A Weekly e-Newsletter from
Senator Johnny Isakson (R-GA)

September 19, 2008

Dear Friends,

Our nation is facing very serious times economically. This morning, Treasury Secretary Paulson announced that the Administration will seek to implement a program to remove bad assets off the balance sheets of financial companies and will seek legislation from Congress next week to help carry out this plan. Paulson acknowledged that this will be a costly plan, but that it will be less costly than the alternative of a continuing series of financial institution failures and frozen credit markets. I look forward to seeing the details of this plan and to carefully considering any legislation the Administration sends to Congress next week.

Paulson also announced that the Treasury will establish a temporary guarantee program for the U.S. money market mutual fund industry to insure the holdings of any publicly offered eligible money market mutual fund that pays a fee to participate in the program. This move is designed to stem the outflow of funds as consumers start to worry about even the safest investments. In addition, the Securities and Exchange Commission has imposed a two-week ban on short-selling the stocks of 799 financial companies.

One of the significant factors that is contributing to the problems we are seeing is the absence of transparency and accountability on behalf of investment banking.  The subprime securities that were created on Wall Street were falsely rated investment grade by Moody’s and Standard and Poor’s.  As we look to the future, it is important that we never allow something like the securitization of high-risk paper and rating as investment grade to ever happen again without some level of transparency and the absolute level of accountability on behalf of the institution. 

Congress must realize that our actions and words do matter.  We should be careful to understand that in a time of uncertainty in our financial markets and a concern by all Americans, rich or poor, Republican and Democrat, that our words matter.  We should work diligently to give people confidence in our system of government and our financial system.  We must provide the intervention and appropriate aid when necessary, but not over regulate or stigmatize a system that has worked for the better part of two and a quarter centuries.  I love this country and the people I represent.  I hope that we are able to see to it that we have a sounder economy, a sounder dollar, and a sounder America. 

What’s on Tap?

Next week, the Senate will debate the Administration’s proposal to restore the economy and may take up energy legislation.

Sincerely,
Johnny Isakson