Having Your Cake And Throwing It At The President, Too

Gotta love Republicans.

What is at least a little surprising, though, is seeing some of the same Republicans who rejected the package issue press releases touting the spending measures in their districts.

Rep. John Mica was gushing after the House of Representatives voted Friday to pass the big stimulus plan.

"I applaud President Obama's recognition that high-speed rail should be part of America's future," the Florida Republican beamed in a press release.

Yet Mica had just joined every other GOP House member in voting against the $787.2 billion economic recovery plan.... Mica wasn't alone in touting what he saw as the bill's virtues.

To be fair, it's hard to say just how common this was yesterday; the McClatchy article only points to a couple of examples of the GOP hypocrisy.

But it's nevertheless amusing. In Mica's press release about the stimulus package, for example, he not only applauded the spending for his district, he neglected to mention altogether that he opposed the bill. Rep. Don Young (R-Alaska), who also issued a press release claiming "victory" for an Alaskan contracting program in the bill, also failed to mention that he voted against the measure that he's so excited about.

Yep, that's right...Republicans in the House taking credit for the stimulus bill they unanimously rejected.

How stupid do they think the American people are?

[UPDATE] This anti-reality denial mindset extends to the Senate as well, where Arlen Specter whines his GOP buddies really, really wanted to support it, they just couldn't vote for it because they're just too darn scared of the Wingnut Attack Squad Anti-Traitor Elite Unit Team Go! I believe him. The GOP hasn't changed a bit. Rush and Malkin are still in charge.

Yeah, this is a political party I want to join, where the frothing nutjobs with microphones swearing revenge and pain and lasers are in fact running our public policy.

The Swedish Solution

Nouriel Roubini and fellow NYU professor Matthew Richardson take to the WaPo to push for Plan N. The details:

Nationalization -- call it "receivership" if that sounds more palatable -- won't be easy, but here is a set of principles for the government to go by:

First -- and this is by far the toughest step -- determine which banks are insolvent. Geithner's stress test would be helpful here. The government should start with the big banks that have outside debt, and it should determine which are solvent and which aren't in one fell swoop, to avoid panic. Otherwise, bringing down one big bank will start an immediate run on the equity and long-term debt of the others. It will be a rough ride, but the regulators must stay strong.

Second, immediately nationalize insolvent institutions. The equity holders will be wiped out, and long-term debt holders will have claims only after the depositors and other short-term creditors are paid off.

Third, once an institution is taken over, separate its assets into good ones and bad ones. The bad assets would be valued at current (albeit depressed) values. Again, as in Geithner's plan, private capital could purchase a fraction of those bad assets. As for the good assets, they would go private again, either through an IPO or a sale to a strategic buyer.

The proceeds from both these bad and good assets would first go to depositors and then to debt-holders, with some possible sharing with the government to cover administrative costs. If the depositors are paid off in full, then the government actually breaks even.

Fourth, merge all the remaining bad assets into one enterprise. The assets could be held to maturity or eventually sold off with the gains and risks accruing to the taxpayers.

The eventual outcome would be a healthy financial system with many new banks capitalized by good assets. Insolvent, too-big-to-fail banks would be broken up into smaller pieces less likely to threaten the whole financial system. Regulatory reforms would also be instituted to reduce the chances of costly future crises.

The more I see about Plan N, the more I believe Geithner and Obama will have no choice but to go this route. Yes, it includes the dreaded "bad bank" there as step 4, but remember, the main problem of "bad bank" is the quandary that there's no price that can be paid for these toxic assets that both keeps the insolvent banks afloat and isn't a complete waste of taxpayer money. If you nationalize the insolvent banks beforehand, the moral hazard of the first half of the unsolvable "bad bank" equation vanishes, and you only then have to worry about getting the taxpayers a good deal, which is much easier.

Of course, "good deal" in this case is relative. They're still crap and will remain crap for a long time.

Still, this is the clearest argument yet for Plan N, how it would be executed, and why it should be so (read the whole thing).

Ironically the main argument I'm seeing against Plan N is not the argument you'd expect. People are yelling that nationalization is evil, that it's fundamentally against the free market and all that. That argument is dead and buried after the multiple wave of taxpayer bailouts are now the only thing keeping these zombie banks going. They are already effectively nationalized and would be gone without the bailout billions, period. There's no argument against that.

