This article first appeared in the St. Louis Beacon: October 2, 2008 - Rep. William Lacy Clay, D-St. Louis, told Beacon reporters before the vice presidential debate Thursday night that he will vote no Friday when the revised financial bailout plan reaches the House.
Clay said he opposes the measure because of both its increased price, over $800 billion, and its top-down approach. Clay said it would have been better to help homeowners having trouble paying their mortgages.
Clay said a main reason he was opposing the bill is the overwhelming opposition of his constituents. His office has been receiving more calls in favor of the bill in the past few days, since the first House vote, but he attributed that to orchestrated calls from employees of Wachovia and Edward Jones employees. "Many of them don't live in the First District," he added. Clay also said that he didn't trust Treasury Secretary Henry Paulson.
The Congressional Black Caucus has discussed the bill in the past few days and most member of the Caucus will oppose it, although Clay added that "they'll probably pick off a few" to vote for the bill.
Although he won't be voting on the measure, Mo. Gov. Matt Blunt also said he opposes it. That's so even though his father, Rep. Roy Blunt, has been one of the key Republican leaders working to pass a measure.
Rep. Todd Akin, R-Town and Country, also continues to oppose the economic rescue plan.
In advance of the House vote expected on Friday, Akin spokesman Steve Taylor said Thursday that most of the constituents who contacted the congressman remain opposed to the package, and so does Akin.
"We are hearing from constituents on a level that is unprecedented," Taylor said, acknowledging that the tide against the proposal has abated somewhat since dramatic drops in the stock market earlier this week.
"We take all contacts seriously. All of the concerns are valid. It's still running much more against."
Akin's opposition continues to be based on concerns that the people who would run the bailout program are people who were in charge when the financial emergency emerged.
"Seven hundred billion dollars in taxpayers' money would go to Treasury Secretary Paulson to disseminate at his discretion." Taylor said. "That's particularly distressing given that Paulson was one of those at the helm for this crisis.
"Paulson is saying, 'Let's buy this back and hold it because it does have some value.' Whether that's true or not, we don't know. It's been a situation where a huge expectation has been created in the market and is tied to it psychologically. It's sort of an ultimatum mentality, but there is no addressing of alternative proposals for a solution. You do not hand out $700 billion without one committee hearing."
As an alternative, Akin has co-sponsored HR 7223, which has among its provisions to suspend the capital gains tax, schedule the government-sponsored enterprises for privatization, repeal the Humphrey-Hawkins Full Employment Act.
Jerry Costello, D-Belleville, also remains a no vote. David Gillies, his chief of staff and press secretary, said this afternoon that the core bill has not changed enough for Costello to change his negative vote from earlier this week.
He also is worried that a false sense of urgency is pushing the bill too fast.
"He certainly thinks we've rushed it," Gillies said, "and set up an artificial time line. We need to be considering more carefully other approaches."
Gillies would not get more specific on what alternatives Costello would prefer.
He said that while constituent response has become a little more favorable toward the bailout than earlier this week, "still the vast majority is against it."
Another no vote earlier this week, Rep. William Lacy Clay, D-St. Louis, would not say today how he plans to vote the next time around. But his office confirmed that like Akin, Clay has seen a majority of calls to his office still opposed to the bailout proposal.
Sen. Claire McCaskill, D-Mo., announced Wednesday morning that she would vote tonight for a revised bailout or rescue plan partly because it includes tax breaks that would help Missourians. The original $700 billion plan has been modified to include protection against paying the alternative minimum income tax, aid for rural schools and a phased approach to the spending.
Sen. Christopher S. Bond also expressed support for the measure. In a statement released to the press, he said, “I will vote tonight to keep the credit crisis from spreading from Wall Street to Main Street, which would put workers' paychecks, families' savings and seniors' retirement in jeopardy. This rescue plan is not a blank check and I fought to ensure that the compromise bill now includes oversight to protect taxpayers, accountability so failed CEO's don't get golden parachutes and transparency so families can know their money is safe.”
In a conference call to reporters, McCaskill acknowledged that she didn't really like the Senate bailout package, but she said she had no choice except to support it. She called the plan a far cry from the original Bush administration proposal.
"We're not giving him a blank check or even a check," she said of the Senate plan. "This is not a check written to Wall Street. It's a check written for assets" that would be bought cheaply, for perhaps as little as 20 cents on the dollar, and reap a profit for the government once the economy stabilizes and the assets are sold.
She stressed that nobody is sure how much the assets are worth -- and was reluctant to put a price tag on them. "The problem we have now," she said, "is that these assets don't have a price." But she said she would vote for the Senate proposal "because I think the alternative is much worse. It's the best thing for our economy, for taxpayers and for people in Missouri."
She blamed the Bush administration for the market's instability, saying, "I don't like the idea to use taxpayer money to buy this paper in the first place. It is absolutely an insult that this administration" and "the Republican Party have been focused on...deregulating everything over the last 7 1/2 years."
She was particularly pleased with the tax credits, which she said included credits for "alternative fuel, which is very important to our economy."
