[Sosfbay-discuss] Fwd: U.S. Senator Dianne Feinstein responding to your message

[Andrea Dorey]

A response to my message from DiFi?????
Curious.  I thought I wrote to Senator Boxer.
I wonder how DiFi got into this loop.  Hmmmmm.
Andi

Begin forwarded message:

> From: <senator at feinstein.senate.gov>
> Date: October 10, 2008 8:28:08 AM PDT
> To: <andid at cagreens.org>
> Subject: U.S. Senator Dianne Feinstein responding to your message
>
>
> Dear Ms. Dorey:
>
>            Thank you for your letter expressing concern about  
> Congress' recent 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 with you. Please find attached two statements that I have  
> given on the Senate floor detailing my reasons for supporting the  
> Emergency Economic Stabilization Act of 2008 (Public Law 110-343),  
> which the President signed into law on October 3, 2008.
>
>            Once again, thank you for writing.  If you have any  
> additional questions or concerns, please do not hesitate to contact  
> myWashington, D.C. office at (202) 224-3841. Best regards.
>
> Statement of U.S. Senator Dianne Feinstein
> In Support of the Economic Rescue Package
> October 1, 2008
>
>            "Mr. President, I rise today to support the bipartisan  
> economic rescue legislation.
>
>            It has been said that Senators have six-year terms for a  
> reason. And that reason is to be able to take tough votes because  
> it's right for the nation, and take tough votes when at times they  
> may be adverse to the beliefs of your constituency.
>
>            This today is indeed a tough vote.
>
>            I want to thank the Banking Committee, particularly its  
> chairman, Chris Dodd, and members on both sides of the aisle for  
> their work on this.
>
>            So let me quickly begin.
>
>            This bill is not the bill that was put forward by  
> Secretary Paulson on September 20th. His bill was essentially a non- 
> starter - startling in its unbridled allocation of power to one  
> man: the Secretary of Treasury whom we know now, and to a Secretary  
> of Treasury after January whom we do not know.
>
>            It placed this man above the law, above administrative  
> oversight and above Congressional action and essentially gave him  
> $700 billion to do with what he thought best.
>
>            This bill didn't fly with virtually anyone who looked at  
> it, particularly constituents, who have called in the tens of  
> thousands all across this land.
>
>            My office has received over 91,000 calls and emails with  
> over 86,000 opposed. The bill before us is not Paulson's three-page  
> proposal. Rather, it is a bipartisan effort that adds oversight,  
> accountability, assistance to homeowners, executive compensation  
> limits and other measures to protect taxpayers.
>            But there still is a lot of misinformation on this bill.
>
>            This is not a $700 billion gift for Wall Street.
>
>            Rather, the federal government will buy equity in  
> certain assets - both good and bad - to pump liquidity into the  
> marketplace and unfreeze credit which is increasingly freezing and  
> unavailable.
>
>            Over time, these assets will be sold and the federal  
> government will be the first paid back on the investment.
>
>            The belief is that by doing this the federal government  
> will clear much of the bad debt on the books of certain strategic  
> financial institutions, restoring stability, adding liquidity and  
> unfreezing credit.
>
>            Recently, we have seen major U.S. institutions fail:
>
> Bear Stearns
> Fannie Mae and Freddie Mac
> Lehman Brothers
> Merrill Lynch
> AIG
>
> And, two retail banks - not investment banks:
> Washington Mutual, and Wachovia
>
>            If we do nothing, more institutions will fail.
>
>            Now, you may say: what does this mean to me? I work  
> hard, I pay my bills, I pay cash.
>
>            Here's what it will mean to you: it will be harder for  
> most Americans to get any credit. Therefore, jobs will be lost.
>
>            And we may well face a deep recession.
>
>            California has 3.75 million small businesses with an  
> average of 5.6 employees. That adds up to over 20 million jobs.
>
>            Some of these businesses are funded with cash, but most  
> are funded with credit. When credit freezes, payrolls cannot be  
> met. And when payrolls cannot be met, pink slips are sent out.
>            And this will happen to retailers, grocery stores,  
> restaurants, electrical and plumbing contractors, apparel  
> manufacturers, computer and electronics stores, and auto dealerships.
