Congress Members Seek Bailout Details
Saturday, September 20, 2008
Members of Congress from the D.C. area said yesterday that they were eager to avoid a meltdown in the nation's financial system but were awaiting details before deciding whether to support a proposed massive government bailout.
Some said they don't want to appear to be rewarding reckless business executives and leaving homeowners who face foreclosures to fend for themselves.
"We're between a rock and a hard place at this point," said Rep. Tom Davis (R-Va.). "No matter what you do it's controversial."
The U.S. Treasury plans to ask Congress to approve a plan to spend hundreds of billions of dollars to buy struggling firms' mortgages. The announcement, and another pledging guarantees for money-market mutual funds, sent the stock market soaring 369 points yesterday.
Some area lawmakers said any aid for Wall Street should come with new rules for the markets.
"We're certainly going to be looking at the oversight responsibilities, regulatory steps that we need to be taking to ensure that, in fact, markets are run responsibly and do not result in this extraordinary call on the public treasury and on taxpayers to bail out irresponsible behavior," House Majority Leader Steny H. Hoyer (D-Md.) said in an interview with CNBC.
Sen. John W. Warner (R-Va.) said the executive and legislative branches have to decide "what is the risk of doing nothing, and letting the free marketplace do its role, or seek legislation to reduce the severity of serious consequences to almost every single aspect of our economy."
Rep. Frank R. Wolf (R-Va.) said that he doesn't see how Congress can refrain from intervening but that it "raises a lot questions."
Rep. James P. Moran Jr. (D-Va.) said he would support the bailout only if taxpayers are allowed to profit from the future success of companies that are aided. He would support the purchasing of mortgages for people's houses, but not their vacation properties, as long as banks bring them down to fair market value, he said.
Hoyer said that in hammering out the rescue package, "our priority will be to protect taxpayers on Main Street, not reward bad decisions made on Wall Street."
Sen. Benjamin L. Cardin (D-Md.), a member of the Budget Committee, said Congress must work quickly with the Bush administration to restore confidence in the financial markets. But he also called for an examination of "how our financial system was allowed to become so vulnerable," including a look at the effects of deregulation, deficit spending, the trade deficit and U.S. dependence on foreign energy.
"Once the dust settles, we must take decisive action that will prevent the type of financial collapse that we have witnessed in recent weeks" from recurring, Cardin said in a statement.
A similar demand for oversight came from Rep. Chris Van Hollen (D-Md.), chairman of the Democrats' 2008 House campaign.
"We need to look at the whole area of executive compensation and find a way to end this outrageous practice of CEOs who engage in grossly negligent activity and then end up with soft landings because of their golden parachutes," Van Hollen said.
Rep. Donna F. Edwards (D-Md.) said, "The system has been so deregulated that nobody was watching the store.
"This can never be allowed to happen again," she continued in an interview. "This can't just be about taking care of Wall Street and not taking care of Main Street. We have people who are losing their jobs and their homes, and I want to make sure that whatever package we come up with next week clearly should stabilize our financial markets but also do something to stimulate this economy, so people are put back to work and they're not losing their homes."
Del. Eleanor Holmes Norton (D-D.C.), criticized the administration for its proposal.
"After long ignoring a predictable melt down of the global and national economies, the administration has rushed to shore up the top of the economy as Americans rapidly lose jobs, retirement funds, savings, and homes," she said in a statement.
However, she praised the plan to use up to $50 billion from a Depression-era fund to insure money-market mutual funds.
Davis, who will retire in January, said he is reviewing solutions. But he appeared wary of far-reaching new regulations for the financial sector, saying more transparency is needed. He said the government could not bail out every person and institution.
"You can't afford to help everyone," he said. "People who signed up for mortgages they couldn't afford bear some responsibility."
Staff writer Anita Kumar contributed to this report.