Washington, DC - Today, Congressman Dan Lungren (R-CA) after supporting the bipartisan Emergency Economic Stabilization Act (H.R. 3997), released the following statement:

“We should be concerned about this vote today.  We witnessed the defeat of a good faith bipartisan effort to protect our citizens from a potentially serious downturn in our economy. This was not an effort to bail out Wall Street.  That is not the legitimate concern of government.   Rather, Congress has an obligation to do everything within our power to try to contain the implosion in our financial markets from cascading down to the people of the 3rd Congressional District and the rest of the nation. 

“Like many of you, I am angry that we find ourselves in this situation.  On September 20, 2008 Treasury Secretary Paulson sent a proposal to Capitol Hill which too closely resembled a bailout of Wall Street.  The original proposal was completely lacking in accountability for those in the financial community who created this mess.  Congressional oversight of the plan was absent.  There were inadequate protections for the American taxpayer.  

Listen to Congressman Lungren's KTKZ interview

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“However, due to the tireless efforts of the House Minority, significant changes were made to the original Paulson proposal:

• A market oriented insurance plan was added, which would involve Wall Street in paying premiums to guarantee its own troubled assets. 
• Taxpayers would receive non-voting equity warrants in participating financial institutions.  
• Limitations are placed on executive compensation and “golden parachutes.” 
• Extensive oversight by the Congress, a Special Inspector General and the GAO would be required. 
• Accountability is built into the purchase of the troubled assets with the last half of the authorized amount subject to Congressional approval. 
• If after five years there are any losses to the taxpayer due to the program, the money is to be recouped from the financial industry. 

"The potential cost of the plan is also a legitimate concern of American taxpayers.  It is important to understand that even though the Treasury Department has the authority to purchase loans totaling $700 billion (in three installments) that does not mean that this in any way represents a cost which will be imposed on taxpayers under the bipartisan proposal.    First of all, the $700 billion authority will be reduced dollar for dollar by the level of insurance coverage provided by the bipartisan bill.  Secondly, as the nonpartisan Congressional Budget Office (CBO) explains:

CBO expects that since the acquired assets would have some value, the net budget impact would be substantially less than $700 billion; similarly, net case disbursements under the program would also be substantially less than $700 billion over time, because, ultimately, the government would sell the acquired assets and thus generate income that would offset much of the initial expenditures.

"I share the skepticism of many Americans concerning the cost estimates made by government relating to its own programs.  Throughout its history, the CBO has served in a nonpartisan fashion as a watchdog over the federal budget.  However, even if one assumes that CBO is somehow wrong, the proposal specifies that if the rescue program has incurred a net loss, the President would be required to submit a legislative proposal to recoup that shortfall from entities benefiting from the program. 

“Even though this is not the bill I would have written, at a time when the crisis on Wall Street threatens to spread to Main Street it is not enough to say that we will punt.  This is not a responsible option when we are talking about American families and American jobs hanging in the balance.  When companies are encountering difficulty obtaining short term loans to make their payrolls, when automobiles and other products are not being sold because financing is not available, and when pension funds and the life savings of Americans are in jeopardy, there is no alternative.
 
“We are faced with a potential credit freeze that will impact all of us and cause prolonged pain for the economy and the American people. Congress needed to act.”