Emergency Economic Stabilization Act of 2008

EMERGENCY ECONOMIC STABILIZATION ACT OF 2008 -- (House of Representatives - October 03, 2008)

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Ms. JACKSON-LEE of Texas. Madam Speaker, I would like to thank the chairman of Financial Services BARNEY FRANK for bringing this important piece of legislation to the floor. I rise today with the confidence that our system of government is strong and the constitutional protections of the full faith and credit of our government must protect Main Street America while we reform America's Wall Street.

Many have claimed that this is a historic vote. Historic votes are not ubiquitous. Historic votes come about through necessity and not through the failures of people. This problem has persisted for a while and now Congress must rush before the recess to a vote. While I would have liked more time, time has seemingly run out.

I would begin by saying that I had concerns about the bill that was presented to the Congress on Monday. After much deliberation and a return visit to my district, I vote ``yes'' for this bill. Given these dire economic times, it is the responsible thing to do to vote ``yes'' when the mass of Americans are suffering.

Let me give you a picture of the tough economic times which face Americans. The economy is shredding jobs. The U.S. economy has lost jobs in every single month of 2008. In September, the economy suffered its biggest 1-month job loss,-159,000, in over 5 years. In total, the economy has shed 760,000 jobs since the beginning of the year.

Poor labor markets are significantly increasing unemployment. Within the past year, the number of unemployed Americans has increased by 2.2. million. In September, there were 9.5 million unemployed workers, keeping the unemployment rate at a 5-year high of 6.1 percent. Thus, it has become harder for Americans to find jobs.

The economy is faced with credit crunches. Individuals have found it difficult to get first or second mortgages, credit, credit cards, and loans, including student loans. Because of the compendium of these economic concerns, coupled with the drying up of the credit market, I have changed my vote from a few days ago from a ``no'' to a ``yes.'' I changed my vote because of my concern for the well-being of the American people.

The first three articles of the United States Constitution address the three branches of Government and their enumerated powers. These Articles govern the legislature, the executive, and the judicial branches. Because there is no specific grant of constitutional authority for the actions that will be taking place here today, we the Members of Congress need to exercise oversight over the powers and actions of the executive. Should the executive or its agencies exceed the powers granted to it in the Constitution, the judicial can review the determinations made by the executive and the legislative branches. These concepts are fundamental to our Constitution and our system of constitutional checks and balances. These checks and balances were established by the Founding Fathers to reign in the unbridled power of the executive.

Today we are engaged in a fundamental exercise of the constitutional powers extended to the Congress. Today's vote is critically important.

Several questions come to mind when I consider the present financial crisis: Where was the FDIC? Where was the SEC? Where was the Federal Reserve?

I have worked with leadership to offer consistent amendments, not once but twice unsuccessfully, that would have strengthened the enforcement measures over the past week to change the administration's proposal to make it more encompassing, effective, and better for the American people.

While the present legislation is impressive, it is also impressive regarding what needs clarification in the present legislation. For example, the legislation needs clarification on its bankruptcy restructuring, enforcement, and judicial review. These are all issues that I have been very concerned about.

Because I am concerned and desire that the maximum number of Americans get relief from this bill, I offered amendments yesterday. To ensure that this bill provides relief for Americans, I offered the following amendments:

First, many are concerned about the dollar amount that will be set aside for those individuals facing mortgage foreclosure. Therefore, I asked that language be inserted into the bill so that $10 billion be utilized for the Secretary of the Treasury to restructure mortgages.

Second, as Senator BARACK OBAMA has recently stated, he is committed to altering the bankruptcy code in the future to assist homeowners on the question of restructuring their mortgages. Therefore, I believe that there should have been Sense of Congress language that the Congress should review and amend the bankruptcy code to permit bankruptcy judges to address the question of individual home mortgage restructuring. This would have sent a clear message that Congress is interested in helping Americans pay off their debt despite its not changing the bankruptcy code at this time.

Third, there needs to be greater enforcement. In the section on judicial review, Section 119, there should have been language that specifically states that ``the courts should be able to exercise their discretion to grant injunctive and/or equitable relief if the court determines that such relief would not destabilize financial markets.''

Fourth, the legislation should have created a new, independent commission to exercise oversight over what happened and the commission should regularly provide reports to Congress. This commission would be backward looking.

