Letter From Olver: House Passes Bipartisan Economic Rescue Package

By U.S. Rep. John W. Olver
1st Massachusetts District
03:56PM / Friday, October 03, 2008

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U.S. Rep. John W. Olver

As you may know, today, the House of Representatives passed a bipartisan economic rescue package. None of us is pleased to be in this situation but I believe that inaction will lead to far more costly consequences than the heavy price tag that comes with this plan.
 
The [Bush] administration's proposed plan was a $700 billion blank check with the entire weight of the bailout falling on the taxpayers of America and extraordinary powers given to the secretary of the treasury without oversight review even by the federal courts. 

That was unacceptable.

After many heated discussions and prolonged negotiations among bipartisan representatives, a plan has been ironed out that I can support. Under this plan, the Treasury Department will receive up to $700 billion in increments to purchase risky assets from banks and investment firms. The compromise plan greatly reduces the impact on taxpayers and includes the following provisions:

Protection for Taxpayers

    * Requires congressional review after the first $350 billion is disbursed.
    * Gives taxpayers a share of the profits of participating companies.
    * Requires the president five years from now to submit a plan to ensure taxpayers are repaid in full, with Wall Street making up any difference.
    * Allows the government to purchase troubled assets from pension plans, local governments, and small banks that serve low and middle income families.
    * Raises the limit on FDIC insurance to $250,000 up from $100,000.
    * Includes a one year patch of the Alternative Minimum Tax, saving millions of Americans from paying higher taxes in 2009.

Limits on Executive Compensation

    * Prohibits multimillion dollar golden parachutes.
    * Limits CEO compensation that encourages unnecessary risk-taking.
    * Recovers bonuses paid to executives based on gains that later turn out to be false.

Strong Independent Oversight and Transparency

    * Instituted four separate independent oversight entities to protect the taxpayer.

•  Includes a strong oversight board appointed by bipartisan leaders of Congress.
• GAO oversight and audits at Treasury to ensure strong controls to prevent waste, fraud, and abuse.
• An independent inspector general to monitor the Treasury's actions.
• Transparency — requiring posting of all transactions online — to help jumpstart private sector demand.

    * Allows for meaningful judicial review of the Treasury secretary's decisions.

Protection for Homeowners

    * The government will be able to work with servicers to change the terms of mortgages bought under this program.
    * Extends provisions to stop tax liability on mortgage foreclosures.
    * Helps save small businesses that need credit by aiding small community banks hurt by the mortgage crisis.


The financial crisis is not confined to lower Manhattan. If it only affected Wall Street bankers, I would let them sleep in the beds they made. Across the country, retirement accounts are diminishing and loans for both businesses and individuals are unavailable. Without available credit, our economy is effectively stalled, hurting every single American. Given the far-reaching impacts of this crisis we should not view this as a bailout of Wall Street. Rather, it is a buy-in towards our economic recovery.

We would not find ourselves in this position were it not for the Republican majority in Congress that worked hand-in-glove with President Bush, and shirked responsible regulation in favor of a Wall Street free-for-all that gambled away American retirement funds while feeding the greed of executives. That era is over.

I realize the difficulty many of you have in embracing this plan; I had it too. The idea that we let Wall Street privatize their profits and publicize their risks is anathema to the American ideal. 

But I must assure you that I would not have voted for this new plan if I did not truly believe that it would provide relief for struggling Americans and prevent continued economic decline.

However, it is important to note that our work here is not done. While this plan will help ease the strain on our economy for the time being, we must realize that our economy is broken. The next Congress will need to focus on a multifaceted approach to get it back on track. A key component will be a complete overhaul of our financial regulatory system so the same practices that caused this crisis will not reoccur. 

Please be assured that I will support efforts to overhaul our financial system so that we never find ourselves in this situation again.

Sincerely,

John W. Olver
Member of Congress

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