US: Politicking on the edge, while banks fall over

Despite early appearances there might be an agreement on the US financial crisis, it now appears party political considerations have taken over and any deal is now in tatters.

Democrats had insisted the interests of taxpayers, who will be funding the bailout, be given priority. This included equity stakes in banks who got the billions and a share of any profits that flowed from the bailout over time.

US House Republicans turned up at a White House meeting convened by President Bush and announced they could not support such a bailout. Objecting to the government having any equity role in the banks, instead they want taxpayers to underwrite an insurance guarantee without taking any equity in the banks being bailed out.

Democrats, who were ready to support a bailout, reportedly felt betrayed and it went downhill from there, to the point were US Treasury boss, Henry Paulson, went down on one knee imploring Democrat House Majority leader, Nancy Pelosi, to not "blow it up". She responded that it wasn't Democrats who had blown it up and Paulson resportedly agreed.

Finger-pointing ensued, including - tellingly - the Republicans accusing the Democrats of trying to rush through a bailout agreement before Republican Presidential candidate, John McCain, could get to Washington and participate in the forming of any agreement.

Hang on a minute.

Is the bailout urgent or not? Why is making John McCain look good suddenly the overriding aspect of any deal to be brokered? Accusing the Democrats of moving too quickly to effect the bailout seems like a VERY odd way to respond to a financial crisis.

The Republicans have no problems with taxpayers funding the bailout, they just don't want taxpayers to benefit by it - apparently on ideological grounds.

Apparently private property is sacrosanct to Republicans unless it's money that belongs to taxpayers. The markets can crash in a heap before they will let taxpayers see value for money.

Meanwhile, today saw the largest bank failure in US history. Washington Mutual, worth over US$309 billion, was taken over by the US government, wiping out shareholder equity and many bond holders. Alongside the big picture, this historic event barely rated a sidebar.