White House Won’t Support House GOP’s Alternative Financial Plan

White House Won’t Support House GOP’s Alternative Financial Plan Wednesday, October 01, 2008 By Fred Lucas, Staff Writer

White House (CNSNews.com) - With Senate passage of a revised financial bailout in sight, the White House rejected considering a more free market alternative proposed by House Republicans.

The alternative plan, announced Tuesday by Rep. Jeb Hensarling (R-Texas), chairman of the Republican Study Committee (RSC), replaces the $700 billion bailout package aimed at easing the credit crisis with a plan to federally insure mortgages up to 100 percent.

The current plan, supported by President Bush, would allow the Treasury Department to purchase the troubled mortgages and mortgage-backed securities, which are at the heart of the ongoing credit crisis.

Nonetheless, insurance is part of the revised proposal being considered by the Senate Wednesday, White House spokesman Tony Fratto said.

"It is mandated in the bill that if the Treasury puts in place the asset purchase, it must also put in place a guarantee plan," Fratto told CNSNews.com after the White House press briefing Wednesday.

“I know the RSC wants only the insurance option and not the purchase option. We disagree with that and believe that the purchase program needs to be part of the solution here,” Fratto said.

In addition to federally insured mortgages, the Republican Study Committee plan also includes tax cuts for businesses to promote investment and the sale of unwanted assets. There also are provisions in the plan for greater accountability of Government Sponsored Enterprises, such as Fannie Mae and Freddie Mac.

The Gulf: Good times

Less concerned about the global market plunge are the Gulf states, which raked in a fortune from the rise in oil prices and created vast monetary reserves that allowed their governments to inject funds into their financial markets to stabilize them. This week, for example, the central bank of the United Arab Emirates (UAE) announced that it would transfer about $14 billion to the country’s banks and financial institutions as a loan taken in extraordinary conditions, so they can maintain liquidity at a desirable level. The central bank is considering lowering the liquidity level from the current rate of 14 percent, and it will also buy bonds from the banks.

As was the case throughout the Arab world, foreign investors yanked capital out of the Gulf states immediately after the markets began to crash. The Gulf banks, which are underwriting colossal building projects in those countries, would have faced a real disaster if clients had demanded their money. Thus, after investing $7.5 billion last November to save Citigroup, the Dubai Development and Investment Authority had to repeat the move - this time to save the country’s banks.

However, beyond the stability of the banks in the Gulf states and the inhabitants’ certain knowledge that the state will not allow the banks to collapse - mainly because most of them are owned by the ruling families and their cronies - people in the Gulf are starting to worry that the big bubble is liable to burst in their faces. Their concern is specifically for the real-estate bubble, which attracted big investors primarily to the UAE, and more recently to Qatar and Kuwait. With all the luxury towers, the neighborhoods of seaside villas, the office buildings designed by the world’s leading architects - local economists now think that the real-estate market has reached the saturation point and that a shift to different fields, notably industry, is desirable.

http://www.freerepublic.com/focus/f-chat/2092270/posts

From Congressman David Scott - Why dems voted no:

Dear Friend:

Thank you for contacting me regarding H.R. 3997, the Emergency Economic Stabilization Act. I appreciate you taking the time to share your views with me. The opinions and concerns of my fellow Georgians are an essential component of my decision making process as a Member of Congress.

I understand your views about H.R. 3997, which was a bipartisan effort to help stabilize the economy and preserve homeownership. Unfortunately, this bill did not include enough protections for taxpayers. Nor did it include provisions to ensure some help for the thousands of Americans facing foreclosure. While the legislation was modified as to break up the $700 billion into incremental allotments, the legislation was still a blank check for Secretary Paulson. The foreclosure mitigation provisions were not mandatory, and I worried that if these provisions were simply voluntary, those in charge of rolling out the plan may choose not to help the thousands of Americans facing foreclosure. You will be pleased to know I voted against this legislation, which failed to pass the House by a vote of 205 to 228, and I will be sure to monitor any changes or actions to improve upon the current version.

As far as negotiations on the bill are concerned, congressional leaders are behind closed doors hammering out a new version, and we could be back in session as early as this Thursday with a new bill. I am hopeful additional stipulations for America’s homeowners will be included. With some 6,000 foreclosures each day, more must be done to not only stabilize the financial markets, but also stabilize our nation’s communities. I have joined with my good friend from California, Congressman Joe Baca in devising a further plan to help those facing foreclosure which includes setting aside 1 percent of the $700 billion for a home-loan programs similar to the one set up by President Franklin Roosevelt. Similar legislation was enacted during the great depression known as the Homeowner’s Loan Corporation (HOLC), which was established to refinance homes in the hopes of preventing foreclosure. The goal of this plan, the Family Foreclosure Rescue Corporation (FFRC), would be to prevent homelessness and help families that may not receive help from current laws or initiatives. The plan would also include a member board selected by Congress. Qualifying families would need to apply to the FFRC for a new loan, and families would still pay a monthly mortgage payment but with a set interest rate.

In the next version of this legislation, I want to extend relief to homeowners whose outstanding mortgage indebtedness exceeds the value of their home due to recent declines in the market. We must ensure neighborhoods are stabilized by reducing these foreclosures and the downward impact this housing debacle is having on home price created by the continued threat of widespread foreclosure. Furthermore, the plan will be done in a way that is efficient with a minimal cost to the taxpayer, with corporate profits being returned to the Treasury. Please be assured, as negotiators continue to work towards a new consensus on this legislation, I will be sure to share your views with my colleagues should the full House again debate and vote on a new bailout bill.

As I mentioned, your input is vitally important to me. I hope you will continue to give me the benefit of your opinion in the future. Please be assured, I will keep your views in mind as the full House considers various issues in the 110th Congress. Furthermore, I encourage you to visit my website at http://davidscott.house.gov where you can view the latest news and updates about pertinent issues and legislation important to you. You may also sign up for my electronic newsletter and receive periodic updates on my activities as your representative in Washington. As always, my staff and I are here to serve you. Please feel free to contact us if we ever can be of further assistance to you or to share your concerns.

Sincerely,

David Scott

Member of Congress

in that second term he has been what everyone else has been saying: He is a sitting dud, just terrible....not as bad as Jummy but terrible....

This is what Bush was before 9/11 and what he would have been for his whole (one) term, but for 9/11. He leaped on the "wartime president" identity (I always wondered why he was so eager to designate himself as such) and did take decisive action in the MidEast which should forever be respected and praised.

But in this situation he doesn't even seem to remember that the original objective was to restore credit and free up money flow, not bail out mis-handled banks and malfeasant bankers.

Something about draining the swamp despite the alligators, not fighting alligators for a living while the swamp endures unchanged.

This is politics...It seems pork and earmarks are not technically the same things:

http://www.heritage.org/Research/Budget/bg1266.cfm

“Governments have long used the power to tax and spend to favor certain constituencies with special benefits over and above what a system based on a formula or need would provide. In a democracy, elected officials generally have well-defined, geographic-specific electoral bases, so such benefits tend to be location-specific and highly visible, usually taking the form of infrastructure spending on such projects as courthouses, highways, airports, and government office buildings. Traditionally referred to as “pork,” this spending often manifests itself as a specific line item, or “earmark.” Earmarks appear most commonly, but not exclusively, in appropriations bills passed by Congress and signed into law by the President.”

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