Congressman McCaul Votes "No"

AUSTIN – Standing up to pressure to rescue the economy using a risky plan that would balloon the deficit to $11 trillion, Congressman Michael McCaul (R-TX 10) made the responsible decision to vote against the Senate’s Wall Street bailout bill. "I know the American people want a solution to this economic crisis because of the fear that has been injected into this process. But this is not the right solution," Rep. McCaul said.

Congressman McCaul voted against the bill because it provides no reforms to assure the crisis does not happen again. It includes pork projects that have no business in emergency legislation and have increased the price tag to $850 billion. Its supporters cannot provide assurances that the plan will work yet it puts taxpayers on the hook for the irresponsible lending practices of some of the nation’s largest banks.

"I am outraged that the Congress would approve this and sell it to the American people as a life or death proposition on the economy," said Rep. McCaul. "This is about responsibility and integrity and finding the right solution to perhaps the greatest challenge in a generation. If we make the wrong move out of haste and fear, our economy will suffer far greater losses."

Treasury Secretary Paulson had known about this impending economic crisis for one year before he and President Bush decided it was dire enough to drop it on Congress in its final week of the session and weeks before an election. "This issue deserves to be deliberated, not hastily rushed through Congress because Paulson injected fear. We know the American people want Congress to act but pushing through a bill without reform is useless," Rep. McCaul said.

Among the great minds opposing this plan is William M. Isaac, chairman of the FDIC from 1981 to 1985. Isaac asserts that the FDIC has the ability and the authority to address the single greatest short-term economic challenge we face: shoring up our credit markets so that banks have enough money to keep making loans, allowing businesses to continue to meet their payrolls and employees to collect a paycheck and provide for their families.

"In my view, if the FDIC were to declare an emergency and vow to protect all general creditors of failed banks and institute a net worth certificate program, the financial markets will calm down immediately," Isaac wrote today in Forbes.com. "Banks will once again feel comfortable lending to other banks and to customers of banks. They will stop hoarding their liquidity. The Senate bill is an irresponsible raid on taxpayer money," Isaac continued.

Reforms Needed

Congressman McCaul voted in 2005 to force more oversight onto Fannie Mae and Freddie Mac to reduce the number of risky loans that they could back. However, the bill died, allowing risky loans to continue to spread through the entire financial system. If reforms had been passed the bailout might not be necessary.

"I believe the stand we have taken against this bill is the leadership this country needs," Rep. McCaul said. "We need to get back to work immediately to institute the reforms not contained in this bill to address the failed government policies of the 90’s that not only allowed, but encouraged banks to overextend themselves. Without reforms, we’re throwing good money after bad," said Rep. McCaul.

"It remains incumbent upon each of us elected to serve to put our partisan beliefs aside and work hand in hand to reach a long-term solution that is not convenient, but that upholds our constitution and the principles on which this great nation was founded."

Senate Pork and Failed Leadership
Aside from failing to address the root causes of our economic crisis, the bill that emerged from the Senate makes a mockery out of our democracy.

Those in the Senate who championed the Paulson plan as our only solution took this crisis so seriously they chose to act in the same irresponsible way that Wall Street banks did to get us into this mess. For them it was pure opportunism. They loaded an emergency funding package with self-serving pork projects – including tax cuts subsidies for wooden arrows and Puerto Rican rum– on top of the $700 billion that they blindly gave away. "This is the vary reason that the public has no confidence in their elected leaders," Rep. McCaul said.

Standing Up to Paulson
Congressman McCaul was among a small group of 11 House members who stood up to Minority Leader John Boehner to oppose the Bush-Paulson plan from the time it was released. The notion of expecting the Congress to give the Treasury Department carte blanche is foremost a violation of the system of checks and balances on which our country was founded.

Congressman McCaul worked to incorporate better oversight and accountability into the plan. As a result, the bill that was initially defeated in the House was much improved but still required taxpayers to fund the bailout. The Senate bill is virtually no different.

More than 200 leading economists from across the country agree that Congress can’t be rushed to judgment and should take its time to do this right. They also agree that the bill still forces taxpayers to make a significant sacrifice, with little evidence to suggest that the troubled markets will be settled.

"I cannot allow responsible Americans who placed their trust in me to pay for $700 billion in bad debt incurred by private firms," Rep. McCaul said. "You don’t work hard to pay for the mistakes of others, but to provide for your families. I stand by my conservative principles and will continue to push for a free market solution. And I have faith that our country, and our economy, will stand strong and prosper."