2008 Bailouts Delayed?

What if the infamous bank bailous of 2008 were delayed? Basically, Bush and the Repubs couldn't get their act together and it was up to the Obama Administration? Would they do it differently? Would they get the FDIC and SEC on the banks?
 
I'll repeat what I have posted here before:

Remember that at first the House rejected the bailout bill--*then the Dow lost 777 points in one day.* http://www.cnbc.com/id/26945972 After that, there was no doubt it would pass. If they rejected it a second time the market would go down still further until the bill did pass.

I once compared the situation with Trotsky's justification for initially opposing Brest-Litovsk. True, he said, doing so led to Germany driving deeper into Russia and making the terms of peace even harsher. But it was necessary to reject it at first just to show the Russian people how disastrous rejection would be and how helpless Russia would be if it stayed in the war; without this demonstration the Bolsheviks would have been denounced as German agents. (Actually, Lenin and his party *had* gotten money from the Germans, but that's another story.) In September 2008, tanking stocks had the same effect German tanks had in 1918: they showed that resistance was futile.

One reason the bailout was inevitable is that hatred of banks and Wall Street and bailouts was *not* the predominant popular emotion in September 2008. That mostly came later, after the situation had stabilized somewhat. In September 2008 the predominant public emotion was simply *fear.*
 
I'll repeat what I have posted here before:

Remember that at first the House rejected the bailout bill--*then the Dow lost 777 points in one day.* http://www.cnbc.com/id/26945972 After that, there was no doubt it would pass. If they rejected it a second time the market would go down still further until the bill did pass.

I once compared the situation with Trotsky's justification for initially opposing Brest-Litovsk. True, he said, doing so led to Germany driving deeper into Russia and making the terms of peace even harsher. But it was necessary to reject it at first just to show the Russian people how disastrous rejection would be and how helpless Russia would be if it stayed in the war; without this demonstration the Bolsheviks would have been denounced as German agents. (Actually, Lenin and his party *had* gotten money from the Germans, but that's another story.) In September 2008, tanking stocks had the same effect German tanks had in 1918: they showed that resistance was futile.

One reason the bailout was inevitable is that hatred of banks and Wall Street and bailouts was *not* the predominant popular emotion in September 2008. That mostly came later, after the situation had stabilized somewhat. In September 2008 the predominant public emotion was simply *fear.*

I'm not saying it never happens. I'm just asking how long could the bailouts or whatever the solution was could be delayed by or would waiting longer be complete and utterly bedlam? Something would've happened yes, but the details could have different impacts.
 
Iceland prosecuted the bankers and bailed out the depositors. Their unemployment rate peaked at 6.4%. The US threw trillions at the fat cats and experienced unemployment north of 10%.

The Dow was still over 10,000 after the 777-point drop. It fell an additional 3500 points over the next six months after the bailout finally passed.

The bailout was just a heist by fat cats.
 
I'm not saying it never happens. I'm just asking how long could the bailouts or whatever the solution was could be delayed by or would waiting longer be complete and utterly bedlam? Something would've happened yes, but the details could have different impacts.

And the point of his post was that we saw complete and utter bedlam, which is why delays came to an abrupt end after the first attempt failed in the House. Nobody was willing to test things any further after that. What you might want would be a POD to make banking industry collapse faster, rather than slow down Congress any more.
 
And the point of his post was that we saw complete and utter bedlam, which is why delays came to an abrupt end after the first attempt failed in the House. Nobody was willing to test things any further after that. What you might want would be a POD to make banking industry collapse faster, rather than slow down Congress any more.

That's not what I as wondering. However, what if then the US prosecuted the banks then? Say one of the senators instead proposed a bill to have the FDIC, SEC, FBI and whoever go in to investigate this madness to stop it and pretty much forced the Senate and then the House's hand on the issue.
 
That's not what I as wondering. However, what if then the US prosecuted the banks then? Say one of the senators instead proposed a bill to have the FDIC, SEC, FBI and whoever go in to investigate this madness to stop it and pretty much forced the Senate and then the House's hand on the issue.

The Senate would vote down such a bill in a landslide. The Democrats had only a one-vote majority, and Chris Dodd, to name one, was a major friend of the banks. There were, of course, many, many others, including large chunks of Obama's campaign and Cabinet. The critical mass to get such things through Congress wasn't there, and didn't emerge under Obama.

Likewise, there would have been very few prosecutors or regulators who would have gone along with such a hard line, seeing how most of the regulators would have aspired to work in the private sector in the future, and many prosecutors would have to work with, and maintain relations with, private sector actors to do their job. Obama's first Attorney General took on big banks as clients both before and after his stint at the DOJ. They literally kept his office reserved for him while he was with the Administration, in anticipation of his coming back to work with Goldman et al.
 
The Senate would vote down such a bill in a landslide. The Democrats had only a one-vote majority, and Chris Dodd, to name one, was a major friend of the banks. There were, of course, many, many others, including large chunks of Obama's campaign and Cabinet. The critical mass to get such things through Congress wasn't there, and didn't emerge under Obama.

Likewise, there would have been very few prosecutors or regulators who would have gone along with such a hard line, seeing how most of the regulators would have aspired to work in the private sector in the future, and many prosecutors would have to work with, and maintain relations with, private sector actors to do their job. Obama's first Attorney General took on big banks as clients both before and after his stint at the DOJ. They literally kept his office reserved for him while he was with the Administration, in anticipation of his coming back to work with Goldman et al.

I am asking this because I am planning a timeline in the future that would involve this and circumsrances would lead to potentially different attitudes and opinions... but I won't divulge too much info on that.

Would there be a way to sneak in legislature past the bank-allies by exploting their desperation or something?
 