>
>            Sales at auto dealerships have fallen dramatically in  
> the past year.
>
> Ford sales are down 34 percent,
> Chrysler sales are down 33 percent,
> Toyota sales are down 29 percent, and
> GM sales are down 16 percent.
>
> The list will go on and on.
>
>            Importantly, there have now been several improvements to  
> this bill. First, The FDIC insurance rate covering bank deposits  
> has been increased from $100,000 to $250,000. Americans will know  
> that their deposits are secure up to $250,000.
>
>            The legislation will provide tax relief to working  
> families.
>
>            One example: the Alternative Minimum tax is a real  
> problem. It was meant to apply only to 200 wealthy people, but it  
> was never adjusted for inflation and it has crept down the income  
> scale to the point where more than 25 million taxpayers today may  
> well have to pay an Alternative Minimum Tax.
>
>            In California, 700,000 people paid this tax last year.  
> But 4 million Californians will pay that tax this year unless we  
> take action.
>
>            This bill takes that action. For one year it will  
> prevent this tax increase.
>
>            The Congressional Budget Office has reviewed this bill  
> and concluded that the net cost to taxpayers is "likely to be  
> substantially less than $700 billion."
>
>            Again, these investments are first in line to be paid back.
>
>            It must be remembered that there was a great deal of  
> criticism when the U.S. government bailed out Mexico in 1996 with  
> $20 billion. The fact is, the money was paid back ahead of time and  
> $600 million in profit was made.
>
>            Let me give you the following points.
>
>            This bill mandates that the government provide loan  
> modifications for the subprime mortgages it acquires. This will  
> help keep families in homes rather than foreclosing and putting the  
> house on a deteriorating housing market where property values drop  
> and homes are looted.
>
>            The bill limits executive compensation.
>
>            It provides strong oversight and accountability,  
> including a financial stability oversight board, a five-member  
> Congressional oversight panel, an Inspector General, and a constant  
> presence at Treasury by the Government Accountability Office.
>
>            This is the only choice Congress can make.
>
>            One can rail against it and vote no on it, but that's  
> not going to solve the problem. We have one chance, and one chance  
> only, to solve the problem, and it is this bill.
>
>            I wish I could write it differently. Others wish they  
> could write it differently, but the fact is that we are faced with  
> this. Again, there is no question this is a tough vote.
>
>            But there's no question that this is a vote that I  
> believe has to be made."
>
> U.S. Senator Dianne Feinstein
> Floor Statement on the Economic Rescue Proposal
> September 26, 2008
>
>            "Mr. President, to date I have received from  
> Californians more than 50,000 calls and letters, the great bulk of  
> them in opposition to any form of meeting this crisis with  
> financial help from the Federal Government. I wanted to come to the  
> floor to very simply state how I see this and some of the  
> principles that I hope will be forthcoming in this draft. Before I  
> do so, I wish to pay particular commendation to Senator Dodd,  
> Senator Schumer, Senator Bennett, and others who have been working  
> so hard on this issue. I have tried to keep in touch -- I am not a  
> negotiator; I am not on the committee -- but California is the  
> biggest State, the largest economic engine, and people are really  
> concerned.
>
>            We face the most significant economic crisis in 75 years  
> right now. Swift and comprehensive action is crucial to the overall  
> health of our economy. None of us wants to be in this position, and  
> there are no good options here. Nobody likes the idea of spending  
> massive sums of Government money to rescue major corporations from  
> their bad financial decisions. But no one also should be fooled  
> into thinking this problem only belongs to the banks and that it is  
> a good idea to let them fail. The pain felt by Wall Street one day  
> is felt there, and then 2,3,4 weeks down the pike, it is felt on  
> Main Street.
>
>            The turbulence in our financial sector has already  
> resulted in thousands of layoffs in the banking and finance  
> sectors, and that number will skyrocket if there is a full  
> collapse. The shock waves of failure will extend far beyond the  
> banking and finance sectors. A shrinking pool of credit would  
> affect the home loans, credit card limits, auto loans, and  
> insurance policies of average Americans. I am receiving calls from  
> people who tell me they want to buy a house, but they can't get the  
> credit or the mortgage to do so. Why? Because that market of credit  
> is drying up more rapidly one day after the other. It would have a  
> major impact on State and local governments which would lose tens  
> of millions of dollars, if not hundreds of millions of dollars.
