The magnitude of the 2008 financial crisis in the United States unfolded in late September when U.S. Treasury Secretary Henry M. Paulson came before a joint congressional committee and said “I have run out of tools. We have four days before the whole thing falls apart,” Sen. Bob Bennett (R-Utah) told a group of campus and community members recently.
Bennett participated in a forum this week on the financial crisis at the William & Mary Law School. The forum, hosted by the Law School’s Election Law Society, addressed the causes of the crisis and advice for the future in addition discussion on the creation of the Rescue Plan.
The senator, who serves as a senior member on the Senate Banking Committee, was among the leadership of the U.S. Senate that helped create, negotiate and pass the Financial Rescue Package. He told the standing room only crowd “no one single factor” created the rise in housing prices at the root of the country’s current fiscal state. Instead, he said, the crisis was fed by a confluence of events including the easing of income requirements for credit, zero down mortgages and a tangle of interbank loans.
The $750 million dollar rescue package was the correct course of action, Bennett said, even in hindsight. “There are times when you have to act and you have to act responsibly.”
Bennett, who also serves on the Joint Economic and Senate Appropriations Committees, said he has confidence in the country’s economic future, while acknowledging the U.S. would have to deal with a recession.
“We will get this financial thing resolved one way or the other. That doesn’t mean the recession will be taken care of. We’ve got to work our way through the recession in more classic ways.”
Still, he is optimistic.
“Fortunately, we have as chairmen of the Federal Reserve a man who is a student of the Great Depression and the Fed is not making the same kind of mistakes,” Bennett said.
Bennett has represented the state of Utah in the Senate since 1992. Prior to coming to Congress he served as CEO of the Franklin International Institute and was named Inc. Magazine’s “Entrepreneur of the Year” for the Rocky Mountain region.
Asked for advice, Bennett cautioned against the “bubble mentality” – that “tendency of human beings to, when they see something in the commercial scene going up in price, to assume that they finally found a good thing that will always continue to go up in price.”
“There will come a time in your life when you will be tempted to buy that third house,” he told a student. “Don’t do it.”