Specter urging caution on bailout plan
U.S. Sen. Arlen Specter urged cautious deliberation yesterday regarding the proposed $700 billion bailout of the nation's banks to stem what some consider the worst financial crisis since the Great Depression.
U.S. Sen. Arlen Specter urged cautious deliberation yesterday regarding the proposed $700 billion bailout of the nation's banks to stem what some consider the worst financial crisis since the Great Depression.
During a news conference and in a letter to U.S. Senate leaders, the speaker of the House and Bush administration officials, Specter repeatedly used the phrase "we ought not to rush to judgment."
President Bush has urged Congress to pass the bill by Friday when legislators are expected to adjourn.
Instead, Congress should "take the time necessary to study the details of this proposal," the Republican senator said, suggesting that legislators hold hearings to question Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. Also, the Pennsylvania senator said, the bill should come before the full Senate "where there is opportunity for debate."
The bailout proposal, written by Paulson and Bernanke and sent to lawmakers on Saturday, would use taxpayer money to buy troubled debt - termed "illiquid mortgage assets" by the Treasury Department - from financial institutions. The Treasury would also manage this bad debt.
The illiquid mortgage assets block the financial system and, therefore, clog financial markets, posing a threat to the system and the economy, according to the Treasury.
The hearings Specter suggests would would spur a discussion, resulting in op-ed pieces, letters to the editor and scrutiny from academics and economists, he said.
Specter said he was "skeptical" about the plan and that he has some questions:
"How's the transaction going to treat the hundreds of thousands of Americans who are in fear of losing their homes to foreclosure?"
"What's the impact going to be upon the Wall Street financiers and tycoons who have caused this problem?"
He also wondered if the bailout would help U.S. business with foreign entities. "If foreign companies are involved [then] foreign countries ought to bear part of the bailout," Specter said.
The senator wasn't the only one who was holding off on embracing the bailout.
Democratic House Speaker Nancy Pelosi, D-Calif., called for independent oversight, protections for homeowners and limits on excessive compensation for executives. *
Associated Press contributed to this report.
