As Congressional leaders continued to hash out details of a financial and mortgage market bailout on Thursday, it’s pretty clear that response to the bailout proposal has been all over the map. Some say the proposal marks the end of American capitalism; others suggest that large-scale intervention is needed to preserve it. But nearly everyone seems to agree that something must be done. Rob from the poor and give to the executives? Henry Waxman, chairman of the House Committee on Oversight and Reform, voiced his misgivings Monday in a media statement that urged limits on executive compensation and greater financial transparency — both issues that it now appears will be included in the bi-partisan congressional counter-proposal agreed upon earlier Thursday. “I have serious reservations about the administration’s bailout proposal,” Waxman said at the time. “The structure of the plan appears designed to maximize returns for Wall Street and minimize protections for the taxpayer.” Some HW sources have consistently agreed with Waxman’s take, even with the additional provisions now added that will seek to limit executive compensation. One source, who asked to remain anonymous for this story, echoed Waxman’s doubts and argued if the US wants to remain a capitalist nation, the government should “disgorge the execs” and immediately take control of any insolvent banks. “Paulson’s plan will completely bury us in debt and enrich the crooks that got us here in the first place,” the source told HW. “We need prosecutions, not bail outs.” For their part, consumer groups have carried a pretty consistent drumbeat for foreclosure relief since Treasury secretary Henry Paulson first announced a bailout plan last Friday. Center for Responsible Lending president Mike Calhoun has said repeatedly this week that it’s not only important but necessary for the government to remember taxpayers in the proposal. “By forcing taxpayers to buy abusive and reckless loans from irresponsible lenders, taxpayers are funding a multi-million dollar subsidy to private corporations,” Calhoun said. “Only by preventing the 6.5 million foreclosures expected in the next few years … will the economy begin to recover.” Follow the money A source close to HW, who asked not to be named in this story, argued that regardless of details, the bailout plan suffers from a more fundamental flaw: the US simply does not have the money necessary to buy up all the troubled assets now clogging up balance sheets. “We’re going to have to print it [dollars]; or, at the very best, we’re going to have to borrow at least some of it,” said the source, an attorney who argues that “certain economic tenets that are like gravity … borrowing money is not costless, and printing money leads to inflation.” Eventually, the attorney told HW, the “short-sighted” actions of Paulson, Bernanke and Bush will result in the very sort of economic crises they now say they are attempting to avoid. Isn’t there another way? Comments we’ve received this week underscore the disbelief and doubt many of our readers have; and many readers have ideas on how this could be done more efficiently. Mark Willis, a visiting scholar at the Ford Foundation, told HW in an email that a more plausible way for the government to stabilize a housing market would be to take over CDO and MBS issuances as trustee. Willis argued that such an action would effectively put “all the strips of mortgages back together.” “Under this scenario the government would, in effect, gain the same authority over the non-conforming mortgages that it now has over Fannie/Freddie guaranteed mortgages,” Willis said. Then the government, as trustee, could modify loans to accommodate falling housing prices, “thus speeding the rate at which the housing market finds its bottom,” he argued. An industry consultant, who asked not to be named in this story, compared the proposed bailout to “a cat chasing its tail” and suggested a moratorium on reporting mortgage delinquencies or defaults on consumers’ credit reports. With no bad credit from toxic loans, the source reasoned, borrowers could return to the market to buy up homes at lower prices, thereby reducing excess supply of homes, increasing demand and stabilizing the housing market. “This market will not recover until you can bring buyers to the marketplace,” the source said. One nation, under debt Another source that spoke to HW expressed concern that all the asset buying now being proposed — especially at greater-than-market prices — will lead the United States to sell large quantities of debt to foreign countries to fund the purchases. The problem, according to the source, is not traceable to the Bush administration or even the Clinton administration before it. It’s an issue with America’s debt culture that runs far deeper, the source suggested. “American dominance as a super power is over,” the source flatly said. “It’s time we close our doors to the world … fix our house, and once we are off life-support, then we socialize with the world.” Editor’s note: Send comments and questions about this story to [email protected].