Sept. 29, 2008
Bailout Package Better; Tough Work Lies Ahead
Statement of Joan Claybrook, President of Public Citizen
It is abundantly clear that Congress must pass some kind of measure to shore up Wall Street, which has been brought to the brink of disaster because of greed, corruption and manipulation by financial titans. Today, lawmakers will vote on the taxpayer-funded bailout package they hammered out over the past week.
We are pleased that the measure has improved dramatically from its original three-page form, which gave unprecedented power to the Treasury Secretary and contained no oversight provision or taxpayer protections. Now, the bill has much of what Public Citizen and other advocacy groups called for: It authorizes limits on golden parachutes and on some top executive pay; creates extensive oversight mechanisms (a Financial Stability Oversight Board, regular reports to Congress by the Comptroller General, inspector general review and congressional oversight); gives the taxpayers an equity stake when federal funds are invested; doesn’t give the Treasury Secretary all $700 billion at once; authorizes judicial review of actions taken under the program; includes transparency provisions to ensure the public can track what the government is doing; allows for public participation; imposes conflict-of-interest limits; and requires action to minimize consumer foreclosures. The bill requires a study of the effectiveness of the regulatory system and the role that leveraging funds played in this crisis. In addition, lawmakers have pledged to re-regulate the markets.
However, the measure still lacks several provisions we sought, including a cap on consumer interest rates on credit cards and mortgages, whistleblower protections and a requirement that companies receiving bailout money not use it to hire lobbyists.
We are concerned at the haste with which lawmakers are acting. There has been no time for committee hearings to vet the legislation so lawmakers could consider alternative methods for bailing out Wall Street.
Lawmakers have worked hard to forge an agreement, but their work has barely begun. They must closely monitor the Treasury Department in coming months to ensure that taxpayers – not just Wall Street moguls – are protected. And they must hold hearings and craft strong re-regulation and consumer protection measures to ensure that the U.S. does not endure another debacle such as this.