Whether you like her or not, the facts she lays out on the gravity of all the financial failures is pretty astounding…read on:
Dear Mr. Gory:
Thank you for your letter expressing support for recent legislation to stabilize our Nation’s financial markets.
This is a difficult situation for which there are no perfect solutions, and I would like to share my thoughts and concerns with you. Please find attached two statements that I have given on the Senate floor detailing my reasons for supporting the Emergency Economic Stabilization Act of 2008 (Public Law 110-343), which the President signed into law on October 3, 2008.
Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my
Washington, D.C. office at (202) 224-3841.
Statement of U.S. Senator Dianne Feinstein
In Support of the Economic Rescue Package
October 1, 2008
“Mr. President, I rise today to support the bipartisan economic rescue legislation.
It has been said that Senators have six-year terms for a reason. And that reason is to be able to take tough votes because it’s right for the nation, and take tough votes when at times they may be adverse to the beliefs of your constituency.
This today is indeed a tough vote.
I want to thank the Banking Committee, particularly its chairman, Chris Dodd, and members on both sides of the aisle for their work on this.
So let me quickly begin.
This bill is not the bill that was put forward by Secretary Paulson on September 20th. His bill was essentially a non-starter – startling in its unbridled allocation of power to one man: the Secretary of Treasury whom we know now, and to a Secretary of Treasury after January whom we do not know.
It placed this man above the law, above administrative oversight and above Congressional action and essentially gave him $700 billion to do with what he thought best.
This bill didn’t fly with virtually anyone who looked at it, particularly constituents, who have called in the tens of thousands all across this land.
My office has received over 91,000 calls and emails with over 86,000 opposed. The bill before us is not Paulson’s three-page proposal. Rather, it is a bipartisan effort that adds oversight, accountability, assistance to homeowners, executive compensation limits and other measures to protect taxpayers.
But there still is a lot of misinformation on this bill.
This is not a $700 billion gift for Wall Street.
Rather, the federal government will buy equity in certain assets – both good and bad – to pump liquidity into the marketplace and unfreeze credit which is increasingly freezing and unavailable.
Over time, these assets will be sold and the federal government will be the first paid back on the investment.
The belief is that by doing this the federal government will clear much of the bad debt on the books of certain strategic financial institutions, restoring stability, adding liquidity and unfreezing credit.
Recently, we have seen major U.S. institutions fail:
Fannie Mae and Freddie Mac
And, two retail banks – not investment banks: Washington Mutual, and Wachovia
If we do nothing, more institutions will fail.
Now, you may say: what does this mean to me? I work hard, I pay my bills, I pay cash.
Here’s what it will mean to you: it will be harder for most Americans to get any credit. Therefore, jobs will be lost.
And we may well face a deep recession. California has 3.75 million small businesses with an average of 5.6 employees. That adds up to over 20 million jobs.
Some of these businesses are funded with cash, but most are funded with credit. When credit freezes, payrolls cannot be met. And when payrolls cannot be met, pink slips are sent out.
And this will happen to retailers, grocery stores, restaurants, electrical and plumbing contractors, apparel manufacturers, computer and electronics stores, and auto dealerships.
Sales at auto dealerships have fallen dramatically in the past year.
Ford sales are down 34 percent,
Chrysler sales are down 33 percent,
Toyota sales are down 29 percent, and
GM sales are down 16 percent.
The list will go on and on.
Importantly, there have now been several improvements to this bill. First, The FDIC insurance rate covering bank deposits has been increased from $100,000 to $250,000. Americans will know that their deposits are secure up to $250,000.
The legislation will provide tax relief to working families.
One example: the Alternative Minimum tax is a real problem. It was meant to apply only to 200 wealthy people, but it was never adjusted for inflation and it has crept down the income scale to the point where more than 25 million taxpayers today may well have to pay an Alternative Minimum Tax.
In California, 700,000 people paid this tax last year. But 4 million Californians will pay that tax this year unless we take action.
This bill takes that action. For one year it will prevent this tax increase.
The Congressional Budget Office has reviewed this bill and concluded that the net cost to taxpayers is “likely to be substantially less than $700 billion.”
Again, these investments are first in line to be paid back.
It must be remembered that there was a great deal of criticism when the U.S. government bailed out Mexico in 1996 with $20 billion. The fact is, the money was paid back ahead of time and $600 million in profit was made.
Let me give you the following points.
This bill mandates that the government provide loan modifications for the subprime mortgages it acquires. This will help keep families in homes rather than foreclosing and putting the house on a deteriorating housing market where property values drop and homes are looted.
The bill limits executive compensation. It provides strong oversight and accountability, including a financial stability oversight board, a five-member Congressional oversight panel, an Inspector General, and a constant presence at Treasury by the Government Accountability Office.
This is the only choice Congress can make.
One can rail against it and vote no on it, but that’s not going to solve the problem. We have one chance, and one chance only, to solve the problem, and it is this bill.
I wish I could write it differently. Others wish they could write it differently, but the fact is that we are faced with this. Again, there is no question this is a tough vote.
But there’s no question that this is a vote that I believe has to be made.”