A Rescue Plan for Michigan's Economy

Statement

A Rescue Plan for Michigan's Economy

Congress has recently taken three significant actions in response to the credit crunch and foreclosure crisis. We provided $25 billion in loans to automakers; we enacted the Housing and Economic Recovery Act; and we passed the Emergency Economic Stabilization Act as a rescue plan for our struggling financial system.

I pressed to make $25 billion in loans available to auto manufacturers and suppliers to help them retool facilities. This will allow our domestic manufacturers - and American workers - to take significant steps forward to produce advanced technology vehicles and their component parts that will reduce our consumption of oil and emissions of greenhouse gases and ultimately save consumers money at the gas pump. This retooling is important to help our automakers thrive in these tough economic conditions.

I supported the housing legislation because it offers hope of remedying a number of the current problems facing homeowners and providing some protection against a deeper, longer term economic crisis. It will help struggling homeowners switch to more affordable 30-year fixed rate mortgages and provide counseling to help keep people in their homes.

I also voted for the rescue plan recently signed into law. I hope that allowing the government to inject capital into financial institutions will help restore availability of credit to businesses and consumers. I am pleased that the bill includes significantly more taxpayer protections than the original Bush Administration proposal, including oversight provisions, some limits on excessive executive pay, and protections to prevent foreclosures and keep people in their homes, which I believe are essential for turning our economy around.

If we failed to act, pensions and savings could quickly be decimated by a wrecked stock market, and Americans could suffer significant job losses and less ability to buy everything from groceries to a new car or house. Businesses could see their access to capital greatly reduced, home mortgages could become even more difficult to acquire or refinance, foreclosures could further skyrocket, and auto and student loans could be much more difficult to get. Construction jobs would disappear, the auto industry would cut back even further on production and lay off workers, and retail and service jobs would be lost. Retirees counting on their retirement savings would see their nest eggs shrunk. Investments - even those made long ago in supposedly "safe" assets - would be drowned.

The path we have traveled to get into this predicament has been marked by an appalling lack of oversight by the regulators who were supposed to police the marketplace. As in the run-up to the Great Depression, our financial institutions were allowed to run wild. The Bush Administration has reduced capital requirements for financial firms. The authority of the Securities and Exchange Commission to regulate certain major transactions was reduced, and speculators took over the majority of some commodity trading, like oil. Still, echoing Roosevelt's opponents in the 1930s, some opponents of the government stabilization actions we have adopted argue that these rescue plans - and regulation of the practices that brought us here - threaten our free markets. They are wrong.

In a free country, we need to have stoplights and cops to maintain order, keep people safe and give everyone fair treatment and opportunity. The same is true of a free economy: when stoplights and cops are replaced by a drive to achieve total deregulation, the country is left with an absolute mess - and that's what we face today. Cops have been taken off the beat in our financial markets; reasonable restraints on free markets, so they don't run wild, have been dismantled. It is clear that a financial industry regulatory overhaul should be one of the first priorities of the next President and the new Congress.

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