Congressman Chris Shays addresses the Financial Crisis



		Christopher Shays U.S. Congress, Connecticut's 4th District October 3, 2008 Dear Friend, It has been a long two weeks since Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke publicly presented Congress with a plan to promote and preserve economic and market stability by purchasing troubled assets from financial institutions. In the wake of huge losses by Fannie Mae and Freddie Mac and the bankruptcies of Lehman Brothers and AIG, Secretary Paulson made the case that Congress needed to move quickly to avoid further meltdown in the financial markets. Treasury Plan The Administration requested $700 billion to purchase troubled assets from the market with no taxpayer protection. The plan, which was presented to Congress without oversight, limitation on executive compensation, or warrants on stock, met strong bipartisan opposition in Congress. Original House Legislation After a week of intense negotiations between and within both parties and chambers, a substantially improved version of Treasury’s initial proposal was introduced. This legislation included a strong oversight board, an Inspector General, a Congressional oversight committee and limits on executive compensation. The bill also provided for stock warrants to ensure taxpayers benefit when firms profit from this federal assistance. Unfortunately, the House considered and rejected H.R. 3997, the Emergency Economic Stabilization Act, by a vote of 205 to 228 on Monday, September 29. Following this defeat, the stock market lost $1.2 trillion in a single day, some of which was restored in the days following. Final Legislation Today, the House passed a second version of Treasury’s proposal, H.R. 1424, by a vote of 263 to 171. In addition to the provisions we added in the initial legislation, this bill includes an increase in Federal Deposit Insurance Corporation insurance to $250,000. On Sunday night, I proposed an amendment to the original package to increase this insurance to $300,000. Other changes include an extension of: the Alternative Minimum Tax (AMT) patch to prevent an additional 21 million families from being subjected to this onerous tax; research and development tax credits which enable businesses to invest in innovation; the deduction for state and local sales taxes; renewable energy tax credits that increase investment in wind, solar, geothermal and biofuels; and energy efficiency tax credits. The bill creates new tax credits for construction of clean coal facilities and for capturing carbon dioxide. The bill also prohibits insurance companies from imposing treatment limitations or financial requirements on the coverage of mental health benefits, bringing them on par with coverage for physical ailments, and expands the refundable portion of the child tax credit to lower-income families. Regretfully, this legislation also includes some frivolous provisions, such as: an exemption from excise taxes for Boy Scout wooden arrows and on rum produced in Puerto Rico; special expensing rules for television production; and an adjustment for calculating depreciation on racetracks. I voted in favor of debating and deleting these extraneous measures, but a rule blocking debate on these provisions passed by a vote of 223 to 205. These provisions were a fraction of the total cost, however, and the entire package was too important to the health of our economy. What follows is my floor statement: October 3, 2008 Floor Statement on the Emergency Economic Stabilization Act There aren’t many times we get a second chance to do the right thing. This is the kind of vote our constituents sent us to make on their behalf. It is a legacy vote - one of the most important votes we will ever cast – a vote we will carry with us the rest of our lives. The majority of my constituents have voiced opposition to this bill. But the fact is, the financial markets lost $1.2 trillion in one day when we failed to act Monday afternoon. Some of that has been restored, but we are witnessing the possibility of our economy coming to a grinding halt. I don’t intend to play Russian roulette with our economy - or my constituents - which is why I voted for this bill when it came before us on Monday, and why I will vote for it again today. Many of us, on both sides of the aisle, agree this is not a perfect bill. In fact, some of my financially savvy constituents have educated me about other ways we could intervene. The bottom line is this legislation is a short-term solution to address a longer-term problem. Those of us back next Congress, and I make no assumptions about my own election, truly have our work cut out for us. This bill is for Main Street. It’s for college and retirement savings and the value of homes. It’s for access to car loans, student loans and mortgages. It’s for the ability of small businesses to borrow, expand, stock shelves, meet short-term cash needs such as payroll, and invest in new plants and equipment. The credit market is tightening, strangling our economy. Liquidity has dried up, and money is simply not getting to the individuals and businesses who need it. Consumers, savers and investors are losing confidence. I am grateful the bill before us today will increase deposit insurance to $250,000 – a recommendation I had made – so American depositors know their money in their banks is safe. Yesterday, the President of a community bank wrote me, “Congress needs to understand the consequence of money moving out of banks.” Deposits enable banks to loan and expand the economy. Withdrawals force banks to call in loans and contract the economy ten fold. This crisis requires all of us to put our country first, and our ideology and partisanship aside. We need to pass the Emergency Economic Stabilization Act, and then go back home and face the voters. Those of us who are fortunate enough to return will come back, roll up our sleeves and do everything we can to help our country grow and prosper again. Click here to read my previous floor statement given September 29, 2008. Click here to read my previous e-newsletter of September 27, 2008. Contact Information By Mail Bridgeport Office Congressman Shays 10 Middle Street 11th Floor Bridgeport, CT 06604-4223 203/579-5870 phone 203/579-0771 fax Stamford Office Congressman Shays Government Center 888 Washington Boulevard Stamford, CT 06901-2927 203/357-8277 phone 203/357-1050 fax By Phone Washington, D.C. 202/225-5541 Norwalk 203/866-6469 Bridgeport 203/579-5870 Ridgefield 203/438-5953 Shelton 203/402-0426 Stamford 203/357-8277