Bailing Out Wall Street

BAILING OUT WALL STREET -- (House of Representatives - September 27, 2008)

Mr. DeFAZIO. The problem with what Congress is trying to fix is that Paulson's premise is wrong, that if we take and dump $700 billion into Wall Street, buying up their bad assets, somehow the benefits will trickle down to Main Street and prop up our struggling housing market. As Mr. Isaac, the former head of the FDIC says, ``Having financial institutions sell the loans to the government at inflated prices so the government can turn around and sell the loans to well-healed investors at lower prices strikes me as a very good deal for everyone but U.S. taxpayers. Surely we can do better.'' He proposes a credible alternative, similar to something done during the savings and loan crisis.

There are many cheaper alternatives out there that don't put taxpayers on the hook. But if we are going to go ahead with the Paulson premise, then it should be paid for by Wall Street with a modest one-quarter of 1 percent transfer tax on securities, something we had from 1914 until 1966. The Brits apply a one-half of 1 percent tax, and they use that money just to fund their government. Here we would use it to help Wall Street heal itself.

Some are saying, well, the initial payment is only going to be $250 billion now. $250 billion would double our investment in infrastructure in the United States for 5 years.

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