Harkin reflects farmer skepticism of bailout
Senator Tom Harkin (D-IA) who was among congressional leaders meeting with Treasury Secretary Henry Paulson Wednesday night, told reporters Thursday that Congress should not be stampeded into writing a financial bailout that doesn't represent the public interest.
"My office was deluged with calls from Iowans who are outraged by this bailout," Harkin said.
Small business owners know they're not getting federal bailouts. That's especially true when hundreds of Iowa small businesses damaged in last summer's flooding were turned down for low-interest loans from the federal Small Business Administration, Harkin said.
Nor was Harkin convinced when President George W. Bush said in his speech to the nation Wednesday that farmers would be affected if the bailout isn't approved. "I'm not so certain about that," Harkin said. "Our situation in agriculture is very good right now." The ratio of farmers and ranchers debts to assets in the U.S. currently stands at 9%, he said. "That's the lowest ever."
At a confirmation hearing Wednesday for a new board member for the Farm Credit Administration, Harkin also said he believes agricultural loans remain strong.
"Despite the problems associated with residential real-estate loans, agricultural mortgages and agricultural loans remain strong. Recently Standard and Poor's applied the best possible credit rating on the consolidated debt obligations issued by the Farm Credit System," Harkin said. "We can all be grateful that the agricultural sector seems to be thriving despite the turmoil in the rest of the US financial sector."
Still, Harkin acknowledged that Congress almost has no choice but to pass some form of bailout, and that the commercial banks that lend to farmers might be affected if it doesn't. Statements about the seriousness of the financial crisis by Paulson and Federal Reserve Chairman Ben Bernanke have become a self-fulfilling prophesy, he said.
"The credit markets have basically dried up SINCE Paulson made his remarks last week," Harkin said.
Several members of Congress have proposed coming up with less than the $700 billion request from Paulson, perhaps agreeing to fund $150 billion through January, since the Treasury Department wouldn't be using all of the full $700 billion right away, Harkin said. But Paulson wants the markets to be assured that the full $700 billion is committed.
Harkin would like to see financial aid for financially distressed home owners and holders of credit card debt as well as help for Wall Street. And he favors giving the federal government a stake in Wall Street firms aided by the bailout. That way, if the firms recover, taxpayers would share their increased value.
But in spite of reports today that an agreement is close on the bailout, Harkin did not describe much compromise from Paulson, who has reportedly agreed to limiting compensation of executives at firms getting a bailout.