[Congressional Record (Bound Edition), Volume 154 (2008), Part 17]
[House]
[Pages 23075-23152]
[From the U.S. Government Publishing Office, www.gpo.gov]




              EMERGENCY ECONOMIC STABILIZATION ACT OF 2008

  Mr. FRANK of Massachusetts. Madam Speaker, pursuant to House 
Resolution 1517, I call up from the Speaker's table the bill (H.R. 
3997) to amend the Internal Revenue Code of 1986 to provide earnings 
assistance and tax relief to members of the uniformed services, 
volunteer firefighters, and Peace Corps volunteers, and for other 
purposes, and offer the motion at the desk.
  The SPEAKER pro tempore. The Clerk will report the title of the bill, 
designate the Senate amendment to the House amendment to the Senate 
amendment, and designate the motion.
  The Clerk read the title of the bill.
  The text of the Senate amendment to the House amendment to the Senate 
amendment is as follows:
       In lieu of the matter proposed to be inserted by the 
     amendment of the House to the amendment of the Senate, insert 
     the following:

     SECTION 1. SHORT TITLE, ETC.

       (a) Short Title.--This Act may be cited as the ``Defenders 
     of Freedom Tax Relief Act of 2007''.
       (b) Reference.--Except as otherwise expressly provided, 
     whenever in this Act an amendment or repeal is expressed in 
     terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Internal Revenue Code of 
     1986.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title, etc.

                     TITLE I--BENEFITS FOR MILITARY

Sec. 101. Election to include combat pay as earned income for purposes 
              of earned income tax credit.
Sec. 102. Modification of mortgage revenue bonds for veterans.
Sec. 103. Survivor and disability payments with respect to qualified 
              military service.
Sec. 104. Treatment of differential military pay as wages.
Sec. 105. Special period of limitation when uniformed services retired 
              pay is reduced as a result of award of disability 
              compensation.
Sec. 106. Distributions from retirement plans to individuals called to 
              active duty.
Sec. 107. Disclosure of return information relating to veterans 
              programs made permanent.
Sec. 108. Contributions of military death gratuities to Roth IRAs and 
              Education Savings Accounts.
Sec. 109. Suspension of 5-year period during service with the Peace 
              Corps.
Sec. 110. Credit for employer differential wage payments to employees 
              who are active duty members of the uniformed services.
Sec. 111. State payments to service members treated as qualified 
              military benefits.
Sec. 112. Permanent exclusion of gain from sale of a principal 
              residence by certain employees of the intelligence 
              community.
Sec. 113. Special disposition rules for unused benefits in health 
              flexible spending arrangements of individuals called to 
              active duty.
Sec. 114. Option to exclude military basic housing allowance for 
              purposes of determining income eligibility under low-
              income housing credit and bond-financed residential 
              rental projects.

                      TITLE II--REVENUE PROVISIONS

Sec. 201. Increase in penalty for failure to file partnership returns.
Sec. 202. Increase in penalty for failure to file S corporation 
              returns.
Sec. 203. Increase in minimum penalty on failure to file a return of 
              tax.
Sec. 204. Revision of tax rules on expatriation.
Sec. 205. Special enrollment option by employer health plans for 
              members of uniform services who lose health care 
              coverage.

                  TITLE III--TAX TECHNICAL CORRECTIONS

Sec. 301. Short title.
Sec. 302. Amendment related to the Tax Relief and Health Care Act of 
              2006.
Sec. 303. Amendments related to title XII of the Pension Protection Act 
              of 2006.
Sec. 304. Amendments related to the Tax Increase Prevention and 
              Reconciliation Act of 2005.
Sec. 305. Amendments related to the Safe, Accountable, Flexible, 
              Efficient Transportation Equity Act: A Legacy for Users.
Sec. 306. Amendments related to the Energy Policy Act of 2005.
Sec. 307. Amendments related to the American Jobs Creation Act of 2004.
Sec. 308. Amendments related to the Economic Growth and Tax Relief 
              Reconciliation Act of 2001.
Sec. 309. Amendments related to the Tax Relief Extension Act of 1999.
Sec. 310. Amendment related to the Internal Revenue Service 
              Restructuring and Reform Act of 1998.
Sec. 311. Clerical corrections.

  TITLE IV--PARITY IN APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH 
                                BENEFITS

Sec. 401. Parity in application of certain limits to mental health 
              benefits.

                     TITLE I--BENEFITS FOR MILITARY

     SEC. 101. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR 
                   PURPOSES OF EARNED INCOME TAX CREDIT.

       (a) In General.--Clause (vi) of section 32(c)(2)(B) 
     (defining earned income) is amended to read as follows:
       ``(vi) a taxpayer may elect to treat amounts excluded from 
     gross income by reason of section 112 as earned income.''.
       (b) Sunset Not Applicable.--Section 105 of the Working 
     Families Tax Relief Act of 2004 (relating to application of 
     EGTRRA sunset to this title) shall not apply to section 
     104(b) of such Act.
       (c) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after December 31, 2007.

     SEC. 102. MODIFICATION OF MORTGAGE REVENUE BONDS FOR 
                   VETERANS.

