on 09/18/2008 11:11 am
Lucinda Herbert
Diana, I have been wondering the very same thing. There are some very profitable lines of business, which I suspect, they may sell — just to raise capital. I keep digging trying to determine what the strategy will be. Barney Frank and Chris Dodd have had a hand in this debacle in addition to those who greedily bought and sold those securities. Time will tell, but I am as concerned as you are. It has been a dreadful week.
By Lucinda Herbert on 09/18/2008 11:26 am
Diana T
http://www.fool.com/investing/general/2008/09/17/aigs-failure-is-so-much… This morning, I read an article by Warren Buffett written sometime ago warning about derivatives. And, I’ve heard so many of these people say that the traders and the companies didn’t even know what was on the paper they were trading, even the default swaps, which is what apparently got AIG into a liquidity problem.
By Diana T on 09/18/2008 11:19 am
Lucinda Herbert
Diana, Good article. Thanks for the post. Not understanding what you’re trading is unforgivable. I think they were so greedy they never thought about paying out claims when they came due. Where were the risk managers???
By Lucinda Herbert on 09/18/2008 11:35 am
Diana T
The risk managers were doing a lot of head turning, if you know what I mean, according to economist Robert Reich and others. He also lays a lot on the doorstep of Greenspan for turning his head while all of this was being cooked up. And, as I dealve more deeply into this, people like Reich and Buffett, to name a few, were admonishing and warning about this a very long time ago. I believe that it took on a life of its own and the traders just thought it would go on forever, and like Scarlett O’hara, worry about it tomorrow.
By Diana T on 09/18/2008 11:48 am
Lucinda Herbert
DT You’re absolutely right. Because they were making soooo much money. Greed. They never completely assessed the risks of their MO and certainly had no safeguards to mitigate them. They are paying the piper … and we may too.
By Lucinda Herbert on 09/18/2008 11:54 am
Diana T
We are the ones that will pay the piper because we find ourselves in basic ownership of AIG liquid. I am still learning how this works because I’m not an authority. Greed? For years, I’ve been bitching about these huge bonus buy-outs that CEOs get for leaving a company; it’s downright wrong, especially when they are doing such a bad job. It encourages them to be bad stewards of their companies because they know they will get 10’s of millions when they leave. Barney Frank was on Charlie Rose last night; go to Charlie’s website and watch the re-broadcast. I know people are looking at him also, but I am going way back in the archives and records to see what he was thinking and writing along the way. Because, if it was such an easy answer, we’d be able to fix it today.
By Diana T on 09/18/2008 12:27 pm
WE D
Frank has plenty to answer for. But don’t for get Chris Dowd and the other Dems getting hand outs from Freddie and Fannie http://hotair.com/archives/2008/06/16/wsj-investigate-countrywide-politi…
By WE D on 09/18/2008 2:23 pm
Lucinda Herbert
You might want to read Nick Kristoff’s column today. It’s pretty gross. http://www.nytimes.com/2008/09/18/opinion/18kristof.html?
By Lucinda Herbert on 09/18/2008 3:04 pm
Diana T
I did read it, Lucinda, and I think I posted it somewhere on wow, but for the life of me, I can’t remember where. Yes, I thought it was very well thought out.
By Diana T on 09/18/2008 6:50 pm
Lucinda Herbert
I didn’t think Nick Kristof was gross; I really like his columns. It sickens me that Richard Fuld has collected the amount of money he has and meanwhile did little to prevent the demise of a company that has been around for a century and a half. It was so irresponsible, and frankly so greedy.
By Lucinda Herbert on 09/18/2008 10:13 pm
Diana T
The amount of money these CEOs get when they leave is beyond obscene, and I think that it gives them an incentive to not do their best job because they know that when they do leave, there will be huge bonuses.Think of all of the exits and the $$$ that have gone out of the door with these guys. I don’t know a lot about how they would do it, but it seems to me that there ought to be a cap as to how much a CEO can get. Now that you and I own a part of AIG, perhaps they will listen to us? Ah, well, I guess not…
By Diana T on 09/18/2008 11:55 pm