(CNSNews.com) – Following the defeat of the $700-billion bailout package on Monday, Rep. Jeb Hensarling (R-Texas), chairman of the Republican Study Committee (RSC), introduced a bill that he said relies on the free market rather than the federal government to solve the nation’s financial problems.
Instead of mandating that the U.S. Treasury purchase up to $700 billion in teetering mortgages and mortgage-backed securities, as the plan backed by the Bush administration and congressional leadership mandated, the RSC alternative would try to restore confidence in the mortgage market by insuring all such investments at 100 percent of their value.
Under the plan, mortgages that Treasury officials deemed to be risky would be insured at a higher premium than mortgages considered stable. The mortgages would be insured by the federal government, i.e., tax dollars. Thus, the plan is not pure free market but is more reasonable than an outright federal purchase of the mortgages with tax dollars, suggested Hensarling.
“In order to fundamentally deal with the crisis, some part of the full faith and credit of the government will have to be behind it [the solution],” Hensarling told CNSNews.com, and this would shore-up confidence in the mortgage and mortgage-backed securities markets. “But Wall Street ought to be paying for that, and we ought to be limiting taxpayer exposure.”
The plan also includes provisions important to Democrats that had been a part of the Bush plan, such as a provision that would severely limit the size of the “golden parachute” an executive, whose failing companies opted into the government’s insurance plan, could receive and ensuring that financial institutions participating in the program would have to disclose more about their mortgage-asset holdings.
Hensarling said at a press conference Monday that under ordinary circumstances conservatives would not consider granting the federal government such powers of intervention, but in these “extraordinary times” his caucus realizes that compromise is necessary.
“We come here ready to swallow hard, but we can’t swallow everything,” said Hensarling. “We do not feel that models such as loans secured by assets and the insurance model received the attention they were due. On a normal day, a conservative would run for the exits from either of those plans, but these are extraordinary times.”
However, the bill also includes provisions that appeal to free-market conservatives, including the gradual privatization of federal lending giants Fannie Mae and Freddie Mac; regulations barring Government Sponsored Enterprises (GSE’s) from engaging in risky investments; and temporary tax cuts and regulatory relief for businesses.
A press release from the RSC about the alternative plan states that it will allow Wall Street to work its way out of the financial crisis rather than cause it to depend upon the American workers’ tax dollars.
“We believe that we can help Wall Street work out of this crisis, not force the taxpayers into a bailout,” said the RSC. “We believe that voluntary private capital, not involuntary taxpayer capital, will help the system recover.”
“House conservatives believe that any model that essentially has taxpayers bailing out Wall Street is fundamentally flawed,” said Hensarling at the press conference.
Sources on Capitol Hill told CNSNews.com that at least five other conservatives in the House, including Reps. Bill Sali (R-Idaho), Paul Ryan (R-Wis.), Joe Barton (R-Texas), John Shadegg (R-Ariz.), and Marsha Blackburn (R-Tenn.) are also developing alternative plans to deal with the mortgage crisis.
Congress Needs An Ethics Bailout
By INVESTOR’S BUSINESS DAILY | Posted Wednesday, October 01, 2008 4:20 AM PT
Public Trust: As members of Congress grab $700 billion from taxpayers’ pockets for bad loans — encouraged for decades by the laws they passed — who will rescue them from ethical bankruptcy?
Read More: Economy
After the 2006 election giving Democrats a majority in both Houses of Congress for the first time in more than a decade, the incoming speaker of the House, Nancy Pelosi, promised that “the Democrats intend to lead the most honest, most open and most ethical Congress in history.”
It hasn’t turned out that way. Barely a month before presidential and congressional elections comes a cherry on top of the layers of congressional Democratic ethical lapses of the 110th Congress — a new scandal involving the speaker’s own campaign cash.
The Washington Times reports that over the past decade, the speaker funneled $99,000 in rent, utilities and accounting charges from her political action committee to Financial Leasing Services, a real estate and investment firm owned by her husband, Paul Pelosi — a practice the House voted to ban last year with Pelosi’s support (after which the bill failed in the Senate).
Since her husband became treasurer of the speaker’s PAC to the Future, the payments have quadrupled, according to Federal Election Commission records.
According to the Times, the PAC’s rent grew to four times what it was early this year; a Pelosi senior adviser told the paper this was due to San Francisco’s expensive real estate market.
Placing spouses on their campaign and PAC payrolls was one of the key attacks Democrats made against Republicans in the Jack Abramoff lobbying scandal, most notably during their successful 2006 campaign. The Pelosi revelations come four years after Team Majority, another Pelosi PAC, was fined $21,000 by the FEC for exceeding the legal limit on campaign contributions.
Pumping cash from your own campaign to your husband’s firm is a strange way of trying to turn the institution over which Pelosi presides into the “most ethical Congress in history.”
But then taking to the House floor last week in the face of a market meltdown and delivering a fallacious rant against “the Bush Administration’s failed economic policies . . . built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision, and no discipline in the system” was a strange way for a speaker of the House to try to gain passage of what was supposed to be a bipartisan financial rescue plan.
What both the speaker’s new scandal and her reflexive partisanship show is that this Democratic Congress is not concerned about ethics, nor is it interested in working together with either the president or the minority party in Congress to solve problems.
House Democrats chose as their leader Nancy Pelosi, whose San Francisco congressional district is one of the most radical in the country, for the sake of grabbing and keeping power in the most effective way possible, and wielding that power to enact left-wing ideology into law. And, if possible, destroy or cripple the Bush presidency while they’re at it.
The most ethical Congress in history?
With Chris Dodd, D-Conn., still serving as Senate Banking Committee chairman, who took a sweetheart loan deal from Countrywide mortgage? With Kent Conrad, D-N.D., still Senate Budget Committee chairman, who did the same?
How about Rep. William Jefferson, D-La., whose freezer in his Washington, D.C., home was found by the FBI to contain $90,000 in cash? He may be indicted by a grand jury on 16 corruption charges, but he still takes to the floor of the House of Representatives and votes as a member of this self-styled most ethical Congress ever.
Adding mirth to the muck, Jefferson was reportedly pressured, unsuccessfully, to resign his House Ways and Means Committee seat by none other than that panel’s chairman, Charles Rangel, D-N.Y. (Jefferson was later thrown off). Maybe that’s what Rangel was busy with when he forgot to report to the IRS the $75,000 in rental income for his Dominican Republic beach house. No sign of scandal shaming Rangel into stepping down.
Voters will have no shortage of things to think about as they step into the voting booth next month. One of them should be the Democratic Congress’ shattered promise of setting and keeping the highest ethical standards.