       (a) Qualified Mortgage Bonds Used To Finance Residences for 
     Veterans Without Regard to First-Time Homebuyer 
     Requirement.--Subparagraph (D) of section 143(d)(2) (relating 
     to exceptions) is amended by striking ``and before January 1, 
     2008''.
       (b) Increase in Bond Limitation for Alaska, Oregon, and 
     Wisconsin.--Clause (ii) of section 143(l)(3)(B) (relating to 
     State veterans limit) is amended by striking ``$25,000,000'' 
     each place it appears and inserting ``$100,000,000''.
       (c) Definition of Qualified Veteran.--Paragraph (4) of 
     section 143(l) (defining qualified veteran) is amended to 
     read as follows:
       ``(4) Qualified veteran.--For purposes of this subsection, 
     the term `qualified veteran' means any veteran who--
       ``(A) served on active duty, and
       ``(B) applied for the financing before the date 25 years 
     after the last date on which such veteran left active 
     service.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after December 31, 2007.

     SEC. 103. SURVIVOR AND DISABILITY PAYMENTS WITH RESPECT TO 
                   QUALIFIED MILITARY SERVICE.

       (a) Plan Qualification Requirement for Death Benefits Under 
     USERRA-Qualified Active Military Service.--Subsection (a) of 
     section 401 (relating to requirements for qualification) is 
     amended by inserting after paragraph (36) the following new 
     paragraph:
       ``(37) Death benefits under userra-qualified active 
     military service.--A trust shall not constitute a qualified 
     trust unless the plan provides that, in the case of a 
     participant who dies while performing qualified military 
     service (as defined in section 414(u)), the survivors of the 
     participant are entitled to any additional benefits (other 
     than benefit accruals relating to the period of qualified 
     military service) provided under the plan had the participant 
     resumed and then terminated employment on account of 
     death.''.
       (b) Treatment in the Case of Death or Disability Resulting 
     From Active Military Service for Benefit Accrual Purposes.--
     Subsection (u) of section 414 (relating to special rules 
     relating to veterans' reemployment rights under USERRA) is 
     amended by redesignating paragraphs (9) and (10) as 
     paragraphs (10) and (11), respectively, and by inserting 
     after paragraph (8) the following new paragraph:

[[Page 23076]]

       ``(9) Treatment in the case of death or disability 
     resulting from active military service.--
       ``(A) In general.--For benefit accrual purposes, an 
     employer sponsoring a retirement plan may treat an individual 
     who dies or becomes disabled (as defined under the terms of 
     the plan) while performing qualified military service with 
     respect to the employer maintaining the plan as if the 
     individual has resumed employment in accordance with the 
     individual's reemployment rights under chapter 43 of title 
     38, United States Code, on the day preceding death or 
     disability (as the case may be) and terminated employment on 
     the actual date of death or disability. In the case of any 
     such treatment, and subject to subparagraphs (B) and (C), any 
     full or partial compliance by such plan with respect to the 
     benefit accrual requirements of paragraph (8) with respect to 
     such individual shall be treated for purposes of paragraph 
     (1) as if such compliance were required under such chapter 
     43.
       ``(B) Nondiscrimination requirement.--Subparagraph (A) 
     shall apply only if all individuals performing qualified 
     military service with respect to the employer maintaining the 
     plan (as determined under subsections (b), (c), (m), and (o)) 
     who die or became disabled as a result of performing 
     qualified military service prior to reemployment by the 
     employer are credited with service and benefits on reasonably 
     equivalent terms.
       ``(C) Determination of benefits.--The amount of employee 
     contributions and the amount of elective deferrals of an 
     individual treated as reemployed under subparagraph (A) for 
     purposes of applying paragraph (8)(C) shall be determined on 
     the basis of the individual's average actual employee 
     contributions or elective deferrals for the lesser of--
       ``(i) the 12-month period of service with the employer 
     immediately prior to qualified military service, or
       ``(ii) if service with the employer is less than such 12-
     month period, the actual length of continuous service with 
     the employer.''.
       (c) Conforming Amendments.--
       (1) Section 404(a)(2) is amended by striking ``and (31)'' 
     and inserting ``(31), and (37)''.
       (2) Section 403(b) is amended by adding at the end the 
     following new paragraph:
       ``(14) Death benefits under userra-qualified active 
     military service.--This subsection shall not apply to an 
     annuity contract unless such contract meets the requirements 
     of section 401(a)(37).''.
       (3) Section 457(g) is amended by adding at the end the 
     following new paragraph:
       ``(4) Death benefits under userra-qualified active military 
     service.--A plan described in paragraph (1) shall not be 
     treated as an eligible deferred compensation plan unless such 
     plan meets the requirements of section 401(a)(37).''.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to deaths and disabilities occurring on or 
     after January 1, 2007.
       (2) Provisions relating to plan amendments.--
       (A) In general.--If this subparagraph applies to any plan 
     or contract amendment, such plan or contract shall be treated 
     as being operated in accordance with the terms of the plan 
     during the period described in subparagraph (B)(iii).
       (B) Amendments to which subparagraph (A) applies.--
       (i) In general.--Subparagraph (A) shall apply to any 
     amendment to any plan or annuity contract which is made--

       (I) pursuant to the amendments made by subsection (a) or 
     pursuant to any regulation issued by the Secretary of the 
     Treasury under subsection (a), and
       (II) on or before the last day of the first plan year 
     beginning on or after January 1, 2009.

