Congress Eyes Oversight In Wall Street Cleanup

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Congress takes up the massive bill to bail out the nation's financial institutions this week, where the theme might be "anything but clean." So far lawmakers are focusing their concerns on oversight, helping homeowners and questioning CEO salaries.


If oil markets have the jitters, so do Democrats and the Republicans on Capitol Hill. The Bush administration's proposal to spend $700 billion to buy bad debt sent shudders through many members of Congress. As NPR's David Welna reports from Capitol Hill, the proposal is getting a chilly reception, but negotiations continue.

DAVID WELNA: Lawmakers are keenly aware how many more voters are on Main Street compared to Wall Street, and with a huge election seven weeks away, Congress is clearly siding with Main Street. When members of the House rose today to speak on the bailout, it was a bipartisan chorus of deep skepticism. Here's Oregon Democrat Peter DeFazio railing against Treasury Secretary Paulson.

Representative PETER DEFAZIO (Democrat, Oregon): He insists this has to be done without meaningful discussion or debate or any change by the Congress. Sort of, you know, an immediate authorization for use of financial force. Does this remind anybody of anything? Like the rush into Iraq on election eve a number of years ago.

WELNA: And here is Florida Republican Cliff Stearns calling the bailout an assault on American capitalism.

Representative CLIFF STEARNS (Republican, Florida): The nationalization of private asset is inherently un-American. As free enterprising Americans, we need to let our markets determine the winners and the losers, not the United States Treasury.

WELNA: Stearns was followed by a member of the Financial Services Committee, California Democrat Brad Sherman.

Representative BRAD SHERMAN (Democrat, California; Member, Financial Services Committee): Today, we are asked to approve the greatest power grab any executive has ever asked for. And the greatest transfer of wealth Wall Street could imagine.

WELNA: Indiana Republican Mike Pence, for his part, sent a letter to his GOP colleagues today, urging them to oppose the bailout plan.

Representative MIKE PENCE (Republican, Indiana): We simply cannot increase the national debt by nearly a trillion dollars without expecting the American people's ire, and ultimately without expecting a massive tax increase in the near future.

WELNA: But Secretary Paulson has some strong allies, as well, on Capitol Hill. Barney Frank, the Democrat who chairs the Financial Services Committee, told reporters it makes sense for the U.S. to intervene, both because it can raise the money and because it may not end up being so costly.

Representative BARNEY FRANK (Democrat, Massachusetts; Chairman, Financial Services Committee): It is very likely the case that the market is so depressed now psychologically, that a lot of the value out there is undervalued, that there is more real value that you could realize today. Which means if somebody with very deep pockets could hold that, buy it and hold it, and then not sell it all at once, but sell it in a more controlled fashion, you have a very good chance of breaking even or making a little money. That's why, you know, it's never going to remotely cost anything like 700 billion.

WELNA: Still, Frank says Democrats will be adding several key items to Paulson's proposal. One of them, a strong oversight board, is acceptable to the White House. Two others, using bankruptcy judges to rewrite the terms of distress mortgages and putting curbs on how much executives of bailed out firms are paid, are not. Senate Majority Leader Harry Reid said Congress must still go further.

Senator HARRY REID (Democrat, Nevada; Senate Majority Leader): It's not enough to fund a Wall Street bailout, simply. We need an economic recovery plan to create jobs, provide better unemployment insurance, invest in our crumbling infrastructure. Now, Mr. President, such a plan has to be voted upon before we adjourn, either as part of this legislation or separately.

WELNA: That adjournment, which is slated for Friday, is now likely to come only when the bailout package is finished. David Welna, NPR News, the Capitol.

