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Wonkbook: Oil spill hurting climate bill; Dodd/Shelby near deal; Geithner sells bank tax

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Agenda.

House: The big bill in the lower chamber is Haiti Economic Lift Act. They're also moving a bunch of resolutions, including my favorite: "Supporting the goals and ideals of National Train Day." Over in Committeeland, the Joint Economic Committee is being joined by economist Alan Krueger to take a look at job creation.

Senate: After an exciting Tuesday spent talking about amendments without reaching any agreement on the rules for voting on amendments, the Senate gathers at 9:30am to try again. And election nerds will be excited to hear that the Rules Committee is looking at vote-by-mail programs, with an emphasis on Oregon's experience. Special guest witness: Sen. Ron Wyden.

White House: You mean, what is the White House doing in addition to worrying about oil spills, defaults in the Eurozone, terrorist attempts, and financial regulation? Glad you asked! The prez is signing the Caregivers and Veterans Omnibus Health Services Act. You can read about it here.

And! The Financial Crisis Inquiry Commission begins hearings on shadow banks (watch them here), payroll processing firm ADP releases its monthly report on private-sector payrolls, the Institute for Supply Management releases its index of service-sector activity in April, and tickets are on sale for Iron Man 2, which opens Friday. Yes, I think Iron Man 2 is important policy news. Something something military-industrial complex something. And if you make me defend this belief, I'll just link to this.

Top Stories

Oil spill makes climate bill less likely: "The oil slick spreading through the Gulf of Mexico will prompt Congress to establish new regulatory, safety and technological requirements that could impede further off-shore oil drilling, the White House's top energy official said Tuesday," writes Jonathan Weisman. "But lawmakers said the catastrophic spill could further dim the White House's hopes for securing legislation aimed at reducing U.S. consumption of oil and other fossil fuels, by making it impossible to forge a compromise that includes expanded undersea drilling." Bright side: Harry Reid is taking the opposite view.

Dodd/Shelby deal appears near: Aides to the committee chairman, Christopher J. Dodd, Democrat of Connecticut, and the panel’s senior Republican, Richard C. Shelby of Alabama, said the two senators had agreed to scuttle a $50 billion fund proposed by Democrats," report Edward Wyatt and David Herszenhorn. "Under the deal, the Federal Deposit Insurance Corporation would finance the liquidation of failed financial companies, using a new credit line with the Treasury Department backed by the failed company’s assets. The money would be recouped later through the sale of assets, with shareholders and creditors forced to take losses."

Old GOP line: It's a bailout! New GOP line: It's not a bailout if it's done using a line of credit from Treasury?

Tim Geithner's tries to sell the Senate Finance Committee on a post-TARP tax: "When you and your colleagues in Congress gave the Treasury Department authority to put out this financial fire, you included in the legislation a requirement that the president put forward a plan, quote, 'that recoups from the financial industry an amount equal to the shortfall in order to ensure that the TARP program does not add to the deficit or the national debt,' unquote."

"This is a simple and fair principle. Banks, not the taxpayer, should pay for bank failures. And this is a principal with ample historical precedent. In the aftermath of the S&L crisis, Congress changed the law to require the FDIC to impose a fee on banks to recoup any losses from closing failed banks." More testimony here.

Grassley's response: “If a TARP tax is imposed and the money is simply spent, that doesn’t repay taxpayers one cent for TARP losses. It’s just more tax-and-spend big government, while taxpayers foot the bill for Washington’s out-of-control spending.”

Data-nerd interlude: Charts and graphs that will finally make nothing clear.

Table of Contents

Economy: Greece catches pneumonia, America starts to sneeze; FinReg: 'Audit the Fed' amendments gaining momentum; Oil spill: BP had gotten Immigration: a Tucson sheriff takes aim at the Arizona law; Health-care reform: repeal popular among Republicans, but not among voters; Appendix: Behold the rise of superweeds.

