Democrats: "We Will Not Simply Hand Over A $700 Billion Blank Check To Wall St"

***UPDATE*** 11:11PM Democrats have begun to push back on the bailout plan offered by the Bush Administration, specifically with legislation that would cut the salaries of the CEO's whose firms participate in the bailout and by adding more oversight provisions. The Washington Post reports:

Congressional Democrats considering the Bush administration's emergency plan to shore up the U.S. financial system yesterday countered with their own demands, presenting draft legislation giving the government power to cut salaries of chief executives at firms that participate in the bailout and slash severance packages for their top management...

...Democrats sought to add oversight provisions and taxpayer protections to the proposal, which amounts to the largest government intervention in the private markets since the Great Depression. "We will not simply hand over a $700 billion blank check to Wall Street," House Speaker Nancy Pelosi (D-Calif.) said in a statement.

Under the proposal drafted by House Democrats, the Treasury would be required to force faltering firms that want to sell their troubled assets to the government to "meet appropriate standards for executive compensation." Those standards would include a ban on incentives that encourage chief executives to take "inappropriate or excessive" risks, a mechanism to rescind bonuses paid for earnings that never materialize and limits on severance pay.

Obama issued a "statement of principles" regarding the bailout plan. One principle it emphasized was that the plan cannot bail out Wall St. and ignore the troubles on Main St.:

"We must work quickly in a bipartisan fashion to resolve this crisis and restore our financial sector so capital is flowing again and we can avert an even broader economic catastrophe. We also should recognize that economic recovery requires that we act, not just to address the crisis on Wall Street, but also the crisis on Main Street and around kitchen tables across America...

...Taxpayers should be protected. This should not be a handout to Wall Street. It should be structured in a way that maximizes the ability of taxpayers to recoup their investment. Going forward, we need to make sure that the institutions that benefit from financial insurance also bear the cost of that insurance.

Help homeowners stay in their homes. This crisis started with homeowners and they bear the brunt of the nearly unprecedented collapse in housing prices. We cannot have a plan for Wall Street banks that does not help homeowners stay in their homes and help distressed communities.

The AP reports that Treasury Secretary Henry Paulson said Sunday that the government should resist including households in its bailout plan despite calls from Democrats to do so:

Treasury Secretary Henry Paulson said Sunday that the nation's credit markets remain frozen and Congress must move quickly to pass a $700 billion bailout package for financial firms. But key Democrats said the legislation needs changes to provide better protections for taxpayers and homeowners in danger of losing their homes.

"The credit markets are still very fragile right now and frozen," Paulson said in an interview on NBC's Meet the Press. "We need to deal with this and deal with it quickly."[...]

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Democrats said they understood the need for urgency but insisted that the measure needed to provide help for homeowners threatened with losing their homes, perhaps by changes in bankruptcy laws to allow for mortgages to be modified, and by capping pay and benefit packages for executives at the huge Wall Street firms that will be selling their bad debt to the government.

"I don't want the American taxpayer to get this bad debt and then the guy (whose company once held the bad loans) gets millions of dollars on his way out the door," said House Financial Services Chairman Barney Frank, D-Mass.

Paulson and President Bush have argued that the alternative would be credit markets that remain frozen, meaning that businesses will fail because they can't get the loans they need to operate and the economy will grind to a halt because consumers, who account for two-thirds of economic activity, won't be able to get the credit they need to keep spending.

At a rally in Charlotte Sunday Obama spoke about how he believed the government needed to deal with the financial crisis when it comes to households:

We must work quickly in a bipartisan fashion to resolve this crisis to avert an even broader economic catastrophe. But Washington also has to recognize that economic recovery requires that we act, not just to address the crisis on Wall Street, but also the crisis on Main Street and around kitchen tables across America.

Read more of Obama's remarks.

Comments

[O gurl]

So, as a young voter, I am perplexed. Everytime I cast a vote, I am asked a zillion questions about whether I am for or against this bill or that bill... about whether our tax dollars should go toward rennovating a park or whether visitors should be allowed to feed the ducks at the lake.

Now, when $700 BILLION of tax payer dollard is at stake, I have no say in the matter?

I agree with Pelosi and Obama, we can't place more burden on the average tax payer to save investors before we approve legislation to save American families. How can the GOP be completely against social aid programs but all for forcing the average Joe to save the stocks and bonds of the same wealthy jerks that refuse to fund health care for the elderly?

GIVE ME A BREAK!

[lornejl]

Here, here's a break, that's more than any repub will ever give you.

[O gurl]

Haha! Well, I better take it, lest McCain ends up in office. ;-)

[missedith]

Thank God the Dems are finally saying "thanks but no thanks" on the bailout to nowhere. This is nothing more than Iraq 2 and the urgency is the main clue. We cannot let these crooks (on Wall St and Penn Ave) hold us hostage any longer.

[frvale007]

HOORAY FOR PELOSI AND BARNEY FRANK AND OBAMA . DONT COW DOWN TO THESE PLAYGROUND BULLIES ANYMORE "ENOUGH IS ENOUGH" THEY SAY "TRUST ME " AND THE WHOLE WORLD KNOWS THAT THEY ARE LIARS!!!!!!!!!

