Main Street Rescue or Wall Street Bailout ?
Over the past few weeks I've heard from thousands of Idahoans concerned about the recent economic turmoil and what can be done to ease its effects. The vast majority of those calls, emails and letters urged the government to stay out, and let the market "correct" itself. But as the days progressed, it became evident that this crisis was spreading from Wall Street to the credit marketspreventing farmers, local businesses and America's families from receiving the loans and lines of credit they depend on.
Two weeks ago, Congress went to work to shape a responsible legislative rescue plan from the initial demands handed us by the Treasury Secretary to allow him to buy toxic mortgage assets from at-risk financial institutions, in order to free up credit. The original plan quickly evolved to include strong protections for taxpayers, like transparency and both judicial and Congressional review. When that proposal was voted down by the House of Representatives, the Senate added another safeguard by increasing the current protection of deposits in FDIC-insured banks and credit unions to help prevent any potential runs on banks.
The necessary speed in which the Senate acted did have consequences. It allowed the media and others to incorrectly label this action as a "bailout." It's not a bailout. No sums of money are being transferred to private companies or to CEOs. To restore confidence in the credit market, the federal government is acquiring or insuring troubled mortgage-backed securities to allow financial institutions to stabilize and continue lending money. When the market is stable and the full values of these assets are restored, they will be sold and all revenues will be returned to the Treasury to pay off the debt.
Throughout this process, protecting the interests of taxpayers and Idaho businesses has been my top concern. I have updated my website with the latest information, including the full text of the legislation and a side-by-side comparison of the progression from the original to current plans. I fully understand Idahoans' skepticism and opposition to this action, but I am confident this rescue will result in little costs to taxpayers when completed. And I was unwilling to stand by and do nothing while banks failed and hard-working Americans' investments, pensions, homes, small businesses and very way of life were put at risk.