Treasury Secretary Henry Paulson's announced changes to the $700 financial bailout plan -- to focus on shoring up financial institutions that offer consumer credit rather than purchasing troubled assets -- led all three network newscasts last night, and are featured on the front pages of today's major newspapers. The story is being reported in stark terms: ABC World News referred to "a dramatic change in course"; NBC Nightly News called it "a $700 billion switcheroo"; a "bombshell announcement," said Fox News Special Report. Bloomberg News, meanwhile, reports the Secretary "may encounter resistance from Congress for the remaining $350 billion after using most of the first half to buy bank stakes."
News outlets generally cast Paulson's actions as evidence that the financial crisis is getting worse. The Politico, for example, reports Paulson's "announcement was a public acknowledgment by the administration that the hundreds of billions of dollars spent thus far to buy up complex mortgage-related assets were not solving the economic crisis that their misuse triggered, or helping to lubricate the dried-up credit markets." The New York Times says "administration officials acknowledged that banks and financial institutions were as unwilling as ever to lend to consumers." And the Financial Times said Paulson's decision was "feeding a gathering sense of gloom as investors fled from risk and US equity markets sank to levels approaching their October lows."
That "sense of gloom" appeared to permeate much of the media coverage of Paulson. NBC Nightly News opened its broadcast by noting the change is intended "to try to bolster the economy, which, of course, remains in the midst of deep trouble." ABC World News showed Art Cashin, of UBS Financial Services, saying, "TARP (the Troubled Asset Relief Program) was an illusion. It never really happened. TARP never got off the ground."
CNN The Situation Room reported, "Originally sold to Congress as a way to take troubled assets off banks' books, Paulson today said he changed his mind." The CBS Evening News notes Paulson "insisted he had not misled the Congress." Paulson said in an interview with USA Today, "You need to be able to change strategies as the facts change."
On NBC Nightly News CNBC senior economics reporter Steve Liesman said: "The situation, Paulson says, got measurably worse, so they needed new types of measures to address it." McClatchy reports "the man who shepherded the legislation through Congress, Rep. Barney Frank, D-Mass., was unhappy that the Treasury has moved away from plans to buy mortgage bonds and individual loans in order to prevent foreclosures by modifying the loans."
The Financial Times, on the other hand, is reporting Paulson's decision "was applauded by Republicans and Democrats on Capitol Hill on Wednesday." Sen. Chuck Schumer is quoted saying, "I'm glad to see that Secretary Paulson has finally seen the light." Also positive was the analysis of the Wall Street Journal, which notes Paulson "indicated the government would continue flooding financial institutions with cash, but would also try to increase the availability of student loans, auto loans and credit cards." The Washington Post, meanwhile, said that "notably absent from his list of priorities were the nation's automakers, or any other industry beyond banks and other lenders." The Washington Times, Los Angeles Times and Christian Science Monitor also report on Paulson's move.
Paulson's move split the punditocracy. On MSNBC's 1600 Pennsylvania Avenue, Dylan Ratigan of CNBC said, "The fact of the matter is, the Treasury Secretary...is not inspiring confidence. He is not conducting this business in a transparent way." On Fox News Special Report, Morton Kondracke of Roll Call said, "I think it was the right move because it was so complicated and so time consuming to try to value these assets and try to figure out how to stage an auction or a reverse auction to try to buy them that it was just not going to work." On Fox News Special Report, Mara Liasson of National Public Radio said, "I think the fact that he changed tactics is a good sign." Also on Fox News Special Report, Fred Barnes of the Weekly Standard said, "The market didn't like it."
Oversight Of Bailout Funds "A Mess" In a front-page story titled "Bailout Lacks Oversight Despite Billions Pledged," the Washington Post reports "the Bush administration has" already "committed $290 billion of the $700 billion rescue package." But "for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste." Treasury Department inspector general Eric M. Thorson said, "It's a mess. ... I don't think anyone understands right now how we're going to do proper oversight of this thing."
