Housing Bailout summary, part 1, the Democrats lied…
Posted by Mike Sylvester - 7/23/08 @ 10:05 pm - Filed Under National Politics
HB 3221 is a 700 page law that passed the House today and is likely to pass the Senate this week. The bill is not in its final form yet; therefore, some of the items in this post may change when the bill becomes law.
Over 99% of the Congressional Democrats support this bill. Between 1/3 and 1/4 of the Congressional Republicans support this bill.
Mark Souder, our Republican Congressman in Indiana’s 3rd Congressional District did vote correctly on this bill; he voted against it.
I disagree with this bill; however, after analyzing it I have to say it is not as bad as I originally thought it would be. I do oppose it; however, I have calmed down quite a bit after two or three hours of research. HB 3221 is a bill that should not have been passed; however, it is not as crippling as I first thought.
The worst thing about HB 3221 is that it once again illustrates how the Congressional Democrats are completely shattering their 2006 campaign promise to restore fiscal sanity to Washington. In 2006 Nancy Pelosi, Harry Reid, and the vast majority of Congressional Democrats ran on a platform that included “Pay-as-you-go-rules.” “Pay-as-you-go-rules” require that you designate new sources of revenue to pay for all new spending. HB 3221 is estimated to cost the US taxpayers 25 billion dollars. The Democrats decided to suspend the “Pay-as-you-go-rules” again and they decided to just add the costs of this bill directly to the Federal Debt (Which is currently just over 9.5 trillion dollars on a cash basis).
This is shameful and Nancy Pelosi and all of the Congressional Democrats who voted for this bill should be ashamed of themselves for passing the cost of this bill (with interest) onto future generations of Americans.
The second thing about this bill that angers me is that it raises the National Debt limit from 9.8 trillion dollars on a cash basis to 10.6 trillion dollars on a cash basis. This further shows that the Democrats have absolutely no intention of restoring fiscal discipline. IN fact, they are already saying that they will add at last another 1.1 trillion dollars to the National Debt.
The Democrats absolutely lied and have completely broken their campaign promise to restore fiscal discipline in Washington DC.
Part 2 of this post will analyze HB 3221 and its effect on America.
Mike Sylvester
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3 Responses to “Housing Bailout summary, part 1, the Democrats lied…”
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Mike, this does not violate the “pay-as you go” rule. The designated source to pay for this bill is China, who we will have to borrow more from.
By the way, I received my economic stimulus check recently. I’m thinking it might be wise to invest this in Chinese Yen.
Unfortunately, Mark Souder voted “yes” for the $700 Billion dollar plan. Wish he would have listened to his voters.
This is where we are today given the “Bailout Vote & Plan.”
Here’s Mr. Souders’response:
Sept. 26th, 2008 before the vote: I wanted to provide you an update. I have included in this email a letter sent today by the House Republican Leader John Boehner to Speaker Nancy Pelosi. September 26, 2008
The Honorable Nancy Pelosi
Speaker of the House
H-232, U.S. Capitol
Washington, D.C. 20515
Madame Speaker:
As our discussion ended last night, we agreed to continue talking about how to best solve this economic crisis. Like you, House Republicans and I believe we must address this crisis quickly and in a way that protects the interests of families, seniors, small businesses, and all taxpayers. As you know, this process is not about faceless executives on Wall Street, but about keeping families in their homes, safeguarding their retirement security, college savings, and bank accounts, and protecting their jobs.
Over the last week, we have frequently discussed Secretary Paulson’s proposal, and I have repeatedly expressed the need for improvements on behalf of myself and my Republican colleagues. Our staffs have also been in regular contact. To that end, Financial Services Committee Ranking Member Spencer Bachus (R-AL) was tasked by House Republicans to engage in discussions with Chairman Barney Frank (D-MA) and Chairman Chris Dodd (D-CT) and report back to our Conference on the progress of those negotiations before a final deal could be made. Yet Chairman Frank and Chairman Dodd, on several occasions over the last several days, announced that a bipartisan deal was at hand even though the reservations about the underlying proposal I had expressed to you had not been addressed. Each time such announcements were made, or even rumored, I or my staff made it clear to media and to your staff that any such deal did not include House Republicans.
