McHenry cautious on bailout; Johnson criticizes record on deregulation

While the Bush administration and congressional leaders on Capitol Hill sweat out the details of a $700-billion rescue package for failing financial institutions, the debate over the bailout is heating up in North Carolina's 10th District.
U.S. Rep. Patrick McHenry of Cherryville sits on the House Financial Services Committee that on Wednesday will listen to and question Secretary of the Treasury Henry Paulson and Federal Reserve Chairman Ben Bernanke.
"I hope to hear in much greater detail the specifics of their proposal," McHenry told television news reporters, "and I look forward to the opportunity to question them on my concerns."
Many congressmen on both sides of the aisle, including presidential candidate Sen. John McCain, want close congressional oversight of any bailout proposal.
"Ultimately," McHenry said, "my responsibility is to the American taxpayer, who will be the underwriter of this dramatic proposal."
But his opponent, Democrat Daniel Johnson of Hickory, faulted McHenry for already siding with the financial institutions against the interests of home owners and families.
"Time and time again, McHenry, who has accepted campaign contributions from subprime mortgage lenders like Countrywide, has taken the side of big Wall Street banks over the families of Western North Carolina," Johnson told political blogger Howie Klein on The Huffington Post. "(He) not only didn't lift a finger to take action before problems in the mortgage industry rose to crisis level, for years he advocated for subprime lenders ... and argued against 'burdensome regulations' on such lenders."
Johnson pointed out McHenry voted against "a comprehensive, bipartisan response to the current mortgage crisis that would have empowered more families to stay in their homes and prevent further disclosures (American Housing Rescue and Foreclosure Prevention Act, HR 3221). McHenry and 13 other House Financial Services committee members also urged President Bush to veto the bill designed to strengthen regulation of Freddie Mac, Fannie Mae and the Federal Home Loan Banks.
"One of the reasons that I am running for Congress is because the economic trends of the past 10 to 15 years — from unfair trade deals to the rising cost of food and fuel to the increasing unavailability of healthcare — has stacked up against the working families of Western North Carolina," Johnson told Klein. "The implosion of big banks like this will make it even more difficult for the people of our district to get the funding to expand their small businesses or buy their first homes.
"The financial meltdown ... shows the great damage done by politicians like Congressman McHenry who abdicated their responsibility to crackdown on abuses in the housing market. While the subprime crisis was caused by the actions of irresponsible lenders and irresponsible borrowers, failure to act to stabilize the housing market affects all homeowners and drags down the entire economy."
President Bush wants Congress to vote quickly on the bailout and to give the Treasury complete control.
Most analysts say that's not likely. Some members of Congress want oversight, some want more help for homeowners in addition to investors and some, particularly free-market conservatives, aren't sure whether they can endorse the administration's plans.
In a statement Monday, U.S. Rep. Virginia Foxx, R-N.C., who frequently votes with McHenry on conservative issues, said she had not yet decided whether to support the latest bailout. She expressed concern that the preliminary proposal "looks like a blank check with no accountability. Taxpayers deserve better."
Rep. Brad Miller, D-N.C., another of the four North Carolina lawmakers on the House Financial Services Committee, said, "I'm not willing to vote for $700 billion to save an industry that comes out just as crooked on the other end. I want real reforms."
Rep. Walter Jones, R-N.C., the third North Carolinian on the financial services committee, said there was a chance the administration could persuade him to support the package, but he thought it unlikely.
"I just don't like the idea of these corporations, who made all these mistakes, all of a sudden saying, 'Okay, Mr. Taxpayer, it's time for you to bail us out,'" Jones said.
Rep. Mel Watt, D-N.C., a fourth member of the financial services committee, said any bailout needs to include protections for some individual homeowners, not only large investors harmed by the subprime mortgage crisis.
Watt said that in meetings with constituents in North Carolina last weekend, "Lots of people were asking 'Will there be something in this package for people who are trying to pay off their mortgages but having trouble, and not just people on Wall Street?'"
Sen. Elizabeth Dole, R-N.C., who serves on the Senate Banking committee, which scheduled a hearing on the bailout, said she remains "skeptical."
"I don't think those advocating for the rescue have fully made their case," she said. "I have very serious concerns that this proposal could leave taxpayers holding the bag."

Meida General News Service and The Associated Press also contributed to this report.