TOLEDO, OH - U.S. Representative Marcy Kaptur voted against the Wall Street bailout bill, which was defeated on the floor of the U.S. House of Representatives.
Kaptur 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."
"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."