Over the past couple of weeks, millions of Americans have anxiously watched while news of a looming economic crisis has dominated the headlines. We have found ourselves in the middle of a historic crossroads and we have the weight of an enormous responsibility on our shoulders.
I understand the misgivings that many people have expressed about the Emergency Economic Stabilization Act and I share some of the same concerns. I do not want to allow those who were motivated by greed to benefit at the expense of the taxpayer. I do not want to give unfettered authority to a government who has done little to earn that trust. I do not want Wall Street to benefit while families and entire neighborhoods in my district are suffering.
At the same time, we could not stand by while our economy crumbles. The economic crisis that we are currently facing threatens our neighborhoods, our children's education and our families' economic future. The credit freeze does not distinguish between good and bad actors and instead punishes both. No one would emerge from this crisis untouched and those who would be harmed the most would be average citizens. This is why I supported moving forward with a proposal to address the root causes of the current economic crisis.
However, I was unable to lend my support to the proposal offered by the Bush Administration until I was confident that certain items were in place, including that excessive compensation for executives would be curbed, protections would be available for those at-risk of foreclosure, taxpayers would recoup their investment, and sufficient transparency and independent oversight were required.
1. Executive Compensation Limits: Excessive compensation for CEOs and executives will no longer be tolerated-ending the era of "Golden Parachutes." There are several provisions in the bill that prohibit or provide checks on excessive compensation for any financial institution that benefits under this program, including granting shareholders the power to vote up or down on executive compensation. Additionally, this bill limits the amount ($500,000) of compensation that is tax deductible, which will go a long way in eliminating the incentive for companies to over-compensate executives.
2. Foreclosure Prevention: Protections are included to prevent foreclosures that are currently driving down home values on Long Island and across America. Provisions in this bill mandate that if the U.S. Treasury owns the entire asset backed by a mortgage at-risk of foreclosure, the Treasury must reasonably modify the loans. Although there are many people who will not be able to afford their home even with modification, for those that can afford their home with reasonable modification, the U.S. Treasury must do so.
3. Recouping Taxpayer Dollars: Insurance policies for the taxpayer are included so that the taxpayer is not left holding the bag at the end of the day. First, the US Treasury has a mandate to effectively use taxpayer dollars to purchase assets that have long-term value. Second, the U.S. Treasury must obtain an interest in any financial institution selling their assets so that when the market returns, the taxpayer will benefit. Last, if after five years the taxpayer has not broken even on this deal, Wall Street will be held responsible for covering the costs.
4. Transparency and Independent Oversight: Provisions requiring strong transparency and independent oversight are included to ensure that (1) taxpayers know how their money is being used, including which financial institutions are participating in the program and how much they are selling, (2) those who made the mess in the first place are not able to benefit under this program and (3) taxpayer dollars are being used efficiently with the ultimate goal being to pay back every penny.
You can be sure that the work of Congress is not done with the passage of this legislation. The Financial Services Committee, on which I serve, will be holding hearings to make sure that the new authority granted to the government is carried out in a way that protects the taxpayers and is consistent with the types of requirements I highlighted above. The Committee on Oversight and Government Reform will be holding hearings to understand how we wound up where we are and what regulations are needed in the future so that we are not faced with this type of economic crisis again. The Education and Labor Committee, on which I also serve, will be addressing the impact of the financial crisis on workers' retirement security.
While the Emergency Economic Stabilization Act is a bold and sweeping effort to address the economic crisis, it is still going to take some time to right the course of the floundering markets. This is not a cure-all or an overnight fix. There will surely be some shaky ground ahead, but the measures included in this proposal will help to stop the bleeding and set us on a path to recovery.
I came to my decision to vote for this proposal after careful and serious consideration. In many ways, this was one of the most difficult votes I made as a member of Congress. But I am confident that we have included the necessary protections to make this package one that will help the current economic crisis and help us weather this storm.