Statement on the Emergency Economic Stabilization Act of 2008
“After a number taxpayer protections were included, I voted in favor of the Financial Rescue Package when it was presented to the House of Representatives. I don't like the legislation, but I hated even more the economic crash that I am concerned would follow if Congress does not take action.
“Supporting the bill was an incredibly difficult decision. I am a longtime advocate of limited government and free markets. But in this extreme situation, if decisive action was not taken, Wall Street's poor decisions would have disastrous consequences for Main Street.
“I believe it is necessary to protect North State citizens from a severe economic downturn. We are facing a once-in-a-century crisis in our financial markets that if not addressed could lead to a Great Depression-style bank run and a severe and long lasting economic recession that would cost jobs and hurt families, farmers and small businesses throughout Northern California. If the problems created by this finance crisis would affect only those on Wall Street who made poor decisions, I would agree it should run its course. But with bank accounts, incomes, jobs and retirement savings in Northern California on the line, we cannot afford to sit on the sidelines and hope for the best.
“Because the federal government will be acquiring the at-risk mortgage assets, my sincere hope is that as the housing market improves with time, taxpayers will earn back every penny, and potentially make a profit. However, if after five years the government and therefore the taxpayers experience a loss from the asset purchase program, the President is required to submit a proposal to recoup the losses from the entities that benefited from the program.
“In addition, the legislation was changed from its original version to include significant protections for taxpayers. Due in large part to the efforts of House Republicans, the original proposal was significantly improved with the following provisions:
a) No golden parachutes for Wall Street: It ensures that business executives don't profit from this rescue recovery plan.
b) Federal insurance program protects taxpayers, forces Wall Street to share the burden: It creates an alternative insurance program whereby participating companies, not taxpayers, will share in the costs.
c) Up-front Treasury authority cut in half: We cut the original cost of the proposal in half, ensuring Congress will have to approve the second half of the funding.
d) Taxpayers first in line for profits: When profits come to these companies, we get their stock warrants so the first person in line to get those profits is the American taxpayers so they can get their money back.
“This crisis came about because of the irresponsible business practices in our financial services sector that were aided and abetted by ill-advised government policies. Reform is badly needed in our financial services sector and we must fix these failed government policies, place safeguards against predatory lending, update our regulatory system, and prosecute all illegal behavior to ensure that this never happens again.
“This is far from an ideal bill. But at the end of the day, I believed it was necessary to avert a potentially historic economic collapse that would have cost far more than we could bear in the way of lost jobs, incomes and retirement savings in Northern California.”
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