Spotlight on the House: How Congress Should Respond to the Bailout

The events of the last several weeks are dizzying in scope. Lehman Brothers, a firm founded in the 1850s, survived the Great Depression, but it could not survive the current financial crisis. Similarly, Merrill Lynch, nearly 100 years old, was a casualty of the latest crisis as well. The root cause of the failures we face today stems from the ideological commitment to oppose public input through regulation, oversight, and corporate accountability. Now, the bankruptcy of the trickle-down philosophy has fully manifested, and Americans are being asked to make historic sacrifices.

The pressure from the Bush administration to rush and pass a so-called "clean" $700 billion bailout is disconcerting because I believe their mantra of deregulation and lax oversight is a major factor contributing to the crisis we currently face. Thankfully, our nation's founders intended that Congress be a deliberative body. I expect that we will debate this matter and not just hand the Treasury Secretary a $700 billion blank check to dole out however he wishes.

I don't think anyone wants taxpayers to singularly bail out these companies, but it looks like it's inevitable that we will do so in order to keep our economy from completely collapsing. There are three crucial issues that should be addressed.

We need to ensure homeowners are protected first and foremost. We will not stabilize the markets if millions of homeowners continue to lose their homes to foreclosure. I believe we should include language to allow the restructuring of mortgages, specifically by passing a "cram-down" provision which would allow bankruptcy judges to restructure mortgages on a primary residence. This will go a long way to ensure that millions of working Americans can remain in their homes.

Second, we shouldn't allow companies that receive a taxpayer-funded bailout to lavish extravagant compensation on executives who failed them in the first place. I strongly agree with Chairman Barney Frank who said that we must place reasonable limits on executive compensation as part of this bailout proposal.

Finally, there needs to be oversight and accountability to how this money is used. In its proposed form, the Treasury Secretary's decisions are specifically "non-reviewable" by the courts, Congress, or the Government Accountability Office. I believe there must be oversight of this program, including judicial review, as well as regular oversight authority granted to the committees of jurisdiction here in Congress.

These changes would make this unpleasant duty more acceptable and accountable to the taxpayers who could ultimately shoulder the costs of this bailout.

Comments

[donndublin]

After reading through most of these comments I can’t help notice how the liberals can’t refute any of the details that the writer presents. All they can do is throw out general and vague responses with no specifics or hard numbers. Only what they hear their leaders say.
You can’t argue with liberals. Most never made it past algebra and in college became liberal arts majors. They are mathematically challenged and incapable of analytical thinking. Therefore they lack logic and reasoning skills and rely on feelings and intuition. They learn how to express themselves through art and journalism and some even do it quite well. Being “touchie-feelie” people, they are adaptable to the gay lifestyle. Economics is beyond their comprehension so don’t expect them to understand much about this financial crisis.

[jeaide]

Hey, there donndublin:

Your entire post was more than just a tad ironic. You criticize "liberals" for "vague responses with no specifics or hard numbers" then back your argument up with an entirely subjective commentary about their math skills. If you are going to make the argument that "liberals" are "mathematically challenged" and "rely on feelings and intuition" you may want to consider backing that up with some numbers of your own. Also, backing your own argument that "they are incapable of analytical thinking" by saying that "they lack logic and reasoning skills" is entirely circular reasoning. So by your circular definition, you are a liberal - I also doubt you have any understanding of economics, especially as it pertains to the current financial crisis...

[themodernleader]

Springsm. The only conclusion is that our government is entangled and within the tentacles of finance. Freddie Mac has a 360 billion dollar budget tor lobbying. Obama, my hero, has received a mess of money from commodity traders and Wall Street swindlers and the likes of Warren Buffet. He owes them. And in office he will predictably behave as finance expects. There will be only crumbs for the coming millions of unemployed, cold and hungry citizens. We do not have democracy. Look at all the gerrymandered districts of entrenched financial power. In my District my Congressman doesn't even have an opponent. And when he deigns to talk to the citizens, it is as master to servant, not servant to constituents.
We are entering the winter of our governance. The failure of leadership is so egregiously treasonous that the Republic's survival will be in the balance in the next two decades. And I am not at all optimistic.

[wallygator]

I'm tired of eating ramen noodles standing in a bread line would be a nice change of pace.

[themodernleader]

Rep. Ellison: You are acting on false premises. You assume that the Bush is giving you complete picture. Where are their studies, data, graphs and charts? You see unsupported predictions. The prediction that 700 billion will save America is sheer bunk. The fact that it feed financial gnomes to strengthen their hold on government is a fact. The assumption that it will save our banking industry is bunk. It will save connected banks, including the bank blessed by Buffett. But the financial industry is coalapsing because bubble capitalism made our finance double while our manufacturing withered. Now it must contract in half: 11% of our GNP. Why? We are rapidly becoming a traditional country of consuming debt resulting from domineering finance on our government and economy.
A vote for a 700 billion "bailout of our economy" is a bailout of Wall Street finance and a hyjacking of t of the middle class. And the money will disappear. In a few weeks or months, another crisis will arise, for example, FDIC due to massive bank failures. (We have twice as many banks as are efficiently, effectively justified.­) Student loans, credit card, auto and consumer loans are going belly up and will call for bailout.
Your responsibility: Vote against the bailout and tell the people the truth of our declining condition. You will be considered a courageous leader and will be given accolades by your constitutents while being ignord and condemned by corrupt power.