Economy

Greek crisis pounds US stocks: The markets suffered their worst day since February as the Dow Jones industrial average and the Standard & Poor's 500-stock index both fell more than 2 percent," report Dina ElBoghdady and Renae Merle. "The sell-off comes on the heels of an upbeat period marked by stronger-than-expected profits for many U.S. companies and favorable reports about consumer spending, housing and manufacturing. But financial troubles in Greece and the threat to other deeply indebted European countries serve as a startling reminder of how quickly gains could unravel."

Factory orders up: "Orders for manufactured goods are surging, with another jump in March, and business spending continues to grow," reports Sara Murray. "New orders for factory goods rose 1.3% to $391.5 billion, the 11th increase in the past 12 months, the Commerce Department said Tuesday. Orders increased 1.3% in February as well."

Companies are ill-served by massive layoffs during recessions: "Mr. Mascio has studied how companies in the Standard & Poor's 500-stock index have performed over 18 years," reports Scott Thurm. "His conclusion: those who cut deepest, relative to industry peers, delivered smaller profits and weaker stock returns for as long as nine years after a recession."

Steve Pearlstein told you so: "For the past year, I've been warning that the imbalances underlying the financial crisis -- the explosive growth of credit, the mispricing of risk, the mispricing of real estate and other assets, the overcapacity in the global economy -- were so huge that a quick and easy economic recovery was highly unlikely," he writes.

"And for much of that time, it has looked as though I was dead wrong. Stocks rebounded, credit markets revived, corporate profits returned and bank balance sheets have been repaired. But the nagging suspicion is that too much of this rebound is the result of the massive fiscal and monetary stimulus that not only did its job of reversing what was a dangerous downward spiral, but also made it possible for many countries to delay dealing with those fundamental economic imbalances. No better proof exists than the financial drama now unfolding in Western Europe, where for many years countries from Ireland to Greece used the financial cover offered by a new continental currency to overspend, overborrow and overexpand."

Heartwarming interlude: A child with liver cancer gets to be a superhero for a day -- with the help of a substantial chunk of Seattle.

FinReg

'Audit the Fed' bill hits the Senate: "Sen. Bernard Sanders (I-Vt.) is pushing an amendment to the financial overhaul bill before the Senate that would broaden the Government Accountability Office's power to audit the Fed and compel the central bank to disclose details about the firms that received emergency federal aid during the financial crisis," report Brady Dennis and Perry Bacon Jr.

"Sanders's amendment has drawn more than a dozen co-sponsors from both parties. A petition encouraging the bill has the support of groups as disparate as FreedomWorks, a conservative activist group that has helped organize Tea Parties, and liberal organizations such as the Campaign for America's Future and prominent progressive blogs."

Seems like a bad time for the Federal Reserve's leg shop to be understaffed: "The Federal Reserve's efforts to fend off challenges to its independence by Congress could be complicated by departures from the central bank's legislative-affairs office," reports Jon Hilsenrath. "Three officials in the office—Laricke Blanchard, Robert Pribble and Tara Foscato—are on their way out or on leave from the group, cutting it nearly in half for now. Mr. Pribble is going to work for a hedge fund, Ms. Foscato a lobbyist. Mr. Blanchard, who used to run the group, has been loaned to the Export-Import Bank for six months."

Oil spill

The government had declared BP's Gulf of Mexico site safe: "The Interior Department exempted BP's calamitous Gulf of Mexico drilling operation from a detailed environmental impact analysis last year, according to government documents, after three reviews of the area concluded that a massive oil spill was unlikely," reports Juliet Eilperin. "The decision by the department's Minerals Management Service (MMS) to give BP's lease at Deepwater Horizon a 'categorical exclusion' from the National Environmental Policy Act (NEPA) on April 6, 2009 -- and BP's lobbying efforts just 11 days before the explosion to expand those exemptions -- show that neither federal regulators nor the company anticipated an accident of the scale of the one unfolding in the gulf."

Chemical warfare working? "The huge oil slick in the Gulf of Mexico still hadn't inundated the shore on Tuesday, and officials speculated that was partly because it was being pummeled with massive amounts of chemicals designed to break up the oil," reports Jeffrey Ball. "Those fighting the spill are spraying an unprecedented amount of dispersants into the Gulf in an attempt at environmental triage. Though there are questions about the environmental impact of using so much dispersant and using it at the seafloor, experts say, any such impact pales compared with the damage that would occur if the slick made it to the ecologically fragile Gulf Coast with full force."

