Bailout Package Almost Finished?

| Sun Sep. 28, 2008 2:24 AM EDT

BAILOUT PACKAGE ALMOST FINISHED?....The Wall Street Journal reports exclusively tonight that there was a "delivery of food from sandwich shop Cosi to Ms. Pelosi's office just before 8 p.m. EDT." Exciting!

On a more substantive note, I'm trying to figure out if there's any Republican position at all regarding the financial crisis and what to do about it. John Boehner says he's against the Paulson bailout but has steadfastly refused to offer an alternative. Richard Shelby refuses to even acknowledge that a bill is being negotiated. Eric Cantor has offered an actual policy proposal, but as near as I can tell it's one of those weird movement conservative things that doesn't even begin to make sense. It's billed as an insurance scheme to rescue an insolvent banking system, but I gather (?) that what he wants to do is assess fees on the very firms that are insolvent in order to set up an insurance pool that allows them to bail themselves out. Huh? This sounds like a bunch of skydivers forming a circle and thinking they can all pull each other up. I think you'd need M.C. Escher to illustrate it.

Despite all this, Politico reports that a verbal agreement among lawmakers has finally been reached and just needs to be "committed to paper":

The plan would likely give Paulson a relatively free hand accessing the first $350 billion of the $700 billion he sought. It was not clear when the remaining $350 billion would become available, but Treasury apparently agreed that a future Congress could block its release though a joint resolution signed by the president.

The agreement would also include much greater oversight than the Bush administration had initially proposed; an opportunity for the government to take an equity share in the companies it helps, either through warrants or options to buy stock; and a provision limiting the compensation paid to executives of those companies.

This sounds good, especially the equity share language. Unlike some of the bells and whistles that both sides have been trying to festoon on the bill, this one really does seem like a must-have. If it's structured right, it ensures that taxpayers are protected against losses due to overpaying for toxic mortgage securities and guarantees that the eventual cost of the bailout will be far, far less than the nominal $700 billion price tag.

Supposedly, this deal will get substantial support from House Republicans, though it doesn't really seem to be any different from the language that was being discussed a couple of days ago. Apparently it includes Cantor's insurance scheme, but only for future use and only on a voluntary basis — though this part is murky. It sounds like a fig leaf to me, but if that's what it takes to get them on board, I guess that's fine.

And what if they're not on board? Assuming that the rest of the oversight/comp/equity language is reasonable, Obama should support it and Democrats should stand up and pass it regardless. Yeah, it's a drag having to clean up Republican messes, but you know what? We'd better get used to it. This is just the first of many.

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