Complain about a product or service

Somber Washington Prepares for Bailout

Partisan bickering crumbles talks

By Joseph S. Enoch
ConsumerAffairs.com

September 26, 2008

Personal Finance • Feds Report More Signs of Recession • Consumer Confidence Rebounds in November • Cheap Oil May Be Economic Stimulus • Job Security Lacking This Holiday Season • An Upside to the Down Market: A Lower Tax Bill • Americans Tap Savings to Cope with Economy • Economists' Panel Sees Prolonged Recession • Getting A Small Business Loan in Bad Economic Times • Jobless Rate Spikes in October • Monthly Job Cuts Hit Five-Year High • Business Economists See More Signs of Recession • What's Ahead For the Economy? • Consumer Confidence Plunges to Record Low • Bankers See Recovery in Second Half of 2009 • Autumn Has Long History as Financial Disaster Season • Finding a Job Takes Longer in Slow Economy • Baby Boomers Scramble to Reassess Future • What's Your Recession Game Plan? • Study Finds Racial Disparity in Retirement Savings • New York Threatens to Prosecute AIG for Fraud • Inflation Not a Factor in September • Retirement Postponed for More Americans • Economic Worry Supplants Terrorism Fear • Wall Street Leaders Missing In Action • Doctors Worry About These Stressful Times • Financial Meltdown Takes Toll on Consumer Confidence • Economic Turnaround Will Take Time • Retirement Plans Hammered in Credit Squeeze • Fed Takes Another Step to Bolster Credit Market • Economists Offer Plan for Stabilizing House Prices • House Passes Bailout Bill; Bush Signs Into Law • Senate Expected to Pass Bailout Bill • FDIC Seeks Increase in Deposit Coverage • Voter Anger Rattles Congress; Bailout Fails • Congress Agrees On Compromise Bailout Bill • Somber Washington Prepares for Bailout • Deal Or No Deal: What The Bailout Means To You • FDIC May Need Additional Funds if Banks Keep Failing • Which Type of Money Market Account Is Right for You? • How Does The Banking Crisis Affect You? • Lehman Files Largest Bankruptcy in U.S. History • Why Individual Investors Shouldn't Buy Individual Stocks • Bear Stearns to Pay $28 Million to FTC for Abusive Lending Practices • When Should You Sell Exchange Traded Funds? • Has the Bear Market Hit Bottom Yet? • How Do You Survive a Bear Market? --- • More Personal Finance News

A dark cloud rolled over Washington, D.C. last night, bringing rain and brisk wind, right as talks for a proposed bailout of Wall Street crumbled. It still looms today as this city prepares to pass legislation that could have a monumental impact for years.

On the streets, in the restaurants and in the backrooms, most murmurs eventually turn toward the bailout and all too often the word "depression" is uttered.

On Capitol Hill, few members of Congress have rushed to take a side on a piece of legislation that historians may look back on as the bold savior of a plunging economy or as the $700 billion gift to Wall Street that deflated the dollar and and acted as a catalyst to the nation's financial doom.

"I wouldn't stick my neck out on this because it's out of control," said a longtime Washington lobbyist who wished to remain anonymous because of the controversial nature of the bill.

Many members of Congress are going about their regular business today, trying to pass their own legislation before a four-month recess for the elections. But no one can deny that the top item on almost everyone's minds is the proposed bailout.

"While everyone is concerned about the bailout, most lawmakers are not involved directly in the negotiations,"Peter Urban, who covers Sen. Chris Dodd (D-Conn.) chairman of the Banking Committee, for the Connecticut Post, wrote in an e-mail. "For them, business is moving forward in the normal end-of-session rush."

The lack of any legislation to address the problem could be blamed on partisan showmanship as the two parties prepare to boost their presidential candidates before tonight's debate.

Obama has said he would vote for a bailout as long as it included many incentives for consumers struggling to make payments and for the rest of the taxpayers who ultimately will be footing the bill, especially if the plan fails.

McCain has touted his work on the legislation, yet has taken no side and has made no comments on what specifics he would favor.

"I'm confident we will have a deal," McCain told reporters yesterday. "How much I had to do with it, I'll let you and others be the judge."

The standoff was amplified in a meeting last night with President Bush, the two presidential candidates and Congressional leaders, who all expected to walk out with a bipartisan plan. The talks quickly crumbled and turned into a shouting match, according to reports from inside the closed door meeting. After, Henry Paulson, Treasury secretary, literally got down on one knee and pleaded with House Speaker Nancy Pelosi (D-Calif.) to not "blow it up."

The bailout is probably not blown up, and talks continue, Urban wrote, but he doubts there will be anything firm until tomorrow morning at the earliest.

Until then, this city appears to be on hold, even as the first debate is only hours away.

"Everyone is watching, waiting, glued to the TV," the lobbyist said. "It's so volatile."

Almost no details on any of the various bailout plans have been released and even many lawmakers outside of the direct negotiations have not been filled in, the lobbyist said.

Many consumers have called into their local representatives to express dismay at a bailout that would seem to aid the very bankers and Wall Street executives that might be to blame for the nation's crisis.

"I assume most members are getting tons of emails and calls about the crisis, and strong opposition from the public to a pure bailout as outlined by Treasury Secretary Hank Paulson," Urban wrote.

"My sense is the public doesn't have a clear view on what Congress is considering to make Paulson's bitter pill tolerable including: oversight, taxpayer protections, foreclosure help and restrictions on Wall Street executive pay."

The White House, September 26, 2008.

Even outside the immediate Beltway, many D.C. residents are feeling the weight of the bailout negotiations in their daily lives. "We are in the position of needing to buy a new used car right now and one dealer gave us a hard time about holding a particular car for more than a day," one Virginia resident told ConsumerAffairs.com.

"You try working full time and trying to buy a car in the middle of the week with a toddler!," they said. "In this market, can you seriously afford to give your customers, especially on a big ticket items, a hard time?"

"I think it's sad that it's the banks that are getting government help, but the people who have lost their homes are high and dry," another Virginia resident said. "Fred couldn't pay his mortgage because of his bank's unscrupulous lending practices, so now the bank gets a bailout? What about Fred and his family? Who bails them out?"

The general consensus among consumer groups is that if there is a bailout, that it include the credit card reforms the House passed Tuesday and that it include a number of protections against further foreclosures, abuse among those who will likely profit from the bailout and greater transparency.

Details of any legislation that makes it to either chamber of Congress probably won't be known until a vote takes place.

Regardless of what is voted on, no one can doubt the gravitas.

"This will be a historic lesson of monumental proportions," the lobbyist said.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Back to the top |