Bush Won’t Support House Conservatives' Alternative Financial Plan

October 1, 2008 - 4:09 PM
With Senate passage of a revised financial bailout in sight, the White House rejected considering a more free market alternative proposed by House Republicans.
White House (CNSNews.com) - With Senate passage of a revised financial bailout in sight, the White House rejected considering a more free market alternative proposed by House Republicans.
 
The alternative plan, announced Tuesday by Rep. Jeb Hensarling (R-Texas), chairman of the Republican Study Committee (RSC), replaces the $700 billion bailout package aimed at easing the credit crisis with a plan to federally insure mortgages up to 100 percent.
 
The current plan, supported by President Bush, would allow the Treasury Department to purchase the troubled mortgages and mortgage-backed securities, which are at the heart of the ongoing credit crisis.
 
Nonetheless, insurance is part of the revised proposal being considered by the Senate Wednesday, White House spokesman Tony Fratto said.
 
"It is mandated in the bill that if the Treasury puts in place the asset purchase, it must also put in place a guarantee plan," Fratto told CNSNews.com after the White House press briefing Wednesday.
 
“I know the RSC wants only the insurance option and not the purchase option. We disagree with that and believe that the purchase program needs to be part of the solution here,” Fratto said.
 
In addition to federally insured mortgages, the Republican Study Committee plan also includes tax cuts for businesses to promote investment and the sale of unwanted assets. There also are provisions in the plan for greater accountability of Government Sponsored Enterprises, such as Fannie Mae and Freddie Mac.
 
Further, the RSC bill includes limits on pay for outgoing corporate executives if their failing companies opt into the government’s insurance plan, while the corporations would also be required to disclose more information to the public.
 
The initial $700-billion rescue package proposed by Treasury Secretary Henry Paulson for the nation’s banks failed in a bipartisan House vote Monday, striking a blow to both President Bush and congressional leaders in both parties that championed the proposal.
 
The bailout is also supported by both presidential candidates, Republican John McCain and Democrat Barack Obama. However, a recent Rasmussen poll showed only about 24 percent of Americans supported the proposed bailout.
 
Senate leaders Harry Reid (D-Nev.) and Mitch McConnell (R-Ky.) seem to have reached an agreement on a compromise package that increases FDIC insurance from $100,000 to $250,000 for individual bank accounts, and includes eliminating the Alternative Minimum Tax (AMT) and providing energy tax credits to businesses.
 
“The bill has been modified in a way that significantly increases the chances it will be passed by both chambers,” Fratto said at the briefing. “The bill is a product of extensive bipartisan cooperation.”