Thursday, October 2, 2008

Cantwell Says Bailout Bill Not the Right Solution

WASHINGTON, D.C. –U.S. Senator Maria Cantwell (D-WA) issued the following statement after the vote on the economic rescue and tax extenders package. Cantwell voted no. The measure passed by a vote of 74 to 25:

“The people of Washington state sent me here to fight for sound fiscal policy. I have led the fight for taxpayers in my state to get the fairness they deserve with the state sales tax deduction. I have led the fight for rural communities in my state and across the country to be treated fairly with payments for the federal land in their counties. I have fought long and hard to break the partisan stalemate on a bold new clean energy tax policy and unleash the power of solar and renewables. I support these provisions in the bill.

“And while I put my full support behind these tax relief measures, I believe that bold action is needed to solve our current financial crisis. I am just not for this action. I am in favor of putting the full faith and credit of the U.S. Government behind solving this financial crisis, but I do not support turning the keys of the U.S. Treasury over to the private sector. I don’t believe it’s the government’s job to pick winners and losers in corporate America.

“I advocate that we take three immediate actions to not only get our capital markets back on a stable footing, but ones that get our country back on a path to economic recovery. One, have the Department of Treasury make equity investments in financial institutions so taxpayers get a share of the good assets as well as the troubled assets. This can ensure better protection for the taxpayer. Second, we should immediately launch both a Congressional oversight committee and a private, independent panel to identify the culprits and devise regulatory reforms to correct the problems that caused this crisis. Third, we must take action to stabilize housing prices for all Americans to stem the tide of foreclosures.

“While there are parts of this emergency rescue bill I am supportive of, such as expanding FDIC bank deposit coverage to $250,000 and implementing more reasonable accounting rules, I am not supportive of a structure where the government only gets companies’ bad assets. This approach leaves the government with less resources, the troubled companies with less working capital, and in the end may not solve the market's underlying financial problems. If the government were to make more traditional cash equity infusion into these companies it would spur ten to twelve more times private sector investments into the stressed capital markets.”

Cantwell delivered the following remarks on the Senate floor Wednesday evening:

“Mr. President, I don't think 5 minutes would possibly be enough time for me to explain all the things I would like to say. I am sure I could spend an hour talking about credit default swaps. I am sure I could spend 2 days talking about the lack of transparency in the financial markets.

“I am sure I could spend a lot of time explaining what I think is the right thing we should do to put as much liquidity into the markets as possible. So I will try to be succinct.

“I came to the Senate knowing what it is like to take a tough vote. To make the decision that is right for the American public. It’s most important to do the right thing. I also know what it is like to see millions of dollars in the stock market go away and watch a stock bubble burst.

“I also know what it is like to stand on the Senate floor, as I did 3 years ago, when someone tried to cram legislation in the Defense authorization bill to open up drilling in the Arctic Wildlife Refuge, and I said then that is was the equivalent to legislative blackmail.

“I am not going to vote for this legislation tonight based on whether someone crams in tax credits, for which I actually have fought so hard. I am going to render my decision based on what I think is important for the American people.
“I think there is something that is missing in our discussion. I applaud Chairman Dodd who has worked hard on the Banking Committee. I applaud my colleague who just spoke, who spoke eloquently about the need to do something.

“But the problem with the legislation before us is that it is choosing winners and losers in corporate America. It is inserting the Federal Government in a role in which they decide, along with the private sector, exactly how funds should be allocated.

“I am for the full faith and credit of the U.S. Government backing these institutions. What I am not for is turning the keys to the Treasury over to the private sector.

“There is much we could agree on tonight. We could agree on the new changes to the FDIC rule. We could agree on mark to market accounting changes and to bringing better marketing and accountability to the system.

“We could agree on the up-tick rule and other predictability measures that help the market understand that there is a broad commitment by this institution to do something to help stabilize the markets.But I am very concerned about the "pick here, pick there" approach that has transpired in the last several weeks.

“I ask you to just think of one institution, in my State, Washington Mutual -- which I would not necessarily applaud for its subprime lending rates or for its use and backing of credit default swaps, but I would ask you to consider the fact that as that institution was forced into sale by this Government,

“Who were the winners and losers in that?

“J.P. Morgan got the assets of that institution and benefited from that. In fact, J.P. Morgan predicted to me on a conference call the night they acquired Washington Mutual that after one year with their investment, they would have an over $500 million on that investment. That is a 27 percent returned in one year.
“The FDIC got some money out of that, too. And then to say nothing about the over 60,000 shareholders who were wiped out.

“My complaint is: where is J.P. Morgan who should be standing up for the retirement plans, the deferred compensation plans, and other packages that the employees at that company were due?

“It is very convenient for us to now choose that we are going to add to J.P. Morgan's bottom line. In fact, if we would instead do what I am suggesting, we could have an equity proposal instead of having TARP, the Troubled Asset Relief Program, as the roof over America.

“Instead, we could have an equity program where the United States would leverage our capital and spur 10- to 12 times the private sector investment at the same time, our Nation would be better funded, better prepared, for the onslaught of trouble that is still going to remain after we pass this legislation.
“I could not even get my amendment to be considered.

“So, so much for the transparency of the Senate."

“I am going to continue to work for this idea, for equity, for a more leveraged position, and that we do the traditional role that Government has done time and time again: to use our equity to leverage the private sector to secure our economy.

“Thank you Mr. President, and I yield the floor.”

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