The plan proposed by the Treasury Department is dangerous and ill-conceived and should not be adopted in its current form. Our nation is facing a real financial crisis that calls for action that is thoughtful and swift – but not hasty. The actions we take at this perilous time must set the stage for a real recovery that benefits Main Street as well as Wall Street. The last thing we should do is compound the enormous imbalances in our economy with an enormously imbalanced rescue package – one that continues to put working families dead last.
Congress should start over and do it right. Any bailout plan must be governed by an independent board with transparency and effective public and Congressional oversight. There must be strong safeguards that any taxpayer money is spent in the public interest, and that a needed bailout does not become a raid on the Treasury by financial elites.
Participating institutions must give the government equity—a stake in the good assets in exchange for the benefits of the bailout; Use the full array of financial and legal tools available to the government to stop foreclosures and restructure home mortgage loans for working families.
It must address the cause of the crisis on Main Street in addition to the symptoms on Wall Street. Congress should pass a second stimulus package in its entirety. We need a stimulus that extends unemployment benefits, provides needed aid to cities and states, and creates good jobs by rebuilding crumbling schools, roads, bridges and water systems and works to address the disastrous weaknesses in our financial regulatory system and corporate governance system that allowed this disaster to happen.
The Treasury Department proposal fails all these tests. It proposes a grant of unlimited authority to the Bush Administration to spend $700 billion of the public’s money to prop up whomever they wish on Wall Street, without any rules or independent oversight. It does nothing for families facing foreclosure or for working people hit hard by the economy, and it does nothing to hold those who caused this crisis accountable.
Congress should use as a starting point the bill proposed Tuesday by Senate Banking Committee Chair Christopher Dodd, together with the Congressional leadership’s stimulus package.
The stakes at this time are enormous. If this plan ends up squandering hundreds of billions of dollars of the public’s money, the damage will not be limited to the financial system. As a nation, we must address the health care crisis, the infrastructure crisis, the energy and environmental crisis and the jobs crisis.
Our future and our children’s future depend on focusing our nation on these challenges in the real economy.
John J. Sweeney is president of the AFL-CIO where he helps lead the federation of America’s unions representing 10.5 million workers.