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Congressmen, locals speak out about bailout fallout
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| A board at the New York Stock Exchange displays the final numbers, Monday Sept. 29, 2008. Wall Street's worst fears came to pass Monday, when the government's financial bailout plan failed in Congress and stocks plunged precipitously, hurtling the Dow Jones industrials down 777.68, or 6.98 percent to 10,365.45, in their largest one-day point drop ever. (AP Photo/Richard Drew) |
By JOSH HARDWICK
The U.S. government and financial system have been breaking all the wrong records lately.
Wall Street plunged nearly 800 points Monday in the single greatest point drop ever on news that the U.S. House of Representatives voted down a bill to buy up the country’s bad mortgages.
For reference, the previous largest single-day drop was 684 points on Sept. 11, 2001.
Last month members of the U.S. Treasury and Congress pushed for an unprecedented proposed bailout of the country’s major banking institutions, many of whom – such as Freddie Mac, Fannie Mae and now Washington Mutual and Wachovia – hold billions in subprime mortgage loans that debtors cannot afford to pay off.
The bill, officially titled the, “Emergency Economic Stabilization Act of 2008” called for the U.S. government to purchase banks’ economy-crippling mortgage securities in the amount of $700 billion.
For reference, the previous largest bailout was proposed just this month: $25 billion for propping up the struggling U.S. auto industry.
In addition to the massive price tag of this latest proposal, the newest bailout bill would have also granted the U.S. Treasury the power to spend without Executive or Judicial review.
The plan voted down Monday by a House vote of 228-205, sending stocks tumbling and lawmakers clamoring for a compromise.
Such a compromise is expected to be reached in the form of a new proposal as early as Oct. 2, though local representatives are insisting on major changes before giving their support.
U.S. Rep. Ted Poe called the failed proposal a “sellout” of the American people, whereby the mistakes of subprime-lending financial institutions would have been pushed off onto taxpayers.
“They just wanted taxpayers to cover their losses, like a gambling debt,” said Poe, who represents Texas’ 2nd Congressional District.
Poe also expressed disapproval over the development of the bailout plan by U.S. Treasury Secretary Henry Paulson and certain members of Congress, whom he feels tried to keep the bill from being discussed before it was brought before the House.
“The leadership in both parties supported the bill. Rank-and-file members voted it down because it was done in the back rooms of the Capitol with very little input from most members of Congress,” he said.
So, what will have to change to get Poe’s vote?
The congressman said he would support the bill if it injected more capital into the marketplace without passing the cost on to the citizenry, such as requiring financial giants to purchase insurance plans for when their good loans go bad.
Poe said any options would be better than what he considers an attempt by the government to scare the public into accepting a bad deal.
“The politics of fear was the driving force behind this bill. Paulson presented no other options but his and would not listen to any other suggestions,” he said. “He is not the only one with ideas on how to fix this country, and we should listen to those other voices.”
Texas Democratic Rep. Gene Green voted against the $700 billion financial system bailout.
“I voted ‘N‘o’ although the bill has been improved substantially from the U.S. secretary of the treasury to the president, the Senate and Congress. Originally, they just wanted to have a $700 billion bill with no oversight,” Green said. “There would be no one to look at it and see how they were spending the money.”
Green said there were several changes made to the bill by Speaker of the House of Representatives Nancy Pelosi, House Minority Leader John A. Boehner and the Senate that made it better, but he had trouble with it stemming from the fact the bill helps investors, but did not do much for those who purchased high-risk mortgages.
“The bottom line is, I had trouble defending the bill to my constituents who may have those high-risk mortgages,” Green said. “It would be saying we are taking care of the investors on those mortgages, but the people who signed up for them are still being evicted unless they can negotiate. I was hoping the bill would have this. If we are changing the law for the investors, why can’t we help people who bought those high-risk mortgages?”
Green says to do that, a change in bankruptcy laws would be necessary.
“They way I understand the law, if someone files for bankruptcy, the judge is prohibited from reworking the original mortgage on the first home,” Green said. “If they have a second or third home, then the judge can do it. Most people in my area only have one home. Why wouldn’t we want to rework that loan so they can stay in their house and not have it foreclosed and just extend those loans?”
