$700B bailout plan fails in House

Published 11:38 pm Monday, September 29, 2008

Rep. Terry Everett was among the six Alabama Congressmen who voted for a $700 billion rescue plan for the nation’s financial system Monday, but the measure fell 23 votes shy of passing, 228-205.

The stunning vote shook the government, Wall Street and markets around the world and left both parties and the Bush administration scrambling to pick up the pieces. The Dow Jones industrials plunged nearly 800 points, the most ever for a single day.

Everett (R-Rehobeth) who represents the Wiregrass in the U.S. House, said in a written statement he supported the bill “reluctantly.”

“My distaste for the greedy people who put us in this crisis is beyond words,” he said. “But we are a nation of credit and that credit will collapse if nothing is done. People buy homes, automobiles and most things in our economy on credit. Many even buy next week’s groceries by using a credit card. Agriculture is Alabama’s largest industry and farmers could be unable to secure credit to plant next year’s crops.

“The compromise is also much better than the original bill. Slush funds have been eliminated, oversight to protect the taxpayer is included, total taxpayer investment may be closer to $350 billion rather than $700 billion, and the program sunsets in two years. This federal intervention into our free enterprise system runs against every conservative grain in my body, but I will reluctantly support this compromise measure.”

Republican Rep. Robert Aderholt of Haleyville was Alabama’s only Congressman who didn’t support the bill. Rep. Mike Rogers (R-Saks), Rep. Jo Bonner (R-Mobile), Rep. Spencer Bachus (R-Birmingham), Rep. Artur Davis (D-Birmingham), and Rep. Bud Cramer (D-Huntsville) all supported the measure.

The legislation the administration promoted would have allowed the government to buy bad mortgages and other sour assets held by troubled banks and other financial institutions. Getting those debts off their books should bolster those companies’ balance sheets, making them more inclined to lend and ease one of the biggest choke points in a national credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the national economy, which is already sputtering.

Stocks started plummeting on Wall Street even before Monday’s vote was over, as traders watched the rescue measure going down on television. The final stock tally was a 777-point drop, far surpassing the 684-point drop on the first trading day after the Sept. 11, 2001, terror attacks.

Locally, Edward Jones Investments financial advisor Bill Greenwald said big drops have happened before and will happen again.

“Obviously, when the House Republicans voted against the bill, the market reacted negatively to it,” Greenwald said. “Hopefully, Congress will bring it back, review and renegotiate. That’s the first step in helping the credit markets repair themselves.”

He said those who have a long-term investment plan should be fine.

“If you’ve got a good strategy for investments long-term. don’t let the short-term change it,” he said. “This has happened before, but people tend to forget.”

He pointed specifically to the 2000 to 20003 time period.

“It will cycle back around,” he said. “People need to stick to their investment strategies and plans during this time. American’s economy is still the strongest in the world. It always recovers.”

On Capitol Hill, Democratic leaders said the House would reconvene Thursday, leaving open the possibility that it could vote later in the week on a reworked version. “We need to put something back together that works,” a grim-faced Treasury Secretary Henry Paulson said after he and Federal Reserve Chairman Ben Bernanke joined in an emergency strategy session at the White House.

In the face of thousands of phone calls and e-mails fiercely opposing the measure, many lawmakers were not willing to take the political risk of voting for it just five weeks before the elections.