Wall Street Bailout

Floor Speech

WALL STREET BAILOUT -- (House of Representatives - September 22, 2008)

The SPEAKER pro tempore. The Chair recognizes the gentleman from California (Mr. Sherman) for 5 minutes.

(Mr. SHERMAN asked and was given permission to revise and extend his remarks.)

Mr. SHERMAN. Let me join the bipartisan chorus of skeptical voices about this $700 billion bailout.

We live in an era of great concentration of power in the Executive Branch and great concentration of wealth on Wall Street. Today, we are asked to approve the greatest power grab any executive has ever asked for and the greatest transfer of wealth Wall Street could imagine. $700 billion is supposed to be given to the administration, and they will give it to Wall Street.

They are going to buy the worst of the worst assets in the back of any investment bank's closet. They can decide what to pay. They can buy from this one and not that one. They can have as much politics and as much cronyism as they are able to conceal, and there will be no oversight So, they can conceal a lot. No standards, no accountability. They can pay any price to any person for any toxic asset, and they can refuse to pay any price to any person for any toxic asset.

This $700 billion is on top of the Fannie and Freddie Mac bailouts, which were not bailouts so much of those entities. Those entities are really now part of the government. They were bailouts of the Wall Street investors in the bonds that had been guaranteed by Freddie and Fannie.

So we have already transferred hundreds of billions of dollars to Wall Street; we are now told to do $700 billion. And be sure, if we do the $700 billion now, they will be back for a few hundred billion in a while and a few hundred billion beyond that.

The truth is we don't know. The truth is they don't know. If we pass this bill, Wall Street could be sagging in a few weeks anyway. If we don't pass this bill, Wall Street could rebound by the end of the year. No one can make your 401(K) safe. No one can tell you whether your 401(K) will be safe regardless of whether we pass this bill or not. The only thing that is certain is that if we pass this bill, Wall Street executives will be happy.

This bill allows whatever money we give to a Wall Street firm, they can invest it overseas the next day. And if a foreign entity has invested in these bonds, these toxic assets, they don't get bailed out by their own government; they can sell those bonds to a U.S. entity on Monday, and the taxpayer can be stuck with these toxic assets by Tuesday.

We are told we are going to get regulatory and corporate governance reform next year; but this bill does not include a fast track provision to assure that serious proposals are considered, particularly when they are subject to filibuster in the Senate. Why no fast track for every kind of regulatory and corporate governance reform?

The administration was gagged kicking and screaming into providing $3 billion of help to home owners who face troubled loans. They want over $1 trillion for Wall Street. That shows you the ratio of their compassion.

There is nothing in this proposal from the administration to limit executive compensation. So when we pay $1 billion to a Wall Street firm, the next day they can use that money to hand out huge and enormous bonuses to their executives. I would propose that we have a 50 percent surtax on the executive compensation paid to the executive of any bailed out entity, starting with Bear Stearns and Fannie and Freddie and AIG, and continuing through those who benefit from this bill.

We clearly need a stimulus, at least a well-crafted stimulus program.

And, finally, why should the Department of the Treasury have total carte blanche? We should require that every major contract entered into under this bill and every purchase of toxic assets be approved in advance by the GAO; otherwise, this is just a license to the Treasury to hand out money in return for trash, cash for trash, and they get to decide how to do it.

If you are skeptical about this bill, please meet with me and others at 2:30 today in Room 2220, that is 2220 at 2:30, and let's discuss how we can make a bill that reflects American values and not Wall Street values.

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