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Rep. Cantor Offers Take On Bailout

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Rep. Cantor Offers Take On Bailout

Economy

Rep. Cantor Offers Take On Bailout

Rep. Cantor Offers Take On Bailout

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Rep. Eric Cantor (R-VA) is the co-sponsor of an alternative proposal on a bailout for the financial system. He says the plan would remove the burden of the bailout from the taxpayers. Cantor talks about the proposal and the state of negotiations on the rescue plan.

MELISSA BLOCK, Host:

And we're joined now by one of the renegade House Republicans who's co-sponsored an alternative bailout proposal. He is Eric Cantor, Republican of Virginia. Congressman Cantor, thanks for being with us.

ERIC CANTOR: Melissa, it's a pleasure.

BLOCK: I just described you as a renegade, would you agree with that?

(SOUNDBITE OF LAUGHTER)

CANTOR: Sort of made me chuckle.

BLOCK: OK. Well, fair enough. How close do you think you are on a deal? You have negotiators in there now. Is there any agreement between two plans that are really, really diametrically opposed?

CANTOR: Well, you know, I do think that there is a lot of agreement on both sides of the aisle. First thing, I think we all realize, the consequences of inaction are unacceptable. So we will have a deal and it is just grinding through the legislative process. Secondly, I think that there is a common principle in the House with most members on both sides of the aisle that we feel that we ought not be turning to the taxpayers to pay the tab first, that we ought to at least make those owners of these assets on Wall Street pay for this bailout before we turn to the taxpayers.

BLOCK: And you had wanted a plan that would involve having companies buy insurance from the government for mortgage-backed securities, not a government bailout. Are you saying no government money up front at all?

CANTOR: Well, now, Melissa, what we're saying is the government, federal government, insures more than half the mortgages of this country right now. The government knows how to insure mortgages. So when there is a situation where there is a straight mortgage-backed security, not these slice and dice securities, but straight mortgage-backed securities. We can expect a government entity such as Ginnie Mae or another to impose an actuarial analysis and come up with the premium. That premium would be paid by the owners, these banks on Wall Street, for government insurance, that would enhance- give a credit enhancement and these securities would raise back up to value at par. And frankly at that point, the taxpayers will be receiving premiums.

The owners of these assets that are insurable will have the government guarantee. Now, there is plenty of those paper out there now that are so slice and dice that there's no way I think possible you could come up with the risk analysis. Therefore, you're going to have to have a purchase plan the way Mr. Paulson is talking. But at the end of the day, we've got to insist on some accountability. I mean, people are tired that business and Congress are not accountable to the people and taxpayers. I think that that is a principle that both sides here in the House want to see come out of this.

BLOCK: Congressman Cantor, you've also been talking, I believe, about lowering the capital gains tax. Is this really the time to be talking about that?

CANTOR: Well, if what we have right now is a crisis of confidence in our markets and what we have is liquidity sitting on the sidelines, we ought to be doing whatever we can to bring that private capital back into the market so we can boost, re-boost our liquidity. So anything that we can do to attract capital from overseas, to attract investment capital that is parked now and not in the investment arena, that's what we should be looking to and this is what our free market is about. We've always had a free market in this country. It has worked. It will work again. We've got to get through this crisis of confidence again which is why needed to have a plan this weekend and as quickly as possible.

BLOCK: OK. Congressman Cantor, thanks for being with us.

CANTOR: Thanks, Melissa.

BLOCK: That's Eric Cantor, Republican of Virginia, one of the co-sponsors of an alternative bailout plan.

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