Crapo: Taxpayers Remain Top Priority
Banking hearing focused on federal role in unfreezing credit markets and returning country to economic stability
Washington, DC - For the second time in as many weeks, Idaho Senator Mike Crapo returned to Capitol Hill to participate in Senate hearings regarding the economic crisis facing the nation. Today, he joined fellow Senate Banking Committee members in a hearing that focused on the federal regulators' role in the economic crisis and solutions to restore stability and soundness to the country's financial markets.
Crapo's questions to the witnesses focused on how best to protect the taxpayers in any program that the federal government pursues and how to quickly unfreeze the credit markets. During an exchange with Treasury official Neel Kashkari, who has been tasked to head up the disposition of the $700 billion economic stabilization package, Crapo emphasized the need for American borrowers to have access to credit, and that the federal government's priority should be to ensure that banks have enough capital to lend. From the first Treasury proposal, Crapo has consistently advocated that the Treasury Department take an equity position for taxpayers so that shareholders and other financiers of risky behavior take the hits first and the taxpayers take losses last.
Crapo also expressed concerns that the Treasury proposal to buy toxic assets (i.e., residential mortgage-backed securities) is having the opposite impact by encouraging investors to stay on the sidelines and step in at a later date. Crapo said, "The question is how we quickly unfreeze the credit markets while protecting the taxpayer. Money must be available to consumers who need credit, and any funds provided to banks should be used for that purpose. Congress must actively oversee this $700 billion program and make sure that the taxpayer is being protected while putting our country's financial house back on solid footing."
"Uncertainty remains in our financial markets, with the stock market on a roller coaster ride each week," Crapo said after the hearing. "It is important that we fully understand the causes of the economic crisis and that we take appropriate measures to bring our economic strength back as well as put preventive measures in place to prevent a similar crisis from occurring in the future. The recent decision by the federal government to take stakes in some of the nation's top financial institutions as part of a new plan underscores the need to rebuild our financial situation. This will require a great deal of discussion and careful evaluation of how to strike the appropriate balance between ensuring a safe and sound banking system without needlessly restraining risk-taking, which would hinder economic growth. As a member of the Senate Banking Committee, I will continue to be very involved in congressional actions to deal with this crisis and in developing long-lasting solutions and policies to stabilize our economy."
Other witnesses at today's hearing included the chairman of the Federal Deposit Insurance Corporation Sheila C. Bair; the director of the Federal Housing Finance Agency James B. Lockhart III; HUD's Federal Housing Commissioner Brian Montgomery; and the Governor of the Federal Reserve System's Board of Governors Elizabeth A. Duke.