Welch: No to bailout, yes to recovery

NEAL P. GOSWAMI, Staff Writer
Saturday, October 4

BENNINGTON — Vermont Rep. Peter Welch was among several dozen other Congressmen who reversed course Friday, giving the U.S. House of Representatives the votes it needed to pass a massive bailout bill that Washington hopes will unfreeze credit markets.

Friday's 263 to 171 vote in the House allows for Treasury Secretary Henry Paulson to spend $700 billion to purchase deflated mortgage-related securities and other bad assets that have caused several large investment banks to fail in recent weeks. Congress hopes that by purchasing those bad assets with taxpayer money, banks will free up money to loan to people and businesses.

A total of 33 Democrats and 25 Republicans switched their votes from Monday, when the House rejected an earlier bailout plan.

Welch, a first-term Democrat facing re-election in November, voted against the original "bailout" bill Monday, arguing that it would not work. On Friday, however, he voted for the amended version, which he is now calls an "economic recovery bill."

"When we began this, I knew we had to act," Welch said. "I was not disputing that we had a major credit crisis."

But the original bill rejected Monday did not contain provisions to protect Vermonters' jobs or savings, Welch said Friday in a conference call with reporters before returning to the House floor to cast his vote. Nor did it protect the American taxpayers, he said.

Plenty had changed between Monday and Friday, Welch said. Since the original vote Monday, the Senate managed to pass an altered version by an overwhelming 74-25 vote — putting pressure back on the House.

And both presidential candidates — Sens. Barack Obama and John McCain — having invested a fair amount of political capital on a bailout plan, were working the phones trying to convince more of their party members to support the plan.

Welch said that by Friday, the "three-page blank check" Paulson sought for Wall Street had gone through significant changes, and provisions that he had pushed for were included.

Welch said the amount of money insured by the Federal Deposit Insurance Corp. will be raised from a $100,000 limit to a $250,000 limit, giving Americans more confidence in the security of their savings. And the Securities and Exchange Commission agreed to change an accounting practice that Welch said will help banks free up money to lend by changing how assets are valued.

Welch said those provisions, along with additional oversight and a crackdown on executive compensation, helped changed his mind.

"I knew that at the end of the road I would have to make a choice," he said. "I've used every ounce of energy I have to get the best bill. It's this bill or no bill. ... I strongly believe that this bill, this flawed bill, is the best choice."

"I strongly believe that no bill is an absolute catastrophe for Vermonters, people that have absolutely nothing to do with this problem," he said.

Perhaps the most important factor leading to Welch's switch, however, was a telephone call from Obama.

"Senator Obama gave me his personal assurance ... that as the next president of the United States, he would fight for recoupment funds ... to make sure that the cost of this plan would come from the financial community," Welch said.

The Senate bill also added additional spending, though, including adding on $110 billion in tax breaks, and funding for other "pork" projects.

Welch said the additional spending was regrettable, but not enough to derail the bill.

"If I were in charge ... I wouldn't have put those things on," he said. "I have concluded, and quite firmly, that passing this bill is better for Vermonters than not passing it, which I think would be catastrophic for Vermonters."

Strongly opposed

Plenty of people disagree, though. Bennington Town Clerk Timothy Corcoran said he strongly opposed any bailout. He said an overwhelming number of people who have passed through his office in recent days have also opposed the bill.

"I'm very disappointed in Peter Welch," Corcoran said. "History will look on this as a poor move. This is bailing out poor management over a long period of time."

Corcoran said it is patently unfair to ask taxpayers to bailout a problem created by a few on Wall Street. He said most people believe there are times when public funds are necessary, but this is not one of them.

"You don't mind paying for hurricanes that we don't have here because that's a national disaster, but this was greed," he said. "Peter Welch should be ashamed of this vote."

Michael Bethel of Bennington, an independent candidate hoping to unseat Welch in November, praised the Democrat for his initial vote, but took issue with the reversal Friday. Bethel, who will debate Welch at a forum in Bennington next week, said he plans to focus on that switch.

Welch said he understands why Vermonters may oppose the bailout plan. "I hear the outrage of Vermonters. It is absolutely outrageous that Wall Street created this. It's extremely frustrating for folks," he said.

Vermonters were also scared of what would happen if the plan was not passed, though, Welch said. "I share the feeling, but what I also heard in the calls from Vermonters, even the ones that were most outraged, was a certain fear about the consequences of inaction," Welch said.

Welch sits on the powerful House Rules Committee, but could be removed by House Speaker Nancy Pelosi. His decision to switch his vote was not because of pressure by Democratic leaders using that leverage, he said.

"I was not experiencing arm-twisting. And bottom line, my responsibility is to Vermonters, not the leadership," he said.

Contact Neal P. Goswami at ngoswami@benningtonbanner.com