Statement Of Senator Patrick Leahy

In Support Of The Financial Bailout Package

October 1, 2008  

 

This financial crisis is rooted in material actions involving executive greed and ineptitude, flawed economic policies, and the incompetence of on-the-scene regulatory agencies.  And we are dealing with this crisis at the unfortunate intersection of two toxic trends: the loss of confidence in our financial system, and the public’s loss of confidence in the Bush Administration.  Many have come to agree with those of us who have long felt that ‘trust me’ is not enough when this White House asks for sweeping new powers. 

 

As this crisis spreads, threatening to harm our families, businesses and communities, the clock has been running out on the federal government’s opportunity to try to staunch the damage.  I opposed the original Bush plan, which was fatally flawed on several counts.  Since then I have worked in good faith to fix its shortcomings, and by now several constructive changes have been made.  After many fits and starts and long negotiations that have run through many nights, the clock is close to running out.  As the Senate has prepared to vote on this revised plan, I have weighed its flaws and its improvements against the need for action to avert a wider credit crisis and the harm that would bring to Vermont and the nation.

 

I had long talks on the day of the vote with Chairman Dodd and Senator Obama and others to understand their reasons for supporting this plan.  I have come to agree with them that, while it is far from perfect, it is better than the alternatives at this crucial point.  The spreading national emergency tips the balance in favor of this revised plan.

 

Vermonters are divided on this, and I know that many will disagree with my decision.  I respect their views and appreciate the many suggestions they have made to improve this plan or to try other approaches.  Many improvements have been made.  With credit conditions for businesses, public institutions, states, localities, and average Americans deteriorating every day, I believe that acting now to help put our economy on an even keel has become even more of an urgent priority. 

 

The bill that the Senate voted on tonight has changed significantly since President Bush first proposed a $700 billion blank check last week.  It provides greater checks and balances on the government’s authority.  Any actions taken by the Treasury Secretary should be approved by an oversight board, supervised by an Inspector General, reviewed under the Administrative Procedures Act, and examined by the courts if there is a question of fraud or abuse.  I fought and won in adding the check-and-balance of judicial review.

 

This revised plan increases the government’s insurance of consumers' and businesses bank deposits from $100,000 to $250,000.  This would safeguard the savings deposits of families and businesses and farmers in Vermont and protect the checking accounts of businesses that continually need to buy materials, sell their products and make their payrolls.  

 

This plan now also tightens the restrictions on executive pay and banning golden parachutes for firms participating in the program.  Under current law, there are no restrictions on the amount of executive compensation that Wall Street CEOs can be paid.  With these people having their hand out for a federal bailout, we should limit executive pay and prohibit greedy executives from walking away from the mess they created with millions while regular American investors lose their savings and retirement funds. 

 

My decision to support this remedy did not come lightly or easily.  The worsening crisis has made the choice increasingly clear -- and the stakes of doing nothing, significantly higher.

 

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