Thompson explains his bailout 'no'

More regulation and more taxpayer protection are needed in the $700 billion bailout bill expected to resurface in Congress as soon as today, said Rep. Mike Thompson, D-St. Helena.

Thompson declined to say whether he will ultimately vote for a bailout, citing the number of changing circumstances, such as the stock market's fall Monday and rebound Tuesday.

"We need to get it right," he said. "That's the issue. I think we can do that. I think we can do it expeditiously."

Thompson and Rep. Lynn Woolsey, D-Petaluma, voted against the measure Monday.

Woolsey could not be reached for comment Tuesday, but has said she rejected the package because "it failed to address the root cause of the financial crisis."

Thompson, a fiscally conservative Democrat, said the bill needs to minimize taxpayer risk and also address more of the "underlying problems" of the economic meltdown.

For example, Thompson advocated regulation of credit default swaps, the obscure financial instrument used by speculators to bet that a certain company will fail.

The government also needs to "get a position" in private companies receiving bailout funds. The position must be "first and foremost," he said, so that Wall Street firms don't "end up with the good stuff" while taxpayers are "stuck holding the junk."

Citing an upcoming round of adjustable-rate mortgage shifts next year, Thompson said the bailout -- billed Tuesday as an "economic rescue" -- should give homeowners some protection against foreclosure.

Without such protection, he said, mortgage payments could swell, and "we're back in the same soup."

An organization of major Bay Area employers Tuesday sent a letter to Thompson, Woolsey, Rep. Barbara Lee, D-Oakland, and Rep. Pete Stark, D-Fremont, who all voted against the bailout.

"Member companies from all sectors of the economy are expressing extreme concern that should a package not be adopted, and soon, there will be a complete freeze in the already tight capital markets," Bay Area Council President Jim Wunderman says in the letter.

"This will have a catastrophic impact on the region's economy, and downsizing and layoffs will be inevitable."

You can reach Staff Writer Guy Kovner at 521-5457 or guy.kovner@pressdemocrat.com.