Insiders Perspective: Embarrassing Congressional Reaction to an Originally Dangerous Bailout Plan
MYM Series: Wall Street Bailout Explanation 4 of 4
We have learned today that the House of Representatives passed the Emergency Economic Stabilization Act of 2008 by a vote of 263-171. Because the Senate passed the same version just days prior, the bill is now ready to be sent to the President for his signature. So there you have it, a couple of weeks of complete panic, volatile markets, confusion, unhappy voters, and a much anticipated vice presidential debate has come to a exhausting yet satisfying end.
As I have mentioned before, my day job is working in Government Affairs on financial services issues in Washington DC, which has given me a unique perspective on the two-week bailout hoopla. I Watched as U.S. Treasury Secretary Henry Paulson, Securities and Exchange Commission (SEC) Chairman Christopher Cox (who was interestingly not invited to testify in front the of the House committee), and Federal Reserve Chairman Ben Bernanke testified before both the Senate Banking, Housing, and Urban Affairs Committee and the House Financial Services Committee—both have jurisdiction over financial services issues in their respective chambers.
My initial reaction after watching ten hours of testimony is how embarrassing our Congressional leaders handled themselves and how dangerous Secretary Paulson’s original piece of legislation was. I’ll first start with our members of Congress. As you would expect with 435 member is the House, not all of them are going to be experts on every issues. However, when a member serves on the committee charged with maintaining our capital markets, I would EXPECT them to know the issues—especially in times of economic crisis. Don’t get me wrong, plenty of the committee members were more than prepared and I commend them for playing such a constructive role. However, it was evident from the beginning that certain members were not prepared to question our financial leaders on such heavy and important financial topics that we face today. So I ask, how can they possibly be ready for an informed vote on the issue?
Everyone knows the elections are right around the corner, and don’t think for a second that any member of Congress has forgotten. With a majority of our public not truly understanding the severity of our credit crisis, and because the legislation was labeled a bailout as opposed to a rescue, Congressional members up for re-election had their best interest in mind rather than what was in the best interest of our nation, economy, and ultimately, for the consumers. In my opinion, voting against legislation designed to keep people in their homes, ensure that responsible lending continues, and most importantly keeps the United States competitive, is irresponsible and inexcusable.
Back to Secretary Paulson’s original legislation. Paulson delivered an embarrassing three-page, bill that’s right a three-page bill, to Congress before his testimony. Worse than what seemed like a rushed piece of legislation is that it included absolutely no oversight. Basically, Paulson wanted Congress to give him (the Treasury) $700 billion dollars, with no checks and balances. He later would say his legislation was only meant as a basic template, but even so, it is his job to provide his expertise to Congress, three-pages of expertise in times like this, does not count.
In the end, everything has come together and to the advantage of Americans, the system has worked. Now, pressure has been put on the next Administratino and those who are appointed into these new financial posts. Only time will tell if the $700 billion dollars will turn into an investment for taxpayers or a bill. Only time will tell if this piece of legislation will help us crawl out of our self inflicted subprime hole. People will forever disagree with this monumental piece of legislation, but everyone, including naysayers, hopes it works. $
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