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We can't afford to be spiteful about bailout

House may vote again today on $700 billion bailout bill after rejecting it Monday. But failure to pass it risks serious and lasting damage to American economy.

Austin American Statesman
October 3, 2008

The U.S. House of Representatives is expected to vote again, perhaps today, on a $700 billion bill to stabilize the nation's financial markets. People are rightfully angry about the need for such legislation. But they should not let their anger blind them to the need to act - soon.

The nation's economy likely is already in recession, but the length and depth of our economic woes will be greatly extended if the shrinking ability to get credit strangles commerce.

Already, there are signs of distress. Unemployment is rising. Foreclosures are up. On Wednesday, the auto industry reported that for the first time in 15 years, the number of vehicles sold was fewer than 1 million in a month - down a whopping 26.6 percent compared to a year ago. That was caused in part by worried consumers holding tight to their wallets, but also, increasingly, because willing buyers could not get loans, analysts said.

Home prices in much of the country continue to decline. Though Central Texas hasn't seen much in the way of home price declines, the number of homes sold has sharply dropped.

Central Texas, like the entire state, has weathered the financial storms in good form so far, but it cannot assume that all will remain well.

"We are in a crisis now," a high-tech industry trade association, AeA, warned Wednesday. "If Congress fails to act quickly and credit markets tighten further, our industry and others will find it increasingly difficult, if not impossible, to secure credit to run their companies."

Austin-area AeA members include Dell Inc., Samsung Austin Semiconductor LP and Spansion LLC.

On Wednesday, the Senate approved the modified bailout bill 74-25, with both Texas senators, Kay Bailey Hutchison and John Cornyn, voting for it.

Tempting as it is to let Wall Street crash and burn in its own folly, the problem is that Main Street may well go down with it if Congress doesn't act.

The bill is far from perfect and, typical of Congress, it has been loaded up with other measures - some worthy on their own merits, some not - that are not directly relevant to the emergency. Still, changes can be made later; the fire must be put out now.

For sure, one of the first tasks the next president must take on is a top-to-bottom overhaul of the nation's system for regulating the financial markets. The current system failed to prevent this credit disaster, and free enterprise proved incapable of handling it without government intervention.

The House should approve the bill and send it to President Bush for his signature. The nation must not turn a bad situation into a national calamity out of fury against Wall Street.