Dear Mr. Gaal:
Thank you for contacting me about our country's financial crisis and the proposed recovery legislation. Today the House defeated this legislation, the Emergency Economic Stabilization Act, by a vote of 205 to 228, despite my support.
Like you, I do not have any interest in "bailing out" Wall Street firms and business leaders who have speculated recklessly, endangered our country's consumers and homebuyers, and resisted regulation that would protect the public interest. My concern is for Main Street - for the people depending on a sound economy and the availability of credit to buy a house or car, to run their business and meet payroll, and to save for college and retirement.
Like it or not, we are all in this together, and the entire economy is threatened as we teeter on the edge of a 1929-style meltdown. Today Wachovia Bank, a North Carolina mainstay, collapsed. But this goes much deeper than bank failures. Last week, the City of Raleigh could not find a buyer for a $300 million bond, and Wake County cancelled its planned $472 million bond issue for school construction, Wake Tech, libraries, and open space acquisition. Both have AAA bond ratings.
Although President Bush lacks the credibility to be of much help, I take the dire warnings of economic analysts very seriously, particularly in light of everything that has happened in the last few weeks. But I could not support Secretary Paulson's request for a blank check for $700 billion to purchase mortgage-backed securities and stabilize the markets.
I thus became part of the intensive discussions over the last ten days to rewrite the Treasury plan in several critical respects. The legislation which came before us today would:
o Provide strict independent oversight and accountability for all activities undertaken by the US Treasury
o Release the $700 billion in installments, with multiple reviews along the way
o Make certain that the entire $700 billion is recaptured by the Treasury and thus by the American taxpayer, by requiring that taxpayers share in any profits resulting from the government's help and providing for assessment of the financial industry for any remaining losses
o Forbid "golden parachutes" and limit other compensation for executives of participating financial institutions.
o Require the government to work with participating institutions and loan servicers to help deserving homeowners negotiate reasonable repayment terms and stay in their homes
The defeat of the bill prolongs and perhaps deepens the crisis. Coordinating with the Senate, the House will need to return within days to try again. Perhaps the economic situation will then lead some members to reconsider. Perhaps the bill can be changed in ways that attract a majority; I certainly have a list of improvements I would like to see. But considering the members who voted "no," I will want to scrutinize carefully any changes designed to attract them.
I am committed over the next few days to continue working to avert financial collapse and get the best possible deal for America's taxpayers and homeowners. I welcome and share your concern about this situation and will be glad to hear from you at any time.
Member of Congress