Senate Democrats

Reid: President’s Inaction Threatens To Further Weaken The Economy

Washington, DCSenate Majority Leader Harry Reid made the following statement today in response to the President’s remarks on the economy this morning:

“Democrats are committed to recovering what more than seven years of failed economic policies have cost America.  Our plan to stimulate the economy and our fiscally responsible budget are important steps in that direction, but we have much more to do.  That is why in the coming weeks, we will continue to strengthen our economy by, among other things, addressing the housing crisis and making investments in energy efficiency and renewable energy.

“The President continues to convince himself that inaction is the cure-all for the economic problems hurting hard-working Americans.  But Democrats know that ‘wait-and-see’ is not a responsible strategy for an economy that is teetering on the brink of recession.  Wages and home values are down but prices for everything from health care to tuition to energy are up.  Just this week, oil and gas prices reached record highs while the value of the dollar reached historic lows.  I hope the President, who has been slow to acknowledge this problem, joins us in recognizing how urgently we need a solution.”

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Bush Administration Proposal Is Too Little, Too Late

BUSH ADMINISTRATION PROPOSAL CALLS FOR MORE VOLUNTARY SOLUTIONS THAT DO NOT RESPOND DIRECTLY TO THE IMMEDIATE FINANCIAL CRISIS TODAY

Bush Administration’s Proposal Amounts to a Call for Greater Self-Policing by the Financial Industry. “For weeks, it has been clear that the administration would have to offer new initiatives to offset fears that America’s credit system could lock up. Around the world, financial markets have gyrated. The domestic economy has shown new signs of recession. And congressional leaders have pushed ahead with plans for decisive government action. But the package of proposals unveiled with much fanfare by the Treasury Department on Thursday was in large measure a call for greater self-policing by the financial industry.” [Los Angeles Times, 3/14/08]

Bush Administration Proposal to Stem the Credit Crisis Relies on Same Market Participants That Caused the Crisis. “But in many ways, the plan relies on the same market participants — from mortgage brokers to credit-rating agencies and Wall Street firms — that government officials and other experts blame for the current crisis.” [New York Times, 3/14/08]

INDUSTRY EXPERTS COOL TO BUSH ADMINISTRATION PROPOSAL

Conservative Expert on Financial Regulation Was Skeptical of Bush Administration Proposal. “‘I’m skeptical,’ said Bert Ely, a conservative and widely respected expert on financial regulation. What’s needed is not licensing, Ely said, but a simple rule: ‘He who makes a loan keeps the risk.’” [Los Angeles Times, 3/14/08]

Former Fed Official Said Proposal Does Not Solve the Problem of Lack of Capital, Suspected it Was a Largely Political Move. “Given the general cautiousness of the group’s proposals, Vincent Reinhart, a former senior Fed official, was asked why he thought the administration released the proposals with such fanfare. He said that at least part of the reason was to try to short-circuit moves by congressional Democrats. But Reinhart, now with the generally conservative American Enterprise Institute, a Washington think tank, doubted that Paulson and the administration could hold off calls for direct action. ‘The financial sector needs more capital. This proposal does not solve that. If things work out, the capital will come from within the private sector,’ Reinhart said. But if they don’t, he added, ‘we might need a government solution.’” [Los Angeles Times, 3/14/08]

Bush Administration Proposal Received Cool Reception from Industries Affected and Wall Street Banks. “Industries addressed in the report, and some Wall Street banks, gave a cool reception to the proposals. Christopher Low, chief economist at FTN Financial, said the recommendations would probably make the situation worse because tighter regulation and capital requirements could make financial firms even less willing to invest or make loans at a time when credit is already tight.” [Washington Post, 3/14/08]

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