Thank you for your letter expressing concern about Congress'
consideration of a plan to meet our Nation's credit crisis with
financial help from the Federal Government. This is a difficult
situation for which there are no perfect solutions, and I would like to
share my thoughts and concerns about this issue with you.
On September 19, 2008, Secretary of the Treasury Henry M.
Paulson, Jr. announced a legislative proposal to use $700 billion to
purchase illiquid mortgage-related assets from ailing financial
institutions. Secretary Paulson's three-page proposal was a non-starter,
and without critical changes it has no chance of approval from Congress.
This proposal would have given a blank check to an economic czar who
would have been empowered to spend it without administrative oversight,
legal requirements, or legislative review. Decisions made by the
Treasury Secretary would be non-reviewable by any court, agency, or
Congress. The proposal also lacked a requirement for regular reports to
Congress on the status of the program. This was simply untenable.
Since this announcement, my offices have received thousands
of comments from Californians like you concerned about how this action
will affect them. Yet, I believe prudent action must be taken. The bill
should include the following principles: a phase-in of funding;
oversight, accountability and transparency; a mechanism allowing the
Secretary of the Treasury to modify mortgages to prevent additional
foreclosures; and a precise cap on executive compensation.
The current credit crisis affects all Americans. If action is
not taken to stem the crisis, Americans risk losing their homes, jobs,
personal savings, life insurance and more. Banks will cease to lend to
businesses and homeowners, and credit will be increasingly difficult to
come by for average Americans. I strongly believe that the consequences
of failing to act now would be greater than not acting at all.
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