>
>            Hurricane Ike shut down refineries on the gulf coast 2  
> weeks ago, and now, today, people are waiting hours in lines for  
> gasoline in the South. Similarly, the collapse of the financial  
> sector would have severe consequences for Americans all across the  
> economic spectrum: for the person who owns the grocery store, the  
> laundry, the bank, the insurance company. Then, if the worst  
> happens, layoffs. And even more than that, somebody shows up for  
> work and finds their business has closed because the owner of that  
> business can't get credit to buy the goods he hopes to sell that  
> week or that month. Wages and employment rates have already fallen  
> even as the cost of basic necessities has skyrocketed. Our Nation  
> is facing the highest unemployment rate in 5 years, at 6.1 percent.  
> Over 605,000 jobs have been lost nationwide this year. My own State  
> of California, a state of 38 million people, has the third highest  
> unemployment rate in the Nation at 7.7 percent. That is 1.4 million  
> people out of work today. One and a half million people -- that is  
> bigger than some States. We have 1.5 million people out of work,  
> and one-half million have had their unemployment insurance expire  
> and have nothing today.
>
>            Congress is faced with a situation where we have to act  
> and we have to do two things. We have to provide some reform in the  
> system of regulation and oversight that is supposed to protect our  
> economy. We also have to find a permanent and effective solution to  
> keep liquidity and credit functioning so that markets can recover  
> and make profit. The situation, I believe, is grave, and timely,  
> prudent action is needed.
>
>            Just last night, the sixth largest bank in America --  
> Washington Mutual-- was seized by government regulators and most of  
> its assets will be sold to JPMorgan Chase. This follows on the  
> heels of bankruptcies and takeovers of Bear Stearns, Lehman  
> Brothers, AIG, Fannie Mae, and Freddie Mac. If nothing is done, the  
> crisis will continue to spread and one by one the dominos will fall.
>
>            Now, this isn't just about Wall Street. Because we are  
> this credit society, the financial troubles facing major economic  
> institutions will ricochet throughout this Nation and affect  
> everyone. So I believe the need for action is clear. But that  
> doesn't mean Congress should simply be a rubberstamp for an  
> unprecedented and unbridled program.
>
>            My constituents by the thousands have made their views  
> clear. I believe they are responding to the original 3-page  
> proposal by the Secretary of the Treasury. It is clear by now that  
> that 3-page proposal is a nonstarter. It is dead on arrival and  
> that is good. Secretary Paulson's proposal asked Congress to write  
> a $700 billion check to an economic czar who would have been  
> empowered to spend it without any administrative oversight, legal  
> requirements, or legislative review. Decisions made by the Treasury  
> Secretary would be nonreviewable by any court or agency, and the  
> fate of our entire economy would be committed to the sole  
> discretion of one man alone -- the man we know today, and the man  
> whom we don't know after January.
>
>            Additionally, the lack of governance or oversight in  
> this plan was matched by the lack of a requirement for regular  
> reports to Congress. This proposal stipulated that the economic  
> czar, newly created, would report to Congress after the first three  
> months with reports once every 6 months after that. This was  
> untenable. Six months is an eternity when you are spending billions  
> a week. The Treasury Secretary asked Congress to approve this  
> massive program without delay or interference. It is hard to think  
> of any other time in our history when Congress has been asked for  
> so much money and so much power to be concentrated in the hands of  
> one person. It is a nonstarter.
>
>            Yesterday, shortly before we met for the Democratic  
> Policy Committee lunch, we were told there had been a bipartisan  
> agreement on principles of a possible solution, and many of us  
> rejoiced. We know that our Members, both Republican and Democrat,  
> have been working hard to try to produce something that was  
> positive. Then, all of a sudden, it changed. One Presidential  
> candidate parachuted into town which proved to be enormously  
> destructive to the process. Now, negotiations are back on the  
> table, and as I say, we have just received a draft bill of certain  
> principles.
