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Ellison: How Congress Should Respond to the Bailout | Print |
The events of the last several weeks are dizzying in scope. Lehman Brothers, a firm founded in the 1850s, survived the Great Depression, but it could not survive the current financial crisis. Similarly, Merrill Lynch, nearly 100 years old, was a casualty of the latest crisis as well. The root cause of the failures we face today stems from the ideological commitment to oppose public input through regulation, oversight, and corporate accountability. Now, the bankruptcy of the trickle-down philosophy has fully manifested, and Americans are being asked to make historic sacrifices.

The pressure from the Bush administration to rush and pass a so-called "clean" $700 billion bailout is disconcerting because I believe their mantra of deregulation and lax oversight is a major factor contributing to the crisis we currently face. Thankfully, our nation's founders intended that Congress be a deliberative body. I expect that we will debate this matter and not just hand the Treasury Secretary a $700 billion blank check to dole out however he wishes.

I don't think anyone wants taxpayers to singularly bail out these companies, but it looks like it's inevitable that we will do so in order to keep our economy from completely collapsing. There are three crucial issues that should be addressed.

We need to ensure homeowners are protected first and foremost. We will not stabilize the markets if millions of homeowners continue to lose their homes to foreclosure. I believe we should include language to allow the restructuring of mortgages, specifically by passing a "cram-down" provision which would allow bankruptcy judges to restructure mortgages on a primary residence. This will go a long way to ensure that millions of working Americans can remain in their homes.

Second, we shouldn't allow companies that receive a taxpayer-funded bailout to lavish extravagant compensation on executives who failed them in the first place. I strongly agree with Chairman Barney Frank who said that we must place reasonable limits on executive compensation as part of this bailout proposal.

Finally, there needs to be oversight and accountability to how this money is used. In its proposed form, the Treasury Secretary's decisions are specifically "non-reviewable" by the courts, Congress, or the Government Accountability Office. I believe there must be oversight of this program, including judicial review, as well as regular oversight authority granted to the committees of jurisdiction here in Congress.

These changes would make this unpleasant duty more acceptable and accountable to the taxpayers who could ultimately shoulder the costs of this bailout.