     In the case of a governmental plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this clause 
     shall be applied by substituting ``2011'' for ``2009'' in 
     subclause (II).
       (ii) Conditions.--This paragraph shall not apply to any 
     amendment unless--

       (I) the plan or contract is operated as if such plan or 
     contract amendment were in effect for the period described in 
     clause (iii), and
       (II) such plan or contract amendment applies retroactively 
     for such period.

       (iii) Period described.--The period described in this 
     clause is the period--

       (I) beginning on the effective date specified by the plan, 
     and
       (II) ending on the date described in clause (i)(II) (or, if 
     earlier, the date the plan or contract amendment is adopted).

     SEC. 104. TREATMENT OF DIFFERENTIAL MILITARY PAY AS WAGES.

       (a) Income Tax Withholding on Differential Wage Payments.--
       (1) In general.--Section 3401 (relating to definitions) is 
     amended by adding at the end the following new subsection:
       ``(h) Differential Wage Payments to Active Duty Members of 
     the Uniformed Services.--
       ``(1) In general.--For purposes of subsection (a), any 
     differential wage payment shall be treated as a payment of 
     wages by the employer to the employee.
       ``(2) Differential wage payment.--For purposes of paragraph 
     (1), the term `differential wage payment' means any payment 
     which--
       ``(A) is made by an employer to an individual with respect 
     to any period during which the individual is performing 
     service in the uniformed services (as defined in chapter 43 
     of title 38, United States Code) while on active duty for a 
     period of more than 30 days, and
       ``(B) represents all or a portion of the wages the 
     individual would have received from the employer if the 
     individual were performing service for the employer.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to remuneration paid after December 31, 2007.
       (b) Treatment of Differential Wage Payments for Retirement 
     Plan Purposes.--
       (1) Pension plans.--
       (A) In general.--Section 414(u) (relating to special rules 
     relating to veterans' reemployment rights under USERRA), as 
     amended by section 103(b), is amended by adding at the end 
     the following new paragraph:
       ``(12) Treatment of differential wage payments.--
       ``(A) In general.--Except as provided in this paragraph, 
     for purposes of applying this title to a retirement plan to 
     which this subsection applies--
       ``(i) an individual receiving a differential wage payment 
     shall be treated as an employee of the employer making the 
     payment,
       ``(ii) the differential wage payment shall be treated as 
     compensation, and
       ``(iii) the plan shall not be treated as failing to meet 
     the requirements of any provision described in paragraph 
     (1)(C) by reason of any contribution or benefit which is 
     based on the differential wage payment.
       ``(B) Special rule for distributions.--
       ``(i) In general.--Notwithstanding subparagraph (A)(i), for 
     purposes of section 401(k)(2)(B)(i)(I), 403(b)(7)(A)(ii), 
     403(b)(11)(A), or 457(d)(1)(A)(ii), an individual shall be 
     treated as having been severed from employment during any 
     period the individual is performing service in the uniformed 
     services described in section 3401(h)(2)(A).
       ``(ii) Limitation.--If an individual elects to receive a 
     distribution by reason of clause (i), the plan shall provide 
     that the individual may not make an elective deferral or 
     employee contribution during the 6-month period beginning on 
     the date of the distribution.
       ``(C) Nondiscrimination requirement.--Subparagraph (A)(iii) 
     shall apply only if all employees of an employer (as 
     determined under subsections (b), (c), (m), and (o)) 
     performing service in the uniformed services described in 
     section 3401(h)(2)(A) are entitled to receive differential 
     wage payments on reasonably equivalent terms and, if eligible 
     to participate in a retirement plan maintained by the 
     employer, to make contributions based on the payments on 
     reasonably equivalent terms. For purposes of applying this 
     subparagraph, the provisions of paragraphs (3), (4), and (5) 
     of section 410(b) shall apply.
       ``(D) Differential wage payment.--For purposes of this 
     paragraph, the term `differential wage payment' has the 
     meaning given such term by section 3401(h)(2).''.
       (B) Conforming amendment.--The heading for section 414(u) 
     is amended by inserting ``and to Differential Wage Payments 
     to Members on Active Duty'' after ``USERRA''.
       (2) Differential wage payments treated as compensation for 
     individual retirement plans.--Section 219(f)(1) (defining 
     compensation) is amended by adding at the end the following 
     new sentence: ``The term compensation includes any 
     differential wage payment (as defined in section 
     3401(h)(2)).''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2007.
       (c) Provisions Relating to Plan Amendments.--
       (1) In general.--If this subsection applies to any plan or 
     annuity contract amendment, such plan or contract shall be 
     treated as being operated in accordance with the terms of the 
     plan or contract during the period described in paragraph 
     (2)(B)(i).
       (2) Amendments to which section applies.--
       (A) In general.--This subsection shall apply to any 
     amendment to any plan or annuity contract which is made--
       (i) pursuant to any amendment made by subsection (b)(1), 
     and
       (ii) on or before the last day of the first plan year 
     beginning on or after January 1, 2009.

