DonYoung

The Bailout

In the fall of 2008, in the hopes of finally addressing the housing market concerns of many banks, investors, and everyday workers, the Administration conceived a giant bailout of the banking industry.  Originally introduced on September 20, 2008 as the “Troubled Asset Relief Program,” Secretary Henry Paulson’s “bailout” plan was both ambitious and hasty.  At its core, this plan called for a $700 billion government buyout of Mortgage Backed Securities.  It is important to note that most of bailout funds DID NOT go towards buying these securities.

In my 36 years of Congressional experience, I have seen some bad pieces of legislation pass the House.  Much of this bad legislation has been brought to the House floor under duress when there is a perceived crisis and inaction is deemed irresponsible.  The duty of a Congressman is to not only think about the here and now, but about two years, ten years and twenty years down the line.  In my view, not only did this legislation give unprecedented power to a single unelected official, it also set horrible precedents that may well have us sliding down a very slippery slope to socialism.

On October 3, 2008 the House voted on the Senate-passed version of bank bailout, also called the Emergency Economic Stabilization Act (EESA).  This was an extremely difficult vote for me.  While on the one hand, I understood the gravity of the financial crisis, on the other hand, these provisions were attached to a $700 billion taxpayer-funded bailout of the banking industry.  After hearing from thousands of my constituents though, I ultimately voted against EESA deciding that no amount of “sweeteners” would change the fact that this was still a $700 billion taxpayer bailout.  Ultimately, EESA passed the House by a vote of 236-171 and was signed into law by the President.

Overall, a bailout should be the last resort, not the first.  It is my belief that Wall Street should first try and bail itself out.  I support several free-market measures including suspending the capital gains tax for investors that buy Mortgage Backed Securities.  This measure, along with tax deductions for banks that lost money on investments in Fannie Mae and Freddie Mac, would use the market to free up the capital that these banks so desperately need.