Bailout shows contrasts in 6th District

Third in a series on the issues facing Republican Peter Roskam and Democrat Jill Morgenthaler in the 6th Congressional District on Nov. 4.

Three weeks ago, U.S. Rep. Peter Roskam voted twice against economic bailout packages before Congress.

His challenger, Democrat Jill Morgenthaler, says she'd have held her nose and supported both measures.

Republican Roskam was among a bipartisan minority who couldn't stomach the $700 billion remedy to financial collapse prescribed by U.S. Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben Bernanke. The bailout passed Oct. 3.

The Wheaton attorney, who sits on the Financial Services Committee, called $700 billion an "arbitrary" number and blamed Paulson for failing to answer questions about the value of defaulted mortgages and the extent of authority the Treasury would have.

"There was no doubt in my mind about the urgency but I didn't think the plan was well thought out," Roskam said.

"They basically went out and said, 'Do this or the economy is going to tank,' and I felt that was an irresponsible communication."

Morgenthaler, a former state top adviser on homeland security from Des Plaines, criticized her opponent's decision. Although the bailout was far from perfect, she said, it was better than doing nothing. "We needed government participation here," she said.

Now, as she walks the district, constituents are fearful about their jobs and businesses, Morgenthaler said.

Roskam said he had supported the idea of allowing banks to purchase insurance from the FDIC to guarantee deposits but that suggestion went nowhere. And, after the government allocated billions to keep American International Group Inc. and government-sponsored mortgage lenders Freddie Mac and Fannie Mae afloat, the latest intervention was too much, he said.

Morgenthaler believes a post-bailout world will require reforms to the financial services industry, aid to homeowners taken in by predatory lending schemes and a moratorium on foreclosures.

"With deregulation, we saw a lot of things going on that were out of control," she said. "We need smart regulation."

Moving forward, Roskam said Congress needs to learn how to "regulate in a much more sophisticated market. The challenge is going to be regulating appropriately."

Calling Wall Street too "emotional," Morgenthaler said it's essential to get the Dow Jones under control to encourage banks to ease lines of credit, which will have a positive ripple effect on small businesses and jobs.

Roskam said the future will require moving away from an economy based on easy credit.

"It's as if we'd scraped the icing off the birthday cake and now we have to eat the cake," he said.