Speaker Pelosi and Senate Majority Leader Harry Reid sent the following letter this afternoon to President Bush on the urgent need to pass bipartisan legislation to address the crisis in the financial markets:
September 30, 2008
The Honorable George W. Bush
The President of the United States
The White House
1600 Pennsylvania Avenue, NW
Washington, D.C. 20500
Dear Mr. President:
Yesterday’s defeat of the Economic Emergency Stabilization Act resulted in additional severe economic impacts both on Wall Street and on Main Street. The consequences of yesterday’s vote – an historic drop in the stock market and the loss of $1.2 trillion in savings, investments, and retirement funds – had a major impact on American families, small businesses, and others that demonstrated the imperative for Congressional action.
We have already made much progress in improving the plan originally sent to Congress. After many days of discussions, we reached bipartisan agreement on key additions, including strong measures to protect taxpayers from the costs of this program; to impose tough accountability on Wall Street through strong oversight and transparency; to limit excessive executive compensation and golden parachutes; to reduce home foreclosures to help families remain in their homes; and to sequence the funding of the program to ensure appropriate cost controls and independent reviews.
We must continue our bipartisan efforts of the past two weeks to pass a comprehensive bill to help stabilize our financial system and protect the American taxpayer. We welcome your statement this morning and are committed to working with you and our Republican colleagues to enact a bipartisan bill without further delay.
Working together, we are confident we will pass a responsible bill in the very near future.
I. Stabilizing the Economy
The Emergency Economic Stabilization Act of 2008 (EESA) provides up to $700 billion to the Secretary of the Treasury to buy mortgages and other assets that are clogging the balance sheets of financial institutions and making it difficult for working families, small businesses, and other companies to access credit, which is vital to a strong and stable economy. EESA also establishes a program that would allow companies to insure their troubled assets.
II. Homeownership Preservation
EESA requires the Treasury to modify troubled loans – many the result of predatory lending practices – wherever possible to help American families keep their homes. It also directs other federal agencies to modify loans that they own or control. Finally, it improves the HOPE for Homeowners program by expanding eligibility and increasing the tools available to the Department of Housing and Urban Development to help more families keep their homes.
III. Taxpayer Protection
Taxpayers should not be expected to pay for Wall Street’s mistakes. The legislation requires companies that sell some of their bad assets to the government to provide warrants so that taxpayers will benefit from any future growth these companies may experience as a result of participation in this program. The legislation also requires the President to submit legislation that would cover any losses to taxpayers resulting from this program from financial institutions.
IV. No Windfalls for Executives
Executives who made bad decisions should not be allowed to dump their bad assets on the government, and then walk away with millions of dollars in bonuses. In order to participate in this program, companies will lose certain tax benefits and, in some cases, must limit executive pay. In addition, the bill limits “golden parachutes” and requires that unearned bonuses be returned.
V. Strong Oversight
Rather than giving the Treasury all the funds at once, the legislation gives the Treasury $250 billion immediately, then requires the President to certify that additional funds are needed ($100 billion, then $350 billion subject to Congressional disapproval). The Treasury must report on the use of the funds and the progress in addressing the crisis. EESA also establishes an Oversight Board so that the Treasury cannot act in an arbitrary manner. It also establishes a special inspector general to protect against waste, fraud and abuse.
To read the Section-by-Section analysis of the Emergency Economic Stabilization Act of 2008 from the House Financial Services Committee, click here>>
Sunday, September 28th, 2008 by Office of the Speaker
Significant bipartisan work has built consensus around dramatic improvements to the original Bush-Paulson plan to stabilize American financial markets—including requiring a plan to ensure the taxpayer is repaid in full.
CRITICAL IMPROVEMENTS TO THE RESCUE PLAN
Democrats have insisted from day one on substantial changes to make the Bush-Paulson plan acceptable—protecting American taxpayers and Main Street—and these elements are included in the draft legislation under consideration.
