WASHINGTON, D.C. â€“ After repeated meetings with White House and Treasury officials, financial experts and colleagues, Congressman Bill Sali joined a bipartisan majority of lawmakers to defeat a bill that would have used $700 billion in taxpayer money to bailout Wall Street investors who made bad investment choices.
“The American people have spoken loud and clear and, for a change, their voices were heard,” said Sali. “Now it’s up to Congress to come up with a real solution to our financial and economic problems. We need a solution that does not jeopardize taxpayers and doesn’t change the relationship of the government with businesses. I’m working with a bipartisan coalition of legislators to put that plan together, and I am confident that with we will be successful. Thankfully, advocates of todayâ€™s failed legislation were unsuccessful in convincing a majority of House members that a massive bail out is the only course of action to take.”
â€œThis measure would have exploded our national debt by hundreds of billions of dollars and yet it fails to address the underlying problems that gave rise to our current financial woes,â€ said Sali.
The Congressman also noted that the defeated measure would have put the federal government in the unconstitutional position of being an investor in major financial firms. “Once we start down this road, we establish the precedent of putting Uncle Sam in the position of choosing winners and losers in the private sector, and that marks a complete departure from our incredibly productive private market-based economy,â€ said Sali. â€œWe need to do the right thing for our kids and our grandkids. This plan didnâ€™t get us there.â€
Sali said he believes Congress needs to provide solutions to get the credit markets settled down and should work immediately to create a business climate that is conducive to long-term economic growth.
“If you look at the airlines, they’re not failing because of the credit crisis. They’re failing because of the energy crisis. We need to do some things to grow the economy. We need to get an energy plan that includes more American crude oil exploration and production. We need to lower taxes. And we need to eliminate cumbersome federal regulations,â€ Sali said.
Toi help solve the credit crisis, Sali has advocated reducing or eliminating certain taxes for private investors who buy troubled investments and is working with other Members of Congress to implement the recommendations of William Isaac, the former chairman of the FDIC, into legislation. Isaac’s proposals would stabilize the banking industry by solving the credit crunch that banks are feeling. That is something the Paulson plan failed to do.
Among Isaacâ€™s suggestions:
* Congress should act quickly to give the FDIC authority to use â€œnet worth certificatesâ€ similar to what was enacted in the 1980s for the savings and loan industry. This will give banks with troubled assets – that are otherwise sound – time to resolve these assets and will not require any subsidy or cash outlay by the taxpayers.
* The SEC should immidiately rescind its rules requiring use of mark-to-market rules for as long as there is no meaningful market for mortgage-backed securities. In the interim, fair value accounting should be used.
* The FDIC should use its existing authority to protect all general creditors in bank failures during the period of instability. This will help avaoid any runs on banks.
â€œBill Isaac is on the right track, and in our rush to address this issue we are ignoring the wise counsel he and others are providing. We are moving too fast and in the wrong direction with this vote,â€ Sali concluded.
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