BP steps up its lobbying: "BP PLC Chief Executive Tony Hayward met with lawmakers on Capitol Hill Tuesday, advancing the oil giant's campaign to avoid the sort of political backlash that has engulfed companies such as Goldman Sachs Group Inc. and Toyota Motor Corp.," report Neil King and Guy Chazan. "The push on Capitol Hill, arising after a rig leased by BP burned and sank in the Gulf of Mexico last month and the well it was drilling began leaking oil, comes as the company said it hopes as soon as Thursday to lower the first of three containment domes over the principle underwater leak."

Thomas Friedman on the spill: "There is only one meaningful response to the horrific oil spill in the Gulf of Mexico and that is for America to stop messing around when it comes to designing its energy and environmental future," he writes. "The only meaningful response to this man-made disaster is a man-made energy bill that would finally put in place an American clean-energy infrastructure that would set our country on a real, long-term path to ending our addiction to oil."

Ergonomics interlude: Is your office chair trying to kill you?

Immigration

A Tuscon sheriff weighs in against the Arizona law: "My deputies have referred more illegal immigrants to Border Patrol and Immigration and Customs Enforcement than any other state or local law enforcement agency in Arizona," writes Clarence Dupnik. "But this new law will pass the burden of immigration enforcement to my county department. This is a responsibility I do not have the resources to implement."

"The more fundamental problem with the law is its vague language. It requires law enforcement officials to demand papers from an individual when they have a 'reasonable suspicion' that he is an illegal immigrant...When used in a law-enforcement context, 'reasonable suspicion' is always understood to be subjective, but it must be capable of being articulated. In the case of identifying illegal immigrants, the ambiguity of what this 'crime' looks like risks including an individual's appearance, which would seem to violate the Constitution's equal protection clause. Such ambiguity is especially dangerous when prescribed to an issue as fraught with emotion as that of illegal immigration. "

Did campaign-finance reform lead to the Arizona law? "Candidates for the legislature [in Airzona] can receive public funding if they collect 220 contributions of at least $5 each. This entitles them to more than $14,000 for the primary campaign and more than $21,000 for the general election," writes Ruth Marcus. "If a competing candidate chooses not to comply with spending and contribution limits, the publicly funded candidate gets matching funds to stay even...Trouble is, it worked -- perhaps too well. The barriers to entry were extremely low. People with little experience in politics at any level ran for the legislature and won. Previously, for better or worse, candidates of both parties were 'vetted' by business groups that then proceeded to help them raise money, a process that served to filter out extremes on both sides.

"And, as it turned out, a law pushed by 'good government' types, primarily Democrats, ended up benefiting conservative Republicans who quickly figured out that the Clean Elections money could be used to take on Chamber of Commerce-type Republicans."

Health-care reform

Health-care repeal popular among Republicans, but not among voters: "The Resurgent Republic poll of 1,000 likely voters found that only 35 percent of respondents agreed with the approach of the GOP members of Congress who sounded the call to 'repeal and replace”'the health care reform legislation passed in March," reports Ken Vogel. "Among respondents who identified themselves as Republicans, however, support for a repeal-and-replace strategy was 67 percent, compared to 36 percent among independent respondents."

Early retirees get federal help: "The White House announced Tuesday that it would help pay medical bills for early retirees who have health insurance provided by their former employers," reports Robert Pear. "The purpose of the temporary $5 billion program, authorized by the new health care law, is to reverse the erosion of employer-sponsored insurance...Under the program, the federal government can reimburse employers for 80 percent of the cost of claims from $15,000 to $90,000 a year for a retired worker who is 55 or older and not eligible for Medicare. The program will run from June 1 of this year to Jan. 1, 2014, when many early retirees, like millions of other Americans, will be able to enroll in health plans offered through new state-based markets known as insurance exchanges."

Agricultural interlude: This photo essay on farming around the world is gorgeous.

