'Pretty please, Nancy' says Hank

US Treasury Secretary Paulson has to beg for the survival of his rescue bid as the country's legislators refuse to give way.

Last Updated: 31 Aug 2010

After what looked like a breakthrough yesterday afternoon, normal service was quickly resumed and it soon became apparent that administrative approval for the $700bn plan is still a way off. The Republicans – yes that’s right, the Republicans – are refusing to back their own administration’s bid, leading to speculation that they are playing chicken for some of the highest stakes imaginable.

If they leave it to the Democratic majority to push the bid through, they can then blame the Democrats for the consequences. But for some reason the Democrats don’t seem too keen on that game. In the meantime the global financial system remains teetering on the brink. Politics, eh – what a lark.

But it is at least providing us with some bleak entertainment. Who wouldn’t have loved to be a fly on the wall at last night’s ‘full-throated discussion’ on Capitol Hill, when Hank apparently got down on one knee to beg House Speaker Nancy Pelosi to say ‘yes’? Not a position that former chairmen of Goldman Sachs are used to assuming. Pelosi’s dry-as-a-bone riposte - ‘I didn’t know you were a Catholic’ – has to be the best one-liner of the crisis so far.

It certainly beats George W Bush’s depressingly crass analysis of the situation, perhaps the most unstatemanlike presidential uttering ever. ‘If money isn’t loosened up, this sucker could go down’ the most powerful man in the world is reported to have said (we can’t help wondering which ‘sucker’ exactly he had in mind). That old adage ‘Cometh the hour, cometh the man’ seems to have failed in his case – the last thing the world needs right now is a US President who talks like a supporting character in a Steven Seagal movie.

Compared to all this high drama, the biggest ever US bank failure is small beer. JP Morgan Chase has acquired the remains of giant Washington Mutual – which lost its shirt and trousers too on sub-prime mortgages - from the Federal regulators for $1.9bn. The bank has $900bn in retail deposits and 2,000 branches so that looks like a pretty good price. JP Morgan is becoming quite the White Knight, having bought up Bear Stearns after its collapse earlier in the year.

Back in the UK, The Bank of England is pumping £55bn into the seized up credit markets to try and get interbank money moving again while the debate in Washington drags on. (Are we the only ones who wonder where all this money comes from? But we think we can guess the answer…). HSBC has announced that 1,100 jobs are to go worldwide, 500 of them in the UK. And Bradford & Bingley’s prospects get worse every day – its shares fell to a new low of 21p as hopes of a rescuer for the troubled buy-to-let lender faded. Perhaps they should get on the phone to JP Morgan?

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