PROTECTION FOR TAXPAYERS, REQUIRING A PLAN TO BE REPAID IN FULL
Requiring Congressional review after the first $350 billion is disbursed
Gives taxpayers a share of the profits of participating companies, or puts taxpayers first in line to recover assets if a company fails
Requires a President five years from now to submit a plan to ensure taxpayers are repaid in full, with Wall Street making up any difference
Allows the government to also purchase troubled assets from pension plans, local governments, and small banks that serve low- and middle-income families
LIMITS ON EXCESSIVE COMPENSATION FOR CEOs AND EXECUTIVES
For companies publicly auctioning over $300 million:
No multi-million dollar golden parachutes for top 5 executives after auction
No tax deduction for executive compensation over $500,000
Penalizes golden parachutes for CEOs who are fired or have run the company into the ground
For companies from which the government makes direct purchases:
No multi-million dollar golden parachutes
Limits CEO compensation that encourages unnecessary risk-taking
Recovers bonuses paid to executives who promise gains that later turn out to be false or inaccurate
STRONG INDEPENDENT OVERSIGHT AND TRANSPARENCY
Four separate independent oversight entities or processes to protect the taxpayer
A strong oversight board appointed by bipartisan leaders of Congress
GAO oversight and audits at Treasury to ensure strong controls; to prevent waste, fraud, and abuse
An independent Inspector General to monitor the Treasury Secretary’s decisions
Transparency—requiring posting of transactions online
Meaningful judicial review of the Treasury Secretary’s actions
HELP TO PREVENT HOME FORECLOSURES CRIPPLING THE AMERICAN ECONOMY
The government can work with loan servicers to change the terms of mortgages (reduce principal or interest rate, lengthen time to pay back the mortgage) to reduce the 2 million projected foreclosures in the next year
Extends provision (enacted earlier in this Congress) to stop tax liability on mortgage foreclosures
Helps save small businesses that need credit by aiding small community banks hurt by the mortgage crisis—allowing these banks to deduct losses from investments in Fannie Mae and Freddie Mac stocks
Today, the House passed the Renewable Energy and Job Creation Tax Act (HR 7060) by a vote of 257-166. The legislation will extend and expand tax incentives for renewable energy, create and retain hundreds of thousands of green jobs, spur American innovation and business investment, cut taxes for millions of Americans, and close loopholes allowing U.S. executives to avoid U.S. taxes by shipping investment overseas.
This legislation is critical for American job creation at a time when the U.S. economy is in crisis, and critical for American families at a time when they are being squeezed by rising energy costs, grocery bills, and unemployment. To reduce our dependence on foreign oil, this legislation would increase the production of renewable fuels and renewable electricity, and encourage greater energy efficiency. The legislation includes:
An eight-year extension of the investment tax credit (ITC) for solar energy
2.75 year extensions of the production tax credit (PTC) for energy derived from biomass, geothermal, waves and tides, hydropower, landfill gas and solid waste
A one-year extension of the PTC for energy derived from wind
Incentives for the production of renewable fuels such as biodiesel and renewable
Incentives to encourage energy efficient products, such as plug-in hybrids cars, and incentives for energy conservation in both commercial buildings and residential structures
These provisions are critical to creating and preserving more than 500,000 good-paying green collar American jobs in the wind and solar industries alone.
Rep. Doggett, a senior member of the House Ways and Means Committee:
Perhaps the sixth time will be the charm. This is the sixth time that this House has approved this legislation to encourage more renewable energy production — more solar energy — more wind energy. It includes provisions that I authored to encourage plug-in hybrid vehicles and geothermal heat pumps and to promote small business development of biodiesel.
American innovation can fuel new jobs here and increase exports abroad. We can put more green where it really counts — in working families’ wallets. The choice is ours: We can run the new economy, less dependent on fossil fuels, or get run over by it.
This is not a House-Senate dispute. This is about Republicans taking hostage this renewable energy bill. Their approach boils down to this: they absolutely refuse to let us take America forward into a less fossil-fuel dependent economy unless we borrow the money to do it.
We all know what President George Bush’s approach has been for the last eight years – “What, me worry?” His philosophy is to just swipe the debt on the national credit card, just borrow a little more money — whether it is the cost of the Iraq War, or $700 billion Wall Street bailout. “Don’t worry! It’s a free lunch! What, me worry?”
They will not let us move forward with renewable energy legislation and a new green economy unless we borrow more money. How much more money do they think they American people can stand to borrow? Under President Bush, we’ve added almost $4 trillion – more than all the Presidents before him put together – borrowing from foreign sources. And they want us to borrow even more before they allow us to do what the American people want, and that is, to look to the future.
If this George Bush bailout proposal has taught us anything, it is the danger of overborrowing. The President’s answer to an over-leveraged Wall Street is to further over-leverage the American people.
Today’s bill doesn’t make that mistake. If it is worth doing, it is worth paying for. That’s what we do.
