September 29, 2008 09:24 PM UTC

Bailout Fails, Udall Votes No, Markets In Chaos

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• by: Colorado Pols

UPDATE #2: We just got Udall’s statement (follows). Bottom line, “[T]he cost of this bailout was too high and the return far too uncertain for the American families who were being asked to bear the burden.”

UPDATE: We’re awaiting a statement from Rep. Mark Udall, who cast a key vote against the bailout package–and his party leadership–today. The gist of Udall’s position is that the bill did not include enough accountability for CEOs and financiers responsible for the crisis, or sufficient protection for taxpayers. Stay tuned, statement forthcoming.

Look out below, Money reports:

The fate of a controversial $700 billion financial bailout plan was in doubt Monday as a House vote turned against it.

The next steps were not immediately clear but supporters were scrambling to put it up for another vote.

What was supposed to be a 15-minute vote stretched past the half-hour mark as leadership scrambled for support. Investors who had been counting on the rescue plan sent the Dow Jones industrial average down as much as 700 points while watching the measure come up short of the necessary support…

“Today is the decision day,” said Barney Frank, D-Mass., on the House floor. “If we defeat this bill today, it will be a very bad day for the financial sector of the American economy and the people who will feel the pain are not the top bankers and top corporate executives but average Americans.”

Udall Statement on Vote Against Financial Bailout Bill

(Washington, DC) – Today, Congressman Udall (D-Eldorado Springs) issued the following statement after voting against H.R. 3997, the Emergency Economic Stabilization Act of 2008, which would have authorized the Treasury Department to spend up to $700 billion dollars of tax funds to buy “troubled assets” held by financial companies. The House of Representatives rejected the bill with 205 Members voting for it and 228 voting against it.

“My first responsibility is to the people of Colorado and to our nation’s taxpayers. I take very seriously the warnings about how conditions in the credit markets could affect the overall economy. But, the cost of this bailout was too high and the return far too uncertain for the American families who were being asked to bear the burden.

“And I cannot ignore that many of the people sounding the alarm are the same ones who recently said things were under control, that risk was being nearly managed out of the system, and that stronger government oversight was unnecessary and counterproductive.

“Although this legislation represents an improvement over the initial blank check sought by the Administration, it is still a bare framework that contains too few measures for real accountability.  It ultimately lays the costs of the greed, bad decisions, and lack of oversight on Wall Street squarely on the shoulders of taxpayers in Colorado and the nation.

“From the beginning, I have said that any response to this crisis must adhere to four core principles: no blank checks for the Treasury; limits on the pay of CEOs whose companies are seeking federal assistance; help for small business and Main Street, not just big business and Wall Street; and guarantees that the taxpayers are protected and will be first in line to get their money back and share in any future windfalls.

“The negotiators revised the Administration’s proposal and produced a bill that came closer to what I think is needed.  But it is not enough.

“Just as importantly, this legislation does nothing to begin the fundamental reform that is needed to fix the broken financial system that led us to this crisis.  Washington is painfully slow to make fundamental reforms except in times of extreme duress and real public outrage.  For this debacle to count for something good, I believe it must lead to real, deep, durable reforms to the laws governing our markets, financial institutions, and their regulation.

“It’s not acceptable to spend $700 billion to bail out the boat, with no assurances that we will ever fix the hole.  

“A stronger version should be brought before the House.

“There needs to be an improved oversight structure, including representation from Congress.

“There needs to be more effective relief for homeowners facing foreclosure.

“The legislation must avoid using the same excessive credit practices that created the very problems we are working to fix.  

“And legislation responding to those problems should include additional strong reform measures to prevent their recurrence.

“In the rush to respond to solve this critical problem, we have an incomplete response.  We need to take more time, work together, to improve it and bring forward a measure that deserves and obtains broad support in Colorado and across the country.”

To contact the Udall press office, call Heather Fox at 970-290-4653.