Rescue package must reflect the interests of homeowners, not just those of the tycoons.
Wall Street firms that survived the Great Depression have now gone under. Minnesota home-repossession rates are at a record high, up 171 percent from July 2007 to July 2008. The economic crisis we are facing is real. President Bush's response: Wall Street gets a $700 billion rescue; Minnesota taxpayers foot the bill and perhaps a foreclosure note to boot.
The president told the nation that the crisis is due to "the irresponsible actions of some jeopardizing the financial security of all." There are even lies circulating that blame minorities for the crisis through the Community Reinvestment Act. This is factually wrong -- and repugnantly bigoted. In fact, the root cause of the failures today is the ideological rigidity of the Bush administration, and its conservative friends in Congress and on Wall Street who oppose regulation, oversight and corporate accountability. For eight long years their mantra has been "regulation and oversight is bad" and "the free market is good."
But now, when their policies have failed and the chickens have come home to roost, taxpayers are asked to help them out. We have little choice. We cannot let Wall Street fail, because if we do, Main Street fails as well. Credit markets are already frozen. If this plan fails, banks restrict lending, unemployment soars, credit cards will become useless and cash will become the king of the economy. We are on the precipice of economic disaster rivaling the Great Depression.
How we respond is critically important. Serious action is needed -- not just for Wall Street, but for homeowners, too. I support government intervention to rescue our economy, not to bail out Wall Street.
If we are to rebuild our economy, let us do so with deliberation, insisting on the taxpayers' terms. The package should ensure that homeowners are protected. We will not stabilize markets if millions of homeowners continue to lose their homes. We should include a "cram-down" provision permitting bankruptcy judges to restructure mortgages for primary residences, thus allowing millions of working families to remain in their homes.
Corporate executives should be held accountable. Lavish compensation packages to the very individuals who failed their companies should be history.
Most important, there should be both judicial and congressional oversight and accountability. Eight years of irresponsible and unregulated free-market lending run amok got us into this fix.
The collapse of Wall Street represents the failure of conservative economics. The idea that government is the problem, as Ronald Reagan said, should be forever dispensed with. Government cannot be both the problem and the solution when convenient.
Keith Ellison, D-Minn., serves on the Financial Services Committee in the U.S. House of Representatives.
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