Rep. Nadler Statement on Financial Rescue Package

WASHINGTON, D.C. – Rep. Jerrold Nadler (NY-08), the Congressman who represents Wall Street, the physical and symbolic center of the American financial market, today issued this congressional statement prior to his affirmative vote on H.R. 3997, the Emergency Economic Stabilization Act of 2008, which was defeated on a vote of 205-228:
    
    “Madam Speaker, I rise reluctantly in support of this rescue package.  I have great reservations about this legislation, but after looking at the situation carefully, reviewing the facts, and speaking with economists whose views and expertise I value, I believe that the threat to our credit markets is both real and urgent.

    “Is the danger severe enough to warrant supporting a bill about which I have strenuous reservations?  I believe so.

    “In the past, I have been very skeptical of proposals brought to us by this Administration with the warning that the situation was dire, that we could not afford to be more deliberate, and that we must give the administration broad new powers.  I opposed the USA PATRIOT Act, the recent FISA legislation, and the vote to authorize the war in Iraq.  In each instance, we were told that the danger was great and imminent.  The Administration went so far as to warn of a smoking gun in the form of a mushroom cloud.

    “Unfortunately, these tactics worked, and Congress was stampeded into doing the wrong thing.  In each case, it was not easy to stand in the way of the stampede, but, in my judgment, after examining all the known facts, it was the right and necessary thing to do.

    “In this case, the Administration should have seen this crisis coming years ago.  Many of us warned that the Administration’s deregulation policies were leading us toward disaster, but so long as unprecedented profits were rolling in, the voices of caution were ignored.

    “The near-religious belief that unrestrained markets would bring nothing but good times, that real estate prices would spiral upward forever, that financial instruments that even the directors of the firms selling them did not understand, would always bring prosperity, permeated thinking in government and out.

    “History should have taught us otherwise.  Our current situation proves otherwise.

    “When the final accounting came, the boom was revealed for what it was:  history’s largest and most costly ponzi scheme.

    “Finally, the Administration acted – belatedly and arrogantly.  Only a week ago, they told us that the situation was dire, that they needed $700 billion – more even than the President’s Iraq adventure has cost so far – and presented us with a three page proposal that said essentially, ‘Give the Treasury Secretary a free hand with nearly a trillion dollars, make sure no one can go to court to stop him if he gets out of hand, forget any oversight or transparency, don’t worry about paying for it, don’t do anything to help the middle class, then buzz off.’

    “In defense of that request, they said we should just trust them – the same people who got us into this crisis – with power even the Vice President only dreams of.

    “As the old joke goes:  how do you say ‘drop dead’ in Washington?  ‘Trust me.’  Only this time, it’s not funny.

    “The legislation before us today is not very attractive, but it is greatly improved from the President’s proposal.  The bill has increased transparency.  It leaves available court remedies, although not as many as I would want.  It partially repays the taxpayers by providing for acquiring an equity stake in participating firms.  It does have real oversight.

    “I am deeply disappointed that some very important provisions for which I fought were not included.

    “The package should have been paid for with a repeal of tax breaks on the wealthy, and of giveaway tax benefits for oil companies and other big corporations and for the industry that caused this mess.  The shareholders should have borne more of the cost of this package.  They are the ones who profited, and they are the ones who should pay.  I do not believe in privatizing profits while socializing risk.  That’s not capitalism, that’s lemon socialism – the people get only the lemons.

    “It is clear that the taxpayers will not be on the hook for the full $700 billion authorized, because the securities that will be acquired are not as worthless as the market now assumes, although we do not know how much they are really worth.  
    
    “I believe that the Bankruptcy Code should have been fixed so that families with predatory or subprime mortgages could restructure their mortgages.  Mortgages are the only secured debts in bankruptcy that cannot be restructured.  Investors can do it with their properties; the Senator from Arizona [Senator McCain] can do it with six of his seven houses; you can do it with airplanes, yachts, steel plants, or anything else.  The only exception is the family home.  That’s wrong, and we should have fixed it in this bill.

    “We need comprehensive regulatory reform in order to stave off the next financial catastrophe, and we need a President and regulators willing to enforce the laws we have on the books.  The bill does not do that, but the next Congress must enact comprehensive regulatory reform.  We need to take away from this experience the lesson I had thought the nation learned in 1929.  Sound regulation in markets is necessary to maintain stability.

    “So, as I said, I am angry that we are in a situation we could and should have avoided, and I am disappointed with the bill we are voting on today.  I am especially angry that we are now at a point where, as unpopular as this is – and my constituents have told me that they do not like this any more than I do – we must act.

“The crisis is real and immediate.  If the credit markets freeze – as they started to do last week and, as we are warned by almost all credible economists, they will if we do not act – we will face a calamity.  All economic activity dependent on credit will cease.  Businesses will not get loans to expand or to meet their payrolls.  Thousands of banks will fail, ATM machines will dispense no funds, credit cards will be worthless, millions will be thrown out of work, and we could face a repeat of the Great Depression of the 1930s.  We cannot be certain this bill will stave off this calamity, but it might.  When faced with a choice between a certainty of catastrophe and a possibility of averting a catastrophe, the choice is clear.

    “Madam Speaker, I reluctantly support this legislation, and I urge my colleagues to do the same.”