As we demonstrated at the beginning of this year when we crafted a timely agreement on the economic stimulus package, a bipartisan response to our nation’s priorities is never out of reach. And I believe the same holds true at this hour. House Republicans are prepared to stay in Washington to forge an agreement on a proposal that reflects the core free-market, pro-taxpayer principles of our Party.
With that in mind, earlier this week, with your knowledge, I directed our Chief Deputy Whip Eric Cantor (R-VA) to lead a working group of House Republicans to develop a package of ideas to move this process forward. His working group represented a broad cross-section of House Republicans—including both moderate and conservative members—and their goal was to develop ideas worthy of support on both sides of the aisle. We have discussed some of these ideas, and I would like to reiterate that I believe they should be given the consideration they deserve as our economic rescue discussions continue. A brief overview of the working group’s blueprint is included with this letter.
Madam Speaker, we owe it to all those with a stake in this process to continue our discussions until we arrive at an agreement that is acceptable on both sides of the aisle—and more importantly, one that serves the interests of American taxpayers. That is why I ask you and your Democratic colleagues to give the House Republican working group’s proposals serious consideration as this process moves forward. If such consideration is not given, a large majority of Republicans cannot—and will not—support Sec. Paulson’s plan. In the interest of the men and women we represent in Congress, I hope it does not come to that conclusion. I look forward to your timely response and to continuing our work together on an economic rescue package worthy of all of our support.
Sincerely,
John Boehner
Republican Leader
HOUSE REPUBLICAN WORKING GROUP
ECONOMIC RESCUE PRINCIPLES
I. Wall Street – Not Taxpayers – Should Fund the Recovery
The most troubling part of Sec. Paulson’s plan is that it relies wholly on taxpayer funds. House Republicans believe that rather than providing taxpayer funded purchases of frozen mortgage assets to solve this problem, any rescue package should adopt a plan to insure mortgage backed securities (MBS) through payment of insurance premiums.
Currently, the federal government insures approximately half of all MBS and can insure the rest of those still outstanding. However, rather than taxpayers funding the insurance, the holders of these assets should pay for it. The working group’s proposal would direct the Treasury Department to design a system to charge premiums to the holders of MBS to fully finance this insurance.
II. Private Capital – Not Tax Dollars – Should Be Injected Into Financial Markets
Instead of injecting taxpayer funds into the market to produce liquidity, private capital can be drawn into the market by removing burdensome regulatory and tax barriers that are currently blocking private capital formation. In short, too much private capital is sitting on the sidelines during this crisis, and it is well past time to unleash it.
Temporary tax relief provisions can help companies free up capital to maintain operations, create jobs, and lend to one another. In addition, the working group recommends a temporary suspension of dividend payments by financial institutions and other regulatory measures to address the problems surrounding private capital liquidity.
III. Immediate Transparency, Oversight, and Market Reform
Both Republicans and Democrats have made clear that they believe there is not a strong enough oversight component in Sec. Paulson’s plan. The House Republican working group’s proposal addresses this flaw. To begin, the plan would require participating firms to disclose to the Treasury Department the value of their mortgage assets on their books, the value of any private bids within the last year for such assets, and their last audit report. Additional safeguards include:
• To limit federal exposure for high risk loans, the working group’s recommendations mandate that Government Sponsored Entities no longer securitize any unsound mortgages.
• The plan would call on the Securities Exchange Commission (SEC) to audit reports of failed companies to ensure that the financial standing of these troubled companies was accurately portrayed.
• The blueprint would guarantee that Wall Street executives do not benefit from taxpayer funding.
• The proposal would call on the SEC to review the performance of the credit rating agencies and their ability to accurately reflect the risks of these failed investment securities.
• The working group recommends that Congress create a blue ribbon panel with representatives of Treasury, SEC, and the Federal Reserve Board to make recommendations to Congress for reforms of the financial sector by January 1, 2009.
