TAKES TO HOUSE FLOOR TO ADVOCATE FOR PROTECTING TAXPAYERS’ INTERESTS

Washington, Sep 22, 2008 - “Once again, hard-working American taxpayers are being volunteered to fund another bailout,” said Rep. Cliff Stearns (R-Sixth). “Bailout after bailout is not a strategy, and it’s certainly not a sustainable cure to our financial ills. These bailouts are an assault on American capitalism, and have introduced a large degree of financial hazard into our economic system.”

Stearns took to the House floor today to denounce the Treasury Department’s proposal for a $700-billion taxpayer bailout of private-sector financial institutions. Added Stearns, “This plan would put taxpayers at a risk for losses that belong to those companies that recklessly sought profits – profits for the stockholders and executives through dividends, salaries, bonuses and presumed stock appreciation. Instead, taxpayers who assume this risk should also enjoy an equity premium that goes beyond the return of their funds with interest for this bailout.”

Stearns proposed giving taxpayers some equity in those financial institutions benefiting from the bailout. Explained Stearns, “The taxpayers, after being awarded interest from their funds, as if they had invested in bonds, should have warrants (a security giving the holder the right to purchase securities from the issuer at a specific price) as an equity kicker to enhance their deal giving them premium financial rewards for their risk. Any institutional lender would demand as much and more. In this way, the taxpayer could share in the upside success of the company they rescued and that success eventually could be used to pay back the American taxpayers.”