Legal Commentary

The Political Value Of "Temporary Takeovers"

By Big Tent Democrat

Writing about the political difficulty of "nationalization," Matt Yglesias glosses over the fact that the Obama/Geithner plan of free bailouts is a complete nonstarter politically. Matt writes:

Nationalizing banks would mean nationalizing the banks’ losses. That would cost a ton of money. Money that congress would need to authorize. If I were a member of congress, I would gladly vote to appropriate the funds. But would the actual members of congress? You can see where doubts might creep in.

Temporary takeovers are supported by the American People by 2-1 over more free bailouts. TARP was it. There will be no more. In fact, temporary takeovers are fast becoming the only viable solution politically. More. . .

At this point, temporary takeovers have been spoken of favorably from serious people (Krugman, Roubini, Stiglitz, etc.) and "Serious People" that run the gamut - from Greenspan to Jim Baker to Lindsey Graham to John McCain to Richard Shelby and we have not even gotten to the "progressives" yet.

It seems to me that too many like Yglesias seem to be caught in a field of Obama respect on this issue - they assume Obama knows best on this now politically and that he is acting as he is because of "political constraints." It is now time to consider whether Obama is simply getting bad advice on policy (from Geithner and Summers) or bad political advice (from Axelrod, etc.)

No one seems to be dealing with this political reality - if Obama fails on the financial crisis - everything else will fail politically as well. This "smallball" political analysis really misses the stakes on this one - both for the economy and for the Democratic Party. This crisis Obama and the Dems are gonna own politically. They should do what makes sense politically - push for the absolute best policy they can muster. They are not doing that now. It is a huge mistake.

Speaking for me only

Full post as published by TalkLeft on March 09, 2009 (boomark / email).