Crapo: Strong Concerns Remain With Treasury Proposal
Taxpayer not adequately protected; Congress must get it right
Washington, DC - Idaho Senator Mike Crapo, a member of both the Senate Banking, Housing and Urban Development and Senate Finance Committees, released the following statement regarding the Administration's proposal regarding the credit crisis in the financial industry:
"The turmoil in the financial industry in the United States is troubling to all Americans. People are uncertain about the implications as well as the details of the problem itself. As a member of the Senate Banking Committee I have spent many hours on this issue. On September 23, I spent over five hours listening to the Secretary of the U.S. Treasury, the Chairman of the Federal Reserve Bank and the Chairman of the Securities and Exchange Commission testify about the situation in the markets today and about the plan that they have proposed. I've talked to dozens of economic and financial experts from all sectors of the financial industry and have examined and evaluated their analyses of the situation. I was able to ask questions then, and in a private meeting I had with them earlier in the week. As a member of the committee with jurisdiction over this delicate and critical issue, I have studied and become well-versed in the functions of the financial services industry, but I have learned even more this past week. Although the situation is highly fluid and changing almost by the moment, I have come to a number of conclusions at this point in the process.
"First, questions from the public about the Treasury proposal have forced Congress to begin a debate about if it is the right solution and what changes to make. After Tuesday's hearing, it became evident to me that the proposal places too much risk on the taxpayer without adequate accountability for those who engaged in the risky economic behavior that has brought this crisis. In addition, the plan needs a strong oversight provision to assure accountability and transparency. And provisions are needed to assure that CEOs of distressed companies do not profit from taxpayer funds.
"The fact remains that a substantial and real threat faces our financial markets and economy. The convulsions that will result from the credit crisis in the financial industry reach into our everyday lives, as families and businesses rely heavily on financial markets. Systemic failure of the network for circulating money and credit is a threat to the entire economy, every business, every homeowner and every American worker's job. The effects of not dealing appropriately with this crisis are too far-reaching for Congress to be forced to move without a careful and comprehensive review of the problem and possible alternative courses of action.
"After having carefully considered the Treasury's proposal and listening to the President on September 24, I am not convinced that the Administration's proposal in its current form is the right solution. This is not to diminish the serious and real threat that faces our financial markets and economy. To be certain, there is a substantial threat that must be dealt with, but this proposal requires the taxpayer to assume the majority of the risk. We must ensure that taxpayers would be protected if the bailout failed. The federal government, namely taxpayers should be the last to take a financial loss. This could dramatically reduce the potential loss to the U.S. Treasury and U.S. taxpayers. Otherwise it will fail the fairness test and only reinforce that individuals and institutions do not bear the full consequences of their actions and the taxpayer will bail them out. What happens on Wall Street with the nation's financial industry has extremely serious repercussions throughout every aspect of our economy, and we simply must get this right.
"In his address to the nation, the President set out some solid principles and agreed to make real changes from the initial proposal. And, today, a new dynamic has emerged that is even more encouraging. The Administration, both Presidential candidates and Congressional leadership are meeting to work out a solution in a bipartisan manner, for the good of America.
"I look forward to continuing a robust debate and consideration of alternative solutions instead of leaving the taxpayer to pay the bill. Congress must act, but should not be rushed into making hasty decisions for political expediency or any other reason. Additionally, Congress should not adjourn to campaign or for any other purpose until consensus is reached on this matter. It is imperative that we protect the taxpayer who will be most at risk in the proposal that we are now considering. These are not simple issues to resolve and we must be willing to carefully consider all options.
"I will be working with my colleagues to try to resolve these very serious issues in the financial services industry. Please check my website for updates, terminology and other information."