Speaker Pelosi is striding around Capitol Hill as though she is responsible for a marvelous piece of proposed legislation: Emergency Economic Stabilization Act of 2008 (Adobe PDF).
"We sent a message to Wall Street: The party is over," Pelosi told reporters at the U.S. Capitol early Sunday evening. Standing with other senior House and Senate Democrats, Pelosi said the bill legislation posted on her office's Web site reflected the final legislation, which she hopes the House will take up tomorrow. Senate Majority Leader Harry Reid, R-Nev., said the Senate would move promptly after the House had acted. [source]
Believe me, Speaker Pelosi, "Wall Street" knew the party was over long before the House you lead got around to doing anything about the situation, and long before your counterpart and pal Senate Majority Leader Reid chimed in. And the problems facing the financial markets are real. The question is, is this legislation you are so proudly touting anything more than a skimpy expensive band-aid?
This is the summary released by Speaker Pelosi's office, with annotations by me.
SUMMARY OF THE "EMERGENCY ECONOMIC STABILIZATION ACT OF 2008"
I. Stabilizing the Economy
The Emergency Economic Stabilization Act of 2008 (EESA) provides up to $700 billion to the Secretary of the Treasury to buy mortgages and other assets that are clogging the balance sheets of financial institutions and making it difficult for working families, small businesses, and other companies to access credit, which is vital to a strong and stable economy. EESA also establishes a program that would allow companies to insure their troubled assets. [So, the Speaker is proud of giving (up to) $700 BILLION of taxpayper money to Treasury Secretary Paulson so that he can use the money to protect BANKS AND OTHER INSTITUTIONS THAT HOLD MORTGAGES, a move that may or may not trickle down to "working families" and others mentioned. Considering how wonderfully it has turned out for the working families/small business owners when these institutions were flush, one wonders whether propping up those same institutions with billions of tax dollars paid by families/small businesses is not rather an ironic circle.]
II. Homeownership Preservation
EESA requires the Treasury to modify troubled loans - many the result of predatory lending practices - wherever possible to help American families keep their homes. It also directs other federal agencies to modify loans that they own or control. Finally, it improves the HOPE for Homeowners program by expanding eligibility and increasing the tools available to the Department of Housing and Urban Development to help more families keep their homes. [After the banks and mortgage lenders get up to $700 billion dollars the Treasury Department will provide direct assistance to American homeowners, who may or may not have been preyed upon, "wherever possible"? Say what? "Wherever possible"? Where will Secretary Paulson consider such help possible? Where will his successor, who could easily be another Republican appointee, consider such help possible?]
III. Taxpayer Protection
Taxpayers should not be expected to pay for Wall Street's mistakes. The legislation requires companies that sell some of their bad assets to the government to provide warrants so that taxpayers will benefit from any future growth these companies may experience as a result of participation in this program. The legislation also requires the President to submit legislation that would cover any losses to taxpayers resulting from this program by charging a small, broad-based fee on all financial institutions. [Need to read the full text of the relevant provisions to assess this as the summary gets very vague here.]
IV. No Windfalls for Executives
Executives who made bad decisions should not be allowed to dump their bad assets on the government, and then walk away with millions of dollars in bonuses. In order to participate in this program, companies will lose certain tax benefits and, in some cases, must limit executive pay. In addition, the bill limits "golden parachutes" and requires that unearned bonuses be returned. [The LEAST that should be and could have been done.]
V. Strong Oversight
Rather than giving the Treasury all the funds at once, the legislation gives the Treasury $250 billion immediately, then requires the President to certify that additional funds are needed ($100 billion, then $350 billion subject to Congressional disapproval). The Treasury must report on the use of the funds and the progress in addressing the crisis. EESA also establishes an Oversight Board so that the Treasury cannot act in an arbitrary manner. It also establishes a special inspector general to protect against waste, fraud and abuse. [Under Speaker Pelosi, the House has passed bill after bill favored by the current President. Why should we think that a House led by her will not give the President everything he wants any time he wants it? Remember, this is a Democratic Speaker who took office saying "Impeachment is off the table" in reference to a President that many of us believe has been responsible for war crimes.]
Ok, so much for my thoughts about the summary and whether Speaker Pelosi should be crowing about this proposed legislation. After all, I am on record as somebody who is not a fan of her judgment and conduct.
Senator Obama, on the other hand, presumably thinks more highly of Speaker Pelosi's political judgment than I do, since she played a key role in wangling his spot on the Democratic ticket. His reaction to EESA:
In an interview Sunday morning on CBS' "Face the Nation," Obama said he had not reviewed the language of the latest proposal, but said if the core principles he put forth were incorporated into it, his "inclination" would be to vote for it; but he added "I'm not happy about it. We should have never gotten into this place in the first place." [source]
Well, Senator Obama, Speaker Pelosi has been in the House getting us into this place for over 20 years, the last seven or so as Speaker. Are you happy she's helped you get into your place today?
Update: Today's Wall Street Journal has a particularly interesting article that includes information about Congress's role in creating the current mess.