Dorgan urges safeguards in economic fix
WASHINGTON (AP) - North Dakota Sen. Byron Dorgan predicted ''future massive taxpayer bailouts'' nine years ago when Congress passed a law that deregulated the banking industry. Now he is again urging Congress to restore some of those regulations.
Dorgan, a Democrat, says Congress needs stringent safeguards against future economic crises as it considers the Bush administration's proposed $700 billion financial system bailout.
He appeared to see the future in 1999, when he was one of eight senators to vote against the legislation to open up competition among banks, securities companies and insurance firms by tearing down Depression-era barriers. The law was supported by 90 other senators and President Clinton.
''We will, in 10 years time, look back and say, 'We should not have done that because we forgot the lessons of the past,''' Dorgan said then.
Dorgan says Congress should not approve the current bailout without increasing regulation and making sure the current meltdown does not happen again.
''I agree that the Congress must now act, but that action must be smart and effective,'' he said. ''That means any action taken must be guided by two principles - protecting U.S. taxpayers from being ripped off in a rushed, blank-check, no-strings-attached Wall Street bailout, and ensuring accountability and oversight to put an end to the very reckless business practices that led to this crisis and put our entire economy at risk.''
Dorgan said any solution should, among other things:
Restore some of the Depression-era protections that were taken away by the 1999 law, which allowed the merging of banking businesses with riskier investments.
Address high compensation of some Wall Street executives, which Dorgan says ''has incentivized reckless behavior.''
Require accountability for the speculative investment activities of hedge funds and investment banks that create and sell complex securities.
Allow a period of forbearance on mortgages.
Create a task force to investigate dodgy practices on Wall Street.
Members of Congress quickly moved to negotiate a plan with the White House on Monday, as President Bush prodded Congress to pass the administration's rescue plan quickly, declaring, ''The whole world is watching.''
Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said ''a great deal of progress has already been made.'' And a government official with knowledge of the talks said the administration had agreed to create a plan to help prevent foreclosures on mortgages it acquires as part of the bailout - a key demand of Democratic lawmakers.
