Coleman, Franken offer ideas on bailout plan

  • Article by: KEVIN DUCHSCHERE , Star Tribune
  • Updated: September 23, 2008 - 10:06 PM

They agreed that executives should not benefit from the economic crisis but disagreed on whether a foreclosure moratorium would help or hinder the market.

U.S. Senate candidate Al Franken took issue Tuesday with a recent statement by Sen. Norm Coleman that the federal government could see a significant return on the massive bailout proposed to right the nation's listing economy.

"It shows how out of touch he is," said Franken, a Democrat who is challenging the Republican incumbent. "Nobody thinks anything like that would be possible."

Coleman responded that while the federal government has sometimes made money off past bailouts, he's not looking at the plan as "a profit center" and that his bottom line is ensuring that any bailout will protect taxpayers.

The Mankato Free Press reported that Coleman, while campaigning Saturday in North Mankato, said "the government could make 10 or 20 times what it pays on this, possibly."

On Tuesday, Coleman said he was speaking in the context of government bailouts such as one for Chrysler in 1979 and last week's takeover of insurer AIG.

"If you buy assets at close to fire-sale prices and the market stabilizes, you'll see an improvement in assets," he said. Any return should be used to pay down the federal debt, he said.

The candidates offered their ideas Tuesday on the $700 billion bailout that Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are proposing to head off a deepening financial crisis.

Franken offered six conditions without which, he said, he would reject a bailout: congressional oversight, ownership stakes for taxpayers in companies seeking relief, no golden parachutes for executives, restoring regulations, a moratorium on home foreclosures and creation of a financial product safety commission.

"If we're going to risk $2,000 for every Minnesota taxpayer, these executives are going to have to learn about sacrifice, too," Franken said.

Coleman agreed that executives shouldn't benefit and that taxpayers should have equity in distressed firms. But he strongly opposed a foreclosure moratorium and allowing bankruptcy judges to adjust mortgages. That would result in higher interest rates and reduced credit for home buyers, he said.

Independence Party candidate Dean Barkley, who practiced real estate law and once owned a mortgage brokerage firm, said that he would hold his nose and reluctantly vote for the bailout. "I just hope it doesn't become a Christmas tree," he said.

The bailout package should mandate congressional oversight and bar benefits for executives, he said. A foreclosure moratorium, on the other hand, would chill the mortgage market and is a bad idea, he said.

"I would urge banks to work with [borrowers], but I don't think we should allow [judges] to go in and unilaterally alter contracts," Barkley said.

He also criticized Coleman's statement about the possibility of making money on the bailout. "That's ridiculous. These are bad mortgages we're bailing out. The best that we can get out of this is a 10 or 20 percent loss," he said.

Kevin Duchschere • 612-673-4455

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