Today you will learn that Wamu has now joined the list of financial institutions to disappear. Did that happen last night because yesterday afternoon Paulson, and co didn't get their way so by making things appear more urgent today they are hoping to be given unprecedented and unnecessary funding and authority with no recourse? hmmm
Below is a response I received yesterday from Senator Mel Martinez notice the phrase "a financial crisis perhaps bigger than the Great Depression." Perhaps? no perhaps, reality is this is far bigger than the great depression, making it the Greater Depression! We are not alone in this, Canada and Europe will soon follow, Asia will only be a few years behind them.
In times of rapid and significant changes we find monumental opportunities. do you know what they are or where to find them? if not email "help" to info@trgcoaching.com
Financial Rescue Plan
Speech to the U.S. Senate
U.S. Senator Mel Martinez
Wednesday, September 24, 2008
This Congress is about to consider the most important legislation affecting our financial markets – certainly for a generation – possibly in our country’s history.
The American people must understand exactly what is at stake as we begin consideration.
What has happened is that the credit markets have quit functioning. Credit cards, car loans, home equity loans, home mortgages, business loans.
Business loans to keep large and small businesses operating have ceased to exist. The financial markets are not functioning putting in jeopardy our entire economy.
Without timely government intervention, the financial system as we know it will no longer exist.
This isn’t a Wall Street versus Main Street argument. This is about every American’s ability to pursue his or her American Dream. Without liquidity in the marketplace, financial transactions come to a halt – and that will create a complete collapse of the financial system.
So the need to act has become clear. Treasury Secretary Paulson has asked for the authority to purchase illiquid assets from financial institutions in an attempt to get the markets functioning again.
But with that authority, comes great responsibility and Congress has an obligation to the US taxpayer to ensure that any program is crafted and carried out with appropriate oversight.
Congress should consider limiting executive compensation in any package we discuss.
Congress will have to engage in active oversight of Treasury as they implement whatever plan we approve. So there should be no blank check. There will be no blank check.
Let me also mention I am pleased to learn of ongoing investigations into the activities of Fannie Mae, Freddie Mac, AIG, and Lehman Brothers. This is the worst financial crisis that our country has encountered in recent history and we owe it to taxpayers to get to the bottom of any wrong doing that occurred.
We need to prosecute any inappropriate behavior on the part of these companies to the fullest extent of the law. If we are going to have to fix this problem, those that created need to be held accountable.
After the dust clears, Congress cannot lose sight of one of the main reasons why we are so heavily encumbered by this crisis – why our financial system is so deeply troubled at this moment in time.
Fannie Mae and Freddie Mac were huge contributors to the problem because of their thin capitalization, ever-expanding portfolios and risky practices.
They fueled and funneled the risky securities that Wall Street bought and sold and made lots of money while ignoring the systemic risk their moves posed to the financial system.
In 2003, when I was HUD secretary, I came before this Congress with Treasury Secretary Snow and warned of the loose regulation of the GSEs and the risk posed by their undercapitalization.
We asked Congress to create a world class regulator to properly provide oversight to these financial entities that had become so large that they had an implied government guarantee and they were deemed too big to fail.
In 2005, Federal Reserve Chairman Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie, “…continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road.”
We are now at the end of that road.
As we go forward, not only will Congress have to determine the future role of these entities, we need to take a very close look at the practices that brought us to this place.
Throughout all of this work, we cannot lose sight of the root cause of this financial debacle – the housing crisis.
Floridians are among the hardest hit in the nation.
Housing prices continue to fall; inventories continue to rise; and a growing number of homeowners are facing their own personal foreclosure crisis.
To find the bottom of the housing crisis, to stabilize prices, we need to act. Congress can approve home buying incentives. Congress can approve a tax credit for down payments. That would at least encourage people to enter the marketplace, would reduce housing inventories, and get the money flowing back into the market.
As Congress debates this package, let’s remember who we work for – the American taxpayer. Our priority should be making decisions that serve their best interest. No blank check. Strict oversight. Accountability. Taxpayer recourse.
It is in every American’s best interest that we act. I look forward to creating the right legislation that averts a financial crisis that will affect every American – a financial crisis perhaps bigger than the Great Depression.
It is a time for responsible leadership. It is not a time for an easy out or a pulpit for populist rhetoric. We need to rise to this moment – for the good of our country.
