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Congressman Pascrell Engages in Rare Weekend Session to Address the Financial Crisis

Press Release

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Date:
Location: Washington, DC


At this moment Congress is engaged in a rare weekend session primarily to address the financial crisis our nation is facing. At this moment House and Senate negotiators are working around the clock to try to resolve their differences and come to a final agreement that can restore confidence in our financial sector.

Many of you have contacted our office to express your concerns about any final agreement. I appreciate your calls and I share your concern. It is important that you know the issues I am committed to and that I hear your comments.

I want to start by saying that this mess Wall Street firms have gotten themselves into is much larger than just a few bad mortgages. The mortgage crisis is a symptom of the larger disease that is the vast deregulation of our financial sector. Simply put, no one was watching the store as greed took over and these firms were allowed to run amuck without any oversight. Regardless of what is done to help bail out these Wall Street firms, I feel very strongly that we will only witness a repeat of these events if we do not address the cause of the problem itself.

It is clear that the current crisis is one of the biggest economic predicaments our nation has faced in many decades. Furthermore, I agree that immediate action needs to be taken to insure that our credit market will not be frozen. Without credit availability, individuals may be unable to obtain a mortgage, car loan, home equity loan or a student loan even with a good credit rating.

However, while immediate action must be taken, we can not allow ourselves to make desperate decisions that will not address the critical issues at hand and will only deepen this crisis in the long run. As negotiations move forward and I await review of a final package I want to lay out to you some of the principles I am standing behind.

No Blank Check for the Bush Administration and Wall Street
President Bush and Treasury Secretary Paulsen originally offered Congress a three page proposal that would have all but given Wall Street a $700 billion blank check. Under the original Treasury plan Secretary Paulson would have full and complete jurisdiction over the purchasing of bad assets without any oversight. I want you to know that this proposal was dead on arrival to Congress and that I am in strong support of a new proposal that will include a new oversight board, which would have the ability to issue "cease and desist" orders over this program. This would guarantee that this massive government program would be monitored to represent the taxpayers' interests. Furthermore, Secretary Paulson will not receive an upfront check from Congress for the full $700 billion. Instead, I support a new provision that would make $250 billion immediately available and an additional $100 billion released upon the Secretary's certification that the funds are needed. Congress could then stop the final $350 billion if it passed a joint resolution of disapproval.

Working for Main Street Interests
As we consider all proposals moving forward, my central focus has always been on helping the average citizen who has been affected by Wall Street greed. Congress has already helped address those hurt by the foreclosure crisis, but more clearly needs to done. First and foremost, the American people need to know that the funds they are sending to Wall Street in a time of crisis will be repaid once these firms get back on their feet. This is why I strongly support the idea of including equity sharing through the use of warrants so the federal government could share on the upside when these firms, who will be bailed out, are restored to financial health. I also believe we should consider changing our bankruptcy laws to help those in foreclosure by allowing judges to reduce the principal of a mortgage to a home's current market value. I feel we can apply this provision to sub prime mortgages and while I believe in protecting the sanctity of a contract, I feel no desire to protect those who engaged in predatory lending practices. Finally, I will insist that any final agreement include limits on executive compensation. It would be a travesty for these failed Wall Street firms to ask the American people for help in a time of crisis only to turn around and give millions of dollars in bonuses to their CEOs.

Its Starts with a Bailout, It Ends with Regulating our Marketplace Properly
It would be a grave error to believe that this bailout package, no matter how good or comprehensive, will be the ultimate answer to our financial crisis. This package is merely the most immediate step that has to be taken, but we can not rest until we fix the mess that vast deregulation of our marketplace has done. The next Administration and Congress need to commit to a complete re-writing of our regulatory system. To start, existing regulations must be strengthened and broadened. We must address the fact of financial entities that are not subject to any regulation and simply must be brought into the system. Of course I am not a proponent of over-regulation, but the events of the last few weeks only prove that we are in desperate need of adequate regulation to protect our financial infrastructure from destroying itself. Rest assured, that while these issues require careful scrutiny and may not be included in this final package, I will remain a vocal advocate for real reform on Wall Street.


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