Appendix

Rise of the superweed (no, not that kind): "Just as the heavy use of antibiotics contributed to the rise of drug-resistant supergerms, American farmers’ near-ubiquitous use of the weedkiller Roundup has led to the rapid growth of tenacious new superweeds," report William Neuman and Andrew Pollack, "'It is the single largest threat to production agriculture that we have ever seen,' said Andrew Wargo III, the president of the Arkansas Association of Conservation Districts."

These energy projects always sound cool, but do they matter? "A start-up company has broken ground on a Texas pilot plant that is supposed to produce ethanol and diesel in a radical new way: with an organism that sweats fuel," reports Matthew Wald. "The company, Joule Unlimited of Cambridge, Mass., has developed several patented gene-altered organisms that absorb sunlight and carbon dioxide and combine these into hydrocarbons."

Closing credits: Wonkbook is compiled with the help of Dylan Matthews and Mike Shepard. Photo by Daniel Acker of Bloomberg News.

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By Ezra Klein  |  May 5, 2010; 7:18 AM ET
Categories:  Wonkbook  
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Next: Is J.P. Morgan's James Glassman a double agent?

Comments

"Wonkbook: Wonkbook"? Is that like "pizza-pizza"?

Posted by: Kevin_Willis | May 5, 2010 7:50 AM | Report abuse

"The only meaningful response to this man-made disaster is a man-made energy bill that would finally put in place an American clean-energy infrastructure that would set our country on a real, long-term path to ending our addiction to oil."

Ah, Mr. Friedman. So easy to say, almost impossible to do. At large scale deployment, almost every form of green energy will have as many detractors and protesters as oil does. For solar, wind, nuclear, etc. to feed our voracious appetite for energy, they will all have inefficiencies and unintended consequences that make them as messy and difficult to deal with as fossil fuels are today--if (perhaps) not as polluting.

It's our addiction to energy that has to be addressed more than our addiction to oil. And that's a stickier wicket.

Posted by: Kevin_Willis | May 5, 2010 7:56 AM | Report abuse

I'll count it as a win that all the headers except for "Agenda." don't have a period after them. Glad to see you read some comments Ezra!

Posted by: phantasypunk | May 5, 2010 8:00 AM | Report abuse

Ezra I'm curious: how many people have signed up for Wonkbook so far? Anyway I'm enjoying it.

Posted by: gocowboys | May 5, 2010 8:00 AM | Report abuse

Kevin : "So easy to say, almost impossible to do."

You misunderstood Friedman's suggestion.

Your response above indicates you think he said we should without delay deploy a new clean-energy infrastructure.

However, what Friedman actually suggested if you read carefully, is that we should immediately adopt a new energy bill that designs a FUTURE clean-energy system and which begins a transition to such a system. That is clearly not impossible, though with all the oil-shills in the GOP blocking the way, it would indeed be difficult.

Posted by: Lomillialor | May 5, 2010 8:06 AM | Report abuse

"Companies are ill-served by massive layoffs during recessions"

This is true, but the executives making the layoffs look like they are at least taking drastic action, are thus favored by the board or the shareholders (who aren't getting fired), and get to keep or expand their hefty pay packages.

But too many layoffs cut too deep into the talent pool (and also fire, in tandem, the best people to start a competing company, or a whole department worth of talent for a competitor). You can't suddenly go from needing 10% of your workforce to not needing them, and since cuts are often random (and newest hires), you get rid of a lot of talented people, not just deadwood.

Posted by: Kevin_Willis | May 5, 2010 8:11 AM | Report abuse

@Lomillialor: To each their own opinion, but I think that's a distinction without a difference. Yes, it's easy to adopt an appealing-sounding mission statement. Much more difficult to execute.

Again, if fossil fuels were something used by model-train enthusiasts and professional spelunkers only, it wouldn't be an issue. There would be no resentment, or problem with, fossil fuels. It is our huge energy consumption which will make any type of energy production problematic.

