A bailout? Hardly, senator says
October 7, 2008
A bailout of Wall Street?
That is hardly the case to Sen. Bob Bennett.
Washington’s rescue of troubled financial giants, the Republican said Tuesday during remarks in Park City, could eventually make American taxpayers some big money.
He said some are estimating the federal coffers will receive the $700 billion in bailout money back plus another $1 trillion in the deals. Others caution the feds will not even receive the $700 billion back, he acknowledged as he spoke to a housing conference at the Prospector Square Lodge and Conference Center.
"These are not bailouts of big Wall Street firms," Bennett told a crowd attending the Utah Housing Coalition conference, predicting a windfall for American taxpayers as a result of the deals.
Bennett said he expects the mortgages at the center of the financial troubles that have rocked Wall Street will, over time, be worth more than they are now. If that is the case, the feds, and taxpayers, will be rewarded.
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"The $700 billion is not thrown to the wind and lost," Bennett said.
He conceded, though, he wants Washington to quickly retreat from its strategy of bailing out companies, even as he said the country is in a recession and the maneuvers will lessen the impact of the economic downturn.
Bennett, who supported the bailout, said many Utahns disagreed with his position, with his office receiving overwhelming opposition. He said 400 people have called his office opposing the bailout for every one person who called supporting the plan.
Some of the callers utter bad words as they speak to his staffers, Bennett said, describing that office workers have received instructions to hang up on callers who are obscene.
Bennett said the ratio of supporters to opponents has started to slightly change toward the supporters recently. He credited the change to Utahns learning more about the bailouts, but he said many still "don’t fully understand" the moves in Washington.
He spoke and took audience questions for nearly one hour, with Bennett spending substantial time describing the mortgage industry, talking about the dot-com industry and saying the information revolution took hold much more quickly than the Industrial Revolution. Bennett, whose Senate seat is not on the ballot in November, did not talk about the presidential campaign.
He said the mortgage industry operates differently than it once did, saying mortgages are "slice and diced" and "sold off in bits and pieces all over the world" to investors. Problems erupt if the original mortgage is not paid.
Bennett said the housing market is the bubble of today’s economy, following the dot-com era and the tulip market long ago in Holland.
"The current bubble has been the housing bubble . . . ," he said, adding that people had seen buying a house as a no-risk investment. "When the housing bubble burst . . . it created wreckage all around it."