Heller decries Wall Street ‘arrogance’ in bailout

WASHINGTON -- A young Dean Heller got a taste of Wall Street mindset when he worked as a stockbroker and trader on the Pacific Stock Exchange in Los Angeles during the 1980s.

Now a Republican member of Congress from Nevada, Rep. Heller said Tuesday he chuckled knowingly when officials from "The Street" criticized the House of Representatives for failing to pass the Bush administration's bailout package.

"That is Wall Street arrogance," Heller said. "They created their problems and they want someone else to bail them out."

Heller was back in Douglas County during a short recess as congressional leaders worked behind the scenes to fashion a rescue for the bailout plan that went down to stunning defeat on Monday.

Their aim was to find the right combination of sweeteners to attract the dozen votes needed for House passage of the $700 billion plan, perhaps later this week.

Heller was one of 133 Republicans who opposed the measure. Rep. Shelley Berkley, D-Nev., was among 95 Democrats who did the same.

Rep. Jon Porter, R-Nev., voted for the bailout.

Heller said he supported at least one of the proposed changes being discussed. It would increase deposits backed by federal deposit insurance from $100,000 to $250,000 or more.

But Heller said he remained unpersuaded that a government bailout was advisable or necessary, and he is unlikely to change his vote. The conservative maintained there are still other choices to help the markets, short of taxpayer involvement.

Heller and others have proposed easing accounting regulations, called "mark to market" rules, that require lenders to mark down the value of bad assets even when they have no plans to sell them. This might improve the books for many lenders. But accounting firms have argued against the change. They say it would only mask bad loans and deceive investors about their value.

Heller in recent days also has sat in on briefings by former Federal Deposit Insurance Corporation Chairman William Isaac, who has suggested alternatives including a program President Reagan implemented during the 1980s to address the savings and loan crisis that kept risk away from taxpayers.

The rescue cost $1.8 billion "but it was paid for by the financial institutions," he said.

"We are in crisis right now, but there are ways we can get out of the crisis without putting taxpayers on the hook." Heller said. "The market will work itself out."

In the meantime, losses that are causing investors to shudder "are not close" to what was lost in the aftermath of the 9/11 attacks and "not close" to the Black Monday crash of 1987, he said.

The problem, he said, is the Bush administration has been single-minded and has refused to consider options for the latest crisis.

"We went from A to Z with (Treasury Secretary Henry) Paulson and Bush, and nobody was talking about B to Y," Heller said.

Berkley was observing Rosh Hashanah and was not available on Tuesday.

Meanwhile Sen. John Ensign, R-Nev., said he was prepared to set aside his free market principles and vote for the bailout -- if it contained several changes to his liking.

The Senate is expected to vote today. Ensign would not say how he would have voted on the House bill.

Ensign said Nevada's economy "is on the brink."

"There are several places that are under construction that are having trouble finishing financing packages," he said of development projects in the state. "They are not all like that, but there are enough of them."

Ensign said his view was shaped by private conversations he did not detail during a conference call with reporters organized by the John McCain campaign to discuss the candidate's role in the bailout negotiations.

"I am a believer in the markets and market forces normally." Ensign said. "But in this situation I believe the government created this. Congress and the current administration have some culpability on how we got here and Congress has to act."

Sen. Harry Reid, D-Nev. was working behind the scenes Tuesday to shape a Senate bill.

"In the coming days, I will continue doing everything possible to see this dire and avoidable financial crisis through to the best possible outcome and towards a future of stability and growth for our country's economy," he said in a Senate speech.

Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760.