Minute by minute, hour by hour, the debate rages in Washington.
Most agree the $700 Billion Financial Bailout proposal forwarded by U.S. Secretary Henry Paulson and Fed Chairman Ben Bernanke, will soon become law.
Those in the street here in Chicago are confused, but reluctantly agree with the need for a bailout. Few Real Estate Practitioners we have spoken with, either on the selling side, the legal side, or the lending side, see a quick fix, however.
Secretary Paulson, Chairman Bernanke, and others in the Bush Admistraiton predict disaster should the bailout plan not move forward. Said Bernanke, " The financial markets are in quite fragile condition, and I think absent a plan they will get worse."
As we know by now, bailout legislation would allow the U.S. Government to buy millions of dollars in 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.
But what say the people?
Most Americans respond very negatively to the idea of the government bailing out troubled banks and other financial firms. Public reluctance crosses party lines.
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 the Bush Administration. (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.
Which Presidential Candidate would do a better job with the U.S. Economy in light of the current economic climate and pending bailout?
The LA Times/Bloomberg Survey gives the edge to Democrat Barack Obama. Of those questioned, 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.
This survey included 1,428 adults, of which 1,287 were registered to vote, and was conducted via phone last Friday through Monday, September 22nd. The margin of error is 3% - higher for smaller sub-segments interviewed.
See our post on BlogChicagoHomes.com today for more info, as well as links to ongoing coverage in the Wall Street Journal and the Los Angeles Times, from reporters Brian Blackstone and Maya Jackson Randall (in The Journal), and Doyle McManus (in The Times, and reprinted in the Chicago Tribune).
DEAN & DEAN'S TEAM CHICAGO
