Capitalism Triumphs Over Democracy as Bailout Passes the House

The House voted this afternoon to pass a modified version of the Bush-Paulson bailout plan by a 263-171 margin. 172 Democrats and 91 Republicans supported the measure.

Before the vote, CNN reported, "At least 20 House members said Friday they had switched positions and would now support the proposed $700 billion bailout of the nation's financial system.

"Among the 20 converts is Rep. Jesse Jackson Jr., D-Illinois, his chief of staff, Kenneth Edmonds, said.

"Edmonds said Jackson is changing his vote because "he received assurances from (Sen. Barack Obama) that, if elected, his administration will aggressively use authority in the bill to prevent foreclosures and stabilize the housing market."

"Rep. Howard Coble, R-North Carolina, said he plans to switch his vote because constituents began urging him to do so. He said the people he represents initially urged him to oppose the plan.

"Other Republicans who said they plan to change their votes to support the bill include Rep. Ileana Ros-Lehtinen of Florida, Rep. John Sullivan of Oklahoma, Rep. Jim Ramstad of Minnesota, Rep. John Shadegg of Arizona and Rep. Sue Myrick of North Carolina.

"The Senate bill passed Wednesday night included measures that:

* Allow Treasury Secretary Henry Paulson to buy up to $700 billion in bad mortgage-related securities and other bad assets.

* Allow the Treasury Department to modify mortgage terms to help homeowners avoid foreclosure.

* Permit the government to receive equity in companies it helps so taxpayers get a share of any future profits.

* Restrict executive pay for companies aided by the program.

* Create an independent oversight board to oversee the Treasury Department program.

"Besides Jackson, at least 12 Democrats who opposed the bill announced plans to change their vote, including Rep. Shelly Berkley of Nevada, Rep. Emanuel Cleaver of Missouri, Rep. John Lewis of Georgia, Rep. Elijah Cummings of Maryland, Rep. Betty Sutton of Ohio, Rep. Mazie Hirono of Hawaii, Rep. Bruce Braley of Iowa, Rep. John Yarmuth of Kentucky, Rep. Bill Pascrell of New Jersey, Rep. Donna Edwards, of Maryland, Rep. Lynn Woolsey of California and Rep. Hilda Solis of California."

Rep Dennis Kucinich (D-OH), who voted against the bill, released the following statement:

“The public is being led to believe that Congress has reconsidered its position because we have before us a better bill than we had a few days ago. It is the same bill plus hundreds of new pages for hundreds of millions of tax breaks. What does this have to do with the troubles of Wall Street?

“Driven by fear we are moving quickly to pass a bill, which may produce a temporary uptick for the market, but nothing for millions of homeowners whose misfortunes are at the center of our economic woes. People do not have money to pay their mortgages. After this passes, they will still not have money to pay their mortgages. People will still lose their homes while Wall Street is bailed out.

“The central flaw of this bill is that there are NO stronger protections for homeowners and NO changes in the language to ensure that the secretary has the authority to compel mortgage servicers to modify the terms of mortgages. And there are NO stronger regulatory changes to fix the circumstances that allowed this to happen.

“We should have created a mechanism for our government to take a controlling interest in mortgage-backed securities and use our power to work out a new deal for the homeowners. We could have done this. We should have done this. But we didn't.

“Now millions of Americans will face the threat of foreclosure without any help. And the numbers will soon rise for a number of reasons. Not only because of the Alt-A, jumbo mortgages which will soon be reset at higher interest rates, but because the London Interbank Offered Rate (LIBOR) is pushing up rates on adjustable mortgages and more than half of the US adjustable mortgage rates are tied to LIBOR. Homeowner defaults will grow in significant numbers. Let’s see if Congress will be as quick to help homeowners on Main Street as they were to help speculators on Wall Street.