Sep 25 2008
By Marilyn Geewax
To help secure congressional approval for its financial-sector bailout, the Bush administration is eager to win the support of Sen. Richard Shelby of Alabama. That won't be easy.
The highest-ranking Republican on the Senate Banking Committee has become a leading skeptic about the $700 billion plan being promoted by his own party's president.
In a TV interview on Tuesday, he said, "I think we're going down the road of France now."
But ever a Southern gentleman, he added that his comment was made with "all due respect for my French friends."
Shelby, the 74-year-old son of a Birmingham steelworker, is a former prosecutor. He was elected to the House as a Democrat in 1978, and moved up to the Senate in 1986. After switching to the GOP in 1994, he backed the Gramm-Leach-Bliley Act, which deregulated financial markets.
He is considered a solid conservative, but also is known for speaking his mind, and sometimes bucking business groups. For example, he focused on consumer needs while crafting credit-report legislation, and won a public service award from the Consumer Federation of America in 2005.
Now his populist streak is showing again as he rails against the use of taxpayer money to help bail out Wall Street. During Tuesday's Senate hearing, Shelby hit hard at Treasury Secretary Henry Paulson, the architect of the administration's proposed bailout.
"What if it doesn't work?" Shelby asked. "You assume it will work, but you can't assure us that you know it's going to work, because you thought some of the other plans were going to work."
Shelby's skepticism is a big hurdle for the Bush administration, which is warning of dire consequences if Congress fails to approve a bailout this week.
A Wall Street Journal/NBC News poll released Wednesday showed that only 31 percent of voters approve of the Bush plan, while 33 are opposed and the rest were unsure. With such scant political support from the public, the administration needs to muster all the backing it can get from influential senators, such as Shelby, who are not facing re-election this year.
By speaking out, Shelby has become an overnight hero to many conservatives.
Some economists are applauding his reluctance, saying the stakes are too high for lawmakers to blindly follow wherever Paulson is going. "A politician should not just go with the flow" when taxpayers are being put at risk, said Diana Furchtgott-Roth, a senior fellow at the Hudson Institute, a conservative think tank. "Shelby is not just being an obstructionist.? His view is shared by many eminent economists."
Shelby's opinions also appear to be popular with many in his home own of Tuscaloosa. An editorial in the Tuscaloosa News on Wednesday said "bravo" to Shelby for "refusing to be stampeded into blithe acceptance of the Bush administration's proposed bailout plan for financial firms."
On the newspaper's Web site, comments generally reflected the opinion of "BunnyGirl," who said: "Shelby knows Bush has sold out true conservative principles and I admire his guts in standing up and crying 'foul.' This is financial socialism."
But even as BunnyGirl was worrying, Paulson was back on Capitol Hill on Wednesday, cajoling members of the House Financial Services Committee to overcome their qualms and approve a bailout bill.
If Congress fails to act this week, "it would threaten all parts of our economy," Paulson said.