Published: October 10, 2008 12:13 am            

Lucas still optimistic on financial bailout

Even though U.S. Rep. Frank Lucas (R-Cheyenne) voted against the $700 billion bailout bill, he says he still hopes it will work.

Lucas said he hopes all of those involved in the bill give it time to work, and it may be years before the funds are recovered. Lucas objected to the bill not going through the proper procedural process in the House or Senate, through the committee system where amendments could be made, and he also disagreed with the “sweeteners” that were added. He said the bill will take 30-to-90-days to take effect, but it may be years before the investment is returned to the treasury.

“We got into it because of the property bubble and it burst,” he said.

Lucas, a Roger-Mills County farmer, said it is his habit to watch property sales. He noticed in the area where he lives in Washington, D.C. that property values rose 20 percent a year in three years.

“That is not sustainable. It reminds me of Oklahoma in the 1980s when the property bubble popped,” he said.

The challenge is how long it will take to recover the money. He also warned that bundling of loans, such as were done with mortgages has also been done with commercial loans and automobile loans and that also will have an effect. He said Federal Reserve Chairman Ben Bernanke is an academic with expertise in the Great Depression. Bernanke has taken the opposite approach to that taken from the financial crisis of 1929-33 and has increased liquidity.

“In the short run it will cost substantially more than $700 billion, but in the long run we have the chance to get some back. It will take patience,” he said.

Lucas said he was under pressure from the White House to vote in favor of the bailout, which he subsequently voted against -- twice. He stood as the lone Oklahoma Congressional member to vote against the Senate version of the bill.

If Democrats win the November election and take commanding leads in the House and Senate, President Bush’s tax cuts which expire in 2010 will be allowed to expire and taxes will increase.

Lucas said the bailout problem is real and that the country had the real capacity to have a melt down which will affect everyone. He related a story about purchasing a pickup for his wife to use on the farm six months ago. Lucas said he has bought pickups regularly from the dealer for 20 years and never missed a payment.

The pickup was hail damaged and he traded it for another, and found his interest rate was two points higher, even with his good credit.

“That’s a reflection of tighter credit. We all operate on borrowed money, Main Street, agriculture, Wall Street, everyone -- and there will be increased costs to everyone,” he said.

Lucas said the problem erupted because everyone liked the system. Home buyers were getting homes they could not afford through tricky mortgage rates, Realtors were selling houses and making profits, bankers and Freddie Mac and Fannie Mae were all making big profits. Everyone along the line liked the system, but it could not be sustained.

In other issues, he talked about the changes to the recent farm bill, and how those changes reflect the viewpoint of House Speaker Nancy Pelosi. She increased the funds going to food programs, and reduced funds going to agriculture research, the commodity program, and other traditional agriculture programs. Those programs will now receive only 25 percent of the amount they previously received, he said.

Depending on how the Republicans define term limits, Lucas could be the senior Republican on the agriculture committee, and if Republicans get a majority in the House in the near future, he could be ag chairman.