There could be a new multibillion-dollar bailout in the future for federal taxpayers, says the chairman of the House Banking Committee.
The Federal Deposit Insurance Corp., which guarantees bank deposits, is in obvious distress and the Bush administration's proposed solution is nothing more than "convoluted and questionable borrowing schemes," Rep. Henry B. Gonzalez, D-Texas, said Wednesday.The American people, who already have had to pump $80 billion into the rescue of failed savings and loans, "are beginning to smell a new taxpayer bailout," Gonzalez told reporters. If there is basis for that fear, he added, "it would be prudent of the administration to level with the people up front."
Gonzalez said he has called for FDIC Chairman L. William Seidman and Alan Greenspan, chairman of the Federal Reserve Board, to testify before his committee on April 11 and 19, respectively.
Honest answers from the administration and quick action by Congress would prevent "some five-minutes-to-midnight call for emergency legislation when the bank insurance fund goes broke," Gonzalez said.
The administration has proposed that FDIC be allowed to borrow $25 billion from the Federal Reserve system..