Saturday, October 04, 2008
My Exchange with Senator Max Baucus
I respectfully ask you to consider the following:
1. No purchase of toxic securities by Treasury, i.e. no pure bailout for Wall Street. The Bush/Paulson proposal simply puts all the burden on us taxpayers and lets foolish investors off scot-free. (And puts enormous unchecked power in the hands of the Bush administration.)
2. If the banking system really is in jeopardy and bailout needed, then Charles Calomiris' (Columbia U.) proposal using preferred shares is far preferable. Ask him.
3. No bailouts for irresponsible homeowners. We taxpayers who lived within our means should not be bailing out greedy neighbors who knowingly took on debts they couldn't afford.
4. CEO compensation: it's unimportant. Much as I despise some of these people, any solution ought to minimize financial disruption and minimize costs to us taxpayers. Punishing people isn't the point of this. Don't jeopardize a fix by making this a sticking point.
5. Most of all, we need a fix of the system, of the process that led to this mess, and not simply a bailout of existing mistakes. Get the Fed under control, abolish it if necessary. No more of the low interest/expansionary policy that stimulated the real estate bubble. And no more Federal deficit spending.
This is the most important issue that America has faced in my lifetime. You are very influential. Please consider these points and make them part of any solution. I have not voted for you in the past, but if you do right on this one, I'll support you in every way I can.
Charles N. Steele, Ph.D.
Thank you for contacting me regarding my vote in the Senate on the state of our financial markets and economy. I appreciate hearing from you on this very important issue.
This vote was one of the toughest votes I have cast in my Senate career. The letters, phone calls, emails and faxes from Montanans across the state expressed disbelief and frustration with our economic state and concern for our economic future.
The greed and failure of public and private institutions to safeguard our financial security have let us down. Montanans are struggling just to make ends meet, and don't want to see their hard earned money go to bail out Wall Street.
I voted for this legislation because I was concerned that the impacts would start to be felt by families and small businesses on Main Streets across Montana and the country. Congress was charged with the responsibility to ensure that this crisis was interrupted before the effects began to ripple through Main Street. The legislation includes tools and resources to build a stronger financial framework with oversight and safeguards.
Locally, I am concerned about the lack of access to credit and how it affects Montanans and Montana communities. If a bank can't get credit, neither can the local hardware store, the coffee shop, the car dealership down the street, college-bound students and the new neighbor who just bought the house next door. Already the funds that Montanans depend on are beginning to dry up, and the crisis is starting to hit home. Without this credit, businesses will stagnate and start to close, folks will lose their jobs and Main Street economies across Montana will begin to decline.
From the start, I insisted that any plan I support must ensure the following: 1) Montanans and Americans won't shoulder all the costs of mistakes made by greed on Wall Street; 2) chief executives won't get large payouts or golden parachutes; 3) middle-class homeowners will get relief; and 4) this situation never happens again.
To provide stability to our community banks and ensure its customers' money is safe, I successfully included a temporary increase in the FDIC deposit insurance limit from $100,000 to $250,000. The FDIC insurance limit was last increased in 1980.
To help homeowners, this bill requires the government to work with lenders and servicers to modify mortgage terms for those struggling to keep up with payments.
I demanded oversight provisions in the bill to create an independent Inspector General (IG) to oversee this program - and only this program. The IG is accountable only to Congress and the taxpayers. I want the IG to be on the ground on Wall Street, closely monitoring the firms that receive taxpayer money.
It is not acceptable for executives to get big payouts when their firms are getting assistance from the government. That is why I worked so hard to ensure that this bill limits compensation to executives, and includes provisions to end tax breaks that these participating companies get for executive pay.
The package of vital tax incentives that were included in the economic stabilization legislation will help to create more jobs. We will need these good-paying jobs to help restore our economy. These provisions included the extension and creation of tax incentives for renewable energy, a one-year fix for the 20 million-plus Americans who are slammed every year by the Alternative Minimum Tax, a tax break on college tuition, and a tax deduction for State and local taxes paid. Extensions of the tax credit for teachers' classroom expenses and tax relief for companies in research and development are also included.
I believe our country's economy is at stake. Our economic situation is as dire as I have ever seen in my years in Congress. While the legislation was not perfect, I felt it was necessary to address Montanans top concerns that I listed above, and it had to be done immediately.
Additional information about the legislation is available at the website listed below: http://thomas.loc.gov - click on the link entitled Economic Stabilization on the front of the website. If you do not have access to the Internet, please contact my toll-free number at 800-332-6106 for assistance from my staff.
Thank you again for getting in touch with me. I hope this response has answered some of your questions regarding my vote.
With best personal regards, I am
Senator Max Baucus
Dear Senator Baucus,
This is a terrible thing you have done. Giving Secretary Paulson the authority to purchase toxic assets is not a solution. We taxpayers now will be buying other peoples' mistakes. To recapitalize the banking system you could have done a preferred shares injection: minimal risk to taxpayer and treasury, and doesn't take those who made mistakes off the hook.
Furthermore you've done nothing about the incredible greed and incompetence of the Fedral Government: Congress, who pushed for lower lending standards and for Fannie and Freddie to be a ready market for bad mortgages, the President and his administration, who presided over the growing housing and asset bubble and encouraged it, and most of all the Federal Reserve, which fueled the fire with cheap credit.
You in Washington D.C. created the mess. Now you pass it to us. You are shameless.
Charles N. Steele