- Dec 29, 2008
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Members of Congress are acting as nervous as mice at a cat convention these days.
And for good reason, it seems.
Public anger over the taxpayer rescue of the Wall Street mess is a sword of Damocles hanging over every incumbent from President Obama on down, experts said.
A misstep by one party could see them in the minority for a generation in the same way that Republicans were cast out of power by FDR and his policies during the Great Depression.
The depth of voter anger to the bailouts was revealed Monday in new polling data released by the Pew Research Center for the People and the Press.
An overwhelming 87% majority of Americans are bothered by the bailout policy, while 48% describe themselves as downright angry.
Even more than a third - about 36%- are angry even though they also think taxpayer assistance to banks is the right idea.
Another worry for politicians is that the stock slide this year has been the steepest since the majority of American households began to hold equities in retirement plans.
In the late 1980s, only 20% of American households held stock. But that percentage has jumped to over 70% because of the advent of 401(k) plans, said pollster Scott Rasmussen. So the pain is more widely felt.
Congress getting cornered
At the same time they are bashing them, politicians have been pleading for help from policymakers.
Whenever Treasury Secretary Geithner or Fed chief Bernanke are called to Capitol Hill to explain the crisis, there are pleas for clarity and a simple story to tell voters.
A prime example came a few days ago from Senator Max Baucus, the Democratic chairman of the Senate Finance Committee.
"I mean, if you could, is there some way you can just, in English to the average American...try to think this through and more in words, in terms, that the average American starts to understand," Baucus pleaded with Geithner.
"When you try to explain it -it's Greek," Baucus told him.
Economists are worried that Congress will do nothing more to help the banks. And this will only make the banking crisis last longer.
Vincent Reinhart, a former Fed official and now banking expert, thinks that politicians should start calling the bailout "ransom."
"They would have been much better off not calling it a bailout but calling it ransom," Reinhart said.
"We have to give resources to the financial sector because the financial sector is holding the American economy hostage," Reinhart said.
"You don't like paying ransom, but at least you understand why you do it," Reinhart said.
Reinhart and others believe that Geithner's recent sketch of a plan to set up a public/private fund to buy toxic assets was motivated chiefly by a desire to avoid asking Congress for more money for banks.
Many believe the government must first purchase the bad assets, primarily mortgage-related assets. This would require more funds to be appropriated. Some experts say there will be $1 or $2 trillion in up-front costs. Some of that money will be recovered if and when the assets are sold but this is cold-comfort for politicians.
Bailout anger creates perilous times for both parties - MarketWatch
So Bernanke says the recession could end this year if the major problems of the financial system are fixed and that it won't end until they are, and this article suggests that they won't be fixed anytime soon because the politicians in both parties are afraid of the anger voters will direct towards them if they spend the money that is necessary to fix the financial system's problems.
And for good reason, it seems.
Public anger over the taxpayer rescue of the Wall Street mess is a sword of Damocles hanging over every incumbent from President Obama on down, experts said.
A misstep by one party could see them in the minority for a generation in the same way that Republicans were cast out of power by FDR and his policies during the Great Depression.
The depth of voter anger to the bailouts was revealed Monday in new polling data released by the Pew Research Center for the People and the Press.
An overwhelming 87% majority of Americans are bothered by the bailout policy, while 48% describe themselves as downright angry.
Even more than a third - about 36%- are angry even though they also think taxpayer assistance to banks is the right idea.
Another worry for politicians is that the stock slide this year has been the steepest since the majority of American households began to hold equities in retirement plans.
In the late 1980s, only 20% of American households held stock. But that percentage has jumped to over 70% because of the advent of 401(k) plans, said pollster Scott Rasmussen. So the pain is more widely felt.
Congress getting cornered
At the same time they are bashing them, politicians have been pleading for help from policymakers.
Whenever Treasury Secretary Geithner or Fed chief Bernanke are called to Capitol Hill to explain the crisis, there are pleas for clarity and a simple story to tell voters.
A prime example came a few days ago from Senator Max Baucus, the Democratic chairman of the Senate Finance Committee.
"I mean, if you could, is there some way you can just, in English to the average American...try to think this through and more in words, in terms, that the average American starts to understand," Baucus pleaded with Geithner.
"When you try to explain it -it's Greek," Baucus told him.
Economists are worried that Congress will do nothing more to help the banks. And this will only make the banking crisis last longer.
Vincent Reinhart, a former Fed official and now banking expert, thinks that politicians should start calling the bailout "ransom."
"They would have been much better off not calling it a bailout but calling it ransom," Reinhart said.
"We have to give resources to the financial sector because the financial sector is holding the American economy hostage," Reinhart said.
"You don't like paying ransom, but at least you understand why you do it," Reinhart said.
Reinhart and others believe that Geithner's recent sketch of a plan to set up a public/private fund to buy toxic assets was motivated chiefly by a desire to avoid asking Congress for more money for banks.
Many believe the government must first purchase the bad assets, primarily mortgage-related assets. This would require more funds to be appropriated. Some experts say there will be $1 or $2 trillion in up-front costs. Some of that money will be recovered if and when the assets are sold but this is cold-comfort for politicians.
Bailout anger creates perilous times for both parties - MarketWatch
So Bernanke says the recession could end this year if the major problems of the financial system are fixed and that it won't end until they are, and this article suggests that they won't be fixed anytime soon because the politicians in both parties are afraid of the anger voters will direct towards them if they spend the money that is necessary to fix the financial system's problems.
