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Bush OKs historic $700 billion bailout

Rep. Deal joins Georgia Republicans in voting against the measure

POSTED: October 8, 2008 5:02 a.m.

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U.S. Rep. Nathan Deal and his six fellow House Republicans from Georgia were not swayed by arm-twisting and steadfastly voted against a historic $700 billion government bailout of the battered financial industry on Friday.

The 263-171 vote to pass the legislation capped two weeks of tumult in Congress and on Wall Street, punctuated by urgent warnings from Bush that the country confronted the gravest economic disaster since the Great Depression if lawmakers failed to act. President Bush swiftly signed it.

Deal, who was among the lawmakers voting against the measure on Monday, was surprised at the number of members of Congress who changed their votes on Friday.

"When I started listening to people making statements on the floor, I realized they had picked up substantial numbers," Deal said, adding that it appeared 58 voted "yes." "That’s a pretty big swing in a short period of time with little difference in the main part of the bill."

Of the crossover vote, 25 were Republicans.

"Some of them hung their hat on the tax extenders, but almost all of that were things we had already voted on in the House," Deal said.

Deal said phone calls to his office since Monday overwhelmingly supported his opposition of the bailout bill.

"This is going to have long-term financial implications in terms of the government acquiring bad debt, which we pay for by borrowing the money to pay for it. It signals the largest shift away from noninterference by government in the free market system to major interference."

Georgia’s U.S. Sens. Saxby Chambliss and Johnny Isakson both voted Wednesday night to approve the massive package, which had been

"sweetened," with both tax breaks and earmarks.

"We commend those members of the U.S. House of Representatives who put their country first to vote for this important legislation," Chambliss and Isakson said in a joint statement issued Friday. "Make no mistake, none of us were happy to find our economy being assailed by the failed financial decisions of unscrupulous Wall Street executives and none of us wanted this rescue proposal to cost so much."

U.S. Reps. John Lewis and David Scott, both from Atlanta, were among the lawmakers who switched their votes. Lewis said he became convinced that "the cost of doing nothing is greater than the cost of doing something."

He said the incoming president and Congress must continue to demand accountability from financial institutions. Scott said the new bill provided additional assistance to homeowners and to restructure troubled loans. He also said he became concerned as credit dried up in Atlanta, leaving small businesses with dwindling short-term loan options.

"In order to help keep employees on the job, we could not wait around for a perfect bill," he said.

Lewis and Scott joined Georgia Democratic Reps. Jim Marshall of Macon and Sanford Bishop of Albany who voted "yes" again Friday.

Democratic Reps. John Barrow of Savannah and Hank Johnson of Lithonia continued to vote "no."

"We have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said shortly after the plan cleared Congress, although he conceded, "our economy continues to face serious challenges."

His somber warning was underscored on Wall Street, where enthusiasm over the rescue gave way to worries about obstacles still facing the economy, and the Dow Jones industrials dropped 157 points. The Labor Department said earlier in the day that employers had slashed 159,000 jobs in September, the largest cut in five years.

The historic vote was a striking turnaround from the measure’s spectacular failure earlier in the week, which had triggered a massive stock sell-off and prompted jittery lawmakers — fearing a crushing economic contagion that was spreading to their constituents — to reconsider.

"Let’s not kid ourselves: We’re in the midst of the recession. It’s going to be a rough ride, but it will be a whole lot rougher ride" without the rescue plan, said Rep. John A. Boehner, R-Ohio, the minority leader, as he prepared to cast his vote for the most sweeping federal intervention in markets in decades.

Treasury Secretary Henry Paulson pledged quick action to get the program up and operating.

The bailout, which gives the government broad authority to buy up toxic mortgage-related investments and other distressed assets from tottering financial institutions, is designed to ease a credit crunch that began on Wall Street but is engulfing businesses around the nation.

"In these past two weeks, we’ve seen things we never thought we would see before in terms of the economic insecurity of our own country," said House Speaker Nancy Pelosi, D-Calif. She said the measure would "begin to shape the financial stability of our country and the economic security of our people."

Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, said the rescue bill was just the beginning of a much larger task Congress will tackle next year: overhauling housing policy and financial regulation in a legislative effort he compared to the New Deal.

"We were the EMTs rushing to the rescue of an economy that suddenly found itself choking, but now we have to perform more serious reform," Frank said.

Just four days earlier, the previous version of the bill was sent down to defeat, largely at the hands of angry conservative Republicans. On Friday, a total of 33 Democrats and 25 Republicans switched from opposition to support. In all, 91 Republicans joined 172 Democrats to support the measure while 108 Republicans and 63 Democrats voted "no."

The reversal reflected a high-stakes political environment just four weeks before Election Day. Some lawmakers were worried about their own jobs, but others — mostly Democrats — focused on the prospect that a new president could have a far more significant effect on the economy than any one piece of legislation.

Several of the Democratic switchers were members of the Congressional Black Caucus who said they changed course after securing commitments from presidential candidate Barack Obama that he would back legislation to help struggling consumers and homeowners facing foreclosures if he wins the White House.

Republican presidential candidate John McCain also lobbied for the measure, according to aides who declined to say whom he called.

Rep. Roy Blunt, R-Mo., the party vote-counter, said McCain phoned Rep. John Shadegg, a fellow Arizonan who switched to "yes."

The legislation’s roller-coaster ride through Congress began at a somber meeting in Pelosi’s office in mid-September, where Paulson and Federal Reserve Chairman Ben Bernanke frightened senior Democrats and Republicans with their warnings of an impending economic collapse without quick legislative action.

As lawmakers scrambled to draft a bill, they were barraged by angry calls from constituents to reject what many saw as a huge giveaway to the very financial institutions that helped cause the subprime mortgage meltdown at the root of the economic crisis — with nothing to help its ordinary victims.

"Pray for our republic," intoned Rep. Marcy Kaptur, D-Ohio, a leading opponent of the measure. "She’s being placed in very uncaring and greedy hands."

Supporters said the idea of economic disaster superseded their fears. "I may lose this race over this vote, but that’s OK with me," said Republican Rep. Sue Myrick of North Carolina, who switched her vote to favor the measure. "This is the right vote for the country."

 

The Associated Press contributed to this report.



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