Because when you consume at our levels, there is no such thing as clean energy. And I'm all for forty square miles of desert being devoted to solar arrays, a hundred miles of windmill farms, tidal energy (goodbye, coral), and hydroelectric power (people, and snail-darters, can move). But large scale deployment of these, or any other, technologies will like have unintended consequences that aren't even really projectable at this point.

Posted by: Kevin_Willis | May 5, 2010 8:17 AM | Report abuse

"But I think that's a distinction without a difference"

There is a big distinction between what you thought Friedman suggested and what he actually said.

Your comments indicated you thought he wanted a quick switch to a clean-energy infrastructure whereas what he actually suggested is we get serious about planning for, and then start transitioning to such a system. What he suggested is NOT impossible, as you asserted, and in fact is being done in many other countries as we speak.

Posted by: Lomillialor | May 5, 2010 8:38 AM | Report abuse

Just a quick shout out to let you know I really appreciate you pulling this together. For folks like myself who get all their news from the web, it makes for a nice quick overview of what's happening out there.

Posted by: rayrick1 | May 5, 2010 8:48 AM | Report abuse

"If a TARP tax is imposed and the money is simply spent, that doesn’t repay taxpayers one cent for TARP losses."

I agree with Sen. Grassley. Accounting is dark arts, what with all the various accounts and fungibility and whatnot. The only way we can actually recoup the TARP money is to track down, serial by serial, the exact TARP bills these bankers used to light their cigars with.

Posted by: Fnor | May 5, 2010 8:55 AM | Report abuse

"The only meaningful response to this man-made disaster is a man-made energy bill that would finally put in place an American clean-energy infrastructure that would set our country on a real, long-term path to ending our addiction to oil."


maybe the underlying truth to our energy problems, is that the way of life that the world of people have presently chosen to aspire to, is ultimately not sustainable.
maybe it will not be possible to live the way we do, because over time, and with the near-certainty of more catastrophes, we simply will not be able to meet the demand, without destroying the planet in the process.


Posted by: jkaren | May 5, 2010 9:08 AM | Report abuse

Why is the tax to recoup TARP money directed at the banks? The banks are actually paying back to TARP money. Even AIG might well pay back its TARP money over the next 2-3 years.

Given the way it is being sold, the tax should be on automakers like GM who are paying back TARP money with TARP money. As of last quarter, GM was still losing money hand over fist:

http://money.cnn.com/2010/04/07/news/companies/gm_results/index.htm

If you want to tax the banks for another reason, well okay then but don't sell it as a way to recoup TARP funds - that's just going to lead people to look at the automakers.

Posted by: justin84 | May 5, 2010 9:12 AM | Report abuse

this morning, in different news sources, i have read three different estimates of the amount of oil seeping out into the ocean.
and two completely different opinions on whether the strategies at hand, are working.
and a grim report on the unknown environmental effects of the dispersant at deep levels in the sea.

i will keep saying it everyday, the coherent, connected stream of information that should be coming directly to the american people on this disaster, from the white house, from napolitano, chu, salazar....from experts at the epa, is not happening.
what is coming, are bits and pieces of information from "experts" that we have never heard of, and also dont know if we can trust.
there needs to be a major primetime press conference, with all of these people present, telling us what they know so far. it is not good enough to hear unvalidated information from an expert here or there.
the administration, the cabinet members have a responsibility to speak credibly to all of us about what is happening.
i find this more and more upsetting as each day goes by.

Posted by: jkaren | May 5, 2010 9:15 AM | Report abuse

#Lomillialor: "There is a big distinction between what you thought Friedman suggested and what he actually said."

But very little difference. :)

"Your comments indicated you thought he wanted a quick switch to a clean-energy infrastructure"

Where did I say that? For someone who assumes I misread Freidman, you kinda read stuff I didn't say into what I said. That's called "irony".

"whereas what he actually suggested is we get serious about planning for, and then start transitioning to such a system"

Well, even that is much easier said that done, but actually having the "getting serious" translate into something effective is an extraordinarily difficult, intractable problem. That is, if it's going to be meaningful. If it's going to be posturing and photo-ops and the societal equivalent of BP's "going green" campaign, then I guess that's easy enough.

