It is with deep disappointment and a heavy heart to have witnessed Congress' failure to address the grave financial challenges we face as a nation. With an election looming, my colleagues in Congress thought first and foremost of their own jobs at the expense of the jobs of those they serve.
I could not and did not accept last week's proposal by the Bush administration - an administration that totally mishandled this situation. But instead of pointing fingers and standing idly by - as would have been the politically expedient thing to do - I worked to secure concrete protections for the taxpayer.
Today's vote was about stopping the Wall Street crisis from creating a banking crisis in our communities. The Bush administration's proposal was unacceptable, and the American people demanded an alternative solution be brought to the table.
I joined my colleagues in putting forth an alternative economic rescue proposal and secured these taxpayer-protections in the final bipartisan agreement. I fought to make sure that once these troubled institutions start making profits, the taxpayers benefit first and foremost.
I fought to make sure Wall Street executives don't profit personally as a result of their irresponsible decisions. I wrote the provision that ensures that Wall Street shares in the cost of their own recovery.
I supported this bill in order to stabilize our economy and to preserve American jobs. It is about Main Street - that Wall Street's crisis doesn't become Main Street's crisis. It is about protecting working families' access to credit - so students can secure college loans, farmers can buy feed, seniors can secure their retirement and businesses can pay their employees.
I am outraged that we find ourselves in this situation, and I have grave concerns for the state of our economy. In light of the political expediency of my colleagues and the horrendous failures of the Bush administration, we will have to roll up our sleeves and go back to the drawing board to enact a meaningful solution to our financial crisis.
U.S. Rep. Paul Ryan (R-Wis.) represents Wisconsin's First Congressional District.
6 Comments
And well you should be concerned.
We have but one problem, and that is our corrupt political system that allows special interests to buy legislation to benefit them instead of the public. Campaign contributions bought the deregulations that have trashed our economy, and campaign contributions have bought the earmarks and overspending that permeates Washington. Get the bribery out of Washington and you'll see politicians vote for their people rather than their pocketbooks.
Corruption doesn't work in Mexico, and it doesn't work in the U.S..
When this is all over, Paul, the best thing you could do for this country is to pass (optional) public funding of campaigns. At a cost of $10 per taxpayer per year, few would argue that its costs are more than offset by its savings.
If you owned a company you would not allow employees to take money from vendors. Why do we allow that of our politicians?
See http://www.wiCleanElections.org
Jack Lohman
http://MoneyedPoliticians.net
Rep. Ryan:
Your analysis is right on. Our thanks to you for the hard work and candid reporting. This is not a situation where someone will ride in and "save the day." This is going to get stink on everyone.
But that's what happens when there is a mess to be cleaned up. Question is, who is going to roll up their sleeves and get the job done? And who is going to too busy shouting, "I didn't do it!"?
Recently, I wrote a submission to the Biztimes staff regarding the use of taxpayer dollars to line the pockets of the utility companies. Tax dollars are being distributed through social services agencies to assist the less fortunate families with their increasing utility bills as the cost of home heating and electricity rise (along with the profits of the utility companies).
Now, we're seeing the government recommend the use of our tax dollars to aid corporations on an unimaginably large scale, with the proposed $700 billion bailout plan. While the initial plan was voted down, yesterday, there is no doubt that another similar plan will quickly reemerge in Congress. The plan focuses on bolstering the balance sheets of large corporations, while putting our tax dollars at great risk. Have you read the 107 page plan?
The Secretary of the Treasury, for example, doesn't have to publish the mechanisms for purchasing, valuing, or identifying the troubled assets to purchase, until two days after the assets are purchased. Furthermore, the Secretary has 60 days from the initial purchases to report his decisions to the committees set up for the purpose of exercising oversight. Two months after the fact might prove to be too late. The Secretary can purchase $50 billion in troubled assets before having to make his report.
The Secretary is allowed to guarantee mortgage backed securities, exposing the tax payer to massive losses should the securities continue to decline in performance and value beyond the expectations of actuaries which are used to determine the premiums to be collected for participation by financial institutions in the program.
The Secretary shall "take into consideration protecting the interests of tax payers by maximizing overall return." In the world of investing, the attempt to maximize returns by definition exposes the investor to greater risk. Maximum returns can quickly become maximum losses should the underlying investment fail to perform as expected or desired. We're witnessing this very thing, right now.