Green feels changing the bankruptcy laws is the only way to do it.
“That way mortgage companies know they have to negotiate or the person will just file for bankruptcy,” he said.
If the changes are made to the bill, Green said he feels more comfortable about saying to his people in the area they helped those with the loans and their neighbors as well.
“If there is a home that is foreclosed in a neighborhood, then that could lower the value of the neighborhood for everyone,” Green said.
Green said he would like to see what things have changed on the bill before he votes on it again. He hopes to get a chance to vote on it Oct. 2, but that could be delayed due to House members taking time off for Rosh Hashana.
“I’m worried they may change things I actually supported,” Green said.
Green said he supported that part of the bill that makes sure CEOs, owners of investment banks or a mortgage company that received huge compensation and did not have to file for bankruptcy pay money back if the government has to bail them out.
Preventing huge salaries is another issue Green wants addressed.
“Some of these people were making $15 million a year,” Green said. “It is hard to explain that to folks in my area who struggle to get by every day.
Green said he supports the proposal, made by some House Republicans, to raise the federal deposit insurance limit from $100,000 to $250,000.
“Now a lot of people in my district do not have $100,000, but it would make people feel safer about the banking system,” Green said. “This has passed the House several times, but not the Senate.”
Green said if they wanted his full support for the bill, then it would have to include unemployment compensation.
“Seeing in our area, there is high energy prices and low unemployment,” Green said. “But when the unemployment runs out in 13 weeks, there is no more. The House has always extended unemployment benefits in hard economic times. Some people in my area could not go to work for a t least a week due to Hurricane Ike.”
The financial bailout is not only affecting government officials, but local citizens as well.
Bob Ward, owner of Bob’s Computers and repair in Crosby, said he is happy Congress decided to vote down the proposed financial bailout.
“They need to take time to cross their T’s and dot all of their I’s,” Ward said. “It’ll hurt a lot of companies, especially car dealers and those in real estate.”
Ward said some of the blame can be laid at the feet of mortgage companies that lent out money to people for homes they could not afford.
“Mortgage companies are a cause of a lot of the problem,” he said. “They were too liberal when they lent money to people. Twenty-five years ago, you had to prove you had the resources and income as well as putting down a down payment. Now they aren’t even asking for a down payment in a lot of cases. Not everyone can afford a home and the ones who cannot shouldn’t have on unless they can pay for it.”
Ward agreed that a cap should be placed on executives of failing businesses.
“If they are in distress, they should not get bonuses,” Ward said. “I think it takes push and shove from the top down to the bottom. I am pleased they did not let that vote go through. They really need to sit down and really sharpen the pencil. People say we can’t wait., Well, we can wait. They need to put it down on paper right, so the next generation is not left in this situation.”
Ward also feels the recent strike from Hurricane Ike has prevented some from finding out as much as they need to about the financial situation.
“Some had their electricity back on pretty quick, but those who are not listening to the radio or reading the paper are not able to see what is going on,” he said. “I think some missed out on the first debate because of no electricity. I think (Hurricane Ike) definitely had an impact.”
BAILOUT VOTER RECORD: U.S. Representatives from Texas
YES (9):
KEVIN BRADY – 8th
KAY GRANGER – 12th
PETE SESSIONS – 32nd
LAMAR SMITH – 21st
CHET EDWARDS – 17th
CHARLIE GONZALEZ – 20th
RUBEN HINOJOSA – 15th
EDDIE BERNICE JOHNSON – 30th
SILVESTRE REYES – 16th
NO (23):
JOE BARTON – 6th
MICHAEL BURGESS – 26th
JOHN CARTER – 31st
K. MICHAEL CONAWAY – 11th
JOHN CULBERSON – 7th
LOUIE GOHMERT – 1st
RALPH HALL -4th
JEB HENSARLING – 5th
SAM JOHNSON – 3rd
KENNY MARCHANT – 24th
MICHAEL MCCAUL – 10th
RANDY NEUGEUBAUER – 19th
RON PAUL – 14th
TED POE – 2nd
MAC THORNBERRY – 13th
HENRY CUELLAR – 28th
LLOYD DOGGETT – 25th
AL GREEN – 9th
GENE GREEN – 29th
SHEILA JACKSON LEE – 18th
NICK LAMPSON – 22nd
SOLOMON ORTIZ – 27th
CIRO RODRIGUEZ – 23rd
Wall Street plunged nearly 800 points Monday in the single greatest point drop ever on news that the U.S. House of Representatives voted down a bill to buy up the country’s bad mortgages.