"What he suggested is NOT impossible, as you asserted, and in fact is being done in many other countries as we speak."

Well, then, it's actually very easy, and I just don't get it. In fact, we're practically done.

Me, I think pithy proselytizing about how this or that problem means that we need to get serious about green energy isn't terribly meaningful outside of a context of our incredible (and constantly growing) consumption of energy.

To quote Friedman again: "The only meaningful response to this man-made disaster is a man-made energy bill that would finally put in place an American clean-energy infrastructure that would set our country on a real, long-term path to ending our addiction to oil."

Easy to say, and completely unserious. All buzzwords and catch-phrases, and without a critical context in the energy discussion: either you pay the high costs for energy production, or you learn to do with less. Or you focus on radically improving efficiencies, so that replacing fossil fuels doesn't require solar and wind farms the size of the state of California.

Posted by: Kevin_Willis | May 5, 2010 9:25 AM | Report abuse

Kevin said : To quote Friedman again: "The only meaningful response to this man-made disaster is a man-made energy bill that would finally put in place an American clean-energy infrastructure that would set our country on a real, long-term path to ending our addiction to oil."

By using that quote, you made my point exactly, and the worst thing is you either don't understand why I say that or you're pride is too hurt to admit it.

Posted by: Lomillialor | May 5, 2010 9:48 AM | Report abuse

@Lomillialor: "By using that quote, you made my point exactly, and the worst thing is you either don't understand why I say that or you're pride is too hurt to admit it."

You left out the most likely explanation: that you're wrong, and I'm trying, as patiently as I can, to explain to you why you're wrong.

But I think I'll just have to accept that you're not going to get it, and move on. :)

Posted by: Kevin_Willis | May 5, 2010 10:01 AM | Report abuse

"If a TARP tax is imposed and the money is simply spent, that doesn't repay taxpayers one cent for TARP losses. It's just more tax-and-spend big government, while taxpayers foot the bill for Washington's out-of-control spending."

Sorry, Senator Grassley, you're not sexy enough to sell this ridiculously incoherent statement. Shoulda put it up on Sarah Palin's Facebook page. Not only that, you needed at least one more meaningless buzzword in there to get you enough credits to qualify for your GOP Senior flag pin. Better luck next time.

Posted by: slag | May 5, 2010 10:02 AM | Report abuse

BTW, best part of this Wonkbook was the data-nerd interlude. Especially enjoyable was the pie chart on that pie chart's resemblance to Mister T. (yes, I have seen it before, but it's still awesome).

New to me was the criteria for the proper tactical usage of the phrase "Oh, snap!" in flowchart form. Very useful.

Posted by: Kevin_Willis | May 5, 2010 10:06 AM | Report abuse

"This is a simple and fair principle. Banks, not the taxpayer, should pay for bank failures."

This is an unfair principle. Responsible banks (and by extension their customers), that don't go under, should pay for irresponsible banks that do go under? Much simpler, fairer principle- reduce leverage if you want FDIC insurance at good rates. Too much leverage? Then your insurance rates rise.

"'It is the single largest threat to production agriculture that we have ever seen,' said Andrew Wargo III, the president of the Arkansas Association of Conservation Districts."

Completely ridiculous. We had a brief respite from weeds, now they are back. That's not a threat to production agriculture, it's just puts us back to time when we didn't have RoundUp. Blown way out of proportion.


Posted by: staticvars | May 5, 2010 10:17 AM | Report abuse

I need some help here because I'm REALLY slow.

Republicans are against the FinReg part of the bill about winding down banks because they KNOW that $50 billion is not nearly enough and it will just lead to bailouts by the taxpayer. Dems say no way.

But if we use the oil spill as an example is $75 million enough to clean up what needs to be cleaned up? The answer is absolutely not.


So in 10-15 years when and if banks need to be bailed out and if it went through (I know that part is dead now) and $50 billion wasn't nearly enough shouldn't Dems be to blame?

In the end I'm 100% for re-establishment of Glass Steagal although I'm sure that's probably dead too.

Posted by: visionbrkr | May 5, 2010 10:50 AM | Report abuse

The confusion about Friedman's quote is understandable.. he neglected to mention the most important part, which is that the next six months are going to be critical.

