USA Todayleads and the Wall Street Journal banners the lukewarm reaction from the markets to the Bush administration's plan to buy an equity stake in some of the country's largest banks. On the day when the program, which President Bush described as "limited and temporary," was announced, the Dow Jones industrial average fell slightly and credit markets thawed a bit. The Washington Postleads with a look at the anger that was seeping out of community banks yesterday as executives were eager to say they don't need the help and resent the fact that the government will rescue those who made bad decisions. The reaction suggests the government will have to do some arm-twisting to persuade banks to participate. Although the program is officially voluntary, Treasury officials were quick to say they won't be shy about trying to persuade certain banks to apply for government money.
The Los Angeles Timesand New York Timesboth lead with inhouse presidential election polls that show Barack Obama's lead among likely voters has widened to nine percentage points and 14 percentage points, respectively. The LAT highlights that Obama's increased lead is partly due to a shift among independent voters, who used to lean heavily toward McCain but now prefer the Democratic nominee by five points. McCain's choice of running mate has something to do with this change, as 31 percent of independents say they're less likely to vote for the Republican ticket because of Sarah Palin.
In a front-page piece, the NYT points out that after Monday's party, when the stock market had one of its biggest rallies in history, investors had to face "a sober reality" yesterday as they couldn't escape the widely held feeling that a deep recession "may be unavoidable." The WSJ points out that, even as credit started flowing yesterday, it was at a snail's pace and it could be months before "money flows freely again." Even when credit markets do eventually recover, it may be too late for some companies. So while financial shares soared, many other companies saw their stocks decrease in value.
The LAT points out that by deciding which banks should get a chunk of the $125 billion that will be available to banks and thrifts across the country, the government could end up deciding which banks will die and which banks survive. "The natural course of Darwinian banking has been interrupted by this plan," a financial analyst said. The WP specifies that when Treasury officials decide who should get help, they will ignore pleas from institutions that are doing relatively well and those that are on extremely thin ice. Instead, the Treasury will focus on those that are in the middle and could realistically benefit from cheap money from the government.
Even if, as the WP suggests, community banks will be pressured to take government money, they're unlikely to face the same level of arm-twisting as the executives of the nine big financial institutions did on Monday. The WSJ and NYT both front narrative pieces on what took place at Monday's meeting, where top bank executives were told to sign a piece of paper agreeing to sell shares to the government. The executives were shocked, as many expected that the meeting would simply be a briefing about new measures the government would take to ease the crisis. While there were a few protests from banks that insisted they didn't need the money, everyone quickly agreed to go along with the plan. "It was a take it or take it offer," a source tells the NYT. "Everyone knew there was only one answer."
Few think the banks have anything to complain about. Compared with the European plans, the U.S. program is highly favorable toward banks, as Treasury officials didn't want it to seem punitive in any way and emphasized that the government shares wouldn't carry voting rights. Under the British plan, for example, banks can't pay shareholder dividends until the government has been paid back; in the United States, banks can still pay dividends but can't increase the amount without approval. Some are also criticizing the U.S. program because it doesn't impose any requirements on the banks to use the government money to increase lending.
In other news, the WP reveals on Page One that the White House issued classified memos in 2003 and 2004 that broadly endorsed the CIA's use of harsh interrogation techniques on al-Qaida suspects. CIA officials repeatedly asked the White House for a written document, which shows how the agency was concerned that top administration officials might plead ignorance if the techniques became public. "The question was whether we had enough 'top cover,' " a former CIA lawyer said. Beyond the general terms, it's unclear what exactly was in these memos, since the WP couldn't get anyone to describe their contents because they're still classified.
Echoing the WP's poll from earlier this week, the NYT's surveyemphasizes that McCain's attacks against Obama seem to have backfired, as the majority of voters say the Republican is waging a negative campaign and spending more time attacking than discussing the issues. A majority also say they're not bothered by Obama's background and past associations. But many voters are bothered by Palin's presence on the Republican ticket. The NYT says her unfavorable rating now stands at 41 percent, and the LAT reports that a mere 43 percent of voters say she is qualified to be president, while 76 percent see Joe Biden as qualified. Meanwhile, a new day brings even more signs that the current environment would make it difficult for any Republican to win the election. The LAT reports that only 10 percent of voters feel the country is going in the right direction, while the NYT says more than 8-in-10 Americans don't "trust the government to do what is right."
The WSJ notes that new polls show Obama has widened his lead in four battle-ground states. The Democratic nominee now has double-digit leads in Michigan, Minnesota, and Wisconsin, and a nine-point lead in Colorado.
McCain issued a new plan to deal with the downturn in the economy a day after his Democratic rival put forward his own proposal. The move means that "both presidential candidates will head into their final debate Wednesday night armed with fresh plans to ease middle-class burdens," notes the WP. Unsurprisingly, McCain's $52 billion plan includes several new tax cuts, including a temporary reduction on capital gains. And while their plans have many key differences, the two candidates do agree on a few issues. Like Obama, McCain also proposed eliminating income taxes on unemployment benefits. For his part, Obama endorsed McCain's idea of waiving tax rules that force seniors to withdraw money from their retirement accounts.
The NYT goes inside with a package of stories about how Obama's race might play a factor in the election. The candidates rarely talk about the issue, which is more often "whispered, internalized or masked by discussions of culture or religion," and there's little question that Obama's race will help bring out black voters in several key states. But will it hurt him with white voters? Much of it has been said before, but the NYT's Adam Nossiter talks to people in the South and some of the reactions to Obama's biracial background are particularly shocking. While it might not be surprising that these sentiments exist, it is slightly amazing that some seem to have no qualms about expressing their feelings ("He's other. It's in the Bible. Come as one. Don't create other breeds.") on the record.
Just because Bush's time in office is running out doesn't mean his administration doesn't want to go out with a bang. The WSJ notes inside that administration officials are quickly moving to rewrite a large number of federal rules to protect companies that comply with government regulations from product-safety lawsuits. Whether the effort succeeds largely depends on whether the Supreme Court sides with the administration in a pre-emption case it will hear next month. And while it might be tempting to think a future administration could simply undo these new rules, the truth is that it can take a while to amend federal rules.
The LAT fronts a look at the "most comprehensive map of the heavens ever produced," which was completed this year. After years of work, a team of scientists created a three-dimensional model of the universe "that allows an observer to travel, as if by rocket ship," to places that are "billions of light-years away." The model includes 217 million objects, including 800,000 galaxies and 100,000 quasars. Among other things, it confirms the existence of dark energy and shows that the universe is really flat. "You see a fuzzy blob and you know it's another galaxy like ours, and it's never been seen before," one astronomer who worked on the project said. "It just sends a chill down your spine."