- The financial rescue plan has become a politicized issue in the hands of lawmakers.
- With political elections looming and disenchantment with Wall Street palpable, politicians can't help but regard the bill with self interests in mind.
- This adds a degree of uncertainty for markets—after all, politicians can tack on provisions that have little to do with the current financial crisis and everything to do with politics.
- Already some concessions have been made to the proposal—and still others are being discussed.
- Still, it's yet unknown what shape or scope the final draft bill will take.
He gets down on his knees and begs for Her Majesty's mercy! But her heart is hard, and does not stir for clemency—for this decree is not to her liking.
No, that wasn't a scene from Elizabeth I; that was the scene Thursday night on Capitol Hill as Treasury Secretary Henry Paulson on bent knee begged House Speaker Nancy Pelosi for enough votes to pass the Troubled Asset Repurchase Program (TARP).
And so it is. Today's US financial fate—if it wasn't already—is now hyper-politicized drama. If it was thought the current financial rescue plan was already political in its inception, it's become a political beast in the hands of lawmakers. Politicians, if nothing else, are predictable in their practices.
Potential Wall Street interests aside, the proposed bill in its original form was crafted with a focus on saving the financial system (and the economy by extension) from meltdown. But with political elections looming and disenchantment with Wall Street among constituents palpable, politicians can't but regard the bill without considering their own political careers. After all, what's a politician without an office?
Lawmakers from both parties are trying to wrangle concessions from the proposed bill, causing a delay in the passage of a purportedly urgent financial salve. The rescue proposal talks failed to reach political agreement as pledged on Thursday and were on shaky ground Friday. This delay adds a degree of uncertainty for markets—after all, politicians may use this time to tack on provisions that have little to do with the current financial crisis and everything to do with politics.
Already some concessions have been made to the proposal, including provisions regarding foreclosure prevention, executive compensation, equity stakes, and oversight boards—and still others are being discussed. Lobbyists and special interests groups are diligently contacting their Congressional representatives. Challengers to incumbents' seats up for re-election are brushing up on their spin. Presidential candidates are leaping into the thicket to presumably showcase leadership skills despite questionable financial expertise. Unfortunately, pandering to public opinion doesn't always mean acting in the interests best befitting the current situation.
Still, it's yet unknown what shape or scope the final draft bill will take. It is encouraging to see so much deliberation and resistance to authorizing a check for $700 billion. Then again, perhaps greater urgency would limit potential damage done by politically motivated add-ons. It's simply too soon to know.
One thing we do know: Had it truly been Elizabeth and not Nancy…they'd all have lost their heads by now.