Posted by: BigTunaTim | May 5, 2010 11:04 AM | Report abuse

"So in 10-15 years when and if banks need to be bailed out and if it went through (I know that part is dead now) and $50 billion wasn't nearly enough shouldn't Dems be to blame?

In the end I'm 100% for re-establishment of Glass Steagal although I'm sure that's probably dead too."

visionbrkr,

My understanding is that there are no "bailouts" there are only "funeral expenses." Shareholders and execs are wiped out, the bank dies, and the assets are sold off. This is not a "bailout" in the sense that the balance sheets are cleaned up to make the institution viable and attractive to a new owner. The money is intended to cover the government administrative costs of winding down the failed bank, not to prop it back up. So perhaps the $50 billion is not an inadequate number.

And now (per the apparent deal with Shelby) that the costs are supposed to be deducted from the sale of the assets, if the assets are inadequate, are Republicans "to blame?"

I agree about Glass Steagall; I am perplexed as to why restoration of Glass Steagall was not widely viewed as the logical starting point for the re-regulation of financial institutions.


jkaren,

I concur with you...I also wish that the government could set up a daily press briefing with definitive information and answers about the disaster on the Gulf Coast.

Sadly, I think one of the lessons here is that what little expertise there is about this spill lies mostly outside the government, and that is part of the reason we aren't getting the kind of communication from executive branch leadership that would reassure us that persons in authority are effectively managing the crisis. The feds just don't seem to have good scientific and technological assets in place to understand and attempt to control a disaster of this type.

Posted by: Patrick_M | May 5, 2010 11:13 AM | Report abuse

Patrick,

I agree with the fact that this is the concept but when the funeral expenses go up and the max figure stays at $50 billion then who pays for it?

I lean on Peter Schiff here that banks are not too big to fail but too big to exist in that size and structure. Break em up now and don't let them get that big. Don't be afraid to say "NO" to mergers. Does that even happen???


I'm not familiar with the deal (not following it as closely as healthcare for obvious reasons) but if that's the case then YES Republicans would be to blame. As I've said I'd sign on breaking them up now and reinstating Glass Steagal but I don't think you'd get enough from either party to go that route, espeically in an election year with immigration and climate on the back burners ready to move up.

Posted by: visionbrkr | May 5, 2010 11:31 AM | Report abuse

Ezra, I really like Wonkbook but if you want me to read it via email you need to stop masking the outbound links. The way to do this is to ask your tech team to replace:

http://link.email.washingtonpost.com/r/YLCS8G/A2YYE/4AG1IV/BJR4MR/5XSWY/AZ/h

with something like:

http://link.email.washingtonpost.com/?outbound=http://www.nytimes.com/2010/05/04/business/energy-environment/04weed.html

Then I can mouseover and see where you're sending me before I decide to go there. You're targeting a web-savvy audience, no?

Posted by: DaffyDuck2 | May 5, 2010 11:52 AM | Report abuse

Kevin_Willis:

"It's our addiction to energy that has to be addressed more than our addiction to oil. And that's a stickier wicket."

No kidding. Kind of like our addiction to oxygen, thats a pretty sticky wicket too. I don't think the mainstream media has yet grasped that energy=economy. I am hoping Ezra will lead this charge.

Posted by: nathanlindquist | May 5, 2010 12:26 PM | Report abuse

@Patrick_M
"Shareholders and execs are wiped out, the bank dies, and the assets are sold off. This is not a "bailout" in the sense that the balance sheets are cleaned up to make the institution viable and attractive to a new owner. "

The problem with the current package is not the treatment of shareholders, it is the treatment of bold holders. The taxpayer made a lot of bond holders in failed entities whole. The better option is to require any entities that fall in this scope (any entities with access to the Fed) to have convertible bonds, so the bond holders end up with equity and the entity can remain viable since that will wipe away the debts (and massively dilute the shareholders). The best option is reduce the size of these overconnected entities.

Posted by: staticvars | May 5, 2010 3:03 PM | Report abuse

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