FAIRMONT — Helping the nation’s financial markets is vital to saving credit lines for West Virginia’s banks and its businesses — large and small — and consumers in general, U.S. Rep. Alan B. Mollohan said.
Without congressional action, the nation’s financial credit markets will begin to dry up, and ordinary West Virginians will soon feel the effects, he said.
Taking troubled mortgage-related bonds off the books of financial firms will restore confidence among global investors in the country’s stock and financial markets, Mollohan said in urging action by Congress.
“We want to fix this now before we experience credit problems on Main Street,” he said Tuesday.
“If it becomes harder to borrow money on Main Street, the consequences for the overall economy are dire.”
The bill that lost Monday in the House of Representatives by a 228-205 vote was not a “Wall Street bailout,” he said. A veteran lawmaker and one of a dozen subcommittee chairmen on the House Appropriations Committee, Mollohan voted for it.
He will support another economic rescue package, details of which are still being devised by leaders in both parties.
Mollohan said the Republicans (133) and Democrats (95) who voted against the measure saw the “first serious consequences” of a failure by Congress to take action when the Dow Jones industrials dropped 778 points after Monday’s vote.
“The stock market lost more than $1.2 trillion in value in just several hours” as investors sought more security for their funds, he said.
Unlike past eras, ordinary Americans have a bigger stake in today’s stock markets because their pension and 401-K plans are invested in stocks.
The bill voted down Monday was a “much better package” than the one presented to Congress 12 days ago by Treasury Secretary Henry Paulson and President Bush, he said.
“I could care less about the investment companies and the ‘golden parachutes’ for executives. I am against all that,” Mollohan said.
“And that’s what Secretary Paulson submitted to us. It was a ‘no-strings attached, Wall Street bailout,’ but that’s not what we voted on Monday.”
The bipartisan leadership bill would have given the government an ownership stake in participating companies. It also placed sharp restrictions on executive pay.
It allowed the purchase of troubled assets from pension plans, local governments and small banks that serve the poor and middle class.
Taxpayers were placed first in line to recover assets if the participating workout companies fail.
As for oversight, the bill created four entities, including an independent board appointed by leaders in both parties. Unlike private firms, the government can hold troubled mortgages for several years. It can sell them when the housing market recovers and probably make money on the deal, Mollohan said.
“It’s very important for all of us to accurately understand the problem we are confronting and the nature of the solution that is being proposed.
“The problem that I and 99 percent of my constituents face is the prospect of our lending institutions, our banks, our credit unions and even our credit-card companies not having money to lend to us.
“West Virginia banks are strong banks. They’re not a part of this problem, and that’s good. But no matter how strong they are, they are a part of the national, financial credit system.
“When credit dries up at the top, increasingly our banks will feel the pinch, and they will start not having money to loan. And then small businesses will not be able to make payrolls, auto dealers will not be able to sell cars, real estate people won’t be able to sell homes,” and homeowners won’t be able to fill those homes with furniture and appliances.
Credit-card companies will start limiting how much their customers can charge.
“This will all happen if we don’t fix this,” he said.
E-mail Bill Byrd at bbyrd@timeswv.com.
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