Darcy Says “No Blank Check” in Bailout Proposal
Bailout must have significant protections for taxpayers
By DARCY BURNER
GUEST COLUMNIST
Over the past decade, with the removal of protections that had been in place since the Great Depression, we abandoned all checks on bad behavior by banks. As a result, we face a financial crisis of historic magnitude. It should never have come to this.
The Bush administration and too many in Congress enabled, encouraged and ignored the bad behavior on Wall Street that created this mess. Now they say that that without a massive taxpayer-funded bailout — at a cost of more than $2,000 for every man, woman and child in the United States — our economy is at risk of collapse.
If we are going to bail out Wall Street to the tune of $700 billion, taxpayers must get significant reforms and real protections in return. Congress should move forward in a calm and orderly way, and not be stampeded into endorsing a bad deal. First and foremost, we must not just hand over a blank check to an administration that has failed us.
Instead, let’s put in place reforms with real teeth. Any bailout plan must address the following points:
Protect taxpayers: The financial institutions that made the bad decisions should bear as much of the cost as possible. Taxpayers should be given a stake in bailed out firms. Financial institutions must be held accountable for accurately representing the quality of the assets they’re unloading so that they cannot game the system. Address bad behavior. Any bailed out firm must accept restrictions on extravagant CEO pay. Taxpayers have a right to know that public money will not disappear into the pockets of the same people who created this mess in the first place. Help Main Street: If Wall Street gets assistance, Main Street deserves help, too. Delinquent homeowners should be offered renegotiated mortgages to give them greater opportunity to stay in their homes. Create accountability. Congress must have explicit oversight of bailout efforts. No unelected member of the administration should have sole authority over so much of the taxpayers’ money.
Congress should combine these protections with regulatory reforms that protect ordinary Americans. As BusinessWeek pointed out last year, the 2005 Bankruptcy bill, widely recognized as a giveaway to the credit card companies, has had the perverse effect of encouraging foreclosures and has been a major contributor to the current mess. Let’s fix it. And we need to take a hard look at the banking deregulation enacted in the last decade.
Fundamentally, we need change of attitude inside the Beltway. We need regulations and policies that don’t exist to shower favors on the wealthy and powerful corporations, but instead protect the interests of ordinary middle-class Americans. If we act wisely, transparency and accountability will be restored and sensible regulation put back in place.
But let’s be clear: Today, due to the failures of leadership in both the public and private sectors, our economy is in trouble. As this situation plays out, thousands of Americans far from Wall Street are likely to lose their jobs through no fault of their own. Trillions in wealth held by ordinary people in the form of home value and investment value will be erased.
So let’s put some substance behind the growing desire for change — so this mess is never again repeated.
Darcy Burner is the Democratic candidate for Congress in the 8th District.
