Monday, September 29, 2008

Thoughts on the Scandalous, Enormous Bailout

I am not an economist, and I am afraid that I don't really have any original thoughts about the astonishingly HUGE bailout package. I don't know what will happen if Congress doesn't pass some sort of a package. But I do know that it makes me absolutely heartsick to think of how this money could be spent to HELP PEOPLE!!! Schools, job training programs, drug rehabilitation, college loans, small business assistance, health care...the list goes on and on.

I was interested to note that two Oregon representatives, Peter DeFazio and Earl Blumenauer, voted against it. I have great respect for both of them, and just last month Rep. Blumenauer spoke at my company about the need for investments in the country's infrastructure. He is a wonkish sort of politician, but he is clearly extremely bright and wants to do the right thing for the citizens of Oregon and the whole country. I went to his web site to see what he had to say about the package, and he has a video of his comments on his site. Here is a rough transcript of his speech before Congress:

I appreciate the gentleman's courtesy, as I credit his mastery for bringing this bill before us today. Thanks to his leadership, the leadership of Speaker Pelosi, the cooperation of the Republicans, it is a far better bill. But unfortunately this is not likely to be the end of the bubbles. We must be extraordinarily careful if we are not to compromise the next rescue. Remember long-term capital management, the hedge funds? What happens if the hedge funds are next? Any real rescue must include bankruptcy equity for homeowners. This is not just a moral issue; it's the key to stabilizing home values currently in free fall.

We cannot continue to bail out with borrowed money. No bill should be enacted without a payback from the financial services sector. Not a hint of a promise to pay back in five years. And at the core, we are ignoring the fundamental question about the size and scale of the financial services industry that is in trouble not just because of a lack of regulation, but because we had too many people pursuing unsustainable business practices.

We have seen an irresponsible bill change into a responsible bill. It's not as good as it should be and sadly may be beside the point. I will vote no reluctantly hoping I am wrong but fearing that I am right.

The unprecedented outpouring of emotion and advice from Oregonians about our financial crisis has been the silver lining on a dark cloud. If anything, the responses are more intense and widespread than those to the war in Iraq, or to any of the myriad calamities and momentous developments in the dozen-plus years I have been in Congress. The American people understand the significance of this financial meltdown, and they are asking all the right questions.

Here’s what I’m hearing: People are demanding accountability, and no golden parachutes. Instead of using tens of billions of taxpayer dollars to reward the Wall Street executives who drove us into this ditch, we should insist on ‘clawback provisions’ to ensure that the people who created this mess bear some of the financial burden as well. Congressional leaders are right to be skeptical of a $700 billion bailout, and should not rush to conclusions. People are insisting that Congress understand the depth of this problem and what might be on the horizon. Could the heavily leveraged, murky world of hedge funds become the next crisis?

People are clear that if there is going to be some relief it ought to protect Main Street, not just Wall Street, and make a difference to people across America who are caught in this financial firestorm and are at risk of losing their homes and businesses.

People want to make sure that they receive fair value for the investments of their tax dollars. Whether it is a loan guarantee or a capital infusion, Americans want to know that they have a chance to get their money back. If there is a profit to be made, it ought to come back to the taxpayers and the US Treasury. Americans are asking hard questions about whether taxpayer assistance means more borrowed money. Many people feel that we should tax or surcharge the people who profited from this rollercoaster, instead of adding to the debt burden for future generations, which only puts us further at the mercy of foreign investors.

People are, without exception, outraged at getting a three-page proposal from the Bush administration in the dead of night that would concentrate all power, with no checks and balances, in the hands of the Secretary of the Treasury--the same Secretary who refused to bail out Lehman Brothers and thought that the economy was fundamentally on track. Finally, and most importantly, people think that we ought to know what’s involved, and we ought to understand the details before we put taxpayers’ money at risk. If it takes an extra day, an extra week, an extra month to get this right — that’s just fine.

At a particularly stressful time, amid stock market tumult and a 24-hour news cycle, I am encouraged that Oregonians have the presence of mind to counsel deliberate, thoughtful action. I hear you loud and clear, and will do everything within my power to craft solutions that address your concerns.

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