Paulson resists more household aid
WASHINGTON – Treasury Secretary Henry Paulson is resisting a Democratic push to add additional help for households to the $700 billion bailout bill.
Paulson said Sunday that because financial markets remain under severe stress there is an urgent need for Congress to act quickly without adding other measures that could slow down passage.
“We need this to be clean and to be quick,” Paulson said in an interview on ABC’s “This Week.”
Paulson resisted suggestions being made by Democrats that the program be changed to include further relief for homeowners facing mortgage foreclosures and to include an additional $50 billion stimulus effort. Some Democrats have also suggested capping compensation of executives at firms who get the bailout help.
Paulson said he was concerned that debate over adding all of those proposals would slow the economy down, delaying the rescue effort that is so urgently needed to get financial markets moving again.
“The biggest help we can give the American people right now is to stabilize the financial system,” Paulson said.
However, Sen. Charles Schumer, D-N.Y., said that he believed there would be changes to the three-page Paulson plan and that agreement could be reached quickly.
Schumer said that he was pushing to get a provision where the government would receive stock warrants in return for the bailout relief and for creation of a government oversight board to supervise the huge operation, which under Paulson’s plan would be run out of the Treasury Department. He said Paulson seemed receptive to changes when he had discussed his ideas with him.
“I have told him . . . we need changes related to housing, we need to put the taxpayer first ahead of bondholders, shareholders,” Schumer said on “Fox News Sunday.”
Paulson said in the interviews that he had been talking to other governments about the need for them to offer similar relief because the current financial crisis is global.
“The credit markets are still very fragile right now and frozen,” Paulson said in an interview on NBC’s Meet the Press. “We need to deal with this and deal with it quickly.”
Paulson said that the nation’s outdated regulatory system for financial markets must be overhauled but the first job is to get the most sweeping rescue package since the Great Depression passed by Congress in coming days.
Paulson made the rounds of the television talk shows on Sunday to stress the need for speed in getting the bailout package approved. The administration was negotiating the details of the proposal with members of Congress with the expectation that it can be passed in the next week.
Paulson said that “it pains me tremendously to have the American taxpayer put in this position but it is better than the alternative.”
Both Paulson and President Bush have argued that the alternative would be credit markets that remain frozen, meaning that businesses will fail because they can’t get the loans they need to operate and the economy will grind to a halt because consumers won’t be able to get loans to make the purchases that keep the economy moving forward.
On Saturday, Bush said the White House is ready to work with Congress to quickly enact legislation to allow the government to purchase hundreds of billions of dollars worth of bad debt linked to the collapse of the housing market.
Congressional aides and administration officials were working through the weekend to fill in the details of the proposal.
The Bush proposal that would dole out huge sums of money to Wall Street firms and bankers is a mere three pages in length and is vague in terms of determining which institutions would qualify or say what – if anything – taxpayers would get in return.
“It’s a rather brief bill with a lot of money,” said Sen. Chris Dodd, D-Conn., the Banking Committee chairman. “We understand the importance of the anticipation in the markets, but we also know that what we’re doing is going to have consequences for decades to come. There’s not a second act to this – we’ve got to get this right.”
Democrats, who say they will work with the administration to pass a plan, are demanding it include relief for homeowners struggling with mounting debt, not just for Wall Street.
The proposal would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue.