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I don’t really think it will happen, but what if McCain wins? What if this 72 year old man with serious bouts of cancer in his recent history and a legacy of serious additional physical ailments wins the election and this person is our vice president? What has McCain done to our country?

I’m officially speechless. I’m almost tempted to say, “Yes! Delay the vice presidential debate. Otherwise it would be too painful.” – Cy Cobb

DIGG IT

Say what you will about the Palin/Couric interview on CBS, Sarah Palin made history tonight and that must be recognized.

With the release of the interview, Sarah Palin became the first vice presidential candidate to lick themselves on national TV. Yes, folks, she’s reached a level never before contemplated by any vp candidate at any time in the great history of the USA.

I doubt Couric even realizes her part and place in this momentous occasion. Silly woman. Sometimes the visuals count just a little more than the interviewee’s anxious memorization of shallow talking points. Forget content (such as it is), think saliva.

I defy anyone (that means you, Couric) to uncover a single televised vice presidential candidate licking moment in our history.  Go ahead. I dare ya. Oh…..you say “I’ll try to find you some and I’ll bring ‘em to ya”?

Well, ok then. Just let me know.

For those of you who insist on context, here’s the link. It’s only five minutes and forty seconds out of your life. –Cy Cobb

There’s something about this couple. I’ve met them before. Rapid risers who’ve not completely or thoroughly arranged their lives to bear scrutiny. A DUI, an unexpected pregnancy, a vendetta against an ex-brother-in-law, a feud with a mother-in-law, a governor with a husband who takes more than a little interest in how she operates the state. This picture sort of sums it up:

Sarah and Todd Palin are sketchy. Not to be trusted. Up to something. Low brow.

And it’s not just the mysterious lies, half truths, confabulations. It’s not just that the McCain campaign is now running Alaska and all Alaskan press inquiries are now referred to campaign staff. Or that these folks have a mean streak. It’s all of that…and….well, their sketchiness.

When Dick Cheney selected himself as vice president in 1999, he was a known entity. Not a household name, but the man had held government positions since the Nixon Administration. Unfortunately for McCain, the only pubic knowledge about Governor Palin was that she was a first term governor of a wilderness state. More unfortunately for McCain, what folks have learned since her nomination hasn’t helped her or his approval numbers.

Rep. Jim McDermott (D WA) delivers a succinct description of Treasury Secretary Henry Paulson latest bailout plan:

Very amusing.

Setting the stage.

On September 18, 2008, John McCain called for the establishment of an entity like the Resolution Trust Corporation of the 1980s and 1990s.

Presidential candidate Sen. John McCain, R-Ariz., called for the creation of mortgage and financial institutions trust, which would work with the private sector and regulators to identify institutions that are weak and take remedies to strengthen them before they become insolvent. “For troubled institutions, this will provide an orderly process through which to identify bad loans and eventually sell them,” McCain said in a speech.

Let’s Do the Time Warp Again….

What was the RTC? From Wikipedia:

The Resolution Trust Corporation (RTC) was a United States Government-owned asset management company charged with liquidating assets (primarily real estate-related assets, including mortgage loans) that had been assets of savings and loan associations (S&Ls) declared insolvent by the Office of Thrift Supervision, as a consequence of the savings and loan crisis of the 1980s. It also took over the insurance functions of the former Federal Home Loan Bank Board. It was created by the Financial Institutions Reform Recovery and Enforcement Act (FIRREA), adopted in 1989. In 1995, its duties were transferred to the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation.

Between 1989 and mid-1995, the Resolution Trust Corporation closed or otherwise resolved 747 thrifts with total assets of $394 billion. [1]

And what did it cost the taxpayers? According to the FDIC (pdf), plenty. A short summary is available here:

How much did the RTC cleanup cost the taxpayer?

According to analysis by the FDIC, the total amount incurred by the taxpayer came to $75.6 billion, while the private sector absorbed just $7.1 billion. The taxpayer covered more than 90% of the cost of the bailout. The FSLIC also accumulated losses. The total tab to the taxpayer as of 1999 came out to $123 billion, or about 81% of the total costs.

