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Nebraskans have serious concerns about the Treasury Department's legislative proposal for the bailout plan. I share those concerns and have made them clear in a letter to the leaders of the Senate Banking Committee.
American taxpayers did nothing to create this crisis, yet they will be asked to bear the heavy expense of government intervention. While Nebraskans understand that the cost of inaction may well be greater than the cost of this $700 billion proposal, they rightfully demand strong protection of their investment, accountability, shared responsibility and benefit, and strong oversight.
The proposal raises some serious questions as it amounts to a "blank check" for the largest ever government intervention in the private markets. If taxpayers are expected to finance this bailout effort, changes should be considered to this legislation and to regulation and oversight of Wall Street, so that this chapter of history never repeats itself.
Taxpayer's Best Interests Must Be Reflected
If taxpayers are to be expected to finance this bailout effort, there should be mechanisms in place to protect that investment and all profits of this program should be returned to the taxpayer. Any net profits from this program should accrue foremost to retirement of the public debt.
Future generations should not bear the cost of Wall Street’s failures, and the cost of this program should be shared with those who participate in it. There should be no golden parachutes for the executives who presided over these distressed firms, and any plan should include limits on executive compensation.
No Free Ride for Reckless Financial Institutions
The assistance offered to troubled firms should operate as much like a loan as possible while still achieving the necessary effect of calming the crisis. The program should require participating firms to issue ownership shares or collateral to the Treasury in exchange for assistance. Our responsibility to the taxpayer demands as much.
The benefit of this program should not accrue solely to those who get to offload distressed assets onto the taxpayer. The legislation should reflect that the root cause of this crisis is rising foreclosures and dropping home values, and to the extent that assets owned or held by the government can be increased in value by assistance to homeowners, that approach should be accommodated by this legislation. In other words, we should not rescue Wall Street from itself without a strong commitment to Main Streets, in Nebraska and across the country.
Shared Responsibility with Other Nations
The U.S. government's actions are intended to control a deepening global financial crisis, yet the cost will all be born at home by U.S. taxpayers. Other nations should share in this effort if their financial institutions hope to benefit from this program.
Strong Oversight Needed
Reports to Congress should come more frequently than twice yearly, and the reporting requirement should stand for as long as any mortgage-related assets remain in Treasury's possession. The Government Accountability Office should have full and unfettered access to all aspects of the program, because taxpayers demand transparency and accountability if they are to be expected to finance this program.
Congress faces unattractive options for addressing this unprecedented problem. If we are to ask American taxpayers to bear this heavy burden, we should craft a responsible solution to this crisis, one worthy of the taxpayer’s investment. These are the principles I believe are needed to ensure that Main Street is not forgotten in any bailout of Wall Street.
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