[StBernard] A Message from Congressman Charlie Melancon
Westley at da-parish.com
Wed Oct 8 15:47:19 EDT 2008
October 8, 2008
Dear Mr. Annis:
Thank you for taking the time to contact me to express your opposition to
the economic rescue package. I appreciate hearing your views, and I
understand your resistance to the measure.
At the end of March, the value of Bear Stearns stock, an 85-year-old
investment bank, dropped to $2 a share. The drop in stock value reflected
the effects of holding bad investments and mortgage-backed securities, which
threatened the company's solvency. The Bear Stearns bailout exposed a much
larger problem and marked the beginning of the federal government's effort
to help American financial investment firms stay solvent. More recently,
Fannie Mae, Freddie Mac, and AIG also received assistance from the federal
With the near-failure of all these blue-chip companies, it became apparent
that many other companies would follow suit and a comprehensive plan was
needed to calm the markets and protect credit availability. As a former
small business owner, I know what happens when a restaurant or store can't
get a loan. They shutter their doors. They lay off their staff. It's obvious
the fundamentals of our economy are crumbling. The fact that we even got to
this point shows how sick our economy really is.
On September 22, 2008, President Bush, Treasury Secretary Henry Paulson, and
Federal Reserve Chairman Ben Bernanke announced their 3-page version of a
rescue package. The Bush/Paulson/Bernanke "blank check" rescue proposal drew
the ire of nearly everyone. This rescue would have been dead-on-arrival if
the President hadn't been willing to negotiate with us and make it a better
deal for taxpayers. Fortunately, he was willing to listen. After a marathon
week of negotiations, lawmakers who shared my concerns were able to make
such drastic changes to the bill that I was able to support it. While the
bill I supported in the House was still far from perfect, the rescue plan
protected every tax-paying American by treating us like investors, while
attempting to stabilize our economy.
First, the rescue guarantees we get a share of the profits of participating
companies, or puts us first in line to recover our investment if a company
fails. The plan also requires our next president craft a proposal to make
certain we are repaid in full, with Wall Street making up any shortfall. And
finally, the rescue cut the President's $700 billion request in half and
makes him come back to Congress and justify any additional funding for the
plan so we can be certain we aren't throwing good money after bad.
This rescue plan also begins to reform Wall Street's bad habits and reverse
a decade where deregulation was gospel and agencies charged with keeping
investment banks honest looked the other way. The rescue establishes four
separate independent oversight entities or procedures to protect taxpaying
citizens. It guarantees judicial review of the Treasury Secretary's actions
- an item we insisted on in negotiations with the White House. And it
penalizes golden parachutes for CEOs who are fired or run their company into
the ground and limits CEO compensation for companies that lean heavily on
taxpayer money to stay afloat.
When this rescue is put into practice, the federal government and the
American taxpayer will own a lot of questionable investments. That fact
should give us pause. Yet we are facing the worst financial crisis in our
nation's history. That fact compels action.
When I look at the best way to protect Louisianians' retirement pensions,
small business payrolls and home values, this bill is necessary. I've seen
our state go through a recession in the 1980's and if I can help avoid those
hard times again, I want to try.
Thank you again for contacting me about this important issue. I am proud to
represent Louisiana's Third Congressional District. Please do not hesitate
to contact me again if I may be of further assistance. Please visit my
website at www.house.gov/melancon to sign up for my e-newsletter to learn
more about my work at home and in Washington.
Member of Congress
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