WASHINGTON, D.C.—New Jersey congressmen split 7-6 in voting against the $700 billion Wall Street bail out plan proposed by the Bush administration in the wake of a nationwide mortgage crisis, which triggered bank failures and a diminutive stock market crash Monday.
Democrats Donald Payne, Steve Rothman and Bill Pascrell voted against the $700 billion proposal along with Republicans Rodney Frelinghuysen, Scott Garrett, Frank LoBiondo and Chris Smith.
Republicans Mike Ferguson and James Saxton joined Democrats Rush Holt, Albio Sires, Frank Pallone and Rob Andrews in voting for the financial bailout package that had been negotiated by the White House and a bipartisan group of elected and appointed officials.
Members of the U.S. House of Representatives who voted against the $700 billion financial system bailout received twice as much in campaign contributions from banks and securities firms as those voting against the tax dollar giveaway.
Payne said he voted against the bailout because it was unfair to constituents in impoverished urban areas of his district, which includes parts of Union County.
“I couldn’t vote for a bill like this which would require my constituents that are really hurting financially to pick up the tab run up by wealthy Wall Street executives,” Payne said.
Rothman, a Bergen County Democrat, said the bailout was the wrong solution, and didn’t help regular people by addressing the crumbling national infrastructure and lack of jobs.
“I think there are better ways to fix the economic problems caused by this administration than this trickle-down Wall Street bailout program,” Rothman said.
The failed bailout package included neither stimulus for future economic growth nor relief for consumers facing job losses and future difficulties in meeting mortgage payments, credit card debt, and student loan obligations.
This has been termed the “second wave” problem that the financial sector will have to deal with as the slowdown/recession continues.
Part of the reason that U.S. investment banks have fallen so quickly has been a change in the way that assets have been recorded. “Mark-to-market” accounting, in the move to transparency, has caused assets to be listed at current market value, as opposed to historical cost.
In the second wave, it will be the commercial banks that will bear the brunt of the loan defaults and they have huge depositor bases that help with capitalization requirements.
Also, their business model is based on accruing revenue and expenses and this helps to smooth over the ups and downs.
A trade deficit of around $700 billion is currently being financed mainly through capital infusions from China and Japan. The increase in U.S. trade debt is already a concern as the nation’s accumulated budget deficits push the total financial debt to $11 trillion.