Dear Madame Speaker

http://corner.nationalreview.com/post/?q=MGViMTg0ZGI4YWEyNjJjYmMwOWYwNjg4YWE0YzhjZTU=

[rquoter]The Honorable Nancy Pelosi

Speaker of the House

H-232, U.S. Capitol

Washington, D.C. 20515


Madame Speaker:

As our discussion ended last night, we agreed to continue talking about how to best solve this economic crisis. Like you, House Republicans and I believe we must address this crisis quickly and in a way that protects the interests of families, seniors, small businesses, and all taxpayers. As you know, this process is not about faceless executives on Wall Street, but about keeping families in their homes, safeguarding their retirement security, college savings, and bank accounts, and protecting their jobs.


Over the last week, we have frequently discussed Secretary Paulson’s proposal, and I have repeatedly expressed the need for improvements on behalf of myself and my Republican colleagues. Our staffs have also been in regular contact. To that end, Financial Services Committee Ranking Member Spencer Bachus (R-AL) was tasked by House Republicans to engage in discussions with Chairman Barney Frank (D-MA) and Chairman Chris Dodd (D-CT) and report back to our Conference on the progress of those negotiations before a final deal could be made. Yet Chairman Frank and Chairman Dodd, on several occasions over the last several days, announced that a bipartisan deal was at hand even though the reservations about the underlying proposal I had expressed to you had not been addressed. Each time such announcements were made, or even rumored, I or my staff made it clear to media and to your staff that any such deal did not include House Republicans.


As we demonstrated at the beginning of this year when we crafted a timely agreement on the economic stimulus package, a bipartisan response to our nation’s priorities is never out of reach. And I believe the same holds true at this hour. House Republicans are prepared to stay in Washington to forge an agreement on a proposal that reflects the core free-market, pro-taxpayer principles of our Party.

With that in mind, earlier this week, with your knowledge, I directed our Chief Deputy Whip Eric Cantor (R-VA) to lead a working group of House Republicans to develop a package of ideas to move this process forward. His working group represented a broad cross-section of House Republicans – including both moderate and conservative members – and their goal was to develop ideas worthy of support on both sides of the aisle. We have discussed some of these ideas, and I would like to reiterate that I believe they should be given the consideration they deserve as our economic rescue discussions continue. A brief overview of the working group’s blueprint is included with this letter.

Madam Speaker, we owe it to all those with a stake in this process to continue our discussions until we arrive at an agreement that is acceptable on both sides of the aisle – and more importantly, one that serves the interests of American taxpayers. That is why I ask you and your Democratic colleagues to give the House Republican working group’s proposals serious consideration as this process moves forward. If such consideration is not given, a large majority of Republicans cannot – and will not – support Sec. Paulson’s plan. In the interest of the men and women we represent in Congress, I hope it does not come to that conclusion. I look forward to your timely response and to continuing our work together on an economic rescue package worthy of all of our support.

Sincerely,

John Boehner

Republican Leader[/rquoter]

 

i could theoretically support the paulson plan, as originally conceived, and if that's what the democrats want and truly believe it's best for the country, they could pass it in an hour. however, that's not what they want. the democrats want to lard up the paulson plan with give aways for folks like ACORN, which i don't support.

 

i didn't say i supported the house rep plan as is, nor did i say i was enthusiastic about the paulson plan. none of the plans on offer are ideal, but isn't it the job of congress to work together and craft a bill that everyone can support?

 

here's a decent explanation of what the house reps are looking for, and why.

http://www.usnews.com/blogs/barone/...ing-the-700-billion-bailout-is-insurance.html

[rquoter]Note to Paulson: The Key to Passing the $700 Billion Bailout Is Insurance
September 26, 2008 09:58 AM ET | Michael Barone | Permanent Link

Contrary to widespread expectations in Washington and on Wall Street, Treasury Secretary Henry Paulson's financial bailout/rescue package was not agreed to at the White House meeting that started at 4 p.m. Thursday. The meeting included the congressional and committee leaders of both parties and the administration's top financial officials, plus two presidents—George W. Bush and either Barack Obama or John McCain.

