When top financial regulators come today to sell Congress on one of the largest bailouts in U.S. history, they're likely to hear multiple versions of the phrase “no blank checks for Wall Street.”
Congress won't write a $700billion check with “no strings attached and wish (the Department of) Treasury the best,” said Rep. John Spratt, D-S.C., chairman of the House Budget Committee. “Time is of the essence, but we have to be deliberative.”
As the Bush administration pushes its plan to prevent large-scale financial meltdown, Carolinians in Congress are trying to balance calls to rescue the economy and the risk of political slaughter on the campaign trail.
At home over the weekend, Congress heard from voters who are concerned about financial security, but don't want to foot the bill for years of bad decisions on Wall Street.
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Sen. Jim DeMint, R-S.C., said he won't back the government buying up bankers' worst debts to keep them solvent, a plan to be pitched in the Senate Banking Committee today by Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke.
“This plan does nothing to address the misguided government policies that created this mess and it could make matters worse by socializing an entire sector of the U.S. economy,” DeMint said. “Most Americans are paying their bills on time and investing responsibly and should not be forced to pay for the reckless actions of some on Wall Street, especially when no one can guarantee this will solve our current problems."
Sen. Elizabeth Dole, R-N.C., of the Banking Committee, said she'll press Paulson and Bernanke for answers and a slower timetable.
“This definitely shouldn't be rushed through and crammed down people's throats,” said Dole, who backs delaying adjournment this week to spend more time on the proposal.
Rep. Patrick McHenry, R-N.C., said last week that “what we don't need is government overreaction that can further harm the financial markets.” On Monday, an aide said McHenry will await a hearing of the House Financial Services Committee this week to ask questions for taxpayers, who would be the “underwriter of this dramatic proposal.”
Rep. Mel Watt, D-N.C., said he sees the need to “do something dramatic,” but wants more protection for consumers.
“The proposal adequately protects the interest of lenders and the economy, but I am not sure I think it goes far enough to protect the interest of borrowers,” said Watt, a Charlotte Democrat on the House Financial Services Committee, which will hear from Bernanke and Paulson on Wednesday.
Watt said he would support a cap on executive compensation for Wall Street executives whose firms are being rescued – a provision pushed by House Speaker Nancy Pelosi, D-Calif.
So does Sen. Lindsey Graham, R.-S.C., who along with Watt, Spratt and others is pushing for an independent oversight board that would monitor the bailout.
The last thing we need is an executive of a failed firm walking away with millions,” said Graham.
Spratt said there are also practical considerations.
“What we're working on is figuring out how to record this unprecedented flow of funds,” he said. The outline for the bailout plan he got this weekend didn't spell out the details. It was only two and a half pages long.