$700 Billion in Corporate Welfare

The Bush Administration has asked Congress to give it a check for $700 million dollars to bailout various financial institutions that are in crisis due to poor decision making and lack of regulatory oversight. The administration has tried to fast track this bill, but fortunately, it looks as though Congress isn't going to rush into a rash decision. Part of the original bill given to Congress even included a section that states: "Decisions by the Secretary [of the Treasury] pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." That is simply unacceptable. Based on the past track record of the Bush Administration, I have little faith in them handling this crisis properly.

Barack Obama gave a press conference to discuss the financial crisis that can be viewed here. Earlier in the week, Obama released a Statement of Principles for the Treasury Proposal. The statement includes the following stipulations for the proposal:

• No blank check. If we grant the Treasury broad authority to address the immediate crisis, we must insist on independent accountability and oversight. Given the breach of trust we have seen and the magnitude of the taxpayer money involved, there can be no blank check.

• Rescue requires mutual responsibility. As taxpayers are asked to take extraordinary steps to protect our financial system, it is only appropriate to expect those institutions that benefit to help protect American homeowners and the American economy. We cannot underwrite continued irresponsibility, where CEOs cash in and our regulators look the other way. We cannot abet and reward the unconscionable practices that triggered this crisis. We have to end them.

• Taxpayers should be protected. This should not be a handout to Wall Street. It should be structured in a way that maximizes the ability of taxpayers to recoup their investment. Going forward, we need to make sure that the institutions that benefit from financial insurance also bear the cost of that insurance.

• Help homeowners stay in their homes. This crisis started with homeowners and they bear the brunt of the nearly unprecedented collapse in housing prices. We cannot have a plan for Wall Street banks that does not help homeowners stay in their homes and help distressed communities.

• A global response. As I said on Friday, this is a global financial crisis and it requires a global solution. The United States must lead, but we must also insist that other nations, who have a huge stake in the outcome, join us in helping to secure the financial markets.

• Main Street, not just Wall Street. The American people need to know that we feel as great a sense of urgency about the emergency on Main Street as we do the emergency on Wall Street. That is why I call on Senator McCain, President Bush, Republicans and Democrats to join me in supporting an emergency economic plan for working families – a plan that would help folks cope with rising gas and food prices, save one million jobs through rebuilding our schools and roads, help states and cities avoid painful budget cuts and tax increases, help homeowners stay in their homes, and provide retooling assistance to help ensure that the fuel-efficient cars of the future are built in America.

• Build a regulatory structure for the 21st Century. While there is not time in a week to remake our regulatory structure to prevent abuses in the future, we should commit ourselves to the kind of reforms I have been advocating for several years. We need new rules of the road for the 21st Century economy, together with the means and willingness to enforce them.

Obama has not been reactionary in handling this crisis, but has been speaking about it for quite some time. He has attempted to pass legislation and spoken about it at various times on the campaign trail. You can read the transcripts of a speech he gave in March here. I find that his vision and ideas for helping to solve the financial crisis are strikingly different from John McCain. It is so hard to understand where John McCain stands these days, as his stance on issues is constantly changing. Don't forget that on September 15th, the day that the stock market suffered its greatest loss since the week after 9-11, he stated that the economy is fundamentally sound. Now, he finally says it is in a crisis. But if you review his history, you will understand a great deal more about McCain's economic past. McCain has been a supporter of deregulation that led to the Savings and Loan Scandal of the 80's, the Enron scandal, and now this one. Read this blog post, as it quickly summarizes McCain's past related to these scandals. I truly find it hard to believe anything that he is saying these days.

Now don't misinterpret me. We don't need heavy handed regulatory oversight, but we do at least need some. Many supporters of a free market society believe that the invisible hand of capitalism will cause the market to correct itself. Well, obviously that isn't the case, as the current "free market" Administration is now proposing a huge welfare check for Wall Street. Sensible regulations and oversight are needed to prevent crises such as this, which was a direct result of deregulation and greed.