For reference, the previous largest single-day drop was 684 points on Sept. 11, 2001.
Last month members of the U.S. Treasury and Congress pushed for an unprecedented proposed bailout of the country’s major banking institutions, many of whom – such as Freddie Mac, Fannie Mae and now Washington Mutual and Wachovia – hold billions in subprime mortgage loans that debtors cannot afford to pay off.
The bill, officially titled the, “Emergency Economic Stabilization Act of 2008” called for the U.S. government to purchase banks’ economy-crippling mortgage securities in the amount of $700 billion.
For reference, the previous largest bailout was proposed just this month: $25 billion for propping up the struggling U.S. auto industry.
In addition to the massive price tag of this latest proposal, the newest bailout bill would have also granted the U.S. Treasury the power to spend without Executive or Judicial review.
The plan voted down Monday by a House vote of 228-205, sending stocks tumbling and lawmakers clamoring for a compromise.
Such a compromise is expected to be reached in the form of a new proposal as early as Oct. 2, though local representatives are insisting on major changes before giving their support.
U.S. Rep. Ted Poe called the failed proposal a “sellout” of the American people, whereby the mistakes of subprime-lending financial institutions would have been pushed off onto taxpayers.
“They just wanted taxpayers to cover their losses, like a gambling debt,” said Poe, who represents Texas’ 2nd Congressional District.
Poe also expressed disapproval over the development of the bailout plan by U.S. Treasury Secretary Henry Paulson and certain members of Congress, whom he feels tried to keep the bill from being discussed before it was brought before the House.
“The leadership in both parties supported the bill. Rank-and-file members voted it down because it was done in the back rooms of the Capitol with very little input from most members of Congress,” he said.
So, what will have to change to get Poe’s vote?
The congressman said he would support the bill if it injected more capital into the marketplace without passing the cost on to the citizenry, such as requiring financial giants to purchase insurance plans for when their good loans go bad.
Poe said any options would be better than what he considers an attempt by the government to scare the public into accepting a bad deal.
“The politics of fear was the driving force behind this bill. Paulson presented no other options but his and would not listen to any other suggestions,” he said. “He is not the only one with ideas on how to fix this country, and we should listen to those other voices.”
Texas Democratic Rep. Gene Green voted against the $700 billion financial system bailout.
“I voted ‘N‘o’ although the bill has been improved substantially from the U.S. secretary of the treasury to the president, the Senate and Congress. Originally, they just wanted to have a $700 billion bill with no oversight,” Green said. “There would be no one to look at it and see how they were spending the money.”
Green said there were several changes made to the bill by Speaker of the House of Representatives Nancy Pelosi, House Minority Leader John A. Boehner and the Senate that made it better, but he had trouble with it stemming from the fact the bill helps investors, but did not do much for those who purchased high-risk mortgages.
“The bottom line is, I had trouble defending the bill to my constituents who may have those high-risk mortgages,” Green said. “It would be saying we are taking care of the investors on those mortgages, but the people who signed up for them are still being evicted unless they can negotiate. I was hoping the bill would have this. If we are changing the law for the investors, why can’t we help people who bought those high-risk mortgages?”
Green says to do that, a change in bankruptcy laws would be necessary.
“They way I understand the law, if someone files for bankruptcy, the judge is prohibited from reworking the original mortgage on the first home,” Green said. “If they have a second or third home, then the judge can do it. Most people in my area only have one home. Why wouldn’t we want to rework that loan so they can stay in their house and not have it foreclosed and just extend those loans?”
Green feels changing the bankruptcy laws is the only way to do it.
“That way mortgage companies know they have to negotiate or the person will just file for bankruptcy,” he said.
If the changes are made to the bill, Green said he feels more comfortable about saying to his people in the area they helped those with the loans and their neighbors as well.
