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Washington: Regional House members hoping for a better rescue bill

By: Herman Wang
(Contact)

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WASHINGTON — Chattanooga-area House members say they still are hoping for a better Wall Street bailout bill, even though the version passed Wednesday by the Senate contains some sweeteners intended to win over resistant lawmakers who defeated the measure earlier this week.

All four Tennessee and Georgia senators voted for the bill, which would allow the government to purchase up to $700 billion in distressed debt, but Rep. Zach Wamp, R-Tenn., said he wants to see certain accounting rules withdrawn to help banks stabilize.

“I’m really fighting and holding out for the very best possible agreement,” said Rep. Wamp, who had voted against the House bill on Monday. “It’s incredibly disappointing to me they won’t put strong language in this bill on the mark-to-market provisions. I told the White House, it’s a linchpin for me.”

The House is expected to take up the bill Friday.

Mark-to-market rules require banks to value their mortgage securities at market price, instead of their implied future value, which have devastated the banks’ finances as market conditions have deteriorated.

Opponents of relaxing the rules say doing so could lead to banks using false accounting to overstate the value of their assets to investors.

A spokesman for Rep. Lincoln Davis, D-Tenn., the lone Tennessee Democrat to vote against the House package, said the congressman will “carefully review and research (the Senate bill’s) merits” and has not committed either way.

To garner more support, the Senate added several tax relief provisions to the bill, including one that allows residents of states without an income tax, such as Tennessee, to deduct sales tax from their federal returns.

Though Rep. Davis has supported the sales tax deduction, he is among several conservative Democrats who have insisted on pay-as-you-go rules that require spending cuts to offset any tax cuts.

The Senate bill, which also extends tax breaks for alternative energy investment, contains only partial offsets.

Sen. Bob Corker, R-Tenn., said the bill includes safeguards for taxpayers and that any positive returns from the purchased debt would go toward retiring the federal debt.

“It’s a large investment, but it’s one that will create liquidity in the financial systems, which will keep the system working so when people cash their payroll checks or try to get a loan, there’s actually cash available,” he said.

Sen. Lamar Alexander, R-Tenn., said the bill will “get economic traffic moving again and restore confidence” in the market.

He also praised the inclusion of the sales tax deduction, saying it will result in $400 in tax relief for 600,000 Tennesseans each year.

“While this bill extends the deduction for two years, we still need a permanent fix, and I will continue pushing for legislation to do just that,” he said.

Sen. Johnny Isakson, R-Ga., urged the House to pass the bill.

“This is on the shoulders of the Congress,” he said. “The people affected are our constituents who voted for us and sent us here.”

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