Fifth, the legislation should have been narrowly crafted so that corporate executives who may be convicted of criminal malfeasance in the financial sector might be barred from conducting financial business with the Government for a period of 7 years.

Sixth, the legislation should have permanently lifted the present insurance cap of $100,000 that the FDIC has established to insure funds stored in FDIC-backed banking institutions to $250,000. I believe that this has already been included in the Senate bill; but, my amendment would have made the change permanent.

Seventh, in section 109, which addresses ``foreclosure mitigation efforts,'' the language should be changed from ``shall encourage'' to ``shall require'' to provide stronger relief for Americans.

Specifically, current section 109(a) states in pertinent part that ``the Secretary shall implement a plan that seeks to maximize assistance for homeowners and use the authority of the Secretary to encourage the servicers of the underlying mortgages ..... to minimize foreclosures.'' I believe if the true intent is to bailout ``Main Street,'' the Secretary should be ``required'' to minimize foreclosures.

There are certain redeeming qualities to the bill.

I understand that H.R. 1424 establishes a Financial Stability Oversight Board in section 104; Oversight and Audits in section 116; and a Congressional Oversight Panel in section 125. Therefore, these sections provide some oversight over the financial crisis and help to add one piece to the economic puzzle.

Without bankruptcy I offered an amendment that $10 billion should be set aside so that the Department of Treasury could use those funds to address the question of individuals facing home mortgage foreclosure. I considered it important to set aside money because I wanted to ensure that Main Street received something from this bailout and not just Wall Street.

The administration has labeled the current economic situation as a crisis that requires emergency measures. Our vote today in favor of the legislation is a first attempt at addressing these dire economic times.

Above all, my concern is to ensure that the American people receive the relief that they deserve. If the American people are facing mortgage foreclosure, it is my desire that monies be provided to them so that they can continue to stay in their home and pay their mortgages and their bills. Everyone deserves the economic dream of owning their own home. But the financial institutions were dilatory in their responsibility to assess the borrower's ability to pay for loans and purchase a home. It was the squandering of this responsibility and preoccupation with greed and avarice that has led us to where we are today. I am not satisfied that this bill is perfect, but this bill does allow Treasury to buy toxic assets from financial institutions, including our small and community banks. Once these toxic assets are purchased, the Treasury should be encouraged to restructure loans that are in foreclosure. This is indeed encouraging news.

There are substantial improvements in the present version of the bill compared to the Bush administration proposal. However, the bill as it is presently written, in my view needs some clarification as to how it provides the necessary relief to middle-class America. There are provisions now that address accountability measures by requiring a plan to ensure the taxpayer is repaid in full, and requiring congressional review after the first $350 billion for future payments.

Principally, there are three phases of a financial rescue with strong taxpayer protections: reinvest, reimburse, and reform. One of the phases is to reinvest in the troubled financial markets to stabilize the markets. Another, reimburses the taxpayer and requires a plan to guarantee that they will be repaid in full. The last is to reform how business is done on Wall Street. The current legislation provides for fewer golden parachutes and, to its credit, provides sweeping congressional oversight.

There are critical improvements to the rescue plan that yield greater protection to the American taxpayers and even to Main Street. However, with the passage of this bill, it is my hope that H.R. 1424 will help the financial markets and make America secured. I am cautious and hopeful that there is enough in the bill to help Americans struggling with their mortgages.

Although I have certain lingering concerns regarding this bill, I have voted for this bill. After meeting with an Assistant Secretary for the Treasury, some of my concerns were answered; others remained. For example, the Assistant Secretary indicated Treasury's intervention in the markets will afford it the opportunity to purchase toxic assets. After Treasury purchases these toxic assets at fair market value, it is expected that the purchase price will set a marker so that other similar classes of assets will be purchased at the same or higher price level. This is a positive development for banks and financial institutions to recapitalize themselves. By itself this would be a help to commercial banks that desire to sell off their toxic assets.

In my conversation with the Assistant Secretary, he indicated that as time goes on, Treasury will develop guidelines for identifying and helping troubled small and community banks. It is intended that small and community banks and small, women, and minority-owned businesses will all be aided by this legislation. These latter institutions will be aided because it is expected that there will be more liquidity in the market available to these entities and that more credit can be extended to them.

Lastly, the Assistant Secretary indicated that under sections 109 and 110, that Treasury has every incentive to renegotiate the terms of troubled mortgages. Importantly, the Assistant Secretary indicated that not all homeowners who are facing mortgage foreclosure will be helped. The goal, however, is to help as many Americans as possible.

