Kanjorski Supports Restricted Executive Compensation for Distressed Financial Companies

WASHINGTON - Congressman Paul E. Kanjorski (D-PA), the Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, today issued the following statement regarding the economic legislation that Congress is currently working on at the request of Treasury Secretary Henry Paulson, Jr.  As a leader on the Financial Services Committee, Congressman Kanjorski has been working to protect taxpayers and average Americans in the development of this bill.

"To save the American economy, we need to enact legislation giving the federal government unprecedented power to save capitalism from its own excesses.  However, the Congress will not reward the reckless behavior which led us to the brink of catastrophe.  Rather, we will insist upon limits to the compensation paid to executives who take advantage of the federal government's program to purchase their troubled assets.  Furthermore, we will insist upon the ability to recover any bonuses awarded for outrageously reckless behavior that contributed to the current crisis. 

"We must ensure that the American people have the greatest possible chance of fully recovering the staggering $700 billion cost of this emergency action.  We are developing a mechanism that would ensure that if this action succeeds, the American people share in the success.  By purchasing illiquid assets, the federal government is performing a critical service to the financial institutions upon which our economy depends for the free flow of funds.  Every American deserves to share in the upside, since every American is sharing the risk.

"Congress has been put in a very difficult position.  Secretary Paulson is pleading for legislation to prevent global economic meltdown.  Unfortunately, Congress must take extraordinary action to protect American jobs, savings, pensions, and homes. 

"Congress is responding responsibly to the current crisis, but we will not give a blank check to the Secretary of the Treasury, neither the current secretary nor the next secretary who will serve in the next administration.  I am pleased with our efforts to impose some constraints such as the oversight of the Government Accountability Office and the possible creation of a Congressional Oversight Panel.    

"I know I speak for my constituents and my colleagues when I note that none of us are happy to be in the dire situation we face.  Financial Services Committee Chairman Barney Frank and I are fully committed to comprehensive regulatory restructuring so that we do not repeat this sorry moment in history.  Clearly, this is a complex and delicate undertaking which requires great care that we do not inappropriately stifle the spirit of innovation which has made the United States the world's financial leader.  Equally clearly, government regulators must play a role in ensuring the stability of our economy and prevent the type of risks to the entire system that we face now."      

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