Statement by Congresswoman Betty McCollum

The Emergency Economic Stabilization Act of 2008 (H.R. 1424)

October 3, 2008

Madam Speaker, our country is facing an economic crisis and America’s families are living with it everyday.  If proof is needed, today, the Labor Department released new employment statistics revealing that 159,000 American jobs were lost in September.  So far this year more than 750,000 American jobs have been lost.  In September alone, more than 1.5 million Americans are working part-time jobs because they cannot find full-time work.  The wages of American workers are stalled and with inflation at 5% it means most working Americans have effectively taken a pay cut.  These are hard times for working families.

This report translates into real pain not just for Main Street, but for every family that sits around the kitchen table deciding how to make ends meet.  We are seeing jobs at risk, credit frozen, business activity stalled, and the pensions and college funds of hard working Americans at risk.  This is an economic crisis and the time for Congress to act is now.

On September 29^th, the House failed to pass the economic rescue package. I voted for that bill and I have no regrets. As a result of the failure of that bill to pass, the stock market went into an immediate free-fall resulting in a $1.2 trillion loss of value.  That translated into seniors losing their retirement, workers losing their jobs, and confidence being lost in the American economic system which exacerbates the downward economic spiral.

What Congress is once again attempting to do today is pass an emergency package that will provide $700 billion to the Treasury Department to buy mortgage-backed securities, sometimes referred to as “toxic paper,” that is strangling the credit market for companies, small business, and families.  This credit crisis is real and we are seeing it manifest itself in the inability of consumers with good credit to get auto loans, banks refusing to lend to banks, and municipalities unable to access financing for needed projects like roads, hospitals and water treatment plants. The entire credit system is frozen and it will require action by Congress to salvage our economy after years excess, abuse, and corruption by Wall Street.

The American people, seeing this rescue package with a $700 billion price tag, should be angry. I am angry.  My office has received thousands of calls from constituents who are furious, but anger should not be an excuse for inaction. Many of these calls, even the majority, have warned me of the evils of what they call a “socialist intervention.”  Many advocated that a better solution would be to keep government out of the crisis and let the market solve its own problem – even if the outcome is a complete economic meltdown. In my estimation, such an argument is both irrational and irresponsible.

The bill before the House today is a critical first step towards stabilizing the economy and preventing financial disaster for millions small businesses, families and seniors.  I support this rescue package because Democrats, Republicans, and the Secretary of the Treasury, along with the Chairman of the Federal Reserve, came together and worked tirelessly, putting politics aside, and put the people’s needs first in addressing this serious crisis.

This bill provides $700 billion to buy mortgage-backed securities.  These are assets with value bundled with distressed assets that will purchased by the government so they can be taken off the books of financial institutions, restoring confidence and trust in the institutions, and allowing for liquidity to return to the credit market.  This is not an ideal solution, but it is not a giveaway either.  This $700 billion is a federal investment that will buy assets that possess value and many experts say taxpayers could break even or earn a profit in the end.  In the meantime serious oversight, accountability, and government regulations have been added to protect the taxpayer.  There is strong language to help homeowners in financial distress to prevent home foreclosure which again makes this bill very important and relevant to American families in trouble. Also, I am very pleased that prohibitions on golden parachutes for executives from companies benefiting from this legislation have been put in place. 

Finally, this legislation is not the end of Congress’s efforts to address the causes of this crisis, only the beginning.  Next week I will participate in Oversight and Government Reform Committee hearings to explore the root causes of this economic disaster. Where there is identifiable malfeasance recommendations for criminal investigation and prosecution should be made to the Justice Department.  Wall Street’s high flyers whose excesses and corruption violated the law must be held accountable.

While this package is not perfect, it is Congress’s best effort to address this economic crisis.  A new provision in this bill that I support is a temporary increase for insured deposits under the Federal Deposit Insurance Corporation from $100,000 to $250,000.  This increase in deposit insurance is intended to allow for additional liquidity in lending and restore confidence for depositors that their money is safe.

There are other aspects of this bill that were added by the U.S. Senate which I strongly object to because they are giveaways to special interests.  Tax breaks for special interests like NASCAR, the rum industry, and the manufacturers of children’s arrows is an egregious abuse of the legislative process to pass out favors. These giveaways result in a $107 billion reduction in revenues to the federal government meaning more deficit spending.

My preference would have been to strip these provisions from the bill.  These pork barrel provisions, if absolutely necessary, should have been offset and paid for to eliminate deficit spending.  The Senate’s irresponsible inclusion of these earmark tax giveaways is an example of how the other body is out of touch with the needs of ordinary Americans.

This week, concluding with today’s vote, the Congress – Democrats and Republicans – will take action not seen since the Great Depression to intervene to restore confidence in the markets.  If successful the result will be to avoid dramatic and damaging pain for America’s families of every income level and geographic location.  Doing nothing to address this emergency situation would be a decision to condemn the U.S. economy and the American people to years of stagnation and hard times.

Following the passage of this bill and its signing into law, there must commence a new era of government responsibility, oversight, accountability, and, when necessary, regulation of the financial markets.  The Reagan era of deregulation for markets and labeling government as the problem is over.  We have seen how this philosophy has mutated into the grotesque excesses of Wall Street’s elite and their massive concentration of wealth. It has infected our economy with a financial pathogen that is now destroying small businesses as well as the lives of families and the communities they live in.

The next Congress – the 111^th Congress – will have a duty to institute unprecedented and tireless oversight of not only this rescue effort, but all the excess in the market place, from Wall Street to the pharmaceutical industry, and beyond.  The Bush administration’s abdication of its duty to regulate and its endless campaigns of misinformation on innumerable issues has eroded the trust American’s once had in their federal leaders.  From the falsehoods that led this nation to war in Iraq to the current corruption scandal in the Justice Department, this White House has destroyed the American people’s confidence in government.  This administration’s failure to regulate Wall Street and protect taxpayers is just another example of misplaced priorities and a costly lack of leadership.

My vote for H.R. 1424 is a vote to protect the jobs, pensions, college accounts, and the savings of millions of hard working Americans.  This important step must be followed with a new commitment to accountability and government oversight. I will be working to make sure this rescue package not only helps restore our economy, but returns every dollar we invest back to taxpayers.