"Fiscal conservatives" bought off dirt cheap

OK, the bailout train is back on the tracks.  The Senate voted 3-1 in favor.  No big surprise.  A core of so-called "fiscal conservatives" voted against — a group I've already collectively nominated for Chumps of the Year.  A surprising number of Democrats joined them, for whatever that's worth — OK, not much.

So now the "new and improved" version goes to the House.  Turn a few more of those "fiscal conservative" Republicans and it's a done deal.  And it won't take much to get them to sell out.

Rep. John Shadegg of Arizona, a leading conservative who voted no on Monday, told a Phoenix radio station Wednesday that he'd be "inclined to vote for the bill" if it raised the cap on federal deposit insurance and changed a rule that forces companies to devalue assets on their balance sheets to reflect the price they can get on the market.

So the bailout, this utter insult to fiscal responsibility, is A-OK with this "fiscal conservative" provided…

  1. The FDIC cap is raised, encouraging more reckless irresponsible lending with depositors' money with the guarantee Uncle Sam will come to the rescue if things go haywire.
  2. Financial institutions are allowed to suspend mark-to-market accounting, and assign whatever valuation to their "assets" they damn well please — even if there's no market for those assets, and even if similar assets have been sold by other institutions at fire-sale prices.

House GOP leader John Boehner — who was unable on Monday to twist the arms of these "fiscal conservatives" in the way Denny Hastert got them to sell out on the Medicare prescription program five years ago — calls these two provisions a "victory" for House Republicans.

If this is what victory looks like, defeat scares the hell out of me.

The Daily Reckoning