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Last Friday, I sat down with Congressman Peter Welch in Burlington for about an hour. We had a conversation that touched upon the current financial mess, Democratic capitulation, Iraq and a few self-reflections. I'll be posting it throughout the next week or so. JD: The bailout is what's on everybody's mind right now. It's funny, after you voted against the first bailout bill, and I mentioned to some people that I was meeting with you, they told me to tell him “nice job”, and after the second vote, I got a few emails saying “tell him I want to take that back!” It was obviously a difficult vote either way, if you read on GMD, odum kind of took you to task for it. PW: Yes. JD: You originally said in the article quoted in the Times Argus, “We're at the point that we have to choose, it's this bill or no bill - no bill is an absolute catastrophe.”, and, well, some of us see this as a false choice. And probably some of this comes from skepticism about the Bush administration, at this point how can you trust anything they say? PW: Well, first of all, I don't trust anything they say. There was nothing in my final decision that was based on trusting George Bush at all. JD: Do you trust Hank Paulson? PW: It's not about trusting him; he's not the ideologue that Bush is, but my vote was not based on the credibility of Paulson. This – whether we like it or not, first of all, it's not surprising that this is happening. Many people who have said that is was reckless for us to allow such deregulation predicted at one point, we'd pay a price for it, because it was a house of cards. You know, we had an economy that was built on credit, rather than an economy that was built on production, okay? So if you step back, a lot of people who were critical of the bailout, their criticism rightly goes back to the whole house of cards that was constructed and eventually, we didn't know when, it was just a question of when, not whether that house of cards would collapse. And so, I was not surprised. Some folks raised this WMD question, that was a big deal, with Bush coming in, but there's a fundamental difference. JD: When you refer to the WMD's, do you refer to the notion that Bush is basically - PW: ... making it up. JD: Okay. PW: But the reality of it is that these things were blowing up all around us – at AIG, Lehman Bros., Bear Sterns, Washington Mutual, Countrywide – Citibank losing 20 billion dollars, with these executives in there with these ripoff salaries and golden parachutes. The evidence of this financial meltdown was real, and these huge firms that made billions of dollars, in effect by running this speculative enterprise, were so excessive that they shot themselves in the head. Lehman Bros. Was borrowing at a 35 to 1 ratio, and as long as the housing market wsa going up, they were fine. Once it flattened and came down, they not only brought down a lot of innocent bondholders including an Arizona teacher's fund, a city in Norway, they destroyed their own business. So, even the people who had a self-interest in having this continue, they were so reckless that they destroyed their own livelihood. So, I didn't need a lot of evidence that there was a problem, because it was hitting us in the face. What I needed, what was tough on this, there was two things. I was adamantly opposed to in the first bill that the president presented that was a three page bill, giving a total blank check, with literally no oversight and no taxpayer protection. Number two, a challenge and question for any of us, even those of us who have been harsh critics of deregulation, was what practical steps could we take to try to protect the taxpayers, Vermonters, Americans who did not participate in this reckless conduct but were going to suffer from the consequences. The fact is, we're in uncharted territory, because of this credit crisis, and that's unique to this economic downturn that we have now.
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