House conservatives want changes to bailout plan

The House Republican Study Committee (RSC) called an emergency meeting Monday afternoon to finalize an alternative proposal to the administration’s plan to bail out struggling financial institutions, according to several congressional sources. 

It is unclear what changes the RSC will seek, but the conservative group’s concerns about the $700 billion package are another indication that the administration’s proposal will not sail through Congress.

{mosads}During a Sunday press conference, Senate Banking Committee Chairman Chris Dodd (D-Conn.) said, “The idea of coming up here and say[ing], ‘Give us $700 billion and we’ll see you later’ is unacceptable.”

The RSC meeting will take place Monday at 5:30 p.m. A spokesman for the RSC could not be immediately reached for comment.

RSC Chairman Jeb Hensarling (R-Texas) expressed skepticism in the Treasury Department’s proposal on Friday, saying he was “unconvinced that this is the proper remedy for our nation at this time.”

In a statement Saturday, Rep. Mike Pence (R-Ind.), a former RSC chairman, came out against the idea of a government bailout.

“Congress must not hastily embrace a cure that may do more harm to our economy than the disease of bad debt,” he said.

In a “Dear Colleague” letter circulated on Monday, Rep. Scott Garrett (R-N.J.) attached three articles written by economists at the Brookings Institution, the Heritage Foundation and the University of Chicago that all offer alternatives to the administration’s plan.

“As in most cases, there is not just one solution to a public policy problem,” Garrett wrote. “It is my hope that the ideas below will provide some interesting analysis to the problems faced by the U.S. financial markets and generate thoughtful debate as we consider this monumental legislative proposal.”

The plan also came under attack from GOP and Democratic lawmakers on the floor, who devoted their morning speeches to criticizing the proposal crafted by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke.

“This is a bill for Wall Street, not a bill for Main Street,” Rep. Brad Sherman (D-Calif.), a member of the House Financial Services Committee, told The Hill after speaking out against the plan Monday morning.

Sherman said that lawmakers have received heavy pressure from the Bush administration to pass the bailout quickly.

“Wall Street and the administration are going all out to tell constituents, ‘Make your congressman vote for our bill, or your 401(k) [retirement plan] is toast.’ ”

Florida Republican Cliff Stearns also criticized the proposal, which would allocate hundreds of millions of dollars to buy mortgage-based assets from private firms.

“Bailout after bailout is not a strategy,” said Stearns, who said that taxpayers could be left with a huge bill.

Rep. Pete DeFazio (D-Ore.) also criticized Paulson’s plan.

“Secretary Paulson gets the key to the Treasury and will start off by borrowing $700 billion in the name of the American people and maybe more later,'' DeFazio said in a Monday floor speech.

“And it waives all laws. All laws! No oversight; no one looking over his shoulder; no conflict-of-interest rules; not even court review. He insists this has to be done without meaningful discussion or debate or any change.”

Sherman has invited House lawmakers who oppose the Treasury Department’s plan to meet in the Rayburn House Office Building this afternoon to organize their response.