Shuler votes ‘no’ on $700 billion bailout plan

Though it’s not over, yesterday Rep. Heath Shuler cast a ‘no’ vote on a $700 billion bailout plan that supporters say is necessary to stem the economic crisis caused by the implosion of the U.S. financial industry.

In a statement after the vote, which is to be brought up again this week, Shuler said: “This bill would have taken bad paper assets that weren’t good enough for Wall Street and forced them on the American taxpayer.”

The legislation would have guaranteed up to $700 billion in taxpayer funds to purchase and manage troubled assets among banks and investment houses that gambled, and lost, on subprime mortgage loans.

“The American taxpayers should not be, cannot be, and will not be responsible for the bad business decisions made on Wall Street,” Shuler said. “Worse yet, there was no assurance that even this $700 billion bailout package would have solved the problem.”
 
In the statement, Shuler also expressed concern regarding the lack of oversight and accountability for the financial markets. “This bailout would have sent the message to those on Wall Street that they do not need to be concerned with the consequences of their actions because the taxpayers would clean up any mess they created.” 

The House is expected to reconvene later this week to consider additional legislation regarding the current financial situation. “Congress did its job,” Shuler said. “The world’s greatest deliberative body has a solemn obligation to consider the long term implications of its actions, and in this case, a majority decided that this bailout was not the answer. I look forward to staying in session and working with my colleagues until we find the best solution.”

— Hal L. Millard, staff writer

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18 thoughts on “Shuler votes ‘no’ on $700 billion bailout plan

  1. Jon Elliston

    Thanks tatuaje, that’s a handy resource. For those who check it out, I suggest scrolling over the little blocks representing each member of the House; when you do that, a map pops up showing the member’s district.

  2. Reality Check

    If the media would actually report what the bill contained, we would know what he voted against. The details here are what is going to matter down the road. This is a very serious time for our economy. I wouldn’t mind seeing them take a while to sort this out. The only problem there is that the pork and special interests will increase the longer it takes to get it done.

  3. tatuaje

    Wanted to share a back and forth going on in another thread…it’s actually more relevant here.

    From a post by Dionysis
    This is part of a much longer (and well written) point that you can find here:
    http://www.mountainx.com/opinion/2008/the_feminists_stir

    The first visible damage of this deregulation came in the form of the now-famous Enron loophole. The loophole allowed energy companies to trade energy in an unregulated fashion. This act allowed Enron to play havoc with the California energy market, causing severe economic damage to that State while taking greater and greater risks that, ultimately, resulted in Enron’s collapse.

    my reply

    I agree…I learned a lot from watching ‘Enron: The Smartest Guys in the Room’. And today, as I was reading about some changes certain legislators want to make to a new and improved bailout bill, I came across this:

    “Another possible change to the bill would modify “mark to market” accounting rules. Such rules require banks and other financial institutions to adjust the value of their assets to reflect current market prices, even if they plan to hold the assets for years.”

    I profess to not being an expert at economics, but doesn’t this sound so similar to the Enron situation? Basing current value of commodities (such as electricity) on possible future value? Dionysis, Entopticon? A little help? Are they trying to solve the problems brought about by deregulation with more deregulation?

    Dionysis replies

    “I profess to not being an expert at economics, but doesn’t this sound so similar to the Enron situation? Basing current value of commodities (such as electricity) on possible future value? Dionysis, Entopticon? A little help? Are they trying to solve the problems brought about by deregulation with more deregulation?”

    I’m far from an expert in economics either, but you’re right. From what I understand, ‘modification’ of mark to market accounting rules would benefit mostly the banking and investment firms, and is opposed by the Big Four and other accounting firms, as well as consumer groups.

    “Some House members advocate scrapping mark-to-market accounting altogether as a way to help lenders holding mortgage loans and securities whose value have fallen sharply. Consumer groups have balked at the idea, and accounting firms are about to jump in as well, fearing such a change could deceive investors about the value of troubled loans and mortgage-backed assets.

    Accountants won’t be going it alone because consumer groups don’t like the idea of rescinding mark-to-market accounting either.

    “It’s absolute idiocy,” said Barbara Roper, director of investor protection for the Consumer Federation of America. “Allowing companies to lie to investors and lie to themselves is not the solution to the problem, it is the problem…”

    Ms. Roper said lawmakers need to understand “that the alternative to mark-to-market accounting is mark-to-myth” and could give banks and other financial companies the freedom to value assets at inflated amounts…”

    “…lawmakers who seek to suspend the requirement would be siding with banks and their trade group at the expense of investors, and “may be sowing the seeds for another round of financial reporting devastation down the road.”

    http://online.wsj.com/article/SB122280147924091325.html?mod=googlenews_wsj

    And finally, my reply….

    Ms. Roper said lawmakers need to understand “that the alternative to mark-to-market accounting is mark-to-myth” and could give banks and other financial companies the freedom to value assets at inflated amounts…”

    cool…thanks for the link and perspective….It seems to me that most people are against the bailout but don’t know why….but this is one of the pieces I think I understand

    http://www.salon.com/news/feature/2008/10/01/bail_out/

    I’ve been trying to explain to friends and family (and supplying copious links on the internets) what’s going on, but it’s not like I really know the full details (or have a solution).

