NEWS & VIEWS ROUNDUP: September 23

FBI investigating companies at heart of meltdown

The FBI is investigating four major U.S. financial institutions whose collapse helped trigger a $700 billion bailout plan by the Bush administration, The Associated Press has learned.

Two law enforcement officials said Tuesday the FBI is looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, and insurer American International Group Inc. Additionally, a senior law enforcement official said Lehman Brothers Holdings Inc. also is under investigation.

The inquiries will focus on the financial institutions and the individuals that ran them, the senior law enforcement official said. [continued…]

Buyout plan for Wall Street is a hard sell on Capitol Hill

Treasury Secretary Henry M. Paulson Jr. received an angry and skeptical reception on Tuesday when he appeared before the Senate Banking Committee to ask Congress to promptly give him wide authority to rescue the nation’s financial system.

Mr. Paulson urged lawmakers “to enact this bill quickly and cleanly, and avoid slowing it down with other provisions that are unrelated or don’t have broad support.”

The Federal Reserve chairman, Ben S. Bernanke, who appeared with Mr. Paulson, said the financial system “continues to be very unpredictable, and very worrisome,” and that inaction could lead to a recession. [continued…]

House GOP rises up against Cheney

There was a time when Dick Cheney could turn back a Republican revolt on Capitol Hill.

That time is gone.

House Republicans rose up en masse against their vice president on Tuesday morning to blast an administration proposal that would grant Treasury historic authority to start buying hundreds of billions of dollars in devalued mortgage-related assets, according to members present.

The lines to speak were long, the questions many and sentiment in the Cannon Caucus Room Tuesday swayed heavily against the Treasury proposal. [continued…]

Getting real — and letting the cat out of the bag

Whoa — it seems that Ben Bernanke ditched his prepared testimony and, instead, let the cat at least partly out of the bag.

I believe that under the Treasury program, auctions and other mechanisms could be devised that will give the market good information on what the hold-to-maturity price is for a large class of mortgage-related assets. If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits.

First, banks will have a basis for valuing those assets and will not have to use fire sale prices. Their capital will not be unreasonably marked down …

As I wrote earlier this morning, the whole “take these assets off the balance sheets” line is fundamentally disingenuous; the key question is what price Treasury pays for the assets. And here we have Bernanke effectively saying that it’s going to pay above-market prices — prices that allegedly reflect “hold-to-maturity” value, but still more than private investors are willing to pay. [continued…]

Abrams as McCain’s top foreign policy aide?

Not terribly surprising, but I have it from a reliable source that Elliott Abrams, currently Deputy National Security Adviser for Global Democracy Strategy who also heads the NSC’s Near East office, is regularly briefing the McCain campaign — Randy Scheunemann appears to be the main contact — and has told friends and colleagues that he is confident that he will get a top post in a McCain administration. Now, assuming Abrams is not talking through his hat, I very much doubt that a Democratic-majority Senate would confirm Abrams, who pleaded guilty to essentially lying to Congress during the Iran-Contra affair, to any position that required confirmation (especially as long as Chris Dodd, who clashed frequently and bitterly with Abrams when the latter served as Assistant Secretary of State for Inter-American Affairs under Reagan, remains alive). That would leave his current abode — the NSC — as his most likely destination. But he is already a deputy national security adviser. Does that mean that he thinks he will be THE Deputy National Security Adviser — in charge of the day-to-day operations of the NSC — or even THE National Security Adviser in the McCain White House? [continued…]

Obama’s foreign policy advantage

A funny thing happened on the morning of July 19 — Prime Minister Nouri al-Maliki of Iraq endorsed Barack Obama’s plan for a 16-month withdrawal timeline from Iraq in an interview with Der Spiegel magazine. In a stroke, the entire conservative argument on Iraq was demolished. Withdrawal, they’d been telling us, was abject surrender and the abandonment of our Iraqi allies. The conservative counter that this was merely political posturing by Maliki made no sense — if the reason Maliki was calling for withdrawal was the overwhelming demand for withdrawal on the part of the Iraqi public, that was all the more reason for us to leave. And, of course, looking backward John McCain was (and is) still committed to the idea that, even in retrospect, invading Iraq was a good idea. It looked to me like the election was in the bag. Democrats were going to win the national-security argument, and hence, the election. [continued…]

Ten national security myths

The Iraq War is a testament to the great damage a foreign policy based on myths, lies and distortions can do to our nation’s security and well-being. As the election draws near, a new set of myths and fallacies as misleading as those that led the Senate to support George W. Bush’s invasion of Iraq have become embedded in our foreign policy discourse. Many of them are being perpetuated by the very same political forces that peddled the myth of mushroom clouds coming from Saddam Hussein’s Iraq. Others are the product of muddled thinking on the part of both Republicans and Democrats. If left unchallenged, these myths and fallacies could influence the outcome of the election and shape policy in the next administration. In this special feature, put together by Nation editors with Sherle Schwenninger, a frequent Nation contributor and director of the Global Economic Policy Program at the New America Foundation, we dissect ten of them and offer what we believe is a more accurate depiction of what is at stake for the United States and the world. [continued…]

Poll: Most Americans think U.S. is losing war on terrorism

A majority of Americans think the United States isn’t winning the war on terrorism, a perception that could undermine a key Republican strength just as John McCain and Barack Obama head into their first debate Friday night, a clash over foreign policy and national security. A new Ipsos/McClatchy online poll finds a solid majority of 57 percent thinking that the country can win the war on terrorism but a similar majority of 54 percent saying that the country is NOT winning it.

The poll came just days before the two major-party candidates meet for the first of three debates, a 90-minute showdown Friday on foreign policy and national security at the University of Mississippi.

Jim Lehrer of PBS will moderate the debate between Republican McCain and Democrat Obama, which will be televised nationally starting at 9 pm EDT. [continued…]

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