RISMEDIA, Sept. 29, 2008-(MCT)-After reaching a compromise to pump $700 billion into the world’s financial markets, lawmakers took on an even tougher task Sunday: selling the pact to skeptical colleagues and wary Americans. Congressional leaders and White House officials reached a tentative ”phased-in” Wall Street bailout deal yesterday-and now it’s time for deeply divided rank-and-file lawmakers to have the final say on an historic bill some argue is as important and contentious as the Iraq war vote in 2002.
As congressional leaders fanned out to explain the deal struck in the wee hours Sunday-and as exhausted staff members rushed to write the actual bill before a House vote today-many members questioned the wisdom of shotgunning a take-it-or-leave-it bill through Congress in a matter of hours.
But House and Senate leaders, including top House Republicans, said that the new plan sets the first real limits on executive pay, that it provides aid for homeowners facing foreclosure and that it comes with an IOU from Wall Street and the next administration for any money taxpayers spend.
Part of the sales job included fighting the “bailout” label. House Minority Whip Roy Blunt, R-Mo., said it was “a workout of the problem, rather than a bailout,” while House Speaker Nancy Pelosi said the bill “is not about a bailout of Wall Street. It’s a buy-in so we can turn our economy around.”
They also said the hard-fought pact was not open to renegotiation.
“The bill is frozen,” Pelosi said Sunday.
Pelosi, D-Calif., said the bill would go to the House floor for a vote today.
Assuming it passes there, Senate Majority Leader Harry Reid said he would rush the bill to the Senate for a vote, likely by Wednesday.
In the House, “I think it will get a majority, but it won’t get a huge majority,” said Rep. Barney Frank, the Massachusetts Democrat who was one of the chief negotiators of the pact.
Before the House Republican leadership’s endorsement of the plan, some remained concerned about the size of the plan.
Rep. Thaddeus McCotter, the Livonia Republican who vocally opposed the plan when it was unveiled last week, said earlier Sunday that he opposed the compromise, too, calling it “a fundamental change in the system of governance.”
“They can parcel it up, they can put ribbons on it, but $700 billion is $700 billion,” McCotter said. “If it were your money, you wouldn’t do it. The problem is Congress is spending someone else’s money.”
Sen. Judd Gregg, R-N.H., said the compromise made several improvements to what the Bush administration had unveiled last week. Leaders from both parties said they reluctantly agreed to shore up lending among banks, a pillar of the economy that could financially cripple many Americans should it collapse.
Financial firms “are so overcommitted with bad loans they can’t make good loans,” Frank said on C-SPAN. “The process of financing automobiles is about to shut down.”
Skeptics in the House
House Democrats have doubts about the plan, too. Asked what he thought of it, Rep. John Conyers, D-Detroit, said, “Not much.”
“We’re waiting to see how much room there is for improvement,” he said, following a meeting of what some House Democrats called the skeptics’ caucus. “I can tell you we haven’t gotten one call in 10 days in support of this plan.”
Rep. Mike Rogers, R-Brighton, said the backers of the compromise “haven’t gotten me there yet. There are a lot of changes I’d like to see, and I’ve heard from a lot of smart people that there are alternatives we haven’t heard about.”
But the lawmakers who crafted the compromise said speed was of the essence, and that the time for major changes to the bill had passed. While few senators appeared to outright oppose the plan, several House members from both sides of the aisle said support was slim.
The basics of the plan did not change from what Treasury Secretary Henry Paulson pitched last week. If approved, the government will spend up to $700 billion buying mortgages and other real estate related investments whose values have plunged because of the housing market meltdown.
Some of the changes include:
- An IOU for taxpayers. The U.S. Treasury plans to eventually sell the bad debt it buys, and assumes those values will rise. If the loans never recover, the new plan requires the treasury to take an ownership stake in the firms that sold the debt.
Should the treasury remain underwater on its investments in 5 years, the pact requires the president to tell Congress how the difference will be made up. Democrats wanted to require a small tax on Wall Street transactions to cover the cost, but Republicans objected.
Frank said he estimated the plan would likely cost taxpayers about $100 billion. Gregg said taxpayers could profit.
“At the end of the day, there really are no taxpayer funds at risk here,” said House Minority Leader John Boehner, R-Ohio.
- Limits on executive pay. If a company sells the treasury more than $300 million in assets, it cannot give its top five executives golden parachutes afterward, and it will lose the tax deductions on executive pay over $500,000.
If the treasury buys the debts directly, similar limits apply, and the companies can take back money paid as bonuses for gains that later turn out to be false.
“The party is over,” Pelosi said Sunday. “The era of golden parachutes for high-flying Wall Street executives is over.”
- The government also must work with mortgage companies to reduce the estimated 2 million foreclosures expected to hit homeowners over the next year.
Other changes include handing the money over in stages, with $350 billion up-front and $350 later on, and the inclusion of an insurance system for bad debts that House Republicans had pushed as an alternative.
GOP unsure of votes
House Republican leaders, who had objected to a proposed deal earlier in the week, emerged from a meeting with colleagues Sunday evening saying they were fully behind the bill, but unsure how many House Republicans would cast a vote in favor.
“We’ve made it pretty clear to our members that we are supporting this bill,” Boehner said.
Presidential candidates John McCain, a Republican, and Barack Obama, a Democrat, expressed cautious support for the plan, pending the final language of the bill, which Pelosi posted online Sunday evening. While Democrats control the House, Pelosi has said the bill must get dozens of Republican votes to pass — in part to lash the parties together against the opposition of constituents one month before the election.
“We will have to have bipartisanship to pass it,” she said.
Copyright © 2008, Detroit Free Press, Boston Herald
Distributed by McClatchy-Tribune Information Services.
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