Update on the Financial Crisis

Statement

This week has been extremely painful for many of you, and I understand how deeply this economic crisis is impacting everyone across the economic spectrum. We are in the midst of a worldwide crisis of dimensions not seen since Hoover and the Great Depression of the 1930s, and in such situations there is an intrinsic need for governments to respond. That was one of the most important lessons that we learned from our experience nearly 80 years ago, but now we need for governments around the globe to come together and work with one another to get through this.

The economic rescue package that we passed last week has yet to be implemented, but I remain confident that it will ease the credit crunch and help restore confidence in our economy. I am particularly encouraged by Treasury Secretary Paulson's announcement this week that more capital will be injected into banks by purchasing equity stakes in financial institutions in addition to buying toxic mortgage assets, as I believe that this will have a more immediate impact on easing the credit crunch and give taxpayers a better return on this $700 billion investment.

Additionally, the increase in federal coverage of bank deposits from $100,000 to $250,000 (which I principally supported by introducing legislation on September 22) is a key component of this plan. Any money that you or your family and friends have in a checking or savings account at your bank is safe up to $250,000. This important measure was crucial to passing the rescue package, and it should help to shore up confidence in the banking system, and help to bring more capital and liquidity into financial institutions. It will also be of great benefit to small businesses who have been hit hard by the economic downturn.

Last week's vote in favor of the economic rescue plan was extremely difficult to make. Like many Americans, I was wary of President Bush when he laid out his case for this emergency legislation given his track record on issues like Iraq, the PATRIOT Act, Katrina, the U.S. Attorney firings, FISA and Guantanamo Bay. However, after listening to financial experts, economists, business leaders and constituents, I determined that inaction would have been extremely irresponsible. It is the responsibility of the President and the Treasury Secretary to respond to crises such as this, and while I wish that someone else was quarterbacking the federal government right now, we in the Congress have to give them support in desperate times. In other words, just because you don't have Peyton Manning under center doesn't mean you don't throw the ball on 4th and 20.

As the rescue progresses, we in the Congress will provide strong, bipartisan, independent oversight of President Bush and Secretary Paulson's activities. As global markets continue to struggle, we stand ready to reconvene at any moment and do what is necessary to strengthen the economy here at home and prevent the crisis from spreading further. My colleagues and I are back in our districts talking to constituents and we hear your pleas for assistance, and there is a plan in the works to pass a second economic stimulus package after the November elections in a lame duck session. This time, the focus of the stimulus package will be to extend benefits to those who need it most and who will quickly put this money back into the economy. We plan to issue more food stamps, extend unemployment insurance and increase funding to the states for Medicaid (TennCare in Tennessee).

I am obviously disappointed that the market did not respond better to the announcement of our rescue package this week, but the drop in prices is reflective of how bad things had gotten and the critical need for swift action. I still believe that our package can achieve its goal of restoring the availability of credit in our economy for businesses and families. The rescue package also includes an extension of the sales tax deduction in Tennessee (following legislation I introduced in the House), clean renewable American energy tax incentives which are critical to creating and saving half a million green jobs and helping us achieve energy independence, tax cuts for 20 million families who could be hit by the Alternative Minimum Tax, extensions of expiring business and family tax cuts, disaster relief, mental health parity to end coverage discrimination, and other provisions.

Like most of you, I was outraged when I learned about American International Group (AIG) executives and their half-million dollar luxury retreat to California. It is simply disgraceful that these men and women would so brazenly jet off on a holiday after the Fed bailed out their company. I agree with Senator Obama who suggested that these executives be fired and that they reimburse the Treasury to cover the costs of the retreat.

This month, we will also continue to conduct vigorous oversight. The Congress is now conducting a sweeping Congressional investigation - to get to the root of the American financial crisis and lay the foundation for action on common sense regulation of the financial and home lending industries which affect every aspect of our economy.

Already, Congressional hearings have uncovered important information regarding the economic crisis and lack of regulation and oversight of Wall Street. Through hearings, we have learned that Americans lost over $2 trillion in retirement savings in the last 15 months, and that the Securities Exchange Commission Office of Risk Management included only one staff person who was responsible for identifying all the risks of major transactions, including a $62 trillion credit default swap.

While Democrats and Republicans have worked together to get our economy back on track, we must not forget the catastrophic choices of the last eight years - choices that led to financial meltdown, massive job losses, a disastrous energy policy that prioritizes oil company profits over people, skyrocketing health care costs, a costly war that should never have been waged, and a surplus turned into a deficit that will burden generations to come.

Some of you may remember back in May that the House passed and the President eventually signed into law the Housing and Economic Recovery Act of 2008, which I proudly supported. The law is now taking effect and the 9th District has received more than $14 million dollars for assistance in areas trying to recover from the effects of foreclosure and declining property values. With the assistance of state and local government, this money will be put to work immediately in communities and neighborhoods in Memphis and Shelby County with the greatest need. This housing crisis is affecting every sector of our economy, and this money will go a long way toward helping staunch the bleeding in the most vulnerable neighborhoods.

Finally, today I attended the funeral for Army Specialist Christopher Fox, a Hamilton High School graduate, in West Memphis presided over by Pastor Jesse Briggs. He was the 4,178th casualty of the war in Iraq. He made the ultimate sacrifice for our country, and I was proud to honor him last week on the Floor of the U.S. House of Representatives. His family and friends have shown extraordinary courage and resolve through this terrible tragedy, and I hope you will all join me in keeping them in your prayers.

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