by Congressman Frank Lucas
A Bailout on the Bailout
This October, Congress passed a $700 billion Bailout Bill, aimed at stabilizing our rocky financial and housing markets who have been hit hardest by the recent troubles. Specifically, the bill laid out a plan to establish a company that would purchase mortgages that were considered “toxic.” The goal was to unclog the market of these mortgages, which would hopefully return liquidity to the markets and restore confidence in our economy. Although this was a tough decision for me, I voted against the Bailout Bill both times it came before the House of Representatives.
Since the bill’s enactment, however, the Treasury Department has not purchased a single one of these “toxic” mortgages and Secretary Paulson announced last month that they never would. Instead, the Treasury Department used $250 billion to purchase preferred stock in the nation’s nine largest banks, which preside mainly on the east and west coast, and $40 billion to bailout out insurance giant AIG. Recently, the three American auto giants, GM, Chrysler, and Ford, visited Washington D.C. (in their private jets, I might add) to ask for another $25 billion to bail them out. If Congress grants their request, that will leave less than one tenth of the initial installment of $350 billion.
While I respect the opinion and knowledge of Secretary Paulson on this matter, I am troubled by these recent events. Congress approved the use of a huge sum of taxpayer money for specific purposes, namely purchasing these “toxic” mortgages, yet the fine print of the Bailout Bill gave the Treasury department huge discretionary powers on how to spend it. And they have used it. Now the America people, joined by Congress, are forced to sit back and wait to see how the Treasury plans to spend the remainder of their money. And we are all left asking the question: Will any of this actually work, and if so, when?
My no vote, I believe, was the correct vote, and it seems these recent events support my choice. One of my biggest problems with this bailout bill was the lack of specifics in it. No where in the bill did it determine who would decide which mortgages would be purchased and at what price. And more importantly, no where did it exactly limit what the Department of Treasury could and could not do with the taxpayers’ money. I feared that this hastily crafted bill placed too much power into a few people’s hands, limiting oversight and maximizing the risk with American taxpayers’ money. My concerns have now become reality.
As Congress plans to reconvene next week for one last Lame Duck session to potentially put together an automaker bailout, I hope that they reflect on these recent events before hastily crafting yet another large piece of legislation that put huge sums of American taxpayer’s money in jeopardy. I look forward to continuing to work with my colleagues to correct the recent economic woes, and hope they focus on initiatives that encourage economic growth through lowering the tax burden on American families and small businesses.