Posted on 10/01/2008 4:37:37 AM PDT by Mr. Mojo
(CNSNews.com) - Following the defeat of the $700-billion bailout package on Monday, Rep. Jeb Hensarling (R-Texas), chairman of the Republican Study Committee (RSC), introduced a bill that he said relies on the free market rather than the federal government to solve the nation’s financial problems.
Instead of mandating that the U.S. Treasury purchase up to $700 billion in teetering mortgages and mortgage-backed securities, as the plan backed by the Bush administration and congressional leadership mandated, the RSC alternative would try to restore confidence in the mortgage market by insuring all such investments at 100 percent of their value.
Under the plan, mortgages that Treasury officials deemed to be risky would be insured at a higher premium than mortgages considered stable. The mortgages would be insured by the federal government, i.e., tax dollars. Thus, the plan is not pure free market but is more reasonable than an outright federal purchase of the mortgages with tax dollars, suggested Hensarling.
“In order to fundamentally deal with the crisis, some part of the full faith and credit of the government will have to be behind it [the solution],” Hensarling told CNSNews.com, and this would shore-up confidence in the mortgage and mortgage-backed securities markets. “But Wall Street ought to be paying for that, and we ought to be limiting taxpayer exposure.”
The plan also includes provisions important to Democrats that had been a part of the Bush plan, such as a provision that would severely limit the size of the “golden parachute” an executive, whose failing companies opted into the government’s insurance plan, could receive and ensuring that financial institutions participating in the program would have to disclose more about their mortgage-asset holdings.
Hensarling said at a press conference Monday that under ordinary circumstances conservatives would not consider granting the federal government such powers of intervention, but in these “extraordinary times” his caucus realizes that compromise is necessary.
“We come here ready to swallow hard, but we can’t swallow everything,” said Hensarling. “We do not feel that models such as loans secured by assets and the insurance model received the attention they were due. On a normal day, a conservative would run for the exits from either of those plans, but these are extraordinary times.”
However, the bill also includes provisions that appeal to free-market conservatives, including the gradual privatization of federal lending giants Fannie Mae and Freddie Mac; regulations barring Government Sponsored Enterprises (GSE’s) from engaging in risky investments; and temporary tax cuts and regulatory relief for businesses.
A press release from the RSC about the alternative plan states that it will allow Wall Street to work its way out of the financial crisis rather than cause it to depend upon the American workers’ tax dollars.
“We believe that we can help Wall Street work out of this crisis, not force the taxpayers into a bailout,” said the RSC. “We believe that voluntary private capital, not involuntary taxpayer capital, will help the system recover.”
“House conservatives believe that any model that essentially has taxpayers bailing out Wall Street is fundamentally flawed,” said Hensarling at the press conference.
Sources on Capitol Hill told CNSNews.com that at least five other conservatives in the House, including Reps. Bill Sali (R-Idaho), Paul Ryan (R-Wis.), Joe Barton (R-Texas), John Shadegg (R-Ariz.), and Marsha Blackburn (R-Tenn.) are also developing alternative plans to deal with the mortgage crisis.
House conservatives?
I thought they had all either died or retired or were voted out.
Anything that utilizes market forces and includes much-needed reforms is superior to the bailout proposal.
LOL !
House Conservatives....as elusive and rare as leprechaun’s !
Mark to Market is only cure for fiscal woes versus the methods suggested by pandering polidiot’s and presstitute hoes !
...just my opinion of course !
I think I like it. I want to know more. What is H.B number?
The dems will not sign on to this plan and will let it drag out right up to the election to cause as much political harm as possible to McCain.
Oh, boy. 5 MORE plans?
Sheesh.
bttt
If the taxpayers have to take the risk of insuring these loans, there’s really no difference b/w this plan and the Paulsen plan.
This is a bad idea too.
“like the idea that these mortgages and instruments will be insured at their REAL value.”
The idea that anything has a fixed and constant value is one of the most destructive myths in the marketplace of ideas.
It sounds as though these House conservatives have several good, free-market ideas. Why didn’t Pres. Bush ask for their input before launching Paulson’s spectacular Socialist balloon that was shot down so ignominiously by the House? Could it be because Pres. Bush has never considered conservative economic principles to be important?
What exactly is the Senate suppose to vote on tonight at 9PM?...is it the same bill from Monday, but dressed up in slightly different language?
Also....Can the Senate pass a bill the House rejected/voted NO?
Thanks!....they seem to keep changing the rules/& I'm fed up with their lies.
From an economics standpoint, it sounds reasonable - though a huge longshot to be seriously considered and passed.
However, from a political standpoint, it behooves the Republicans in congress to get behind ONE PLAN that is not the socialistic bailout the Dems have, and will continue, to propose.
Let the Dems pass their bill without any Republican help - a bill that is HUGELY unpopular with the electorate, and we can make this election a squeaker. I think that when the American electorate CLEARLY AND UNAMBIGUOUSLY sees one party voting for socialism and the other for free market solutions, the free market will win every time.
I thought that's what's been happening all week.
No. This is still a misuse and abuse of our tax dollars and exceeds the limits of Congressional intrusion into free markets and private industry as established by the Constitution.
These folks are still putting a prom dress on a pig and calling it the Prom Queen!!
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