     In the case of a governmental plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this 
     subparagraph shall be applied by substituting ``2011'' for 
     ``2009'' in clause (ii).
       (B) Conditions.--This subsection shall not apply to any 
     plan or annuity contract amendment unless--
       (i) during the period beginning on the date the amendment 
     described in subparagraph (A)(i) takes effect and ending on 
     the date described in subparagraph (A)(ii) (or, if earlier, 
     the date the plan or contract amendment is adopted), the plan 
     or contract is operated as if such plan or contract amendment 
     were in effect, and
       (ii) such plan or contract amendment applies retroactively 
     for such period.

     SEC. 105. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED 
                   SERVICES RETIRED PAY IS REDUCED AS A RESULT OF 
                   AWARD OF DISABILITY COMPENSATION.

       (a) In General.--Subsection (d) of section 6511 (relating 
     to special rules applicable to income taxes) is amended by 
     adding at the end the following new paragraph:
       ``(8) Special rules when uniformed services retired pay is 
     reduced as a result of award of disability compensation.--
       ``(A) Period of limitation on filing claim.--If the claim 
     for credit or refund relates to an overpayment of tax imposed 
     by subtitle A on account of--
       ``(i) the reduction of uniformed services retired pay 
     computed under section 1406 or 1407 of title 10, United 
     States Code, or

[[Page 23077]]

       ``(ii) the waiver of such pay under section 5305 of title 
     38 of such Code,

     as a result of an award of compensation under title 38 of 
     such Code pursuant to a determination by the Secretary of 
     Veterans Affairs, the 3-year period of limitation prescribed 
     in subsection (a) shall be extended, for purposes of 
     permitting a credit or refund based upon the amount of such 
     reduction or waiver, until the end of the 1-year period 
     beginning on the date of such determination.
       ``(B) Limitation to 5 taxable years.--Subparagraph (A) 
     shall not apply with respect to any taxable year which began 
     more than 5 years before the date of such determination.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to claims for credit or refund filed after the 
     date of the enactment of this Act.
       (c) Transition Rules.--In the case of a determination 
     described in paragraph (8) of section 6511(d) of the Internal 
     Revenue Code of 1986 (as added by this section) which is made 
     by the Secretary of Veterans Affairs after December 31, 2000, 
     and before the date of the enactment of this Act, such 
     paragraph--
       (1) shall not apply with respect to any taxable year which 
     began before January 1, 2001, and
       (2) shall be applied by substituting ``the date of the 
     enactment of the Defenders of Freedom Tax Relief Act of 
     2007'' for ``the date of such determination'' in subparagraph 
     (A) thereof.

     SEC. 106. DISTRIBUTIONS FROM RETIREMENT PLANS TO INDIVIDUALS 
                   CALLED TO ACTIVE DUTY.

       (a) In General.--Clause (iv) of section 72(t)(2)(G) is 
     amended by striking ``, and before December 31, 2007''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to individuals ordered or called to active duty 
     on or after December 31, 2007.

     SEC. 107. DISCLOSURE OF RETURN INFORMATION RELATING TO 
                   VETERANS PROGRAMS MADE PERMANENT.

       (a) In General.--Subparagraph (D) of section 6103(l)(7) 
     (relating to disclosure of return information to Federal, 
     State, and local agencies administering certain programs 
     under the Social Security Act, the Food Stamp Act of 1977, or 
     title 38, United States Code or certain housing assistance 
     programs) is amended by striking the last sentence.
       (b) Technical Amendment.--Section 6103(l)(7)(D)(viii)(III) 
     is amended by striking ``sections 1710(a)(1)(I), 1710(a)(2), 
     1710(b), and 1712(a)(2)(B)'' and inserting ``sections 
     1710(a)(2)(G), 1710(a)(3), and 1710(b)''.

     SEC. 108. CONTRIBUTIONS OF MILITARY DEATH GRATUITIES TO ROTH 
                   IRAS AND EDUCATION SAVINGS ACCOUNTS.