[springsm]

Why don't they see this modern leader? Why can't congress get tough and ask for some real meat in this bail out fraud. Dodd and Schumer and Shelby in the Senate are all going to huff and puff and rant and rant and talk too much...but NONE are going to say no and they aren't going to ask for the hard details. How much money is missing in Iraq, from Katrina, etc. Bush wants to bail out his wall street pals...bef­ore he leaves office. WHY don't they wake up. Rep. Ellison, don't try to be nice and even here...the republicans are bullies and you will capitulate also...but come on. This is plain old unethical ilmoral, illegal behaviour we are tyring to fix. These people can say NO and work it out. But you know what? By Friday Paulson will have his money. mos

[Pdubya]

Dear Rep. Please pick up the Constitution and read it. The answers lie within. We are presented with this option or "do nothing". What absurdity, as if there was no other option!

Other options shall not include $700 BILLION with strings! It is the very infusion of that fiat currency into our system that will kill the dollar. PERIOD.

silly partisans, tricks are for kids!

"Allow me to issue and control a nation's money and I care not who writes its laws!". Amshell Rothschild.

Please, please reach across the isle and gain strength in forces to stop this. Phase out the Fed, the real culprit!

The Freedom Formula: Au + Ag + Cu + Pb

[oceanbreeze]

Folks, stay on top of this bailout discussion. Stay alert, and spread the word to everyone in your commentary. This rescheduling nonsense is a sideshow, and may very well prove a distraction.

We need to stay on top of it. The House in their hearings today does not seem as harsh as they were at first. If they pass this will lesser money, but still give full unchecked license to paulson, and don't get us equity into these co's, it will be a huge blunder.

Keep monitoring the bailout news, and if you can, please rewrite your representatives to let them know what you think.

For what it's worth, European news sources report that financial experts, policy analysts, and regulators across Europe agree that a bailout is not necessary, let alone one of this magnitude.

No-one wants the economy to suffer, for sure. But, it is way too suspicious that all of this is so urgent, so huge, with way too much authority, yet, in uncharted territory.

[springsm]

How do you write to Dodd if you are not a constituent? We need to really write some intelligent letters to our Senators and our Representatives. Telephone calls too. Flood them. Let them know we are watching and we understand and we care. The Congress folks as well as the administration cabal think the public is outright childish and stupid. And granted, many are..but many are NOT too. I also read foreign newspapers­....you get some real news that way.

[Project4NuBostonTeaParty]

With all due respect, Congressman, this is how I read this latest "Mushroom Cloud" from the White House, delivered this time through surrogate Paulson:

IT'S PARTY TIME! ...On Wall Street!

We're back in business, boys!

[TXfemmom]

Oh, and if the foreign banks fail, the government should enact immediately, and before they do so, a law which permits the U. S. government to seize assets of foreign banks who come to the United States, take FDIC insurance, and then fail, which are located in their home countries. That would mean that the foreign banks could not loot their assets to their homelands and then fail, leaving U. S. taxpayers to pick up the tab.

[TXfemmom]

The Dems need to hold firm on it, dispel propaganda from the Republicans and KEEP THE CONGRESS IN SESSION DURING THE WEEK, TO CALM THE MARKETS UNTIL THE ELECTION, IF NECESSARY.

That would demonstrate that the DEMS are serious, and are willing to stay in session during the week and look out for what is best for the country, and TAKE THE HIGH ROAD. No one could criticize this approach, and the Dems could demonstrate that they are putting the country, and the people first.

If we have to bail out these companies, then the government should control the majority of the seats of the Board of Directors, be given a majority stake in the businesses, control executive compensation, have total unfettered access to all records, and get any and all profits until the money is paid back with interest, and then, and only then, should the banks be able to slowly buy out the government.

ADDITIONALLY, NO BAILOUT ON ANY FOREIGN BANKS. NOT A SINGLE ONE. IF THEIR HOME COUNTRIES WILL NOT DO IT, THEN AMERICAN CITIZENS SHOULD NOT BAIL OUT FOREIGN BANKS WHO CAME HERE TO PILFER, PLUNDER, AND STEAL.

[WineWonkette]

How do we know that the ransom money won't be used to invade Iran as a "catalyst to boost the economy"?

