Watchdog groups ask Congress to reject bailout plan

Two national citizen watchdog groups are asking Congress to slow down its debate on the proposed financial bailout and examine it more carefully. The following news release was issued:

WASHINGTON, D.C. – Two nationally recognized citizen groups called on Congress Wednesday to slow down, proceed carefully and incorporate consumer safeguards in any financial bailout plan, including a cap on credit card and mortgage interest rates, public equity in firms receiving bailout funds, and rules that would prevent lobbyists and firms from cashing in on the massive taxpayer handout.

Public Citizen and Consumer Watchdog released a set of recommendations for Congress to consider as it debates a bailout plan worth $700 billion, a hastily reached, arbitrary amount since it is unknown how much the assets of the failing financial institutions are actually worth. Never before has Congress considered such a large expenditure with such little discussion or specifics.

The groups’ recommendations call for increased regulation of financial institutions and strict accountability for the firms that receive bailout money. The recommendations include:

* Ignore Wall Street’s effort to panic Congress into hasty passage of bailout legislation. To protect America, Congress must do its job and carefully consider legislation that will not only restore the economy but prevent a future debacle. Congress should not rush a plan through so that members can adjourn to their election campaigns.
* Cap interest rates on credit cards and mortgage rates at a level based about 3 percentage points above the Federal Reserve’s Discount Window, which is presently 2.25 percent. Taxpayers shouldn’t be charged exorbitant interest rates to borrow their own money.
* Ensure government ownership stake in bailed out firms in proportion to the amount of taxpayer risk. This should include a seat on the boards of directors of companies that take bailout money.
* Prevent bailout recipients from receiving government contracts to manage the government’s newly held assets. The companies that receive taxpayer assistance must also agree to a ban on lobbying Congress or bank regulators until taxpayers have been repaid. Additionally, there should be strict salary and bonus caps for executives of any companies receiving a bailout and tight limits on payments to management companies.
* Require Strict government accountability and greater transparency. All Treasury actions must be subject to ordinary judicial review and any new program or authority must be subject to open-government laws, such as the Freedom of Information Act and the Sunshine Act.

“Rushing through a $700 billion package will blow open the doors of the Treasury for unprecedented graft and corruption,” Public Citizen President Joan Claybrook said. “Congress must put their constituents’ interest ahead of their own political agendas.”

Harvey Rosenfield, the founder of Consumer Watchdog who led the California voter revolt at the ballot box that resulted in stringent regulation of insurance rates, said: “Americans who play by the rules and work hard to provide a decent life for their families are now being asked to pay for the mistakes of those who bent or broke the rules in pursuit of riches. If our money is going to be used to save the economy, we deserve real relief, like a rollback in interest rates, not face-saving gestures intended to allow public officials who did nothing to stop this catastrophe to race home to campaign for re-election claiming they protected taxpayers.”

David Arkush, director of Public Citizen’s Congress Watch division, said accountability is paramount.

“This crisis is rooted in a lack of regulation and oversight,” Arkush said. “This bailout bill must be covered by the Freedom of Information Act and have regular reporting to Congress of all expenditures.”