Tuesday, September 23, 2008

Oregon's own Rep. Peter DeFazio really uncorked one yesterday on the house floor. Here's a transcript:

“Well, Secretary Paulson has submitted a simple proposal to Congress. This is it, three pages. It’s about a billion dollars a word.

“It is quite simple. Secretary Paulson gets the key to the treasury to start off by borrowing $700 billion dollars in the name of the American people. Maybe more later. And it waves all laws. ALL LAWS. No oversight. No one looking over his shoulder. No conflict of interest rules. Not even court review. Pretty simple proposal. He insists it has to be done without meaningful discussion or debate or any change by the Congress. Sort of immediate authorization for use of financial force. Does this remind anybody of anything – like the rush into Iraq on election eve a number of years ago? It’s all too familiar.

“He wants to take care of Wall Street’s illiquid assets, his way of putting things. Less charitable pundits have said ‘cash for trash’ Wall Street could then return to business as usual. That’s Mr. Paulson’s plan.
“He is of, by, for and about Wall Street, the former head of Goldman Sachs. He wants to go back to the way things were. They should never go back to the way things were! There need to be consequences and there needs to be major change in the financial structures and the financial instruments and the regulation of Wall Street – Something this administration still continues to deny or says, ‘Oh, we’ll do it later after we give ‘em everything they want up front, after we bail ‘em out.

“Now many want a condition on what’ll happen here. They want to have oversight. That’s good. They want to limit executive compensation for any firm that takes a bail out. That’s good. They want a linkage to a main street stimulus package and jobs. That’s good. Those are all good. But we’ve got to question it and take our time here to question the basic premise. Should we just take all their junk that people like Hank Paulson created – exotic instruments, the big parties they’ve been throwing – should we just take that and give it to the taxpayers and borrow the money from who knows where? Or should we take an equity stake in these firms? That’s what the government did when it bailed out Chrysler. They said, ‘OK, we’ll bail you out, but we own you. And when you come back, we’re going to make money for the taxpayers. Secretary Paulson wants to set it up so that the taxpayers, at best— and in all likelihood this wouldn’t happen— might break even some day. No. We need to take an equity assurance from these firms, or we need to extend them loans. Have them mark down this junk to market. There’s a market for it, it’s about 22 cents on the dollar. Make ’em mark it down. And then if they’re threatened or they’re illiquid, they can come to us and ask for a loan. And the terms are going to be stiff and we aren’t going to give it to just any one of these firms. No. We need to do this. We need to do it with oversight.

“And executive compensation is key no matter which way we go. Oh, let the boards of directors control that? Come on. Boards of directors are all like first cousins and closer, you know? I mean, these people are all feathering each other’s nests. Hank Paulson himself got a $50 million bonus for one year. The same year Wall Street rewarded itself with $60 billion of bonuses. That’s not a mistake – billion dollars worth of bonuses in 2006. These people are out of control, They don’t understand the real world. And for them to talk about main street or pretend they’re populist and they care about main street and student loans and homeowners’ equity is a bunch of B.S. We need major structural reform.

“We are the last bulwark here – the House of Representatives, the United States Senate. Because if we pass this bill as they proposed it, we would be doing a terrible disservice to the American people, to the world economy. And what if his bet doesn’t work? You have the execs come out of it whole and then they scoot that money offshore into hiding holes or into gold or something else. What if it doesn’t work and we’ve extended our credit out about as far as it will go? Where are we going to borrow $700 billion? What’s the next step? We need a much more targeted, deliberative process. You can’t come up with it in three days or four days. We shouldn’t be rushed into this. If it takes a week, two weeks, three weeks, a month. The world will wait. They’ll wait for a thoughtful plan that cure the disease in addition to getting us beyond this initial problem. That’s the job of this congress. We should not be rolled by our Wall Street execs who’s masquerading as secretary of the treasury.”


Post a Comment

<< Home