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Congressman Rob Bishop

Representing the 1st District of Utah

Bishop Votes No on Bailout Deal

September 29, 2008
Op-Ed and Speech

Rob Bishop Statement on Bailout Vote:

 

One thing Congress doesn't do well is learn from history, but we really need to.  And we don't even need to go back as far as the Great Depression – we can look at the Savings and Loan crisis in the 1980's.  That problem was solved without large amounts of taxpayer cash.  Today's problems, while not exactly the same, are similar.  The market has a capital problem which has caused a liquidity problem.  But I think there are ways to produce capital without tying it directly to the taxpayers.

 

William Isaac, a former Chair of the FDIC, suggested some ideas over the weekend, based on our last major financial challenge, that a lot of us conservative Republicans think are solid ideas.  If enacted, these proposals could help stabilize the banking industry and make economic downturns less severe and shorter in length.  The cost is minimal and the impact could be almost immediate.  He advocated that Congress should approve net worth certificates, modify fair value accounting standards, and put an end to naked short selling.  These sound like good first steps, particularly versus a taxpayer-backed bailout.  But for sure the solution needs to be more market-driven rather than based on taxpayer liability.

 

We are in a tough financial spot, and things could get worse fast, but Congress is acting too quickly based on what you've really got to admit is an artificial deadline. We should be focused on acting correctly rather than just quickly.

 

House Republican Leadership should be commended for making the bill a lot better than the original proposal.  But it just wasn't good enough, was too government driven, was too large an amount to authorize all at once, and put the taxpayers too much at risk.

 

We do need a solution, but there are better, more market-based options we need to look at.  I have co-sponsored one of those better options, and I am prepared to stay here as long as necessary to pass a workable, market-based plan that will help the economy and protect American taxpayers.

 

I don't believe this crisis has been caused by an unregulated market.  In fact, the free market probably hasn't been given enough of a chance to perform.  So many of today's financial problems seem to be tied in some way to Fannie Mae and Freddie Mac, which are huge Government Sponsored Enterprises.  They got too big too fast with too much government involvement in the housing market, particularly as Congress put mandates on them to force the flow of credit, even when it wasn't prudent or deserved.  It was government-backed social engineering with housing and credit, and it got the country's financial industry into trouble.

 

The first proposal that Bush and Paulson sent up was totally unacceptable.  The apparent ‘deal' with the Democrats shortly after that was even worse, with costly, extraneous and flat out bad provisions attached.  The Leadership compromise in the last 24 hours was considerably improved, thanks to Minority Leader Boehner and conservative House Republicans pushing for needed changes and protections for American taxpayers.  But there are still a couple of major problems.  First, the insurance portion to back this bad debt through insurance premiums paid for by Wall Street was a good start, but the final bill makes that program optional and not mandatory.  Second, the overall amount of $700 billion was not reduced, it's just spread out over a couple stages, and Congress would have to step in and proactively stop that amount from automatically going out.  We can and should have started with a smaller authorized amount, and then forced Congress to take another look at this down the road.

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