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I don't see any damage done by voters encouraging other voters to participate in democracy, especially when there is a full disclosure included. I wrote my Congressman and he just wrote back (a form letter to constituents, but it's an immediate response!)

September 27, 2008

Dear Friend,

I’m in Washington this weekend working to address one of the most critical challenges ever to face our country. In spite of warnings by me and others as early as 2002, our financial institutions were under-regulated, and grew beyond the ability to manage their balance sheets.

The result - an enormous amount of bad debt - has caused a liquidity crisis that could bring our economy to a halt. Money is simply not being lent to individuals who need it. For businesses, this means an inability to borrow, expand, invest in new equipment, stock shelves or even meet short-term cash needs, such as payroll. For individuals, it makes it harder to buy a house, a car, or obtain a student loan. It also threatens the assets of everyone who has an IRA or 401(k), college savings, pension plan or owns a home.

This crisis requires your public officials put their country first, and ideology and partisanship second. While time is of the essence, we need to address this challenge with the right legislation, not just any legislation.

Treasury Plan

Last weekend, Treasury Secretary Henry Paulson proposed a plan which would allow the federal government to purchase $700 billion of mortgage-related assets. By providing a way for firms to get bad debt off their balance sheets, Secretary Paulson believes we would restore liquidity to our financial markets and get banks lending again.

Unfortunately, the plan Secretary Paulson brought to Congress did not include an oversight board, limits on executive compensation or taxpayer protections.

Taxpayer Protections

To have my support, this financial package must put liquidity in the marketplace while protecting the taxpayer. I do not support a package that is a “blank check” for Wall Street funded by taxpayers on Main Street.

While the White House and Senate seem less focused on taxpayer protections than my colleagues in the House, many agree for a plan to succeed we must do everything we can to protect taxpayers. In the end, the minimum objective of this package should be to hold you and your neighbors harmless, and the maximum objective should be a healthy return on your government’s investment.

Treasury Authority

The package I support could make up to $700 billion available, distributed in phased allocations, to remove bad debt. The federal government should have the option to buy this debt at a discount; make loans to banks in need; or issue insurance to the banks with troubled assets at present market value.

In any scenario, however, I want the government to have an equity stake in participating firms who will profit from this federal assistance. If the taxpayers are helping rescue bad banks, the taxpayers should benefit as those banks become healthy. The government should receive stock warrants for any investment it makes to ensure the taxpayer also benefits.

Executive Compensation Limits

It would be unconscionable to reward with taxpayer money the stewards of these institutions who took bad risks and paid themselves well in the process. We must prevent golden parachutes and excessive executive compensation.

Oversight and Transparency

Additionally, oversight of the plan must be air-tight. This plan must include a strong oversight board with smart, proactive people - not the same bureaucrats who failed us in the past - and an Inspector General to guard against waste, abuse and fraud. This board must hold Treasury accountable for the mortgage-related assets it purchases and ensure they’re bought at a discount, reflecting present market value of these assets.

We can’t hand over $700 billion and hope it will be spent wisely. We need concrete evidence this money is not misused by ensuring the program is transparent. Americans need to know, on a daily basis, the value of every transaction taking place.

Committee Responsibilities

As a senior member of both the Financial Services Committee and Oversight and Government Reform Committee, I will be at the center of uncovering what happened; holding institutions accountable, both in and outside of the government; and reforming the regulatory process.

In the Financial Services Committee, we will adopt reforms to prevent this serious circumstance from happening again. In the Oversight and Government Reform Committee, we will be actively involved in unraveling why this problem occurred and who was responsible. No person or institution will be left out of this review, including Congress.

The GSEs: Fannie Mae and Freddie Mac

How did things get this out of hand? Banks, brokers and Congress encouraged people to buy homes they couldn’t afford, often with little or no documentation, and compelled institutions to extend credit to individuals incapable of making their payments. Members of Congress put tremendous pressure on Fannie Mae and Freddie Mac to buy subprime loans. Subprime, by its very definition, is a loan extended to high-risk borrowers.

Fannie Mae and Freddie Mac, who securitize half of our nation’s $12 trillion mortgage market, accumulated significant bad debt, but because they were not registered under the 1933 or 1934 Securities Act, they were not required to disclose their risky portfolios.

Back in 2002, Congressman Ed Markey (MA-7) and I led a bipartisan effort to regulate Fannie Mae and Freddie Mac by introducing H.R. 4071, the Uniform Securities Disclosure Act. This legislation would have brought the registration and reporting requirements of these companies under the SEC, like all other publicly-traded companies.

I warned, “We will be back,” if Congress didn’t require the same disclosure of these companies we require of all other companies. Only 21 members of Congress cosponsored our legislation - 15 Republicans and 6 Democrats. We reintroduced this legislation in 2003 with 27 cosponsors - 14 Republicans and 13 Democrats.

It is difficult for me to hear so many members act like they were not responsible for this credit crisis when they had the opportunity to advocate reform by supporting our legislation, but chose not to.

We also considered regulatory reform for Fannie Mae and Freddie Mac in 2005. I was one of 19 cosponsors of this reform legislation, which would have replaced the ineffective Office of Federal Housing Enterprise Oversight (OFHEO) with a robust regulatory authority to oversee Fannie Mae and Freddie Mac and their risky investment portfolios, alleviating the systemic risk that has now put the entire country’s financial system in jeopardy.

During House consideration of this legislation, Congressman Ed Royce (CA-40) introduced an amendment requiring OFHEO to dispose of any high-risk assets or liabilities held by Fannie Mae and Freddie Mac. I voted for this amendment because it would have empowered OFHEO to better oversee these companies’ holdings. Unfortunately, this amendment was defeated by a vote of 73 to 346.

While we address this very real crisis, please be assured I will continue to insist on a recovery plan that protects taxpayers, and ultimately the value of your home and retirement savings, by injecting liquidity into the market. If members of Congress are willing to put partisanship aside and be Americans first, not Republicans or Democrats, we will get the job done, and get it done right.

I know who I'm voting for in Nov!
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