(October 3, 2008) - Thanks in part to personal calls from presidential candidate Sen. Barack Obama, more than a dozen Congressional Black Caucus members flipped their votes and helped pass a Wall Street bailout plan, known as the Emergency Stabilization Act of 2008, Friday.
Fifteen of 21 CBC members who helped defeat the bill in the House of Representatives Monday, joined the lawmakers who voted 263-171, a margin of 90 votes, in support of the $850 billion package.
Illinois Rep. Jesse Jackson said despite misgivings he decided to change his vote after he “received assurances from Sen. Obama that, as president, they ‘would aggressively regulate predatory lending and force mortgage modifications to prevent foreclosures.’”
“Senator Obama and I agree that our financial foundation needs reinforcing. We also agree that homeowners need protections. [But], first things first. Congress must stabilize the economy or we’ll see more Americans facing foreclosures, layoffs, and bankruptcy,” said Jackson, one of the Obama campaign’s 10 national co-chairs.
Among the three CBC members from the Washington, D.C.-Maryland-Virginia metropolitan area who can vote, Congressman Bobby Scott of Virginia was the only holdout with Maryland Reps. Elijah Cummings and Donna Edwards changing their votes to the affirmative.
Along with Scott, original CBC dissenters who maintained their opposition included: Rep. G.K. Butterfield of North Carolina, Rep. William Jefferson of Louisiana, William L. Clay Jr. of Missouri, John Conyers Jr. of Michigan, Hank Johnson of Georgia and Donald Payne of New Jersey.
In statements after his vote Monday, Scott said he could not vote for a bill that did not provide for an assessment of the real value of the assets they were purchasing. He said he feared taxpayers would be paying too much for essentially worthless assets.
“Purchasing worthless assets adds nothing to general liquidity; overpaying for assets from all companies is an inefficient way to help those companies who only need temporary assistance to survive and overpaying for assets does nothing for homeowners,” Scott said.
Like other CBC members, Scott argued the bill also did not provide enough help for homeowners facing foreclosure, the problem at the base of Wall Street’s troubles.
Congressman Cummings, who changed his vote Friday, said this was “one of the most difficult votes” of his 12 years in Congress. Like others, he faced the dilemma of addressing the needs of his constituents who were targeted by predatory lenders and who were facing the loss of their homes and others who face the loss of their pensions and life savings in the turmoil of the financial markets.
“Yesterday morning, one of my neighbors whose house is in foreclosure—a man who lives just a few doors down from me on Madison Avenue in Baltimore—summed it up best. He said, ‘Elijah, I have been hearing about this bill to help out Wall Street, but what is in the bill to help me? What is in there to help save my home?’ And, I had to tell him—not very much,” Cummings said.
“At the same time, my stomach turns when I think about the men and women who have worked hard their entire lives who risk losing large portions of their savings if we do not act now,” the congressman added. “When I think about the young people in my home town of Baltimore who are relying on loans to go to college and uplift themselves and their communities—when I think about these students being shut out from education because they can’t get loans, it makes me ill. And, it makes me sick when I think about Drew Greenblatt, who came to my office yesterday because he is in danger of not being able to make his payroll—which would force him to begin laying off his employees—almost 50 of whom are my constituents in Baltimore.”
In a decision that rocked the already teetering financial markets, the House voted down the financial rescue package, Monday, by a slim 228-205 vote margin. The defeat came at the hands of 133 Republicans and 95 Democrats who sought more free market solutions to the problem and who felt there should be more provisions for distressed homeowners, respectively.
In response, the Senate approved a modified version of the bill Wednesday. The bill, which maintains at its center the Bush administration’s $700 billion plan to buy up toxic securities backed by bad mortgages, included several provisions meant to make it more palatable.
Those included: An increase on the cap for federally-insured bank deposits from $100,000 to $250,000; the extension of a number of business and individual tax reliefs, including tax breaks for the use and production of renewable energy and for research and development; it protects 20 million middle-income Americans from the alternative minimum tax—the so-called “income tax for the wealthy”—and disburses $8 billion in tax relief to those affected by natural disasters in Louisiana, Texas and the Midwest.
The bill also allows the government to purchase and sell foreclosed homes and encourages servicers under the HOPE program to restructure loans whenever possible and allows renters to stay in foreclosed homes where permissible.
Sen. Obama, one of 74 senators that voted for the bill, on Thursday appealed to House members, including the 21 members of the Black Caucus who voted against the Wall Street bailout bill, to follow the Senate’s example and “deal with the immediate crisis.”
The legislation is not perfect, he said, and a more comprehensive, long-term plan would need to be developed, however “it is what we have to do prevent a crisis from turning into a catastrophe.”
Cummings said the reassurances of Democratic leaders, including the man he hopes will become president, convinced him to change his mind. While the current bill does not address all of his concerns, they have assured him that it is the first step towards a more lasting solution.
“There is no guarantee that this recovery package will work. But, what it will do is keep things from getting worse while we have time to go back to the drawing board and craft legislation that brings the reforms we really need—the reforms that President Obama will fully back,” Cummings, another national co-chair of the Obama campaign, said. “I know that he understands the plight of the American family right now, and I know that he will be true to his heart on taking every single step necessary to fix our economy and restore people’s lifetime dreams once he is president.”