Hinojosa lone Valley bailout supporter

McALLEN — South Texas lawmakers split on a failed $700 billion emergency bailout Monday aimed to rescue the nation's financial system.

U.S. Rep. Rubén Hinojosa, D-Mercedes, was the lone congressman to support the measure that both U.S. Reps. Solomon Ortiz, D-Corpus Christi, and Henry Cuellar, D-Laredo, shot down citing overwhelming opposition from voters in the Rio Grande Valley.

"I've received many calls and emails from constituents across my district with the overwhelming majority opposing this bailout," Cuellar said in a statement released after House lawmakers defeated the bill with a 228-205 vote. "There are too many unanswered questions to undertake such a sweeping measure at this time."

Dozens of locals have been urging lawmakers since last week not to pass the bailout to rescue banks saddled by shaky mortgage assets. The unprecedented plan to stabilize the tumultuous stock market also drew the ire of lawmakers, including Ortiz, who said in a statement Monday that he would not authorize to bail out Wall Street from a mess of its own making unless there were assurances that the money would be returned to taxpayers.

"We need to act with prudence and not be rushed to act without debating all the consequences," Ortiz said in the statement. "The price tag — an estimated $700 billion — was too much for the American taxpayers to handle and would have placed an underserved burden on future generations."

Supporters of the bill warn that failing to rescue the nation's financial institutions would lead to further market uncertainty and make banks more reluctant to extend credit. That consequently could stop business growth, increase unemployment and begin a downward economic spiral.

"No one wanted to be voting on this legislation today. The greed and lack of regulatory oversight that got us into this situation should never have happened," Hinojosa said in a statement. "Inaction was not an option. This bill was not about bailing out Wall Street. It was about making sure the average Americans (sic) can continue to get credit for their basic needs like housing, student loans and automobiles."

Hinojosa, who said he opposed the original proposal and sits on the House Financial Services Committee, said changes including limits on executive pay, tougher government oversight and a plan to eventually recoup losses from the nations financial institutions if the U.S. Treasury has lost money after five years, persuaded him to vote for the legislation.

When credit isn't extended, people will be unable to get loans to buy automobiles, homes and just about everything else, Hinojosa said. Some banks have already said it's growing difficult for them to extend credit.

Cuellar challenged that assertion saying that in discussion with local banks this week he was assured that the credit is still being extended to many people locally.

Both Cuellar and Ortiz indicated they would consider voting for a bailout package if it included protection for homeowners facing foreclosure and if it resembled a stimulus package that would put money in taxpayers' pockets. Ortiz indicated he was also disappointed that a provision to allow bankruptcy courts to restructure mortgages was not included in the final draft.

"Any new proposal should allow for bankruptcy judges to work with people who have lost their homes and get them back on track," Ortiz said.

Cuellar said his office received hundreds of calls and e-mails from individual voters urging the congressman to oppose the bill. A poll of 500 constituents conducted by the congressman's office found that nearly 66 percent opposed the bill.

"(Voters) have to feel that this is not going to just help Wall Street (and that) the person on Main Street, or 10th Street in McAllen, is going to have a stake in this," Cuellar said after the vote.

Lawmakers from both the Democratic and Republican sides of the aisle voted against the measure. More than two-thirds of Republicans and 40 percent of Democrats opposed the bill.

Stocks plummeted Monday as investors were gripped by fear that the financial system would further fail. The Dow Jones industrial fell more than 700 points after the House defeated the bailout package.

Shares of International Bancshares Corp., the parent company of Laredo-based International Bank of Commerce, fell 1.24 points to close at 26.6 Monday. The bank, which was named as the number one Hispanic-owned business in Texas and sixth nationally by Hispanic Business Magazine earlier this month, has been largely untouched by the subprime lending crisis.

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Sean Gaffney covers business, the economy and general assignments for The Monitor. He can be reached at (956) 683-4434.