Moreover, the situation today is far, far different than that of 1989. According to Sebastian Mallaby in an Op-Ed in today’s Washington Post,

the RTC, which was created in 1989 to clean up the wreckage of the savings-and-loan crisis, bears little resemblance to what is being contemplated now. The RTC collected and eventually sold off loans made by thrifts that had gone bust. The administration proposes to buy up bad loans before the lenders go bust. This difference raises several questions.

The differences, according to Mallaby, are vast enough to defeat the use of an RTC like entity to save Wall Street’s ass.

In the 1980s, the government did not need a strategy to decide which bad loans to take over; it dealt with anything that fell into its lap as a result of a thrift bankruptcy. But under the current proposal, the government would go out and shop for bad loans. These come in all shapes and sizes, so the government would have to judge what type of loans it wants. They are illiquid, so it’s hard to know how to value them. Bad loans are weighing down the financial system precisely because private-sector experts can’t determine their worth. The government would have no better handle on the problem.

In practice this means the government would make subjective choices about which bad loans to buy, and it would pay more than fair value. Billions in taxpayer money would be transferred to the shareholders and creditors of banks, and the banks from which the government bought most loans would be subsidized more than their rivals. If the government bought the most from the sickest institutions, it would be slowing the healthy process in which strong players buy up the weak, delaying an eventual recovery. The haggling over which banks got to unload the most would drag on for months. So the hope that this “systematic” plan can be a near-term substitute for ad hoc AIG-style bailouts is illusory.

And, according to an article from the Wall Street Journal online:

The RTC seemed controversial and ambitious at the time. Any analog today would be even more complex. The RTC dispensed mostly of commercial real estate. Today’s troubled assets are complex debt securities — many of which include pieces of other instruments, which in turn include pieces of others, many steps removed from the actual mortgages or consumer loans on which they are based. Unraveling these strands will be tedious and getting at the underlying collateral, difficult.

There were other problems with the RTC at the time, which, although tempered by oversight and accountability not yet present in the current bailout structure, ran out of money as Republicans in Congress used the situation to stick it to the newly elected President Clinton:

Resolution Trust ran out of money in late 1990 and only after several unsuccessful attempts did Congress approve more money in March 1991. The delay cost several hundred million dollars in extra losses at savings and loans in Government hands.

The defeat of the House bill highlights the lawmakers’ independence from their leadership. Representative Robert H. Michel, Republican of Illinois and minority leader, actively supported the bill but was unable to contain a large group of House Republicans who are ideologically opposed to the tight regulations on savings and loans and who are eager to watch House Democrats squirm on any vote concerning financial institutions.

So McCain must happily roll in the bed his mouth made for him earlier this week as the Fed will play the RTC card in urging Congress to ride to the rescue. And although Sen. Chis Dodd has said there’s no time to set up an RTC like entity, some of the folks on the left, like Barney Frank and Paul Volcker have supported the idea.

Given the complexity of the underlying financial problems today and the nature of the debt involved, an RTC solution is too little, too late, and too expensive. Given the chance to propose a solution, McCain went to the taxpayer well once again, calling on the American public to save Wall Street’s sorry ass from the excesses deregulators like McCain encouraged.

Senator Obama needs to get in front of this to tell the public that such a tiny slap on the wrist for the banks that got us into this mess at taxpayers expense won’t work and only encourages bad behavior in the future. He needs to call for a solution that helps Wall Street and homeowners and do it even if it looks like Paulson’s proposal will pass. Because the Fed proposal, John McCain’s proposal does nothing to help the American taxpayer and everything to help banks.

An RTC type solution is the natural consequence of vast, GOP-fueled deregulation and the first place politicians like McCain want to go in order to make the taxpayers pay for his cronies’ mistakes.

I predict that McCain will play this big this week, setting the stage for a faux economic populist message to be delivered at the first debate. Obama needs to get ahead of this and do it soon.

UPDATE: And lo and behold, Obama makes a great first move on the topic.

Here’s video of Obama’s speech today. It doesn’t deal specifically with the RTC idea, but if such a program is guided by the principles outlined in Obama’s speech, it’s a more sustainable solution. Obama’s call for international participation gives me hope that if an entity along the lines of the RTC is created, it’s not resurrected from the whole cloth of the old agency.