House GOP: We have leverage on bailout

House Republicans say they have significant leverage on the revamped bailout package, claiming that Democrats will scramble for votes unless they make changes to it. 

Republicans in the lower chamber are balking at the bailout package, saying that Democrats will be solely responsible for the ramifications of what they see as a flawed compromise.

{mosads}Reps. Eric Cantor (R-Va.) and Paul Ryan (R-Wis.) are leading an effort by House Republicans to circulate the set of principles to their colleagues and like-minded Democrats, according to a senior Republican.

Asked whether the effort comes too late, the GOP official said the votes would be leverage enough to have the principles considered by congressional negotiators.

House Speaker Nancy Pelosi (D-Calif.) has indicated that a bill will not be brought to the floor without broad Republican support.

GOP presidential candidate Sen. John McCain (Ariz.) and the White House have been made aware of their alternative.

Reps. Cantor, Ryan and Jeb Hensarling (R-Texas) discussed the proposal at a press conference Thursday afternoon.

Other Republicans involved in this effort include Reps. Mike Castle (Del.), Judy Biggert (Ill.) and Spencer Bachus (Ala.), who is the ranking member of the Financial Services Committee.

During a meeting of the Republican Conference on Thursday, House Minority Leader John Boehner (R-Ohio) made it clear that, although Democrats have announced they have brokered a deal, House Republicans would not be a part of it.

“As I told our conference this morning, there is no bipartisan deal at this time,” Boehner said. “There may be a deal among some Democrats, but House Republicans are not a part of it.”

The GOP’s “economic rescue principles” advocate adopting a mortgage insurance approach to solve the financial problems facing the country, according to a fact sheet obtained by The Hill.

Roughly half of all mortgage-backed securities (MBS) are insured by the government, and House Republicans have advocated that the other half also become insured by the Treasury Department.

“We can ensure the rest of the current outstanding MBS; however, rather than the taxpayers funding insurance, the owners of these assets should pay for it,” the fact sheet says.

The Republican proposal backs the removal of regulatory and tax barriers to help facilitate the use of private capital to produce liquidity; temporary tax relief provision to help companies free up capital; and temporary suspension of dividend payments by financial institutions.

The proposals call for Wall Street executives to “not benefit excessively”; for the creation of a “blue ribbon panel” of officials from the Securities and Exchange Commission (SEC); and for the Federal Reserve to make recommendations for reform of the financial sector by Jan. 1, 2009.

Additionally, they direct the SEC to report to Congress on the ability of credit rating agencies to assess the risks of the failed investment securities and to audit the books of the failed financial institutions so that their standing is accurately portrayed.