    I do think that we should spread the word that this “‘modification’ of mark to market accounting rules” is dangerous as evidenced by the Enron scandal and others. Shooting Shuler an email (he probably doesn’t understand what’s going on either) wouldn’t hurt, although Congress has been literally crippled with web traffic…

    http://blog.wired.com/27bstroke6/2008/09/house-web-site.html

    so maybe good luck getting through….crazy times, indeed….

    I transferred this over to this thread because I feel it’s important for us, the people, to have a grasp of what’s going on with this financial crisis and the proposed bailout(s). Important to share info with each other and our representatives….

  4. Reality Check

    I am an expert in economics. The real estate market is where it is because of decades of abuse from a variety of angles. Both political parties share in the chaos.

    First, providing high risk loans to individuals who previously could not qualify and then giving them the Freddie/Fannie stamp of approval.

    Second was deregulation of the mortgage backed securities market.

    Third is idiotic Americans who refuse to read or even remotely understand the most important documents they are ever going to sign in their whole lives.

    If Freddie/Fannie had not stamped their approval on these high risk loans – pressure that consistently came from Democrats starting with Carter – there would be no securities being traded that are bogus or worthless.

    If the markets had not been deregulated – Reagan with Tip O’Neill’s blessing and the changes from W’s admin – there would be a fair market to sell these high risk securities that actually sets a reasonable value.

    If American’s would pay attention and quit playing the ‘ignorance’ card, they would have never gotten into this in the first place.

    The solution has to start with Freddie/Fannie … backing these loans with tax dollars and giving them the same ‘risk’ status as an old school conforming mortgage is going to cause the problem again in the next economic downturn. There also needs to be corruption investigations of both. They were lobbying congress for policy and accounting changes – crazy talk!

    Things worked great in the 80’s and 90’s because the Tech market supported the whole economy. The Tech market corrected and then 9/11 changed the world economic dynamic. We can’t always count on things to be all rosy.

  5. tatuaje

    So, looks like the Senate is going to vote this evening on a new “bailout” plan…. That we won’t even get to see…That is so frustrating…Here’s an article I found about the “new & improved” version….Not a whole lot of info, but, well, that’s because there’s not a whole lot of info…

    http://www.salon.com/tech/htww//

  6. tatuaje

    A little more info on the “‘modification’ of mark to market accounting rules” question….(from today on the Wall St. Journal website)

    On the question of the SEC’s mark-to-market accounting rule, the agency issued guidance Tuesday that could give management more flexibility in valuing securities when there isn’t a regular market for them.

    Over the past year, some financial firms have had to write down the value of assets; under the accounting rule, if there is no active market, an asset’s value would have to be cut substantially, even if it might be worth something in the future. That has eroded firms’ capital base, making them more vulnerable to downturns in the market and reducing confidence among investors.

    The SEC said on Tuesday that in some circumstances it might make more sense to judge assets not on what the market will bear, but on their intrinsic value — for example, if they’re from a highly respected company that is unlikely to default.

    The move is less expansive than that desired by some business groups, which wanted the rule suspended altogether. But its implications are nonetheless significant, potentially giving financial firms a way to revive the value of assets that were previously considered worthless. Critics have charged that such a move would paper over problems and make opaque markets even harder to judge.

    So, little info coming out about the particulars of the “bailout” bill, but it looks as if they are still looking to deregulate to solve problems caused by deregulation, as well as throwing money at the middle-class to make the medicine go down easier…

    Call or email our senators…Richard Burr & Elizabeth Dole…contact info linked below:

    http://www.senate.gov/general/contact_information/senators_cfm.cfm?State=NC

  7. Dionysis

    Thanks for the kind words, tatuaje. Unfortunately, I’ll have to defer any more commentary on the subject until perhaps later tonight. Believe it or not, I actually have a day job that, while pretty flexible, does require me to focus on occasionally. Today is one of those days.

    I’ll check the postings later this evening.

  8. The Senate approved the bailout bill tonight and I believe this bill must return to the House for another vote. Passage there would send the bill to the President to sign.

    It seems reasonable to me that Shuler must be present in the chamber to cast his vote. This would conflict with a proposed debate but I feel that his House vote is more important.

    If he repeats his Nay vote on this bill — and he should — then it will have been worth it to miss a minor local media event for the sake of stabbing this atrocity in the heart.

    Off to Washington, MacHeath. And godspeed.

  9. The Government Did It
    Yaron Brook | Forbes | 07.18.08
    http://snipr.com/40gxk

    “[…] What we need to do is remove the government’s power to coerce, bribe, reward and bail out irrational decisions. The unfree market has failed. It’s time for a truly free market.”

  10. tatuaje

    Quick update….

    Burr voted for …..

    Dole voted against ( 1 of 25 )….

    Call Shuler and tell him how you feel….

    DC office DC fax
    202-225-6401 202-226-6422

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