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Some Lawmakers Seek To Broaden Rescue Bill

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Rep. Barney Frank and Sen. Christopher Dodd talk with reporters on Capitol Hill. i

House Financial Services Committee Chairman Barney Frank (left) and Senate Banking Committee Chairman Christopher Dodd talk with reporters after a Sept. 18 meeting with Bush administration officials about a plan to rescue financial firms. Chip Somodevilla/Getty Images hide caption

toggle caption Chip Somodevilla/Getty Images
Rep. Barney Frank and Sen. Christopher Dodd talk with reporters on Capitol Hill.

House Financial Services Committee Chairman Barney Frank (left) and Senate Banking Committee Chairman Christopher Dodd talk with reporters after a Sept. 18 meeting with Bush administration officials about a plan to rescue financial firms.

Chip Somodevilla/Getty Images

Bush administration officials want Congress to approve a $700 billion aid package for Wall Street, and they want it to happen within days. Democrats say they're willing to help shore up the financial markets, but they want a bill that includes relief for homeowners and taxpayers as well.

Treasury Secretary Henry Paulson went from one Sunday TV talk show to another trying to explain why a deficit-ridden nation should go hundreds of billions of dollars deeper in debt — all to cover the bad bets made by some of the nation's wealthiest private firms.

Paulson's argument was simple: Things could get far worse should the U.S. not ride to the rescue.

"I have every confidence that Congress will go along with this ... that doesn't mean everyone in Congress will agree, it doesn't mean there won't be a healthy debate. But I am highly confident that we will get the authorities we need this week," he said on CBS' Face the Nation.

Rep. Frank Wants Economic Boost

Paulson said he not only wants congressional approval to be quick; he wants it clean — not to be loaded up with items he didn't request. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, followed Paulson on CBS:

"Secretary Paulson and I have a lot of agreement, but we have a difference on what's clean," Frank said. "We don't think that trying to stimulate the economy given the 6-plus-percent unemployment — let's not forget other problems as we focus on this one — I don't think that dirties up the bill."

Frank wants the bill to limit executives' compensation at the financial firms getting bailed out. He also wants a special tax on those making over $1 million a year to help offset the cost of the bailout.

Another leading Democrat, New York Sen. Charles Schumer, seemed to throw cold water on Frank's wish list during an appearance on Fox News Sunday.

"We will not Christmas-tree this bill," Schumer said. "The times are too urgent. Everyone has their own desires and needs. It's going to have to wait."

But then Schumer pulled out his own wish list for a bailout bill.

"When I and others have talked to Secretary Paulson, he has said he is open to changes, and I would call changes necessary in three areas. I call them THO: taxpayers — they have to come first; homeowners — we have to do something about the mortgage crisis, not just foreclosures but the price of housing, which is affecting everyone on Main Street; and oversight — we need some accountability here."

'The Mother Of All Bailouts'

And it wasn't just Democrats saying Congress should take a closer look at what's in the bailout.

"This is the mother of all bailouts, and we don't see the end in it yet," said Richard Shelby of Alabama, the top Republican on the Senate Banking Committee. He told CBS that he expected the bailout would actually cost more than $1 trillion.

"We don't know the endgame in this, and I'll tell you, what bothers me about this is that I believe that the chairman of the Fed and the Treasury secretary, Paulson, with all due respect to them, they've been staggering from crisis to crisis, and they haven't even said today that this will end the crisis."

Other congressional Republicans are closing ranks with the Bush administration. House Minority Leader John Boehner told ABC's This Week it's time Congress rose above partisan politics, even on the eve of a fiercely fought election:

"We don't need 535 members of Congress adding their best idea to this bill," Boehner said. "We need to keep it clean, simple, move it through the House and Senate, and get it on the president's desk."

Jon Kyl of Arizona, the Senate's No. 2 Republican, told Fox he's optimistic the bailout plan will move through Congress in time for lawmakers' planned adjournment.

"I think the chances are better than 50-50 that we'll get it done by the end of the week, and hopefully it won't be bogged down with too many extraneous and costly provisions," Kyl said.

That was before House Speaker Nancy Pelosi (D-CA) issued a defiant statement Sunday night. "We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome," she said.



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