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Yesterday, I reluctantly voted to approve the Emergency Economic Stabilization Act. This is not a vote I wanted to make, but it is one I ultimately decided was necessary to keep our economic crisis from worsening. The stock market plunge of more than 777 points was a sign that the emergency is real. That doesn’t just hurt Wall Street, it hurts Main Street as well. Our retirements, college funds, small businesses, and homes are being threatened by this crisis. Just yesterday, I heard from a small business owner in the San Gabriel Valley who had lost his line of credit and was concerned about making payroll. That’s what’s at the heart of this crisis – small business owners and consumers facing a potential credit freeze across our economy.
This debate has been a contentious one, and I have heard from a lot of you about your concerns. You, and I, vehemently opposed the Paulson Plan. It was too much of a blank check with no oversight or accountability. Your concerns are what pushed House Republicans to fight for changes to the plan initially put forward by the Treasury Secretary. We fought to make sure the final plan was much tougher on Wall Street, much more punitive for crooks, and had much more protection for every taxpayer. We insisted that there be no golden parachutes for failed corporate executives. There is absolutely no reason failure of this magnitude should be rewarded. We also fought to increase taxpayer protections by ensuring the treasury is repaid in full for its investment in these troubled assets. Some in Congress wanted to divert the recovered money to partisan groups like ACORN instead of directing it to pay down the debt. We said no. We fought to make sure ALL the money went back to the taxpayers. We also worked hard to significantly increase the oversight of this program. In the original version, there was none. By the time it came up for a vote, there were real checks and balances. Was this bill perfect? Absolutely not. Was it dramatically better than what we had originally been asked for? Yes.
The anger about why our economy is in such upheaval is very real and we all are rightfully concerned about the future. To be honest, I’d like to see some of the crooks who caused this crisis thrown in jail. In the meantime, I remain in Washington this week because I am convinced we have to take real steps to get our economy back on track. My vote yesterday was a good faith effort to do that. I don’t believe the blame game is going to help anyone save for retirement or college or keep their home and I’m not interested in playing it. We clearly have more work to do. I am committed to working toward a solution and feel confident that the House will work to come up with a proposal that can win support across party lines and begin to move the country away from the brink of financial disaster.
Please stay in touch with your thoughts and concerns as this process moves forward.
Sincerely,
David Dreier
Member of Congress
Following is a list of key changes to the original Paulson Plan secured by House Republicans to better protect taxpayers:
• Real Accountability to Protect Taxpayers. House Republicans insisted on real accountability in the final bill. In general, the Treasury is limited to purchasing up to $250 billion outstanding at any one time. If the Treasury needs to use another $100 billion, the President must certify this action and report to Congress. Further spending requires congressional action.
• Real Oversight to Strengthen Taxpayer Protections. Treasury’s initial proposal had minimal oversight to protect taxpayer dollars and House Republicans rejected it. Instead, we insisted on a more rigorous oversight structure by creating a Financial Stability Oversight Board, a Special Inspector General, and a Bipartisan Congressional Oversight Panel.
• No Tax Increases. House Republicans insisted that the final measure include NO tax increases. The proposed compromise simply requires a proposal from the Administration to recoup any losses after five years. In fact, the final measure includes tax cuts for struggling community banks.
• Equity Stake for Taxpayers. Because of House Republicans, any AIG-type deals in the future require mandatory equity interest in order to provide taxpayers with potential future benefits. All auctions require a percentage of equity or debt based on the level of participation in the program.
• Another Option to Limit Taxpayer Exposure: House Republicans insisted that Treasury be given multiple options to deal with the current economic crisis. Under the final measure, Treasury must create an insurance program that protects the taxpayers and requires companies that participate in this program to pay risk-based premiums.
• No Pet Projects for the Special Interests. House Republicans insisted that the bill not contain the pet projects initially slipped in to reward special interests like ACORN. The original Frank-Dodd proposal created an affordable housing slush fund and directed 20 percent of net benefits from the program to be directed to ACORN-type organizations. The final measure directs all net benefits back to the Treasury to pay down the national debt.
• Blocking Trial Lawyer Pork. House Republicans insisted the bill lose the so-called “cramdown” provisions allowing bankruptcy judges to reduce mortgage principals under the guise of helping those at risk of foreclosure. This would have been a bonanza for trial lawyers and undercut the effectiveness of any economic recovery effort by making it even harder to value mortgage-backed securities.
