From My Senator on the Bailout of Wall Street
Senator Feinstein‘s veeeeeeeery long response to a letter I submitted to her office. Her key points are:
- Necessity for a bailout
- Phased funding of bailout
- Paulson plan thumbs down because too much power in one person. Entrust responsibility not just to one person. More oversight/accountability necessary.
- Legislative reform of the financial system in the first quarter of 2009
- Protection for tax payers in the form of warrants/stock/etc. Learn from the Swedes.
- Cap on executive compensation for firms that participate in bailout. If executives balk, let them sink or swim on their own.
- Mortgage relief
Dear Ms. XXX:
Thank you for your letter expressing concern about Congress’ consideration of a plan to meet our Nation’s credit crisis with financial help from the Federal Government. This is a difficult situation for which there are no perfect solutions, and I would like to share my thoughts and concerns about this issue with you.
On September 19, 2008, Secretary of the Treasury Henry M. Paulson, Jr. announced a legislative proposal to use $700 billion to purchase illiquid mortgage-related assets from ailing financial institutions. Secretary Paulson’s three-page proposal was a non-starter, and without critical changes it has no chance of approval from Congress.
This proposal would have given a blank check to an economic czar who would have been empowered to spend it without administrative oversight, legal requirements, or legislative review. Decisions made by the Treasury Secretary would be non-reviewable by any court, agency, or Congress. The proposal also lacked a requirement for regular reports to Congress on the status of the program. This was simply untenable.
Since this announcement, my offices have received thousands of comments from Californians like you concerned about how this action will affect them. Yet, I believe prudent action must be taken. The bill should include the following principles: a phase-in of funding; oversight, accountability and transparency; a mechanism allowing the Secretary of the Treasury to modify mortgages to prevent additional foreclosures; and a precise cap on executive compensation.
The current credit crisis affects all Americans. If action is not taken to stem the crisis, Americans risk losing their homes, jobs, personal savings, life insurance and more. Banks will cease to lend to businesses and homeowners, and credit will be increasingly difficult to come by for average Americans. I strongly believe that the consequences of failing to act now would be greater than not acting at all.
Attached please find a statement I recently made on the floor of the Senate expressing my feelings on this issue. Please know that I will keep your thoughts in mind as this situation unfolds.
Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.
U.S. Senator Dianne Feinstein (more…)
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