Here is the letter I received today from my congressman explaining his reasons for voting against the economic recovery package last week.
October 13, 2008
Dr. Paul Pival
Bainbridge Island, WA
98110-2615
Dear Dr. Pival:
Thank you for contacting me regarding the economic recovery package. I appreciate hearing from you on this important issue.
As you know, I voted against the first economic recovery legislation due to grave concerns about taxpayer protection, accountability, and oversight. While I worked with my colleagues in the House of Representatives for stronger protections, unfortunately my concerns were not addressed in the Senate’s version of the bill and it remains, in my opinion, inadequate and inequitable. For this reason, I was unable to support the Senate’s version of this bill passed the House by a vote of 263-171 and was subsequently signed into law by President Bush.
Please be assured that my opposition to this bill did not stem from any misunderstanding of the severity of the credit crisis that is currently restricting the flow of capital at all levels of our economy. My background in economics as well as my service during previous Congresses as a member of the House Financial Services Committee has made clear how dropping real estate prices triggered a major credit crisis affecting interbank credit rates, corporate bond insurance, and ultimately restricting loans for small and large businesses and consumers. While these linkages don’t encompass the entire problem, they do show that an effective solution to reduce the very real danger of economic stagnation is necessary. My vote reflects my desire to protect the long-term growth of the American economy by enacting economic policy that is more likely to result in getting our economy back on track, and to fix some of the underlying problems of the bill.
I realize the need to find consensus and it is my hope that the enacted plan works to free up credit. However, this basic plan to have government officials choose which troubled assets to purchase and set the prices at which to buy and sell them, as it was proposed by Treasury Secretary Paulson, has not offered adequate protection for the taxpayer, nor has it addressed the underlying reason for this credit crisis -- the collapse of the housing market. Therefore, while our credit challenge is real, I found the recently enacted legislation to be fatally lacking.
First, we needed to include real taxpayer protections. It’s not enough to have a provision asking for an unidentified President in 2013 to present an unidentified plan to ask for taxpayer money back from Wall Street. It was an illusion of protection. At this time, a shortfall created by this bill remains unpaid for and I don’t think that burden is fair when so many Americans are struggling to make ends meet. Instead, Congress should have stayed to work for a plan that works for taxpayers. One such example would be what Warren Buffet achieved in his recent deal with Goldman Sachs– acquiring an equity stake directly from the banks in the form of preferred stock in exchange for much-needed investment capital from the government. Under such a plan, banks would begin investing again immediately and taxpayers could profit with them. Congressional leaders suggested that the Treasury acquire equity guarantees, but the recently enacted legislation still lacks an explicit requirement for taxpayers’ to be guaranteed an equity stake commensurate with the amount of taxpayer assistance given.
Second, this package does not address needed reforms to the financial and housing markets to prevent a crisis like this from happening again. Imprudent banking practices like severe overleveraging and faulty corporate insurance as well as lax government oversight are just a few systemic weaknesses which must be addressed immediately. Without proper oversight and brakes in place to slow down the rate of the economic downturn on a micro level, I fear these problems will continue despite the passage of this package.
In addition, we must address the root of this financial crisis by doing more to help the people who played by the rules to stay in their homes. I remain unconvinced that this bill will trickle down to stop the widespread bleeding in our housing market. A plan of this size should include both a macro and micro approach to improving our financial markets.
Under the enacted plan, even with minor changes placed in the Senate’s version of the Economic Recovery Act, such as increasing the FDIC coverage limit for individual deposits to $250,000, and adding extensions of energy tax credits as well as the Washington State sales tax deduction which I voted for earlier this year, this plan falls far short of what the American people need. In making my decision, while I recognized the need for expediency on this matter, my bottom line on this legislation was not met: explicit and legally binding protections for the taxpayers (such as the equity stake I mentioned previously) and including homeowners who are struggling down on main street.
Please be assured that I remain concerned about where we are headed as a nation and steadfast that I must do everything I can to ensure justice and economic prosperity. Like you, I worry about the health of our investments, about the security of our retirement – these are the essential tools around which we plan our futures. Although we may have disagreed on this issue, I hope you will continue to contact me so that we may find common ground and work together in the future.
Please continue to contact me about the issues that concern you, as I both need and welcome your thoughts and ideas. I encourage you to contact me via email, telephone, or fax, as security measures in the House cause delays in receiving postal mail. For more information on my activities in Congress, and for information on services that my office can provide, please visit my website at http://www.house.gov/inslee. If you would like to subscribe to my email updates, please visit http://www.house.gov/inslee/signup.htm.
Very truly yours,
JAY INSLEE
Member of Congress
JRI/et
Confirmation# 2757816
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