With stocks crashing, Wall Street begging for bailouts, and taxpayers screaming about the cost, Congress finally started talking yesterday about solutions.
Talking, not acting. "No one knows what to do,"
Sen. Harry Reid
(D., Nev.) told Bloomberg News.
Fed Chairman Ben S. Bernanke
Treasury Secretary Henry M. Paulson Jr.
are working on it. But, as to making new policy, it's an election year.
U.S. Rep. Barney Frank
(D., Mass.) said regulation was the answer. "It's the commercial banks,
Bank of America
, that are the most heavily regulated, that we are turning to," said Frank, the House Financial Services Committee chairman, in an interview on CNBC.
"There needs to be a regulator now for the investment banks that has the power to regulate the amount of leverage and impose capital requirements," Frank added.
But he disagrees with Paulson on whether that power should be the
or some new entity. And he wants hearings and discussions before action.
Frank thinks the
free-market ideology made it slow to act, and then heavy-handed. "The Bush administration has now begun this pattern of ad-hoc interventions," he said, "and I don't think that's appropriate in a democracy."
But the top Republican on the U.S. Senate banking committee said the Federal Reserve went too far in pledging $85 billion to refloat
American International Group Inc.
"I think they made a mistake,"
Sen. Richard Shelby
(R., Ala.) told CNBC. "The best arbiter of the market is the market itself. It's not easy. But it will be better, and it will correct our whole economy quicker."
Won't that be painful? "There'll be a lot of banks to fail," he said. "Somebody's got to say, 'Enough!' We cannot bail out everybody."
Hard-pressed consumers aren't likely to give up their Internet, video or phone before other expenses. It's probably cheaper than going out. But
is still worried.
"Obviously, we're very concerned about the effects [the credit markets] may have in the consumer markets," Comcast
chief financial officer Michael Angelakis
Goldman Sachs Group Inc.
at Goldman's yearly telecom investor conference.
"We're not immune to clearly economic factors," he added. "We have a defensive, resilient business that can take some body blows related to the economy, which we're feeling right now. . . . What we really worry about is growth and how we execute."
invested $178 million in the spring in
Lehman Bros. Holdings Inc.
common and preferred shares, "at a time when the teetering bank's pleas for cash were being rejected by one savvy investor after another," complains
State Sen. Joseph Pennacchio
The senator, a dentist, wants New Jersey State
Investment Council Chairman Orin Kramer
, a hedge fund manager and Democratic fund-raiser, to tell why the state backed Lehman. He wants to see if
people treated Lehman a special way, either because they were pals or because of a misguided attempt to lure Lehman jobs to Jersey from Manhattan.
The state's investment, or a big hunk of it, has gone where none willingly follow, in Lehman's bankruptcy. But Corzine says New Jersey has actually lost less than other investors on the Wall Street crash, because it avoided banks as a group. Lehman was an investment like any other, Kramer told me. "It is demagogic to pick out a handful of losers from a portfolio that's outperformed and blame public employees for those decisions."
Kramer said the council's critics didn't show up at its meetings. He offered to debate Pennacchio on state investment decisions, in front of reporters.
"If he wants to debate, we'll debate," the senator told me. "But that pension fund is bleeding. How could we lose so much money in such a short period?"
We're not sure we'd want to match investment calls with Kramer, who runs
Boston Provident L.P.
"He's put up tremendous numbers this year," said
, cofounder of
and CEO of
Highview Investment Group.