Banking association CEO: No need to be afraid
Most of Alabama’s congressional delegation voted for the $700 billion emergency rescue for the nation’s financial system that was defeated by a majority 228-205.
Alabama’s delegation, voting yes were: Rep. Spencer Bachus, R-Vestavia Hills; Rep. Artur Davis, D-Birmingham; Rep. Bud Cramer, D-Huntsville; Rep. Terry Everett, R-Rehobeth; Rep. Mike Rogers, R-Saks; and Rep. Jo Bonner, R-Mobile.
Davis, whose 7th District includes Dallas County, said he voted for the financial package for one primary reason: his concern the credit markets and capital markets could be devastated if Congress did nothing.
“Like five of my colleagues in the Alabama delegation, I worried that the effect of such a collapse could cost Alabamians jobs, could threaten businesses all over the state and could jeopardize the pension funds of numerous workers,” he said.
Voting no was: Rep. Robert Aderholt, R-Haleyville.
Stocks plummeted on Wall Street even before the 228-205 vote to reject the bill was announced on the House floor.
Said Davis, “Like all other Americans, I am troubled by the astonishing drop in the stock market in the aftermath of the bill’s failure. I feel that the outcome of the vote today was a huge gamble with our economy. We are now reduced to hoping for the best as we navigate these very difficult challenges.”
The legislation the administration promoted would have allowed the government to buy bad mortgages and other rotten assets held by troubled banks and financial institutions. Getting those debts off their books should bolster those companies’ balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the national economy that is already sputtering.
Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home. Despite pressure from supporters, not enough members were willing to take the political risk just five weeks before an election.
Despite the news, Dan Bailey, CEO of the Alabama Bankers Association said the safest place for money is still in the bank.
“The Alabama banking industry is well prepared to ride out the economic storm,” he said Monday afternoon. “And our citizens should know that their deposits are safe. No customer has ever lost a penny of federally insured deposits.”
Most of the problems leading up to the bailout vote involved large institutions, such as Fannie Mae, Freddie Mac and investment firms, which are not banks. Washington Mutual, a bank, recently closed, but was acquired by J.P. Morgan Chase. But the transaction was a seamless one that protected all deposits, Bailey added, even amounts above the $100,000 limit.
Bailey also pointed out that Wachovia was among the banks hardest hit by the mortgage crisis. The FDIC has said that Wachovia did not fail, all depositors are protected and the FDIC’s insurance was not needed the association chief executive stressed.
The Associated Press contributed to this story.