By Judith Yates Borger, Marisa Helms and Catharine Richert
Tuesday, Sept. 30, 2008
Reps. Jim Ramstad, Collin Peterson and Tim Walz voted against the finanical rescue plan, but when the U.S. House comes back later this week to give the measure another go, the trio will likely be high on congressional leadership’s list of members to sway in favor of the bill.
House leaders only need 13 more votes for the bill to pass, and they will be spending the next few days wrangling support where ever they can get it.
In part, that effort will likely focus on a group of 49 fiscally conservative members, known on Capitol Hill as Blue Dog Democrats. Peterson is card-carrying member, and voted against the measure.
Peterson is in a very safe seat. Earlier this week, he said that a vote against the bill for him would be a vote for his conscience and his constituents. People in his district do not favor giving the Treasury Department that kind of power, he said, and neither does he.
“A lot of the Blue Dogs, given what’s on the table, don’t see a lot to work with,” Peterson said.
House Speaker Nancy Pelosi was able to rally some Blue Dog support for the bill by insisting that an unrelated tax cuts bill be paid for. While that didn’t seem to sway Peterson, some of the changes being discussed this week could change his mind. Democratic presidential nominee Barack Obama has suggested negotiators raise the FDIC insurance cap on investments, and Peterson said he agrees with that idea. Other changes could include cutting the capital gains tax and dolling out that $700 billion to the government in even smaller installments than those already outlined in the bill.
Walz, who also voted against the bill and whose office received more than 1,000 calls opposing the bailout, said he thinks the bill does too much for investors and not enough for taxpayers. Like many other conservative freshman Democrats, Walz won his district by a small margin in 2006 and will need to take constituent concerns to heart this fall as he aims for a second term.
Meanwhile, Ramstad is a retiring member, so he’s got little to lose by voting for the unpopular bill. However, Ramstad expressed strong doubts, saying in a statement, “The administration’s bailout plan imposes great risk to taxpayers and no guarantee of success. Because this bill was considered in such haste, without adequate hearings or debate, nobody knows what this complex financial scheme will produce, so the final cost to taxpayers is uncertain.”
Republican and Democratic leadership made a big push earlier this week to bring the 26 members who will not be seeking office again on board with the plan. And while 18 retiring members ended up voting for the measure, Ramstad was one of eight holdouts — a group that makes up more than half the number of votes leadership needs to pass the bill.
Minnesota’s House delegation split 4 to 4 Monday across party lines in an unsuccessful congressional attempt to pass a bipartisan plan.
The measure, which had the support of congressional leaders and the Bush administration, failed on a House vote of 228 to 205.
Supporting the measure were 2nd District Republican Rep. John Kline, 4th District Democratic Rep. Betty McCollum, 5th District Democratic Rep. Keith Ellison, and 8th District Democratic Rep. James Oberstar.
Voting against the bill were 1st District Democratic Rep. Walz, 3rd District Republican Rep. Ramstad, 6th District Republican Rep. Michele Bachmann and 7th District Democratic Rep. Peterson.
What the delegation says
MinnPost Monday asked members of the Minnesota’s House delegation and U.S. senators — and the candidates running against them — to give their views on the situation. Here are responses MinnPost received Monday and today. We will update the story as more responses come in.
Rep. Tim Walz, Democrat:
“I don’t believe the package on the floor, first and foremost, protected taxpayers and got to heart of the foreclosure issue,” says Walz, who voted against the package.
Walz says his office received more than 1,000 calls opposing the bailout package.
He says that although congressional leadership is moving in the right direction with the most recent version, including stronger oversight provisions, Walz says the focus is still not in the right place.
“In the bill there’s a lot of ‘shalls’ referring to Wall Street, and a lot of ‘maybes’ for Main Street,” says Walz. “I know it’s the overused cliché of the week, but my office sits on Main Street. It’s a real place, with real people, and I don’t understand why there aren’t more benefits for them.”
Walz says what’s needed now is new thinking. “We’re in a financial train wreck, that’s obvious to everyone,” says Walz. “It’s not going to work to allow the same bad ideas to get us out of this. We need a different angle.”
Brian Davis, Republican:
He, too, would have voted against the bill.
“We need to take this opportunity to fix what caused the problem to begin with before hundreds of billions of dollars are put at risk,” says Davis of Rochester. “A lot of people have been raising the red flag about this for years. If the underlying structural problem is not addressed, then who’s to say the bailout would be successful and won’t happen again?
