The Financial Rescue Package

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Many of my constituents have contacted my office to express their views on this legislation. I reviewed their comments and I respect the fact that they took the time to make me aware of their position.

I voted for this legislation because inaction would seriously threaten the economy for middle-class families in my district. I do not support everything in this bill, but it is necessary because it will allow our local banks to continue lending money to families and small businesses.

Our national economy is experiencing serious financial problems. As demonstrated by the recent dramatic fall in stock prices, the largest one-day point drop in the Dow-Jones Industrial Average in our nation’s history, this situation is an emergency. Congress had to take immediate action.

Let me stress that this is not a "bail out of Wall Street." The bill Congress approved is very different from what the Administration proposed. It is focused on helping American families, the communities we all live in, and the local businesses we all rely upon. Any investment of federal tax dollars in financial assets of these firms will give the taxpayers an equity share and a chance to recover these tax dollars in future profits. Both the Office of Management and Budget and the Congressional Budget Office forecast the total cost of this action will be significantly less than the amounts discussed in the media.

The Emergency Economic Stabilization Act provides $250 billion in initial funds now, with an additional $450 billion available if approved by Congress next year. The EESA protects American taxpayers by:

• Requiring that the President propose legislation to raise revenue from the financial industry in order to offset any net losses to the taxpayers. This step is to ensure that American taxpayers and future generations are not left with this debt.
• Increasing the limit for federal deposit insurance from $100,000 per account to $250,000. FDIC insurance protects Americans’ checking and savings accounts if a bank becomes insolvent, and this provision was vital to give confidence to every family that their savings and their retirement funds are safe.
• Permitting the Treasury Department to take an ownership share in any company that participates in the program. The ownership share would allow the government to receive a portion of the future increased value of these assets if they were to become profitable after the government bought troubled assets. This gives taxpayers an equity share in the participating companies with a chance to repay the emergency funding from appreciated assets.
• Providing tax relief to over 22 million Americans by fixing the Alternative Minimum Tax (AMT), keeping it from impacting middle-class families.
• Helping Americans keep their homes and to avoid foreclosure. It requires that firms participating in the plan help families who are behind in their mortgage payments renegotiate the terms of their loans to make them more affordable.
• Requiring Congress to exercise constant oversight over the bailout funds to make sure that the money is accounted for and spent wisely. This oversight will allow for the development of responsible regulations to prevent this situation from occurring again.
• Limiting compensation packages of the executives of these companies. No golden parachutes. The executives that created this problem should not be rewarded with taxpayer dollars.

The initial plan called for billions to secure failing financial institutions, administered at the discretion of the Treasury Secretary without oversight or accountability. That was a bad plan, and we worked to secure tough, real-time oversight of the process. This new package goes beyond just shoring up the economy. It provides a clear path to help homeowners stay in their homes, helps business owners get access to desperately needed capital, unfreeze the credit markets, and it starts much needed reforms of the financial sector so that we are never in this economic situation again.

Unemployment in the United States is at a seven-year high, energy prices are at historic highs, and already burdened Americans are seeing the collapse of major U.S. financial institutions. I have spoken to economists and business managers from across the political system, and they agree that Congress had to act quickly to stabilize our economy.

History gives us guidance about the right approach in a crisis like this. At the start of the Great Depression, President Herbert Hoover chose to stand aside while the financial system collapsed. We cannot stand aside and allow this crisis to harm Americans' homes, savings accounts, and retirement investments.

I believe the alternative to this bill--to do nothing--would have devastating consequences for our economy that would bring great harm to every community in America. If we let our financial sector fail, all American businesses would suffer greatly. The failure and collapse of these companies would hurt the availability of all lines of credit, so that commercial banks would not be able to lend money for a home, college loan, or small business investment.

We all have the right to know how we got here, why this rescue plan is important, and how we are going to transparently and responsibly move out of this financial crisis. One of the main reasons that we are in the crisis is the lack of proper safeguards and regulations of the financial services industry, regulations which were removed by this Administration over many years. I will fight to make sure that this plan puts the average person first, protects American taxpayers by allowing them to share in the profits and recover assets, and includes strict accountability and oversight. We also need to understand how we got into this situation. The House Committee on Oversight and Government Reform, Congress’s investigative body, is already planning hearings in the coming weeks to investigate the root causes of this crisis and hold people responsible.

I certainly hope that we begin to see the economy improve as a result of this action. Please do not hesitate to contact me in the future if you have any questions or comments.