FOR IMMEDIATE RELEASE
September 29, 2008

Washington, D.C.—Below is Congressman William Jefferson’s statement on H.R. 3997, The Emergency Economic Stabilization Act of 2008.

“Leading economists in our country cannot agree on whether a bail out of our nation’s financial institutions is needed, and, if it is, whether having our government buy $700 billion dollars in bad real-estate loans does the job. I have concluded there is a need to infuse liquidity into our banking system, but there is a better way to do it than adding nearly a trillion dollars to our national debt – to be paid by our children and grandchildren – and placing extraordinary new powers in the hands of an Administration to spend this $700 billion in taxpayer funds, whose cozy relationship with Wall Street bankers was a principal cause of the present financial woes of our system.

Two stated reasons for the overly fast paced bail out – funds fleeing money market accounts and depositor confidence – are easily handled without having taxpayers take on any new debt. The Treasury, ten days ago, put the federal government’s guarantee behind money market accounts, and deposits of most depositors are backed by the FDIC, with the full faith and credit of the U.S. Government.

To infuse new capital into banks holding troubled mortgage - backed securities, our government would be better advised to buy the good assets/equities of banks – thus guaranteeing equal value for federal dollars spent, meaning, essentially, no new federal debt at all. The banks would get the money they need and our Treasury would not have to take bad real-estate debt to market at below-value, fire sale prices, incurring losses on the part of taxpayers. On the bottom end of the process, where citizens and businesses are dealing with foreclosures and loan failures, we should provide new rights in bankruptcy proceedings to give them a chance to hold on to as many individual residences and business assets as possible.

Not enough time has been taken to consider alternatives. Many taxpayer friendly models, superior to the one Congress was forced to vote on today, created by our government during the Savings and Loan crisis of a few years ago, could have also been tailored to the current crisis.

Although H.R. 3997 is far better than the bill first presented to Congress by the Administration, I still could not support it. It is far too expensive, too uncertain as to its chance for success, and too hurriedly considered to give taxpayers the best chance for an equitable outcome. Our nation and our region have great needs that must be addressed. Given our current budget deficits, we should be as prudent as possible in expending taxpayer dollars, so that we can meet the needs of all of our people with the resources available. Unfortunately, H.R. 3997 violates this principle, and I therefore voted “NO” on it today.”