The comments of a Congresscritter
10-01-2008, 11:57 AM
#1
Registered User
Thread Starter
The comments of a Congresscritter
I wrote to my House representative Pete Sessions (gasp! first time I've ever done anything like that) and got the following response today. I hate the partisan fingerpointing in it, but it has some tidbits about Monday's bill I hadn't known that are some good thinking points IMO.
=========
Thank you for contacting me and providing me with your opinion on the Emergency Economic Stabilization Act. I appreciate having the benefits of your thoughts on this difficult issue for American taxpayers and the American economy. Over the last few days, I have received a great deal of feedback from my constituents, I would like to take this opportunity to discuss the problem underlying this emergency and what is happening in Washington to address it.
How We Got Here, and the Stakes Involved
The root cause of today's crisis is simple: the unchecked proliferation of losses from "N.I.N.J.A." (No Income, No Job or Assets) loans throughout our financial system. After infecting the financial services sector, this problem spread to the commercial credit markets that are used by businesses of all sizes and across all sectors - and now threatens to hit Main Street as hard as it has already hit Wall Street.
While the effects of this freeze in the commercial credit markets may seem like they could be contained to the financial services sector, we learned last week that a number of large corporations that have nothing to do with financial services have completely stopped extending lines of credit to franchisees - which means countless small business owners will not have access to the credit they need to pay employees and purchase inventories.
When this fact is coupled with testimony from economists that a failure to address this crisis may cause a wholesale failure of the banking system - severely affecting the lives of everyday Americans - it is clear that the ill effects of this bad decision-making by Wall Street will not be borne only by those bad actors that caused it, but by every American.
The Administration Proposal and the "Paulson/Pelosi Plan": From Bad to Worse
The Administration's response to this crisis came in the form of a three-page proposal from Treasury Secretary Henry Paulson asking Congress for unlimited authority over $700 billion to buy this bad debt at taxpayer expense. Unsurprisingly, this proposal was met by stiff resistance - especially by me and my Republican colleagues in the House of Representatives who believe in smaller government and limiting taxpayer exposure.
When it became clear that this proposal had no support in Congress, House Speaker Nancy Pelosi and House Financial Services Committee Chairman Barney Frank then negotiated a number of changes with the Administration intended to shore up liberal support for the measure - including earmarks for trial lawyers and community organizers like ACORN - that went even further away from my goal of protecting the taxpayer.
The House Republican Revolt
In response, House Republicans offered their own counter-proposal to this constantly-evolving compromise between the Administration and Democrat Leadership. The conservative Republican proposal - which I have cosponsored - would insure mortgage-backed securities through the payment of insurance premiums instead of providing taxpayer-funded purchases of frozen mortgage assets as the current proposal would do.
This counter-proposal also includes measures to reform accounting practices such as "mark-to-market" that have unnecessarily fueled this crisis, increase transparency and prevent Wall Street Executives from benefiting from taxpayer funding, as well as measures that would increase private capital involvement in the recovery and reduce taxpayer exposure while addressing the underlying issues that created the crisis.
Republican Victories for Main Street
A number of the provisions from this counter-proposal were incorporated in the final version. These provisions enforced the Republican position of saying "no" to a blank check to the Treasury Department and special interest and demanding more accountability for Americans. In having these measures included, House Republicans achieved a number of significant victories for Main Street, including provisions to:
oEnsure that after five years, if the government has a net loss as a result of the purchase program, the President must submit a proposal to recoup those losses from the entities that benefited from this program.
oProvide for taxpayer ownership in companies receiving assistance, so that taxpayers have an opportunity to profit from any gains.
oAllow community banks to take capital losses on Government Sponsored Entity (GSE) assets against ordinary income, providing much needed relief for local banks.
oAuthorize government agencies that hold mortgages to do work-outs with troubled borrowers - provided such workouts do not harm the interests of taxpayers.