The Secretary shall also "take into consideration the need to help families keep their homes." The American Dream is a strong illusion. Americans have come to believe that part of the American Dream is for everyone to own their own home. This is a misguided concept. There is no problem with renting. An individual renter is not "throwing money away." In fact, rent can help stimulate the neighborhood even more than home ownership. Home ownership typically involves mortgages these days. Unless your loan is from a community bank, the money you pay in interest usually leaves the area. Rent, on the other hand, usually goes to a local property owner, allowing that money to be re-invested in the local community. Which method seems more likely to you to "stabilize communities" as mentioned in the plan?
The limit on public debt is going to be increased to $11,315,000,000. That's right, eleven trillion dollars, but they say in the plan that after the plan runs five years, if there is a shortfall in the assets when sold versus the price of the assets when purchased, the government is going to recoup that money from the financial industry it just bailed out. How are we to be sure the government will be able to do this. We're just supposed to hope and pray that everything is fixed in five years, and that all of these corporations that proved to operate in a manner resulting in failure are now all of a sudden going to become profitable?
The plan is full of words that can easily be misunderstood. It is full of words like "homeowner" and "community" and "stabilize" but the real message is much different. The plan aims to save the corporations from losses by allowing them to get rid of their troubled loans, and get more cash to "invest," which means more loans made. The corporations that are struggling have already demonstrated an inability to make sound decisions in their operations, and now they're going to get more money. We should not support a plan that bails them out. Rather, we should look to the recent Washington Mutual and Wachovia situations. The banks that have proven an inability to make smart decisions should be taken over, and sold to financial institutions that know what they're doing. The government shouldn't step in and take over a corporation like they did with AIG. Does the Federal Deficit and National Debt lead you to believe the government is any better at managing their operations?
In short, some people shouldn't have been given loans to purchase houses. Some couldn't afford the payments, hence the creation of "stated income loans." Some demonstrated an unwillingness to pay back their obligations, though many sub-prime mortgage lenders approved loans to borrowers very low on the scale of credit-worthiness. If you believe these people were "duped" by unethical lenders, that's a perfect reason to perform audits of the lenders, but not to give the lenders financial support. Create penalties for fraud, deception, etc. Don't bail them out for it.
In the world of the free-market, the concept is that "you win some, and you lose some." Some people are going to have to lose. For those of you that have money in the market, you can take a look at your statement and see that right now, YOU'RE the one that's losing. Where's YOUR bailout? Additionally, if the government takes over an asset that includes your failed mortgage, you may get a break. What about all of the people that have mortgages that they're paying? These people are having their tax dollars used to bail out the individuals that aren't paying. By force, we are paying the debts of others.
There are consequences for being greedy, and making high rate loans to undeserving borrowers, and for living beyond your means by purchasing a house you can't afford. Higher risk means higher returns, but it also means higher possibility for losses. The market takes care of itself in this regard. Some of these financial institutions should be allowed to "fail." However, to protect the individual depositor, they should be taken over, and sold to a performing institution. Individual depositors didn't take "great risks" when they chose to put their money in to a checking or savings account, and they shouldn't be subject to the pain of failure caused by their banks that DID take the risks. Help out the depositors. Don't help the greedy.
Respectfully,
Gene Anjovik
Thanks for your note above, Gene. I started out believing the bailout was necessary, and it may still be. But I'm still not sure.
I thank the Republicans who stepped up to the plate to force a reconsideration, though I think we have an election that many were posturing for. Nonetheless, we needed calm to prevail. My concern now is that if it really should be killed, it isn't going to be, because many have done the necessary chest-pounding, and now they'll vote for it because of the cash they've received from the banking and credit industry.
I'd sure feel better if I knew that political cash wasn't changing hands in this process.
Jack Lohman
http://MoneyedPoliticians.net
On the 1999 Glass-Steagall banking deregulation bill, McCain voted FOR eliminating regulations and voting AGAINST were Feingold, Kohl and Joe Biden. Obama wasn't borne yet, and Bill Clinton defended his signing it into law. Source:
http://www.votesmart.org/issue_keyvote_member.php?cs_id=V2238
Jack, dereg. was and is not the issue. Lenders being forced, literally, to make stupid loans that prior to 2000 would never have made it past the application. They were forced by government and F. May/F. Mac were given the blessing by congress to underwrite these loans even though they did not meet any established guideline. The Bush administration can not take the blame for this one, congress is directly responsible for this "lender/banking" crisis. This issue was called out back in early 2006 and congress told the oversight to shut up and go back to their desks.