I have drafted a letter to Chairman Frank of Financial Services, and I have raised several questions to which I would like answers.

First, I have asked Chairman Frank that should something go wrong with this bailout, whether Congress can be called to reconvene at any time before or after the election.

Second, I have asked Chairman Frank to share the constitutional grant of authority that would prevent the Secretary of Treasury from having unfettered power so that there will be a balance between the interests of the banks and individual homeowners.

Third, I have asked Chairman Frank what members of Congress can expect in the 111th Congress regarding follow-up on this bill and the financial situation generally.

Fourth, I have asked Chairman Frank to answer how members can ensure that community and regional banks can take advantage of this bill.

These are critical questions that need to be answered.

I believe that Wall Street is an important and vital part of the Nation's economy. I believe that the people who work there are good. It is a well known fact that financial markets do not always serve small businesses and minorities. I have personally had experiences where good hardworking people and small business owners were denied access to financial markets.

I believe in America and I believe in its Constitution. I believe that this bill would allow constant monitoring and vigilance and would help the American people.

I am reminded of the Preamble to our Constitution, which reads:

``We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.''

I would like to end with a quote from Alexander Hamilton: ``the sacred rights of mankind are not to be rummaged for, among old parchments, or musty records. They are written, as with a sun beam in the whole volume of human nature, by the hand of the divinity itself and can never be erased or obscured by mortal power.''

I hope that this legislation will provide the American people with the sun beam. It is my hope that this legislation works and that it serves the American people.

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Ms. JACKSON-LEE of Texas. Madam Speaker, I would like to thank the chairman of financial services Barney Frank for bringing this important piece of legislation to the floor. I also rise with a sense of the solemnity of this moment. However, I rise today with the confidence that our system of government is strong and the constitutional protections of the full faith and credit of our government must protect Main Street America while we reform America's Wall Street.

The first three articles of the United States Constitution address the three branches of government and their enumerated powers. These articles govern the legislature, the executive, and the judicial branches. Because there is no specific grant of constitutional authority for the actions that will be taking place here today, we the members of Congress need to exercise oversight over the powers and actions of the executive. Should the executive or its agencies exceed the powers granted to it in the Constitution, the judicial can review the determinations made by the executive and the legislative branches. These concepts are fundamental to our Constitution and our system of constitutional checks and balances. These checks and balances were established by the Founding Fathers to reign in the unbridled power of the executive.

Today we are engaged in a fundamental exercise of the constitutional powers extended to the Congress. Today's vote is critically important.

Several questions come to mind when I consider the present financial crisis:

Where was the FDIC?

Where was the SEC?

Where was the Federal Reserve?

I have worked with leadership to offer consistent amendments, not once but twice unsuccessfully, that would have strengthened the enforcement measures over the past week to change the Administration's proposal to make it more encompassing, effective, and better for the American people. While the present legislation is impressive, it is also impressive regarding what needs clarification in the present legislation. For example, the legislation needs clarification on its bankruptcy restructuring; enforcement; and judicial review. These are all issues that I have been very concerned about.

Because I am concerned and desire that the maximum number of Americans get relief from this bill, I offered amendments yesterday. To ensure that this bill provides relief for Americans, I offered the following amendments:

First, many are concerned about the dollar amount that will be set aside for those individuals facing mortgage foreclosure. Therefore, I asked that language be inserted into the bill so that $10 billion be utilized for the Secretary of the Treasury to restructure mortgages.

Second, as Senator Barack Obama has recently stated, he is committed to altering the Bankruptcy Code in the future to assist homeowners on the question of restructuring their mortgages. Therefore, I believe that there should have been Sense of Congress language that the Congress should review and amend the Bankruptcy Code to permit bankruptcy judges to address the question of individual home mortgage restructuring. This would have sent a clear message that

Congress is interested in helping Americans pay off their debt despite its not changing the Bankruptcy Code at this time.

Third, there needs to be greater enforcement. In the section on judicial review (section 119), there should have been language that specifically states that ``the courts should be able to exercise their discretion to grant injunctive and/or equitable relief if the court determines that such relief would not destabilize financial markets.''

Fourth, the legislation should have created a new, independent commission to exercise oversight over what happened and the commission should regularly provide reports to Congress. This Commission would be backward looking.

