Massachusetts Congressmen Say Bailout Plan Needs Work
CRISIS
Worcester Telegram and Gazette
Rachel Kolokoff and Guanlei Ren
Boston University Washington News Service
September 24, 2008
WASHINGTON – Massachusetts members of Congress voiced skepticism on Capitol Hill Wednesday as Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson again urged Congress to approve a $700 billion bailout plan for Wall Street.
Though Paulson and Bernanke said at the House Financial Services Committee hearing that the bailout is required to stave off a worsening financial crisis, congressmen are reluctant to approve such a large investment in devalued financial assets without further assurance that taxpayers will benefit in the long run.
“I think we need to protect the taxpayers of this country, and handing $700 billion to Wall Street with no conditions, no oversight and no accountability is irresponsible,” U.S. Rep. James P. McGovern, D-Worcester, said.
Rep. McGovern said the last time Congress made the mistake of giving the administration free rein was with the Iraq war.
“When they passed that resolution, they basically gave President Bush whatever he wanted and that turned out to be a tragedy,” Rep. McGovern said.
U.S. Rep. John W. Olver, D-Amherst, also said the plan needs more regulations.
“The plan as first put forward by Secretary Paulson was essentially a $700 billion blank check,” Rep. Olver said in a statement. “It offered a bailout for Wall Street with virtually unlimited powers that could not be reviewed by another federal agency.”
U.S. Rep. Richard E. Neal, D-Springfield, shared Rep. Olver’s concerns, emphasizing the need for further oversight to ensure a safe return on taxpayer investments. These billions are a loan, not a grant, he said.
“I would suggest we approach this judiciously, try to value the assets that are involved and put in place a corporation with great transparency that would sell off the assets of many of these companies, many of which are good, and pay back the federal Treasury,” Rep. Neal said.
U.S. Rep. Niki Tsongas, D-Lowell, said that while it may take some time to further develop the plan, it’s become clear that this government intervention is necessary.
“It seems to me that simply by promising to act as Secretary Paulson did last week that it’s created such a high level of expectation in the market that if we fail to address it we could have a real crisis on our hands,” Tsongas said.
U.S. Sen. John F. Kerry, D-Mass., in a written statement, said he is worried that taxpayers will pay the price. While immediate action is necessary, he said, he too is troubled by a lack of oversight.
“Republicans have consistently railed against oversight and accountability during the last eight years,” Sen. Kerry said. “Now taxpayers are forced to clean up their mess.”
U.S. Sen. Edward M. Kennedy, D-Mass., agreed that accountability is vital to the plan.
“There has to be full disclosure, and Americans everywhere must join together to make sure those who hold positions of responsibility are going to fulfill them both now and in the days and weeks to come,” Sen. Kennedy said in a statement.
At Wednesday’s hearing, Secretary Paulson said he understands that members of Congress are concerned but assured them the plan has taxpayers in mind.
“Let me make clear – this entire proposal is about benefiting the American people, because today’s fragile financial system puts their economic well-being at risk,” he said. “When local banks and thrifts aren’t able to function as they should, Americans’ personal savings, and the ability of consumers and businesses to finance spending, investment and job creation, are threatened.”
In his testimony, Mr. Bernanke emphasized that America still faces “grave threats” to its financial stability.
He also said that, besides the bailout plan, the Federal Reserve had taken actions to increase liquidity and stabilize markets, including new financial agreements with the Bank of England, the Bank of Japan and the Bank of Canada.
Members of the Financial Services Committee, chaired by U.S. Rep. Barney Frank, D-Newton, criticized the bailout plan. Lawmakers said they understand that Wall Street and Main Street are linked but want a detailed spending plan. Taxpayer protection, committee members said, was the main concern.
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