What Sen. Charles Schumer Wants in the Bailout

Speaking at a hearing on Capitol Hill Wednesday, Sen. Charles Schumer, a New York Democrat, outlined several components he would like to see incorporated into the bailout, including the following:

From Schumer's prepared statement:

Spending the $700 billion in installments:

I think we must seriously consider putting this program in place in tranches, or installments—so that we do not limit the Secretary's ability to act as necessary, but are able to evaluate the effectiveness of these expenditures over time. If the program is working, the Congress will certainly ratify continuing expenditures by the Treasury. But if it is not working, then we will need to review it before we once again find ourselves on the brink.

Equity:

I remain puzzled by the resistance you and Secretary Paulson have offered to proposals that Senator Jack Reed and many of my colleagues have made about the need for equity being part of the process we are discussing. My constituents ask me about it, as do many of the business people and many of your fellow economists who I've spoken with about this. It seems only fair that we reward taxpayers if, as we all hope, this plan succeeds.

Help for homeowners:

I remain convinced that judicial loan modifications, which would allow judges leeway in helping homeowners facing foreclosure, are an essential step that we must consider to resolving these problems, and the housing crisis.

More oversight:

There must [be] greater oversight as part of this plan. This administration is asking simply for trust. However much we may like Secretary Paulson or you, Mr. Chairman, no sane person would put 700 [billion dollars] in your hands on trust alone. I cannot in good faith tell my constituents that "it's fine, we know they'll do the right thing." Strict oversight is a sine qua non.