For Immediate Release For Immediate Release
Contact: Chyrisse Tabone-Russell, Communications Director
John Russell for Congress Campaign
Fundamentally in consideration of any bailout, America must protect the financial integrity of taxpayers while also ensuring that appropriate and routine credit access and availability at reasonable price points is re-established.
America must not rush into any agreement without first validating the nature of the evolving constrictions on credit availability. We are not even absolutely certain this bailout is necessary or will even be effective in fulfilling its loosely stated goals. More detailed information must be made available to not only the congress but the general public as well.
As a former financial advisor (Series 7 and 63 license), and after having spoken with several financial experts, listened to numerous economic pundits both on television and radio, considered the comments by leaders on both sides of the aisle, and having read the analysis of the current situation by several leading economists, I have arrived at some important conclusions that should define the guiding principles of any bailout measure agreed to by the Congress and approved by the President. Therefore, the principles listed below I believe provide a more comprehensive basis for securing our economy, not only in the current crisis, but going forward as well.
In addition, the American people must learn conclusively just how we arrived at this point in order that we never visit this place again. Consequently, it is imperative that prompt investigation be part of any arrangement with decisive prosecution and punitive actions taken in order to deter future illegal behavior and ensure that the wrong-doers do not profit from their criminal actions.
Below are my recommended principles that should be part of any bailout.
· Require that companies benefiting from the bailout be prohibited from giving so-called "golden parachutes" to executives and have rules to revoke bonuses awarded based on mis-stated economic performance claims. Executives at any level must be subject to suspension or revocation of their securities credentials as well as substantial fines and/or criminal charges and prosecution as appropriate.
· There must be funds allocated for investigation and prosecution of those involved in the fraudulent activities perpetrated that caused this crisis. The probe would be defined to include everyone from loan officer to the mortgage underwriter to the CEO's of major investment and mortgage banking firms as well as government regulators. See these articles: one, two, three and four.
· No individual is too important to be prosecuted. Legal efforts must be undertaken immediately to protect critical information. Computer hard drives, electronic as well as paper documents must be secured by appropriate government enforcement agencies on an immediate basis with prosecutorial and enforcement actions publicly stated regarding those who might consider destroying evidence.
· The plan must set defined quantitative parameters that establish what bad assets would be subject to bailout as part of this governmental "investment."
· Any agreement must allow the government to take an equity stake in participating companies to share in future profits. The purchase price as was suggested by Warren Buffett must be at the current market price not some price above current market. This price has been established by sales of "distressed" assets already sold.
· This burden cannot fall entirely on taxpayers. I agree with the proposed reinstating of a small surcharge (equal to one quarter of one percent) on all stock trades as well as on more exotic financial transactions. Such a proposal, which is similar to one that already exists on the London Exchange, would offset the cost to taxpayers by raising approximately $150 billion a year and should be directed toward the U. S. Treasury.
· Require that the government draft a plan to renegotiate the mortgages it acquires to help homeowners avoid foreclosure as well as those who may already be in the process of foreclosure.
· Put in place as part of the plan a mechanism for bankruptcy judges to re-negotiate sub-prime mortgages with outrageous adjustment terms which are set to adjust in 2009-10; Thus allowing judges to revise terms that may avert foreclosure which in turn will also assist in stabilizing the market over the longer term.
· Allow judges to rewrite the terms of homeowners' mortgages currently in foreclosure as a means of keeping these people in their homes.
· Create a bipartisan congressional oversight panel to scrutinize the rescue program and subject it to court review.
· Limit the program to financial institutions with "significant operations" in the United States and exclude foreign central banks and companies owned by foreign governments.
· Require that a parallel bill with timeframe for completion be required to re-regulate the financial markets, that is a contemporary Glass Steagall bill to re-institute constraints on the market to prevent further eruptions in the future.
- The most recently announced so called pending arrangement of placing Goldman Sachs and Morgan Stanley as recipients of approximately 350 Billion dollars initially, and as overseers in the bailout arrangement should give rise to questions: such as were they involved in the mortgage fraud which caused this crisis, should they be a recipient of or in control of the bailout funding, would consolidating this power in their hands give us another firm or two that like AIG that is "too big to fail." Americans cannot to rush down a path again which will likely set us up for an even more disastrous fall in the future. These issues must be addressed.
While it is important to ask questions after the fact, in economics/finance as in medicine, it is much more beneficial to be actively engaged, asking the questions that might have prevented a crisis, be it medical or economic, from happening in the first place.
Having the knowledge as well as the courage and willingness to ask the important questions in a quiet meeting early on may not get you any publicity but such initiative may contribute to the collective well-being of a nation a thousand fold as opposed to grandstanding... after the fact.