I Rise To Defend John McCain

John McCain is a great American, although I had my doubts about him as a Presidential prospect.  The toilers at TPM Muckrakers, on the other hand, are not so great students of recent history.  Here, they report breathlessly on John McCain appearance on Meet The Press:

Speaking on NBC's Meet The Press this morning, Sen. John McCain (R-AZ) repeated his claim that he -- and the entire country -- was lied to about the TARP program in 2007.

Asked about the claim by host David Gregory, McCain was adamant. "We were all misled" by Bush administration Treasury Secretary Hank Paulson, McCain said.

Evan McMorris-Santoro then recycles a post by Zachary Roth which included this:

McCain Rewrites Own History On Bailout Vote

...But now, in a bid to explain his vote for the bailout, the Arizona senator is flat out rewriting history.

McCain said recently that he only voted for the $700 billion package because Henry Paulson and Ben Bernanke misled him, by assuring him it would focus on the housing meltdown, rather than on Wall Street. But that appears to be directly contradicted by the record.

Unless John McCain was a psychic, he is going to be absolutely correct about this.  Paulson quite famously pulled a switcheroo, going to Congress for authority to buy up to $700 billion in toxic securities and then reversing his field two weeks later and investing directly into some big banks, including Goldman.

I am not sure what it takes to convince a lefty, but here we go:

NY Times, Sept 28 2008: Treasury Would Emerge With Vast New Powers:

During its weeklong deliberations, Congress made many changes to the Bush administration’s original proposal to bail out the financial industry, but one overarching aspect of the initial plan that remains is the vast discretion it gives to the Treasury secretary.

The draft legislation, which will be put to a House vote on Monday, gives Treasury Secretary Henry M. Paulson Jr. and his successor extraordinary power to decide how the $700 billion bailout fund is spent. For example, if he thinks it wise, he may buy not only mortgages and mortgage-backed securities, but any other financial instrument.

To be sure, the Treasury secretary’s powers have been tempered since the original Bush administration proposal, which would have given Mr. Paulson nearly unfettered control over the program. There are now two separate oversight panels involved, one composed of legislators and the other including regulatory and administration officials.

Still, Mr. Paulson can choose to buy from any financial institution that does business in the United States, or from pension funds, with wide discretion over what he will buy and how much he will pay. Under most circumstances, banks owned by foreign governments are not eligible for the money, but under some conditions, the secretary can choose to bail out foreign central banks.

NY Times, Oct 3 - Bailout Plan Wins Approval:

Supporters said the bailout was needed to prevent economic collapse; opponents said it was hasty, ill conceived and risked too much taxpayer money to help Wall Street tycoons, while providing no guarantees of success. The rescue plan allows the Treasury to buy troubled securities from financial firms in an effort to ease a deepening credit crisis that is choking off business and consumer loans, the lifeblood of the economy, and contributing to a string of bank failures.

As a bonus, here is  Paul Krugman on Sept 21 denouncing the Paulson plan as misdirected, arguing that Paulson really needs to scrap the idea of buying toxic waste and instead put the money directly into banks.  Et voila!  That is just what Paulson did, shortly after Congress approved something different.

NY Times, Oct 15 2008: Drama Behind A Banking Deal:

The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, they were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry M. Paulson Jr. said they must sign it before they left.

...

But by 6:30, all nine chief executives had signed -- setting in motion the largest government intervention in the American banking system since the Depression and retreating from the rescue plan Mr. Paulson had fought so hard to get through Congress only two weeks earlier.

...Analysts say the United States was forced to shift policy in part because Britain and other European countries announced plans to recapitalize their banks and backstop bank lending. But unlike in Britain, the Treasury secretary presented his plan as an offer the banks could not refuse.

McCain was certainly misled, as were we all.  That doesn't mean the first policy was correct and the second one wrong, nor does it mean that McCain would not have supported Paulson's Plan B if Paulson had pitched that from the outset as the only sensible way forward.

But as a matter of historical fact, what Paulson did was quite different from what he said he would do when Congress voted him the funds.  Just as McCain said.

Comments

[Army of Davids]

I'm not touching this.

He's not conservative enough for me by a good ways.

But if he's conservative enough to vote against ObamaCare that is good enough for this moment in time.

When it's time he and JD Hayworth can go at it. Right now is a time to focus on the country and stopping the pile of garbage that Pelosi, Reid and Obama have planned.

[bgates]

I am not sure what it takes to convince a lefty

Since that sorry episode involves the executive spending most of a trillion dollars without any Congressional authorization, what it will take is about ten months - throwing money away by executive fiat is going to be big in the Bush Did It: 2011 Edition.

[You missed him on the Bloom Box; he was good.]

C'mon over here, TCO. I know we can talk rationally about this.
==================================

[Leo the Leper.]

bgates, you aren't funny enough to be for real.
==========================

[narciso]

Don't enccourage him, Kim. honestly, the truth is, we were sold a pack of lies, the Treasury, has no intention of actually solving
the problem, we know that now. Then again, the
source code of the Us economy had been so corrupted in the last few years, with the active cooperation of Franks, Dodd, Biden,
& co, that's it's dubious what other alternative would have worked.

[bgates]

Am I being accused of being Leo?

[Jim Ryan]

kim's on hair trigger. It was a lucid post, possibly a Leo before his evening five vodkas and a percocet.

