The recent federal discussion about America's current credit crisis and troubled banking system is a contentious topic. At my Washington and Oklahoma offices, thousands of Oklahomans have called in and voiced their opinions on what role the federal government should play in these uncertain economic times.
Despite the fact the vast majority of Oklahoma's banks made responsible business decisions and remain strong, many of America's major lending institutions are on the brink of failure. In the past few weeks, we have seen the fourth largest bank in the United States, home to 400 billion dollars in bank deposits, sold for a dollar a share. We have watched three of America's five major investment banks collapse, and the country's largest insurer nearly collapse.
After weighing the cost of federal action against the consequences of inaction, I have decided to support need for a financial rescue package. My primary reason for supporting the plan is a belief that the American banking system is currently at risk of total collapse. The slow and rolling failure of America's largest financial entities should cause great concern among all Oklahomans. Many of our citizen's count on banks and financial institutions to protect their life-savings, expand their businesses, finance major family purchases, and send their children to college. A failure of our lending institutions could destroy our nation's economy and cause many of our citizens to lose their jobs and homes.
I realize that spending hard-earned tax dollars to stabilize the banking industry is not popular. However, I believe the alternative, which is to do nothing, could lead to years of economic despair for our state and nation.
As we move forward toward a resolution of this crisis, my concerns lie not with Wall Street executives trying to save their reputations, but with the retirement account of the family-of-four in Claremore, with, the firefighter's pension in Muskogee, and the life-savings of the senior citizen in McAlester.
In the weeks to come, I will continue to monitor any proposal put forward that responsibly deals with the current financial emergency. As the debate in Congress continues, I feel it is important for the people of Oklahoma to have answers to some common questions about the plan:
Q: Does the plan write a check to the Treasury Secretary for $700 billion of taxpayer money?
A: No. The plan would make $250 billion available to the Treasury Department, with strict requirements set by Congress for how the money can be used. The President could then seek more funds for the rescue program as needed. However, any such request would have required additional review and approval of Congress.
Q: Is the plan transparent and include oversight to prevent future corruption and bad decision-making?
A: Yes. The package creates a strong independent oversight board that could veto the Treasury Secretary's decisions. Members of the board would be appointed by both Democrats and Republicans.
Included in the package is a requirement for a non-partisan watchdog agency to conduct regular audits of the program to prevent waste, fraud, and abuse. Also included is a newly appointed independent Inspector General that would closely scrutinize the purchase and management of what the government buys.
Q: Does the rescue plan provide CEOs with "golden parachutes"?
A: Absolutely Not. One of the cornerstones of the plan is strict limitations on compensation for executives whose firms receive federal money.
Q: Does the plan include protections for the American people, provide insurance for taxpayers, and allow them to share in any financial gains from the program?
A: Yes. If the American people incurred losses, Wall Street would be responsible for repaying every dime. It also gives taxpayers a share of any profits, and put taxpayers first-in-line to recover money if a company fails. It requires the President five years from now to submit a plan to ensure taxpayers had been repaid in full - with Wall Street making up the difference. These measures guarantee security and financial reimbursement to the American people.
Q: How would this program benefit everyday Oklahomans?
A: The major reason for the financial rescue plan is to insure that our banking system remains intact. If the American banking system were to collapse, car loans, student loans, home mortgages, home equity loans, and business expansion would come to a halt. If business transactions were to be hindered, payroll and benefit payments would be impossible to make. Private sector job growth would disappear and Oklahoma families would be put in serious financial risk.
Q: How does this plan prevent additional home foreclosures and protect home owners?
A: Under the plan, the federal government would have been allowed to work with lenders of the mortgages that are purchased to restructure financial terms. These changes include lengthening repayment times and reducing principal or interest rates. By taking these measures, we could work to prevent the continued downturn in home values we see across the nation.
Q: What is in the second version of the plan that was not in the first?
A: The newest version of the bill includes a temporary increase in the insurance limit on bank deposits to $250,000 from the current $100,000.
The second version also provides another one-year "patch" designed to prevent 22 million taxpayers from being subject to the AMT on their 2008 returns. If the AMT patch does not pass, approximately 263,000 tax returns in the Second Congressional District will create just over $6 million in new tax liability. Of the 249,000 returns claiming between $0 and $100,000 income, there will be a total of over $738,000 in new tax liability. These numbers highlight the need to prevent the AMT from affecting hard-working Oklahomans.
Finally, the second version also includes tax provisions such as small business tax incentives, research and development tax incentives for all businesses, incentives for the development and production of energy, the deduction of education expenses, as well as many other critical tax provisions that have been on the books for several years and must be renewed.
Q: Will this plan solve every problem currently facing our nation's economy?
A. Unfortunately No. From job loss to the rising costs of energy, health care, and education, there are many other issues that we must also address. However, with this decisive action, we could prevent this crisis from becoming the type of economic catastrophe that occurred in the 1930s. Once this disaster is averted, we could then continue to tackle the other economic issues facing hard-working Oklahomans.