Stupak: Bailout abandons Northern Michigan values

By U.S. Congressman Bart Stupak (D-Menominee)*

WASHINGTON, D. C. -- In mid-September, Treasury Secretary Henry Paulson insisted there would be no bailout for American International Group (AIG), which was heavily invested in the subprime mortgage market. Thirty six hours late, the Federal Reserve provided $85 billion to save AIG in the largest government bailout of a private corporation in U.S. history. Just days earlier, the failure of Lehman Brothers became the largest bankruptcy in U.S. history, sending global markets into turmoil.

By the end of that same week, the Treasury Secretary came to Congress with a $700 billion bailout proposal for Wall Street, insisting it be implemented immediately to avoid a severe financial crisis.

It was against this backdrop that Secretary Paulson and Federal Reserve Chairman Ben Bernanke requested unprecedented authority and power, asking elected officials to hand over the keys to the U.S. Treasury. As greed ran amuck, there was now panic on Wall Street.

It came as quite a shock that the same men who have for the past year continued to insist our economy is sound were now asking Congress for government intervention unprecedented since the Great Depression. I did not trust their gloom and doom forecast and wanted time to review the proposal.

Over the past 10 days, Democrats and Republicans have worked with the Bush Administration to craft H.R. 3997, the Emergency Economic Stabilization Act of 2008. During this time, I have heard from thousands of my constituents across northern Michigan. My staff and I have reached out to banks, credit unions, small businesses and economists. Most sense the urgency of addressing the financial crisis, but had many more questions than answers.

While the debate raged over what Congress should do, a consensus on four main principles emerged: there must be transparency on the purchase of troubled assets; no golden parachutes should be provided for executives; Congress must provide oversight; and the taxpayers must be protected. H.R. 3997 falls short in all of these areas.

Although $700 billion is the number being attached to this bailout, even the Treasury Secretary acknowledges it was arbitrarily chosen to calm the financial markets. No one can tell us the total cost of the bailout or even if the infusion of $700 billion will solve the problem.

My review of H.R. 3997 shows the limitations on Wall Street executive pay only apply if a financial entity receives $300 million in government help. The bailout raises the national debt to $11.3 trillion and leaves taxpayers no way to recoup the interest we will have to pay on the $700 billion bailout. Perhaps most importantly, no one can tell us where or how the United States will come up with $700 billion.

I am concerned $700 billion is just the beginning and additional billions of dollars will almost certainly be necessary. The bailout is likely to go on for years, and over that time I fully expect corruption and criminal activity will be found on Wall Street.

I cannot ask American families -- who work hard, play by the rules and struggle to meet their own financial obligations -- to bailout Wall Street executives for their reckless, lavish lifestyles.

For that reason, I voted “no” on H.R. 3997. This bailout does not represent our northern Michigan values, but instead rewards excessive financial shenanigans without any accountability.

The $700 billion bailout failed in the U.S. House of Representatives by a vote of 205-228 on September 29. I expect to be called back to Washington in the coming days to consider an alternative package. I will examine that alternative proposal closely to see that it addresses the concerns I have raised. Congress will do what is necessary to stabilize our economy and restore confidence in the financial markets, but will ensure that protecting the taxpayers is priority number one.

* U.S. Congressman Bart Stupak (D-Menominee) represents Michigan’s 1st Congressional District in the United States House of Representatives. Visit his Web site for more information about his work for this large district, which includes all of the Upper Peninsula and much of Northern Michigan below the Mackinac Bridge as well. This column was written on Sept. 29, 2008.