by Dana Wilbourn
posted October 9, 2008
) Photo by Dana Wilbourn Rep. Zach Wamp at the Rotary Club |
Rep. Wamp said Treasury Secretary Henry Paulson came to Congress with a three-page explanation of the problem and a request for $700 billion, and it was Sec. Paulson who used the terms “Wall Street” and “bailout” in the same sentence.
Congress must protect the interest of the American people and the first bill, the Monday bill that he voted “No” on, did not protect those interests, Rep. Wamp said.
On the Monday vote, Rep. Wamp said, Congress was sending a signal to Wall Street that this situation was totally unacceptable and Congress was demanding accountability. He said he knew there would, most likely, be a second vote and therefore they had time to make this a better product.
Between the Monday vote and the Friday vote, Rep. Wamp said, a mountain of evidence was presented. If this could be likened to a jury trial, he said, the evidence would have been so overwhelming that a settlement would have been proposed and accepted.
“I don’t like (the situation) any more than anyone,” Rep. Wamp said. “I went to the floor (of Congress) and said nobody in my district hates this more than me.”
If the House had not voted it down on Monday, we would not have gotten some of the good reforms that we got in the Friday bill, he said.
A major reform in the Friday bill was an increase in FDIC insured funds from $100,000 to $250,000 for every depositor in America, Rep. Wamp said. The government of Ireland, in the midst of all of this, told their citizens they would stand 100% behind their deposits because they were afraid, as we were afraid, people would panic and pull their money out of the banks, he said.
The second reform that came from voting the measure down the first time was what is called market to market. The problem is, he said, that the financial services sector over the past decade has evolved into a mortgage-backed security sector and there are $11 trillion in funds pinned to those securities. These mortgage-backed securities were going upside down and were not worth what they were sold for, he said.
Rep. Wamp said the Securities and Exchange Commission stepped in, and in an effort to value them so they could be sold market to market, said the lowest common denominator (of a value that keeps going lower and lower), must be used. They could not use the market approach; they could not use the income approach; they could not use any other approach. They had to be valued at the lowest possible level and that value was then frozen.
Employers, employees and consumers then had a complete credit market freeze. That is why this has never been about the stock market, he said, it is about the credit market.
Rep. Wamp said he read one analysis of the crisis that said 1 of 2 steps must happen. “You can let the chips fall where they may,” he said, “or you find a lender of last resort.”
“There is only one lender of last resort and it is called the federal government,” Rep. Wamp said.
“We should listen to Warren Buffet about what to do,” Rep. Wamp said. “He knows more about (the market) than any single member of Congress.” Mr. Buffet said if this were a deal that he would make, he would make money on it. This is a good deal for the taxpayers and it’s a very necessary step at a critical time, Mr. Buffet is quoted as saying, Rep. Wamp said.
The fundamental question became, Rep. Wamp said, “Would Congress stand behind our economy or not?”
“I heard from large insurance companies, I heard from large pension funds, I heard from large foundations, and I heard from Mayor Ron Littlefield,” Rep. Wamp said. All were greatly concerned about the economic situation. All wanted to know if Congress was going to stand behind the economy or not.
Rep. Wamp told of a lady in Cleveland, Tn., with her son at her side and with special needs grandchildren, who told him “thank you” for his “No” vote but added, “Don’t leave Washington D.C. without doing something. Congress has to act.”
Freddie Mac and Fannie Mae, 10 years ago, began to extend credit to people who did not qualify, Rep. Wamp said. He said, over five years ago he applied for a loan to build his own house and the lender tried to get him to take a LIBOR loan (an adjustable rate, interest only loan). It would have saved him over $1,000 per month on the loan payment. The lender said, Rep. Wamp could buy a car with the savings. It was a sub-prime loan, Rep. Wamp said, and he did not fall for it. A lot of people did.
There is a lot of blame and there are a lot of lame excuses, Rep. Wamp said. He said he had members of Congress come to him the day he announced he was going to vote “Yes” and say, “Thanks for doing that, so I don’t have to.”
Rep. Wamp said a lot of people are concerned with what they are calling “pork” in the bill that he voted “Yes” on. It is unfortunate, he said, that the Senate added these items, but understand, he said, those were mostly items to correct some existing laws passed years ago that were bad laws. Another bill would have been forthcoming and it would have passed with those same “pork” items. It was a matter of taking 1 vote instead of 2, he said.
An example of that “pork”, he said, was the wooden arrows with a 35 cent excise tax. The law had been passed in 2004 intending to tax metal or alloy arrows used for hunting. Wooden arrows were never intended to be taxed. Wooden arrows probably don’t cost 35 cents to make, he said, and a poorly written law was taxing them 35 cents.
“Politically, it was really dumb to add to this package,” he said, “because it allowed the national media that is cynical and sometimes irresponsible, to say this was a sweet deal or this was pork. No, they (the Senate) just wanted to cast 1 vote instead of 2. They just added it and sent it back over to the House so we could explain it.”
“My view is, vote your heart, your conscience, and then go home and defend it. That’s what I’ve been doing, every chance I get,” he said.
“This latest rescue should remind us all how tenuous our fundamentals are; how delicate our entire system is; and that our way of life is not guaranteed to be extended from one generation to the next. It’s time for all of us to pull together and try to solve these problems and address the long-term sovereignty of our great nation,” Rep. Wamp said, in closing.
| Dining Out | Business | Movies | Focus | About Us |
| Church | Living Well | Memories | Outdoors | Real Estate | Student Scene | Travel |