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Financial Socialism?

Mike

Well-known member
Republican anger at ‘financial socialism’
By James Politi and Daniel Dombey in Washington

Published: September 23 2008 21:45 | Last updated: September 23 2008 21:45

As the curtain opened on the first congressional hearing called to examine the US financial rescue plan, the harshest words came from Richard Shelby, the senior Republican on the senate banking committee.

Calling it the “most important hearing our committee has conducted in the 22 years I have been a member”, Mr Shelby lashed into the Treasury plan, saying there were “no credible assurances that this plan will work”.

“We could very well spend $700bn and not resolve the crisis,” the influential Alabama senator said as Hank Paulson, Treasury secretary, and Ben Bernanke, Federal Reserve chairman, prepared to speak. “Before I sign off on something of this magnitude, I want to know that we have exhausted all reasonable alternatives.”

Other Republican senators also expressed their doubts about the proposal, with varying degrees of distaste.

“I am very sceptical of this proposal and am extremely frustrated that we find ourselves in this position,” said Elizabeth Dole of North Carolina. Jim Bunning of Kentucky said: “This massive bail-out is not the solution. It is financial socialism, it is un-American.”

Bob Corker of Tennessee attacked what he described as a “deer-in-the-headlights mentality” in dealing with the crisis.

While Democrats have complained about the lack of oversight provisions in the Treasury’s proposals and called for measures to deal with issues such as executive pay, bankruptcy and homeowner help, many Republicans have more fundamental concerns about whether such a recourse to interventionism will undermine the free market.

“My fear is that taxpayers will be left with the mother of all debts, the federal government becomes the lender and guarantor of last resort, and our nation finds itself on the slippery slope to socialism,” Congressman Jeb Hensarling, chairman of the conservative Republican study committee, said last week.

Dick Cheney, US vice-president, yesterday met the 110-member committee in an attempt to win it over. Last week, 31 of its members wrote a letter decrying the “the increasing propensity, size and frequency of government interventions”.

But some Republicans at yesterday’s Senate hearing struck a more encouraging note. “Our current effort is a short-term rescue effort clearly in the interest of our country and the world and it must be done,” said Chuck Hagel of Nebraska.


Copyright The Financial Times Limited 2008
 
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