Then on Oct 2, 2008.
Thank you for contacting me regarding a possible rescue plan for the U.S. financial markets. As the House of Representatives prepares to vote, I wanted to let you know of some important developments.
On September 30, I joined many of my colleagues in signing a letter to Securities and Exchange Commission (SEC) Chairman Christopher Cox urging the SEC to suspend the use of fair value accounting practices, commonly known as mark-to-market. The suspension of this rule would allow institutions to more accurately price assets according to their long term value, and avoid unnecessary write-downs on their balance sheets. This, in turn, provides banks with greater flexibility to provide loans to individuals and businesses, without costs to taxpayers.
You may be interested to know, the SEC responded to Congressional pressure and announced changes that make it easier for institutions to price hard-to-value assets. While the SEC did not suspend fair value accounting practices as I had hoped, the changes do provide relief without burdening Hoosier taxpayers.
Again, I appreciate the opportunity to correspond on this issue. For your information, I have attached a copy of the letter to Chairman Cox. I hope you find it helpful. Please do not hesitate to contact me again with further questions.
Sincerely,
Mark Souder
Member of Congress
The mark-to market reply Oct 8, 2008:
Thank you for contacting me regarding federal intervention into U.S. financial markets. I have greatly valued reading the various viewpoints across northeast Indiana. I appreciate hearing from you, and I certainly understand your frustration.
From the beginning of this debate, I-along with my fellow Hoosiers-have been furious about the current financial circumstances. I have great disdain for the idea of spending tax-payer dollars to bailout Wall Street. My support for the Economic Stabilization Act, however, was based on the belief that failure to act would put our local employers, workers, and economy at much greater risk. I was unwilling to jeopardize the future of hard-working families and individuals who did nothing contribute to the current situation.
As the collapse of the toxic mortgage-backed securities market began to ripple through the economy, Congress had to act immediately. Credit has tightened and small businesses, farmers and home owners will be impacted if things continue to spiral downward. I hope in the paragraphs that follow I will be able to share some of my views that guided me through this difficult decision.
I strongly disagreed with several measures in the original administration proposal. I felt that Congress was being asked to write a blank check for Wall Street and the Treasury Department, and I fundamentally opposed this action. I was outraged by the idea that we would bail out the very people who had run their companies into the ground. I was appalled that we’d allow golden parachutes to remain intact and that CEOs who’d gambled and lost could walk away unharmed. As the Congressman responsible for the most manufacturing jobs in the nation, I knew that if our GM truck plant, manufactured housing companies, and others did not have access to credit they would suffer great losses. Thousands of jobs could be lost.
When the latest compromise was unveiled, I was still concerned with the idea of government intervention. However, despite my concerns, I believe this was the most practical solution presented by the Democrats. Below is a listing of the provisions that I feel will protect Hoosiers:
o Reduced taxpayer exposure. Rather than the $700 billion blank check requested, $250 billion will be available to the Treasury Secretary and additional funds beyond $350 billion will require Congressional action.
o Taxpayers recoup losses. If after 5 years, taxpayers have lost money on the asset purchase program, the President is required to submit a plan to Congress to recoup these losses from the firms that participated in the program.
o Caps executive compensation. Ensures that bad actors who contributed to this crisis are not rewarded with millions of dollars.
o Helps struggling homeowners. Mortgage entities are required to work with homeowners at risk of foreclosures, considering the actual value of the house.
The vote I cast in favor of the Economic Stabilization Act was one of the most difficult decisions I have ever had to make as a member of Congress. Despite much opposition, my job as the representative of northeast Indiana is to vote in the best interests of those I represent.
Thank you for keeping in touch with me. If I may be of assistance in the future, please do not hesitate to contact me again. I also encourage you to visit my Web site, which may be found on-line at http://www.Souder.House.gov.
Sincerely,
Mark Souder
Member of Congress
[...] in July I had two posts detailing why I opposed HB [...]