Oberweis makes economic bailout suggestions

Calling it a hasty decision worse than the rush to war five years ago, 14th Congressional District hopeful Jim Oberweis slammed the core of the proposed economic bailout plan and offered some suggestions to soothe the crisis Wednesday.

Oberweis said the plan for the government to use $700 billion to purchase so-called toxic assets from struggling financial agencies under the assumption that the assets will eventually sell for more than they are currently worth is "so fundamentally flawed that there's just no way to make good sense of that."

A better idea is for Congress to codify some of the actions the markets are already taking to correct themselves, Oberweis said.

After reviewing Oberweis' bailout news release, his opponent, incumbent Democratic Congressman Bill Foster, parried it as old news.

"What we need right now is for the two parties to work together, work out a compromise that will pass Congress and restore confidence in the financial markets," Foster said in his own written statement.

"What is not needed now is more ideologically based rehashing of concepts that have already been considered and rejected by both parties, or more excuses for the abusive Wall Street practices that have gotten us into this crisis."

Oberweis said he supports the U.S. Securities and Exchange Commission's decision on Tuesday to ease an accounting rule known as "mark to markets" or fair value accounting. The rule requires companies to value their assets at the prices they could be immediately sold for.

In the phenomenon of more and more defaulted home mortgages across the country, even mortgages that haven't defaulted begin to lose value based on the bad mortgages dragging down the base selling price of mortgages in general. It's no longer about what the good mortgages will be worth down the road, but what all mortgages are worth in general. In the current crisis, mortgage values have tanked as the assets behind them lost value.

Oberweis said suspending that accounting practice would prevent companies from having to downgrade the value of certain assets when they really will be worth much more. That, in turn, would make those assets attractive once again to buyers and infuse money back into the markets.

Second, Oberweis said he supports a provision in the bailout legislation the U.S. Senate was considering Wednesday that raises the limits on federal deposit insurance. which is the insurance that backs deposits in the nation's banks. Oberweis wants to raise the insurance limit to $250,000 for individual accounts. The current limit is $100,000.

Finally, Oberweis suggested the creation of a new class of stock. The stock would allow companies to issue stock that wouldn't be subject to capital gains taxes when it was sold, but Oberweis did not detail what assets such a stock might entail. However, he said the stock could catalyze the economy with billions of new dollars.

The issue of capital gains taxes in regards to the current economic woes was briefly addressed by the House's Financial Services Committee and dismissed as part of an overall shunning of changes to the tax code as being insufficient to address the current problems.

Perhaps offering insight for all lawmakers and candidates, however, was a late afternoon conference call between Oberweis and 14th District constituents. It was clear many residents still don't buy the notion that any taxpayer dollars should be used to address the situation and particularly not for the purchase of any of the "toxic" mortgage assets.