(More from Congressman McGovern (Socialist-Cuba) in the comments – promoted by Cool Cal)
After a week of casting devestating votes on behalf of the 5th congressional district Niki has finaly written to let us know why she felt so compelled to defy her constituants and go against the advise of the concord coaltion by supporting the Pork Fed Bailout Bill
Here is her lengthy, if somewhat light on content correspondance. Sadly she is running unopposed this November and will undoubtedly dissapoint over and over again (curses upon you Kurt Hayes) 🙂
Over the course of the past week, intense debate has centered on the financial rescue package which failed last Monday in the House of Representatives. On Wednesday, the Senate passed a similar package which was sent back to the House of Representatives for approval. Today the House passed the Senate’s version by a vote of 263 to 171. My office has received more than 1,500 phone calls, emails and letters on the subject with people passionately expressing their views on both sides of the issue.
In the weeks leading up to today’s vote, I heard warnings from the Treasury Secretary, Chairman of the Federal Reserve, and economists from across the political spectrum about the very serious crisis in the credit markets that could have a devastating impact on American taxpayers if left unresolved. I took those warnings very seriously.
At the root of this crisis was an explosion in risky lending driven by loosely-regulated mortgage companies and unregulated investment markets. Some individuals also irresponsibly took on loans that they could not reasonably expect to repay. This led to a growing number of high-risk mortgages being traded in an unregulated market. As financial institutions accumulated assets backed by failed mortgages, the unknown amounts of bad debt on their books created a lack of confidence. Institutions began refusing to lend to each other out of fear that they would not be repaid and the resulting paralysis meant that the credit market, which so many everyday people and businesses rely on, tightened drastically.
This week I saw two examples of the impact that the troubled financial markets are having in our backyard. On Wednesday, I met with the North Middlesex Chapter of the Retired Educators Association of Massachusetts in Tewksbury. The pensions of many of these former teachers were heavily invested in AIG, the troubled insurance giant which was rescued by the government last month after it teetered near collapse. While some have called for allowing these institutions to fail, widespread market failure would severely impact hardworking Americans the majority of whom played no role in creating this crisis.
As the example of the Retired Educators Association illustrates, failures in the market risk wiping out a lifetime’s worth of retirement savings for people like teachers, municipal workers, and many other hardworking Americans.
In a conversation with an administrator at one of our local hospitals this week I saw a different but equally troubling consequence of the economic downtown. Hospital administrators are finding it increasingly difficult to access credit, which affects everything from the services they offer to patients, to their ability to pay their own employees. This hospital watched as their interest rates rose from just under 2% to 8%, a change that they had not anticipated.
These are just two examples of the chain reaction of troubling events that we will continue to experience if access to credit dries up and the market destabilizes. Without the ability to borrow money, responsible individuals and families will not be able to purchase a home, car, or many of the other goods and services which require financing. Businesses large and small will not be able to access short-term credit to meet payroll or to purchase inventory, which could lead to layoffs. Grocery stores will find it harder to access the credit they need in order to put food on their shelves. Our farmers won’t have the credit necessary to buy seed and harvest crops. College education will be put out of reach for even more young Americans as student loan interest rates skyrocket. And municipalities that rely on the sale of bonds will have difficulties raising money to fund critical infrastructure projects such as safe roads, bridges and schools.
As you know, I had very strong concerns with the original plan presented to Congress by President Bush and Treasury Secretary Paulson. The Bush plan was little more than a blank check to the Treasury Secretary. It gave far too much authority to one person, included no congressional oversight or judicial review, and protected Wall Street’s interests but not the interests of the people I represent. My colleague Barney Frank and members of both the Democratic and Republican leadership took the Bush proposal and improved it significantly. While the bill they ultimately produced was far from perfect and failed to include a number of the provisions I had sought such as bankruptcy reform, it represented a necessary response to an emergency situation. I believe that failure to act, even if it meant accepting a flawed bill, would have had grave consequences. We saw a small glimpse of those consequences on Monday following the House’s vote when the stock market lost over $1 trillion in value.
I was pleased that the compromise plan included limits on taxpayer exposure, which was critical to my support of the bill. The bill does not grant the authority to the Treasury to immediately spend $700 billion. Instead, the bill makes $250 billion available now with an additional $100 billion released upon certification that funds are needed; an additional $350 billion would be authorized but would not be released should Congress vote against it. The bill provides taxpayers with the potential upside of this investment by requiring participating companies to share a portion of their equity with the government and by allowing profits from the sale of these assets to return to the government. The bill also includes a provision to ensure that taxpayers suffer no net loss from the program and that it does not add to the national debt. After 5 years, the President is required to report on the net loss or gain of the program. If there is a net loss, the President is required to submit a plan to Congress for recouping that loss from the financial services sector in an amount equal to the loss. Furthermore, for mortgages and mortgage-backed securities acquired by the government through the program, the bill requires Treasury and the other federal agencies to mitigate foreclosures and to encourage servicers of mortgages to modify loans through the Hope for Homeowners program. The bill also includes strong oversight–including an oversight board, an Inspector General within Treasury, and frequent reports by the Government Accountability Office–as well as limits to executive compensation.
While the underlying recovery package did not change significantly from the version voted on by the House on Monday, it did include a temporary increase in federal deposit insurance so that individuals know that the money they put in the bank is secure. Today’s overall bill was also considerably larger than what the House of Representatives originally considered. The Senate combined the financial rescue package with a separate bill whose wide-ranging provisions included a one-year patch for the alternative minimum tax, insurance parity for mental health, disaster relief, and extensions of the child tax credit, research and development tax credits, and renewable energy tax credits, among many others. While I support a number of these provisions, I believe the Senate’s decision to attach it to the rescue package was irresponsible and represented political maneuvering, not good policy. Nonetheless, my position did not change that the health of our economy and the threat posed by the current crisis made it critical that I vote for the underlying rescue package.
This package represents a necessary step for addressing the current emergency. It does not, however, signal the end of Congress’s involvement or the need for action. The current crisis has only reinforced the growing consensus across the political spectrum that we need broad reform of our regulatory system and responsible oversight of the regulatory process.
Today’s employment report serves as a reminder that our economic troubles run deeper than the financial market distress that is monopolizing the headlines. Enacting the financial rescue plan is only a first step and a temporary measure to arrest the current downward spiral. This month I joined my colleagues in the House in voting to curb unsound credit card practices. Today, I was glad to join my colleagues in passing a bipartisan extension of unemployment insurance to help those Americans trying to get back on their feet. American families are struggling and we must work together in the coming months to get our economy back on a firm footing.
Many of the calls I received expressed the sentiment that we must do more to address the root causes of this crisis, and I want to make it clear that I completely agree. Congress will continue to investigate this extremely important issue through the end of this year and in the next Congress. The implementation of a financial recovery plan will be closely monitored, and I will be working with my colleagues to tighten regulation of mortgage lending, increase disclosure, and establish federal oversight of unregulated financial markets. I will also be working to ensure that federal regulators do not adopt a hands-off approach to their responsibilities. The last eight years have demonstrated that it is not a question of big government or small government but effective government.
Like you, I am angry about the situation in which we find ourselves. But the consequences of doing nothing are far too great. The resulting hardships will fall disproportionately on working families and middle class Americans. I took my vote on this bill extremely seriously and cast it to prevent such a situation from occurring.
I am grateful for all of your calls, letters and emails as Congress considered this most consequential issue. I encourage you to continue to be in touch on this or any other matter and I look forward to seeing you in the district.
Member of Congress