Making Sense of the Wall Street Rescue on Main Street

Statement

Making Sense of the Wall Street Rescue on Main Street

As the failures of Wall Street financial institutions became a reality last month, I was reminded of the Alabama hit song from the 1980s, "Song of the South." I'm sure many Arkansans are familiar with it. It tells the story of man recounting the struggles of growing up as a child in the Depression-era South. And as the current crisis loomed, one line stood out in particular, "Well somebody told us that Wall Street fell/But we were so poor that we couldn't tell."

While that may have been true in 1929, today's world is not quite the same. Yes, the economy is on a severe downward swing. Arkansas families are paying more than ever at the pump. Food prices have risen. Housing prices continue to fall precipitously. Job losses are mounting every day.

Moreover, as a result of the economic crisis on Wall Street, credit markets have tightened, failing banks are being bought out, and the stock market is down. It is a time of economic uncertainty. However, today's global economy is more complex and intertwined than ever. If Wall Street collapses now, Americans from coast to coast will not only feel the effects on Main Street, it will be felt around the world.

The fact is that the reckless actions and appetites on Wall Street and among consumers may have caused this crisis, but it is now Main Street's problem. When Arkansas small businesses cannot make payroll, students cannot get loans to fund their education, and consumers who play by the rules cannot secure home or car loans, it will be too late.

Not taking action will lead our nation on a greater economic downward spiral. That is why I voted for this rescue package-to implement a strategy to stabilize the markets and bring greater confidence to investors and businesses by creating an environment that promotes growth.

It is unfortunate that we are in this situation. As a Member of the Senate Finance Committee, I directly asked Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson tough questions more than six months ago about the state of the economy as mortgage defaults increased. Specifically, I wanted to know if there was any role for Congress to play. At the time they said nothing was wrong. Then the economy began to turn for the worse when Bear Stearns showed signs of failure. Months later, Fannie Mae and Freddie Mac required government intervention, Lehman Brothers went bankrupt after 158 years of business, and AIG asked for government help.

Despite their best intentions to fix this problem, Mr. Bernanke and Mr. Paulson could not and did not understand the magnitude of this problem. So while our financial policymakers were fiddling, Wall Street was, in actuality, burning.

When the Bush Administration finally recognized that Congressional intervention was necessary and presented its original bailout proposal to Congress, essentially asking for a $700 billion blank check with no strings attached, I was outraged. Moreover, the American people were outraged.

After digesting their initial proposal, I weighed in with Senate leaders to ensure that the investment from taxpayers is minimal, that Americans receive a return on their money, and that executives do not receive outrageous payouts. After tedious negotiations, the rescue package passed by Congress is much more practical on these fronts than the blatant bailout the Administration initially sent us.

I must admit, though, that I do not agree with all aspects of the rescue package. I think there is more to be done down the road to improve transparency and oversight in our financial markets. However, I believe the cost of inaction far outweighs the cost of passing this bill.

The legislation we enacted also includes important tax relief for working families and our businesses. It expands the Child Tax Credit so that low-income families who make minimum wage can receive the benefit; expands the tuition deduction for college students so that more Arkansans can afford college; and provides a one-year patch, or band aid, on the Alternative Minimum Tax (AMT) so that tens of thousands of Arkansans aren't subjected to higher federal income taxes this year. It also provides relief for our state's small and medium businesses, the economic engine of our communities, that will allow them to reinvest in themselves, create jobs, and keep the economy moving.

There is no doubt that there are some provisions that were added to the package that many people disagree with. However, the economic turmoil we face was far too serious to throw the baby out with the bath water. As a result, I felt I had no choice but to support this package, in an effort to stabilize the economy and invest in the growth of businesses and industry. I am pleased that the House of Representatives followed our lead and President Bush signed the bill.

My first priority has been and remains the well-being of Arkansas taxpayers. We did not get into this situation overnight, and we will not get out of it overnight. We must look to ensure long-term stability in our economy. In the next Congress, we will take steps the necessary to put our economy back on track by providing additional oversight and considering tougher regulations to ensure that this does not happen again. We also plan to look at other issues affecting working families and businesses such as health care and tax reform.

As we move forward, you can be certain that I will continue to fight in the U.S. Senate to ensure that Arkansans and all Americans have the opportunities and resources they need to provide for themselves and their families in these uncertain times.

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