Welch votes for bailout

By Erin Kelly, Free Press Washington Writer
October 4, 2008

WASHINGTON — After helping defeat an earlier bailout plan, Rep. Peter Welch voted Friday to approve revised legislation aimed at rescuing the nation’s financial markets and stopping a credit freeze that Welch feared could crush Vermonters.

The House approved the revised bill 263-171 and President Bush signed it into law later Friday. The bill passed in the Senate on Wednesday.

“It’s this bill or no bill,” the Vermont Democrat said Friday before the vote. “I strongly believe that ‘no bill’ is an absolute catastrophe for innocent Vermonters and businesses that had nothing to do with causing this crisis.”

Welch, in a conference call with Vermont reporters, said he believed the new rescue plan will help ensure that Vermonters aren’t hurt by a credit crunch that threatens to dry up money for student loans, car loans, home improvement loans and small business loans.

The core provision of the $700 billion financial rescue plan allows the Treasury Department to buy troubled financial assets from banks so they can continue lending to businesses.

The congressman voted against an earlier version of the bailout bill on Monday. That bill was defeated by the House and led to a record stock market drop on Wall Street.

Welch said the revised bill includes more protections for taxpayers and consumers, including an increase, from $100,000 to $250,000, in bank deposits the federal government will insure.

He also said he received a call Tuesday from Democratic presidential nominee Barack Obama urging him to vote for the legislation.

“Senator Obama gave me his personal assurance that, as the next president of the United States, he would fight for what he called a ‘recoupment fund’ to make sure the cost of this program would be borne by financial firms, not the taxpayer,” Welch said.

Welch also said he was heartened by Securities and Exchange Commission Chairman Chris Cox’s decision to change an accounting rule to make it easier for banks to loan money to responsible homeowners in a tough housing market. Welch had written to Cox last week seeking the change in the so-called “fair value” rule.

Welch said he knows Vermonters are angry about bailing out reckless Wall Street firms.

“I share (their) fury that our economy has come to this point,” Welch said, nothing that the state has the second lowest rate of mortgage foreclosures in the nation. “Vermonters did not cause this problem, but we can get caught in the undertow unless Congress takes action.”

Welch’s vote came just two days after Vermont Sens. Patrick Leahy and Bernie Sanders split their votes on the rescue package.

Leahy, a Democrat, voted reluctantly for the bill, saying he was convinced that the crisis was too serious to do nothing.

Sanders, an independent, voted against the bailout package because he opposed using money from middle-class taxpayers. He offered an unsuccessful amendment to pay for much of the bailout by imposing an additional 10 percent tax on individuals who earn more than $500,000 a year and couples who make more than $1 million a year.

“Today, the Bush administration and Wall Street got what they wanted,” Sanders said.

Sanders said he was disappointed that Obama, whom he supports for president, helped round up votes for the bailout.

“Frankly, I believe that Senator Obama and the Democratic leadership could have created a much stronger piece of legislation which addresses the financial and economic crisis that we face and which protects the middle class.”

Contact Erin Kelly at ekelly@gns.gannett.com.