Fifth, the legislation should have been narrowly crafted so that corporate executives who may be convicted of criminal malfeasance in the financial sector might be barred from conducting financial business with the government for a period of seven (7) years.

Sixth, the legislation should have permanently lifted the present insurance cap of $100,000 that the FDIC has established to insure funds stored in FDIC-backed banking institutions to $250,000. I believe that this has already been included in the Senate bill; but, my amendment would have made the change permanent.

Eighth, in section 109, which addresses ``foreclosure mitigation efforts,'' the language should be changed from ``shall encourage'' to ``shall require'' to provide stronger relief for Americans.

Specifically, current section 109(a) states in pertinent part that ``the Secretary shall implement a plan that seeks to maximize assistance for homeowners and use the authority of the Secretary to encourage the servicers of the underlying mortgages ..... to minimize foreclosures.'' I believe if the true intent is to bailout ``Main Street,'' the Secretary should be ``required'' to minimize foreclosures.

Can you clarify how this legislation has any enforcement? I understand that H.R. 1424 establishes a Financial Stability Oversight Board in section 104; Oversight and Audits in section 116; and a Congressional Oversight Panel in section 125. However, none of these sections appear to provide penalties or sanctions for non-compliance.

I intend to have the following questions answered:

Ms. JACKSON-LEE of Texas. Can you explain why the bankruptcy provisions were removed from the bill?

Ms. JACKSON-LEE of Texas. Without bankruptcy I offered an amendment that $10 billion dollars should be set aside so that the Department of Treasury could use those funds to address the question of individuals facing home mortgage foreclosure. I considered it important to set aside money because I wanted to ensure that Main Street received something from this bailout and not just Wall Street. Can you explain what provisions in the bill would ensure that the monies are spent on persons in mortgage foreclosure?

Ms. JACKSON-LEE of Texas. Can we add report language indicating to the Secretary how monies are to be used when it comes to Americans in mortgage foreclosure and can we add language that the Secretary should attempt to restructure the mortgages of homeowners that are in mortgage foreclosure?

Ms. JACKSON-LEE of Texas. The Administration has labeled the current economic situation as a crisis that requires emergency measures. Because these are ``exigent'' circumstances that are in need of correction, what in the bill prevents the Secretary from using all the $350 billion by January 2009?

Ms. JACKSON-LEE of Texas. Above all, my concern is to ensure that the American people receive the relief that they deserve. If the American people are facing mortgage foreclosure, it is my desire that monies be provided to them so that they can continue to stay in their home and pay their mortgages and their bills. Everyone deserves the economic dream of owning their own home. But the financial institutions were dilatory in their responsibility to assess the borrower's ability to pay for loans and purchase a home. It was the squandering of this responsibility and preoccupation with greed and avarice that has led us to where we are today.

There are substantial improvements in the present version of the bill compared to the Bush administration proposal. However, the bill as it is presently written, in my view needs some clarification as to how it provides the necessary relief to middle-class America. Frankly, the bill provides no panacea to our present economic woes. Our markets will have the full faith and credit of the United States.

There are provisions now that address accountability measures by requiring a plan to ensure the taxpayer is repaid in full, and requiring Congressional review after the first $350 billion for future payments.

Principally, there are three phases of a financial rescue with strong taxpayer protections: reinvest, reimburse, and reform. One of the phases is to re-invest in the troubled financial markets to stabilize the markets. Another, reimburses the taxpayer and requires a plan to guarantee that they will be repaid in full. The last is to reform how business is done on Wall Street. The current legislation provides for fewer golden parachutes and, to its credit, provides sweeping Congressional oversight.

There are critical improvements to the rescue plan that yield greater protection to the American taxpayers and even to Main Street. However, with a ``pause'' we can help the financial markets and make America secure. I still have concern that there is enough in the bill to help Americans struggling with their mortgages. Is there some bright hope you can share with me to relieve me of my anxiety?

Ms. JACKSON-LEE of Texas. Chairman Frank, on many occasions, you have reiterated the concern of the American people, which we both share, the wish that this legislation had stronger and more comprehensive relief for home owners facing foreclosures. Please elaborate on your interest, willingness, and commitment for us to work together to introduce and pass stronger and more comprehensive housing foreclosure legislation in the next Congress?

Thank you, Mr. Chairman, to you and your staff, for your commitment to this issue.

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