- The Washington Times - Tuesday, September 30, 2008

Backers of the $700 billion Wall Street rescue package, including both presidential candidates, vowed yesterday that Congress will deal with the nation’s financial crisis this week, saying that world markets, as well as ordinary Americans, are demanding action after Monday’s stunning rejection of the taxpayer-financed bailout bill by the House of Representatives.

“We’re staying here until the answer is ‘yes,’” Senate Minority Leader Mitch McConnell, Kentucky Republican, said on the Senate floor, vowing that “any solution will be a bipartisan solution.”

Senate Banking Committee Chairman Christopher Dodd, the Connecticut Democrat who was a key architect of the congressional compromise, told reporters, “I’m told a number of people who voted ‘no’ yesterday are having serious second thoughts about it.” He added, however, “there’s no game plan that’s been decided.”

A top House Republican aide said even a number of GOP members were reconsidering in light of the market and voter reaction.

“It was like the dog who chased the car,” the aide said. “Well, they caught it. Now what?”

After falling sharply Monday after the stunning 228-205 House vote against the bailout proposal, world markets staged a rally Tuesday, partially undercutting arguments from President Bush and top congressional leaders that Congress must act quickly.

Wall Street snapped back Tuesday after its biggest sell-off in years, as the Dow Jones industrials surged nearly 500 points to the 10,860 level. S&P index of 500 major stocks was up 58.35 points to 1,164.

Several lawmakers said that they had detected a dramatic change in public sentiment in the wake of the House vote rejecting the bailout plan. Congressional offices had been deluged in recent weeks by angry constituents opposed to the rescue package.

Bush: ‘Financial security of every American’ at stake

White House blames media for ‘bailout’ bust

Congress rejects historic bailout; Dow drops 778 pts.

“There’s been a dramatic shift in my office, and I’m hearing the same thing from other offices,” said Rep. John Campbell, California Republican who voted for the bill. “The calls and e-mails have gone from 80-20 against to maybe 50-50 since the vote, and it’s moving heavily toward the ‘yes’ said.

“What’s happening is that it’s sinking in to people that this crisis isn’t just for Wall Street, that it could impact them in a negative way,” Mr. Campbell said in an interview.

“My telephone calls are starting to change,” said Sen. Lamar Alexander, Tennessee Republican and supporter of the bill, saying many are now pressing Congress to act.

“We’re not going to sit around looking at the wreckage figuring out who to blame,” he said. “We can do that next week.”

But many House members who rejected the proposal, including Democrats and conservative Republicans, said Tuesday their conscience was clear.

“I have no regrets for doing my job [-] none,” said Rep. Elijah E. Cummings, Maryland Democrat. “Sometimes the train needs to be slowed down so that you can get it on track.”

Mr. Cummings, along with Rep. Peter A. DeFazio, Oregon Democrat, and several other liberal colleagues on Tuesday proposed several alternatives to the rescue plan that included changes to federal accounting rules and increasing the Federal Deposit Insurance Corporation limit to $250,000 from $100,000.

With his own party leading the revolt against the bill, President Bush made another public appeal for passage of the $700 billion package, after conferring with presidential rivals Sen. John McCain and Sen. Barack Obama

“I recognize this is a difficult vote for members of Congress,” Mr. Bush said in an early-morning appeal. “But the reality is we are in an urgent situation and the consequences will grow worse each day if we do not act.”

Mr. Obama gave one of his most explicit endorsements to date for the bill, telling a campaign rally at the University of Nevada at Reno that “the American economy that needs this rescue plan.”

“To the Democrats and Republicans who opposed this plan yesterday, I say: Step up to the plate and do what’s right for this country,” the Democratic nominee said.

Mr. McCain and Mr. Obama both endorsed a change to the bill designed to attract more House Republican support: raising the federal deposit insurance on bank deposits to $250,000. The aim of this change would be to reassure nervous Americans and hence their elected representatives at the Capitol that the legislation would shore up the faltering economy.

The proposal was praised by House Minority Leader John A. Boehner, who said Republicans had suggested the higher cap in the bill negotiations but had been blocked by Democrats.

Leaders of both parties Tuesday were trying to gauge what changes to the bailout compromise could be made to attract more of their own members.

Moves that might attract more liberal Democratic support include giving bankruptcy judges more authority to rewrite mortgage terms and “cram down” interest rates for homeowners threatened with foreclosure, which Republicans considered a deal-breaker in the original bill.

Democrats could also resurrect provisions to fund homeowner assistance through the liberal Association of Community Organizations for Reform Now (ACORN), add a transaction fee to stock trades to raise money for assistance programs, and extend unemployment insurance benefits.

Such moves might attract liberal black and Hispanic lawmakers who mostly voted ‘no’ Monday, but would almost certainly cause more House Republicans to vote against the bill.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, in a letter sent to Mr. Bush Tuesday afternoon, pledged to continue “working with you and our Republican colleagues to enact a bipartisan bill without further delay.”

The heart of the Bush administration plan would give the Treasury up to $700 billion to buy up bad home mortgages and mortgage-backed securities now infecting the books of the nation’s banks and other financial institutions. The U.S. credit markets will not recover until the bad debts are dealt with, Treasury Secretary Henry M. Paulson Jr. has argued.

The compromise bill included a number of provisions demanded by congressional leaders, including strict oversight of the package; pay limits for executives whose companies are helped by the plan; a congressional veto over approval of the second $350 billion tranche of spending; and giving an ownership stake in companies that are bailed out.

Supporters and opponents of the bill clashed on Capitol Hill over the surprising rebound in the stock market a day after the stunning vote. U.S. and global markets were up in early trading, with the Dow Jones index of industrial stocks rising more than 350 points at shortly after noon.

Opponents of the bailout plan said the rise showed the bailout was not needed to steady markets and that there was time to craft a better, less expensive rescue plan.

But Sen. Robert F. Bennett, Utah Republican and a backer of the plan, said the market rebounded because top congressional leaders and Mr. Bush vowed to push again for passage. He said that even with the recovery Tuesday, the market has yet to make up the 777 points lost Monday.

“If we break the expectations in the market that this will eventually pass,” he said, “the next time the markets will drop and there will be no coming back.”

With no votes scheduled for the Rosh Hashanah observance, lawmakers plotted strategy behind closed doors Tuesday. Options include amending the bill and holding a second House vote, possibly Thursday, and letting the Senate vote on its own version of the rescue plan first.

White House acknowledged that administration officials have inadequately explained the nature of the economic crisis and the need for a rescue plan.

But the administration also said that the complexity of the problem and the press coverage, not Mr. Bush, are to blame for the lack of clarity. The “bailout,” they say, is designed to free up the nation’s frozen credit markets and get new loans flowing to big and small businesses alike.

“Our communications challenge is explaining why the [London Interbank Offer Rate] is at all relevant to Americans’ ability to get an auto loan, or a small businesses’ ability to maintain their payroll rate,” said White House spokesman Tony Fratto.

The president has made several statements this week and last, including a prime-time address to the nation last Wednesday, in an attempt to sell his $700 billion plan to Congress and the public.

But Mr. Fratto downplayed the importance of Mr. Bush’s public statements.

“There has always been far too much made of any one president’s powers of persuasion on an issue,” he said.

Jon Ward and S.A. Miller contributed to this report.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide