|
FOR IMMEDIATE RELEASE
September 25, 2008
|
|
|
Contact: Zach Goldberg
202-225-5801 (office) |
|
HOLT STATEMENT ON FINANCIAL CRISIS AND BAILOUT NEGOTIATIONS
|
|
|
(Washington, D.C.) – Rep. Holt today released the following statement on the financial crisis and the ongoing discussions of a bailout proposal.
“Secretary Paulson’s solution to the urgent financial crisis is wrong. The problem is that financial institutions have been trading securities whose value they don’t know and can’t know because bad mortgages are mixed in with good mortgages in indeterminate amounts.
For any problem, you should go to the root in order to solve it. The root here is that the bad mortgages mixed with the good mortgages have poisoned the financial papers. In buying those papers, taxpayers won’t know whether they are getting any value for their dollar, and neither Secretary Paulson nor the market will be able to determine the value. So go to the root of the problem. Repair the bad mortgages. The Administration approach is to help Wall Street and hope eventually that helps Main Street. That is backwards. Helping Main Street will help Wall Street, and it will restore confidence, liquidity, and solvency.
There is antecedent for this: the Home Owners Loan Corporation (HOLC), which the Federal Government created in 1933 in that mortgage crisis. This program, which lasted 20 years, shored up a collapsing market by purchasing delinquent mortgages at a discount and working with homeowners to restructure the mortgages into more manageable terms. Congress and President Roosevelt authorized HOLC for $4.75 billion – or $76 billion in today’s dollars. With this investment, in its first two years, HOLC helped more than 1 million homeowners. In fact, when the HOLC finally ended, it showed a net $14 million surplus for taxpayers.
Let’s take a breath and show the world that the government of the United States will not let the financial house collapse.
|
|
|
|
