U.S. Chamber presses for full, $700 billion package

The U.S. Chamber of Commerce pressed hard Thursday for Congress to approve a full $700 billion bailout package for Wall Street before it goes into recess.

Bruce Josten, the group’s executive vice president, said passing temporary measures and delaying a full package until after the election would represent “severe brinksmanship and hubris on the part of Congress.”

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In a separate interview, Josten said the Chamber was appealing to its chapters across the country to build grassroots support for the package. Josten said he held a conference call with small-business owners, and has been on calls to the press nonstop to push the message.

“We’re pulling every trigger,” he said.

On the call, he said Congress needed to act forcefully to fend off a potentially deep recession.

“We have a capitalist system that depends on credit, and credit depends on confidence — right now we have a lack of both,” Josten said during a teleconference Thursday.

Chamber officials said that for the package to be effective, it would need to authorize most of the $700 billion the Treasury Department has asked for the program, which would allow the government to buy failing, mortgage-backed assets from banks and other financial institutions.

Chamber of Commerce Chief Economist Marty Regalia said dramatic action is needed to help the faltering economy. “The market and the American people will be better off if [Treasure Secretary Henry Paulson] is the 400-pound gorilla in the room,” Regalia said to describe the necessary scale of government action.

“The quicker Congress stabilizes the market, the sooner the meltdown can be mitigated,” he said.

Regalia started to refer to the measure as a “bailout,” but caught himself and instead called it a “rescue plan.” GOP leaders have made a concerted effort in recent days to re-frame the language used in the debate.

In the Senate, members of both parties on Thursday afternoon said they had an agreement on the principles of the plan, but House Republicans were balking at the deal. House GOPers have expressed concern over the massive government intervention in the free market since the plan was first announced last week.

Josten conceded the Chamber is having trouble convincing House Republicans to back the measure. “We’re having some challenges with our natural allies,” he said.

Rep. Jeb Hensarling (R-Texas) on Wednesday called the plan “a slippery slope to socialism” and argued for a free-market solution to the crisis, such as a suspension of the capital gains tax.

But Josten predicted House GOPers will “be won over by their own reality” and will “recognize the risks of doing nothing.”

“We’re trying to generate grassroots support in their districts and in their states to push them to support the package,” he said.

He also acknowledged that support for government intervention in the financial markets is uncharacteristic for the business group, but added, “Our No. 1 job is to represent our members — not to have natural instincts. And right now, our members are screaming and hollering.”

{mospagebreak}He said that the financial crisis is affecting the small- and medium-sized businesses represented by the Chamber and that the crisis has serious implications for all Americans.

“Wall Street is inextricably linked to Main Street,” Josten said. “The average American does not go in for credit on a daily basis, but those that do go in are finding the terms much less favorable to them. In some cases, the bank’s willingness to lend is not there at all.”

Josten believes that the Senate will stay in session this weekend to pass a bipartisan compromise and that the House will pass the package early next week.

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Regalia emphasized that the ultimate cost to taxpayers could be far less than the proposed $700 billion. “Many of these assets could turn out to be more valuable than what they were purchased at,” he said.

He argued that the Treasury Department does not have the liquidity or time constraints that the private sector does, which could allow the department to buy assets at a lower cost but still make a profit.

“Some of these things will be losses,” Regalia admitted, “but you hope that the majority will be gains.” He pointed to one report that estimates that the Treasury could make over $1 trillion from the purchases, but he acknowledged that this estimate was extreme.

Josten said Congress should not place overly burdensome restrictions on the compensation for executives of companies that take part in the program. Members of both parties have pressed for provisions to ensure that CEOs do not become rich through the use of taxpayer dollars to save failing companies.

Josten agreed the issue is a concern, and said he wants to ensure that no one unduly profits on taxpayer money.

He cautioned against being too extreme, however, and said companies must be able to pay their executives enough to secure the most capable people for the jobs.