Published: September 29, 2008 11:03 pm         

Rahall, Capito split on measure

Wall Street went into a nosedive Monday after the House narrowly shot down a proposed bailout plan to rescue investors mired in a shoddy mortgage crisis — a plan that split West Virginia’s delegation along ideological, rather than partisan, lines.

On the West Virginia University campus, however, there was jubilation in the economics department.

“We were all excited that it failed,” Russell Sobel, a professor of economics, told The Register-Herald in a telephone interview.

“None of us were very supportive of this at all. We all think this is a situation where the government should stay out of it.”

Sobel said some banks that engaged in risky loans probably would fail, but others that didn’t go out on a financial limb will survive, and an example of the latter is West Virginia’s largest — BB&T.

“They refused to make any of these silly loans,” he said, emphasizing the institution probably was less profitable because it didn’t assume such precarious debt.

Sobel dismissed as “scare tactics” the dire warnings President Bush made in a failed attempt to drum up sufficient support for the bailout in the House. By keeping the government out, he said, the nation has no need to fear a domino effect that would bring the economy to a total collapse.

If one studies the numbers, the professor said, the bailout plan would mean an additional tax burden of $5,000 to $10,000 for the average American family.

“Even if you just let everything unfold, it won’t be nearly as bad or as big,” Sobel said.

“It’s not going to be like some next Great Depression. Certainly, some banks are going to go out of business, some of the ones who did bad jobs.”

Rep. Nick Rahall, D-W.Va., who voted for H.R. 3997, known as the Emergency Economic Stabilization Act, indicated the battle wasn’t over.

“We will continue to work for an answer that protects the taxpayers and provides a firewall for West Virginians whose savings, jobs and homes could be hurt because of the financial fiasco,” Rahall said in a brief statement.

“This was not a wholesale bailout,” Rahall said in defense of the measure, “as important changes were made from the initial proposal to provide a return to taxpayers.”

Rep. Shelley Moore Capito, R-W.Va., was on the majority side of the vote, saying it is wrong in principle to hurl Wall Street’s woes on the backs of West Virginia taxpayers.

Capito said the House acted on behalf of citizens in opposition to the idea of throwing $700 billion to investors ensnared by top-heavy mortgages.

“As a steward of West Virginia tax dollars, I couldn’t in good conscience support something that would have amounted to the largest bailout in history,” she said.

“Nor was I willing to turn my back on my constituents who were adamantly opposed to this proposal.”

There is no way Congress should provide a “fix” to a financial crisis rooted in “bloated mortgages,” the 2nd District representative said.

“West Virginia families who pay their bills on time and play by the rules deserve far better than this $700 billion bet that would shoulder enormous debt on our children and grandchildren in the blink of an eye,” Capito said.

“We are in uncharted waters and I have a fundamental disagreement with the idea that we were about to spend $700 billion of taxpayer money to protect Wall Street investments without significant assurances that this would work. This is too much money, with too little time, too little support, and no way to know if the plan would even do the job.”

— E-mail:

mannix@register-herald.com