Published: October 08, 2008 10:56 am         

Bailout bill a complicated package

DUNCAN — Only four days have passed since Congress voted to secure an economic bailout package aimed at preventing the collapse of the American economy.

And, while change in economic situations hasn’t been felt yet, the bailout will have significant impact on the American people and how financial institutions operate.

A complicated mixture of several measures, the package comes at a time when Americans are asking the tough questions, concerned about what the collapse of the financial industry means for them, and how a mass bailout will help.

Funded at the expense of taxpayers, the bill provides the federal government with the ability to purchase assets from failing institutions, in addition to extending some tax breaks that benefit millions of Americans and ensuring that mental health is covered by insurance companies.

Specifically affecting Oklahoma, the bill also contains language that depreciated former American Indian lands at a higher rate, encouraging business growth in the area.

U.S. Rep. Tom Cole, R-Okla., who voted for the bailout, said it was not an easy vote for anybody in Congress, but it was what the majority of representatives felt was necessary, even if their constituents were saying otherwise.

“I think that clearly people aren’t pleased about it and they have a right not to be pleased about it,” Cole said. “On the other hand, I think government has the responsibility to act, because I think that the consequences of a financial crisis for average people are very, very serious.”

It’s an issue that has far-reaching effects. And, while Congress shut down the initial economic bailout package, it was not done because the decision was not a necessary one, Cole noted.

“I think most people are thinking, ‘This isn’t going to hurt me. This is all about bailing out Wall Street. And I don’t understand that there’s financial consequences to the state of Oklahoma or to my local community,’” Cole said. “I don’t blame anybody for that because it’s hard to understand and things were changing rapidly.

“The first thing in Congress we did, and we did it on a bipartisan basis, we said, ‘Look, we’re not giving anybody a $700 billion check. If we do this, you’ll get $250 billion and there’ll have to be presidential certification for the next time, and then there’ll have to be a second vote of Congress again for the second half.

“And you’ll be reporting to congressional committees, you’re not just going to be operating on your own,” Cole explained. “Second, we’re going to protect the taxpayer. Now, we know we’re not giving you money, we’re buying assets that we believe have real value. We have every reason to believe that we’re going to get a large portion of whatever we buy out back.

“But we said, ‘Let’s make absolutely certain. If the taxpayers haven’t gotten back every penny they put into this deal within five years, then the president of the United States has to put a plan in front of Congress to recover all the remaining amount at the expense of the financial institutions that benefited from this federal rescue,’” he said.

Other provisions prevent executives from receiving too much compensation from the bailout, placing a cap on the limits, and set up a private insurance where financial institutions can go for help that won’t cost taxpayers money.

Even with all the added provisions, the decision to pass the legislation was not something taken lightheartedly, Cole said.

“It was a very tough vote for anybody who supported it,” he explained.

“I would tell you that Congress, much maligned as it is, did the right thing. It did not immediately accept what the administration said was necessary. It took the time, it added a lot of improvements to the legislation, a lot of protections for taxpayers, and yet at the end, in a very political season, weeks away from election, it acted in bipartisan fashion to get something done in the face of a crisis.

“I have no illusions that this is a popular vote, quite the opposite.

“It’s going to take a long time to implement. The economy is slowing down very rapidly. We’ve lost jobs in the country for the past eight or nine months. We’ve had these series of financial failures.

“It’s important, I think, at a time like this, that the government act and act decisively, even if the actions aren’t particularly popular,” he said.

“And the idea that you can have a crisis in New York and the financial markets, not just in America, but the entire world, and Oklahoma will be unaffected, I think is very parochial thinking and very dangerous thinking.”

While the legislation has passed, it’s not a fix-all for all the financial institution woes. Cole noted that Congress will have a lot more work to do, adjusting regulations and rethinking how credit is issued and debt managed, when legislative sessions start back up again.

“I think not to have acted would have risked something like the Great Depression,” Cole said. “And we’re not out of the woods yet on something like that. Just watch the market in the days ahead, and I think that’s a pretty good indication that the problems we’re facing are serious.

“I think we’ll be doing more after the election. I think I would just tell people we’re in for a challenging economic period. We’re in for major regulatory overhaul and we’re probably going to have a pretty bumpy ride as we come to grips with the sources of this problem.”

     

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