The federal government’s bailout plan ballooned quickly last week — in words, not in dollars. The White House’s initial proposal was a mere two pages, and Sen. Christopher Dodd (D-CT) responded with a 44-page bill. The final bill that was defeated Monday in the House of Representatives tallied a whopping 109 pages. (The full text and roll-call vote are available at http://clerk.house.gov)
All three versions asked taxpayers for $700 billion to purchase toxic mortgage-related assets from financial firms.
The final bill included provisions for purchasing and insuring troubled assets; creating an oversight board; requiring regular reporting; addressing conflicts of interest and foreclosure mitigation; assisting homeowners; reforming credit and more. It also took out language presented in President George W. Bush’s original bill that would have allowed Treasury Secretary Henry Paulson Jr. to make decisions on the economy with no oversight from Congress and the federal court system.
The congressmen for Northern New Mexico said it didn’t go far enough in fixing the financial crisis. Rep. Tom Udall (D-NM) joined 227 other representatives in voting against the bill Monday. (205 representatives voted for it.) Udall spokesman Sam Simon said the congressman doesn’t have a litmus test for what would be acceptable — he just felt that key principles were being ignored.
Simon said those principles are, broadly, more taxpayer protections, less help for corporate executives, more help for homeowners and new rules to make sure financial firms can’t endanger the economy in this way again.
Udall is in a fierce battle with Rep. Steve Pearce (R-NM) for one of New Mexico’s two Senate seats. Pearce also voted against the bailout bill.
University of New Mexico management professor emeritus Allen Parkman said economists are almost universally against the bailout plan, because they believe the market will eventually recover and learn from its mistakes. Unfortunately, Parkman said, people expect the government to do something — and it’s an election year.
“The political process is biased toward doing something, when in fact doing nothing may be the best course of action,” Parkman said.
But at least one of Parkman’s colleagues said the bailout is the lesser of two evils — with the greater evil being a full-fledged economic collapse.
“We hate a bailout, and they’re bad, but we’re doing it not in the interest of people on Wall Street,” University economics professor Matias Fontenla said. “We’re trying to save ourselves.”