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On Monday, I joined 227 of my colleagues and voted against the Emergency Economic Stabilization Act of 2008 (H.R. 3997). This bill resulted from a series of negotiations that started after the Secretary of Treasury requested $700 billion to purchase illiquid assets from financial institutions.
After weighing the final proposal and its potential ramifications carefully, I was not convinced that a $700 billion taxpayer-funded government purchase program would be the right way to help the economy. Nor was I convinced that it would deliver as promised by Treasury Secretary Hank Paulson. This legislation was not in the best long term interests of my constituents or the overall financial well-being of our nation.
Our current problems largely result from years of policies, beginning as long ago as the Clinton Administration, which encouraged an over-extension of credit and irresponsible lending practices. My concern is that even $700 billion cannot undo the damage that has been done and may only delay the inevitable economic corrections.
Like you, I am frustrated that our economy has reached this point. Although this crisis is the culmination of years of bad lending practices and greed on Wall Street, I am particularly troubled by Secretary Paulson’s repeated assurances at House Financial Services Committee hearings that everything was okay. Had Secretary Paulson been upfront with Congress and the American people, we could have begun the process of examining our options for resolving this problem in a deliberate, free market manner before a full blown crisis emerged.
With the failure of H.R. 3997 on Monday, we now have the opportunity to evaluate alternative solutions to our economic crisis. Economists and Republicans offered many suggestions to improve H.R. 3997, but very few were given appropriate consideration. Suspension of mark-to-market accounting principles, temporary suspension of taxes on capital gains, an insurance program for mortgage-backed securities, and increased help for homeowners were some of the many ideas suggested during the last week.
The FBI has launched investigations into Lehman Brothers, Fannie Mae, Freddie Mac and AIG. It is essential that the solution is crafted so that it does not reward those responsible for getting us into this mess in the first place.
We have learned many times before that legislating in a crisis results in unintended consequences. The House will return to Washington this Thursday to reassess the situation. We must examine alternatives that would provide greater protections to Americans in the heartland. It is now essential that Congress come together, put politics aside and find a solution that will release private capital into the credit markets. This is the biggest financial crisis since the 1930s, and it is crucial that we take the time to find and implement the right solution.
If you would like to share your thoughts with me on this issue, please go to .http://geoffdavis.house.gov/Contact.aspx
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Geoff Davis
Member of Congress |
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