Financial Rescue Proposal

Press Release

Financial Rescue Proposal

Calls for Bipartisanship and Proposes Equity Solution to Protect Taxpayers and Restore Stability to the U.S. Economy

Today, in a call for an effective solution and bipartisan action, Rep. Foster testified in front of the Financial Services Committee offering improvements for the $700 billion financial rescue proposal.

In his testimony, he recognized the need for action before laying out a solution.

"First, I accept the need for speed and overpowering force in this situation," Rep. Foster said. "With the credit system locked, small and large businesses are being told to prepare contingency plans for what to do if their operating lines of credit are not extended. Banks are refusing to lend to each other at normal rates, or not at all. If nothing is done, and the situation persists for even a few weeks, we will face an economic downturn unprecedented in our lifetimes."

To make sure credit markets do not freeze up, but also make sure that taxpayers get something in return for assisting in a financial rescue, Rep. Foster advocated protecting taxpayers by pursuing an equity solution rather than an auction solution.

"I believe this is a far better deal for the taxpayer," Rep Foster said. "The companies will be required to write down the value of their toxic assets and in exchange, the government injects cash by buying a large fraction of these banks. Over time, the market recovers and the banks are sold back to private investors."

Rep. Foster also called for common-sense regulation of compensating CEOs so their personal interests are aligned with those of the companies they manage. These regulations would make sure CEOs act in the best interest of their company instead of taking on extreme debt.

"As a former small businessman, I carried an unlimited personal guarantee on my business, which meant that if my business failed, I'd lose my home. Because of that, believe me, I paid very close attention to the debt situation at my company," Rep. Foster said.

Concluded Foster, "This is the time for serious people, from both parties, to work fast, work smart, and map a way out of this crisis. I am ready to continue our work to find a bipartisan solution, and stay through the election if need be, in order to ensure that America has an economic recovery program that protects taxpayers and provides the right balance of oversight and incentive to get our country moving again."

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