Act of Congress: How America's Essential Institution Works, and How It Doesn't - Softcover

Kaiser, Robert G.

 
9780307744517: Act of Congress: How America's Essential Institution Works, and How It Doesn't
Softcover
ISBN 10: 0307744515 ISBN 13: 9780307744517
Verlag: Knopf Doubleday Publishing Group, 2014

Inhaltsangabe

A Washington Post Notable Book

An eye-opening account of how Congress today really works—and how it doesn’t— Act of Congress focuses on two of the major players behind the sweeping financial reform bill enacted in response to the Great Crash of 2008: colorful, wisecracking congressman Barney Frank, and careful, insightful senator Christopher Dodd, both of whom met regularly with Robert G. Kaiser during the eighteen months they worked on the bill. In this compelling narrative, Kaiser shows how staffers play a critical role, drafting the legislation and often making the crucial deals. Kaiser’s rare insider access enabled him to illuminate the often-hidden intricacies of legislative enterprise and shows us the workings of Congress in all of its complexity, a clearer picture than any we have had of how Congress works best—or sometimes doesn’t work at all.


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Über die Autorin bzw. den Autor

Robert G. Kaiser was on the staff of The Washington Post for over fifty years. He eported on the House and Senate; was a correspondent in Saigon and Moscow; served as national editor and managing editor; and as associate editor and senior correspondent. He retired from The Washington Post in 2014. He has also written for Esquire, Foreign Affairs, and The New York Review of Books. His books include Russia: The People and the Power; So Damn Much Money; and, with Leonard Downie Jr., The News About the News. He received an Overseas Press Club award, a National Press Club award, and was a Pulitzer Prize finalist. He has also been a commentator on NPR's All Things Considered. He lives in Washington, D.C.

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Excerpted from the hardcover edition.


CHAPTER ONE

“I Could Hear Everyone Gulp”

Thursday, September 18, 2008, was a fine late-summer day in Washington—blue skies, temperatures in the seventies. But the politicians on Capitol Hill were in no mood to notice the weather. They were thoroughly distracted by chaos in the financial markets brought on by a series of seismic events: the nationalization of the government-supported agencies that provided most of the financing for home mortgages, Fannie Mae and Freddie Mac; then the sudden death of one enormous Wall Street institution, Lehman Brothers; and a unprecedented government bailout of another, the American International Group (AIG), a huge insurance company that traded financial products too. The stock market was suffering convulsions. The Dow Jones Industrials fell 504 points on Monday the 15th, the day Lehman Brothers went broke, then jumped 142 points on Tuesday, when the Federal Reserve Board, the American central bank, saved AIG, then dropped another 449 points on Wednesday, when several huge financial institutions were teetering.

The United States Congress is normally immune to emotional reactions. It is a ponderous institution, usually cautious and always reactive. But some events break through the protective layers of ceremony and custom that typically insulate the House and Senate from high emotion. One such event was unfolding in those September days.

“This is what a Category 4 financial crisis looks like,” members of Congress and other Washingtonians read on the front page of their morning newspaper that Thursday. Steven Pearlstein, The Washington Post’s economics columnist, captured the sinking feeling that gripped the nation’s capital: “Giant blue-chip financial institutions swept away in a matter of days. Banks refusing to lend to other banks. . . . Daily swings of three, four, five hundred points in the Dow Jones industrial average. What we are witnessing may be the greatest destruction of financial wealth that the world has ever seen—paper losses measured in the trillions of dollars. . . . Finance is still a confidence game, and once the confidence goes, there’s no telling when the selling will stop.”

Open-ended bad news, a national and global disaster bound to get still worse—this was a formula for unbridled fear among members of the House and Senate. They all knew that they would be blamed for whatever had gone wrong whenever angry voters got a chance to register their reactions. The politicians always got blamed—this was an article of their professional faith. Fear of being blamed might be the single most potent motivator in the House and Senate. When Congress actually does something dramatic or unexpected, fear is often the best explanation.

