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Tuesday, Oct. 07, 2008

Marshall: Bailout bill painful, necessary

WARNER ROBINS -- U.S. Rep. Jim Marshall, D-Ga., said Monday that the nation's economy faces more uncertainty and a long road to recovery, but the rescue plan approved by Congress last week should ease the credit crunch and hopefully came in time to stave off a depression.

"No one in Congress wanted to vote for that bill. But we had to do it to put the liquidity back into the credit markets and remove the poison from the subprime mortgage mess," he said. "We were in crisis, with the banks not trusting each other and the credit markets locking up. We couldn't sit and wait for the meltdown."

Marshall spoke for nearly an hour to the Aerospace Industry Committee of the Warner Robins Area Chamber of Commerce, explaining his thoughts on the country's economic troubles and his role in the votes by Congress last week to shore up the ailing credit markets.

He said he urged his colleagues to vote for the plan even if it cost them votes in the upcoming election.

"I told them I come from a district that is already tough for a Democrat to hold. The calls I've gotten (from constituents) are 99-1 against the rescue plan. But I told them, 'I'm voting for it, and if I do, you can. I'm willing to give up my seat because we are in crisis and we have to do this.' "

Sure enough, Marshall's opponent in the District 8 race, Republican Rick Goddard, has said he would have voted against the measure.

But Marshall said Monday that he isn't so sure his support of the rescue plan will end up a political liability.

"That's largely because it didn't pass (on the first vote) last Monday," he said. "It's going to take some time for all of this to work. Had it passed and not much happened right away, people would be asking, 'what's that about?' But when the stock market fell 700 points after that 'no' vote, I think that awakened some to the real crisis we face. Maybe as people come to understand this more, they'll realize we had to act the way we did."

Marshall said the blame for the economic troubles is shared by many, including the government for not regulating the mortgage industry better. He said he advocated stronger controls as early as 2005 but was laughed off by those in the business and ignored by his colleagues in Congress.

"You would have thought I had shot the Pope when I suggested more oversight," he said.

But he said buyers also are to blame.

"We have become too wedded to debt; we're too leveraged. Too many bought beyond their means, particularly in housing. And lenders weren't honest with people. It is the fault of irresponsible buyers, bankers, bonders, mortgage buyers, Alan Greenspan and Congress.

"But now the focus should be on getting out of the mess and putting in the regulations to prevent it in the future."

Marshall said the plan, especially with all the pet provisions added by the Senate after it first failed in the House, is much more complicated than it should be, but that action was too imperative to wait for a perfect solution.

"In 1929, Herbert Hoover had the opportunity to intervene in the markets. There were different causes, but a lot was similar to today. People were buying too much and credit dried up. He could have injected some liquidity, but he chose not to intervene, and we had the Great Depression," Marshall said.

"Hopefully, we've acted in time. The government really can't do a lot about the economy as a whole, but it can keep the credit markets liquid and give banks and businesses a chance to work it out."

And he said he still believes taxpayers can eventually come out ahead.

"We're putting $800 billion into buying up this bad debt, but we can sell it and get money back. Financier Warren Buffet says it has the potential to increase 10-fold, which would produce $8 trillion for the economy. Others say it may wind up costing taxpayers $200 billion. But not rescuing the credit markets would have cost much, much more."

Marshall said there still will be economic troubles in the coming months, but that Middle Georgia should fare better than many other areas. And he said he believes the economy will eventually improve to be stronger than ever.

To contact writer Chuck Thompson, call 744-4489.