The Dow Jones Newswire
September 25, 2008
By Patrick Yoest
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Congress Republicans Unveil Alternative Rescue Plans
WASHINGTON -(Dow Jones)- U.S. congressional Republicans remain reluctant to throw their support behind a $700 billion asset-buyout plan, and instead presented alternative plans Thursday afternoon. One would allow banks to purchase insurance for mortgage-based assets, while another would boost the resources of the Federal Reserve and the Treasury Department to allow them to extend loans to banks.
A House GOP working group organized by House Minority Leader John Boehner, R- Ohio, presented the plan, which would create a new entity that Rep. Eric Cantor, R-Va., compared to Ginnie Mae.
"We charge them the premiums, they finance the insurance, and they unclog the system and Wall Street bails itself out," said Rep. Paul Ryan, R-Wis., the top Republican on the House Budget Committee and a member of the working group.
Separately, Sen. Richard Shelby, R-Ala., presented a plan that would increase the total resources of the Fed and the Treasury Department to enable them to extend loans to banks, rather than grant new authority to purchase assets. Shelby is the ranking Republican on the Senate Banking Committee.
"By enhancing the federal government's existing lending facilities and guarantee programs, we can help stabilize money market funds and provide loans to troubled financial institutions without exposing taxpayers to massive losses," Shelby said in the statement.
The plans, which come as the House and Senate leadership and committee chairs are far into negotiations on the asset-buyout plan, signals widespread concern among Republicans about the political implications of appearing to endorse what many voters consider a Wall Street bailout.
"You have to go home and explain what happened with the bailout and why, and then pivot back into election mode," said Rep. Thomas Reynolds, R-N.Y., who chaired the National Republican Congressional Committee in the 2006 election cycle. "That's not easy for Republicans."
A Boehner spokesman said that Boehner endorses the principles of the House working group's blueprint, and Boehner in a statement downplayed progress on the asset-buyout plan by saying that "House Republicans have not agreed to any plan at this point."
The Republican working group, which includes lawmakers ranging from conservative Rep. Jeb Hensarlng, R-Texas, to moderate Reps. Michael Castle, R- Del., and Judy Biggert, R-Ill., is trying to reach across the aisle to enlist Democrats in support of the plan.
Still Cantor and Ryan wouldn't rule out voting for the asset-buyout legislation sought by the Treasury Department, and they didn't name any Democrats who have lent their support to the plan thus far. Boehner's statement said he was "encouraged" by the bipartisan negotiations on the asset-buyout plan requested by the Treasury Department.
Lawmakers aren't the only people anxious about the Treasury Department's asset-buyout proposal. BB&T; Corp. (BBT) Chairman and Chief Executive John A. Allison voiced strong reservations about the plan and in a Tuesday letter to Congress proposed that "the government should directly purchase housing assets, not real estate bonds.
"There is no panic on Main Street and in sound financial institutions," Allison wrote. "While all financial intermediaries are being impaired by liquidity issues, this is primarily a bailout of poorly run financial companies."
-By Patrick Yoest, Dow Jones Newswires; 202-862-3554; patrick.yoest@ dowjones.com
(Matthias Rieker contibuted to this report.) |