I share with you an email about the financial bailout from 16th district Congressman Don Manzullo:
Thank you for contacting me about the Emergency Economic Stabilization Act of 2008. It is good to hear from you.
Like you, I am deeply troubled by our struggling economy. It is devastating to see the impact this financial crisis is having upon hard-working Americans, small business owners, and our retirees. I am furious we are in this position.
As a Member of the House Financial Services Committee, I have been fighting Fannie Mae and Freddie Mac for 8 years for what I consider illegal and unethical practices. I cosponsored three bills (in 2000, 2003 and 2005) that would have reformed Fannie Mae and Freddie Mac and required higher capital requirements so this housing crisis would not have occurred. The first two bills were not brought up for a vote, and the last bill passed the House only to stall in the Senate.
The problem is people were given mortgages who had absolutely no ability to pay. Last July, I questioned Chairman of the Federal Reserve, Ben Bernanke, about why he was just now talking about instituting a rule that required proof that people could afford a mortgage before they received it. Amazingly the rule will not be finalized until late 2009. You can view this exchange by visiting http://manzullo.house.gov and clicking on the Multimedia section.
It exposes taxpayers to a possible $700 billion loss through the government purchase of troubled mortgages, auto loans, and credit card debts without any assurance of success.
Even the Bank of China could have its bad debt purchased by American taxpayers. I am not alone in my concern. Former U.S. Treasury Secretary Paul O’Neill – who also ran Alcoa Aluminum – called the rescue bill “crazy” and said it could have potentially “awful” consequences for our economy. Hundreds of our nation’s top economists called it “unfair” and “short-sighted.”
I supported two responsible alternatives to help lead America out of this terrible economic situation as a first step before risking $700 billion in taxpayer money. One of those alternatives –
- H.R. 7226 – was used by former FDIC Chairman William Isaac to shore up failing financial institutions at relatively little cost to taxpayers during the Savings and Loan (S&L) crisis of the 1980’s. Another alternative –
- H.R. 7223 – would have set up an FDIC-style mandatory insurance program in which Wall Street firms would have paid to insure their mortgage-backed securities. Doing so would have made Wall Street instead of Main Street pay the cost of this rescue.
More detailed descriptions of both alternatives are attached to this letter.
Sadly, we were never given an opportunity to vote for either of these responsible alternatives. Democrat Congressional leaders and the Bush Administration did not allow any alternatives to be debated in the House of Representatives. Rather, I had to vote up or down on what I considered a deeply flawed bailout plan that spends an enormous amount of taxpayer money with no guarantee of success amid significant criticisms from many of our top economists. I was not demanding a perfect bill but merely an acceptable bill, and we were dealing with neither.
Despite my concerns, the bill passed the House and Senate and was signed into law by the President. As a Member of the House Financial Services Committee, I will closely monitor the implementation of the Emergency Economic Stabilization Act of 2008 and continue to work to improve the law. I will also pursue further alternatives to resuscitate our struggling economy while limiting taxpayer exposure to the maximum extent possible. Again, thank you for contacting me about this issue. Your input is important to my work here in Washington.
Donald A. Manzullo
Member of Congress