Edward Markey, Chairman of the Select Committee on Energy Independence and Global Warming, speaking in support of the bill:
President Bush and Senate Republicans have been given opportunity after opportunity to pass tax credit extensions for renewable energy. In just the past year and a half, the Republican leadership has followed the marching orders of the Bush administration and voted 13 times against Democratic efforts to increase our use of renewable energy, help protect consumers from high energy prices and ensure that Big Oil pays its fair share. They have refused each time, instead siding with Big Oil and their fossil fuel friends, even as oil prices remain sky high.
Senate Republicans couldn’t resist this time around either, sending us a renewable energy tax package stuffed with goodies for coal-to-liquids, tar sands, and oil shale. Big Oil even gets to keep most of their tax breaks. The only thing ‘renewable’ about Republican energy policy the last eight years has been their inexhaustible support for the Big Oil agenda.
I commend the great work of Chairman Rangel in stripping harmful and unnecessary provisions and giving us a genuine clean energy tax package to vote on today. This bill primes the renewable energy engine and gives coal a clean path forward with more than $1 billion in tax incentives to demonstrate carbon capture and sequestration.
This may be the last chance to get these renewable energy incentives passed into law. If President Bush and Senate Republicans shoot this package down like they’ve shot down every other clean energy tax package, there may not be another opportunity. Solar and wind companies are delaying projects because of investment uncertainty. History has shown that renewable energy deployment could fall 70 percent or more if these tax incentives lapse. That would translate into 116,000 job opportunities and $19 billion in private investment lost in 2009 alone.
That’s one more legacy I fear this President has no problem carrying back to Crawford: Champagne celebrations for Big Oil and red ink and pink slips for America’s high-tech energy companies and their green collar workers.
Last year, the U.S. installed more new wind capacity than any country in the world. 35 percent of all new capacity was wind. Solar photovoltaic installations in the U.S. also grew an incredible 80 percent. 2008 will surpass that. But what about 2009? 2010? This bill before us invests in the renewable revolution that will transform America. Electric cars, cellulosic biofuels, and wind and solar will assert our energy independence over the coming decade if the President signs this bill.
After eight years of running on a Bush-Cheney-Big Oil energy plan, America, it is time for an oil change! It’s time to change our dependence on foreign oil and OPEC. It’s time to change from the dirty fossil fuels of the past to the renewable energies of the future, like wind and solar. It’s time to change to building green and saving families money. ‘Change, baby, change!’
Today, the House passed Alternative Minimum Tax Relief (HR 7005), to provide critical tax relief to 25 million middle-class families by protecting them from the Alternative Minimum Tax. The bill will provide $62 billion in Alternative Minimum Tax (AMT) relief to ease the strain of rising gas and food prices, and is a critical part of our plan to strengthen the American economy. Though the AMT was put in place to ensure that the wealthiest families did not escape paying taxes altogether, it has grown to be such a problem that it now threatens teachers and firefighters – a far cry from its original intent.
The legislation:
Protects more than 25 million middle-class families from being hit by the AMT. The bill would extend for one year AMT relief for nonrefundable personal credits and increases the AMT exemption amount to $69,950 for joint filers and $46,200 for individuals.
Includes relief for AMT taxpayers who have exercised incentive stock options. In the past, taxpayers that exercised incentive stock options were unintentionally required by the AMT to pay tax on gains that never materialized. This provision will protect these taxpayers from this unintended tax.
Speaker Pelosi on passage:
Today, the Congress is providing critical tax relief to 25 million middle-class families. As many Americans worry about losing their homes and jobs, and all Americans worry about losing their standard of living, the House is passing relief to ease the strain on middle-income families and strengthen the economy.
I am, however, disappointed that stubborn fiscal irresponsibility on the part of the President and Republicans in Congress has resulted in AMT legislation that does not meet the rigors of pay-as-you-go spending. To protect middle-income families from an impending tax increase, we have been forced to drop some responsible spending offsets. Republican misplaced priorities are again burdening future generations with debt.
Democrats will continue our efforts to help Americans on Main Street by putting middle class families first. Republicans must join us to ensure that this essential legislation is enacted into law without further delay.
In his speech tonight, the President presented a long overdue assessment of the state of the economy and the urgent need for legislation to respond to the financial crisis.
I was pleased that the President acknowledged the improvements Congress has made to his original proposal, which was unacceptable.
In Congress, we are committed to passing bipartisan legislation that will stabilize the markets, protect taxpayers, establish tough oversight, and curb excessive CEO compensation. And we will pass it soon.
