State’s liberals help defeat bailout bill

Conservative Republicans stole the spotlight with their opposition to the $700-billion financial rescue plan that fizzled in the House Monday, but they had help from a slew of liberal California Democrats who joined them to defeat the bill.

Those Californians found themselves in the unfamiliar position of not only standing with some of the most staunchly conservative Republicans in the House, but also voting against a traditional ally, House Speaker Nancy Pelosi (D-San Francisco), who campaigned tirelessly for passage.

Among the 14 California Democrats refusing to endorse the bailout plan were Southern Californians, including Reps. Adam B. Schiff of Burbank and Brad Sherman of Sherman Oaks, and Bay Area lawmakers, including Reps. Pete Stark of Fremont and Lynn Woolsey of Petaluma.

The rebellion divided these Californians from colleagues who usually hold virtually identical political views: 18 California Democrats stood with Pelosi to back the bill.

Most of those who opposed the rescue package -- a group that included more than half the members of the Hispanic and black caucuses -- complained that it tilted too sharply toward helping Wall Street and rich investors and did too little for average workers and homeowners struggling in the sagging economy.

“What I wanted to see was an economic recovery package, and what I found looked more like a bailout plan for Wall Street,” said Rep. Xavier Becerra (D-Los Angeles), who voted against the package despite his position as assistant to the speaker. “It was too tenuous for me to look my constituents in the eye and tell them they would recoup their hard-earned tax dollars.”

As the votes were being cast Monday, Reps. Bob Filner (D-Chula Vista) and Darrell Issa (R-Vista), often on opposite side of issues, slapped hands outside the House chamber as they bonded to vote “no.”

Getting liberals such as Filner on board may help determine whether Pelosi and the Bush administration can revive the rescue package later this week.

“There’s a number of things they could do -- they don’t have to do all of them, they just have to show some good faith that they’re actually doing something,” said Rep. Loretta Sanchez (D-Garden Grove), a more fiscally conservative Democrat who spent 12 years in the financial industry. “Basically, when I look at the bill, everything everybody is saying is just not true.”

California has one of the highest foreclosure rates in the nation, and Sanchez and other Californians who voted against the bill pointed out that it would have yielded little mortgage relief for homeowners.

They also said it would not have fully curbed excessive executive compensation, since the bill allowed salaries of any amount.

Despite the fact that the $700 billion was supposed to be disbursed in installments, they pointed out that as written, the plan would allow all of the money to be spent before Bush leaves office Jan. 20.

“With only three months left of this current administration, why are we willing to even make available $700 billion to this administration?” Woolsey asked during Monday’s debate. “Where is the comprehensive economic stimulus package that will assist 95% of the taxpayers, a package that includes unemployment benefits, food stamps, infrastructure investment and, of course, foreclosure relief?”

The bill created an oversight board that could critique decisions taken by Treasury Secretary Henry M. Paulson Jr. but would have no power to halt or delay administration actions.

“It has no teeth to it,” Sanchez said.

And the Californians complained that the package would funnel tens of billions of dollars to foreign firms that could sell their bad assets to U.S. banks.

“This is a bailout for Beijing, Tokyo and London,” Sherman said.

Before the vote, Sherman organized sessions for unhappy Democrats who dubbed themselves the “Skeptics Caucus.” He brought in economists to explain alternatives to the plan that the Democratic and Republican leadership had put together with the administration.

Since the bill’s failure, Sanchez has begun working with a small group of senators to offer an alternative.

“I am a person who believes in the market,” said Sanchez, who alluded ruefully to the state of her 401(k) account. “If I had wanted to save myself, at least temporarily, I would have voted for it. But it’s not about me. It’s about ‘Do we have a bill that actually might do something?’ ”

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richard.simon@latimes.com