The CBS Evening News broadcast a similar report last night, in which it said "the public may feel like victims of a bait and switch. The original idea was spend $700 billion tax dollars to buy troubled mortgage-related assets from struggling banks, but the actual bailout calls for nothing of the sort. Instead, your tax dollars are buying massive shares in some of the nation's biggest and most successful banks with virtually no strings attached."
Stocks Down On Paulson News, Earnings The AP reports an "increasingly despondent Wall Street fell for the third straight session Wednesday as investors absorbed another series of dismal corporate reports and news that the government won't buy banks' soured mortgage assets after all." The Dow "shed 411.30, or 4.73 percent, to 8,282.66. It was the lowest close for the Dow since its 5 1/2-year low of 8,175.77 reached on Oct. 27."
The New York Times says stocks "tumbled more than 4 percent on Wednesday as frightened investors wondered how long the economic slowdown would last, how deep it would cut and whether Washington could do anything to stop the bleeding." The Los Angeles Times headlines its story "Stocks Fall Sharply After Paulson Changes Bailout Strategy," and USA Today titles its report "Stocks Tumble Near 2008 Lows On More Grim Economic News." The Wall Street Journal, Washington Post, and Financial Times run similar stories.
Under the headline "A Barack Market," the Wall Street Journal editorializes, "The voters may be full of hope about the looming Obama Presidency, but so far investors aren't. No President-elect in the postwar era has been greeted with a more audible hiss from Wall Street. The Dow has lost 1,342 points, or about 14%, since the election, with the S&P 500 and Nasdaq hitting similar skids."
Treasury Secretary Paulson and the White House on Wednesday offered unfavorable views of proposals to use part of the $700 billion Troubled Asset Relief Program to offer emergency loans to the Big Three US automakers. The Administration's views did not deter President-elect Barack Obama and congressional Democrats, who are readying possible bailout measures for consideration in a lame duck session.
The Washington Post reports the Bush Administration "signaled yesterday that it would reject a proposal by congressional Democrats to immediately advance $25 billion in government loans to ailing Detroit automakers."
The CBS Evening News reported, ""Congress is considering expanding the bailout and using part of the $700 billion package to help the auto industry, but Steve Massocca warns that's just what Japan did in the 1990s." Massocca: "And what resulted from that was this sort of, quote, unquote, zombie economy. You had these zombie companies that were kept alive simply by the fact that the government was able to support them."
The AP reports Treasury Secretary Paulson "called autos a 'critical industry' Wednesday but said a $700 billion financial rescue program wasn't designed for them. The White House was noncommittal, but said it was open to new ideas." The Detroit News reports Paulson said he "would move to open up the auto financing market, saying he favors rewriting the rules overseeing a $25 billion retooling loan program for Detroit's Big Three automakers to speed aid." Roll Call reports Paulson said "that the larger $700 billion bailout package remains focused on the strains facing the financial system and getting lending going again."
White House "Has Not Ruled Anything Out" KPDX-TV Portland, Oregon reported "the White House has not ruled anything out." White House spokeswoman Dana Perino was shown saying, "Chapter 11 exists. If some companies choose to go that route, I'm not here to speak for the auto companies as to what they may or may not do."
Obama To Push For $50 Billion For Automakers Bloomberg News reports President-elect Barack Obama "is pushing Congress this year to approve as much as $50 billion to save cash-starved U.S. automakers and appoint a czar or board to oversee the companies, a move that would require President George W. Bush's support, people familiar with the matter said."
Frank Bill Would Provide $25 Billion In Loans The Detroit Free Press reports Congress will "hold a hearing next Wednesday to consider a $25-billion bailout of Detroit's automakers, calling the chiefs of General Motors Corp., Ford Motor Co., Chrysler LLC and the UAW to testify, Rep. Barney Frank, D-Mass., said today." Frank, chairman of the House Committee on Financial Services, "said he was crafting a bill to provide the industry $25 billion in loans from the second half of the $700-billion set aside for a financial industry bailout."
Sign up here to get the US News Political Bulletin emailed to you each morning at 8 a.m.