[WildBill]

Pass the bailout contingent upon the immediate resignations of Bush, Cheney, and Paulson. Nancy Pelosi could then assume the presidency and provide, more or less, a caretaker administration for the next 4 months. We could then begin the reforming which is necessary with reregulation of the banking industry. We cannot continue to stumble from one disaster to the next with the Dim Scion at the helm.

Remember: corporate welfare = corporate socialism = national socialism = fascism
(Especially under the current bailout proposal!)

[springsm]

I don't want Nancy Pelosi NEAR the WH...she would sell it to the first bully who walks into the office.

[MNinWI]

Pelosi has been weak kneed since the 2006 elections & began with 'impeachment off the table' statement. Impeachment was necessary and she did not allow it. She could be part of the whole plan they have or why else would she not allow it. Goodbye democracy, it's been fun while we had you.

[Dynamohum]

I agree, if we are to nationalize the burden, then we all should share in the profits and dividends. Otherwise I say vote no or "present" until whatever opposition to it, backs down.

[NicoleAnon]

I don't think you realize how much corruption there is in the banking industry and how they alter their balance sheets and find ways to hide profits because if you did then you would realize that these people will never give us, the honest taxpayers, any money and the banks Paulson wants to help knew years ago that the toxic loans would never be profitable. When Paulson took the CEO job at Goldman Sachs they had $20 billion in debt - when he left they had $100 billion in debt, all of it from taking risks that we're going to have to pay for now. The current CEO of GS made over $60 million last year and Paulson has $500 million - will they be giving any of that money back to us? They made the money irresponsibly.

And I also think it's important for people to realize the congress will approve this bailout probably by the end of the week - in public they will criticize it so they can pretend like they're really looking out for American but they will approve it. The same way the approved authorization for the war in Iraq and then later blamed everyone else for not giving them the right information.

Do you know who the candidates are planning to replace Paulson with?

JM - probably Thain who used to work at Goldman Sachs.
Him - probably Robert Rubin who used to work at Goldman Sachs.

[NicoleAnon]

They say the economy is on the brink of collapsing but it hasn't yet - why not? Apparently banks still have lending to other banks and I know for some some regular banks are not worried about there being a "run" on the bank at all.

It's very obvious that Paulson needs the authority to give banks money, and I'm sure Goldman Sachs will be the primary recipient, before the new administration is in office. If they tell you the world is ending, give them a few billion and then meet every month to find out if it's working of they need more money.

1) When someone asked him why they couldn't get the money in stages instead of all at once since they're not planning on using the money all at once, he didn't have an answer that made sense.

2) Bernanke admited that they're going to buy the toxic loans from the banks and pay them what they believe the loans will be worth in the future, not what they're worth now. This is shocking and I can't understand why nobody is talking about it. They have also agreed to take on assets besides toxic loans, including credit card debt - this bailout is appaling. They're using taxpayer money to increase profits at banks.

3) I didn't see anyone in the senate asking Paulson about the conflict-o­f-interest between him making decisions about which banks to help when he has a "blind trust" of $500 million stocks from GS.

[bluprojekt]

I just read over on Forbes where Bernanke said - and I quote:

"... businesses nor consumers would be able to borrow money."

And I say - so?

I haven't had a credit card in several years - My total personal dept is less than most peoples credit card payments - I personally feel if you don't have the money outright - you don't need it. It does make things more difficult at times but overall - I wouldn't want to be in the majority of the borrowers of this country's shoes.

I'm of the belief that a constantly growing GDP is a smoke screen to perpetuate more consumerism.

What ever happened to making a high quality product here in our country that actually lasted longer than a couple of years - and could be fixed if something went wrong - instead of trashing it and the planet and having to buy a new one - which only perpetuates the cycle of mass consumerism.

And there's no guarantee that anything positive will come about if the $700 billion is approved

Sorry for the rant - this whole economy debacle has me royally pi$$ed off

"Now Go Away or I Will Taunt You a Second Time."

[NicoleAnon]

When Paulson and Bernanke were trying to tell everyone last week how important it is that the bailout is done NOW NOw NOW RIGHT NOW and someone asked them for a specific reason they said "if banks don't have credit they won't give people auto loans" as if it's very important that people continue to buy new cars right now.

During the real crash the stock market went down 9% and then the next week it went down 22% and people had all their money in banks that didn't have FDIC insurance. Our stock market went down 5% and Paulson is telling us that is a sign the world is ending. Of course right now the stock market is inflated and there should be a correction but don't expect him to mention that.

They're also lying to people when they claim almost every bank in this country will close - I know for a fact they are lying. If Paulson had this bailout approved when he wanted Goldman Sachs wouldn't have had to become a holding company and they wouldn't have had to raise capital on their own.

[LOL123]

What's there to debate? With 700 Billion let them fail we can buy the damn stuff. Duh

[Hoelder]

That's so simple: "N" - "O", No.