[mjtaylor22]

This idea of a baiout, is so horrible given the facts that these same entities, or rather too many of them. Paid lobbyist to fight for continued de regulation and non disclosure of transactions. We have had so many overstatements of earnings in the last 8 yrs is tis totally insane to consider a bailout without further due dilligence and disclosure.
Americans invest in publically traded companies for potential profit. if the company dows badly and goes under, the risk is you loose, and could loose it all.
HOW DOES THAT MAKE THE TXPAYER RESPONSIBLE FOR THE DEBT CREATED BY BAD BUSINESS AND THE HIGHEST LEVELS OF OUR LARGEST INSTITUTIONS.
if the bailout is a loan, they need to pay interest just like the rest of US working Americans, so the loan should be at a taxpayer profit.
Not one tax payer has ever received and interest free loan in our country.
If my tax dollars pay corporate debt, at the same time Working Americans cannot pay their own debt, We need interst paid by these giants of industry and alot of it.

[sf94127]

Go ahead, let the dems turn this into a mostly political issue. You can think it about it when the banks collapse and a lot of you are on a breadline.

Pelosi and Dodd were onboard bigtime on Friday, now they are backpedaling as usual and O drones on with his usual "blame this on Bush policies".

The point is the Dems can't stop playing the blame game. They made this mess as much the Reps.
The Dems and Obama let Fannie and Freddie run wild.

[missedith]

Fear Factor. The same thing that drove us to a misguided war in Iraq. Once again, Obama shows himself to be the smart guy...buy pulling back, gathering intel and refusing to react like a chicken startled by a fox. If it's really this urgent, Paulson would not have said all was well such a short time ago.

[LeftCoastLefthandedLefty]

Is that the best you can come up with???

You guys aren't even trying to hid the fact that when it comes ideas on how to fix the mess that deregulation has wrought, you are totally bankrupt.

If you think it's politically expendient to simply go to the "everyone was doing it" card, go ahead. I don't think history will be as kind to the Republican brand. Think about it. Your long debunked economic theories have collapsed the U.S. economy for the second time in the last 80 years. Noone is going to buy that it is just dumb luck that Republicans have been in control of the economy both times.

[likeabite]

How did the Dems help create this mess when the Republicans have controlled every branch of government for 4 years? How did the Democrats help create this mess when Obama has been speaking against the wall st. regulatory practices for over 2 years? Yes they are backpeddling because they see that the Bush administration is trying to pull the Iraq war move again. Wise up and stop being brainwashed. It's just sad

[who38]

This started with Reagan and Clinton was in there somewhere for eight years. Dems have not really done anything but enjoy the ride.

[dejtemper]

The funny thing is that even with this humongous bailout, no one is sure what will happen. Bread lines can still be in our futures, don't ever count yourself out in that. Obama and McCain are running for office so they of coarse, are playing politics. Get off the Dems, let blame lay at the feet of those that did this. Big thing is Paulson, or ANY one person can not be given this power in our country.

[who38]

Paulson's reasoning--This has to work. Wonder if he would say the same if he was an oncologist.

[sandrarita]

Go Nancy! Thank goodness the Democrats are standing up to the Bush/Paulson 'push it through before they know what we've done' team. Who is yelling bailout or disaster alarms? Disaster for who? OK - if they don't want to compromise then do nothing, and let's see what happens. I can't believe the gall of these ba----ds! Their failed policies contribute to the problem and then they want a blank check and free rein to do what they want? Not.

[macohmz]

Republicans simply cannot govern. It is not in their conservative mindset to govern. Republicans can only steal and suck-off restroom patrons.

[sf94127]

Take a look at the economic stats during Carter....­.......we are in financial paradise in comparison.

[nightsdoor]

Let's see... Nixon and Ford 1968-1972. Carter 1976-1980. Reagan 1980-1988, Then you have Bush 1, 1988-1992. Clinton 1988-2000. Bush 2 2000-present.

And this compares to Carter how?

[LeftCoastLefthandedLefty]

I was just a little kid in 1976 but I am pretty sure that Bear Stearns, Merril Lynch, and Lehman Brothers made it though the Carter administration.

The Bush administra­tion......­..not so much.

[gfreshski1]

You jump to Carter, why not compare this to Clinton? Oh, I know why, because YOU LOSE.

[Tinsdale]

There was no financial mega implosion of this proportion under President Carter.

Firms like Lehman did not disappear. Fannie Mae, Freddie Mac and AIG were not put on life support. "Too big to fail!" was not part of the American lexicon.
World markets were not roiled and no one was considering appointing a financial markets "Dictator for Life" under a massive taxpayer funded bail out. There were not a milion plus American homes in foreclosure.
This is not your "financial paradise". This is a financial leper colony.

[mjtaylor22]

On November 12, 1999, the Gramm-Leach-Bliley Act, was signed into law. This Act repealed the Glass-Steagall Act of 1933. One of the effects of the repeal was to allow commercial and investment banks to consolidate. Some economists have criticized the repeal of the Glass-Steagall Act as contributing to the 2007 subprime mortgage financial crisis.[8]­[9]

But the Enron loophole was small potatoes compared to the devastation that unregulated swaps would unleash.

