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September 30, 2008: Congresswoman Kaptur Votes Against Bill To Bail Out ‘Reckless’ Wall Street |
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Marcy Kaptur voted against the Wall Street bailout bill, which was defeated on the floor of the U.S. House of Representatives.
Kaptur, the senior woman in the House, addressed the issue in remarks
on the House floor on Sunday evening. She disputed the contention by
President Bush that America is facing the worst financial crisis in its
history and accused the White House of using fear to pressure Congress
into bailing out Wall Street. She also said Congress should approve no
funding for a bailout until it establishes an economic crimes unit to
investigate criminal activity that created the current situation.
“Taking a trillion dollars of taxpayer money and buying
bushels of unknown and unvalued paper is not smart,” Kaptur said. “It
will delay resolution of that housing crisis. In fact, this bill
actually asks taxpayers to buy a garbage truckload of worthless paper,
everything from subprime auto loans, to foreign bank loans, to hedge
fund paper, to credit swaps. Every reckless Wall Street deal thought up
these 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. “The
housing bubble that burst is at the heart of our dilemma. Until Main
Street housing foreclosures are remedied, the situation will not
improve.”
Kaptur said, “We need the right deal, not a fast deal. The
White House is counting on fear to propel this Congress into hasty and
inappropriate action on a Wall Street bailout that is not in the
interest of our Republic. There is a better way. In fact, it is as
likely the expenditure of $700 billion will actually stand in the way
of the most effective means to remedy the economic challenges facing
us.”
Kaptur said the market problems of the 1980s, when 3,000 banks
failed and interest rates hit 21 percent, posed a greater threat to the
economy than the current crisis. Nonetheless, she said, “the economic
instability was resolved in the financial system in a much more
disciplined and rigorous way than taxpayers printing money for Wall
Street.”
She said the Federal Deposit Insurance Corporation response
dealt with the earlier crisis effectively with no cash changing hands.
FDIC, she said, resolved “thousands of problem situations” issued net
worth certificates to get the nation through the credit shortage. The
agency also regulated transactions with banks with subordinated
debentures and promissory notes, assumed power over executive salaries
and controlled dividends to restore health and rigor to the market.
“The FDIC also adopted a contingency plan to nationalize all
institutions in the event it was necessary. The cost of the entire
enterprise was $1.8 billion, resolving over $100 billion in problem
institutions from the FDIC insurance fund, paid for by the banks, not
the 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 and
overseen by the very reckless people who caused these problems in the
first place,” she said.
Kaptur said the bailout bill fails to reform the Securities
and Exchange Commission, which “more than any other regulatory body,”
has caused the current problem “by its false accounting, overinflated
leverage ratios and (destruction of ) fair value accounting.”
Finally, she said, Congress should create and fund an
independent Emergency Financial Crimes Unit “to investigate the
malfeasance, securities fraud, false accounting, and insider trading
that were the root causes of this extravagance.”
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