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AFL-CIO: Mortgage Bailout Needed, Plus New Stimulus Package

09.17.08

http://blog.aflcio.org/2008/09/08/afl-cio-mortgage-bailout-needed-plus-new-stimulus-package/

AFL-CIO: Mortgage Bailout Needed, Plus New Stimulus Package

by James Parks, Sep 8, 2008

The federal bailout of mortgage giants Fannie Mae and Freddie Mac—institutions pivotal to middle class home ownership—was clearly necessary. But the government needs to go further and provide a second economic stimulus package to spark the struggling economy, AFL-CIO President John Sweeney says.

The federal government announced Sunday that it is taking control of mortgage giants Fannie Mae and Freddie Mac. Treasury Secretary Henry Paulson said the companies will be placed into conservatorship under government control. The Treasury also will invest up to $100 billion to each company over time and lend them money as needed.

But part of the bailout grants executive severance packages totaling more than $21 million—and that portion of the bailout should be frozen pending a full review of their conduct, Sweeney said in a statement.

With the unemployment rate at 6.1 percent—the worst in five years—Sweeney says Washington must be just as aggressive in enacting a stimulus package “that will quickly stabilize and spur our nation’s entire sinking economy.”

Congress must pass a stimulus package that focuses on fiscal relief for states and cities and extends unemployment benefits to cover those still without work. It should include funding for food stamps to make sure that all Americans can provide for their families. Finally, it must provide funding for ready-to-go construction to repair schools, roads and bridges—construction that will help create good, family-supporting jobs in many communities where there are currently none.

Democratic presidential candidate Barack Obama agrees and has called for a second stimulus package for the nation’s working people. He also says the bailout

must not focus on the whims of lobbyists and special interests worried about their bonuses and hourly fees, but instead on strengthening our economy and helping struggling homeowners who are also being hit by lost jobs, stagnant wages and spiraling costs of everything from gas to groceries.

Despite the jobless figures, which include eight consecutive months of job losses, a Bush administration spokesman said there was no need for a second stimulus package because the first stimulus plan was having the intended impact.

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