When the Wall Street bailout bill failed to pass the US House of Representatives Monday, sending the stock market crashing, it briefly appeared that those who voted no had sent the world economy into an abyss. It still might be the case. But that does not seem to be worrying the three no voters who hail from the Bay State: Bill Delahunt of Quincy, Steve Lynch of Boston, and John Tierney of Salem.
The Phoenix spoke today with Lynch and Tierney, both of whom defend their no votes, saying that despite dire warnings of a credit freeze, Congress has the time to make better legislation.
Lynch, who serves on the House Financial Services Committee -- under chair Barney Frank, who is spearheading the bailout legislation -- wants to see some of the cost of the bailout borne by the financial-services industry, rather than the taxpayer. "The matter of who pays is central to this," he says.
Tierney agrees. In addition, he wants the plan to authorize bankruptcy judges to rework mortgages to keep homeowners out of foreclosure.
Both would also like the bill to provide more guidance on how the Treasury Department will value and purchase mortgage-backed securities -- guidance that they believe can significantly lower the cost to the taxpayer, and make it more likely to successfully settle the markets.
"It's a very risky proposition -- people think that this is a silver bullet, and it isn't," Lynch says. He points out that the plan is to leverage $700 billion to settle out the problem of valuating some $17 trillion of mortgages and mortgage-based securities. If not done properly, Lynch says, it might end up a costly failure.
But what of those arguing that immediate action is needed to stave off imminent disaster? Massachusetts Treasurer Tim Cahill, for example, has reported difficulty obtaining credit to make the state's local-aid payments.
Neither is convinced that the peril is quite as close as some say. In fact, Tierney blames President George Bush for over-hyping the urgency. "I'm not sure that one day or two days will make the difference" in whether financial systems collapse, Tierney says, "and it could make the difference in doing it the right way -- and making sure that we don't create a worse problem down the road."
Both lawmakers say they are open-minded about future versions of the legislation that address their concerns. Lynch says that a new version of the bill might come to a vote as soon as Thursday: last night at 11:00, he received an email from Speaker Nancy Pelosi telling members to keep that day free on their schedules.
But a bill incorporating the changes that would please reluctant Democrats like Lynch and Tierney, would likely make it harder to bring in more Republican votes, not easier.
Pelosi has said, from the beginning, that this needs to have bipartisan support -- she and Frank initially insisted that it should have at least 100 votes from each party.
In the event, just a third of the GOP members voted in favor, well short of the 80 their leadership had promised that day, according to both Lynch and Tierney. Given the ideological resistance of many conservatives to the bailout, it would seem likely that the extra votes needed for passage will need to come from Democrats -- which might mean passing it on a predominantly partisan vote.
Tierney says he would have no problem, at this point, passing it without Republican help. "The opportunity to get 100 and 100 has gone out the window," he says.
Lynch disagrees. "It's not a Democratic bill. It's a Republican bill, from the Republican President, with concessions to the Democrats. If they [Republicans] can't do better than 65 votes, I don't think it will happen."
Changes to the bill would also make it harder for the bill to pass the Senate, where 40 opponents can block a vote, and even lose the support of President Bush. In fact, it now appears that the Senate is going to pre-empt the House changes by voting on their bailout bill Wednesday.
Tierney, speaking before that news came this evening, suspected it might be coming. It is the Senate's way of putting pressure on House Republicans to get on board with the bill, Tierney says -- and to prevent House Democrats from passing a bill with significant changes.
If the Senate does pass its bill Wednesday, it appears unlikely that Tierney or Lynch will vote in favor of it when it comes back to the House.