[RichatUF]

If Congress didn't like how Paulson spent the first traunch they could have stopped the Obama Administration from drawing down the second (humm what was McCain's vote on the second drawdown?). And since Congress had to run the vote twice (the first tanking markets broadly 7%-10% in the US and 10%-15% internationally) they had a bit of time to rethink their votes.

[RichatUF]

And it looks like that the Germans and French can't free ride on US bailouts anymore. They might get into the act and shovel some money into Greece. Should be interesting.

[psota]

I'm amazed this is even an issue. Of course Paulson misled everyone. It was done in the open with absolutely no apologies. Hard to understand why more Republicans like McCain have never really complained about this.

[bunkerbuster]

Maybe McCain is embarrassed that he got punked, AGAIN. How many times is that?

[Matthew Crandall]

TRUST THE HEADLINE?

I think John has a point--- anybody who talked to him about TARP in 2007 must have surely been misleading him, since the whole TARP thing didn't happen in 2007, it was 2008....

[Jane]

I tuned into the 6:AM edition of MSNBC and all in attendence (John Harwood, Joe Scarborough, Mike Barnacle and some other lefty I didn't recognize) agreed that John McCain knew full well where the money was going, and was only doing this because he had a primary fight.

I didn't know when I decided to see what the other side was saying that it would cause me whiplash. I wonder if I can sue. No wonder the left is so screwed up. They look up and see the sky is blue, and MSNBC tells them it is green.

[Matthew Crandall]

Oh, and I might add: TARP stands for Troubled ASSET Relief Program, not the Troubled BANK Relief Program. The Troubled BANK Relief Program would be called TBRP, which is the sound I make after eating a very delicious steak dinner.

[Captain Hate]

Jane, expecting Mike Barnicle to have an independently original thought is aiming way too high.

[Janet]

I am SO not a McCain fan. He tries to serve 2 masters. When he is home he puts on a big conservative show for his constituents...and when he is in DC he puts on a big moderate show for the pundit class/MSM.
I have more respect for politicians I totally disagree with if they represent their constituents and are consistent.
Groveling before the pundits/MSM is the lowest of all.

[Still don't.]

TCO is on the wagon and buff. Sorry bgates, I thought I smelled the lion's den; I just didn't get your joke.
==============================

[Cecil Turner]

But as a matter of historical fact, what Paulson did was quite different from what he said he would do when Congress voted him the funds. Just as McCain said.

Yeah, but they could've put any restrictions they wanted on it, or changed it afterward (or, more profitably, put the kibosh on the second half of it).

The reason they gave the program to the Administration with essentially no strings is because they didn't have a clue what to do. Hearing a Congresscritter complain about this program after the fact just grates. (Almost as much as hearing Obama claim he "inherited" the mess.)

[narciso]

That's true, Janet, McCain has dissapointed me in a number of ways, McCain Feingold, Gitmo, Cap n Trade, one wishes Hayworth would make more of this, rather than quixotic points like birtherism. I am still not terribly confortable with the support Sarah has given him and how little he has reciprocated in return. Even though I understand it.

But when they deliberately twist the truth, although the people at TPM are probably scarcely aware of it. it's time to correct
the record

[Captain Hate]

I am still not terribly confortable with the support Sarah has given him and how little he has reciprocated in return.

McCain is out for himself at all times. The "my friends" prefix that he employs so often refers to a null set.

[Pofarmer]

Isn't this interesting, from the Market Ticker

Well, it's too long to copy and paste, but the gist of it is that Goldman Sachs was loan Sharking to Greece at a rate of nearly 17%, off the books.

Some of those conspiracy theories aren't sounding quite as crazy.

[Pofarmer]

Oops, I italicized instead of linked.

Try Market Ticker.

[The class includes all those long Euros.]

Pof, it seems to me that Goldman should be subject to investor lawsuits from playing that dirty game.
==========================

[Pofarmer]

I'll maintain, till, well, sometime, that we'd have all been ultimately better off if these banks/investmenthouses/whatevertheyare had just been allowed to go kerthunk.

[Ignatz]

--I am not sure what it takes to convince a lefty--

Usually ECT.

[And Soros would own the world. He's disappointed that Obama didn't nationalize the banks.]

Well, Pof, it seems they'd have all crapped out but Goldman Sachs, and then where would we be?
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[narciso]

I'm leaning that way, too, Po, they peddled this junk all around the planet, they ended
up with Foxes in the henhouse, now they threaten to bring the whole European house
down around themselves

[toddk]

Isn't this the same defense that Dems use on their Iraq War vote: "I know what I voted for gave them vast powers to do what they ended up doing [go to war/bailout banks], but they told me they were going to do something different [only threaten war/buy toxic assets]. They're LIARS!!!!!" So the fault is in voting for too generic of a bill, right?

[Thomas Esmond Knox]

On October 8 2008, I emailed John Kay (Financial Times) "Dear John, I predict that the offering to Treasury will be of higher quality than punditry predicted."

John replied "We'll see."

McCain and others may have believed that TARP stood for Toxic Assets etc because that was the phrase used by media pundits. It was not used by Paulsen, I had noticed.

I won't bother with the explanation of why it was obvious that the banks needed to offer more value.

In my opinion Paulsen did a fantastic job given the Congressional idiots he had to deal with.