Senate Bill 3283, also named the Commodity Futures Modernization Act of 2000.

Now traders had an officially deregulated market for energy futures. Worse, that bill also deregulated many financial instruments " including the collateralized debt obligations that are at the center of today’s mortgage crisis, which may well cost us more than $1 trillion before it’s over."

[who38]

Gramm for Secretary of Treassury or Commerce.

[Darkdonnie]

A new Lifetime Television poll finds the selection of Gov. Sarah Palin as Sen. John McCain's running mate "has greatly increased the GOP ticket's appeal to women."

Key finding: McCain-Palin holds a 44% to 42% lead over Obama-Biden on who has a "better understanding of women and what is important" to them. Obama held a 52% to 18% lead on the question in July.

"Breaking it down further, age was biggest determining factor. Young women, ages 18-34, chose the Democratic ticket as being more empathetic to their needs, while women aged 35-64 went for the McCain-Palin ticket."

Wow a 36 point swing. Some women must get her, just not the misogynist feminist (oxymoron?) in the hubrispost!

[nightsdoor]

LIFETIME??? ROTFL. They and Palin share the same demographic. Good lord. I wouldn't expect any better from someone who watches the "Rape of the Week" channel.

[missedith]

Who cares? Maybe they're great folks. Go have a beer with them while Obama cleans up the mess the GOP left behind.

[who38]

Flagged. Off topic.

[AmericanVoice]

As usual, the GOP hand over a rush-rush proposal and say Pass-it, and bail out all the people who stole investors-­shareholde­rs, money, without any accountability in place. Let's hold this up, as long as we need too, to protect us the American working class they will be paying for it, so we can have a voice in our investment. They steal your money & pension, and they say pay for it, and then they buy back these companies on the stolen dollars, for pennies on the dollar, when are we going to learn, what corruption, and greed due too a country. Lets look at America right now, that should tell you all you need too know. So you want too know how corrupt, how greedy, how sleazy our Administration has been for the last eight years, you're Looking at It! Not enjoying so much now, are we.

[Darkdonnie]

Your hypocrisy is monumental!

“President Bush in 2003 tried desperately to stop Fannie Mae and Freddie Mac from metastasizing into the problem they have since become.
Here's the lead of a New York Times story on Sept. 11, 2003: "The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." Bush tried to act. Who stopped him? Congress, especially Democrats with their deep financial and patronage ties to the two government­-sponsored enterprises, Fannie and Freddie.
"These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis," said Rep. Barney Frank, then ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

It's pretty clear who was on the right side of that debate

http://www.ibdeditorials.com/IBDArticles.aspx?id=306632135350949

[gconners]

Thanks for the info but in 2003 Republicans controlled both The House and The Senate. Rep. Barney Frank can say anything he wants, but he wasn't in charge.

[LeftCoastLefthandedLefty]

So you are trying to tell me that the Democrats stopped bush from getting legislation passed through congress in September of 2003......­..when the Republicans WERE IN CONTROL OF BOTH HOUSES OF CONGRESS!!!!

Try again.

[who38]

The Democratic Congress has not been able to stop any action that the Bush administration really desired during the last four years. False flag.

[grizhead63]

President Obama just gave one of the best speeches of the campaign in Green Bay. He was very specific and to the point about what the Republicans have done to the economy the last 8 years and how we can fix it. He will make a great Commander in Chief! We must win this thing for the sake of our Country and personal liberty.

Donate as much as you can and help take it back from the pre dat ors and financial vult ur es preying on us.

[Darkdonnie]

Clinton: Redistribute borrowed wealth!

[Chavez08]

When will someone come and "liberate" US from this banker fascism???

I'll have the rose-pedals ready and I've got nylon straps that should help take down that Friedman monument at the University of Chicago.

[Midnightrain]

I love your post. We need liberating!

[Darkdonnie]

You need to thank Carter, Clinton, Dodd, Frank.....­..........­..

[grizhead63]

Oops, Dark took the bait like a Garfish on a worm.

[Fraugher]

What the people think doesn't matter... The corps at stake can spend millions of $$$ lobbying this thing because the bailout is just going to pay back those lobbying costs... Lobbying to stop it does not earn a dime. Since when do working American taxpayers have anything to say when $700B is at stake...

Economic apologists say we will all lose if financial markets collapse. Hogwash! We do not all stand to lose equally anymore than we gained equally through the Bush plan.

[who38]

Thank you.

[ATruthBeKnown]

I will not be held hostage by Paulson. A failure to manage on his part does not constitute stupidity on our our part. We need to every reasonable control on this man and this money. We need to insure that the wasteland of foreclosed and about to be foreclosed are addressed.

WE must recognized that he is part of the problem and must be handled as such. We need to get down to serious business. The business of fixing this. Then we will kick some butt (including his).

Release the Hounds !!!!

[who38]

There needs to be a massive protest march in DC on Friday. Is this being organized?