Why I voted *NO* on today's Wall Street Bailout
By Rep. Dana Rohrabacher, Oct 3, 2008 -
• Last Minute Irrelevant Expenditures Added To The Bailout
It is unconscionable that on an issue as important as this, completely irrelevant expenditures were added solely to secure additional votes. Some examples include excise tax breaks for wooden toy arrows, film and television production tax breaks, aid to rural schools, a monetary transfer to an abandoned mine reclamation fund, and permanent authority for undercover tax enforcement operations. While many of these provisions may be worthy on their own, they have no place in an alleged financial rescue bill.
• No Reform
The bailout bill does nothing to address the initial root causes of the economic crisis we now face. It’s more of a carrot with no stick. Even proponents of the bill admit the root causes still exist providing no real oversight authority. Fannie Mae and Freddie Mac are still not reformed. If we press the restart button without making any changes, we are doomed to repeat our mistakes.
• Too Much Power Granted To The Treasury Secretary
The bailout bill grants overly broad new authority to the Treasury Secretary, yet lacks detailed specificity on the assets to be purchased. This misstep has led some legal scholars to raise constitutional concerns. It lacks specific guidelines and standards under which the Secretary can operate granting enormous discretion over hundreds of billions of additional dollars.
• The Bill Was Rushed Through Congress
A bill of this magnitude needs to be carefully considered. Congress should exercise responsible scrutiny through Committee hearings and public comment. Unfortunately this bill was pushed through without adequate time for meaningful alternatives to be considered. Instead, scare tactics and alarmism prevented any substantive discussion. In less than one week, this bailout bill swelled from 3 pages, to 110, and finally to over 450 pages, with limited time to deliberate on all its provisions.
• No Serious Provisions For Recoupment Of Taxpayer Losses
Proponents claim the government will be able to sell back these toxic assets for a profit at a later date. The bailout bill, however, merely directs the President to submit a report to Congress five years from now on how he plans to recoup our losses. Any serious desire for repayment should include set provisions, not just a report.
• Hundreds of Billions of Dollars Will Be Paid To Foreign Banks
If the financial crisis is as dire as the Treasury Secretary claims, our first priority should be to spend American dollars on American assets. Yet, no provision within this bill directs the Secretary to buy American assets. Ironically, a hundred billion dollars or more is likely to go to foreign financial institutions. We could potentially up borrowing from Chinese banks to pay for Chinese banks.
• No Alternatives Permitted
The bailout bill was stampeded through Congress with no opportunity to debate meaningful alternatives. For example Congressman Steven LaTourette introduced an amendment with broad support that would have reduced the authorization from $700 billion to $250 billion, saving the taxpayers half a trillion dollars. The Treasury Secretary himself admitted to the Washington Post that he intends to spend on average $50 billion a month in toxic asset acquisitions. Representative La Tourette’s amendment would have limited the Secretary to only 5 months of spending. At that point, Congress could have re-evaluated the situation to determine if further funding is warranted. This common sense amendment was not even given an opportunity to be debated.
Another popular alternative included a mandatory suspension of “mark to market” rules. A wide range of economists agree that current regulations often require assets to be valued lower than they actually are. Suspending these regulations temporarily would relieve the panic setting in some markets. The watered down language in the bill passed by the House merely grants the SEC the authority to suspend these rules, and does not require it.