October 4, 2008
Bush Signs Bailout After House Vote Lawmakers Warn Road Ahead Remains Bumpy
By DIANA MARRERO
Washington -- The House passed a $700 billion bailout of the financial industry Friday in an effort to breathe life into an economy that is seriously ailing as credit continues to dry up. Congressional leaders immediately sent the bill to President Bush, who signed it into law less than 90 minutes later."We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said. "We have shown the world that the United States of America will stabilize our financial markets and maintain a leading role in the global economy."
But even as lawmakers congratulated each other for passing the measure, many were careful not to raise the expectations of the millions of Americans who could end up on the hook for billions of dollars.
"No one can be certain about this," said Rep. Barney Frank (D- Mass.), chairman of the House Financial Services Committee. "We are sure it will make improvements. It may work better or worse than we think. We will be watching it very closely."
The 263-171 vote comes just four days after the defeat of a similar proposal Monday contributed to the largest one-day stock market point drop in history. House leaders had worked to obtain at least an additional 13 votes for Friday's measure, which passed by a much wider margin than expected.
A total of 58 House members changed their votes from no to yes after hearing from nervous constituents worried about an economic collapse after the measure's failure earlier in the week. Wisconsin's eight House members didn't change their minds about the measure.
Democratic Reps. Gwen Moore, Ron Kind, Tammy Baldwin and David Obey voted for the rescue, as did Republican Rep. Paul Ryan. GOP Reps. Jim Sensenbrenner and Tom Petri and Democrat Steve Kagen voted against it.
Ryan, one of 91 Republicans who supported the measure, said the financial rescue may not completely avert a recession but will surely ease some of the country's economic troubles.
"We are going to have a bumpy road ahead of us," he said. "It's really a matter of doing everything we can right now to prevent a severe recession."
Kagen, one of 63 Democrats who voted against the measure, remained steadfast in his opposition.
"I understand that something must be done to revive our economy, but borrowing billions and billons in additional debt is not the answer," the Appleton congressman, who faces a tight re-election fight, said in a statement. "I was elected to represent the best interests of families in Northeast Wisconsin -- not Wall Street -- and this bill does not help them."
One month before election day, the drama unfolded in an intensely political atmosphere. A number of members of the Congressional Black Caucus who voted against the plan Monday said Democratic presidential candidate Barack Obama had helped change their minds. Republican presidential candidate John McCain also supported the measure.
The rescue plan allows the government to buy troubled assets from struggling financial companies, increases the limit on federal insurance for bank accounts from $100,000 to $250,000 and changes a federal accounting rule that will help ease the impact of questionable mortgage-backed securities on financial institutions.
The measure also includes business tax breaks, aid for victims of natural disasters in the Midwest and elsewhere, and money for rural schools.
Kind, a moderate Democrat from La Crosse, supported the final measure even though he worries that the tax provisions could increase the federal debt.
"The danger of inaction was much greater than the danger of action," he said in a statement after the vote. "My fear was that without this plan, we would see another economic freefall."
Treasury Secretary Henry Paulson pledged quick action to get the program up and operating, and Federal Reserve Chairman Ben Bernanke said he would work closely with Paulson to put the bill's provisions into effect.
"The legislation is a critical step toward stabilizing our financial markets and ensuring an uninterrupted flow of credit to households and businesses," he said.
Paulson and Bernanke publicly recommended that the federal government intervene to thaw frozen credit markets just two weeks ago. Congressional leaders did not change the core of the administration's proposal, but added measures to protect taxpayers and limit the compensation given to corporate executives if their companies participate in the government program.
After Friday's vote, several high-profile Democrats, including Obey, of Wausau, and Frank said Congress must turn its attention when lawmakers reconvene in January to revamping the federal rules that govern the nation's financial industry to prevent a similar meltdown in the future.
Obey, the Appropriations Committee chairman, blamed many of the current problems on systemic deregulation by the federal government over the last two decades.
"You wound up over time taking the umpire off the field," he said. "Now everybody's paying the price for it."
The Associated Press contributed to this report.
Copyright 2008, Journal Sentinel Inc. All rights reserved. (Note: This notice does not apply to those news items already copyrighted and received through wire services or other media.)
(c) 2008 Milwaukee Journal Sentinel. Provided by ProQuest LLC. All rights Reserved.