Citizen Groups Call for Caps on Interest Rates, Strict Accountability, Bans on Conflict of Interest, Re-Regulation
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
- 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.” Read Claybrook’s statement.
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.” Read Rosenfield’s statement.
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.”
Click here to read Public Citizen and Consumer Watchdog’s "Principles for a Patriotic Bailout Plan."