Senate Doubts About The Bank Bailout Plan

The very expensive bailout plan is meant to stabilize the foundering economy – but even Republican Senators are skeptical. Some say it’s “financial socialism and un-American.”

Leaders of both parties in the Senate expressed strong reservations about the administration’s proposed financial market bailout plans. Chris Dodd, Chairman of the Senate Banking Committee said, “What they have sent to us, . . . is not acceptable.” And the ranking Republican on the Banking Committee, Richard Shelby, said they need “to consider alternatives to the president’s plan.”

Secretary of the Treasury Henry Paulson and Federal Reserve Chairman Ben Bernanke urged congress to take quick action on the plan. Both architects of the plan were called to a hearing of the Senate Banking Committee on Tuesday. Bernanke warned of a looming recession with high unemployment and more housing foreclosures if the package is not approved.

In the face of sharp criticism from Senators, Paulson admitted that taxpayers would bear the brunt of the crisis. “I’m frustrated, too . . . the taxpayer is already on the hook,” Paulson said. But he insisted the bailout package was still the best solution for everyone. Several Democratic and even some Republican Senators criticized the plan. Republican Senator Jim Bunning said, “It’s financial socialism, and it’s un-American.”

Bush Praises His Administration’s Courage

U.S. President George W. Bush spoke of a courageous move against the crisis by the United States government. “In recent weeks, we have taken bold steps to prevent a severe disruption of the American economy, which would have a devastating effect on other economies around the world,” Bush said in an address to the United Nations General Assembly in New York.

There were differences between the administration and congress in negotiations over the package that aims to buy up to $700 billion in bad loans from threatened banks. According to American media sources, there is still a great deal of discord on the subject of government oversight of the program. Several Democratic Senators expressed the view that they were unprepared to give the administration a “blank check for $700 billion.”

Jean-Claude Trichet, President of the European Central Bank (EZB) said in an interview with EuroNews that the financial crisis required “the constant vigilance of every government and especially central banks.” He expects continued turbulence in world markets.

The European Parliament wants to protect small investors from the consequences of highly speculative financial operations as well as from dishonest market practices. In a cross-party agreement passed by a large majority, the deputies in Brussels will make suggestions for the control of hedge funds and holding companies.