Gregg Urges Congress to Act on Bailout Plan by Weekend
GREGG
New Hampshire Union Leader
Jenny Paul
Boston University Washington News Service
9/25/08
WASHINGTON–Congress must approve the government’s $700 billion bailout plan by this weekend to head off an adverse market reaction on Monday, Sen. Judd Gregg (R-N.H.) said Thursday.
“I would hope we wouldn’t leave here until we had something that we could vote out this weekend,” Gregg said in a conference call with reporters.
He said congressional leaders made “significant” progress during Thursday’s negotiations over the details of the rescue plan, which would authorize the government to buy and eventually resell troubled mortgage-backed securities.
The negotiations addressed issues of executive pay, oversight and the equity stake the government would hold in the companies from which it buys assets, said Gregg, the top Republican on the Senate Budget Committee. He could not provide specifics on those parts of the proposal.
“We have moved towards an agreement — we haven’t finalized it — that would allow the taxpayers to get a benefit if there was an upside here,” Gregg said in reference to the equity issue.
Gregg said the proposal authorizes the government to spend up to $700 billion to purchase troubled assets, but Congress would appropriate only $250 billion for the Treasury to use up front. The Treasury will be able to access an additional $100 billion immediately if it needs more funds, he said. An additional $350 billion would be made available if the next president determines that the money is needed, he said.
“We believe that [the initial $350 billion] is more than enough money for them to go in and buy what they think they can buy and need to buy within the next two to four months,” Gregg said. “There will also be available to them an additional $350 billion, should the president – it will be the next president, obviously – determine that that’s necessary to take that money down in order to settle out the market in this area.”
Taxpayers have a right to be concerned about the initial cost of the rescue plan, he said, but early, aggressive government action is necessary to stave off an economic catastrophe that could result in a “massive” loss of jobs and a credit market meltdown. The lockdown of the credit market was readily apparent Thursday, he said.
“It’s not theoretical,” Gregg said. “Even this morning the major credit markets were simply not working very well at all, and it was virtually impossible to try to move money around through the credit markets.”
He stressed that the plan would not cost taxpayers $700 billion, because the government is buying assets that have value.
“The net cost to the taxpayer may be $100 billion, or it may be that we make money on this,” Gregg said. “We do know absolutely without condition that the net cost will be dramatically less and nowhere near the $700 billion.”
Gregg said there is a tentative agreement to include in the plan a debt-reduction provision that he had pushed for earlier in the week. It would make sure revenues from the program are used to reduce the national debt until the government breaks even on the investment. If the government has returns greater than $700 billion, 80 percent of that profit would go to paying down debt, he said.
Sen. John Sununu (R-N.H.), who also backed the debt-reduction proposal this week, said he believed a bipartisan coalition could draft a plan that puts taxpayers’ interests first.
“I will continue to support efforts to strengthen congressional oversight, improve transparency and ensure that any gains from the Treasury program are used to pay down the federal debt,” Sununu said in a statement. “These are changes that make sense and will increase the chances that any final package will restore confidence and stability to our economy.”
Gregg said he couldn’t be completely confident that the plan would be successful.
“I can be extremely confident that if we don’t do it, we’ll have a catastrophe,” he said. “Will it work? Well I sure hope so, because we’re running out of options if it doesn’t.”
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