Bailout Rocky Horror Shows

The 1930s are back today, featuring remakes of the scary movies that entranced Americans during the Great Depression.

With the political landscape looking a mob scene from "Frankenstein," Ruth Marcus of the Washington Post asks, "Could we put down the pitchforks for just a moment and have a reasonable discussion about the bonuses at American International Group?"

At another screen of the nail-biters' multiplex, Maureen Dowd is egging on the villagers by invoking "Dracula": "What President Obama should have said to the blood-sucking bums at A.I.G., many of them foreigners who were working at the louche London unit, was quite simple: 'We stopped the checks. They’re immoral. If you want Americans’ hard-earned cash as a reward for burning up their jobs, homes and savings, sue me.'"

Meanwhile on Capitol Hill, Barney Frank is directing a remake of "The Invisible Man," demanding that AIG name names so his colleagues won't be flailing at thin air as they chase the bonus takers with Sen. Charles Grassley, who seems to have wandered in from some Japanese slasher flick, demanding that they quit or commit hari kari.

With taxpayers in dire need of distraction from the real world and the President on a trip to the West Coast, ticket sales should be brisk.

Bailout Boomerang

Taxpayer money pouring into banks has not only failed to get loans flowing but even worsened the practices of those that received it.

"The federal government," the Washington Post reports, "has invested almost $200 billion in U.S. banks over the last three months to spark new lending to consumers and businesses.

"So far, it hasn't worked. Lending has declined, and banks that got government money on average have reduced lending more sharply than banks that didn't."

In the Paulson free-money giveaway, recipients have used government funds to merge with weaker institutions, increase reserves and improve their balance sheets.

But the total volume of loans outstanding from all banks fell about 1 percent, according to Federal Reserve data, declining more than twice as much among those that accepted taxpayer money. Some of the first to get funding, such as Citigroup and J.P. Morgan Chase, have reported the sharpest drops.

An irony that emerges is that depositors are shying away from big banks seen to be in bad shape and, encouraged by the increase in FDIC protection, putting money into weaker institutions that offer higher interest rates.

In the face of this bailout boomerang, members of Congress from both parties are now looking for ways to pressure recipients into making more loans, starting with more closely tracking how banks use the money they get.

Barney Frank, chairman of the House Financial Services Committee, expects the Obama Administration to pressure banks harder to increase lending, saying the initial bailout should have come with tougher conditions. He plans to hold hearings this week to push the effort.

This dispiriting picture raises larger questions about the "too big to fail" premise of the bailouts. So far results based on that assumption with a hands-off approach by the government have not been encouraging.

Democrats Eating Their Old

The party that prides itself on being a big tent for diversity is showing signs of cannibalism since it took over Congress a year ago and, in a reversal of eating its young, is threatening to devour some of its long-standing stalwarts.

After all the furor about anti-war legislators not being anti-war enough, now we have Rep. Barney Frank, of all people, defending himself from charges of not being pro-gay enough by backing a bill to protect homosexual men and women in the workplace that might leave transsexuals vulnerable.

“There is a tendency in American politics,” he said yesterday, “for the people who feel most passionately about... a single issue to be unrealistic in what a democratic political system can deliver, and that can be self-defeating.”

In an era when George Bush is still blocking almost everything with his veto power and remnants of a monolithic Republican minority, Democratic activists only play into his hands by forgetting that politics is the art of the possible and that the perfect can be the worst enemy of the good enough.

Push for perfection by all means, but don’t trample those who are out front navigating the minefields.

Incremental improvement in energy standards and cutbacks of farm subsidies are not very exciting for generations that want it all now. But politics has never been the best place for instant gratification, except for those who exercise their mouths rather than real power.

From half a century of observation and activism emerges the lesson that inertia, while it slows progress, can also be the best protection against violent, destructive change.

Those who find that old fogeyism can eat me, too.