Bailout splits Minnesota lawmakers -- Collin Peterson votes against it
ST. PAUL - Minnesota's U.S. representatives agree Congress needs to help fix the country's financial crisis, but on Monday divided their votes on a $700 billion plan to do that.
Rep. Collin Peterson said congressional leaders need to talk to more lawmakers than they have for the past couple of weeks.
"Clearly, they are going to have to go outside of the circle they have been talking to," said Peterson, adding that the Agriculture Committee that he leads "will be drug into this."
Minnesota's representatives split Monday as the House defeated the plan 228-205. Peterson and fellow Democrat Tim Walz voted against the proposal, joined by Republicans Michele Bachmann and Jim Ramstad. Four Minnesotans voted for the measure - Republican John Kline and Democrats Jim Oberstar, Betty McCollum and Keith Ellison.
"As it became increasingly clear that the financial crisis facing America was extending beyond Wall Street and threatening the jobs, homes and retirement security of the men and women reporting for work on main streets throughout Minnesota and across America, we were asked to cast our vote for an imperfect, but important, solution," Kline said. "Unfortunately, this bill did not pass, and the crisis continues."
Oberstar warned of consequences on stock markets, starting overseas and continuing when American markets open today.
"I think the confidence of domestic and foreign financial markets will be shaken," Oberstar told reporters.
Democratic and Republican leaders, who agreed to the package, now must talk to their members and see what changes could make the plan more acceptable, Oberstar added. He blamed the White House for not doing enough to win over Republican votes.
"When you're voting on painful issues of this kind the generally agreed upon principle is both parties share the pain," Oberstar said.
Oberstar, dean of Minnesota's congressional delegation, said he understands that Peterson and Walz had "very genuine, very real" concerns about the package.
"The bill we voted on today passes the buck when it comes to recouping the losses taxpayers might suffer," Walz said. "I also regret that this bill does not do enough to help average homeowners, or provide sufficient oversight of Wall Street."
Peterson talked to some members of his Agriculture Committee, known as the House's most bipartisan panel, to find a solution to the impasse.
While some congressmen say changes made to Treasury Secretary Henry Paulson's original bill improved the plan, Peterson said the Monday version was just "Paulson's plan with a few fig leaves."
"Bottom line: We are not convinced that Paulson's plan from the start was the right strategy," Peterson said.
"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 blank check to buy up Wall Street's bad debt was not the right solution," Peterson added.
One thing a new bill should do, he said, is increase federal insurance on bank accounts from the current $100,000 to $250,000.
Peterson said the Agriculture Committee will become involved in the dispute because commodity sales - the buying and selling of crops, for instance - is part of the problem.
After Monday's vote, Peterson met with some of his committee members and the Commodity Futures Trading Commission chairman.
Thirty-one of the Agriculture Committee's 45 members voted against the measure. Those are the ones Peterson is working with to find a new solution. Late Monday afternoon, Peterson said it was too early to know if a new consensus could be reached.
Peterson said the defeated bill did not consider up to $60 trillion in one type of questionable financial dealings, far more than addressed in the $700 billion proposal.
"Nobody knows what they are; nobody knows who holds them; nobody knows what problem there is there," he said.
"We have got to get some regulation on these swaps," he added.
Trillions of dollars have been invested in other shaky bonds and other financial documents, he said.
Peterson and some allies think the federal government should be given more freedom to buy interest in some of the troubled financial institutions and to snatch up some mortgages.
Before the vote, the western Minnesota congressman said, "I didn't get any calls from back home on this."
But after the vote, he added, "now people are complaining, asking why didn't I protect their 401K."
Many congressmen said they received more calls, e-mails and letters on the bailout issue than anything else in recent years.
Oberstar said he started receiving calls after the vote thanking him for trying to fix the situation.
Before the vote, many from the northeast Minnesota district he serves called to complain about the measure, Oberstar said, but they were not up to speed on the latest proposal. He said a few days' wait may have helped the public support the revised plan, and thus provided more House votes.
Oberstar suggested that legislative leaders seek more votes by providing more protection for Americans facing home foreclosures, perhaps putting a moratorium on them. He also said more lawmakers might vote for the measure if it included better guarantees that the federal government would be repaid by companies that receive the money.
"I hope leadership on both sides and the White House and particularly the Treasury Department remain engaged the next few days," Oberstar said. "The problem of adding or subtracting from the package is ... you may win votes from one side, and thereby lose from the other side."
Federal bailouts for Chrysler Corporation, New York City, Lockheed and the airlines have helped, Oberstar said, showing that proposals like the one the House defeated Monday do have merit.
Kline said the bill was not perfect but was the best possible given the circumstances.
"I just believe that we had negotiated this bill under an enormous amount of pressure because almost all of us have become convinced that there is a financial crisis out there that goes way beyond Wall Street and is going to affect us in the main streets of Minnesota and across the country," he said.
About two-thirds of House Republicans opposed the bill. Among the changes some Republicans wants, Kline said, is greater use of an alternative approach to the bad assets, in which the securities would be insured by the government at the expense of Wall Street, not the public. That would put more burden on Wall Street instead of taxpayers.
Negotiators must worry about listening to both sides, Kline said.
"As you make it more attractive for Republicans, you're probably making it less attractive for many Democrats, so this is not easy," he said. "It has not been easy all week and it's not getting easier."
Voters in Kline's district south and southeast of the Twin Cities overwhelmingly opposed a Wall Street bailout, he said.
"They had some specific concerns and fundamentally they didn't want to be bailing out rich people on Wall Street and having them walk away with the money and the average guy in Minnesota and across the country picking up the tab," Kline said.
Only potential legislation providing amnesty for illegal aliens stirred constituents' interest the way the bailout package did, he said.
"That lit up the phones like crazy. This is on that order of magnitude," Kline said.
Walz, whose district spans southern Minnesota, credited Democratic leaders for making the bill better than originally proposed by the Bush administration, but said they did change enough to win his vote.
"My job is to protect the American taxpayer and this plan doesn't go far enough in looking out for the middle class," Walz said. "It doesn't go far enough in holding Wall Street accountable. If Wall Street is going to get our money, we need to have some protections in place, and this plan doesn't go far enough."
Walz said he called more than 100 southern Minnesotans in the past week, including bankers and business leaders, and they said the bill "falls short."
Among the shortcomings in Walz's view is that the bill does not do enough to help curb a wave of foreclosures.
On the House floor, Bachman told of her opposition: "Let's embrace a practical solution before we tie a $700 billion bailout around the neck of the American people."
State Capitol reporter Scott Wente contributed to this story.