FINANCIAL BAILOUT! Most Agree It Has to be Done – But Few Like It!
FINANCIAL BAILOUT! Most Agree It Has to be Done – But Few Like It!
55% OF TAXPAYERS SAY "NO!" TO BAILOUT – LA TIMES/BLOOMBERG POLL – BUT FED PREDICTS "DIRE CONSEQUENCES" IF NOT ENACTED!
Senators and Congressmen don’t like it. Main Street American Taxpayers don’t like it. Even advocates U.S. Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke don’t like it.
But virtually everyone feels not taking action to bail out the troubled U.S. Financial System could have a severe unwanted outcome. Without a bailout plan Bernanke and Paulson predict business or consumers would not be able to borrow money sales will suffer Americans will lose jobs and the economy will not be able to recover normally. The disaster will likely spread globally.
Said Bernanke " The financial markets are in quite fragile condition and I think absent a plan they will get worse."
Bailout legislation with a $700 Billion proposed cap would allow the U.S. Government to buy thousands of bad mortgages from troubled financial institutions with the goal of heading off emergency bailouts of troubled financial firms as it has in the last few weeks. Mortgage giants Fannie Mae and Freddie Mac were taken over by the Fed a few weeks ago.
Bear Stearns and Merrill Lynch have already been acquired by larger banking institutions – Washington Mutual is seeking a buyer. Storied Wall Street icon Lehman Brothers filed for bankruptcy protection. And the government spent billions to rescue AIG – the world’s largest insurer.
In Congress Democrats are pushing for greater aid to troubled homeowners and perhaps another stimulus program to help the economy as well as proper administrative oversight for the program. Republicans don’t like the prospect of federal intervention of this magnitude. All agree there should be some sort of compensation limit for executives who leave troubled financial firms as a result of the credit-market meltdown.
Senator Jim Bunning (R-Kentucky) said of the plan "This massive bailout is not a solution. It is financial socialism and it is un-American."
Democratic Presidential Candidate Barack Obama wants to make sure U.S. Taxpayers are eventually reimbursed for shouldering the bailout burden. Republican Candidate John McCain wants no earmarked spending attached to any bailout bill. Both agree that financial firm executives should not become enriched from the bailout at taxpayers expense.
Out on the streets most Americans respond very negatively to the idea of the government bailing out troubled banks and other financial firms. Public reluctance spreads across party lines and income and other socio-economic factors.
When asked whether the federal government should rescue financial firms whose collapse could have adverse effects on the economy using taxpayer money 55% of respondents to an LA Times/Bloomberg Survey said they did not agree with government funding for a bailout plan. However during subsequent interviews several respondents indicated they would reluctantly accept a bailout plan if Congress decided one was necessary.
A second poll released Tuesday by the Pew Research Center for the People and the Press found that 57% of respondents think the government is doing the right thing by intervening to stabilize the economy.
The difference in the results of the two polls could be due in part to the wording of the questions in each survey.
With the LA Times/Bloomberg poll respondents were asked whether they believed it was "the government’s responsibility to bail out private companies with taxpayers’ dollars." Most responded "No!."
The research by Pew had a different wording in their questions. They asked respondents if "investing billions to try to keep financial institutions and markets secure" was the right thing to do. A majority answered "Yes!."
Many interview responses from the LA Times/Bloomberg poll contained a similar theme. Said Morris Vermeulen 73 a retired housing inspector in Rogers AR "Normally I’d like to keep government out of the economy as much as we can. But somebody’s got to do something. We can’t have a complete financial collapse."
Yet Vermeulen felt that the big Wall Street Financial Firms who may have helped create this financial turmoil and who might benefit from a bailout should be called to task for forcing Congressional aid.
A solid majority – 62% – of respondents to the LA Times/Bloomberg survey indicated insufficient government regulation was partially responsible for the meltdown in the credit markets.
Who to blame? 32% of respondents blamed the large financial companies who acquired troubled mortgage loan portfolios 26% blamed President Bush and his administrations. (As one would assume Democrats tended to blame the administration more often than Republicans did).
The financial crisis has helped push consumer negativity to a record level. Of those surveyed 79% said they thought the country was "on the wrong track" the highest rate ever in an LA Times poll. Asked whether the U.S. was "generally going in the right direction" or "on the wrong track" 79% said "wrong track" and only 13% said "right direction." That exceeded the previous record of 78% who said "wrong track" in June.
As to the economy in general 81% said it was doing badly an increase from the 76% recorded last month and close to the record high of 82% recorded in June. At that time gas prices were skyrocketing with no apparent end in sight.
With their attention focused on the negative impact on the economy from the credit market troubles and with a likely bailout pending 48% said Democrat Barack Obama is more likely to do a better job dealing with the economy compared to 35% suggesting Republican John McCain would better handle the U.S. Economy.
Coverage on the bailout is extensive and rapidly-evolving. Read today’s remarks by Federal Reserve Board Chairman Ben Bernanke to the Congressional Joint Economic Committee via this link to an article and accompanying video in today’s Wall Street Journal by reporters Brian Blackstone and Maya Jackson Randall.
Also read Doyle McManus’s story from today’s Chicago Tribune originally in the Los Angeles Times regarding the LA Times/Bloomberg and Pew Surveys.
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