Providing for Consideration of Senate Amendment to H.R. 3997, Emergency Economic Stabilization Act of 2008

PROVIDING FOR CONSIDERATION OF SENATE AMENDMENT TO H.R. 3997, EMERGENCY ECONOMIC STABILIZATION ACT OF 2008 -- (House of Representatives - September 28, 2008)

Ms. KAPTUR. With the highest regard for the chairwoman of the Rules Committee, I rise, regrettably, in opposition to this closed rule and against the bailout bill.

We need the right deal, not a fast deal. The White House is counting on fear to propel this Congress into hasty and inappropriate action on a Wall Street bailout that is not in the interest of our Republic. There is a better way. In fact, it is as likely the expenditure of $700 billion will actually stand in the way of the most effective means to remedy the economic challenges facing us.

The Bush administration says we are facing the worst financial crisis in modern history. That is not true. The market problems of the 1980s were much worse than today. Then, 3,000 banks failed; interest rates were at 21 percent; money center banks went down; every bank in Texas went down. But the economic instability was resolved in the financial system in a much more disciplined and rigorous way than taxpayers printing money for Wall Street.

In those days, the FDIC, not through a taxpayer bailout, but through careful use of FDIC's considerable power, resolved thousands of problem situations. No cash changed hands. A system of net worth certificates issued by FDIC was used to get through the credit shortage. FDIC regulated transactions with banks, through a system of subordinated debentures and promissory notes, was enacted. FDIC assumed power over executive salaries and controlled dividends to restore health and rigor to the market.

The FDIC adopted a contingency plan to nationalize all institutions in the event it was necessary. The cost of the entire enterprise was $1.8 billion, resolving over $100 billion in problem institutions from the FDIC insurance fund, paid for by the banks, not the taxpayers. In other words, the market was used to heal the market, not set up a big government bureaucracy at the U.S. Treasury, run and overseen by the very reckless people who caused these problems in the first place.

Today's economic challenge is a credit crisis, not a liquidity crisis. This bill does not address that. The housing bubble that burst is at the heart of our dilemma. Until Main Street housing foreclosures are remedied, the situation will not improve. This bill does not address the serious mortgage workout and mortgage servicing challenges facing Main Streets across this Nation.

Taking a trillion dollars of taxpayer money and buying bushels of unknown and unvalued paper is not smart. It will delay resolution of that housing crisis. In fact, this bill actually asks taxpayers to buy a garbage truckload of worthless paper, everything from subprime auto loans, to foreign bank loans, to hedge fund paper, to credit swaps. Every reckless Wall Street deal thought up these past several years they want to dump on us. We say: No.

Now, this bill also does nothing for reform, for example, to address the shortcomings of the SEC, which has done more than any other regulatory body to cause this problem by its false accounting, overinflated leverage ratios, and by destroying fair value accounting.

The SPEAKER pro tempore. The time of the gentlewoman has expired.

Ms. SLAUGHTER. Mr. Speaker, I yield the gentlewoman an additional 10 seconds.

Mr. DREIER. Mr. Speaker, I would like to also yield my friend 10 seconds.

Ms. KAPTUR. I thank the gentleman for yielding me--very, very much.

The SEC must be a major part of the solution. This bill does not do it.

Finally, Mr. Speaker, before one cent is even considered, this Congress first ought to pass a bill to create and fund an independent Emergency Financial Crimes Unit to investigate the malfeasance, securities fraud, false accounting, and insider trading that were the root causes of this extravagance that must now be resolved in a rigorous and thoughtful manner. This bill does not do it. Draft the right deal, not a fast deal.

I thank the gentlelady and the gentleman for yielding.

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