Republicans Stand Up for American Taxpayers
Some other accomplishments achieved by House Republicans through these negotiations include standing up for American taxpayers, including provisions to:
oCreate an insurance guarantee program fully paid for by participating companies at no cost to the taxpayer.
oShrinks the upfront Treasury authority to $350 billion. The remaining $350 billion is subject to future Congressional approval.
oEstablish a bipartisan Congressional Oversight Panel and a Special Inspector General to monitor the program.
Republicans Eliminate Special Interest Provisions
And some of the House Republicans' most important achievements are reflected by what is no longer included in this legislation, including terrible Democrat-proposed provisions to:
oProvide unions and other activist groups with proxy access to corporate boards.
oDivert funds from the program into a housing fund to support left-wing activist groups like ACORN.
oAllow federal judges to arbitrarily adjust mortgages, creating a bonanza for trial lawyers.
oRequire the government to sell homes it has acquired as a result of foreclosures to state and local governments at a discount.
The House Proposal: The Best Available Option
While the final product does not include all of the Republican counter-proposals, nor all of the reforms that I or my free-market colleagues would like, it represents a huge improvement over both the Administration's original blueprint and the subsequent Paulson-Pelosi plan.
Because of my and other House Republicans' insistence, the Emergency Economic Rescue plan the Congress voted on Monday, September 29, went much further to protect taxpayers and no longer contains the special interest earmarks to benefit labor unions, trial lawyers or community organizers. The overall size of the plan was reduced by half and ensures that Wall Street must fund this plan - not Main Street or American taxpayers.
Like every other member of this House, I did not agree with every provision included in this legislation. However, the House was not given the opportunity to debate an alternate measure.
The choice put before this House was as stark as it was serious: vote for a bill that has been much improved by the efforts of House Republicans, or oppose it and allow Democrats to pass a subsequent bill that looks more like the Paulson/Pelosi Plan and that protects taxpayers far less, spends far more, and is far worse for taxpayers and our country. As a result, I reluctantly supported its passage.
Where America Goes From Here ...
The total effects to the entire American economy are not yet known, but in coming days it appears likely that Congress will again take up some yet-undefined measure to deal with this emergency. In doing so, the Democrat Leadership in the House has two choices - they can either include negative, special-interest provisions to the bill to appeal to their liberal base, or they can recognize the objections of Republicans and the American people by adding provisions that deal with the root of the problem, provide help to Main Street and minimize risk to the taxpayer.
Three proposals I support that could be added to substantially improve the bill are:
oIncreasing Federal Deposit Insurance Corporation (FDIC) Insurance limits - increasing the federal insurance guarantee on accounts from $100,000 to $250,000 would protect individuals' hard-earned savings, help small businesses to make payrolls and buy inventory and provide a much-needed boost of confidence in the overall banking system.
oEnding "N.I.N.J.A." loans - half of the root problem underlying this crisis are bad loans that were made despite the fact that those taking out the loans had an inability to repay them. Lending standards need to be improved to ensure that these kinds of toxic loans are no longer made to people who simply cannot repay them.
oSuspending "mark-to-market" accounting rules - the other half of the problem has been created by forcing companies to value assets based on their immediate price, instead of their rational value in a functional marketplace. Under current rules, declining housing prices haven't just reduced the value of defaulting mortgages - they have reduced the value of all mortgages because the housing collateral protecting them is worth less. And as the companies in the worst shape sold off their assets, they established new, artificially-low valuations of these assets for everyone - setting off an unintentional and entirely avoidable chain reaction. I have urged the SEC to take immediate action to correct this problem and to prevent arbitrary values from being assigned to these assets unless there are actual losses on them.
Please be assured that I will continue my previous efforts to protect the taxpayer and prevent any legislation from passing that puts special interests ahead of the best interests of our economy. If you have any other feedback on this or other legislation that you would like to share, please contact my Chief of Staff Guy Harrison or Deputy Chief of Staff Josh Saltzman at 202.225.2231.
Sincerly,
Pete Sessions
Member of Congress
=========
Thank you for contacting me and providing me with your opinion on the Emergency Economic Stabilization Act. I appreciate having the benefits of your thoughts on this difficult issue for American taxpayers and the American economy. Over the last few days, I have received a great deal of feedback from my constituents, I would like to take this opportunity to discuss the problem underlying this emergency and what is happening in Washington to address it.
