Statement from Congressman Adam Smith on the Financial Recovery Legislation
“Like many Americans, I had major concerns with the Bush Administration’s initial financial recovery proposal. It contained no help for ordinary Americans struggling with their mortgage payments, no oversight and no protection for taxpayers. It was a major power grab attempt by the Administration in the form of a $700 billion blank check and Congress correctly rejected that plan. I also worried about the true extent of this economic crisis – would it just punish Wall Street people who acted unwisely? Or would it impact us all? And, if the latter was true was action by Congress required?”
“After listening to many of my constituents, small business owners, local bankers, and many others in the business and financial world, I have concluded that this crisis is more serious than just the normal downside of the business cycle; that failure to act by Congress could turn a severe economic slow down into a panic—a run on banks and all financial institutions that could plunge us into a deep and lasting recession; and that the plan before Congress, while offering no guarantees, represented a prudent and necessary step to prevent this much more painful economic outcome.”
“I now believe strongly that this crisis affects all Americans. If it only impacted the financial institutions on Wall Street who made outrageously risky investments then I would not have supported this plan. But the credit crunch and the economic slow down will hit us all. Loans for college, cars, homes, or any other consumer need will be almost impossible to obtain. As this reality spreads, businesses in all communities in our country will be forced to cut back, leading to significant job loss. The markets will go down also, placing in jeopardy pensions, 401K plans, and many other investments for all people in our country.”
“I also want to make clear that significant economic hardship is coming no matter what we do. Our nation has lived on credit for far too long, from the federal government’s growing debt right down to average households where we have been collectively spending more than we earned for years. The housing boom only made it worse, enticing people in all walks of life to take on even greater debt with the illusion that the ever rising value of homes would always cover that debt. Wall Street made all of this immeasurably worse with risky financial deals designed to maximize short term profit with no thought whatsoever to long term consequences. Now we all have to find a way to mitigate the damages and begin digging our way out of the mess.”
“Over the past two weeks, through bipartisan cooperation and thoughtful deliberation, Congress delivered a plan that addresses the drastic shortcomings of the Bush Administration’s proposal. The revised plan helps to prevent home foreclosures crippling the American economy. It cuts the requested $700 billion in authorized purchasing of troubled assets by the Secretary of the Treasury in half, and requires Congressional review for future payments. It has a profit-sharing provision that ensures tax payers benefit from the use of their money and requires in five years that the President put forth a plan to recoup the taxpayers’ money from institutions that benefit. I am particularly pleased that this provision was included, as it makes certain that taxpayers receive a maximum return on our money. Additionally, this plan raises the Federal Deposit Insurance Corporation (FDIC) limits from $100,000 to $250,000, providing Americans reassurance that the savings they have worked so hard for will be safe and secure.”
“This financial recovery package also ensures strong independent and Congressional oversight and transparency mechanisms throughout this process, and imposes strict limitations on excessive compensation for CEOs and executives of participating financial institutions. The plan requires strong oversight by a board appointed by bipartisan leaders of Congress as well as strict over sight by the Government Accountability Office. It makes sure to prevent the further enrichment of the people who contributed so much to creating this crisis in the first place, and that any actions by the Treasury Secretary are transparent and open to scrutiny and review.”
“This was not an easy vote, but we are not in easy times. Our country faces a severe economic crisis. This is not a time for inaction. The credit crunch is real and is having a serious effect on small businesses and individuals across the county. An economic slow down cannot be avoided at this point, but this bill can make it far less painful and hopefully give us a chance to pull out of it sooner.”
“But passage of this recovery measure is just the beginning of a process. This fall, Congress is conducting a sweeping Congressional investigation -- to get to the root of the crisis and lay the foundation for action on common sense regulation of the financial and housing industries.”
Reforming How Wall Street Does Business, Investigation Hearings Underway
Oversight and Government Reform Committee
· Examination of the regulatory mistakes and financial excesses that led to the bankruptcy filing by Lehman Brothers. Witnesses will include Lehman Brothers CEO Richard Fuld (held October 6th).
· Examination of the regulatory mistakes and financial excesses that led to the government bailout of AIG. Witnesses will include former AIG CEOs Robert B. Willumstad, Martin J. Sullivan, and Maurice R. Greenberg (held October 7th).
· Thursday, October 16: Hearing on the role of hedge funds in the financial markets, and their regulatory and tax status with the five managers who were paid over $1 billion last year.
· Wednesday, October 22: Hearing regarding the role of the credit rating agencies in the financial excesses on Wall Street. CEOs of the nation’s three largest credit rating agencies have been invited to testify.
· Thursday, October 23: Hearing on the role and responsibility of federal regulators in the Wall Street financial crisis, with former Federal Reserve Chairman Alan Greenspan, SEC Chairman Chris Cox, and former Treasury Secretary John Snow invited to testify.
Financial Services Committee
· The Financial Services Committee will continue to examine and hold a series of hearings in the next Congress, on comprehensive regulatory restructuring, an essential element in addressing one of the root causes of the current financial crisis.
Agriculture Committee
· Tuesday, October 14: The Agriculture Committee will hold a hearing on the financial markets and the growing use of unregulated swaps that contributed to the downfall to AIG and Bear Stearns.
Education & Labor Committee
· The Education and Labor Committee will hold a hearing to examine how the current financial crisis is impacting Americans’ retirement security (held October 7th).
And with a new Administration, Congress’s top legislative priority will be shoring up the economy for all Americans to create good-paying jobs, and strengthening common sense regulation of Wall Street and the housing industry. In addition to acting on findings from these crucial hearings, there will be continued efforts to:
· Provide a Credit Cardholders’ Bill of Rights to provide protections against unfair but common practices.
· Subject CEO pay to a shareholders’ vote.
· Make sure that the mortgage industry follows basic principles of sound lending and consumer protection and crack down on predatory lending.
If you have questions or comments to relay, please contact Linda Danforth,
District Director at: 253-896-3782 or via email at: Linda.Danforth@mail.house.gov
|
| |
| The Honorable Adam Smith | The Honorable Adam Smith |
No comments:
Post a Comment