Washington – Senator Bayh today made the following statement announcing that he will vote for the Emergency Economic Stabilization Act of 2008 (H.R. 1424), calling it a “distasteful but necessary step to protect millions of innocent people from the malfeasance of a few.” His statement follows:

People are angry, and they have a right to be. I am, too. We shouldn’t be in this mess, but we are. The question is: What are we going to do?

Federal Reserve Chairman Ben Bernanke, our nation’s top economic expert, believes that if swift action is not taken to stabilize our financial system, Americans will face a deep and protracted recession, and millions will lose their jobs, life savings and businesses. These aren’t just faceless statistics or big shots on Wall Street. Those who will pay the price for inaction are the worker at the cancelled construction project, the small business owner who can no longer make payroll, the student who will not be able to attend college because she can’t get a loan, the senior citizen who can no longer make ends meet because her nest egg has been devastated. All will suffer if we do not act.

Chairman Bernanke is an economist, not a politician. He is a man not known for overstatement. Could he be wrong? Yes. Is ignoring his advice a risk worth running at this precarious time for our nation? I don’t believe so. As distasteful as it is for Congress to take this action, doing nothing would likely make things much worse. That is the choice before us.

Regrettably, there are no good options. But the current plan is far better than the original proposal. Executives who have brought their companies to the brink of ruin and now seek public help will be prevented from profiting. There will be no golden parachutes or outrageous executive pay packages. There will be independent oversight to prevent conflicts of interest and outright corruption. The taxpayer will be protected by receiving an ownership interest in any company that receives government assistance. If after five years the government has lost money, the financial industry will be required to pay it back.

This package has been improved because tax cuts are included to help middle class families. More than 900,000 Hoosier homeowners will be eligible for a property tax cut. Tens of thousands of students will receive a $4,000 college credit. Thousands of middle class Hoosier families will not see their taxes rise due to the Alternative Minimum Tax.

Most of all, once we have dealt with the present crisis, we must channel our anger into making sure this never, ever happens again.

There are many culpable parties, and all must be held to account. Houses were appraised at above market rates to make ill-advised loans possible. Loans were given to individuals with no verification about their ability to repay. These bad loans were packaged into securities and sold to financial institutions, undermining their financial strength. Rating agencies gave their blessing, saying that these junk securities were “AAA” rated. Financial firms, seeking massive profits, became highly leveraged, greatly exacerbating the harm of any potential mistake. Credit default swaps and other derivative products proliferated in unregulated markets to such an extent that the entire financial system was endangered. “Off-balance sheet accounting” permitted companies to hide assets from public view. They were supposed to be inconsequential. It turned out they were anything but. All of these items and countless others contributed to the current mess. All must be corrected.

The current proposal is no panacea. More difficult decisions lie ahead. But it is better than doing nothing, and that is the alternative. This is a distasteful but necessary step to protect millions of innocent people from the malfeasance of a few.

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