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Let Boehner Write It, or Have the Fed Go Solo

By Matt Cooper

Well, the blame game has begun. Republican House leaders blamed the partisan House-floor speech of Speaker Nancy Pelosi for the bill's defeat. As John McCain would say, "Oh, please." It's absurd to think that Republicans, as Barney Frank noted, voted against the country because their feeling were hurt.

The bottom line is that 2/3 of House Republicans did not back the bill that their leadership was for, that their president was for, and their presidential nominee was for. They balked, maybe for good reason and admirable stubborness. And they did it despite the pleas of the entire business lobby in Washington, and the likes of Joe Nocera and Steve Pearlstein, and financial columnists who begged the passage of this measure.

So now what? It seems to me that the best thing is to let the House Republicans write the next bill. Let Minority Leader John Boehner and company write it. Hank Paulson's taken his shot. The Dems have put forward their suggestions. Now let's try the House G.O.P. plan. No one thinks their insurance scheme will work but they might as well have their day in the sun.

I don't see what other legislative solution comes out of this mess except for this possibility: The Fed buys the assets. Is it possible that the Fed could do extra-legislatively what the Congress could not? It seems to me that the Fed could start to do a version of the Bear deal--replace crummy assets with Treasuries.

Matt Cooper

Related Links
Six Paths to (Possible) Bailout Success
Incentives for Inflation
America's Ad Hoc Fiscal and Monetary Policy

Full post as published by Portfolio.com: Capital on September 29, 2008 (boomark / email).