Financial Rescue Bill

This legislation was controversial from the moment President Bush first presented it. Many people saw it as nothing more than a bailout for Wall Street firms whose unchecked greed fueled an economic crisis. I understand why so many people reacted this way, but I see it differently.

If this bill were just about helping Wall Street, given its behavior, I wouldn’t walk across the street to save it. But this is about our country. It is about our communities, families and access to credit, creating jobs and economic growth. It will not solve our economic problems overnight, that is for sure. And I don’t know anyone who is glad that we even have to consider this plan. But we must approve it in order to move forward.

In the face of grave and growing instability in our credit and financial markets, the President made an urgent appeal to Congress. He presented a three-page plan to grant never-before-seen powers to the Treasury Secretary to spend a staggering $700 billion in taxpayer money to buy up the bad debt held by banks and investment firms – with no accountability and no protection for taxpayers.

Along with many lawmakers from both parties, I rejected the President’s request for a ‘blank check.’ But I did not dismiss the need to take action to help workers and families already hurt by long-standing economic problems who will suffer further if the financial crisis becomes the full scale economic meltdown so many experts predict.

Americans will not be able to borrow to make payroll at small businesses, invest in new equipment, take out college loans, find mortgages, start new businesses, or buy new cars.

Left unchecked, this crisis will further erode people’s retirement savings accounts, pension funds, and other savings, raise unemployment, and undermine our ability to create new jobs. As we are seeing in California, school districts, counties, and cities are losing millions of dollars because of the collapse of firms in which they held investments.

To protect the taxpayer and help the economy, I successfully fought to add several key provisions to the bill, making it now a far cry from the President’s original three-page plan. We added provisions to:

-- provide money in stages, not all at once, and with congressional approval, to buy up bad debt from financial firms;

-- limit the compensation of CEOs whose firms the government rescues. No more golden parachutes for Wall Street tycoons who get government assistance;

-- provide immediate, ongoing and tough oversight by independent boards, including the Inspector General and General Accounting Office;

-- give taxpayers stock equity of the companies that they rescue, giving them a share of the profits as those companies recover and reducing the overall cost of the plan;

-- help families in foreclosure;

-- provide a mechanism to require companies to pay for any losses the taxpayer might face from this plan, and;

-- increase federal bank deposit insurance from $100,000 to $250,000.

These are very important changes.

The American economy is in its weakest condition in years, with rising unemployment, stagnant and declining wages, record high energy costs, and soaring food prices. Mortgage foreclosures are rising while home values decline further. Fundamental investments in our economy remain unmet – for health care, infrastructure, new energy sources, and for education. Add to this now the very real credit and financial crisis.

While the housing crisis and collapse of the financial markets has its roots in the excesses of Wall Street and Republican anti-regulation policies in Washington, the impact of widespread bankruptcies and frozen credit will be felt by each of us.

Americans have every right to be furious with Wall Street CEOs and eight years of the Bush Administration and 12 years of the Republican-led Congress that did nothing but cut taxes for the rich, de-regulate the banks, and turn their backs on critical oversight.

Now, the party for Wall Street that has been a nightmare for Main Street is over.

I pushed for investments in the emergency plan that would have created good paying jobs in California and across America, infusing money for mass transit, highways, bridges, water recycling, and broadband technology. At a time of rising unemployment, it is astounding and unfortunate that President Bush and Senate Republicans rejected this effort.

I understand the concerns that have been raised about this emergency legislation. No one wants to see a commitment of this much money going to buy up bad debt. But we have improved the plan by building in safeguards for the taxpayer and trying to reduce the plan’s overall cost. And, again, I strongly believe that failing to approve it will be far worse for everyone.

Posted by Peake, Amy at 06:22PM | | Comments () | TrackBack (0)

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