What's the problem? An agreement modifying the Paulson plan in significant ways seems to have been reached on the Senate side, between Banking Committee Chairman Christopher Dodd and the committee's second-ranking Republican, Bob Bennett (the ranking Republican, Richard Shelby, is against the whole thing). Barney Frank, chairman of the House Financial Services Committee, expressed confidence that an agreement was reachable. But the word on Capitol Hill is that Speaker Nancy Pelosi is insisting that some substantial number of House Republicans—I've heard the number 110—vote for the measure.

Obviously, Pelosi is looking out for the political fortunes of her Democratic colleagues. The bailout/rescue package has been getting middling to poor responses in polls and furious responses from constituents who don't want their tax dollars sent to Wall Street. House Republicans like Thaddeus McCotter of Michigan have been making populist noises. This would be the second issue this year on which Democrats have found their position suddenly unpopular, the other being oil drilling offshore and in the Arctic National Wildlife Refuge. House Appropriations Committee Chairman David Obey just capitulated on the latter, dropping the language banning offshore drilling from the appropriations bill before the House.

Pelosi's move is not unprecedented. In 1993, when the House was considering the North America Free Trade Agreement, which the Clinton administration and most House Republicans supported and most House Democrats favored, Minority Whip Newt Gingrich insisted that 100 House Democrats vote for it before House Republicans would put their votes on the board. Gingrich then, like Pelosi today, wanted to give his members shelter against what some would consider demagogic attacks. The minority party in the House ordinarily has little power; on much legislation, it is no more than a bystander. But in situations like this, when the majority party in the House needs cover for its members, the minority party in the House can suddenly have more power than the majority party and both sides of the Senate put together.

What do House Republicans want? A senior House Republican gave me and some other reporters a look yesterday at what a working group headed by Assistant Minority Whip Eric Cantor is demanding. The senior House Republican (hereinafter SHR) has what sounded to me like an ingenious approach. He cited Ginnie Mae loans to low-income borrowers, which the government can insure. He proposed that the government (presumably through the entity envisioned by the Paulson plan) offer to sell insurance to financial institutions that hold mortgage-backed securities (hereinafter MBS). Premiums would be determined by the rates of foreclosure on each class of securities so far. Under this plan, the government would be taking in money, not paying it out. Of course, if the premiums are not enough to cover losses, the government might eventually take losses, as it did when the savings and loan industry collapsed. But losses don't seem inevitable and in any case will mostly occur in out-years, not now.

One of the big problems of the Paulson plan is determining the price the government would pay for MBS. If it pays too little, it doesn't help financial institutions very much; if it pays too much, the government will be shelling out a lot of money and won't get back nearly as much when the MBS become liquid and it sells them. And who is qualified to make such evaluations? Many of them are people who have been working for the very financial institutions that are in trouble (although I should think the Treasury Department and Federal Reserve have some people who are very sophisticated in this, too).

The SHR calls this an insurance program and the original Paulson plan a purchase program. He says Treasury Department people have told him that they considered an insurance program but decided that a purchase program would be better. But he also added that in the draft legislation Paulson has advanced, the Treasury would have the authority to set up such an insurance plan without congressional authorization. From what he said, it struck me that both courses could be followed. After all, neither purchases nor insurance is contemplated to take place unless and until a financial institution comes forward and requests one or the other.

So I asked the SHR whether a commitment by Paulson to consider an insurance program would be enough to win over a significant number of House Republicans. He said that a hazy commitment would not be enough, with the implication that the bill would still seem to House Republicans to be a Wall Street bailout with the implication that the government would be shelling out $700 billion of taxpayer money. I followed up by asking whether House Republicans would go along if Paulson pledged to use authority in the statute to set up an insurance program within a month of passage. "That would go far toward convincing [Republican] members," the SHR said. In other words, the insurance option may be the way to save this legislation.

Over to you, Secretary Paulson.[/rquoter]