The U.S. Senate tonight voted 74-25 in favor of a $700 billion financial-markets bailout package similar to that which was rejected by the House on Monday, but with a few trinkets added on such as temporarily raising the FDIC insurance cap to $250,000 from $100,000. Both Barack Obama and John McCain voted for it, as did both of California’s Senators.
Here’s what Dianne Feinstein, D-Calif., had to say about it:
“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 of phone calls 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, theirs 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.”
See Barbara Boxer‘s statement, after the jump…
“We were all stunned. They and their allies were telling us the fundamental of our economy were strong just two weeks before. They had failed to use the powers Congress gave them to stop bad mortgages. Where was the oversight in their proposal? Where was taxpayer equity? Where was the control over CEO pay?
“The answer back from Mr. Paulson on a phone call with dozens of Senators was: No restrictions on this bailout. Well, count me out!
“A far better plan emerged from the Banking Committees. But for me, it didn’t do enough. I wrote to Mr. Paulson urging smaller installments, reforms, and I pushed for direct investment or loans, rather than toxic asset purchases.
“We didn’t get it, but in this Senate legislation, we did get more FDIC protection for bank depositors, which is crucial to deterring an epidemic of bank closures, something that was at the heart of the Great Depression. Broader FDIC protection will help small businesses who need certainty meeting payrolls—that is where working families come in. Most working families today can’t miss even one paycheck given our high cost of living.
“We need to retain and create jobs, which is why I support another change in this legislation—$16 billion in tax incentives for job-producing, renewable energy businesses. Plus, there is billions more in tax relief for businesses and individuals. We lost 84,000 jobs in August alone—we must act.
“Another provision, originally written by Senators Wellstone and Domenici, will keep many families from going bankrupt by ensuring that mental health illness will be covered fairly.
“So this legislation before us is much improved and I hope it passes.
“I want to share what California Treasurer Bill Lockyer said will happen if we don’t act: He said we won’t be able to sell voter-approved highway, school, and water bonds that are desperately needed for California’s economy and the creation of good-paying, new jobs. California also desperately needs access to short-term borrowing from banks to finance our budget.
“Now, how did we get here? In my view, deregulation fever. It started in the 80s with lawmakers interfering with federal regulators over the Savings and Loan crisis. It continued in 1995, when the Republicans took control of Congress. They tried to place a moratorium on all new regulations. That effort failed, but their success came in 1999, when Senator Phil Gramm and his allies tore down the firewalls that separated various financial institutions. And then, the deregulation of the energy business — you remember Enron.
“Phil Gramm recently said we are nation of whiners. I say his legacy is a disaster.
“I believe, and I hope, this package will do what is needed to restore trust in the short term. For the long term, we need regulatory reform and change that makes job-producing investments in America, not in foreign lands.
“I look forward to that work on behalf of my great state of California and this great nation.