>
>            I would like to outline quickly those principles that I  
> think are important. First is a phase-in. No one wants to put $700  
> billion immediately at the discretion of one person or even a group  
> of a very few people, no matter how bright, how skilled, how  
> informed they might be on banking or finance principles. The  
> funding should come in phases and Congress should have the  
> opportunity to make its voice heard if the program isn't working or  
> needs to be adjusted.
>
>            The second point: Oversight, accountability, and  
> governance. The Treasury Secretary should not and must not have  
> unbridled authority to determine winners and losers, essentially  
> choosing which struggling financial institution will survive and  
> which will not. The original plan placed all authority in the hands  
> of this one man, and this is why I say it was DOA -- dead on  
> arrival -- at the Congress. We must assure that controls are in  
> place to watch taxpayer dollars and make sure they are well-spent  
> fixing the problem, and that oversight by a governance committee  
> and the Banking Committees are strong, and that they give the best  
> opportunity for the American people to recover their investment  
> and, yes, even eventually make a profit from that investment. That  
> can be done and it has been done in the past.
>
>            I believe that frequent reporting to Congress is  
> critical. Transparency, sunlight on this, is critical. So Congress  
> should receive regular, timely briefings, perhaps weekly for the  
> first quarter, on a program of this magnitude. A proposal should  
> mandate frequent reporting and the public should be ensured of  
> transparency to the maximum extent possible.
>
>            I also believe that within the first quarter -- and  
> this, to me, is key -- a comprehensive legislative proposal for  
> reform must be put forward. We must reform those speculative  
> practices that impact price function of markets. We must deal with  
> the unregulated practices that have furthered this crisis. Look. I  
> represent a State that was cost $40 billion in the Enron episode  
> during 1999 and 2000 by speculation, by manipulation, and by fraud.  
> There still is inadequate regulation of energy commodities sold on  
> the futures market. And that is just one point in all of this. We  
> must prevent these things from happening. The only way to do it is  
> to improve the transparency of all markets. No hidden deals. Swaps,  
> in my view, should be ended. The London loophole should be ended.
>
>            We have to outline rules for increasing regulation of  
> the mortgage-backed securities market, along with comprehensive  
> oversight of the mortgage industry and lending practices for both  
> prime and subprime lending.
>
>            Senator Martinez of Florida and I had a part in the  
> earlier housing bill, which included our legislation entitled the  
> SAFE Mortgage Licensing Act. We found that the market was rife with  
> fraud. We found there was one company that hired hairdressers and  
> others who sold mortgages in their spare time. We found there were  
> unscrupulous mortgage brokers out there unlicensed, preying upon  
> people, walking off with tens of thousands of dollars of cash. This  
> has to end. It has to be controlled. It has to be regulated.
>
>            So I believe the crisis of 2008 stems from the failure  
> of Federal regulators to rein in this Wild West mentality of those  
> Wall Street executives who led those firms and who thought that  
> nothing was out of bounds. Every quick scheme was worth the time,  
> and worth a try. Congress cannot ignore this as the root cause of  
> the crisis. It was inherent in the subprime marketplace, and it has  
> now spread to the prime mortgage marketplace.
>
>            It is also critical that accurate assessments of the  
> value of these illiquid mortgage-related assets be performed to  
> limit the taxpayers' exposure to risk and structure purchases to  
> ensure the greatest possible return on investment.
>
>            Taxpayer money must be shielded at all costs from risk  
> to the greatest extent possible.
>
>            Reciprocity is not a bad concept if you can carry it  
> out. The Government must not simply act as a repository for risky  
> investments that have gone bad. An economic rescue effort that  
> serves taxpayers well must allow them to benefit from the potential  
> profits of rescued entities. So a model -- and it may well be in  
> these new principles -- must be developed to ensure the taxpayers  
> are not only the first paid back but have an opportunity to share  
> in future profits through warrants and/or stocks.
>
>            As to executive compensation limits, simply put,  
> Californians are frosted by the absence of controls on executive  
> compensation. Virtually all of the 50,000 phone calls and letters  
> mentioned this one way or another. There must be limits. I am told  
> that the reason the Treasury Secretary does not want limits on  
> executive compensation is because he believes that an executive  
> then will not bring his company in to partake in any program that  
> is set up. Here is my response to that: We can put that executive  
> on his boat, take that boat out in the ocean, and set it on fire.  