I am asking this because I am planning a timeline in the future that would involve this and circumsrances would lead to potentially different attitudes and opinions... but I won't divulge too much info on that.

Would there be a way to sneak in legislature past the bank-allies by exploting their desperation or something?

Maybe, but it would require the chicanery be performed by the administrative state. Which is to say, the Bush Administration. So, really, you need to wait for a Democratic President to envision anything truly radical.

That said, there would still have been time and opportunities for a new Administration to do more. You just need a more radical Democrat than Obama or Hillary Clinton. Not Bernie Sanders, who'd just arrived to the Senate. You'll probably have to pull a Dennis Kucinich or someone like that from the fringes into prominence. Now, this'll probably take a lot of time and research on your part, but good timelines are worth that, and I'm quite sure it'd be something original should it happen.
 
Maybe, but it would require the chicanery be performed by the administrative state. Which is to say, the Bush Administration. So, really, you need to wait for a Democratic President to envision anything truly radical.

That said, there would still have been time and opportunities for a new Administration to do more. You just need a more radical Democrat than Obama or Hillary Clinton. Not Bernie Sanders, who'd just arrived to the Senate. You'll probably have to pull a Dennis Kucinich or someone like that from the fringes into prominence. Now, this'll probably take a lot of time and research on your part, but good timelines are worth that, and I'm quite sure it'd be something original should it happen.

All right, I'll spill my hand, since I would need help with this. It's a no 9/11 timeline and the greater prominence of white collar crimes like Enron has an impact. Bush is president in 2008 possibly, but ai't doing too good. For a president, I'm thinking Howard Dean for 2008 though Dennis Kucinich could work too.
 
All right, I'll spill my hand, since I would need help with this. It's a no 9/11 timeline and the greater prominence of white collar crimes like Enron has an impact. Bush is president in 2008 possibly, but ai't doing too good. For a president, I'm thinking Howard Dean for 2008 though Dennis Kucinich could work too.

Well, that could change a lot of calculations. Assuming we don't invade Iraq, that certainly takes the air out of Obama's balloon. And it gives me a better idea.

Now, Howard Dean's reputation as a strong liberal is, much like Obama's built more on his opposition to the Iraq War rather than the rest of his record. He was a pretty centrist Governor of Vermont. Dennis Kucinich is leftist enough to get what you want, but getting him the stature to be nominated for President would take a ton of work. But if you're doing no 9/11, then that could butterfly the plane crash that killed Minnesota Senator Paul Wellstone. That doesn't get rid of the guy's multiple sclerosis, and I'm not sure quite how well he coped with that, but this was a guy who got arrested in 1970 and 1984 for his activism, the second time being a protest against foreclosure procedures. So that's probably the best you can find without turning American politics into something unrecognizable.
 
Iceland prosecuted the bankers and bailed out the depositors. Their unemployment rate peaked at 6.4%. The US threw trillions at the fat cats and experienced unemployment north of 10%.

The Dow was still over 10,000 after the 777-point drop. It fell an additional 3500 points over the next six months after the bailout finally passed.

The bailout was just a heist by fat cats.

(1) Although this is not really relevant to the question I was addressing--"were the bailouts inevitable?"--your figures about Iceland are different from those I have seen: "A steep economic contraction followed the financial crisis of 2008, and the domestic labour market was not spared the effects of it: unemployment as registered by the Directorate of Labour (DoL) rose by 8.2 percentage points from Q1/2008 to Q1/2010, peaking at 9.2%. Unemployment as measured by the Statistics Iceland labour market survey rose by 5.4 percentage points over the same period, to 7.7% (see Section VI for a discussion of the difference between the two measures)." https://www.cb.is/library/Skraarsafn---EN/Monetary-Bulletin/2012/November/pdf-boxex/2012.4_VI-1.pdf

https://fred.stlouisfed.org/series/LMUNRRTTISA156S shows registered unemployment as having jumped from 1.0% (!) in 2007 to 8.1% in 2010. (Those are yearly *averages* so that is consistent with registered unemployment reaching 9.2% sometime during that year. )

So even if unemployment peaked at a lower rate in Iceland than in the US, it had been so low in 2007 that the *increase* in rates may have been greater.

(2) In any event, if the bailout had failed again and the market had gone down another 700 points in a day, it is not likely that members of Congress would have thought, "Well, it might go down a few thousand points in the next few months whether we pass this bill or not." They would be far more likely to pass it, on the theory that at least they would have done *something.*

I am not taking a position on whether the bailout was a good thing or not--only that it was inevitable, especially since the initial failure to pass it was blamed (rightly or wrongly) on what seemed an incredibly petty reason--House Republicans being disgruntled by a partisan speech by Nancy Pelosi! http://www.cnn.com/2008/POLITICS/09/29/bailout.fallout/ Once that perception got out, the Republicans had little choice but to support the bill--"you would let the economy tank because Pelosi hurt your feelings?"

(Please remember that your view--or mine--of whether a bill was good policy has very little to do with the question of how likely it was to pass.)
 
For this to happen, you need Mike Huckabee to be the Republican candidate. He was one of the "jail everyone" types in early 2009 and resented TARP, at the time of its signing, and in the future. He would have come out swinging against it, and would have made it a litmus test for House Republicans. Only 24, I think, ended up voting for it, but Huckabee probably would have dropped that further and probably could have pulled some TARP friendly Republican Senators along with him.

Obama and McCain agreed on TARP, and that made it more or less a free vote. But if it had Presidential impacts, with Obama being accused of helping Democrat donors on Wall Street (and there were a TON of them in 2008, something that is often forgotten) by Huckabee during the campaign, the dynamic changes.
 
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