Wall Street Bailout trips over grass roots

clever title

http://www.theglobeandmail.com/servlet/story/LAC.20080930.RB...

PAUL WALDIE

With files from Lori McLeod

September 30, 2008

Josh Ashley has never been involved in politics but last week he became so enraged at the prospect of the government spending that much money on a rescue package for Wall Street, he put together a local protest movement. His small group began sending e-mails to their Congressman, Jeff Miller, and organized a rally in front of his office last Friday.

Three days later, Mr. Ashley could barely contain his joy when he heard that the U.S. Congress had voted against a $700-billion (U.S.) bailout of Wall Street.

"I'm incredibly happy," Mr. Ashley, 23, said from his office in Fort Walton Beach, Fla., where he works as an electrical engineer.

"We did everything we could to let our representative know that if he voted for it he would basically be fired." Mr. Ashley's almost accidental transformation into political activist made him an unlikely ally is a mixed bag of protesters that ranged from conservative groups against big government to low-income families who want mortgage relief. Combined, they became powerful enough to turn the tide against the high-pressure vote.

More Report on Business Stories
Retailers gird for weak holiday sales season
Wall Street bailout trips over grassroots
Financial tremors rattle emerging powers
'We're all sick to our stomachs around here'
In crisis, Big Three dominate U.S. banks
Constellation co-opts Chesney for new rum
Go to the Report on Business section
Even some long-time lobbyists were stunned by the effectiveness of the grass-roots opposition to the bailout. "It was just incredibly heavy," said Pete Sepp, of the National Taxpayers Union, or NTU, referring to the phone calls and e-mails that poured into congressional offices in recent days.

Mr. Sepp said he has never seen such a fast and furious public reaction to a piece of legislation in his 20 years on Capitol Hill. "This opposition effort built upon itself in the space of a few days, which is pretty incredible."

Mr. Miller, who voted against the bailout, said he has never seen such public outrage against a piece of legislation in his seven years in Congress. His office received more than 1,000 telephone calls in the past few days urging him to reject the legislation. Some of his colleagues were getting as many as 2,000 e-mails and calls a day, many reading simply: "NO BAILOUT."

"These were not your typical calls that were generated by special interest groups," Mr. Miller, a Republican, said from his Washington office shortly after yesterday's vote. "This was Main Street America saying 'No.' "

Treasury Secretary Henry Paulson and Federal Reserve Board chairman Ben Bernanke badly misread the public and made things worse with their comments, Mr. Miller said.

"That's part of the problem. I don't think that the top banking regulator in the United States of America needs to be running around like Chicken Little saying the sky is falling. Yes, there is a problem, but there is a way to work through this issue without a massive government intervention at the federal level," he said.

Mr. Paulson and congressional leaders said after the vote - which was 228 to 205 - that they will try to introduce new legislation. But Mr. Miller said he doubted a new bill will pass. "I think in order to get this bill passed the requirement of taxpayer money is going to have to be minimized to a greater extent," he said. "If they think [public outrage] was loud in the last couple of days, it will be 10 times that over the coming weeks."

Mr. Sepp, whose organization opposed the legislation, said it usually takes several weeks to generate any public reaction to a government proposal. Not this time. By Sunday NTU officials were hearing that so many calls were coming into congressional offices, the switchboard became overloaded.

Some others blamed President George Bush and senior administration officials for not properly explaining the bailout. "The plan wasn't well marketed, in part because it was put together quickly," said Mark Zandi, senior economist at research firm Moody's Economy.com. "What people know about the plan is that its going to cost $700-billion, and the population firmly believes that's going to line the pockets of the people who caused this. The sad thing is, that's just the furthest thing from the truth."

Mr. Zandi said he still expects a revised version of the bill to pass, but if that doesn't happen, "Worst-case scenario is they don't do anything, and the stock market continues to slide, the money markets remain in a deep freeze and layoffs will begin imminently, within the next three weeks, and we'll have a very severe recession. Unemployment could rise into the double digits."

It wasn't just conservative groups leading local efforts against the bailout. Darlene Battle, who works with low income families in Wilmington, Del., brought a busload of people to Washington last week to oppose the bill. Many of them were about to lose their homes through foreclosure. "All weekend, we've been getting people to call Congress," said Ms. Battle who runs the local chapter of the Association of Community Organizations. "We organize low and moderate income families. It's those middle class income families that are going to suffer."

Ms. Battle said she was happy the legislation was defeated and she hopes it will force politicians to re-think their approach and address the underlying problems in the housing market. Referring to Wall Street financial institutions, she added: "We don't want them to get a free pass."