In addition, McCaskill echoed Sen. Christopher S. Bond, R-Mo., in supporting the plan to raise to $250,000 from $100,000 the cap on federal insurance deposits. Lawmakers said that carrot not only would shore up some banks but would sweeten the deal for politicians who otherwise might be reluctant to support the bailout package.
Updated 10 p.m. Sept. 30: Senate announces changes, says it will vote on revised plan Wednesday. | Washington Post
Sen. Christopher S. Bond, R-Mo., says Congress has to revisit the plan to buy troubled assets and restore liquidity to the marketplace. "The first thing we have to do," he said, "is stop political blame games, stop finger pointing ... and recognize we have a tough fight ahead of us."
The second step is to get back to work on a bill that will pass. Senate staff started talking right after the House vote, he said, and Bond said he would be open to some minor tweaks. But he doesn't want so much of a change that people who voted for the bill would change their minds. The final bill, he predicts, will include modest revision but not sweeping changes.
"It's like loading frogs in a wheelbarrow," Bond said. "While you're loading them in one side, you have to make certain you're not losing more from the other."
Bond says he is hearing from Missourians "who believed it was necessary and are furious. Small businesses and others who need credit are afraid they'll go under." He told a cautionary tale of a large car dealership in the Southeast that has locked its doors. No such stories have surfaced in Missouri, yet.
One idea gaining momentum is to increase the deposit insurance levels to $250,000 or higher. According to Bond, this could help persuade people to keep their money in banks rather than moving into Treasury bills or other vehicles. And that, in turn, is important to small banks throughout Missouri, Bond said.
Whether the change in FDIC insurance is the tweak that makes the difference on this bill -- the bipartisan Main Street rescue bill, as it is referred to on the senator's website -- or is treated separately, Bond thinks the idea is good.
After this crisis is has been dealt with, Bond said, "We need to revisit the issue of how we regulate banking and the stock market."
FDIC insurance might be part of that, but he said that Congress should also look at how to "regulate that which is not now regulated." He noted that a lot of people are offering mortgages that are free of regulations. "We know who these people are. We need to register them" and hold them to the standards of others.
Most members of the St. Louis area House delegation voted with the majority Monday in defeating the $700 billion economic bailout proposal by a vote of 228 to 205.
Among those in the local delegation who voted against the bailout were Rep. Todd Akin, R-Town and Country; Rep. William Lacy Clay, D-St. Louis; Rep. Jerry Costello, D-Belleville; and Rep. John Shimkus, R-Collinsville. Voting for the bailout were Rep. Russ Carnahan, D-St. Louis, and Rep. Jo Ann Emerson, R-Cape Girardeau.
Akin expressed strong reservations last week before the compromise package was drafted over the weekend. When it came time to cast his vote, he still opposed the plan.
"Although it's serious and something that needs to be done," his spokesman Steve Taylor said, "the congressman does not accept the premise that this is the only solution."
Taylor noted that Treasury Secretary Henry Paulson, who would gain considerable authority under the plan, was one of the people who had contributed to the crisis atmosphere in the first place, so Akin was not sure that he should have such a central role in the solution.
Taylor also said that Akin was unhappy with the perceived urgency behind the plan.
"The time frame is one of the most disturbing elements," Taylor said.
Costello, who also voted against the proposal, said in a statement released after the vote that he was concerned about the haste with which the proposal had been drafted and brought to a vote.
"I voted against this unprecedented bailout because we are moving too quickly to rush this proposal through and have not adequately considered other approaches to solving the problem of bad debt and tight credit," Costello said.
"I have not been convinced that it is imperative we act right now, or that this proposal will solve the problem as indicated. In fact, numerous economists insist that the Paulson approach will not work. And I resent being told by the investment bankers in the Bush administration and on Wall Street -- the very people that have railed against government oversight in the financial industry for years -- that the taxpayers must come to their rescue."
Costello balked at what he considered too large of a share of the burden being placed on taxpayers.
"What is essential," he said, "is that Wall Street help pay for any program to heal the economy; $700 billion is too much to ask taxpayers to bear without a requisite sacrifice from the industry that bears much of the responsibility for bringing us to this point."
Emerson was one of 65 Republicans who voted in favor of the package, including Rep. Roy Blunt of southwest Missouri, who worked to help put the plan together.
In a statement after the vote, Emerson said: "The failure of this legislation means financial institutions, small businesses and Americans with pensions, retirement accounts, and savings are still at risk from irresponsible actions on Wall Street. This is a serious problem that requires a serious solution.
"The threat posed to Main Street Southern Missouri is real, and I will continue to work for a solution that is transparent and accountable to taxpayers."
Carnahan, who also voted for the plan, said in a statement, "I voted for the Economic Stabilization Act because I believe taking no action would be a considerable risk of serious pain for America, as witnessed by today's negative reaction of the stock market. The legislation would not reward Wall Street for bad risks. Instead it would keep local banks open. It would protect retirement accounts. It would help families get the credit they need. It would keep small businesses alive and hiring."
Donna Korando and Robert Joiner of the Beacon staff contributed to this report.