The New York Times reports on its front page that "a seven-page questionnaire being sent by the office of President-elect Barack Obama to those seeking cabinet and other high-ranking posts may be the most extensive -- some say invasive -- application ever." It "includes 63 requests for personal and professional records, some covering applicants' spouses and grown children as well, that are forcing job-seekers to rummage from basements to attics, in shoe boxes, diaries and computer archives to document both their achievements and missteps."
The New York Times editorializes, "Modern presidential transitions typically tap the funding clout of lobbyists, corporations and political action committees, which in turn provides a point of leverage for powerful interests to gain an inside track even before an administration is sworn in. So it is significant that President-elect Barack Obama flatly rejected that financial source in laying out initial ethics rules to rein in the lobbying culture of Washington insiders."
Roll Call reported on its website yesterday that "Vice President-elect Biden has asked veteran Congressional and White House staffer Ron Klain to be his chief of staff in the White House, according to Democratic insiders." Klain "served in the same position for former Vice President Gore."
Cheney, Biden To Meet Today ABC World News reported, "Vice President and Mrs. Cheney have invited Vice President-elect and Mrs. Biden to Washington" Thursday. They "will tour the Vice President's home on the Naval Observatory grounds."
The AP reports that according to Cheney spokeswoman Megan Mitchell, "Cheney and his wife, Lynne, have invited Biden and his wife, Jill, to their home at the observatory, the vice presidential residence."
Media reports on yesterday's announcement of transition team leaders for the State, Defense and Treasury Departments note prominently that the appointees are veterans of the Clinton administration. The AP, for example, called it "a team heavy on experience in the Clinton administration" and notes the Obama administration's new rules on service by lobbyists and adds, "The Treasury team leads are Josh Gotbaum, an investment fund adviser who has experience in multiple federal agencies, and Michael Warren, chief operating officer of advisory firm Stonebridge International who was executive director of the President's National Economic Council." At State, "the leads are" Tom Donilon and Wendy Sherman; the Defense team "is being led by John P. White" and Michele Flournoy.
A separate AP story lists the transition leaders announced yesterday, noting that in addition to those above, the agency review co-chairs are Melody Barnes, former "chief counsel to Sen. Edward Kennedy...on the Senate Judiciary Committee." The Wall Street Journal reports the group is filled with second-tier veterans of the Clinton administration and workers in the technology and financial sectors." The Washington Post reports that "policy-oriented Democrats" Barnes, Brown and Gips "will consult with an 11-member agency review working group, also announced yesterday."
The New York Times reports on the appointments under the headline "Clinton Officials To Lead Transition At 3 Departments," while The Politico reports that "Obama's review of the vast federal bureaucracy will be led by past aides to former Vice President Al Gore and Sen. Edward M. Kennedy," but "it will also include lots of former Clintonites." The Politico reports separately that Treasury transition leaders Gotbaum and Warren "bring wide-ranging political connections along with significant experience in economic and financial matters."
McClatchy reports, "While still gloomy, Americans have grown a little more upbeat about the country since last week's election of Barack Obama as the nation's next president, according to a new Ipsos/McClatchy Poll released Wednesday." The poll "found that 32 percent of Americans think that the country's on the right track, still a low number but up 11 points from the dismal 21 percent in early October."
Public Willing To Be Patient On Tax Cuts The AP reports, "People want the tax cuts promised during the presidential campaign, but may be willing to wait while...Obama takes on the larger issue of fixing the economy." The AP notes "eighty percent say trimming personal tax rates should be a goal when the new president takes office in January, but only 36 percent say the cuts should a very top priority, according to a new Associated Press-GfK poll."
Sign up here to get the US News Political Bulletin emailed to you each morning at 8 a.m.
