The Long Tail Of Cooperation

Next week, according to administration officials, the Treasury Department will unveil a plan to buy toxic assets from banks, put them into a repository like the Resolution Trust Corporation held real estate from the S&L crisis), tend to them, securitize them, and hopefully, within a few months, untighten the credit clamp.  What this bank will be called, and how it will be administered isn't yet clear; a White House aide said yesterday that few details would be provided before all the details were worked out.

The new bank relates to the stimulus package in the following way.  The creation of the bank, and the subsequent potential for a new bailout of the housing market, the coming financial market re-regulation, -- all of this requires Republican cooperation. And even if President Obama didn't get Republican votes yesterday, he needs to have Republicans not be in a position to oppose the next phase of economy-saving proposals that he'll unveil. The goodwill he wants to buy extends beyond the stimulus package.

There is a sense among some Democratic officials that yesterday's vote by Republicans was for show; that now, since they've gotten a "no" vote out of their system and showed off to the base or whomever, they'll relalign themselves with the forces of good and light and be willing to support the bill as conferenced in February.