Mack votes against rescue plan
U.S. Rep. Connie Mack (R-FL) was one of 228 representatives who voted against the Emergency Economic Stability Act, defeating a $700 billion bailout of the nation’s troubled financial institutions.
The bailout package died Monday in a 228-205 vote in the House of Representatives. The House’s failure to pass the bailout sent the financial markets into a tailspin, with the Dow Jones Industrial Average plummeting nearly 780 points, the largest single-day drop in at least two decades.
A prepared statement from Mack’s Congressional office called him a “vociferous opponent” of the bill.
“This bill was an affront to every ideal that has made our nation great and strong,” the statement reads in part.
Mack railed against what he sees as an increase in the power of the federal government and an unnecessary intervention in the free market.
“It would have given unprecedented and inappropriate amounts of power to the federal government. And it would have snuffed out the free market system that is one of the cornerstones of America,” Mack is quoted in the statement.
The bailout package would have essentially allowed the U.S. Treasury to buy $700 billion worth of troubled mortgage securities from financial institutions. The purpose of this would be to free up capital that has been hard to come by as a result of the sub-prime mortgage and housing crises. The money would be paid in stages, with $250 billion available immediately.
Proponents of the bailout say the bill would enable the federal government to adjust troubled mortgages and create the Financial Stability Oversight Board, which would be charged with enacting policies to ensure the stability of the financial markets.
The new board would consist of the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Treasury secretary and others, and would be overseen by a five-member panel appointed by congressional leaders.
Mack’s opponent in the Nov. 4 general election, Florida State Sen. Burt Saunders, said he would’ve voted for the bailout.
“The condition of the bank system really is critical in the sense that there are many, many banks on the verge of failure,” said Saunders, who is a Republican in the Florida Senate but is running for Mack’s Congressional seat under no party affiliation.
“In my view this shows a tremendous amount of naivete on his part,” Saunders said of Mack’s vote.
He also chided Mack’s stance on the bailout’s intervention in the free market.
“Proper regulation is absolutely critical in a free-market system,” Saunders said.
One local economist disagrees, however, and sees the bailout as delaying a market correction in the local housing sector.
“The bailout would’ve prolonged the inevitable,” said Dean Stansel, assistant economics professor at Florida Gulf Coast University. “We probably would have seen a short-term benefit but over the long-term, it would actually cost us.”
Even though the government could have actually broken even or made money on the $700 billion bailout if the mortgage securities increased in value over time, Stansel said it is not worth the risk.
“It’s a huge amount of money. No one knows exactly what would’ve happened,” Stansel said.
The bailout package could come back before Congress later this week in a revised fashion after Treasury Secretary Henry Paulson and Democratic congressional leaders said they would continue to work to pass the measure, the Associated Press reports.