Senators Skeptical Of Bailout Package
LINDA WERTHEIMER, host:
It's Morning Edition from NPR News. I'm Linda Wertheimer in for Renee Montagne.
STEVE INSKEEP, host:
And I'm Steve Inskeep, good morning. Day by day, Congress is asking more questions about the bailout of the financial industry. Treasury Secretary Henry Paulson was hoping for faster action. He says the help is needed immediately. But Congress is hesitating over questions like who exactly gets the power to spend $700 billion. And yesterday, the questions to Paulson and Fed Chairman Ben Bernanke went on for five hours. NPR's David Welna has this report.
DAVID WELNA: As stock prices went south for the second day since the unveiling of the bad debt bailout plan, Treasury Secretary Paulson pitched his proposal to the Senate banking panel as just the right medicine for what ails the economy.
Secretary HENRY PAULSON (Treasury Department): This troubled asset purchase program on its own is the single most effective thing we can do to help homeowners, the American people, and to stimulate our economy.
WELNA: Committee Chairman Christopher Dodd was not so sure, though. He called the three-page bailout plan "stunning and unprecedented," not only in scope, but also in lack of detail. Fed Chairman Bernanke warned Dodd that financial markets are in what he called a "quite fragile condition" and that absent a plan they would certainly get worse.
Dr. BEN BERNANKE (Chairman, Federal Reserve): I think if this is not done, that it will be of significant adverse consequences for the average person in the United States.
Senator CHRISTOPHER DODD (Democrat, Connecticut; Chairman, Senate Banking Committee): And that's your recommendations, chairman of the Federal Reserve?
Dr. BERNANKE: Yes sir, it is. I do believe we need to act to stabilize the situation which is continuing to be very unpredictable and very worrisome.
WELNA: But that failed to sway conservative Wyoming Republican Mike Enzi. His scathing critique of the plan brought applause from some in the audience, followed by a warning from Chairman Dodd.
Senator MICHAEL ENZI (Republican, Wyoming; Senior Member, Senate Banking Committee): It does not make any sense that we'll reward the banks first who got us in the financial mess and the taxpayers second, many of whom were completely unaware that this kind of financial crisis could...
(Soundbite of audience applause)
Senator DODD: (Unintelligible) I'm going to ask the audience, we'll have to clear this room. I don't want to do that.
WELNA: New York Democrat Charles Schumer then suggested to Paulson that Congress initially approve only a first installment of funding, say $150 billion.
Senator CHARLES SCHUMER (Democrat, New York; Member, Senate Banking Committee): Could this system work if we put in the legislation, say, this is the first tranche and by January 15, say - just pick a date - Congress will come back and re-examine.
Secretary PAULSON: I think that would be a grave mistake.
Senator SCHUMER: And why?
Secretary PAULSON: Because I think what this is about, is about market confidence and having the tools to do the job.
WELNA: Ohio Democrat Sherrod Brown wanted to know something else.
Senator SHERROD BROWN (Democrat, Ohio; Member, Senate Banking Committee): Do you think Wall Street owes the American people an apology?
WELNA: Fed Chairman Bernanke answered first.
Dr. BERNANKE: Wall Street itself is an abstraction. There are many people who made big mistakes and many regulators who made mistakes, so we need to figure out what those were and make sure they don't happen again.
Senator BROWN: Secretary Paulson?
Secretary PAULSON: You know, I share the outrage that people have. It's embarrassing to look at this, and I think it's embarrassing for the United States of America. There's a lot of blame to go around, a lot of blame.
WELNA: But now, Paulson said, is not a time for assigning blame. It's time, he said, for Congress to act.
Secretary PAULSON: So I feel great urgency, and I believe it's got to be done this week or before you leave.
WELNA: Not so fast, said the top Democrat and top Republican on the banking panel, once the hearing was over. Here's what Chairman Dodd told reporters.
Senator DODD: What they have sent to us is not acceptable. This is not going to work. And they're going to have to come back and work with us. And we'll make the decision as to whether or not we're going to send something back to them that can work. I'd like to achieve that result.
WELNA: To which ranking Republican Richard Shelby added, we've got to look at some alternatives.
Senator RICHARD SHELBY (Republican, Alabama; Chairman, Senate Banking Committee): I think the secretary now realizes that what he sent up is not going to be just rubber-stamped.
WELNA: So with both Democrats and conservative Republicans lining up against Paulson's plan, without a different offer, there's little chance Congress will sign off on what would be the biggest financial bailout ever. David Welna, NPR News, the Capitol. Transcript provided by NPR, Copyright NPR.
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