Today, the House passed the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (HR 6983) by a vote of 376 to 47. The legislation will end discrimination against patients seeking treatment for mental illness. Specifically, the bill prohibits insurers and group health plans from imposing treatment or financial limitations when they offer mental health benefits that are more restrictive from those applied to medical and surgical services. As Chairman George Miller explained, “approximately forty-four million Americans suffer from mental illness, but only one-third receive treatment. One reason is that private health insurers generally provide less coverage for mental illnesses and substance abuse than for other medical conditions. This bill is an important step towards ending the stigma attached to mental illness and providing fair coverage to those in need.”
This legislation reflects a House-Senate agreement on the Mental Health Parity bill - the Senate had passed its version of the bill in September 2007 and the House passed its version in March 2008.
Speaker Pelosi on passage:
Today, the vote by the House this evening has given hope and help to the millions of American families dealing with mental illness and addiction. This significant accomplishment will help ensure that those suffering can receive the often lifesaving treatment they need.
This long-overdue legislation has brought mental illness and addiction out of the shadows and to the forefront of our work here in Congress. By requiring that illness in the brain be treated just like illness anywhere else in the body for insurance purposes, we are helping to end discrimination against those who seek treatment for mental illness and saving lives.
Untreated mental illness results in 1.3 billion lost days of work or school in our country every year. Yet bipartisan and independent research shows there is no significant cost to insuring mental illness like any other medical disease. With this legislation, we are making an investment in the strength and productivity of our nation. This will also benefit some of our returning veterans from Iraq and Afghanistan who later become employed in the private sector. For those brave men and women who served in the National Guard and the Reserves, but don’t receive VA care for their entire lifetime, this will help ensure they receive treatment if they ever struggle with mental illness.
I salute my colleagues for helping to ensure that individuals with mental health illnesses and addictions are given the attention, treatment, and resources they need to live a healthy life. I urge the Senate and the President to enact this essential legislation into law without delay.
Credit card debt in the US has reached a record high of nearly $1 trillion, averaging $9,840 per household. With the economy slowing, costs of daily living and unemployment rising, growing numbers of cardholders are unable to keep up with their payments and are being taken advantage of by an industry with few regulations and little oversight. In 2007, credit card issuers imposed $18.1 billion in penalty fees on families carrying credit card balances—up more than 50% since 2003 and accounting for nearly half of the $40.7 billion in credit-card industry profits. While credit card companies will pull in more than $19 billion this years from late fees, over-limit charges, and other penalties, consumers nationwide are facing excessive credit card fees, sky-high interest rates, and unfair, incomprehensible agreements that credit card companies revise at will.
Ends unfair, arbitrary interest rate increases, by requiring ample notice before rate hikes and permitting lenders to raise rates on existing balances only if minimum payments are more than 30 days late (except for increases caused by changes in stated variable and introductory offers)
Ends penalties on cardholders who pay on time, like charging interest on already repaid debt
Protects consumers from due date gimmicks by requiring credit card companies to mail bills 25 days (instead of 14) before the due date
Ends the credit card practice of applying consumer payments to lower interest debt first
Rep. Maloney: “Credit cards are an essential part of our economy, but for too long card issuers have been allowed to do whatever they want, any time, for any reason. A deal is a deal, but what sort of deal is it when one side gets to make all the decisions? This bill will get credit card practices back to basic principles of contractual fairness.”
Chairman Frank:
“The notion that we, the elected Representatives, should defer to the Federal Reserve not on monetary policy, but on a public policy matter involving what constitutes fairness with credit cards…it’s not an argument I’ve often heard on that side. I understand there’s nothing in the Constitution or the Rules of the House that requires consistency - but I would hope we would at least note there’s an element of convenience of the invocation of this argument at this point, ‘Let’s defer to the Federal Reserve.’ No, let’s exercise the powers given to us under the Constitution.”
Rep. Ellison:
“About 8,000 dollars worth of credit card debt is what Americans are holding on average, for people who have a revolving balance. That is a burden people cannot sustain. The fact is, we would not be in this situation if we’d had the active regulation that Americans expect from their government.”
Speaker Pelosi issued the following statement today as Congress and the White House work to craft legislation to address the crisis in our financial markets:
Congress will respond to the financial markets crisis by taking action this week in a bipartisan manner that will protect the taxpayers’ interests. The Administration’s $700 billion proposal does not include the necessary safeguards. Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation.
We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome. Democrats will act responsibly to insulate Main Street from Wall Street.
As we proceed to deal with this crisis, this is clear recognition that the party is over for the Bush Administration’s anything goes, failed economic policies that have damaged our economy, undermined the middle class and further pointed out the need for a New Direction.