WALZ REMAINS SKEPTICAL OF BUSH’S WALL STREET BAILOUT

Says he will be looking for answers in Bush’s address tonight

For Immediate Release
{September 24, 2008}

Contact: Meredith Salsbery
507-388-2149

WASHINGTON D.C. — Today, Treasury Secretary Henry Paulson testified before the U.S. House Financial Services Committee. Congressman Tim Walz said that the statements he heard are causing him to grow more skeptical of the proposed Wall Street bailout.

“Secretary Paulson’s comments have raised more questions than they answered for me,” said Walz. “That’s a very serious problem if he wants my support for his plan.”

Walz, who took part in a conference call last Friday with Treasury Secretary Henry Paulson and Federal Reserve Bank Chairman Ben Bernanke to discuss the government’s response to our economic crisis, today sent a letter to Secretary Paulson pressing for specific answers about the bailout plan. Congressman Walz also said he will be closely watching the President’s address to the nation tonight for answers to his questions.

“People in southern Minnesota ask hard questions before making a big decision and have a healthy amount of skepticism for anyone who insists on an immediate decision about something this important. I share that skepticism and have serious questions about President Bush’s plan to provide a $700 billion bailout of Wall Street.” said Walz.

“We’ve seen before what happens when Congress allows itself to be backed into a corner by President Bush and forced into making a hasty decision with long-term consequences. We need answers before Congress votes on this bailout. Without satisfactory answers to key questions, I will not vote for this package,” continued Walz.

He concluded, “My top priority is to protect the interests of middle class Americans who had nothing to do with this problem but who are now being asked to pay for the fix. President Bush and Secretary Paulson need to answer some hard questions about this plan and explain how it will help the people of my district and of America, and not just bailout the irresponsible Wall Street bankers who got us into this mess.

“We need to take quick action, but most importantly, we’ve got to get this right or we risk making this whole mess even worse.” Walz concluded.

Text of the letter follows:

September 24, 2008

The Honorable Henry M. Paulson Jr.

Secretary of the Treasury

Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, D.C. 20220

Dear Secretary Paulson:

As Congress considers how best to address our current financial crisis, I have serious questions about the unprecedented scope of your proposed $700 billion bailout of Wall Street and the speed with which Congress is being asked to approve it.

In the few days since your proposal has been brought forward, I have heard from many residents of southern Minnesota who are deeply skeptical of the necessity of this bailout and the wisdom of using taxpayers’ dollars to fix a problem that the taxpayers did not create. To be honest, very few of the constituents I’ve spoken to expect to see much benefit from this bailout. For that reason, I would appreciate your assistance in answering some of the many questions I have about your proposal:

How will this bailout be helpful to Americans who do not own stock in these troubled Wall Street institutions?

If the management of a Wall Street firm was so poor that it now requires federal assistance, do you support efforts to ensure that no managers at that firm receive excessive compensation or “golden parachutes” that reward them for their mismanagement?

How exactly will this money be spent and who will receive it? Will there be any limitations on how federal funds can be spent once they are received by the troubled company? How much do you expect will end up as compensation for Wall Street executives and shareholders?

Of the $700 billion provided through this bailout, how much is at risk of not being returned to the taxpayers?

In your testimony before the Senate Banking Committee yesterday, you said: “The market turmoil we are experiencing today poses great risk to US taxpayers…Americans' personal savings, and the ability of consumers and businesses to finance spending, investment and job creation are threatened.” What are the real-life consequences if Congress does not approve your bailout proposal? How likely are they?

Several economists have expressed skepticism about whether your bailout proposal would fix the real problems in our financial markets. They argue that the underlying problem is not illiquidity, but insolvency. If Congress does approve an unprecedented amount of money to help stabilize Wall Street, what assurances do we have that another bailout package won’t be necessary again in a few months time?

Many economists believe that your proposed bailout would set a precedent for future intervention in the financial markets. Are you concerned that this proposal would provide a moral hazard for executives at financial institutions who would otherwise have to live with the consequences of their risky decision-making?

You have cited the need for urgent action by Congress to address the financial crisis. What are the consequences if Congress approves a legislative package in the next few weeks, as opposed to the next few days? What are the specific consequences that we are likely to experience if Congress does not act with the speed that you are urging?

Thank you for your prompt assistance in answering these questions, which will form the basis for my decision-making about any proposed financial relief package that Congress is expected to consider in the coming days.

Sincerely,

Tim Walz

Member of Congress}