By Lauren Ricks STAFF WRITER
The $700 billion bailout bill — passed by the U.S. House of Representatives and signed by President Bush on Friday — was supposed to alleviate economic woes on Wall Street.
But after a nearly 400-point drop Monday and slightly more than a 500-point drop Tuesday, some may be wondering when the relief will come.
“I think the bailout had two purposes: one was to tangibly do something,” Trinity Valley Community College economic professor Linda Gann said. “The other was damage control, to stop the bleeding.”
She said the bill was not as specific as it needed to be, especially concerning how the assets are going to be handled.
U.S. Rep. Jeb Hensarling, who represents Athens and Henderson County, said he voted against the bill for three reasons.
“It undermines personal responsibility. I’m not sure it’s going to work and it seats massive authority to the treasury secretary,” he said. “It sets the government on the road to be guarantor of the economy.”
Hensarling said he didn’t think the Paulson plan (named for Treasury Secretary Henry Paulson) should have been the only one on the table. He said part of the regulation of the free market is competition and failure.
Gann said there are two possible reactions from the public concerning the bailout.
“People will feel good that something is about to be in place,” she said. “Or people will feel negative about a new tax burden and an increase in the size of government.”
Hensarling said he believes there is a legitimate credit crisis.
“I think we are headed into (a recession),” he said. “We need national policies that will help us grow out.”
Hensarling said there are several actions the government can take now.
“We oughta go back and prevent the automatic tax increases written into the budget from happening,” he said.
Hensarling said the increases will cost the average family of four $3,000 in two years. He cited several areas he feels will help the economy, including a suspension of the capital gains tax for two years, a close evaluation of social assistance programs, promotion of more trade, passage of energy legislation to allow offshore drilling in Alaska and investment in alternative fuels.
Gann said the American public needs to be more informed and less panicked about the economic situation.
“We have a lot of tools to turn this around,” she said.
Hensarling said he doesn’t try to read too much into one day swings in the stock market.
“The crisis is not limited to America. It is a global crisis,” he said. “There is a lot of volatility. It is a roller coaster ride. We will work through this.”
First State Bank of Athens President Jess Laird said the credit crisis is not affecting the bank’s practices.
“The bailout has not affected our bank directly. I don’t know who the money will go to,” he said. “It is certainly not little community banks like us.”
Laird said First State Bank did not participate in the sub-prime market.
“We are still lending money,” he said. “It is business as usual for us.”
Laird said the raise of FDIC insurance will support local banks.
“The one benefit I see is raising the FDIC insurance,” he said. “It gives comfort to people about their deposits.”