> If that is how he feels, that is what should happen, or his company  
> doesn't come in. But to say that the Federal Government is going to  
> be responsible for tens of millions of dollars of executive  
> salaries, golden parachutes, whether they are a matter of contract  
> right or not, is not acceptable to the average person whose  
> taxpayer dollars are used in this bailout. That is just fact.
>
>            The one proposal that was made by one of the  
> Presidential candidates that I agree with is that there should be a  
> limit of $400,000 on executive compensation. If they don't like it,  
> too bad, don't participate in the program. As I have talked with  
> people on Wall Street and otherwise, they don't believe it is true  
> that an executive, if his pay is tailored down, will not bring a  
> company in that needs help. I hope that is true. I believe there  
> should be precise limits set on executive pay.
>
>            Finally, as to tangible benefits for Main Street in the  
> form of mortgage relief, there have been more than 500,000  
> foreclosures in my home State of California so far this year. In  
> the second quarter of this year, foreclosures were up 300 percent  
> over the second quarter of 2007. More than 800,000 are predicted  
> before this year is over.
>
>            I have a city in California where one out of every 25  
> homes is in foreclosure. This is new housing in subdivisions. As  
> you look at it, you will see garage doors kicked in. You will see  
> houses vandalized. You will see the grass and grounds dry. You will  
> see the street sprinkled with "For Sale" signs, and nobody buys  
> because the market has become so depressed.
>
>            This crisis has roots in the subprime housing boom that  
> went bust, and it would be unconscionable for us to simply bailout  
> Wall Street while leaving these homeowners to fend for themselves.
>
>            Everything I have been told, and I have talked to people  
> in this business, here is what they tell me: It is more cost- 
> effective to renegotiate a subprime loan and keep a family in a  
> house than it is to foreclose and run the risks of what happens to  
> that home on a depressed market as credit is drying up, as vandals  
> loot it, as landscaping dries up, as more homes in the area become  
> foreclosed upon; the way to go is to renegotiate these mortgages  
> with the exiting homeowner wherever possible. I feel very strongly  
> that should be the case.
>
>            I don't know what I or any of us will do if we authorize  
> this kind of expenditure and we find down the pike in my State that  
> the rest of the year, 800,000 to 1 million Americans are being  
> thrown out of their homes despite this form of rescue effort. Think  
> of what it means, Mr. President, in your State. You vote for this,  
> any other Senator votes for it, and these foreclosures continue to  
> take place and individual families continue to be thrown out of  
> their homes. It is not a tenable situation.
>
>            I hope, if anybody is listening at all, that in the  
> negotiating team, they will make a real effort to mandate in some  
> way that subprime foreclosures be renegotiated, that families,  
> wherever possible, who have an ability to pay, have that ability to  
> pay met with a renegotiated loan. I have done this now in cases  
> with families who were taken advantage of. We called the CEO of the  
> bank, and the bank has seen that the loan was renegotiated, in one  
> case in Los Angeles down to 2 percent. That is better than  
> foreclosing and running the uncertainty of the sale of the asset in  
> a very depressed housing market.
>
>            These are my thoughts. Again, it is easy to come to the  
> floor and give your thoughts. It is much more difficult to sit at  
> that negotiating table.
>
>            I once again thank those Senators on both sides of the  
> aisle who really understand the nature of this crisis -- that it  
> isn't only Wall Street, that it does involve Main Street, and if  
> there is a serious crash, it will hurt tens of millions of  
> Americans, many of them in irreparable ways. So we must do what we  
> must do, and we must do it prudently and carefully.
>            I yield the floor. I suggest the absence of quorum."
>
>
> Sincerely yours,
>
> Dianne Feinstein
>         United States Senator
>
> Further information about my position on issues of concern to  
> California and the Nation are available at my website http:// 
> feinstein.senate.gov/public/. You can also receive electronic e- 
> mail updates by subscribing to my e-mail list at http:// 
> feinstein.senate.gov/public/index.cfm? 
> FuseAction=ENewsletterSignup.Signup.
>
>

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