Murphy, Manion, Schwartz, Kats react to bailout plan

By GARY WECKSELBLATT
Bucks County Courier Times

Bucks County Congressman Patrick Murphy is among those in Washington calling for a limit on executive pay for the leaders of companies whose firms are being bailed out by U.S. taxpayers.

Murphy, a freshman Democrat, wants Wall Street executives and bankers whose companies stand to be helped by the government’s proposed $700 billion rescue plan to “be held to account by placing some limitations on the executives’ pay and compensation.”

Murphy made his thoughts known in a letter Tuesday to Speaker of the House Nancy Pelosi and Barney Frank, chairman of the Financial Services Committee.

The correspondence, which other House members signed onto, also called for the return of bonuses “if executives did cook the books.”

“Any bailout legislation should include, not just immediate action to stop the bleeding, it also must include provisions to prevent this from happening again,” the memo stated.

In the meantime, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson urged swift action Tuesday by Congress.

“The financial markets are in quite fragile condition and I think absent a plan they will get worse,” Bernanke said. “I believe if the credit markets are not functioning, that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP (gross domestic product) will contract, that the economy will just not be able to recover in a normal, healthy way.”

Marina Kats, a Republican challenging Democratic incumbent Allyson Schwartz for the 13th District seat in Montgomery County, agreed there is little time to waste.

“If the government did not step up Friday we would have been in a lot of trouble,” said Kats, a lawyer. “There would have been a calamity that we haven’t seen in our lifetime.

“It’s not a stock market crisis, it’s a credit crunch. The government is not doing a good job explaining the problem to the American people. They’re trying to prevent a panic.”

Lawmakers, however, weren’t rushing to accept the administration’s plan to allow the government to buy bad mortgages and other troubled assets held by endangered banks and financial institutions.

Getting those debts off the books should bolster the institutions’ balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan works, it could help lift a major weight off the sputtering national economy.

“The real issue here is a lack of regulation by the Bush administration and where there was regulation it wasn’t enforced,” Schwartz said Tuesday after a day of meetings.

She understands “the emotions” of constituents who would want to see CEOs stripped of their “golden parachutes” if wrong doing was involved.

“CEOs made bad decisions,” she said. “There will be hearings and investigations into how it happened.”

Tom Manion, a Republican challenging Murphy in Bucks County, said: “We held interest rates too low for too long, allowed Fannie and Freddie to give out too much credit, messed up the banking regulators and were too focused on meeting  unrealistic “affordable housing’ goals. It’s a mess, and now we’re going to have to work together for a solution.

“We clearly need to take some action and I’m anxious to hear the debate about this proposal on the House floor. I do have serious concerns about executive compensation and improving the transparency and oversight in our financial sector, so that our taxpayer’s needs are better served in the future. Or served at all, really. ”