Press Release of Senator Crapo
Crapo Notes Need For Reform At Financial Hearing
Applauds move away from taxpayer purchase of 'toxic assets'
Contact: Susan Wheeler
Washington, DC – Idaho Senator Mike Crapo welcomed the decision by the Treasury Department to move away from purchasing so-called “toxic assets” as part of the $700 billion financial rescue program, but cautioned careful assessment of the program’s effects must be an ongoing process. Crapo participated in a Senate Banking Committee hearing today over use of federal funds under the stabilization program. He voted against the $700 billion program largely because of the high risk that taxpayers would face if the government purchases “toxic assets.”
“Secretary Henry Paulson's announcement that Treasury is not planning to buy toxic assets provides a perfect opportunity to assess the results of the stabilization package and to consider other directional changes,” Crapo said during today’s hearing. “I did not support purchasing these toxic assets and have been very concerned that not only was the taxpayer not adequately protected, but that Treasury's proposal to buy toxic assets created an incentive for investors to stay on the sidelines and watch what the government would do. Then those investors would step in at a later date and either buy or purchase or finance purchases from the government at a discount.
“The direct utilization of our resources to increase liquidity with specific actions was a more appropriate direction that we should take,” Crapo added as he queried panel witnesses about the liquidity plans. “I hope that we can get into a strong discussion about some of the broad regulatory structural reforms that we need to consider.”
During today’s hearing, Crapo questioned witnesses about the Treasury Department’s proposal to explore development of a potential liquidity facility for highly-rated AAA asset-backed securities. He also questioned witnesses about the need to have broad regulatory structure reforms.
“Furthermore, I continue to hear from Idaho employers, from a wide range of enterprises, that normal access to credit continues to be difficult,” Crapo added. “Therefore, it is important that we continue aggressive efforts to stabilize financial markets and increase the availability of credit. But it is essential that we do this right and I remain committed to helping find the proper path forward.”
“There is no question that we need to act, but our priorities must be to protect taxpayers and future taxpayers and conduct a serious examination of our regulatory structure to prevent future problems,” Crapo concluded. “It's clear that we're facing a significant credit loss, and it has the potential to become even worse.”