Highlighting some of the fissures in a proposed agreement to buy up troubled assets from Wall Street, the leading Republican on the Senate banking committee said Thursday he plans to oppose the deal.
In a statement released while Sen. Richard Shelby, R-Ala., was scheduled to be meeting at the White House to discuss federal intervention to shore up financial markets and credit liquidity, Shelby said the proposed solution is moving too quickly.
"We did not get into this situation in a matter of days, and we are not going to fix it in a matter of days," Shelby said.
He went on to oppose Treasury Secretary Henry Paulson's proposal to buy up to $700 billion of mortgage-backed securities and other "illiquid" assets - even after Congressional leaders from both parties had largely agreed on a framework of oversight and restrictions to approve the plan.
"Proponents of the Paulson plan are telling the American people we can solve this problem with a single bill," he said. "I don't believe that is credible."
Shelby went onto discuss a number of "interrelated problems" that he said required significant work.
"First, and most urgent, is liquidity," Shelby said. "Then we must address the solvency of our financial institutions and declining home values, not to mention our entire regulatory structure."
Shelby proposed enhancing existing federal loan programs, providing Treasury and the Federal Reserve with more resources and stabilizing money market accounts in the short term to address the liquidity problems in lending markets and said Congress should return next year to deal with the other issues.
"Even if the Paulson plan works perfectly, which many doubt, including nearly two hundred economists, it will not stimulate new lending, stop de-leveraging, help distressed home owners, or jump start the economy," Shelby said.
"The next Congress is going to have to do more to address this crisis and we have not made this clear to the American people," he continued. "As a member of Congress, I'm concerned that we are being asked to ratify the Secretary's plan without having given meaningful consideration to any alternatives."
"This I can not support," he concluded.
However, President Bush warned of a "serious economic crisis" if Congress failed to approve the measure in a statement before the meeting, which also includes both parties' presidential nominees, Sens. Barack Obama, D-Ill., and John McCain, R-Ariz.
"One thing the American people have to know is that all of us around the table take this issue very seriously and we know we've got to get something done as quickly as possible. And this meeting is an attempt to move the process forward," Bush said. "My hope is that we can reach an agreement very shortly."
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