NC lawmakers at odds over bailout proposals

WASHINGTON - The Bush administration and Congress restarted negotiations yesterday over a $700 billion Wall Street bailout, as opposition from House conservatives to using taxpayer money to purchase securities linked to bad mortgages mounted.

A day after objections from House Republicans appeared to scuttle a tentative deal, Democrats said they were hopeful that an agreement could be reached this weekend.

As negotiations continued, North Carolina lawmakers were in sharp disagreement over the proposal. Some warned that it needed to pass within days, or risk an economic meltdown, while others called those predictions too dire.

While many said they supported the idea at the core of the Bush administration plan, which would put taxpayer money at risk, others said they supported an alternative proposal put forth by House conservatives that the administration has warned would not work.

Sen. Richard Burr, R-N.C., said in an interview that he supported the general concept at the core of the administration’s bailout proposal, and said it was “absolutely crucial” that negotiators reach a deal this weekend.

“Everybody understands that doing nothing is unacceptable,“ he said. “On Monday, we think, it’s absolutely crucial that the markets open with a plan in place, in law.“

Some financial experts say that the toxic mortgage-backed debt has frozen the broader credit market, which has made it difficult for businesses to get loans.

“This is already affecting Main Street,“ Burr said.

Sen. Elizabeth Dole, R-N.C., said that she would not vote for the bailout proposal the Bush administration put forth last weekend.

“It violates every principle of American capitalism and free enterprise that I have been taught,“ she said in a statement.

That original proposal, though, is virtually certain not to come up for a vote.

Congressional leaders deemed the bare-bones plan unworkable the moment the administration proposed it, because it contained almost no oversight provisions.

As the week has progressed, congressional negotiators have worked with the administration to add oversight and make other changes.

For example, rather than provide $700 billion upfront, as Treasury Secretary Henry Paulson initially requested, Congress would approve the funds in stages. Any compromise is also expected to require the government to obtain partial ownership of any company it invests in.

Meanwhile, House Republicans demanded “serious consideration” for a plan of their own, involving less government intrusion and lower cost to the taxpayers than the $700 billion that Paulson has been seeking.

Under their plan, the government would insure the distressed securities rather than buy them. Tax breaks would provide additional incentives to invest.

Democrats and Bush officials said the insurance proposal was acceptable as an option but not as a replacement for the administration’s more sweeping approach, suggesting that the Republican plan would not solve the underlying problem in the credit markets.

Rep. Virginia Foxx, R-N.C., said in an interview that she was extremely unlikely to vote for a plan based around the framework Paulson proposed, and praised the Republican alternative.

“The Paulson/Democrat worldview is to spend more government money. The (conservative Republican) point of view is to find a mechanism to let the private sector right itself,“ she said.

Rep. Patrick McHenry, R-N.C., also praised the plan Republicans put forth

“The fact is we can provide the needed support to the markets, while maintaining our duty to protect the American taxpayer, and ensure that those who made serious mistakes are not rewarded,“ he said.

Rep. Walter Jones, R-N.C., a member of the House Financial Services committee, said he was more adamantly opposed to the framework proposed by Bush than he was earlier in the week, citing increasing opposition from some North Carolina banking executives.

Despite dire warnings from the administration if the plan does not pass, he said he remained deeply opposed to any plan that put taxpayer money at risk.

“I have people in my district that are hurting financially. And now they want to dump a $700 billion bill on their back. That’s not going to happen with my vote,“ Jones said.

Rep. Brad Miller, D-N.C., a member of the House Financial Services Committee, said earlier this week that any package needed to have substantial reform of the way Washington regulates Wall Street. That appeared unlikely to emerge in the final bill.

Still, he said, he supported the basic framework proposed by the administration and was hopeful the final package would include some checks on Wall Street like limits on excessive salaries of executives whose companies participate in the buyout.

“It’s a bitter pill, and I think most Americans think it’s a bitter pill. But we have to do something. But I deeply resent helping the people who created this mess,“ he said.

Rep. Bob Etheridge, D-N.C., said in a statement that he would not vote for a plan that did not limit executive compensation, and provide “help for struggling homeowners and accountability and oversight to protect taxpayers’ money.“

The Associated Press contributed to this report. Sean Mussenden can be reached at 202-662-7668 or