Fallout: The Financial Crisis

What happens if there’s no agreement?

Marketplace Staff Sep 26, 2008
Fallout: The Financial Crisis

What happens if there’s no agreement?

Marketplace Staff Sep 26, 2008


Stacey Vanek-Smith: Democrat John Spratt is the Chairman of the House Budget Committee. Representative, what are you hearing about the deal now?

John Spratt: I understand there’s still some distance between us and them, and there is a group of Republicans in the House, at least, who would like to table a radically different proposal.

Vanek-Smith: Democrats have a majority in the House and the Senate, and you guys could pass a bill if you wanted to. Is that an option?

Spratt: I think we probably could muster a majority, but if they look across the aisle and see their Republican colleagues not stepping up to the problem, I think they’d be less inclined to vote for it.

Vanek-Smith: Why is it important, do you think, to have a consensus?

Spratt: To support the matter to the country, and to make them understand that, as unpleasant as this is, it’s necessary. It would be good if we spoke with one voice.

Vanek-Smith: What happens if an agreement can’t be reached?

Spratt: Well, nobody knows, but there are sensible people who don’t go around crying that the sky is falling or telling us it could be second only to the stock market crash in the late ’20s.

Vanek-Smith: Well, Representative, thank you so much for speaking with us.

Spratt: Yes, m’am.


Scott Jagow: On the line with us now is Congressman John Spratt. He’s a Democrat from South Carolina. Congressman Spratt, you just heard Republicans saying their constituents are against Paulson’s bailout plan. What are your people telling you?

John Spratt: My constituents, those who are calling, are largely saying they simply do not support borrowing $700 billion. But we’re hearing the need for this directly from Ben Bernanke and Hank Paulson. The cost of doing nothing could be catastrophic.

Jagow: But why does the bailout have to be a sort of a top-down philosophy? Why can’t we go bottom up and get the money to the people who have defaulted on their loans?

Spratt: Listen, I’m not enamored of this particular package. And if somebody wants to take a different approach, to resolve the problem, I’m all for it.

Jagow: Do you have another idea for how to do this?

Spratt: I don’t have another idea of how to do it, except that there should be support for the helpless mortgagers who find themselves in forclosure, and there should be some controls on executive pay. I think those two things would make Americans feel better about the package.

Jagow: What’s your gut sense about where this is going?

Spratt: Well, the hard part is yet to come. The negotiation of this agreement has not been easy, and it’s come a long way since last weekend, when it was three pages long. Today, it’s probably 115 pages long. The hard part comes in selling it to the membership of the House and the Senate once it’s completed and can be revealed. And then we’ve got the even more difficult part of selling it to our constituents, the American people. But we also have people that we should listen to like Ben Bernanke, who has no axes to grind and who is a straight-shooting guy. When he says this is a matter of dire consequence, you have to listen.

Jagow: All right, Congressman John Spratt, Democrat from South Carolina, thanks for joining us.

Spratt: Thank you.

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