Pasadena Citizen - News
Compromise needed in bailout plan
By JOSH HARDWICK
The U.S. government and financial system have been breaking all the wrong kinds of 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 Thursday, 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 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 Gov. Rick Perry added, “In a free market economy, government should not be in the business of using taxpayer dollars to bail out corporate America. Congress needs to take off its partisan gloves and work together to bring both short and long term stability to the credit markets. They need to stop blaming each other and start thinking about solutions that put the taxpayers of this country first.”
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 Thursday, 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 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 Gov. Rick Perry added, “In a free market economy, government should not be in the business of using taxpayer dollars to bail out corporate America. Congress needs to take off its partisan gloves and work together to bring both short and long term stability to the credit markets. They need to stop blaming each other and start thinking about solutions that put the taxpayers of this country first.”
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