Emergency Economic Stabilization Act of 2008

Floor Speech

EMERGENCY ECONOMIC STABILIZATION ACT OF 2008 -- (House of Representatives - September 29, 2008)

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Mr. SHERMAN. Just because your constituents hate this bill--and will hate it more when they learn the details--does not mean that voting for it is an act of courageous patriotism. Just because this bill is unpopular doesn't mean we have to pass it immediately. Some 400 eminent economists, including three Noble Laureates, are asking us to come back and do our job and write a good bill in the next week or so.

They state--and their chart is here so you might want to read along--``We ask Congress not to rush, to hold appropriate hearings and to carefully consider the right course of action.'' Four hundred economists, three Noble Laureates.

Now, we know that this bill will allow million-dollar-a-month salaries to executives at bailed out firms, and it allows hundreds of billions of dollars to be used to buy the toxic assets currently held by foreign investors. But we're told not to worry because this $700 billion bill isn't going to cost us anything. We're going to recoup all of the costs from some future revenue bill that we will enact.

Now, the bill does not automatically enact any revenue increase, nor does it protect a revenue bill from filibuster or veto. Congress is highly unlikely to pass a multi-hundred billion dollar tax increase in 2013 or any other year. Tax increase bills are anathema to many. Forty-one Senators can block the plan, and we're giving Wall Street enough money to hire 4,100 lobbyists.

In recent years, Wall Street has effectively defeated every attempt to close every loophole they currently exploit, no matter how pernicious, including those involving Cayman Island tax havens used by hedge fund managers to pay zero tax.

Section 134 of the bill says the tax will be on the entire ``financial services industry''--good banks who don't need a bail out; bad banks who used a bailout; community banks, maybe even credit unions.

It is absolutely impossible to draft a tax that will hit only those firms who receive bailout payments and even more impossible to draft one that taxes each bank in proportion to how much money we lose on the toxic assets we happen to buy from them. In fact, there are no provisions in this bill that even keep track of the losses on the assets we acquire from an individual bank as we manage them, combine them, put them together in pools with assets we acquire from other banks and then sell them off.

Now, these bailed-out firms, many of them won't exist in 2013. Some are going to go under. Some of the bailed-out firms are just shell companies anyway. For example, if the Bank of Shanghai currently owes $30 billion of toxic assets to its tiny subsidiary it has already incorporated in California, the subsidiary will sell those toxic assets to the Treasury; the bailout went to that tiny subsidiary in 2009; it's not even going to exist in 2013.

Many of the bailed-out firms are going to be unprofitable in 2013. And therefore you're not going to be able to put an income tax on them. Some of the bailed-out firms are going to move offshore before 2013. Wall Street gets their money now, and we get it back never.

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