I voted against the bailout bill both times because I am opposed to hastily spending $700 billion in taxpayer dollars without robust oversight and the exploration of alternatives. Yes, I believe that Wall Street needs help. Yes, our economy is struggling and needs to be fixed, but a hasty bailout was a mistake. As the economic crisis deepens, it turns out that the $700 billion bailout is far different from what Nancy Pelosi, Barney Frank and the Bush Administration .
Congress was told that this money was going to be used for a “troubled asset relief program” to purchase toxic assets from bank balance sheets. We were told that buying these assets was the only option to help the economy; no other alternative would work. Shortly thereafter, Treasury Secretary Henry Paulson announced that the money would be used for equity injections into various institutions. This past Friday, the Treasury Department announced it is considering taking equity stakes in insurance companies. The Wall Street Journal designated this move as “a sign of how the government’s $700 billion program has become a potential piggybank for a range of troubled industries.”
The government is now experiencing an influx of requests from companies all over the country: insurance firms, automakers, state governments and transit agencies all want a handout. There are some reports of companies using money from the bailout, your tax dollars, to provide employee bonuses and pay corporate dividends.
In the same article, the Wall Street Journal continued, “While Treasury intended for the program to apply broadly, the growing requests could rapidly deplete the $700 billion, an amount that initially stunned many as being quite large.”
This is alarming. The federal government is handing out easy money, yet we have not worked to fix the systemic causes of our economic crisis. American taxpayers should be alarmed and outraged at the irresponsible use of their money.
I am a cosponsor and a strong supporter of the alternative bill introduced in the House of Representatives, the Free Market Protection Act. This Act contains many efforts to fundamentally address the systemic issues affecting the financial markets and although the bailout bill has already passed the House, the Free Markey Protection Act has some components that are still worthy of discussion. It has an insurance component that places risk-based premiums on outstanding mortgage-backed securities (MBS). There also is a reform component that includes limits to the federal backing of high risk loans and temporarily suspends “mark to market” accounting. I have spoken to many experts who feel that these alternatives could stimulate the market just as effectively as the $700 billion bailout proposal. I don’t believe this is the only solution to the problem, but it shows that there are other alternatives to be explored. It’s not too late to work to incorporate bipartisan proposals that will pass quickly and reassure the markets that we do have a plan to fix this crisis.
Scott GarrettMember of Congress