Gohmert says no to Bush's bailout proposal
By BRENDA BROWN knhedit@kilgorenewsherald.com

"Giving the U.S. Secretary of the Treasury hundreds of billions of dollars is going to inject a lot of money in some people's pockets but it's not going to fix the economy," U.S. Congressman Louie Gohermt said yesterday afternoon after the historic vote to deny a Wall Street bailout in the House of Representatives.

Gohmert voted against the measure, joining more than two-thirds of Republicans and 40 percent of Democrats who opposed the bill.

"The free market principals and the 'American way' prevailed and Congress actually told the Secretary of the Treasury, 'This thing of coming in and asking for hundreds of billions of dollars with no restraint is not going to go. We're going to have to do this an appropriate way and it's not going to be your way or the highway,'" Gohmert said.

The congressman from the 1st District of Texas said he received more than 1,000 communications from his constituency telling him to vote against the bailout measure and about 20 calls for it.

"Lots of experts said even if we do everything (Secretary of the Treasury Henry) Paulson says, it's not going to fix the underlying liquidity problem — that's available credit so people can come in and get loans for the things they need to do. That's something else we need to work on," Gohmert said.

He said the market needs more than a cash infusion — it needs major reforms.

Gohmert said one reform must be the accounting practices used by the Securities Exchange Commission.

"Washington Mutual failed

last week. Wachovia (is being sold). One of the big problems has been that they bought so many of the mortgage-backed securities. All of a sudden, nobody wanted to buy them anymore. The way the SEC valued those market-backed securities, the value you have to list a market-backed security is the value people are willing to pay today.

"If the market freezes up, Washington Mutual and Wachovia have to list on their financial statement they are worth zero. But they're not worth zero. They have underlying property that's worth something," Gohmert said.

He further explained that many of the foreclosures have included some mortgage holders who have been making payments, even if irregular.

"You can use that to calculate the value of a note but the SEC did not allow that as the actual value. They made these investment banks put down that they had zero value. So if we change the accounting rules so that they can at least list the actual value of the property of the security, and then discount it for collection cost, then Washington Mutual would not have closed. Wachovia would not be in trouble. It's all an accounting problem. If these things have value, then the banks are not in trouble," he said.

Gohmert said he was also at odds with Paulson's plan because, in his opinion, the secretary would have full control "and neither Congress or the courts were going to stop him...Secretary Paulson was refusing anything to go through except for his big checkbook."

The congressman said Paulson made millions of dollars in the stock market "and he was going to come out well on this deal.

"I believe (Paulson) truly believed this is what needs to be done, but some of us felt his judgment was skewed by the fact that his best friends work at these firms that were going to benefit dramatically. He was the former head of Goldman Sachs. All his friends at Goldman Sachs stand to go broke if this deal doesn't go through. Gee , I wonder if that could be affecting his decisions?" Gohmert said.

Yes, the market dropped a record 777 points, but Gohmert said oil also dropped $10 a barrel, he said.

"The market has a way of taking care of itself if government just doesn't ruin it," Gohmert said. "I'm not sure we will suffer, especially in East Texas. I don't think we will have to suffer at all if we will utilize competition, American ingenuity and entrepreneurship and common sense, like letting these mortgages be valued at whatever price instead of forcing them to be worth zero."

He said there are other ways to encourage a market rebound and that he had filed a bill to drop the capital gains tax for people who would by assets. He added there may be hundreds of billions of U.S. dollars in foreign banks and one of these proposals is to tell Americans with money in those banks to bring it back to the U.S. to stimulate the economy — and do so without penalty or fines.

Contrary to national media reports, Gohmert said the treasury secretary was "the big impediment to this thing."

"The national news was saying that Republicans stood firm and we got some alternatives in there as well. What they were were alternatives without solutions," he said.

Gohmert said he believes people should "just hold on and it's going to work out. We're going to have a better proposal, hopefully by the end of the week."