       (a) Provision in Effect Before Pension Protection Act.--
     Subsection (e) of section 408A (relating to qualified 
     rollover contribution), as in effect before the amendments 
     made by section 824 of the Pension Protection Act of 2006, is 
     amended to read as follows:
       ``(e) Qualified Rollover Contribution.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified rollover 
     contribution' means a rollover contribution to a Roth IRA 
     from another such account, or from an individual retirement 
     plan, but only if such rollover contribution meets the 
     requirements of section 408(d)(3). Such term includes a 
     rollover contribution described in section 402A(c)(3)(A). For 
     purposes of section 408(d)(3)(B), there shall be disregarded 
     any qualified rollover contribution from an individual 
     retirement plan (other than a Roth IRA) to a Roth IRA.
       ``(2) Military death gratuity.--
       ``(A) In general.--The term `qualified rollover 
     contribution' includes a contribution to a Roth IRA 
     maintained for the benefit of an individual made before the 
     end of the 1-year period beginning on the date on which such 
     individual receives an amount under section 1477 of title 10, 
     United States Code, or section 1967 of title 38 of such Code, 
     with respect to a person, to the extent that such 
     contribution does not exceed--
       ``(i) the sum of the amounts received during such period by 
     such individual under such sections with respect to such 
     person, reduced by
       ``(ii) the amounts so received which were contributed to a 
     Coverdell education savings account under section 530(d)(9).
       ``(B) Annual limit on number of rollovers not to apply.--
     Section 408(d)(3)(B) shall not apply with respect to amounts 
     treated as a rollover by subparagraph (A).
       ``(C) Application of section 72.--For purposes of applying 
     section 72 in the case of a distribution which is not a 
     qualified distribution, the amount treated as a rollover by 
     reason of subparagraph (A) shall be treated as investment in 
     the contract.''.
       (b) Provision in Effect After Pension Protection Act.--
     Subsection (e) of section 408A, as in effect after the 
     amendments made by section 824 of the Pension Protection Act 
     of 2006, is amended to read as follows:
       ``(e) Qualified Rollover Contribution.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified rollover 
     contribution' means a rollover contribution--
       ``(A) to a Roth IRA from another such account,
       ``(B) from an eligible retirement plan, but only if--
       ``(i) in the case of an individual retirement plan, such 
     rollover contribution meets the requirements of section 
     408(d)(3), and
       ``(ii) in the case of any eligible retirement plan (as 
     defined in section 402(c)(8)(B) other than clauses (i) and 
     (ii) thereof), such rollover contribution meets the 
     requirements of section 402(c), 403(b)(8), or 457(e)(16), as 
     applicable.

     For purposes of section 408(d)(3)(B), there shall be 
     disregarded any qualified rollover contribution from an 
     individual retirement plan (other than a Roth IRA) to a Roth 
     IRA.
       ``(2) Military death gratuity.--
       ``(A) In general.--The term `qualified rollover 
     contribution' includes a contribution to a Roth IRA 
     maintained for the benefit of an individual made before the 
     end of the 1-year period beginning on the date on which such 
     individual receives an amount under section 1477 of title 10, 
     United States Code, or section 1967 of title 38 of such Code, 
     with respect to a person, to the extent that such 
     contribution does not exceed--
       ``(i) the sum of the amounts received during such period by 
     such individual under such sections with respect to such 
     person, reduced by
       ``(ii) the amounts so received which were contributed to a 
     Coverdell education savings account under section 530(d)(9).
       ``(B) Annual limit on number of rollovers not to apply.--
     Section 408(d)(3)(B) shall not apply with respect to amounts 
     treated as a rollover by the subparagraph (A).
       ``(C) Application of section 72.--For purposes of applying 
     section 72 in the case of a distribution which is not a 
     qualified distribution, the amount treated as a rollover by 
     reason of subparagraph (A) shall be treated as investment in 
     the contract.''.
       (c) Education Savings Accounts.--Subsection (d) of section 
     530 is amended by adding at the end the following new 
     paragraph:
       ``(9) Military death gratuity.--
       ``(A) In general.--For purposes of this section, the term 
     `rollover contribution' includes a contribution to a 
     Coverdell education savings account made before the end of 
     the 1-year period beginning on the date on which the 
     contributor receives an amount under section 1477 of title 
     10, United States Code, or section 1967 of title 38 of such 
     Code, with respect to a person, to the extent that such 
     contribution does not exceed--
       ``(i) the sum of the amounts received during such period by 
     such contributor under such sections with respect to such 
     person, reduced by
       ``(ii) the amounts so received which were contributed to a 
     Roth IRA under section 408A(e)(2) or to another Coverdell 
     education savings account.
       ``(B) Annual limit on number of rollovers not to apply.--
     The last sentence of paragraph (5) shall not apply with 
     respect to amounts treated as a rollover by the subparagraph 
     (A).
       ``(C) Application of section 72.--For purposes of applying 
     section 72 in the case of a distribution which is includible 
     in gross income under paragraph (1), the amount treated as a 
     rollover by reason of subparagraph (A) shall be treated as 
     investment in the contract.''.
       (d) Effective Dates.--
       (1) In general.--Except as provided by paragraphs (2) and 
     (3), the amendments made by this section shall apply with 
     respect to deaths from injuries occurring on or after the 
     date of the enactment of this Act.
       (2) Application of amendments to deaths from injuries 
     occurring on or after october 7, 2001, and before 
     enactment.--The amendments made by this section shall apply 
     to any contribution made pursuant to section 408A(e)(2) or 
     530(d)(5) of the Internal Revenue Code of 1986, as amended by 
     this Act, with respect to amounts received under section 1477 
     of title 10, United States Code, or under section 1967 of 
     title 38 of such Code, for deaths from injuries occurring on 
     or after October 7, 2001, and before the date of the 
     enactment of this Act if such contribution is made not later 
     than 1 year after the date of the enactment of this Act.
       (3) Pension protection act changes.--Section 408A(e)(1) of 
     the Internal Revenue Code of 1986 (as in effect after the 
     amendments made by subsection (b)) shall apply to taxable 
     years beginning after December 31, 2007.

