MICHEL MARTIN, host:
I'm Michel Martin, and this is Tell Me More from NPR News. Just ahead, a new report takes a hard look at the spending and lending habits of African-American women. Do they give until it hurts? We'll find out in just a few minutes. But first, the full court press by Congressional leaders and the White House was not enough to save the president's $700 billion economic rescue plan. Congressional Republicans joined by a number of Democrats sent the measure to defeat yesterday, and the Dow plummeting along with it. For some answers about why the measure failed and what might happen next, we're joined by Congressman Gregory Meeks of New York, who voted for the bill and Congressman Robert "Bobby" Scott of Virginia, who voted against it. They're both Democrats. Welcome. Thank you so much for coming.
Representative GREGORY MEEKS (Democrat, New York): Hello, Michel. It's good to see you.
Representative ROBERT SCOTT (Democrat, Virginia): Good to be with you, Michel.
MARTIN: First, Congressman Scott, what was it like up there yesterday?
Rep. SCOTT: Well, it was a long day. We debated the bill for several hours, and people voted. I mean, they held it open thinking people might change their votes, but I think people had decided one way or the other how they were going to vote.
MARTIN: Congressman Meeks, we talked last week when the bill first went to Congress and you said you were inclined to vote for the bill. It needed some work. What persuaded you to vote for it in the end?
Rep. MEEKS: Well I think that you know, anytime you have a bill that's going to be a bipartisan bill and I think that's important - there has to be some compromise. And I had - are what I call dealbreakers. And for me, the deal would have been a dealbreaker if we did not have a provision in there to prevent home foreclosures and to help refinance many of the mortgages when people were going into foreclosure. That provision was in there. And I looked at the improvements that the leadership - the Democratic leadership had made to the bill from what was initially submitted by Secretary Paulson. And I thought they were substantial, because they had things like limits on excessive compensation for CEOs, and they had a strong independent oversight, and it was more transparent. So, there was other things of course, that you would have liked to see in the bill but I've yet to see a perfect bill since I've been in the House and it was a compromise bill that I thought would be important for us to do for the sake of all Americans.
MARTIN: Congressman Scott, you voted against the bill. You said in a statement that's just a bad deal for taxpayers. How so?
Rep. SCOTT: Well, the - first of all, we need to do something but it ought to be reasonably related to what the problem is. We essentially have three problems. We have an illiquid market for several of these kinds of securities. We have some businesses that about to go bankrupt, and we need to help the homeowner. And what we - the bill ought to deal with the three problems. Liquidity, you can solve very easily just by paying - offering fair value for assets that are out there. Now, if you're paying - we couldn't, I couldn't get a commitment that we'd pay no more than fair value. They wanted to pay more than fair value because they wanted to solve the second problem that is some companies are going bankrupt because of a temporary illiquidity problem.
Now, some are in fact bankrupt and you can't help them. Some are doing well, they don't need help. But some - if you help them a little bit- they can survive this little temporary thing and do well. The bill, it was unclear how you would help them and the way - apparently, you would overpay for assets. You'd buy worthless assets off these people and presumably enough of the ones in the middle that could actually use the help would benefit. Seems to me though that also benefiting would be those that don't need help and those help wouldn't make any difference.
MARTIN: Well, who's going to decide what was fair value?
Rep. SCOTT: Well, that was the - well, no. You can calculate fair value. Who's going to decide, who's going to get the overpayment would be the problem. But fair value, you can calculate and if you can't figure out what a fair value for an asset is, maybe you ought not be buying it. Now, whether or not this is a good deal really rises, or falls on the question of what you're going to pay. Somebody says, is that house over there a good deal? It has three bedrooms. It has a pool in the back. Well, until you know the appraised value and what you're going to pay for it you cannot have a coherent discussion about whether it's a good deal. It doesn't matter what's - what the appliances convey or whether it's got a new paint job- what is the appraised value of what you're going to pay?
MARTIN: So, Congressman, after the plan failed, of course, you know the Dow Jones Industrial Average, which is a stock market indicator which gauges the performance of the market, plummeted 778 points - which was a record one day drop. When you saw that, did you have any regrets about not supporting the bill?
Rep. SCOTT: Well, you get back to the question as how would the bill help solve the problem? And if it doesn't seem to address the problem that puts $700 billion out there, so presumably some of it is going to land somewhere that's going to do some good. But you ought to have some idea of how - the credit crunch for example, how is overpaying for assets to bankrupt companies or the companies that don't need help. How is that going to help solve the credit crunch?
MARTIN: Congressman Meeks, what about that point? What about Congressman Scott's point. There just wasn't enough protection of the taxpayer's investment.
Rep. MEEKS: Well, no. I think that we did put the protections in there. Number one, we fixed it so that all $700 billion would not be dispersed at one time. And, I think that if you look at what's taking place because a lot of people are looking at the stock market, but you really need to look at the banking index. And, you saw that it was down yesterday about 20 percent which basically the same thing that my dear friend and colleague was talking about is going to occur. It freezes credit. So you're going to have- in a short time if we don't do anything- your going to have small businesses who depend upon loans floating to make payroll will not be able to make payroll.
You're going to have a situation where credit cards are starting happen, people who need credit won't be able to. The credit card company will be reducing the credit limits. You're going to have a situation where people who need car loans won't be able because the liquidity is gone and the credit markets are frozen. And if you look at the banking index as I indicated earlier, where it is down 20 percent, then you also then realize the question of what other institutions will be gone. You know, we had the largest failure with Washington Mutual last week and then Wachovia yesterday. Who's next? And if that then forces a run on the money market where people are fearful and people start taking their money out of money markets, then we're going to be in for even a bigger crisis.
