Mo. lawmakers urge changes to federal rescue plan

WASHINGTON -- Missouri lawmakers in Congress agree a quick fix is needed to stem the nation's financial crisis, but many are calling for changes to the president's bailout proposal.

The Bush administration has a $700 billion plan for the government to buy bad mortgages and other assets held by troubled financial institutions. Treasury Secretary Henry Paulson hopes the infusion will improve their balance sheets so they can resume lending money.

But Rep. Roy Blunt, of Springfield, is part of a GOP revolt. Blunt, the No. 2 ranking House Republican, was tapped Friday to join the high-level discussions and push a rival Republican plan that would lower the bailout cost for taxpayers.

Conservatives want the government to insure rather than buy distressed securities and to offer tax breaks as additional incentives to invest.

"We're going into these negotiations with every intent of having real a negotiation, having a bill that House Republicans can vote for and solving this problem and solving this as quickly as we can," Blunt told reporters.

Republican Sen. Kit Bond said he is reassured that Blunt will be part of the process, but warned in a floor speech that lawmakers "cannot go home and leave without doing something ... or this economy will come to a crashing halt."

Bond wants the administration's $700 billion proposal to include more taxpayer protection, transparency and oversight over how the money is spent.

"If we don't act now and act responsibly, we could find next week companies not able to make their payroll, working families will find that the paycheck they're expecting does not come in," Bond said.

On the other side of the aisle, Democratic Rep. William Lacy Clay, of St. Louis, said he could not support the administration's proposal because it doesn't do anything to help homeowners keep their homes if they declare bankruptcy. He wants to allow bankruptcy judges to modify mortgages so people can stay in their homes.

"If that's not in there, I'm not bringing anything back to my district," Clay said. "There's no incentive for me to bail out Wall Street when it doesn't help Main Street."

A new St. Louis Post-Dispatch/KMOV poll of 800 likely Missouri voters conducted this week shows that 56 percent of voters rejected the Bush plan, with opposition cutting across party lines.

Sen. Claire McCaskill said many of her constituents are angry and frustrated, thinking the bailout is helping "the bad guys who did a lot of stupid stuff on Wall Street."

But she says that's not the case. She described the economy as an engine with gears, one of the essential gears being the ability to borrow money. If that gear is frozen, the engine simply can't work.

With the stream of credit blocked, McCaskill said, small businesses can't get loans for working capital, home buyers can't get reasonable loans and unemployment will soar.

"It's a domino effect that people can't feel immediately, but it is real, and it will have dramatic consequences on their lives if we let the dominos start to fall," she said.

McCaskill wants to make sure the bailout is crafted so Wall Street firms are not rewarded, but that liquidity is quickly restored to the market.

"If we do this right, this is not going to cost $700 billion because what we're buying is worth more than we're paying for it if the credit market starts working again," McCaskill said.

Republican Rep. Kenny Hulshof, of Columbia, who took a break from his gubernatorial campaign, said he is working with the group of conservative Republicans "to look at a free-market way so that we aren't putting taxpayers on the hook."

He thinks the Bush administration is taking the wrong approach and wants to draw private capital into the market by removing tax barriers.

Republican Rep. Todd Akin, of suburban St. Louis, also likes the GOP's alternative approach.

"He won't support using taxpayer dollars to purchase the bad debt," Akin spokesman Steve Taylor said.