Bailout Proposal Meets Bipartisan Outrage
Wednesday, September 24, 2008
The Bush administration sent some of its most powerful figures to Capitol Hill yesterday to rally support for a $700 billion plan to revive the U.S. financial system, but they encountered stiff resistance from lawmakers who are deeply skeptical of the proposal and angered by the administration's push for its speedy approval.
Vice President Cheney, White House Chief of Staff Joshua B. Bolten and other Bush advisers shuttled from meeting to meeting, selling privately to worried lawmakers what Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke pitched publicly at a Senate hearing: a massive bailout for the financial markets. They urged Congress to authorize the plan quickly and without many alterations.
The issue transcended party lines. Democrats voiced doubts, and many Republicans, particularly in the House, balked at the entreaties from Cheney, Bolten and other officials.
"Just because God created the world in seven days doesn't mean we have to pass this bill in seven days," Rep. Joe Barton (R-Tex.) said after exiting a two-hour meeting with Cheney.
Democratic leaders warned that they would not approve the biggest government intervention in the private markets since the Great Depression without significant Republican support.
"It's their problem. It's their bill. And they're going to have to figure out if they can support it," said House Speaker Nancy Pelosi (D-Calif.).
Paulson and Bernanke, meanwhile, defended themselves before the Senate Banking, Housing and Urban Affairs Committee, where senators fumed that the administration had abetted the meltdown in the markets by failing to halt the spread of exotic home loans that are now falling into foreclosure at a record pace. A wide array of firms bought complicated financial instruments backed by those mortgages; the administration is proposing to purchase those troubled assets to help those firms stay afloat.
At times yesterday, Paulson and Bernanke almost seemed to echo the outrage from their questioners.
"I'm not only concerned, I'm angry about the things that got us here," Paulson said. "It makes me angry, and it makes you angry. You talk about taxpayers being on the hook? Guess what? They're already on the hook. If the system isn't stabilized, they're going to bear the cost."
The vice president got a warmer reception during a luncheon with Senate Republicans. But afterward, key GOP senators announced that they now agree with Democratic demands that the bailout package set limits on executive salaries at financial institutions that participate in the program. Democrats have argued that chief executives whose companies accept taxpayer money should not be permitted to pocket millions of dollars in bonuses or big severance packages known as "golden parachutes."
Paulson and the White House have objected to limits on executive compensation, saying limits would discourage successful firms from participating in the bailout. "These are not all weak or troubled firms that own mortgage-backed securities," said White House spokesman Tony Fratto. "They were not necessarily irresponsible players, and so you have to be careful about how you deal with them."
But Republican senators, many of whom face voters in six weeks, have concluded otherwise. "I think executive compensation ought to be part of this," Senate Minority Leader Mitch McConnell (R-Ky.) told reporters. "I think the taxpayers should expect no less than strict limits on what kind of executive compensation might be possible for those involved in these partially government-controlled enterprises."