Congressman Dreier Statement on Passage of the Economic Rescue Package

October 3, 2008

For the second time this week, Congress considered a plan to unclog our banking system and unfreeze our credit markets. I know that the anger about this action is deep and real. Responsible taxpayers who pay their mortgages on time and don’t spend beyond their means do not want to pay for the abuses and bad decisions of predatory lenders, Wall Street executives and irresponsible individuals. I agree completely. That is why I fought so hard for a bill that wouldn’t leave the taxpayers on the hook for restoring our credit markets. I said NO to a bailout for Wall Street, no to golden parachutes for bums who caused this problem, no to a blank check for Secretary Paulson, no to taxpayer funding for partisan groups like ACORN, no to allowing judges to reduce the value of our homes, no to mandating union leaders to serve on boards of private business, no to government manipulation of the housing market. I fought for and voted YES for a plan to unclog the banking system, yes to increased protection for family and small business savings, yes to ensure that sons and daughters have access to student loans so they can get a college education, and most important of all, yes to guaranteeing that the taxpayer dollars are going to be repaid in full and made whole.

Today’s bill is rightly called a rescue bill. But who are we rescuing? It’s not the fat cats. Today we are focused on the working Americans whose livelihoods are threatened by our current economic downturn. Small businesses are losing their lines of credit. Families who have saved for a down payment for years are unable to get home loans. Parents and students are finding it difficult to get loans for college tuition. Those nearing retirement have seen their nest eggs evaporate as the stock market has fallen. It’s not just the irresponsible who are suffering. Today’s credit crunch is hurting businesses and individuals indiscriminately. It is bringing our engines of growth to a grinding halt and shutting hardworking Americans out of their dreams. This bill is not a bailout for Wall Street. It is a plan for restoring job creation and opportunity throughout our entire economy.

This bill also includes two key additional measures. First, it allows the FDIC to insure larger bank deposits, which is absolutely essential for protecting small businesses and for preventing panicked runs on banks. Second, it extends a number of critical tax credits including production and investment tax credits for renewable and alternative energy to promote growth in small businesses, and protection from the Alternative Minimum Tax that would have otherwise unfairly hit millions of American families. Some groups have characterized these tax provisions as pork, but I wholeheartedly disagree. Reducing the tax burden on families and small businesses is an important tool for getting our economy back on track and allowing Americans to keep more of their own hard-earned money.

The final package was still far from perfect. Californians remain deeply divided on whether it was necessary. But Congress was faced with a choice: take action to prevent responsible Americans from further suffering at the hands of bad actors, or do nothing. I chose to take action, so that our markets can once again operate freely and restore our economic strength and vitality.

Taxpayer Protections:

• Increases the amount of bank deposits insured by the government from $100,000 to $250,000 through 2009.  The current limit of $100,000 was set 28 years ago and has not been adjusted for inflation. This will help small business owners and entrepreneurs meet their bottom lines and make payroll.

• Protects 21 million middle-class families from getting hammered by the Alternative Minimum Tax (AMT) for tax year 2008. The rescue plan protects working families from the AMT – an unfair tax, initially intended to affect only the ultra-wealthy, that middle-class Americans were never meant to pay. Without action, 21 million middle-class families will be hit with an average tax hike of $2,500.

• Extends critical energy tax credits and incentives to encourage conservation and the development of renewable energy technologies. The package extends the recently-expired research and development tax credit, which encourages cutting edge research and job creation on American soil, and tax laws that encourage the production of electricity by wind, solar, and biomass, all of which are vitally important as America works toward energy independence.

• Extends tax deductions on state and local sales taxes.  In past years through Republican tax relief, taxpayers have been given the option to claim state and local sales taxes instead of state and local income taxes when they itemize deductions.

• Reaffirms the steps the Securities and Exchange Commission (SEC) has taken to ease harmful “mark-to-market” accounting rules. The SEC has issued accounting guidelines that allow banks to move away from “mark-to-market” accounting rules – outdated regulations that artificially undervalue good mortgage assets and have helped exacerbate this economic crisis.

• Federal insurance program protects taxpayers, forces Wall Street to bear the burden: Requires that companies “pay to play” by footing the bill for insurance premiums to cover their risks.  This company-funded insurance will help to ensure that taxpayer dollars are not lost on bad investments.

• Up-front Treasury authority cut in half: Secretary Paulson’s original proposal sought $700 billion in up-front, immediate authority. The new economic rescue plan cuts this up-front authority in half. The Treasury would have $250 billion in immediate authority, with another $100 billion available after the Secretary reports to Congress. Congress must act to release the remaining $350 billion.  

• Taxpayers protected against losses: Taxpayers would be first in line to recoup losses from participating financial institutions in the event they fail or lose money – not shareholders and certainly not corporate executives.  Taxpayers would also be first in line to earn profits as assets grow in value.

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

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

• A temporary program: Treasury’s authority to take troubled assets off the balance sheets of financial institutions expires on Dec. 31, 2009. The Treasury Secretary can extend the authority for an additional year upon certification to Congress.

• No liberal slush funds: Republicans successfully prohibited a single penny from being redirected into a slush fund for special interests like ACORN.  All new revenue must go toward paying down the national debt.   

• No trial lawyer giveaways: Republicans successfully prohibited trial lawyer giveaways that would punish responsible borrowers and allow bankruptcy judges to unilaterally rewrite mortgage terms.

• No Big Labor paybacks: Republicans successfully prohibited mandating union bosses seats on the boards of private financial companies.

• Bipartisan oversight and accountability: Republicans successfully demanded that the five-member oversight board be truly bipartisan, not stacked for one party or the other.