Rutland Herald - Peter Welch: 'No Confidence In Paulson Plan'

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Rutland Herald - Peter Welch: 'No Confidence In Paulson Plan'

Call it a revolt of the rank-and-file.

The members of the U.S. House — including Vermont's lone member, Democrat Peter Welch — rejected the $700 billion bailout of the troubled banking industry in defiance of their leaders in both parties, including President Bush. The final vote of 228-205 leaves the next step for Congress unclear — and sent stocks dropping rapidly.

"I do believe we have a serious crisis. The excesses on Wall Street can jeopardize us on Main Street," Welch said. But the proposal backed by Bush and U.S. Treasury Secretary Henry Paulson is not a workable solution because it is based on borrowed money.

"I have no confidence in the Paulson plan," Welch said. "I was appalled the administration made no proposal for how to pay for this other than putting it on the credit card of the middle class."

Instead of borrowing the money to shore up the financial markets — experts and federal officials worry that without intervention credit for everything from mortgages to business expansions will dry up — it should be paid for with a small surcharge on some securities transactions, Welch said.

That would make the fund for helping the financial markets function more like the Federal Deposit Insurance Corp. that backs up Americans' bank accounts, he said.

"We have a serious problem and my hope is the leadership will call us back this week or next week and we get to work on a plan that is better and has the prospect of working," Welch said.

Leadership in the U.S. House supported the bailout proposal. But messages from his Vermont constituents were clear, Welch said.

"Fifty percent were no and 50 percent were hell no," he said.

In recent days rejection of the bailout was tempered by fear about what will happen without it, he added.

"They want a plan, but they want a good plan," he said.

Leaders among both Republicans and Democrats supported the proposal. Minority Leader U.S. Rep. John Boehner, R-Ohio, said he hated the proposal to help keep credit available and help out financial institutions that were in trouble, in part, because of taking risks on bad debt.

"Nobody wants to vote for this. Nobody wants to be anywhere near this," Boehner said — before supporting the measure.

In the end only 95 Democrats, including Welch, voted against it, while 133 Republicans did, too.

"The Republicans voted heavily against it. The president failed in persuading his own party," Welch said.

Since the bill died in the U.S. House it never made it to a vote in the U.S. Senate — which had been expected as early as Wednesday evening — but Sen. Bernard Sanders, I-Vt, said the proposal as written was a bad idea.

"With the House vote today, it is time to send a loud and clear message that if a bailout is necessary, it must be paid for by those on Wall Street who caused the problem and the very wealthy who pocketed huge profits," Sanders said in a statement. "Any effective program to help the economy also should re-regulate the financial services industry that has gotten a pass in the past decade, an economic recovery program to put Americans to work at decent wages, and break up huge companies so that there is no longer anything that is too big to fail."

Instead of borrowing the money for the bailout, it should be financed by a 10 percent additional tax on those earning more than a certain amount — more than $500,000 annually for individuals and more than $1 million in combined income for couples, according to Sanders.

Sen. Patrick Leahy, a Vermont Democrat, also had serious objections to the measure, and said a new proposal should be put forward, he said in a statement.

"I worked in good faith to fix some of the shortcomings, and this plan does include my amendment to restore judicial review," said Leahy, whose spot at the head of the Judiciary Committee gave him leverage in the negotiations. "Incredibly, the Bush-Paulson plan had specifically deleted this kind of basic accountability. But that has not erased my concerns about this package."

Gov. James Douglas said Monday he is not sure enough of the details of the proposal to know how he would have voted on the bailout package — but something needs to be done, he said.

"It is extremely disappointing the leaders of the financial world have taken undue risk and behaved in a way to bring our financial situation to such a point," he said. "Something needs to be done to provide stability to the markets."

His Democratic opponent, Speaker of the Vermont House Gaye Symington, did not say how she would vote on the bailout bill, adding that was the place of the state's congressional delegation.

"Vermonters are feeling a great deal of frustration and anger about being asked to bail out Wall Street," she said. "Especially when so many Vermonters are struggling to make ends meet."

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