Tuesday, September 23, 2008

Live-blogging the Senate hearing on the bailout

The NY Times is live-blogging the Senate hearing on the bailout. Thank God there is pushback from both Democrats and Republicans on the Bush Administration's need for speed.

– Senator Dodd, the Democratic chairman of the panel: “I understand speed is important. But I am far more interested in whether or not we get this right. There is no second act to this.”
– Senator Richard C. Shelby, Republican and ranking member of the panel: “Before I sign off on something of this magnitude, I want to make sure we’ve exhausted the alternatives”

What's interesting is the reaction of Republicans from largely rural states. Richard Shelby is from Alabama. I don't know this specifically, but my guess is that there isn't a lot of investment banking going on in Alabama.

What we are witnessing is a breakdown of the Reagan coalition. Reagan brought together religious and cultural conservatives, and Main Street and Wall Street business types. Those groups don't necessarily have much in common beyond an interest in lower taxes and the free markets; Wall Street and Main Street people might be socially liberal.

It is becoming clearer by the day that the fiscal interests of religious and cultural conservatives, particularly in the South, are diverging from the interests of Wall Street. Richard Shelby's constituents do not want to bail out the East Coast elitists on Wall Street. Chris Dodd has a fair number of investment bankers among his constituents, but he's also a Democrat, and there are a lot of people in Connecticut who ARE NOT rich investment bankers.

So if Richard Shelby wants to keep the non-investment bankers in his state voting Republican, he has to stoke the populist fires.

This is going to be interesting to watch. Republicans against corporate greed? Conservatives against the excesses of the markets created by too much deregulation? Hopefully this will be too much hypocrisy even for Republicans.

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