How We Got Here, and the Stakes Involved
The root cause of today's crisis is simple: the unchecked proliferation of losses from "N.I.N.J.A." (No Income, No Job or Assets) loans throughout our financial system. After infecting the financial services sector, this problem spread to the commercial credit markets that are used by businesses of all sizes and across all sectors - and now threatens to hit Main Street as hard as it has already hit Wall Street.
While the effects of this freeze in the commercial credit markets may seem like they could be contained to the financial services sector, we learned last week that a number of large corporations that have nothing to do with financial services have completely stopped extending lines of credit to franchisees - which means countless small business owners will not have access to the credit they need to pay employees and purchase inventories.
When this fact is coupled with testimony from economists that a failure to address this crisis may cause a wholesale failure of the banking system - severely affecting the lives of everyday Americans - it is clear that the ill effects of this bad decision-making by Wall Street will not be borne only by those bad actors that caused it, but by every American.
The Administration Proposal and the "Paulson/Pelosi Plan": From Bad to Worse
The Administration's response to this crisis came in the form of a three-page proposal from Treasury Secretary Henry Paulson asking Congress for unlimited authority over $700 billion to buy this bad debt at taxpayer expense. Unsurprisingly, this proposal was met by stiff resistance - especially by me and my Republican colleagues in the House of Representatives who believe in smaller government and limiting taxpayer exposure.
When it became clear that this proposal had no support in Congress, House Speaker Nancy Pelosi and House Financial Services Committee Chairman Barney Frank then negotiated a number of changes with the Administration intended to shore up liberal support for the measure - including earmarks for trial lawyers and community organizers like ACORN - that went even further away from my goal of protecting the taxpayer.
The House Republican Revolt
In response, House Republicans offered their own counter-proposal to this constantly-evolving compromise between the Administration and Democrat Leadership. The conservative Republican proposal - which I have cosponsored - would insure mortgage-backed securities through the payment of insurance premiums instead of providing taxpayer-funded purchases of frozen mortgage assets as the current proposal would do.
This counter-proposal also includes measures to reform accounting practices such as "mark-to-market" that have unnecessarily fueled this crisis, increase transparency and prevent Wall Street Executives from benefiting from taxpayer funding, as well as measures that would increase private capital involvement in the recovery and reduce taxpayer exposure while addressing the underlying issues that created the crisis.
Republican Victories for Main Street
A number of the provisions from this counter-proposal were incorporated in the final version. These provisions enforced the Republican position of saying "no" to a blank check to the Treasury Department and special interest and demanding more accountability for Americans. In having these measures included, House Republicans achieved a number of significant victories for Main Street, including provisions to:
oEnsure that after five years, if the government has a net loss as a result of the purchase program, the President must submit a proposal to recoup those losses from the entities that benefited from this program.
oProvide for taxpayer ownership in companies receiving assistance, so that taxpayers have an opportunity to profit from any gains.
oAllow community banks to take capital losses on Government Sponsored Entity (GSE) assets against ordinary income, providing much needed relief for local banks.
oAuthorize government agencies that hold mortgages to do work-outs with troubled borrowers - provided such workouts do not harm the interests of taxpayers.
Republicans Stand Up for American Taxpayers
Some other accomplishments achieved by House Republicans through these negotiations include standing up for American taxpayers, including provisions to:
oCreate an insurance guarantee program fully paid for by participating companies at no cost to the taxpayer.
oShrinks the upfront Treasury authority to $350 billion. The remaining $350 billion is subject to future Congressional approval.
oEstablish a bipartisan Congressional Oversight Panel and a Special Inspector General to monitor the program.
Republicans Eliminate Special Interest Provisions
And some of the House Republicans' most important achievements are reflected by what is no longer included in this legislation, including terrible Democrat-proposed provisions to:
oProvide unions and other activist groups with proxy access to corporate boards.
oDivert funds from the program into a housing fund to support left-wing activist groups like ACORN.
oAllow federal judges to arbitrarily adjust mortgages, creating a bonanza for trial lawyers.
oRequire the government to sell homes it has acquired as a result of foreclosures to state and local governments at a discount.