Top
With Republicans reeling from two consecutive cycles of massive losses, the nation's Republican governors are meeting in Miami this week to discuss the Party's future. USA Today says "red-state governors said they could be key to rebuilding." Mississippi Gov. Haley Barbour, a former head of the Republican National Committee, said, "The place where Americans can regain confidence in the Republican Party is where we have Republican governors. We're taking Republican principles and values and applying them to real issues and real life." The New York Times says Republican governors have "traditionally served as a wellspring of new ideas and talent for the party." In a front-page report, the Washington Post says Minnesota Gov. Tim Pawlenty said, "we cannot compete, and prevail, as a majority governing party if we have a significant deficit, as we do, with women, where we have a large deficit with Hispanics, where we have a large deficit with African American voters, where we have a large deficit with people of modest incomes and modest financial circumstances. Those are not factors that make up a formula for success going forward."
The meeting also featured some jockeying for an early lead for the 2012 GOP nod. The New York Daily News says "there was a hint of a chill in the air from" Gov. Sarah Palin's "potential rivals for the 2012 White House race. ... When Pawlenty said, "Drill, baby, drill! by itself is not an energy policy' - referring to the chant that became a staple of Palin's rallies - the target of his tweak was clear. ... When asked if Palin was the best choice McCain could have made for a running mate, no one jumped to answer."
The AP reports this morning that "just as" Alaska Sen. Ted Stevens (R) "appeared ready to take his criminal record back to Congress - perhaps opening a door for Gov. Sarah Palin to replace him -- his re-election bid faltered, and Palin's door perhaps began to close. Democrat Mark Begich, who trailed Stevens by more than 3,200 votes to start the day Wednesday, jumped to an 814-vote lead as state officials resumed counting early and absentee ballots." However, the Anchorage Daily News adds, "The state still needs to count at least 15,000 questioned ballots and an estimated 20,000 absentee ballots that made it to the Division of Elections after election day last Tuesday." The Hill adds that Begich currently holds "a 0.39 percent lead over Stevens," and says that if "the margin between the two candidates is less than 0.5 percent, the state would conduct a recount if one is requested. The state would have 10 days to complete the recount."
The lead change comes just as Palin publicly appeared to show some interest in heading to the Senate, which would be possible if Stevens won reelection and then either resigned or was expelled from the Senate. Asked on CNN's Larry King Live last night about the prospect of running for the seat if it should come open, Palin said, "Now if something shifted dramatically and...if it were acknowledged up there that I could be put to better use for my state in the U.S. Senate, I would certainly consider that but that would take a special election and everything else."
Sign up here to get the US News Political Bulletin emailed to you each morning at 8 a.m.
Top
Jay Leno: "When they move into the White House, Barack Obama's going to be getting a dog for his daughters," but "he's very strict. He said, 'You are going to have to feed it, you are going to have to give it water, and you are going to have to clean up after him. Do you understand that?' And Joe Biden said, 'Yeah.'"
Jay Leno: "Oh, I tell you," the "economy's bad. ... The economy is so bad, Lou Dobbs moved the show to Mexico."
David Letterman: "This is an exciting time in Washington." Barack Obama is "very busy." He is "meeting with his advisors and picking out a cabinet. Meanwhile, John McCain is at Applebee's, blowing on his soup."
Conan O'Brien: "Barack and Michelle Obama are looking for a church in Washington to attend. ... Apparently, the Obamas ask every prospective pastor the same question: 'Have you ever been videotaped screaming, 'God damn America?'"
Sign up here to get the US News Political Bulletin emailed to you each morning at 8 a.m.
Top
Click image for larger view.
Smart analysis, insightful reporting, in-depth perspective—in a new, digital format.
Log in | Buy Now | See sample
View sample page 2View sample page 3View sample page 4View sample page 5advertisement
Get your POLITICALBULLETIN
Click image for larger view.
Smart analysis, insightful reporting, in-depth perspective—in a new, digital format.
Log in | Buy Now | See sample
View sample page 2View sample page 3View sample page 4View sample page 5Embed exclusive U.S. News headlines, rankings, columns, and blog postings to your Web site, blog, or social network.
advertisement
Use of this Web site constitutes acceptance of our Terms and Conditions of Use and Privacy Policy.
