Original Bailout Plan Will Be ‘Core’ of Revised Agreement, Gregg Says
GREGG
New Hampshire Union Leader
Jenny Paul
Boston University Washington News Service
9/30/08
WASHINGTON– Congress could consider a financial bailout package that makes only slight adjustments to the original $700 billion proposal as early as Wednesday night, Sen. Judd Gregg (R-N.H.) said Tuesday, even as New Hampshire’s two House members called for substantial modifications to the plan.
“I think the core of the agreement will be the original proposal,” Gregg, the lead Senate Republican negotiator, said, “because it made a lot of sense, and it was the best idea that was out there from a standpoint of freeing up the credit markets. I don’t think anything in the basic package will be adjusted because that was reached by a bipartisan effort.”
The original plan authorized the federal government to use up to $700 billion to buy troubled mortgage-backed securities. Gregg said no revisions have been finalized but the legislation also could contain a provision to increase federal deposit insurance from $100,000 to $250,000 per account, an idea presidential candidates Barack Obama and John McCain both support. Raising the deposit insurance limit would protect small-business owners and individuals who keep more than $100,000 in one bank deposit account, he said.
“That’s the type of change that you might see,” Gregg said. “This is not a big part of the equation, to be honest with you, but if it makes people more comfortable voting for the overall effort, then we’ll do it.”
But Rep. Paul Hodes (D-N.H.), who voted against the bill Monday, said in an interview he would need to see several substantial changes made to the original proposal before he would consider supporting it.
Hodes said he wants a rescue plan to include changes to bankruptcy laws to allow homeowners to modify mortgages, more stringent restrictions on executive compensation and severance pay and tougher judicial oversight that would allow courts to review the actions and conduct of officials involved in carrying out a relief plan.
“I’m not ruling out supporting a sufficiently modified proposal, but it’s hard to comment in particular about all the things that I want to see changed in order to support this plan,” Hodes said. “Those are just some of the issues that I have and would need to be resolved before getting to the fundamental question of whether or not spending $700 billion of taxpayers’ money buying bad paper is the way to go.”
In an e-mailed statement, Rep. Carol Shea-Porter (D-N.H.), who also voted against the bill, mentioned the need for similar changes to the proposal.
Gregg said congressional leaders are focused on how to revise the plan to garner support from House members who voted against the original bill.
“What we’re working on is trying to figure out what the House needs in order to act rationally on this exercise,” he said. “Maybe I shouldn’t be so negative, but in any event, what they need in order to take action, which will allow them to pass this bill and yet not undermine the basic purpose of the effort, which is to free up credit and protect Main Street.”
Gregg said Congress needs to act quickly to pass the rescue plan to free up the credit market.
“That’s the purpose of this effort — to get these non-performing loans off the books so [banks] will have assets that they can lend against, thus creating credit in the marketplace,” he said.
Gregg stressed that the plan was not a solution to the financial crisis, only a tourniquet to stop the economic bleeding. He would not say whether he thought the country could enter a deep depression if Congress failed to pass a bailout plan.
“I don’t think it’s constructive to talk in those terms, but we are clearly looking at a severe economic event,” he said. “Even if we do act, we’re still going to be in a very slow economy, but it’s going to be something we can manage, hopefully.”
Hodes agreed that congressional action needed to be taken but said he was concerned about rushing to pass a plan without considering alternative proposals.
“Clearly, action needs to be taken, but it needs to be the right action,” Hodes said. “The right steps need to be taken. It’s not enough just to act quickly.”
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