Local Republican stalwarts oppose the proposed $700 billion government bailout of debt-ridden financial institutions and say it's time for both parties to take a firm stand with failing banks.
"Republicans have lost their way and Democrats have lost their minds," said Selinsgrove businessman Ken Meese.
Mark J. Harris, a Snyder County resident who serves on the State Republican Committee, said he's torn on the issue, but said if he were a voting member of Congress, he'd oppose the buyout.
"At some point you have to allow people to fail," he said. "There are winners and losers in society, and why should the government pick who should be bailed out?"
The bailout proposal, written by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, calls for using taxpayer money to buy troubled debt -- termed "illiquid mortgage assets" by the Treasury Department -- from financial institutions. The Treasury would also manage this bad debt.
U.S. Sen. Arlen Specter, R-Pa., said House and Senate members should be cautious regarding the bailout urged by President Bush, saying repeatedly, "We ought not to rush to judgment."
The senator suggested Congress "take the time necessary to study the details of this proposal" and hold hearings to question Paulson and Bernanke.
"How's the transaction going to treat the hundreds of thousands of Americans who are in fear of losing their homes to foreclosure?" asked Specter. "What's the impact going to be upon the Wall Street financiers and tycoons who have caused this problem?"
Democratic House Speaker Nancy Pelosi, D-Calif., was also hesitant about the plan and called for independent oversight, protections for homeowners and limits on excessive compensation for executives.
Harris said leaders on both sides of the political aisle have to work together to address the economic situation that has banks struggling to stay afloat while dealing with bad mortgage debt.
"It's too dicey of a situation" to politicize the issue, he said.
Describing himself as a "distressed Republican," 81-year-old Mease said the government's offer to help banks get out from underneath a pile of bad debt is "insane" and won't fix the problem.
"Bailing out people who are making the mess won't work," he said. "It's putting off the day of reckoning, making money worth less and less. If I buy a car and can't pay for it, they take it away. The people who allowed (the mountain of bad debt to pile up) are the very bankers asking for the bailout."
Mease went all the way back to 1913, when the Federal Reserve was established by Congress, in discussing the bailout.
The creation of the Fed led to bankers taking control of the country's economic system, he said.
"And they screwed up the whole thing," said Mease.
Now, Mease said, the government is taking on the role of a giant insurance company "and totally wiped out private and corporate wealth by putting an IOU on everything we own."
The crisis has begun to impact the stock prices of local banking companies, as well.
Susquehanna Bancshares, M&T Bank and Sovereign Bank were all downgraded by analysts.
Stifel Nicolaus Research downgraded Susquehanna Bancshares from "hold" to "sell" and M&T Bank from "buy" to "hold."
M&T Bank Corp. shares slumped Monday after Stifel, Nicolaus advised investors to take profits following sharp gains last week, The Associated Press reported.
Analyst Collyn Gilbert cut Buffalo, N.Y.-based M&T Bank to "hold" in a note to investors Monday. Gilbert downgraded M&T because the stock's sharp gains Thursday and Friday left it overpriced for a bank that still faces a difficult credit market, the analyst said.
Sovereign Bank was downgraded from "market perform" to "underperform."
Friedman, Billings, Ramsey downgraded Sovereign, citing concerns about the capital position of the second-largest U.S. savings and loan.
Analyst James Abbott cut his price target on Sovereign stock by $3 to $6, and lowered his estimate for company's 2008 earnings by a cent to 65 cents per share.
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GOP leaders decry bailout
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