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Democrats battle bailout fatigue

Lawmakers agree that big financial institutions are in trouble. But they want more help for their constituents.

By Staff writer / March 10, 2009

Forced to move: Rhonda Wagner in Sacramento, Calif., packs family items in preparation for home foreclosure. As a state employee, she had to take a 9 percent pay cut because of California’s budget crisis.

Rich Pedroncelli/AP

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Washington

As the Obama administration prospects its next moves to stabilize financial markets, Democrats are scrambling to ensure the votes in Congress to support them.

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For now, Speaker Nancy Pelosi and Senate majority leader Harry Reid are backing the president’s calls to see the big picture – and give economic recovery programs a chance to work.

But the rank-and-file Democrats, including some committee chairs, are losing patience with big bailouts that have yet to ease the economic woes of their constituents.

“People are enormously harmed and they don’t know how they or events around them will improve,” says Rep. Jane Harman (D) of California, describing a recent event with families facing foreclosure in Compton, Calif.

“I think the way to sell any more bailout packages here is to start with individual people like them and explain why these programs will reach them,” she added, after a meeting with Treasury Secretary Timothy Geithner and House Democrats on Monday night.

“The 30,000 foot view is not really helpful. It’s the three-foot view that needs to be focused on,” she added.

Most Americans are convinced that big banks have already taken more than their share of federal bailouts. A Newsweek poll last week found that 62 percent of Americans think the federal government has spent too much so far helping troubled large banks and other financial institutions, and an earlier USA Today/Gallup Poll had 59 percent opposed to “giving aid to US banks and financial companies in danger of failing.”

But Democratic leaders say that the Obama administration will likely need to come back to the Congress for more bailout money – as soon as there’s evidence that the votes are there to support it.

For now, there is not enough political support in Congress to pass new legislation, should it be required, says Rep. Barney Frank (D) of Massachusetts, who chairs the House Financial Services Committee.

“I don’t want the right kind of remedies constrained by the political fear,” he said at a briefing on the panel’s agenda last Thursday. “It may be the case where, if you don’t put enough into it at the beginning, in terms, for instance, of the toxic assets, you wind up costing more, he added.

In a bid to rebuild support for more help for US credit markets, the Financial Services panel is reviving a reform agenda aimed to show how government intervention is also helping consumers.

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