Rep. Pete DeFazio’s (D-OR) alternative plan to Bailout Bill
On Tuesday, Rep. Pete DeFazio (D-OR) and other members of the Progressive Caucus introduced the “No Bailouts Plan” as an alternative to Paulson’s Plunder. DeFazio’s bill:
- Stabilizes the financial markets without writing a blank check to the big banks and CEOs who got us into this mess.
- Limits future losses by banks without asking taxpayers to pick up the tab. By suspending the application of fair value accounting standards by financial institutions, the bill will limit bank’s artificial write-downs on the value of their mortgage-related and other securities.
- Protects against predatory financial behavior by enacting permanent regulations against short-selling. By requiring the SEC permanently to block short-selling and restore the “up-tick rule” that blocks short-selling in a down market, the bill will protect against predatory financial behavior that harms investor confidence and hurts the ability of banks and other companies to raise needed capital.
- Loans capital to banks that need it, with taxpayers making money on interest when the banks pay off the loans. By creating a Net Worth Certificate Program to allow the FDIC to lend short term capital to failing banks with the promise of repayment with interest, the bill replicates a successful program that worked to stabilize banks from 1982 to 1993. Banks that participate in the program must submit to strict oversight of their executives’ compensation.
- Restores consumer and small business confidence in banks. By requiring the FDIC to raise its insurance limit on costumers’ deposits from $100,000 to $250,000, the bill assures consumers and small businesses their money is safe and helps eliminate runs on banks that threaten the stability of the financial markets.