Rahall: Bailout is ‘vital’

Mannix Porterfield
Register-Herald Reporter

October 01, 2008 10:17 pm

— Americans needn’t fear Great Depression II if the bailout collapses in Congress, but Rep. Nick Rahall says the legislation is “vital” to protect lines of credit so small businesses can meet payrolls and ordinary citizens can buy life’s necessities.
“The status quo, in my opinion, is unacceptable,” Rahall, D-W.Va., said in a Wednesday telephone interview.
Rahall blamed Monday’s failure on a poor job of selling the idea by Treasury Secretary Henry Paulson, whom he referred to as “King Henry,” and said his attitude is what triggered a backlash in the general public.
“They were reacting to the way ‘King Henry’ initially presented this three-page piece of legislation, which was outrageous,” Rahall said.
“Henry Paulson is a smart, competent individual. I don’t detract from that at all. He’s just a political ignoramus. How he could think that he could present a $700 billion proposal, giving him complete, 100 percent authority over how to spend it with no oversight by anybody, is beyond my imagination.”
Rahall said the public also got a poor impression with President Bush making the plea, since his credibility has been tarnished by the war in Iraq.
“I’m not saying we’re going to enter a Great Depression,” he said. “I’m not saying that at all.
“I recognize that a lot of people don’t have credibility in what the president of the United States says, especially since he cried wolf over Iraq and was wrong on that and now he appears to be crying wolf again and there’s not much credibility in what he says. Perhaps he should stay out of it.”
For that matter, Rahall suggested, presidential rivals John McCain and Barack Obama would serve the public’s interest by likewise bowing out of the picture.
One new development seems to make the rescue plan, as backers now prefer to call it, more palatable to his constituents who initially were adamantly opposed to it is the move to hike the FDIC limits to provide more protection to bank customers, Rahall said.
This aspect led Rep. Shelley Moore Capito, R-W.Va., to soften her opposition as well.
“This move could help ensure that West Virginians’ checking and savings accounts are shielded and protected, providing confidence to consumers and taking this concern off the table,” Capito said.
Capito didn’t exactly say she was prepared to reverse her vote with the majority Monday that sent the plan to defeat, adding, “I continue to remain concerned about the amount of tax dollars such a proposal would involve and believe we must have more substantial oversight of this sort of program.”
Actually, Rahall said, the bill isn’t intended to lay out $700 billion up front, but only an initial installment of $250 billion, followed by a $100 bill increment for the next president to consider and final $350 billion subject to approval by Congress.
“So the $700 billion is an outside figure,” he said. “Paulson wanted to show the world he had a big club in his hand, if need be. That’s what riled the American people to no end.”
Rahall said the intent was less to pull the chestnuts of Wall Street investors from the fire than to protect the average citizen on Main Street.
“I’m referring to small businesses, the mom and pop-type operations that go to the bank to get a small loan to keep their doors open in Beckley ... to provide payrolls for the local economy,” he said.
“That allows credit that allows individuals to go borrow what’s necessary to buy a refrigerator. To get their kids started in school. To get small loans. Even the weekend $50 withdrawals from ATMs. You can’t just look at what happens on Wall Street.”
Although West Virginia bankers voiced some concerns over the initial bill, Rahall said, none opposed it outright, and now they have come on board in strong support with the changes.
“Our West Virginia banks have played by the rules,” he said. “They’ve not been greedy.”
Rahall said greed was at the root of the problem, along with deregulation in financial markets a decade ago that needs to be revisited.
Rahall said the original package also has been modified so that taxpayers would be able after investing in foreclosures to not only recoup but actually turn a profit in the long term as assets are expected to rise in value.
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