Tuesday, September 30, 2008

Mica: Constituents hate bailout

Mica: Constituents hate bailout

Representative defends voting against deal

Publication Date: 09/30/08

U.S. Rep. John Mica, R-Winter Park, and his staff fielded hundreds of phone calls and e-mails Monday from 7th District constituents who vehemently opposed the proposed $700 billion bailout.

Calls still poured in hours after the U.S. House of Representatives defeated the Emergency Economic Stimulus Act of 2008 by 228-205.

Mica voted against it, although he said he was disappointed Congress still had no plan to stabilize the spiraling stock market.

"I wasn't happy with the way the bill was crafted," he said. "Based on my own experience and principles, I did not want the taxpayer to be bailing out speculative greed."

The market dropped a record 777 points, its greatest one-day fall, while oil prices spiked at $16 per barrel.

Mica would like to see loan and insurance guarantees -- with no cash up front -- available to embattled financial institutions to avoid further fire sales, market drops and investor scares.

"All of the speculative mortgages and subprime paper has worked their way into financial institutions," he said. "The problem is right now no one wants to handle it."

U.S. Rep. Ander Crenshaw, R-Jacksonville, voted for the bailout bill, Crenshaw's office said.

The bill's provisions would have allowed an immediate $250 billion to purchase, insure or sell troubled assets.

Then, if the president asks, that credit line would be extended another $100 billion.

Another $350 billion would be allowed over that with congressional approval.

U.S. Rep Adam Putnam, R-Bartow, told the Wall Street Journal after the vote, "It is difficult for me to imagine we would leave the market to its own devices and fears until Friday. We're encouraging members to understand the consequences of doing nothing, but I think members have strong convictions about this bill."

Several analysts said that congressional leaders didn't push hard enough to pass the bill, others said that a partisan speech at the last minute by House Speaker Nancy Pelosi of California set some House members against the bill.

Mica said he has experience working toward tighter regulation of financial markets, supporting a compromise between the airline and the financial industries that resulted in every loan paid and the government clearing a "third of a billion" dollars in profit.

In 1999 he and a handful of other House members were outvoted on a bill that would allow banks to get into speculative ventures, he said. And he said he voted against a rule in the late 1990s that allowed Freddie Mac and Fannie Mae to lower their cash reserves from 10 percent to 2-1/2 percent.

"I tried to bring both institutions under closer regulation in 2002, but was voted down," Mica said.

If nothing is done to restore investor confidence, the loan and finance market will "freeze up and become extremely limited," he said. "People won't be able to buy a car, develop property or obtain a mortgage."

He said taxpayers shouldn't pay whenever someone else takes a bad financial gamble.

"We need to limit the risk to the people who paid their bills, worked hard and invested," he said.

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