Gregory Mikkelson, Independence Party:
He also opposes the package. He says there’s no reason for government to bail out the businesses that have the capacity to succeed or fail on their own. He says the crisis shows that people need to take more interest in their government.
“People think Congress will handle it, but (Congress) can bend whichever way the wind blows or the money flows from PAC groups or lobbyists,” says Mikkelson. “People need to take a very active role in politics. It’s our responsibility to be part of government.”
Rep. John Kline, Republican:
In a written release, Kline called his vote in support of the measure a “difficult decision.”
“We were asked to cast our vote for an imperfect, but important, solution,” wrote Kline. “Unfortunately, this bill did not pass, and the crisis continues.”
Kline said that he had heard from thousands of his constitutents who “voiced concern about the liabilities they would face under the bailout plan” and also are worried about their bank accounts.
Although Kline called the package a “bipartisan solution,” he took shots at his colleagues across the aisle:
“My Republican colleagues and I stood firm against the original, seriously flawed plan, as well as irresponsible provisions supported by my Democratic colleagues — including slush funds for left-leaning political organizations. We demanded that Wall Street finance its recovery through a federal insurance program. We also fought to ensure no golden parachutes would be available to corporate executives who made reckless decisions.”
Steve Sarvi, Democrat:
Rep. Jim Ramstad, Republican:
The incumbent, who voted against the measure, is not seeking re-election. He said in a statement:
“Four hundred of the nation’s top economists signed a petition to Congress objecting to the bailout plan, as they are skeptical of the federal government buying up toxic mortgage-backed assets from banks and hoping the benefits trickle down from Wall Street to Main Street,” said Ramstad, who voted against the measure. “According to these economists, the long-term effects of this financial scheme – higher inflation, a weakened dollar and a greater national debt – will outweigh any short-term stabilization of the credit markets.
“Rather than providing $700 billion of taxpayer money to buy frozen mortgage assets to solve the current problem, Congress should adopt the plan to insure mortgage-backed securities through payment of insurance premiums by the holders of these assets.”
David Dillon, Independence Party:
He said the bill that was defeated was pretty good, but if it were up to him, he’d put the bill on a shelf and have it ready to pass “at a moment’s notice,” if the markets freeze. “There is an obvious and distinct possibility that Wall Street saw an opportunity to spook Congress.”
Ashwin Madia, Democrat:
Madia said a bipartisan majority rejected the proposal because there is more work needed. “The rescue plan must be directed towards middle-class Americans,” he said in a prepared statement. “Any legislation must offer real and substantive protections to taxpayers. There must not be any golden parachutes. Increased oversight of the financial services sector is essential.”
Erik Paulsen, Republican:
Rep. Betty McCollum, Democrat:
“This was a tough vote, but our job in Congress is to make tough decisions and lead this country — especially when the financial future of every American family is at risk,” she said in a statement released after the vote. She voted in favor of the bill.
“The inaction of the Congress today caused a historic stock market free-fall that now puts our economy in even more danger.
“Unfortunately, a majority of my colleagues chose to protect their political futures, or their ideological purity, instead of protecting the home values, life savings and the retirement security of the families we represent. Congress needs to get back to work immediately because every job, every pension and every business in this country is at risk.”
In an earlier statement, she said, “Every American with a job, a pension or bank account has a stake in seeing this crisis resolved,”
According to a McCollum spokeswoman, her office received more than 1,600 contacts from constituents with a majority of the calls against the president’s original plan, though many also said they wanted something done to prevent the crisis.
Ed Matthews, Republican:
“This is a victory for the hard-working American taxpayers today,” according to Matthews, who says he opposes the bill and would have voted against it. “I hope Congress does not consider this legislation in the weeks and months to come. It should be left as the defeat that it is.”
Matthews contends the country is not facing a crisis, but rather a “hard economic time.” He says the market is simply correcting itself. He says the fault of the current situation falls squarely with the federal government.
“The market is reacting to foolish government policies,” says Matthews. “There’s been an ‘easy money’ policy for too long, where interest rates have been too low, and for too long, the fed has encouraged banks to lend to people without good credit, few assets and no down payment.”
Matthews says the government should not be picking winners and losers and that the free market will sort itself out.
Rep. Keith Ellison, DFL:
He said he voted for the bailout bill, even though he didn’t like it. The failure of the bill to pass, he said, “may give us an opportunity to go back and get a better product.”
Ellison said he would like to see an improved bill that gives some relief to homeowners by buying some of their debt, as well as the debt being carried on Wall Street. He would like to see an improved bill that restores the provision that allows judges to renegotiate mortgages and removes the cap on FDIC insurance.