Rather, again, it's the political argument, as I've said. Obama can't nationalize the banks because of the political backlash. But eventually, the political backlash of the failure of the economic system in this country will exceed that of Plan N, and when that happens, he has no choice.

The argument then becomes when he'll do it.

Al Versus Norm, Part 275

The Senate Race That Will Not End came much, much closer to actually ending this week with a major ruling against Norm Coleman.

The Minnesota election court has just handed down a very important ruling that will determine the entire course of the rest of this trial -- and it's very bad news for Norm Coleman, cutting off multiple avenues he was pursuing in order to get more votes for himself thrown into the count.

Yesterday the court heard arguments regarding the campaigns' positions on 19 categories of rejected absentee ballot envelopes, and whether the voters should be cut sufficient slack as to allow the ballot in. The court has now handed down a ruling on 13 of those categories -- and it's an emphatic No.

Coleman has currently been allowed to argue for the inclusion of about 4,800 ballots, which were selected from the total pool of over 11,000 rejected votes and just so happen to come largely from his own strongholds. What this ruling means is that he is going to have to significantly chop that list down for the remainder of this trial.

This is not the final word on this question -- Coleman will almost certainly appeal it -- but it's been a very rough day.

When Coleman finally runs out of avenues for his bullshit arguments and has to take it to the Supremes, I hope they tell him "Sorry, this is a state matter. You lose, sir. Good day."

This Week's Busted Banks

If it's Saturday morning, it's time to check to see how many banks the FDIC put under last night, and the answer this week is four.

Banks in Florida, Illinois, Nebraska and Oregon were shut by state regulators, boosting the toll of failed institutions to 13, as a worsening economy and slumping housing market pushes home foreclosures to records.

Riverside Bank of the Gulf Coast in Cape Coral, Florida; Sherman County Bank in Loup City, Nebraska; Corn Belt Bank and Trust Co. of Pittsfield, Illinois; and Pinnacle Bank of Beaverton, Oregon were closed by state regulators yesterday. The Federal Deposit Insurance Corp. was named receiver.

TIB Bank of Naples, Florida, will buy Riverside’s $424 million in deposits, except $142.6 million in brokered deposits, for a 1.3 percent premium. Heritage Bank of Wood River, Nebraska, will pay a 6 percent premium for Sherman County’s $85.1 million in deposits. Carlinville National Bank of Carlinville, Illinois, will assume Corn Belt’s $234.4 million deposits for a 1.75 percent premium. Washington Trust Bank of Spokane, Washington, assumed Pinnacle’s $64 million of deposits, the FDIC said.

Regulators seized six banks in January, the highest monthly toll since 1993. State and federal agencies shuttered 25 banks last year, matching the combined total for 2001-2007, as home foreclosures soared and bank profits tumbled.

That last paragraph should scare the ever-loving snot out of every American who has a bank account.

From 2001-2007, the FDIC closed one bank on average roughly every 102 days. That's normal, baseline stuff.

In 2008 the FDIC closed one bank on average every 15 days, almost 7 times the going rate.

In 44 days through 2009 so far the FDIC has closed one bank on average every three and a half days. That's thirty times as many bank closings as just a few years ago. Thirty times. We're on pace to close 108 banks alone just this year.

We've gone from closing 3 banks a year to closing 3 banks a week recently. The pace is accelerating at an alarming rate.

Obama will have no choice but to nationalize the industry. Dozens, maybe hundreds of banks are zombies. They will not make it. They are insolvent, people. The industry is insolvent. The financial system is insolvent.

The country is insolvent.

StupidiNews, Weekend Edition

• Venezuela has kicked out a Spanish EU diplomat over describing Hugo Chavez as a "dictator".
• Blackwater has renamed itself "Xe" in an effort to rebrand after Iraqi deaths.
• Another wave of violence rocks Iraq as a third straight day of attacks kills dozens.
• The Donald says "You're fired!" to himself as he resigns ahead of Trump Entertainment's possible bankruptcy.
• Researchers may have broken the terabit data transmission barrier with photon technology.