October 27, 2008
Dear Mr. Dravis:
Thank you for contacting me to express your views on H.R. 1424, the Emergency Economic Stabilization Plan and Tax Extender Package. I appreciate hearing from you.
The Senate passed H.R. 1424 by a vote of 74-25 on October 1, 2008. On October 3, 2008, the House passed the bill by a vote of 263-171. Later that day, President Bush signed the bill into law.
The economic stabilization bill is intended to stabilize financial markets, and was substantially improved from the Administration's original proposal. The original bill proposed by the Bush Administration was unacceptable. It asked us to commit $700 billion in taxpayers' money without any meaningful safeguards; we rejected that proposal. In our bipartisan negotiations between the White House and Congress, we stood up for American taxpayers and demanded tough changes to the bill.
Restoring Stability to our Financial Markets
The plan is intended to help stabilize our financial markets by providing the Department of Treasury with the authority to acquire $700 billion worth of troubled assets from financial institutions. This investment in our financial institutions is intended to remove impediments to the flow of credit in our financial markets, and to provide financial institutions with the ability to raise the capital they need to return to the financial markets as active participants. If the plan works, small businesses will be able to borrow the necessary capital to grow, and the routine flow of credit can be restored to our community so that parents can send their children to college and families can purchase homes.
Reimburse Taxpayer Investments
The bill will protect hardworking American taxpayers who are being asked to invest in the future of our nation's economic health. The legislation requires that taxpayers benefit from the government's investments in the purchased assets by providing them with a share of the profits from participating companies, and ensuring that any costs incurred by the program are incurred by the financial industry.
Reform Wall Street Practices and Strong Government Oversight
This legislation imposes strict limits on excessive compensation for CEOs and executives of companies that participate in the asset purchase program, and provides for four separate layers of oversight to ensure that the government runs the program in a transparent manner and that taxpayers are protected.
Relief for Middle Class Americans
The plan will provide relief to millions of homeowners and thousands of small businesses. The legislation provides tax relief for 30 million homeowners and assists small businesses that need credit from small community banks to survive and grow. Importantly, the bill increases the amount of bank and credit union deposits insured by the government from $100,000 to $250,000, ensuring that Americans have confidence in the safety of their deposits in our nation's banks and credit unions.
Reinvigorate the American Economy
To strengthen the economy, the measure includes over $100 billion in tax cuts that will create over 500,000 American green jobs; provide tax relief to middle-class families struggling to make ends meet in the face of the rising energy, health care and grocery costs; and spur business investment and innovation. The legislation also provides tax relief for 25 million middle-class families, and extends tax cuts for American businesses and families.
This legislation is just the beginning of our efforts to address this financial crisis. Chairman Henry Waxman of the Oversight and Government Reform Committee, Chairman Collin Peterson of the Agriculture Committee and Chairman Barney Frank of the Financial Services Committee will hold a series of hearings to determine the origins of the crisis, how regulators and business leaders failed to protect the public interest, and the common sense, reasonable regulations needed to provide security and stability in the future. I have also asked them to review the economic impact of a larger recovery package and, because of the Congress' commitment to fiscal responsibility, the effect on the budget.
On October 13th, I held a forum with some of America's leading economists to help Congress develop a stimulus that focuses on creating jobs and strengthening our economy. Just as we worked in recent weeks on an economic rescue plan to help bring stability to our financial markets, we must now take additional action and pass a jobs creation and economic recovery plan. The legislation would boost the broader economy. It will include an extension of unemployment benefits, increased money for food stamps and the states, and more federal funds for bridges and other transportation projects.
Democrats have made fiscal responsibility a top priority, reinstating pay-as-you-go budget rules on the first day we took control of Congress in 2007. In keeping with these principles, each component of our recovery package will be justified in terms of creating good-paying jobs, stimulating our economy and returning revenue to the Treasury. When Americans are worried about losing their jobs, their savings, their homes and their chance at the American Dream, Congress and the president must work together to lift our economy and restore hope. That is the course the New Direction Congress will continue in the days and weeks ahead.
Our nation is at a critical point in our history, and we must continue to act to restore confidence in our financial markets and to reinvigorate our economy. The vote on H.R. 1424 was a vote with real consequence, and a vote that will shape the financial stability of our country, and the economic security of our people.
Thank you again for contacting me on this important issue. I hope you will continue to communicate with me on matters of concern to you. For more information on this or other issues affecting our city and our nation, please visit my website at www.house.gov/pelosi or sign up to receive e-mail updates at www.house.gov/pelosi/IMA/subscription.html.
Member of Congress