Where are we now?

+ Reports off the Hill say that a deal is done. $700B total, greater Con­gres­sional over­sight, restric­tions on exec­u­tive pay, no bank­ruptcy law changes, no money for afford­able hous­ing, the (use­less) House GOP insur­ance pro­posal stays in but only as an option, and, most impor­tantly, the gov­ern­ment gets equity war­rants in case the toxic assets really are as bad as every­one fears. Obama and McCain are both on board.

+ Paul Krug­man and Brad DeLong are now openly favor­ing Swedish-​style nation­al­iza­tion instead of the Paul­son plan–which, for the record, Yves Smith has been push­ing since the begin­ning–even though Krug­man, at least, rec­og­nizes that a nation­al­iza­tion plan is polit­i­cal poison until at least after the election.

+ House GOP aides and their syco­phan­tic know-​nothing cheer­lead­ers are pleased with them­selves for having put a wrench in the works mid-​week to make the bill more “free-market friendly” (they are think­ing of their insur­ance pro­posal), but mean­while a more real­is­tic appraisal (also from a GOP aide) tells it like it is:

1) This is, essen­tially, the same bill. Total deal is $700b, which Paul­son or next Trea­sury Sec­re­tary can spend the first $250b even if he believes unnec­es­sary. He/She can spend second $450b if thought nec­es­sary. A new bill isn’t passed with veto proof majori­ties to repeal it. This is sub­stan­tively iden­ti­cal to the orig­i­nal Paul­son plan. Con­gress always had the power to repeal some or all of the author­ity if it has veto proof majorities.

2) As for Acorn and bank­ruptcy, they were never in the bill. Dodd/Frank tried to push those in mid/week, they weren’t in the plan already rejected by con­ser­v­a­tives on Monday. Even Obama con­ceded that those pro­vi­sions would come out. They were simply a red her­ring, used for extra bar­gain­ing power by the left.

3) Lip­stick has been put on the pig, and per­haps some Mem­bers will be fooled by it, but their con­stituents will not. I think some polit­i­cal careers will be ended over this.

+ Oh, and remem­ber that AIG bailout? It was prob­a­bly nec­es­sary to keep the credit default swap market from cra­ter­ing, but it doesn’t make things look any better that it saved Gold­man Sachs (Henry Paulson’s old firm) from a $20B loss.