The House Proposal: The Best Available Option
While the final product does not include all of the Republican counter-proposals, nor all of the reforms that I or my free-market colleagues would like, it represents a huge improvement over both the Administration's original blueprint and the subsequent Paulson-Pelosi plan.
Because of my and other House Republicans' insistence, the Emergency Economic Rescue plan the Congress voted on Monday, September 29, went much further to protect taxpayers and no longer contains the special interest earmarks to benefit labor unions, trial lawyers or community organizers. The overall size of the plan was reduced by half and ensures that Wall Street must fund this plan - not Main Street or American taxpayers.
Like every other member of this House, I did not agree with every provision included in this legislation. However, the House was not given the opportunity to debate an alternate measure.
The choice put before this House was as stark as it was serious: vote for a bill that has been much improved by the efforts of House Republicans, or oppose it and allow Democrats to pass a subsequent bill that looks more like the Paulson/Pelosi Plan and that protects taxpayers far less, spends far more, and is far worse for taxpayers and our country. As a result, I reluctantly supported its passage.
Where America Goes From Here ...
The total effects to the entire American economy are not yet known, but in coming days it appears likely that Congress will again take up some yet-undefined measure to deal with this emergency. In doing so, the Democrat Leadership in the House has two choices - they can either include negative, special-interest provisions to the bill to appeal to their liberal base, or they can recognize the objections of Republicans and the American people by adding provisions that deal with the root of the problem, provide help to Main Street and minimize risk to the taxpayer.
Three proposals I support that could be added to substantially improve the bill are:
oIncreasing Federal Deposit Insurance Corporation (FDIC) Insurance limits - increasing the federal insurance guarantee on accounts from $100,000 to $250,000 would protect individuals' hard-earned savings, help small businesses to make payrolls and buy inventory and provide a much-needed boost of confidence in the overall banking system.
oEnding "N.I.N.J.A." loans - half of the root problem underlying this crisis are bad loans that were made despite the fact that those taking out the loans had an inability to repay them. Lending standards need to be improved to ensure that these kinds of toxic loans are no longer made to people who simply cannot repay them.
oSuspending "mark-to-market" accounting rules - the other half of the problem has been created by forcing companies to value assets based on their immediate price, instead of their rational value in a functional marketplace. Under current rules, declining housing prices haven't just reduced the value of defaulting mortgages - they have reduced the value of all mortgages because the housing collateral protecting them is worth less. And as the companies in the worst shape sold off their assets, they established new, artificially-low valuations of these assets for everyone - setting off an unintentional and entirely avoidable chain reaction. I have urged the SEC to take immediate action to correct this problem and to prevent arbitrary values from being assigned to these assets unless there are actual losses on them.
Please be assured that I will continue my previous efforts to protect the taxpayer and prevent any legislation from passing that puts special interests ahead of the best interests of our economy. If you have any other feedback on this or other legislation that you would like to share, please contact my Chief of Staff Guy Harrison or Deputy Chief of Staff Josh Saltzman at 202.225.2231.
Sincerly,
Pete Sessions
Member of Congress
10-01-2008, 12:36 PM
#2
Registered User
Join Date: Feb 2005
Posts: 3,409
Likes: 0
Received 0 Likes
on
0 Posts
This is good for democracy. These representatives are becoming painfully aware of their actual role if they were not already. Individuals are able to see their input sway the course of the global economic system for decades to come.
Of course I would be slightly surprised of those who arguably created and certainly contributed to the problem were able to also decisively figure out how to solve it. The bill is getting better, as long as they get it done this week it will be OK for the time being.
Of course I would be slightly surprised of those who arguably created and certainly contributed to the problem were able to also decisively figure out how to solve it. The bill is getting better, as long as they get it done this week it will be OK for the time being.
Thread
Thread Starter
Forum
Replies
Last Post