About 600 people have called or emailed him since last week, and “100 percent of them are hopping mad,” he said. “But a large number of people know something must be done.”
Chatter among his colleagues left Ellison thinking that people didn’t think the situation was dire.
“When you see the Dow drop 400 points in three minutes, you’re watching your retirement diminish in front of your eyes,” he said. “This is nothing to be taken lightly.”
Barb Davis White, Republican:
Rep. Michele Bachmann, Republican:
She voted against the measure.
“As I’ve stated previously, this plan was rushed, unworkable, and short-sighted,” Bachmann said in a statement. “A majority of House Republicans have parted ways with President Bush on this plan and we demand that alternative proposals be put on the table.”
Bachmann would support a plan that would have Wall Street bail itself out, “not hard-working taxpayers, by requiring institutions to insure troublesome assets that are causing today’s credit crunch.”
Her plan would suspend mark-to-market accounting, which forces companies to take losses on artificially devalued assets on an artificial timetable, to give investors more confidence.
“The plan I support would break up Fannie Mae and Freddie Mac so that the encumbered taxpayer no longer backs them — implicitly or explicitly — and so that they do not artificially grow larger than the market will allow.
“Furthermore, the plan I support suspends capital-punishing tax rates to bring more capital into the U.S. markets, rather than our foreign competitors. And, the plan ensures the Federal Reserve’s attention is focused on long-term price stability, rather than short-term economic growth,” she said. “Finally, it requires the U.S. treasury to write rules keeping executives who made the risky decisions from personally profiting from them with excessive compensation or golden parachutes, all at the expense of taxpayers.”
El Tinklenberg, Democrat:
He says he would have voted for it. He says he opposed the original White House but believes the changes that were included in the final bill were moving in the right direction and should have passed.
“We needed to send a message that we’re ready to take aggressive and strong actions to stabilize the financial markets and the economy,” says Tinklenberg. “Instead, the worst thing happened, we floundered into indecision and uncertainty.”
Tinklenberg says the package isn’t perfect and he and others in his district do have concerns about who benefits.
“But more than that, there’s a concern about a lack of direction here,” says Tinklenberg. “A lack of somebody to take control and lead, to help resolve this. By just doing nothing, uncertainty will grow and escalate. It’s incredibly irresponsible to not have a package that communicates leadership and confidence to the markets.”
Bob Anderson, Independence Party:
He says he would have voted against the bill.
“There were some improvements over the first proposal, but it’s still too soon,” says Anderson. “I’d like to see more people weigh in, other options. This didn’t happen overnight, and it can’t be solved overnight.”
The bill’s failure does not surprise Anderson. “Constituents are coming out 2 to 1 against the bailout,” says Anderson. “Taxpayers shouldn’t have to pay for the mistakes of banks and mortgage companies.”
Rep. Collin Peterson, Democrat:
“Like the overwhelming number of Minnesotans who spoke to me about the Wall Street bailout bill, I didn’t think this proposal was the right solution and so I voted against it,” Peterson said. “I think there are widespread concerns among economists and other financial experts that what was proposed wasn’t going to work and that, in the long run, it might have even made matters worse.”
In a prepared statement Peterson said the bill would have given too much power to Secretary of the Treasury Henry Paulson.
“I don’t disagree that we have a problem in our credit markets and that Congress needs to take an active hand in getting us out of this mess, but handing the secretary of the treasury 700 billion taxpayer dollars to buy up Wall Street’s bad debt was not the right solution,” he said.
Instead, Peterson favors raising and expanding the coverage limits of FDIC insurance, requiring market transparency and federal regulation of the swaps market.
“We can change the ‘mark-to-market’ rules to create a more realistic and flexible system,” he said. “Where government funds are required we can make real investments, buying preferred stocks and real assets instead of allowing poorly managed companies to basically dump their bad assets off on the taxpayer.”
Glen Menze, Republican:
Rep. James Oberstar, Democrat:
He calls the outcome of today’s vote “very disappointing” and warns of grave consequences for the economy.
“I was quite surprised that only a third of Republican votes came forward on this critical – not just for the U.S. but for the world — financial market rescue plan,” says Oberstar, who supported the measure. “I thought, in the end, it would pass.”
Oberstar says he worries that small businesses could be hard hit if the crisis continues. He says the credit market is drying up, which will have a “cascading effect” in the market place.
“If small businesses are not able to get the capital they need to conduct their business affairs, they’ll have to shrink and lay people off,” says Oberstar. “There’ll be a cascade of job losses, of economic stagnation and downturn. It could lead to a depression, not just a temporary recession.”
