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‘The situation we find ourselves in is serious, it is urgent, and failing to act now could have devastating consequences for our nation’s economy’
WASHINGTON, D.C. – U.S. Senate Republican Leader Mitch McConnell delivered the following remarks on the Senate floor Wednesday regarding the economic rescue plan:
“Less than two weeks ago, the Treasury Secretary came to the American people with some bad news. He said he needed Congress to help. And soon, after significant debate, Congress will deliver.
“The problem we face as a nation is urgent and unprecedented. As a result of lax lending practices earlier in the decade, millions of Americans now find themselves either delinquent or unable to cover their mortgages.
“If this were the only problem, we could address it individually by helping those who were victims of fraud and letting those who made bad judgments or who lied on their loan applications pay for their mistakes.
“But what began as a problem in the subprime mortgage market has now spread throughout the entire economy. And here’s where the crisis hits home.
“After banks made these risky mortgages, they sold them. The institutions they sold them to then shopped them around the world. And now these troubled assets are frozen on the balance sheets of the businesses that you and I rely on to buy everything from dishwashers to new homes.
“At the heart of the rescue plan is a need to lift these assets off the books, and to restore confidence in the institutions that hold them. Then, once the housing market stabilizes, we’ll sell them back.
“Many economists, including those at the non-partisan Congressional Budget Office, predict that once the assets are sold off over the next few years, the net loss to taxpayers could be negligible.
“But for now, the practical problem we face is this: credit, the lifeblood of our economy, is frozen. And unless we act, it’s expected to remain that way.
“This means that the lives of ordinary American families could be severely disrupted, commerce could dry up, and millions of jobs could be lost.
“The original White House proposal for addressing this crisis was unacceptable to members on both sides in its initial form. But both parties have since made sure that the taxpayers are protected once a final deal is reached.
“For my part, I came to the Senate floor and put down a firm marker: if Congress was going to help companies that got us into this mess, then executives at these companies would play by our rules. I also said that the government wouldn’t be allowed to use this plan as an excuse to fund new programs. No golden parachutes. Limits on executive pay. And no favors for special interests.
“Thanks to bipartisan insistence on all of these points, the plan that the House voted on earlier this week included every single one of our initial demands. And so does the plan that the Senate will vote on tonight.
“This process hasn’t been easy.
“For the past week, members of Congress and their staffs have worked around the clock to craft a rescue plan that’s designed to protect American families from the shockwaves of the credit crisis.
“When that plan failed in the House, we picked up the pieces, and we put together an even better plan that we think will make it through the House, and onto the President’s desk — this week.
“It’s important that we act now, because the crisis is spreading.
“Small business owners in Kentucky are writing urgent letters to my office saying that their interest rates are already skyrocketing and putting their businesses — and employees’ jobs — at risk.
“A woman in Central Kentucky wrote that she’s afraid she’ll have to sell off part of her family’s farm.
“A retired school counselor wrote to say she can’t afford to see her small retirement savings vanish.
“A small business owner in La Grange told me he’s worried about the effect on his business and his employees because, in just the past week, the interest rate on the loan he took out to finance his office building more than tripled.
“The current crisis may have its roots in the actions of a few. But its effects could potentially reach into every single home in Kentucky, and every other home in America.
“This economic rescue plan is a necessary effort to protect the vast majority of Americans — whose day-to-day lives depend on ready access to credit — from the misdeeds of Wall Street. And, at this point, doing nothing to prevent an economic collapse is no longer an option.
“Here’s what the second-largest newspaper in America, The Wall Street Journal, said about the rescue plan earlier this week: ‘It deserves to pass because in reality it is an attempt to shield middle America from further harm caused by the mistakes of Wall Street and Washington’ … ‘The current seizure in the credit markets is real,’ the Journal added, ‘and it will do far more harm if not repaired soon …’
“For lawmakers, failing to pass this economic rescue plan would be grossly irresponsible. The voters sent us to Washington to respond to crises, not to ignore them.
“To that end, we have acted swiftly. And lawmakers from both political parties have worked hard to protect taxpayers at the beginning and at the end of this plan.
“Thanks to our insistence, this rescue plan will have strong federal oversight. Not only will there be a strong and diverse executive oversight board watching every single transaction, but we will also have the ability to investigate, pursue, and punish any executive who engages in fraud or who attempts to use this plan for personal enrichment.
“If the government is forced to take over the biggest companies, the first thing we will do is wipe out existing compensation packages for failed executives. Then, we fire them.
“For most other institutions we assist, failed executives will no longer get million dollar payouts. And those who previously negotiated severance packages will pay one fifth of them in taxes — on top of the standard thirty to forty percent tax currently in place. This means that executives at these firms will have to hand over more than half of their existing pay packages to the taxpayer.
“Moreover, no executive who hasn’t already worked out a compensation package will be allowed to get one. At these companies, the days of golden parachutes are over.
“As another way of protecting taxpayers, Republicans insisted early on that every dollar the government gets back as a result of this program goes directly to reduce the federal debt. This plan guarantees it. Every dime we get back will be used to pay our debts.
“Since Monday’s House vote, we’ve made some significant improvements to the bill. In order to protect bank customers, Congress will allow the Federal Deposit Insurance Corp. to insure deposits up to $250,000 for one year, up from the current $100,000.
“We also added significant tax relief for American families and businesses, including a temporary patch on the AMT middle class tax that will protect millions of Americans — including 135,000 Kentuckians — from an average $2,000 increase in their annual tax bill.
“At the moment, this plan represents the best way to bring stability to the credit markets, avoid a credit meltdown, and put America on the road to economic recovery. But Congress's job does not end there. After completing this bipartisan effort, members of Congress must recommit ourselves in strengthening America's long-term economic security.
“We should refocus our attention on a balanced energy plan that enables us to find more American energy resources and use less, and by refusing to spend money we do not have on programs that we do not need, thus laying a strong economic foundation for our children to inherit.
“Soon, Senators will cast this historic vote. And when we do, the American taxpayers should know this: this plan was written with their best interests in mind. Not a dime will be spent without strict oversight. Failed executives will be held accountable. No more golden parachutes. And, in the end, the American people can expect to recoup most, if not all or even more of the money that is spent.
“This legislation is not something any of us wanted to consider. Under ordinary circumstances, high-flying businessmen who make bad decisions or abuse shareholder trust should be allowed to fail. But the situation we find ourselves in is serious, it is urgent, and failing to act now could have devastating consequences for our nation’s economy.
“We must contain the damage. The potential consequences of inaction for our Main Street economy are simply too great.”
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