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Murphy gives President's bailout plan a 'thumbs down'
Sep 25, 01:38 PM
By SCOTT WHIPPLE, Herald Staff
09/24/2008
U.S. Rep. Chris Murphy, D-5th District, said Wednesday any economic rescue package he votes for must have strict protections for the taxpayer including strong restrictions on pay of CEOs who participate in the program.
“There needs to be a strong, bi-partisan oversight board that directs and regulates this program,” he said.
Fresh from a financial services committee hearing with Treasury Secretary Henry Paulson and Chairman of the Federal Reserve Ben Bernanke, Murphy spoke to reporters by telephone from Washington. He reviewed the economic recovery plan currently before Congress and gave it a thumbs down.
While negotiations continue, the Congressman stressed provisions he believes must be in the recovery plan: taxpayer protections, a return on future profits of rescued companies for the taxpayer and limits on executive compensation for leaders of companies who benefit from this plan.
Murphy said Paulson and Bernanke’s economic rescue package was met with skepticism by House members.
“Both [men] have done a pretty terrible job of explaining the rationale for their bill and the parameters surrounding it,” Murphy said. “No doubt Republicans and Democrats need to come together, but the lack of willingness by the President and the [Treasury] Secretary to put into the bill real taxpayer protection is troubling to many of us.”
About accountability, Murphy said, “We need to put real regulations on people originating mortgages in a way that we haven’t done. The subprime mortgage market was the Wild Wild West of Wall Street. We need to put basic underwriting criteria through regulation that applies to prime and subprime mortgages. For example, we need a
requirement for all lenders making loans that the borrower has a reasonable ability to repay the loan.”
Murphy added that “we also need to do a much better job of flagging the subprime exposure of secondary investors. Legislation moving through the House would define prime and subprime loans so investors can better judge how much exposure they’ll have.”
After meeting earlier in the day with Speaker of the House, Nancy Pelosi, Murphy said taxpayers should have a share in companies who sell off bad assets to the U.S. government and go on to make big profits.
“The Treasury proposal had absolutely no provision like this,” he said. “We hope the [Treasury] Secretary will continue to work with the Congress to come up with an acceptable proposal.”
Murphy also commented on an announcement Wednesday from Republican Presidential candidate John McCain that he would be willing to suspend his campaign to work on the bailout problem.
“We need to take the politics out of this issue,” Murphy said. “The less finger pointing among Presidential candidates the better. I’d rather see them work together to protect taxpayers.”
State Sen. David Cappiello, Murphy’s Republican opponent in the Fifth District, said he applauded McCain’s decision to suspend his campaign until Congress passes a solution to the financial crisis.
“America is facing an economic catastrophe should the federal government fail to act quickly,” Cappiello said. “However, I am not convinced those in Washington are taking this threat seriously enough. No option proposed by any party should be left off the table in light of the potential for taxpayers to be saddled with billions in bad debt.”
Cappiello agreed with Murphy that “taxpayers must be assured that not one dime of their money will go to failed CEO’s or executives in the process of this market rescue. Any solution passed by Congress must be a clean piece of legislation and not used as an opportunity to further any objective other than the stabilization of our financial markets.”