     SEC. 109. SUSPENSION OF 5-YEAR PERIOD DURING SERVICE WITH THE 
                   PEACE CORPS.

       (a) In General.--Subsection (d) of section 121 (relating to 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(12) Peace corps.--
       ``(A) In general.--At the election of an individual with 
     respect to a property, the running of the 5-year period 
     described in subsections (a) and (c)(1)(B) and paragraph (7) 
     of this subsection with respect to such property shall be 
     suspended during any period that such individual or such 
     individual's spouse is serving outside the United States--
       ``(i) on qualified official extended duty (as defined in 
     paragraph (9)(C)) as an employee of the Peace Corps, or
       ``(ii) as an enrolled volunteer or volunteer leader under 
     section 5 or 6 (as the case may be) of the Peace Corps Act 
     (22 U.S.C. 2504, 2505).
       ``(B) Applicable rules.--For purposes of subparagraph (A), 
     rules similar to the rules of subparagraphs (B) and (D) shall 
     apply.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 110. CREDIT FOR EMPLOYER DIFFERENTIAL WAGE PAYMENTS TO 
                   EMPLOYEES WHO ARE ACTIVE DUTY MEMBERS OF THE 
                   UNIFORMED SERVICES.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business credits) is amended by adding 
     at the end the following new section:

     ``SEC. 45O. EMPLOYER WAGE CREDIT FOR EMPLOYEES WHO ARE ACTIVE 
                   DUTY MEMBERS OF THE UNIFORMED SERVICES.

       ``(a) General Rule.--For purposes of section 38, in the 
     case of an eligible small business employer, the differential 
     wage payment credit for

[[Page 23078]]

     any taxable year is an amount equal to 20 percent of the sum 
     of the eligible differential wage payments for each of the 
     qualified employees of the taxpayer during such taxable year.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Eligible differential wage payments.--The term 
     `eligible differential wage payments' means, with respect to 
     each qualified employee, so much of the differential wage 
     payments (as defined in section 3401(h)(2)) paid to such 
     employee for the taxable year as does not exceed $20,000.
       ``(2) Qualified employee.--The term `qualified employee' 
     means a person who has been an employee of the taxpayer for 
     the 91-day period immediately preceding the period for which 
     any differential wage payment is made.
       ``(3) Eligible small business employer.--
       ``(A) In general.--The term `eligible small business 
     employer' means, with respect to any taxable year, any 
     employer which--
       ``(i) employed an average of less than 50 employees on 
     business days during such taxable year, and
       ``(ii) under a written plan of the employer, provides 
     eligible differential wage payments to every qualified 
     employee of the employer.
       ``(B) Controlled groups.--For purposes of subparagraph (A), 
     all persons treated as a single employer under subsection 
     (b), (c), (m), or (o) of section 414 shall be treated as a 
     single employer.
       ``(c) Coordination With Other Credits.--The amount of 
     credit otherwise allowable under this chapter with respect to 
     compensation paid to any employee shall be reduced by the 
     credit determined under this section with respect to such 
     employee.
       ``(d) Disallowance for Failure To Comply With Employment or 
     Reemployment Rights of Members of the Reserve Components of 
     the Armed Forces of the United States.--No credit shall be 
     allowed under subsection (a) to a taxpayer for--
       ``(1) any taxable year, beginning after the date of the 
     enactment of this section, in which the taxpayer is under a 
     final order, judgment, or other process issued or required by 
     a district court of the United States under section 4323 of 
     title 38 of the United States Code with respect to a 
     violation of chapter 43 of such title, and
       ``(2) the 2 succeeding taxable years.
       ``(e) Certain Rules to Apply.--For purposes of this 
     section, rules similar to the rules of subsections (c), (d), 
     and (e) of section 52 shall apply.
       ``(f) Termination.--This section shall not apply to any 
     payments made after December 31, 2009.''.
       (b) Credit Treated as Part of General Business Credit.--
     Section 38(b) (relating to general business credit) is 
     amended by striking ``plus'' at the end of paragraph (30), by 
     striking the period at the end of paragraph (31) and 
     inserting ``, plus'', and by adding at the end of following 
     new paragraph:
       ``(32) the differential wage payment credit determined 
     under section 45O(a).''.
       (c) No Deduction for Compensation Taken Into Account for 
     Credit.--Section 280C(a) (relating to rule for employment 
     credits) is amended by inserting ``45O(a),'' after 
     ``45A(a),''.
       (d) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 is amended by 
     adding at the end the following new item:

``Sec. 45O. Employer wage credit for employees who are active duty 
              members of the uniformed services.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to amounts paid after the date of the enactment 
     of this Act.

     SEC. 111. STATE PAYMENTS TO SERVICE MEMBERS TREATED AS 
                   QUALIFIED MILITARY BENEFITS.