MARTIN: Let me just jump in here for a minute to say, you're listening to Tell Me More from NPR News. I'm Michel Martin. I'm speaking with Democratic Congressman Gregory Meeks of New York and Congressman Robert Bobby Scott of Virginia about the Bailout Bill that failed in the House yesterday. Congressman Meeks voted for it. Congressman Scott voted against it. We'd like to hear from you. What did you think of the package? Is it a painful but necessary solution to the crisis or welfare for Wall Street? To tell us what you think, visit our blog at npr.org/tellmemore or you can call our comment line at 202-842-3522. That number again is 202-842-3522. The president spoke this morning, and I just want to play a short clip of what he had to say.
President GEORGE W. BUSH: As much as we might wish the situations were different. Our country is not facing a choice between government action and the smooth functioning of the free market. We're facing a choice between action and the real prospect of economic hardship for millions of Americans.
MARTIN: So, I'd like to ask each of you, Congressman Scott if you go first, what's next? I wonder - first of all, are you hearing from leadership? Are they - you're, actually a majority of the Congressional Black Caucus, of which both you and Congressman Meeks are members, voted against the bill. So, what's next? Are you hearing from leadership? Are there plans to meet again to start things over?
Rep. SCOTT: It was close, 21 voted against and 18 voted in favor of it and so, the Congressional black caucus of - actually there's more in favor of it than the Republican caucus. I think - I agree with Gregory that we have a problem. I mean, this isn't a new problem. I mean, we've had - I served on the budget committee, we've had the worst budget deficit going on since the beginning of this administration. Huge surpluses turning into gargantuan deficits. Worst job performance and job growth since the Great Depression. The Dow - you talked about yesterday, I mean, the Dow since the beginning of this administration has been the worst in a quarter of a century. So, this economic problem we have is not new, but we have to get back to the question, not, do we have a problem? We have a problem. Companies are going broke. The question is, how does this proposal help solve the problem. And if you are overpaying for worthless assets and that's really the crocks of the proposal as I see it, because they would not agree to limit their expenditures to fair value. If you pay only fair value, you can solve the liquidity problem easily. You buy securities for what they're worth. If you hold it to maturity, you probably make money not lose money.
MARTIN: Was there anybody in leadership agreed with you on this one?
Rep. SCOTT: Well, when you negotiate the problem is you're trying to negotiate with the Republicans and make it bipartisan and that complicates the situation.
MARTIN: So this is still a dealbreaker for you?
Rep. SCOTT: Well, the - does the house - is the house a good deal? I mean, you could - the conversation has to start and almost stop with, what is the appraised value, what are you paying? If you can't give a coherent answer to what you are going to be paying for what in many cases are worthless assets - and who gets the largesse of the federal government to unload worthless asset on the federal government, then some of them have value. Calculate to the best of your ability what the fair value is and offer that. You're not going to lose any money. Now, you also have to help the homeowner. That's another thing that some of this gets kind of lost.
MARTIN: But we need to - Congressman Meeks a chance to jump in here. And he's also, I should mention on the House Financial Services Committee which played a big role...
Rep. MEEKS: Couple of things. The Congressional Budget Office basically said that this will not cost the taxpayer $700 billion - it'll probably be somewhere far less. And there was, you know, depending upon what happens in the future, an opportunity that where maybe the taxpayers will get a windfall. It will, you know they can make some money. But Michel, what you talk about where do we go from here? You know, one of the things that I can say about Congressman Scott and most of the members of the Congressional Black Caucus that voted against it, they did it with the - because of their conscience and what they thought that was a right thing. We thought that we were going to have a bipartisan deal here.
We knew initially the Democrats was supposed to produce somewhere between 115 and 125 votes and the Republicans were to produce a hundred to 110 votes. In the end, what took place was Democrats produced 140 votes, did more than what our commitment was, and Republicans only 65. And if you listen to what some of the Republican leadership have said, some of them did not vote that way, or did not vote yes, because they had the conviction that Bobby Scott has or that because they though it was a bad deal. They voted that way because their feelings were hurt that they thought that something was said about them.
MARTIN: Well, they said that Nancy Pelosi, the House Speaker's speech...
Rep. MEEKS: That's correct.
MARTIN: Was overly partisan. That was what was said.
Rep. MEEKS: Right. So it's based upon a speech, not based upon what they feel would be the right thing to do for the country.
MARTIN: So, what's going to happen next? Sir, we only have 30 seconds. What's next?
Rep. MEEKS: Well if you commit to pay fair value, I think the Congressional Budget Offices won't cost anything because you have assets offsetting your expenditures. So if you commit to fair value, you can solve the liquidity problem. Go and give capital to those that can use the target capital injection to those companies that need it and help the homeowner. You have to target your assistance to the problem.
MARTIN: We are afraid we have to leave it there. And I assume we will be having future conversations about this. And soon, we hope. Congressman Bobby Scott of Virginia, a Democrat voted against the bailout bill. He was here with me on our Washington studio. We are also joined by Congressman Gregory Meeks, he's a congressman from New York, he's also a Democrat and he serves on the House Financial Services Committee. He was in our New York bureau. I thank you both so much for speaking with us.
Unidentified Man #1: Thank you, Michel.
Unidentified Man #2: Thank you.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.