As debate rages about the government’s financial bailout plan, one ASU professor took his views to Capitol Hill.
Anthony Sanders, a finance professor in the W.P. Carey School of Business, testified Nov. 14 in front of the Congressional Oversight Committee’s Domestic Policy Subcommittee, chaired by Rep. Dennis Kucinich. The subcommittee held a hearing to review the Department of the Treasury’s spending of the $700 billion financial bailout.
“I told them they need to go in and take action,” Sanders said.
He said Congress needs to hold the Treasury to the original bailout plan, which gave the department $700 billion to buy bad loans from banks.
“Instead, Secretary Paulson used the funds to give capital to banks,” Sanders said. “Simply giving [banks] money doesn’t solve the problem.”
The hearing was held to determine if Congress should step in to oversee the bailout spending, but anything more than a recommendation from the committee to Congress could take a very long time, Sanders said.
“At this point, it’s merely, ‘Does Congress try to intervene?’” he said. “They want to take a look at what the treasury department is doing with the $700 billion, and they felt that the Congress approved $700 billion, and perhaps Secretary Paulson wasn’t spending it the way Congress wanted him to.”
After the hearing, Kucinich wrote a letter to the Committee on Financial Services chairman, Rep. Barney Frank, suggesting Congress withhold the second half of the $700 billion.
Jaron Bourke, a staff director for the Domestic Policy Subcommittee, said the letter included important recommendations based in part on Sanders’ testimony.
“[He] played a part in advising Congress about what would be the prudent course of action to take,” Bourke said. “He really was an important contributor.”
Sanders was one of seven people testifying in front of the subcommittee, including Neel Kashkari, the interim assistant secretary of the Treasury, Bourke said. The other six people were leading members of economic community.
Bourke said Sanders was chosen because he is a leading expert in explaining the mortgage crisis and because he was one of the most insightful commentators about its history.
“He spoke about [mortgage loans] from the perspective of having an efficient marketplace. That’s a very important perspective, and furthermore, he was able to speak about the … ways in which that process can be corrected,” Bourke said.
Robert Mittelstaedt, dean of the business school, said the fact that Congress called on Sanders was significant for ASU.
“They tend to seek people that they can get a hold of quickly and easily, and that tends to be people that are up and down the east coast,” he said. “It reflects very favorably on ASU and W. P. Carey.”
Mittelstaedt said Sanders’ testimony helps broaden the reach of ASU and the business school. He said this kind of reach goes to make ASU a “top-of-mind” business school, where people readily think of the University for its prominence in several areas.
“Congress calls on many experts for many things, but in this particular case, because this is such a critical issue for our nation and our economy, we are very pleased that one of our faculty is being called upon,” Mittelstaedt said.
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