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REP. CALVERT DISAPPOINTED IN FAILURE OF THE ECONOMIC STABILIZATION AND TAXPAYER REPAYMENT PLAN
Rebecca RudmanTuesday, September 30, 2008

REP. CALVERT DISAPPOINTED IN FAILURE OF THE ECONOMIC STABILIZATION AND TAXPAYER REPAYMENT PLAN

 

WASHINGTON, D.C. September 30, 2008 – Yesterday Congressman Ken Calvert (R-CA) voted for H.R. 3997, the Emergency Economic Stabilization Act of 2008 because it was improved to provide repayment to the American taxpayer. The vote failed the House 205-228.

"Americans have been put in a situation that we shouldn’t be in and my job is to ensure that the vast majority of people who pay their bills and mortgages are protected," said Rep. Calvert. "Ultimately, I know that although the situation we are in is the responsibility of recklessness on Wall Street, it has very real impacts on all Americans; from the business owner who relies on a line of credit to a student who needs college loans. I voted for the bill because there were provisions included that required Wall Street to pay back all of the funds, which I considered vital in order to protect Main Street and the typical taxpayer."

"Speaker Pelosi chose to be divisive and partisan rather than put the country first at this difficult time," said Rep. Calvert. "I understand why many of my colleagues voted against the bill but I am hopeful that the bipartisan leadership can come together and quickly turn around and produce another bill that will shore up our financial markets and continue to protect taxpayers and Main Street."

Below are liberal provisions Rep. Calvert was pleased to see House Republicans were able to take out of the original plan:

No liberal slush funds: Liberals wanted to direct 20 percent of the revenues from the program into a slush fund for ultraliberal allies like ACORN. House Republicans successfully demanded it be dropped.

No trial lawyer giveaways: Liberals wanted trial lawyer giveaways that would punish responsible borrowers and help their political allies by allowing bankruptcy judges to unilaterally rewrite mortgage terms. House Republicans successfully demanded it be dropped.

No Big Labor paybacks: Liberals wanted to continue their two-years-long Big Labor payback by giving union bosses seats on the boards of participating financial companies. House Republicans successfully demanded it be dropped.

Bipartisan oversight and accountability: Liberals wanted to stock a seven member oversight board with five Democrats and only two Republicans. House Republicans successfully demanded the panel be truly bipartisan with an equal number of Democrats and Republicans.

The Economic Stabilization Act, which the Congressional Budget Office and the Office of Management and Budget certified would have cost substantially less than $700 billion, includes:

Provisions to pay back the taxpayers. The taxpayer, by way of the U.S. Treasury, would be repaid as the assets regain value and are prudently sold by the government back into the private sector. After five years, the Congressional Budget Office would determine what, if any, funds are owed to the taxpayer and would propose a fee on Wall Street companies to pay back the remainder. (A recent Rasmussen Poll shows that "those who understand that taxpayers will eventually get much of the money back support the bailout by a 2-to-1 margin." "Opposition to Bailout Plan Falls Dramatically")

Federal insurance program protects taxpayers, forces Wall Street to share the burden: Required the establishment of an insurance guarantee program that in lieu of purchasing assets with taxpayer funds would be available to insure assets at no cost to the taxpayer.  Costs would be fully paid for by participating companies (i.e. those receiving the assistance).  Assets insured by the program would count against the total funds the Secretary would otherwise have available to make purchases.

No golden parachutes for Wall Street: Irresponsible corporate executives at participating institutions would not be rewarded with golden parachutes or severance pay.

No more harmful "mark-to-market" accounting rules: At the insistence of House Republicans, the Securities and Exchange Commission would have the authority to suspend "mark-to-market" accounting rules – outdated regulations that artificially undervalue good mortgage assets and have helped exacerbate this economic crisis.

Protection for community banks from Wall Street excess: The rescue plan would help local community banks across the country by allowing them to write off losses on Fannie and Freddie mortgage assets they hold.

Funding would be split into two phases of congressional approval. The release of the remaining $350 billion would have required a joint resolution of Congress.

 

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