September 30, 2008: Congresswoman Kaptur Votes Against Bill To Bail Out 'Reckless' Wall Street
September 30, 2008
Kaptur, the senior woman in the House, addressed the issue in remarkson the House floor on Sunday evening. She disputed the contention byPresident Bush that America is facing the worst financial crisis in itshistory and accused the White House of using fear to pressure Congressinto bailing out Wall Street. She also said Congress should approve nofunding for a bailout until it establishes an economic crimes unit toinvestigate criminal activity that created the current situation.
“Taking a trillion dollars of taxpayer money and buyingbushels of unknown and unvalued paper is not smart,” Kaptur said. “Itwill delay resolution of that housing crisis. In fact, this billactually asks taxpayers to buy a garbage truckload of worthless paper,everything from subprime auto loans, to foreign bank loans, to hedgefund paper, to credit swaps. Every reckless Wall Street deal thought upthese past several years they want to dump on us. We say: No.”
Kaptur said the current turmoil constitutes “a credit crisis,not a liquidity crisis,” and the bailout bill does not address it. “Thehousing bubble that burst is at the heart of our dilemma. Until MainStreet housing foreclosures are remedied, the situation will notimprove.”
Kaptur said, “We need the right deal, not a fast deal. TheWhite House is counting on fear to propel this Congress into hasty andinappropriate action on a Wall Street bailout that is not in theinterest of our Republic. There is a better way. In fact, it is aslikely the expenditure of $700 billion will actually stand in the wayof the most effective means to remedy the economic challenges facingus.”
Kaptur said the market problems of the 1980s, when 3,000 banksfailed and interest rates hit 21 percent, posed a greater threat to theeconomy than the current crisis. Nonetheless, she said, “the economicinstability was resolved in the financial system in a much moredisciplined and rigorous way than taxpayers printing money for WallStreet.”
She said the Federal Deposit Insurance Corporation responsedealt with the earlier crisis effectively with no cash changing hands.FDIC, she said, resolved “thousands of problem situations” issued networth certificates to get the nation through the credit shortage. Theagency also regulated transactions with banks with subordinateddebentures and promissory notes, assumed power over executive salariesand controlled dividends to restore health and rigor to the market.
“The FDIC also adopted a contingency plan to nationalize allinstitutions in the event it was necessary. The cost of the entireenterprise was $1.8 billion, resolving over $100 billion in probleminstitutions from the FDIC insurance fund, paid for by the banks, notthe taxpayers. In other words, the market was used to heal the market,not set up a big government bureaucracy at the U.S. Treasury, run andoverseen by the very reckless people who caused these problems in thefirst place,” she said.
Kaptur said the bailout bill fails to reform the Securitiesand Exchange Commission, which “more than any other regulatory body,”has caused the current problem “by its false accounting, overinflatedleverage ratios and (destruction of ) fair value accounting.”
Finally, she said, Congress should create and fund anindependent Emergency Financial Crimes Unit “to investigate themalfeasance, securities fraud, false accounting, and insider tradingthat were the root causes of this extravagance.”
“Taking a trillion dollars of taxpayer money and buyingbushels of unknown and unvalued paper is not smart,” Kaptur said. “Itwill delay resolution of that housing crisis. In fact, this billactually asks taxpayers to buy a garbage truckload of worthless paper,everything from subprime auto loans, to foreign bank loans, to hedgefund paper, to credit swaps. Every reckless Wall Street deal thought upthese past several years they want to dump on us. We say: No.”
Kaptur said the current turmoil constitutes “a credit crisis,not a liquidity crisis,” and the bailout bill does not address it. “Thehousing bubble that burst is at the heart of our dilemma. Until MainStreet housing foreclosures are remedied, the situation will notimprove.”
Kaptur said, “We need the right deal, not a fast deal. TheWhite House is counting on fear to propel this Congress into hasty andinappropriate action on a Wall Street bailout that is not in theinterest of our Republic. There is a better way. In fact, it is aslikely the expenditure of $700 billion will actually stand in the wayof the most effective means to remedy the economic challenges facingus.”
Kaptur said the market problems of the 1980s, when 3,000 banksfailed and interest rates hit 21 percent, posed a greater threat to theeconomy than the current crisis. Nonetheless, she said, “the economicinstability was resolved in the financial system in a much moredisciplined and rigorous way than taxpayers printing money for WallStreet.”
She said the Federal Deposit Insurance Corporation responsedealt with the earlier crisis effectively with no cash changing hands.FDIC, she said, resolved “thousands of problem situations” issued networth certificates to get the nation through the credit shortage. Theagency also regulated transactions with banks with subordinateddebentures and promissory notes, assumed power over executive salariesand controlled dividends to restore health and rigor to the market.
“The FDIC also adopted a contingency plan to nationalize allinstitutions in the event it was necessary. The cost of the entireenterprise was $1.8 billion, resolving over $100 billion in probleminstitutions from the FDIC insurance fund, paid for by the banks, notthe taxpayers. In other words, the market was used to heal the market,not set up a big government bureaucracy at the U.S. Treasury, run andoverseen by the very reckless people who caused these problems in thefirst place,” she said.
Kaptur said the bailout bill fails to reform the Securitiesand Exchange Commission, which “more than any other regulatory body,”has caused the current problem “by its false accounting, overinflatedleverage ratios and (destruction of ) fair value accounting.”
Finally, she said, Congress should create and fund anindependent Emergency Financial Crimes Unit “to investigate themalfeasance, securities fraud, false accounting, and insider tradingthat were the root causes of this extravagance.”