Why N.D. should care about financial rescue

The last few weeks, our nation has experienced an economic crisis of staggering proportions. The chairman of the Federal Reserve has warned we have not seen anything like this since the Great Depression.

The immediate signs of the calamity appeared on Wall Street, as one financial titan after another toppled. But the credit crisis that began on Wall Street has the threat of spreading to every street in the nation — and while North Dakota appears strong, our home state is not an island. Our own economy is in danger.

This is a national problem, with consequences for North Dakota, and requires a national response. Credit markets are frozen, and our economy could grind to a halt. As the credit crisis spreads, families will increasingly be denied home loans, car loans and college loans, and small businesses will be denied the credit they need to operate.

The Treasury Secretary and Chairman of the Federal Reserve told me directly that a failure to take action would result in a sharp, prolonged economic downturn with three to four million people losing their jobs in the next six months. 

At its end, this crisis threatens our jobs, our homes and our nation’s economic future — even in North Dakota.

I share the frustrations of North Dakota, where we take pride in personal and fiscal responsibility. We don’t overextend ourselves and we pay our bills. Yet, many of us feel we’re being forced to step in to clean up the irresponsible actions of others. Make no mistake, I am outraged at the situation and I will be working to make sure this never happens again. 

But right now, we need to take action to restart our economy. That is why I worked with a bipartisan group of lawmakers to improve upon the administration’s $700 billion economic rescue plan. While the administration’s original three-page proposal was deeply flawed and did not protect the American taxpayer, a bipartisan effort in Congress made immense improvements.

The bill we passed in the Senate on Wednesday and sent to the House of Representatives aims to prevent an economic collapse, protect American taxpayers, and steady the financial markets. 

The new proposal is not perfect, but it offers greater protection for all of us, the taxpayers who are being asked to put up the money. And it is not a bailout. The plan gives you an equity stake in companies that seek aid and an opportunity to see taxpayers reap benefits when the markets rebound and those equities can be sold — possibly at a profit, as Treasury Secretary Paulson has noted. This is a crucial point. Taxpayers shouldn’t be left holding the bag. 

The new proposal also meets my insistence on an independent oversight board with real power to guide a phased implementation of the rescue plan. We can’t simply give one person unfettered power over $700 billion of taxpayers’ money. And finally, there will be no golden parachutes for the Wall Street executives who created this problem. Executive compensation is limited for those who participate in the rescue.

I would never support this plan if it was just about Wall Street. This is about protecting families, workers and retirees in North Dakota. Our nation has done this before when we rescued the Chrysler Corp., and with the Farm Credit Services Agency. In both cases, taxpayers got their money back — and even made a small profit.

This is the first step, and hopefully it will help. None of us can be certain it will be enough. But what we do know is if we don’t implement this rescue plan the possibility of a painful and prolonged economic slowdown is very real.

After this rescue plan is in place, we need to take a long hard look at how our financial system spiraled downward so far so fast. I have asked U.S. Attorney General Michael Mukasey to conduct a criminal investigation into the failed financial institutions that helped trigger this economic meltdown. If fraud is found, people need to go to prison. And we need new rules to make sure this does not happen again.

But right now we need to concentrate on implementing this rescue plan and then begin the hard work of rebuilding our nation’s economic strength. We have overcome great challenges like this in the past. We will do so again.

(Conrad is one of two senators representing North Dakota in Washington)

Tags: economy, bailout, senate, vote, depression