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

Floor Speech

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

BREAK IN TRANSCRIPT

Mr. SHERMAN. I must respectfully disagree with the characterization and description of this bill put forward by my good friend, Mr. Dreier, from California.

This bill does not really limit executive compensation. It does limit a few types of golden parachutes. But it doesn't have any limits on regular salaries. Million-dollar-a-month salaries will continue, and they can be raised to $1.5 million a month once the companies get those bailout dollars and feel they can afford to be that generous to their favorite executives.

Foreign banks are going to get hundreds of billions of dollars out of this bill. Now, the bill says that the Treasury only buys securities from U.S. entities. But how does this work then? Well, let's say the Bank of Shanghai is holding $30 billion of toxic assets, business mistakes they made in China. They simply have to sell those $30 billion of bad assets to their subsidiary in the United States. They all have small subsidiaries here. That subsidiary can then, the next day, sell them to the U.S. Treasury. Or alternatively they can sell that $30 billion package of toxic assets to Goldman Sachs, and then Goldman Sachs can sell them to the Treasury the next day.

But keep in mind, if they choose to use their own subsidiary, they sell $30 billion of assets to the Treasury. By 2010, 2011 they can dissolve that subsidiary and leave this country. And how are you going to impose any recoupment tax on them? The concept that there is a guarantee that we're going to recoup our money is absolutely wrong. We would have to pass a $200 billion or $300 billion tax increase bill in 2013. And under section 134 of this bill, that tax is not just on those who are bailed out. It is on the entire financial services industry. How else could you construct a tax if you have one bank that got bailed out to the tune of $1 million and another bank that got bailed out to the tune of $1 billion? What tax rate would you apply to banks of that size? The only way to do it is to impose a tax on a whole segment of or the entire financial services industry.

That means you're going to have the unfairness of taxing community banks and credit unions to pay for the money we give to Wall Street. It also means the bill isn't going to pass at all. Imagine the unfairness argument that that creates. But also any bill to tax Wall Street needs to get through a Senate where 41 Senators can block the bill. And Wall Street will now have enough money, our money, to hire 4,100 lobbyists. All they need is a good argument. And that good argument is that there is no fair way to recoup the money from the individual companies that got it. Many of the companies getting this money in 2009 aren't going to be around in 2013. Many of them are going to be shell companies that are deliberately dissolved in 2013.

We do not have to panic. Four hundred eminent professors of economics, including three Nobel laureates, tell us Congress should not rush. Let's not rush. Let's pass a good bill next week.

BREAK IN TRANSCRIPT

Mr. SHERMAN. Under this bill, it is guaranteed we will get a proposal from the President. But to say that guarantees we're going to pass it is absolutely wrong. We don't pass 200 or $300 billion tax increase bills on the entire financial services industry over the objection of Wall Street and with the really credible argument that we will be taxing the good banks to pay for the sins of the bad banks and taxing the small local banks to pay for the sins of Wall Street--4,100 lobbyists to stop with 41 Senators a bill that will be highly controversial.

BREAK IN TRANSCRIPT

Source