This financial crisis had undermined congressional confidence. In normal situations members and especially senior leaders exude a sense of being on top of events, in control. This is an act, and often misleading, but rarely exposed. During this week in September, the actors stumbled. Congress was visibly on the defensive. Its pretentious facade crumbled. On the 16th, when leaders of the House and Senate met with Hank Paulson, the secretary of the treasury, and Ben Bernanke, chairman of the Fed, the fear was palpable.

That meeting was scheduled as Paulson and Bernanke were finalizing the plan for the Fed to put $85 billion into AIG, transforming the gigantic firm into a ward of the state. Paulson realized they needed to give key members of both houses advance warning for what was about to happen. For decades, administrations of both parties had realized that Congress usually did not want to do much, but it always wanted to be consulted.

Paulson had arranged for such a consultation with Harry Reid, the Democratic senator from Nevada who was the majority leader. They would meet at 6:30 p.m. in the conference room of the Senate Rules Committee in the Capitol. The majority leader invited key senators and congressmen, including the chairmen of the two committees that had jurisdiction over the Fed, Senator Chris Dodd of Connecticut and Representative Barney Frank of Massachusetts. There were only a few chairs in the room, so all stood.

When Paulson and Bernanke explained what was going to happen, the room was hushed. “There was an almost surreal quality to the meeting,” Paulson later recounted. “The stunned lawmakers looked at us as if not quite believing what they were hearing.”

Frank and Dodd both marveled that the Fed had the legal authority to simply make $85 billion available to AIG without anyone else’s approval; theoretically these two men were responsible for overseeing the Fed. That evening they discovered that the central bank had powers they never knew existed. At the end of the meeting Senator Reid was blunt: “I want to be absolutely clear that Congress has not given you formal approval to take action. This is your responsibility and your decision.” That was the true voice of Congress, covering its own flanks before all else.

Now, on the 18th, Speaker Nancy Pelosi had gathered the leaders of her Democratic majority in her grand office on the second floor of the Capitol. On this day the stock market had perked up, apparently encouraged by rumors that the administration was planning some new initiative to help banks cope with their suddenly rotten housing assets. We need to get Hank Paulson up here to talk with us, Pelosi told her inner circle. “I’ll call him and set up a meeting for tomorrow.” After this meeting broke up, she put in a call to the treasury secretary. She wanted to be consulted.

For Paulson, a large, energetic man of high intellect, rich Wall Street experience, and no detectable political talent, this was another in a long string of very bad days. At nine that morning the vice chairman of Morgan Stanley had called to warn that his investment bank was teetering. The world’s banks refused to lend money to one another—credit markets were truly frozen. Disaster loomed. Paulson spent the next several hours exploring alternative responses to the crisis with Treasury colleagues. He spoke to President George W. Bush on the phone and arranged a meeting with him for that afternoon to discuss what to do. In a conference call with Bernanke and other Fed officials, everyone agreed that they would have to make a formal request to Congress to appropriate hundreds of billions of dollars to save the financial system.

No member of Congress was invited to join these conversations. This was typical of modern practice in a crisis: The executive would formulate a response, then bring it to Capitol Hill for approval. In this case, Paulson and Bernanke both realized how hard it would be to get Congress to put up so much money to bail out banks.

Paulson was walking from the Treasury to the White House next door when he took Pelosi’s call on his cell phone. She asked that he and Bernanke come up to Capitol Hill the next morning to brief the Democratic leadership.

“Madame Speaker,” Pelosi recalled Paulson replying, “it cannot wait until tomorrow morning. We have to come today.” Paulson explained “just how bad things were” and said he would be asking Congress for emergency powers. “We need legislation passed quickly. We need to send a strong signal to the market now.”

Paulson asked Pelosi to assemble a bipartisan group of senior members from both House and Senate to hear from him and Bernanke. Soon after this call ended, Bernanke and Paulson sat down in the Oval...

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Verlag
Knopf Doubleday Publishing Group
Erscheinungsdatum
2014
Sprache
Englisch
ISBN 10 
0307744515
ISBN 13 
9780307744517
Einband
Taschenbuch
Anzahl der Seiten
464
Kontakt zum Hersteller
Nicht verfügbar
Verantwortliche Person
preigu
mail@preigu.de

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Osnabrück
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Deutschland

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