As the news spreads around the world, Oberstar predicts an even wider fallout that could further weaken the U.S. economy.
“Asia will evaluate both the market response (the 7 percent stock market dive) and the political consequences,” says Oberstar. “And that may have the effect of further constricting the stock market, and the flow of capital, and we could see even more serious adverse reaction in the financial marketplace.”
But it’s that worldwide reaction that Oberstar thinks could bring all sides back to the table to get a deal done.
Oberstar also says he suspects the Senate could take up and pass an identical bill with some possible adjustments on Wednesday or Thursday and then send it back to the House.
“I think in that case the House members would be more assured they could change their vote and support it,” says Oberstar. “There are still safety valves in the political system that would make it possible to pass this rescue plan.”
Oberstar supports the bill, even though the majority of constituents contacting him oppose it.
Oberstar spokesman John Schadl says the congressman’s office received about 1,400 calls and e-mails this week about the bailout package. “All but about 100 were against the plan as it was originally proposed by Secretary [Henry] Paulson a week ago,” says Schadl. “Today, when people started to hear how the plan had been changed, we were finding that people were becoming more receptive to it.”
Michael Cummins, Republican:
Sen. Norm Coleman, Republican:
In a statement issued Sunday, Coleman said: “The need to address our nation’s financial crisis is not something that can wait, and I believe my colleagues on both sides of the aisle have been aggressive in pursuing compromise solutions to this crisis. The consequences of doing nothing, or sliding into a partisan quagmire, are too great for us to not act on behalf of Main Street, not Wall Street, and hard working moms and dads across Minnesota.
“While I am reviewing the details of the agreement that has been reached, it does appear that my principles and priorities for this financial stabilization package have been adopted. These criteria – no blank check, no golden parachutes, aggressive oversight and clear limits on executive compensation – are basic and essential to my support. I will reserve final judgment until I have had the opportunity to fully review this package. However, I am hopeful that it will meet the very stringent tests that I have insisted upon, and which are essential to protecting American families, throughout this debate.”
Al Franken, Democrat:
“Whether you support or oppose this plan, it is a sad day in America when taxpayers are asked to foot the bill for a mess they didn’t make – especially when that bill is for $700 billion,” Franken said in a prepared statement.
“Think about it: That’s more money that the government pays out every year in Social Security. It’s more than the Pentagon budget. And it’s more than we’ve spent in the entire Iraq War. Most importantly, it’s $10,000 for every Minnesota family at a time when we’re already stretched to the limits.
“That’s real money, and any plan that wants to take it out of our pockets deserves careful consideration, not a rush job.
“I’m going to take a close, hard look at the specifics of this package before I pass judgment on it. It’s not enough that the bill is now better than it was when the administration hastily threw together a three-page proposal. I need to be convinced that taxpayers will be protected and that executive compensation packages won’t be. And I need to be convinced that the bill will fix the systemic under-regulation that led to this crisis in the first place.”
Dean Barkley, Independence Party:
He said that Warren Buffet’s support for the bill tipped him to a position where he would have voted for it, had he been a senator, despite a deep distrust of bailing out Wall Street.
“Unfortunately politics torpedoed [the bailout bill] today,” Barkley said. “If there’s one person to blame for the loss, it would be [Speaker of the House Nancy] Pelosi. If she actually wanted the bill to pass, why did she make [a speech ripping President Bush] before the vote?”
Barkley thought the bill was a big improvement on the original, but he didn’t like that it imposed no restriction on what debt the government would buy, or that it gave 45 days to make the buys, putting the debt-buying after the election.
“I’d like some guidelines of which instruments are going to be bailed out,” he said. “Will foreign investors be allowed? This all needs to be spelled out.”
“And I didn’t like that the same people who allowed this to happen are the ones who are going to figure a way out of it,” Barkley said.
He would like to see a provision that an independent business person – such as Buffet or Michael Bloomberg – would advise the president on the matter.
Sen. Amy Klobuchar, Democrat:
“Any financial plan must ensure that Main Street does not pay for the mistakes of Wall Street,” Klobuchar said. “I have made clear from the beginning that I opposed the Bush administration plan.”
Klobuchar said she and eight other senators have outlined principles they would like to see in a revised plan, “including less money by using installments, stronger oversight, protections for taxpayers, and limits on executive pay. I will review the details of any new proposal with these principles in mind.”
Correction: The version of this article posted Tuesday incorrectly reported that Rep. Tim Walz is a member of a group known on Capitol Hill as Blue Dog Democrats.