Delaware County Daily Times: "Sestak, Williams Differ on Economic Proposal"

Press Release

Delaware County Daily Times: "Sestak, Williams differ on economic proposal" -

By: John M. Roman

U.S. Rep. Joe Sestak, D-7, of Edgmont - who voted Monday for the $700 billion economic bailout that was rejected by the House - and his Republican opponent, Craig Williams, had different perspectives on the proposed rescue package.

However, they both basically agreed the lack of government regulation on new mortgage securities got the country into the economic mess. Williams said he would have voted against the bailout.

The House defeated the emergency rescue package by a vote of 228-205 Monday afternoon, with stocks on Wall Street plummeting even before the vote was announced.

Disappointed with the outcome, Sestak said, "We need to start working on it again and bring it up for another vote this week. This is the most consequential vote I've done in the last two years."

Sestak said he started working on the issue in February when Pennsylvania Higher Education Assistance Agency college education loans became too expensive and less available because of the mortgage crisis.

"Similarly, when Wachovia (Bank) in my district was taken over this weekend by Citigroup, it was indicative that if we do not act to have lending to stop the credit freeze that's happening, businesses will not be able to get loans," he said. "Jobs will be lost, incomes will be hurt or lost and the affordability of car, education and other consumer loans will skyrocket - that is why we must act."

He pointed out that the package contained restrictions on executive compensation, such as golden parachutes, and ensured the government would have a right to any profit once an institution regained its health or a mortgage security could be sold again at a profit.

This pay-as-you-go proposal basically would help "ensure that the taxpayer would get their money back," Sestak said.

He added that he agreed with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke that "this is the greatest financial crisis we have confronted since the Great Depression."

Sestak said that after talking with many individuals on Wall Street and in business within his district, he learned they almost exclusively agreed "the lack of regulation for the new mortgage securities and their bundling into financial instruments, as well as the failure to have smart new oversight on them, was the primary source of not being able to prevent this crisis."

"What we need is what this bill called for - a bipartisan effort to have smart government, not big government, develop and institute the new regulations needed," Sestak said.

Williams said his office was swarmed Monday with phone calls and visitors against the costly bailout.

"I have not talked to a single person today who has favored the bailout," he said. "By and large, people have said they have invested wisely and are paying for their mortgages. They don't know why they have to bail out mortgage companies who were in the practice of giving mortgages to people who couldn't afford it."

Williams laid the blame for the faltering economy going back to the Clinton administration with the Community Reinvestment Act.

"I'm tired of hearing Democrats say this is a product of deregulation of the banking industry by Republicans, which is exactly what Joe Sestak says," he said.

He cited the fraudulent accounting practices by Fannie Mae and Freddie Mac mortgage finance systems. An eventual collapse in the mortgage market was predicted four or five years ago, he said.

Williams said the mortgage market assumed it was being backed by the federal government, but it was not.

"Republicans called for a complete overhaul in 2004," he said, but the "Democrats said that Fannie Mae had an obligation to continue with the obligation of extending mortgages to those who couldn't afford it - all the time with no dollars behind those mortgages."

He noted that 133 Republicans and 95 Democrats voted against the economic bailout.

"I believe that the bailout is designed to save Fannie and Freddie, which I said before are government-sponsored enterprises," Williams said. "And I believe it's probably time to cut them loose and send them back to the private sector, and if need be, buy up the worst of these mortgages to stabilize things," he said.

U.S. Rep. Bob Brady, D-1, of Philadelphia, voted for the Emergency Economic Stabilization Act of 2008 and issued the following statement Monday:

"Eight years of Republican failure to oversee financial markets have now caused what Secretary Paulson and Fed Chair Bernanke called the worse potential crisis since the Great Depression," he said. "I voted for the legislation because, after reaching across the aisle, we were able to draft a bill that included protections for taxpayers and homeowners as well as stepping up to avoid a meltdown of our economy."

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