In contrast with some other Democrats, some of the most “progressive” Demoracts have announced the “No BAILOUTS Act” (overwrought tasteless acronym included, no charge), which on first blush at least deserves serious discussion and a rebuttal by Paulson/Bernanke if they have a reason it can’t work.

It addresses the over-regulation of Sarbanes-Oxley that has made this crisis more acute by eliminating Mark-to-Market accounting rules when there is no meaningful market. So when there is great uncertainty about how many mortgages in a portfolio will default and the prices offered are a fraction of the likely income from simply holding onto the mortgages, you can value them at the likely value of holding the mortgage to maturity. They’re getting in bed with some Republicans and libertarians here. Whoah, Nellie. Bet this is the part other Democrats have the most problems with.

It eliminates “naked” short selling, which doesn’t arouse my ire much but probably is only a fraction of the current issue. Basically this is short selling where you don’t even borrow the stock in the first place to sell it. You can theoretically leave someone else holding the bag, and it’s a dumb idea to begin with.

It has another provision ensuring the “uptick” rule returns, with again a myopic focus on shorts, even though shorts are generally just part of the reaction to an overvalued stock. But it can potentially reduce panic by making people not “pile on” to a declining stock. (Though as an owner of AAPL, I can tell you the broader market does this just fine.)

It also ressurects the “Net Worth Certificate” program, the dodgiest part of the proposal, given that it rather suspiciously ended right after the S&L bailout and 25% of recipients needed further help. But a few variations on this theme (essentially giving government loans based on the worth of the bank, not on the worth of mortgage-backed securities) have been proposed and economists should bash on it for a while to see if it holds water.

Finally, it increases the FDIC insurance rate to $250,000, although the original $100,000 guarantee may have encouraged some of the riskiness that led to the S&L crisis. But that $100,000 insurance limit was made a long time and much inflation ago, so it’s arguably worth far less now than it was then. It might protect banks from runs (*cough* Wachovia/Citibank *cough*), but so many people with that kind of money also have mutual funds that aren’t insured, so I don’t know how it will really react.

This is not to say that I wholeheartedly endorse this plan or even know it’s a superior alternative; but it’s an alternative that doesn’t seem any more laughable on its face than the Paulson Plan, and it deserves to be compared and contrasted for, say, the remainder of this week? If the credit market seizes up before then, then Paulson was probably too late…again.

I’ve seen several variations of this comment:

“I really do think there could have been a better deal,” said Rep. Sheila Jackson-Lee, a Democrat from Texas. “There was no mark in the bill for specifically helping Americans — Mr. and Mrs. Main Street — get out of their mortgage foreclosure crisis.”

Great, so now it’s not just $700 billion to bail out irresponsible Wall Street bankers who make overly risky financial bets assuming that housing prices would rise 20% per year forever, but we’re going to tack on however many billion would be needed to free anybody from having made an overly risky financial bet that their own house would appreciate 20% per year forever. I’m not clear on why either deserves our sympathy.

It’s always sad to be evicted, but believe it or not, the alternative for most people is not Hooverville, it’s called that thing that only the wrong kind of white people and minorities do, renting.

Yes, I’m sorry you’ll have a landlord. Yes, I’m sorry you won’t get a tax break. However, there are people who might otherwise be the Democrats’ natural constituency who are going to be pissed if they are once again denied their own shot at a house one day because they didn’t decide that a negative-amortization loan was a great idea.

Sorry, you bought too much house, and now you want someone else to pay for it so you don’t have to be a dirty plebe who rents.

Democrats, don’t kid yourselves that the primary beneficiaries will be that struggling immigrant family or the historically-oppressed Detroit resident. The primary beneficiaries will be college-educated WASP two-income earners who decided they needed a 5-bedroom 4000 square foot house and a pair of garages for their SUVs to raise little Tyler and Madison. It’s not Mr. and Mrs. Main Street; it’s Mr. and Mrs. Hollybrooke Drive in the Gated Community of Windstone Estates.

If it’s not good for Wall Street Fat Cats™, it’s not good for Johnny and Suzie McMansion, either.

In case you’re wondering, they’ll turn and vote Republican when you’re forced to raise their taxes to pay for it, and you’ll have another eight years of chimp-rule.

It’ll be all your fault for buying alcoholics another round and calling it compassion.

While clearly Wall Street found yesterday’s failure of bailout legislation after a mere week of consideration and a day of debate to be a Bad Thing, I wonder if it’s not a good opportunity. The trend in the Bush administration to pass sweeping legislation under a CRISIS!!!! mentality hasn’t been exactly wonderful. Just like moving a patient with a spinal injury, the impulse to Do Something!!!! can backfire if you don’t really know what to do. Let’s review:

The PATRIOT Act: Passed without most even reading the bill, with off-the shelf Clinton-era wishlists for an expansion of the Justice Department’s abilities to spy on Americans without review from the courts has resulted in exactly zero arrests that have relied on PATRIOT Act laws. It has created one of the least efficient mega-agencies of all time and resulted in local municipalities forming SWAT teams and buying armored personnel carriers. Oh, and it mandates that all copies of the Constitution be used as toilet paper.

Sarbanes-Oxley: Got a little more debate, but again, most people hadn’t even read it, and there are suggestions its provisions have contributed to the current crisis. Growth afterwards has been sluggish; among other things, it prohibits a company from providing free software updates to hardware it sells if it results in new functionality. It’s not exactly a good example of reckless deregulation, to say the least. It is a good example of reckless regulation, passed long after the market had already executed the offending companies that prompted calls for it.

The Emergency Stabilization Act of 2008: It might not even work, and there are alternatives that would put the punishment squarely on the banks who undertook risky securitization and not punish, say, you. Maybe they wouldn’t work either, and none address the ratings agencies that were complicit (much like the accounting companies in the Enron scandal); let’s try something crazy like a another week of hearings and a debate.

Good thing: nobody made trade with furriners their racist whipping boy.

Bad thing: in a debate on foreign policy, international trade didn’t even come up.

My friends, here’s some straight talk: we are soooo fucked.