Bad News For The Bailout

Consider these passages from Forbes' coverage of the bailout:

Sen. Sherrod Brown, D-Ohio, says his office has gotten "close to zero" calls in support of the $700 billion plan proposed by the administration. He doubts it'll happen immediately either. "I don't think it has to be a week" he says. "If we do it right, then we need to take as long as it needs."

Sherrod Brown is not what you would call a conservative Democrat and when Ohio residents (a key battleground) are not sold on the idea of a bailout, maybe it is time for Congress to really think long and hard about whether a bailout is needed and on what terms.

This one should rock you back:

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

Wow. If it wants to see a bailout bill passed soon, the administration's going to have to come up with some hard answers to hard questions. Public support for it already seems to be waning. According to a Rasmussen Reports poll released Tuesday, 44% of those surveyed oppose the administration's plan, up from 37% Monday.

What, the number is not based on any data--color me shocked!!!

Wonder why the public support for the bailout is waning? Because of some of the underlying news.

1. The FDIC has stepped in to prevent banks from failing or to minimize the damage from failing banks--see Washington Mutual and Wachovia. People are not worried about the security of their money, which was one of the leading causes of the great depression, that is a run on banks when depositors lost their confidence. Is Wall Street nervous? Clearly, but I don't think Main Street is.

2. The causes of the failures around the country are being viewed by average Americans as a failure of big companies putting too much into risky investments. Whether you think so or not, most Americans understand the concept of risky investments and really don't feel much sympathy for trading houses and banks who fail because of risky investments.

3. We are too close in time to a previous legislative debacle, i.e. the PATRIOT Act for people to forget that when Congress passes something very large, very complex in a very short period of time, it is almost always a disaster early on. Fool me once shame on you, fool me twice, shame on me.

4. The American public assumes Congress is going to screw it up and thus they would rather Congress not act.