       (a) In General.--Section 134(b) (defining qualified 
     military benefit) is amended by adding at the end the 
     following new paragraph:
       ``(6) Certain state payments.--The term `qualified military 
     benefit' includes any bonus payment by a State or political 
     subdivision thereof to any member or former member of the 
     uniformed services of the United States or any dependent of 
     such member only by reason of such member's service in an 
     combat zone (as defined in section 112(c)(2), determined 
     without regard to the parenthetical).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to payments made before, on, or after the date of 
     the enactment of this Act.

     SEC. 112. PERMANENT EXCLUSION OF GAIN FROM SALE OF A 
                   PRINCIPAL RESIDENCE BY CERTAIN EMPLOYEES OF THE 
                   INTELLIGENCE COMMUNITY.

       (a) Permanent Exclusion.--
       (1) In general.--Section 417(e) of division A of the Tax 
     Relief and Health Care Act of 2006 is amended by striking 
     ``and before January 1, 2011''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to sales or exchanges after December 31, 2010.
       (b) Duty Station May Be Inside United States.--
       (1) In general.--Section 121(d)(9)(C) (defining qualified 
     official extended duty) is amended by striking clause (vi).
       (2) Effective date.--The amendment made by this subsection 
     shall apply to sales or exchanges after the date of the 
     enactment of this Act.

     SEC. 113. SPECIAL DISPOSITION RULES FOR UNUSED BENEFITS IN 
                   HEALTH FLEXIBLE SPENDING ARRANGEMENTS OF 
                   INDIVIDUALS CALLED TO ACTIVE DUTY.

       (a) In General.--Section 125 (relating to cafeteria plans) 
     is amended by redesignating subsections (h) and (i) as 
     subsection (i) and (j), respectively, and by inserting after 
     subsection (g) the following new subsection:
       ``(h) Special Rule for Unused Benefits in Health Flexible 
     Spending Arrangements of Individuals Called to Active Duty.--
       ``(1) In general.--For purposes of this title, a plan or 
     other arrangement shall not fail to be treated as a cafeteria 
     plan or health flexible spending arrangement merely because 
     such arrangement provides for qualified reservist 
     distributions.
       ``(2) Qualified reservist distribution.--For purposes of 
     this subsection, the term `qualified reservist distribution' 
     means, any distribution to an individual of all or a portion 
     of the balance in the employee's account under such 
     arrangement if--
       ``(A) such individual was (by reason of being a member of a 
     reserve component (as defined in section 101 of title 37, 
     United States Code)) ordered or called to active duty for a 
     period in excess of 179 days or for an indefinite period, and
       ``(B) such distribution is made during the period beginning 
     on the date of such order or call and ending on the last date 
     that reimbursements could otherwise be made under such 
     arrangement for the plan year which includes the date of such 
     order or call.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions made after the date of the 
     enactment of this Act.

     SEC. 114. OPTION TO EXCLUDE MILITARY BASIC HOUSING ALLOWANCE 
                   FOR PURPOSES OF DETERMINING INCOME ELIGIBILITY 
                   UNDER LOW-INCOME HOUSING CREDIT AND BOND-
                   FINANCED RESIDENTIAL RENTAL PROJECTS.

       (a) In General.--The last sentence of 142(d)(2)(B) 
     (relating to income of individuals; area median gross income) 
     is amended to read as follows: ``For purposes of determining 
     income under this subparagraph--
       ``(i) subsections (g) and (h) of section 7872 shall not 
     apply, and
       ``(ii) in the case of determinations made before January 1, 
     2015, payments under section 403 of title 37, United States 
     Code, as a basic pay allowance for housing shall be 
     disregarded if the project is located in a census tract which 
     is designated by the Governor (of the State in which such 
     tract is located) as being in need of housing for members of 
     the Armed Forces of the United States.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect with respect to determinations made after 
     the date of the enactment of this Act.

                      TITLE II--REVENUE PROVISIONS

     SEC. 201. INCREASE IN PENALTY FOR FAILURE TO FILE PARTNERSHIP 
                   RETURNS.

       (a) Increase in Penalty Amount.--Paragraph (1) of section 
     6698(b) (relating to amount per month), as amended by section 
     8 of the Mortgage Forgiveness Debt Relief Act of 2007, is 
     amended by striking ``$85'' and inserting ``$100''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the amendments made by 
     section 8 of the Mortgage Forgiveness Debt Relief Act of 
     2007.

     SEC. 202. INCREASE IN PENALTY FOR FAILURE TO FILE S 
                   CORPORATION RETURNS.

       (a) In General.--Paragraph (1) of section 6699(b) (relating 
     to amount per month), as added to the Internal Revenue Code 
     of 1986 by section 9 of the Mortgage Forgiveness Debt Relief 
     Act of 2007, is amended by striking ``$85'' and inserting 
     ``$100''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the amendments made by 
     section 9 of the Mortgage Forgiveness Debt Relief Act of 
     2007.

     SEC. 203. INCREASE IN MINIMUM PENALTY ON FAILURE TO FILE A 
                   RETURN OF TAX.

       (a) In General.--Subsection (a) of section 6651 is amended 
     by striking ``$100'' in the last sentence and inserting 
     ``$225''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to returns the due date for the filing of which 
     (including extensions) is after December 31, 2007.