“If there is a home that is foreclosed in a neighborhood, then that could lower the value of the neighborhood for everyone,” Green said.
Green said he would like to see what things have changed on the bill before he votes on it again. He hopes to get a chance to vote on it Oct. 2, but that could be delayed due to House members taking time off for Rosh Hashana.
“I’m worried they may change things I actually supported,” Green said.
Green said he supported that part of the bill that makes sure CEOs, owners of investment banks or a mortgage company that received huge compensation and did not have to file for bankruptcy pay money back if the government has to bail them out.
Preventing huge salaries is another issue Green wants addressed.
“Some of these people were making $15 million a year,” Green said. “It is hard to explain that to folks in my area who struggle to get by every day.
Green said he supports the proposal, made by some House Republicans, to raise the federal deposit insurance limit from $100,000 to $250,000.
“Now a lot of people in my district do not have $100,000, but it would make people feel safer about the banking system,” Green said. “This has passed the House several times, but not the Senate.”
Green said if they wanted his full support for the bill, then it would have to include unemployment compensation.
“Seeing in our area, there is high energy prices and low unemployment,” Green said. “But when the unemployment runs out in 13 weeks, there is no more. The House has always extended unemployment benefits in hard economic times. Some people in my area could not go to work for a t least a week due to Hurricane Ike.”
The financial bailout is not only affecting government officials, but local citizens as well.
Bob Ward, owner of Bob’s Computers and repair in Crosby, said he is happy Congress decided to vote down the proposed financial bailout.
“They need to take time to cross their T’s and dot all of their I’s,” Ward said. “It’ll hurt a lot of companies, especially car dealers and those in real estate.”
Ward said some of the blame can be laid at the feet of mortgage companies that lent out money to people for homes they could not afford.
“Mortgage companies are a cause of a lot of the problem,” he said. “They were too liberal when they lent money to people. Twenty-five years ago, you had to prove you had the resources and income as well as putting down a down payment. Now they aren’t even asking for a down payment in a lot of cases. Not everyone can afford a home and the ones who cannot shouldn’t have on unless they can pay for it.”
Ward agreed that a cap should be placed on executives of failing businesses.
“If they are in distress, they should not get bonuses,” Ward said. “I think it takes push and shove from the top down to the bottom. I am pleased they did not let that vote go through. They really need to sit down and really sharpen the pencil. People say we can’t wait., Well, we can wait. They need to put it down on paper right, so the next generation is not left in this situation.”
Ward also feels the recent strike from Hurricane Ike has prevented some from finding out as much as they need to about the financial situation.
“Some had their electricity back on pretty quick, but those who are not listening to the radio or reading the paper are not able to see what is going on,” he said. “I think some missed out on the first debate because of no electricity. I think (Hurricane Ike) definitely had an impact.”
BAILOUT VOTER RECORD: U.S. Representatives from Texas
YES (9):
KEVIN BRADY – 8th
KAY GRANGER – 12th
PETE SESSIONS – 32nd
LAMAR SMITH – 21st
CHET EDWARDS – 17th
CHARLIE GONZALEZ – 20th
RUBEN HINOJOSA – 15th
EDDIE BERNICE JOHNSON – 30th
SILVESTRE REYES – 16th
NO (23):
JOE BARTON – 6th
MICHAEL BURGESS – 26th
JOHN CARTER – 31st
K. MICHAEL CONAWAY – 11th
JOHN CULBERSON – 7th
LOUIE GOHMERT – 1st
RALPH HALL -4th
JEB HENSARLING – 5th
SAM JOHNSON – 3rd
KENNY MARCHANT – 24th
MICHAEL MCCAUL – 10th
RANDY NEUGEUBAUER – 19th
RON PAUL – 14th
TED POE – 2nd
MAC THORNBERRY – 13th
HENRY CUELLAR – 28th
LLOYD DOGGETT – 25th
AL GREEN – 9th
GENE GREEN – 29th
SHEILA JACKSON LEE – 18th
NICK LAMPSON – 22nd
SOLOMON ORTIZ – 27th
CIRO RODRIGUEZ – 23rd
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