     SEC. 204. REVISION OF TAX RULES ON EXPATRIATION.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 is amended by inserting after section 877 the 
     following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market.--All property of a covered expatriate 
     shall be treated as sold on the day before the expatriation 
     date for its fair market value.
       ``(2) Recognition of gain or loss.--In the case of any sale 
     under paragraph (1)--
       ``(A) notwithstanding any other provision of this title, 
     any gain arising from such sale shall be taken into account 
     for the taxable year of the sale, and
       ``(B) any loss arising from such sale shall be taken into 
     account for the taxable year of the sale to the extent 
     otherwise provided by this title, except that section 1091 
     shall not apply to any such loss.


[[Page 23079]]


     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence, determined without 
     regard to paragraph (3).
       ``(3) Exclusion for certain gain.--
       ``(A) In general.--The amount which would (but for this 
     paragraph) be includible in the gross income of any 
     individual by reason of paragraph (1) shall be reduced (but 
     not below zero) by $600,000.
       ``(B) Adjustment for inflation.--
       ``(i) In general.--In the case of any taxable year 
     beginning in a calendar year after 2008, the dollar amount in 
     subparagraph (A) shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2007' for 
     `calendar year 1992' in subparagraph (B) thereof.

       ``(ii) Rounding.--If any amount as adjusted under clause 
     (i) is not a multiple of $1,000, such amount shall be rounded 
     to the nearest multiple of $1,000.
       ``(b) Election To Defer Tax.--
       ``(1) In general.--If the taxpayer elects the application 
     of this subsection with respect to any property treated as 
     sold by reason of subsection (a), the time for payment of the 
     additional tax attributable to such property shall be 
     extended until the due date of the return for the taxable 
     year in which such property is disposed of (or, in the case 
     of property disposed of in a transaction in which gain is not 
     recognized in whole or in part, until such other date as the 
     Secretary may prescribe).
       ``(2) Determination of tax with respect to property.--For 
     purposes of paragraph (1), the additional tax attributable to 
     any property is an amount which bears the same ratio to the 
     additional tax imposed by this chapter for the taxable year 
     solely by reason of subsection (a) as the gain taken into 
     account under subsection (a) with respect to such property 
     bears to the total gain taken into account under subsection 
     (a) with respect to all property to which subsection (a) 
     applies.
       ``(3) Termination of extension.--The due date for payment 
     of tax may not be extended under this subsection later than 
     the due date for the return of tax imposed by this chapter 
     for the taxable year which includes the date of death of the 
     expatriate (or, if earlier, the time that the security 
     provided with respect to the property fails to meet the 
     requirements of paragraph (4), unless the taxpayer corrects 
     such failure within the time specified by the Secretary).
       ``(4) Security.--
       ``(A) In general.--No election may be made under paragraph 
     (1) with respect to any property unless adequate security is 
     provided with respect to such property.
       ``(B) Adequate security.--For purposes of subparagraph (A), 
     security with respect to any property shall be treated as 
     adequate security if--
       ``(i) it is a bond which is furnished to, and accepted by, 
     the Secretary, which is conditioned on the payment of tax 
     (and interest thereon), and which meets the requirements of 
     section 6325, or
       ``(ii) it is another form of security for such payment 
     (including letters of credit) that meets such requirements as 
     the Secretary may prescribe.
       ``(5) Waiver of certain rights.--No election may be made 
     under paragraph (1) unless the taxpayer makes an irrevocable 
     waiver of any right under any treaty of the United States 
     which would preclude assessment or collection of any tax 
     imposed by reason of this section.
       ``(6) Elections.--An election under paragraph (1) shall 
     only apply to property described in the election and, once 
     made, is irrevocable.
       ``(7) Interest.--For purposes of section 6601, the last 
     date for the payment of tax shall be determined without 
     regard to the election under this subsection.
       ``(c) Exception for Certain Property.--Subsection (a) shall 
     not apply to--
       ``(1) any deferred compensation item (as defined in 
     subsection (d)(4)),
       ``(2) any specified tax deferred account (as defined in 
     subsection (e)(2)), and
       ``(3) any interest in a nongrantor trust (as defined in 
     subsection (f)(3)).
       ``(d) Treatment of Deferred Compensation Items.--
       ``(1) Withholding on eligible deferred compensation 
     items.--
       ``(A) In general.--In the case of any eligible deferred 
     compensation item, the payor shall deduct and withhold from 
     any taxable payment to a covered expatriate with respect to 
     such item a tax equal to 30 percent thereof.
       ``(B) Taxable payment.--For purposes of subparagraph (A), 
     the term `taxable payment' means with respect to a covered 
     expatriate any payment to the extent it would be includible 
     in the gross income of the covered expatriate if such 
     expatriate continued to be subject to tax as a citizen or 
     resident of the United States. A deferred compensation item 
     shall be taken into account as a payment under the preceding 
     sentence when such item would be so includible.
       ``(2) Other deferred compensation items.--In the case of 
     any deferred compensation item which is not an eligible 
     deferred compensation item--
       ``(A)(i) with respect to any deferred compensation item to 
     which clause (ii) does not apply, an amount equal to the 
     present value of the covered expatriate's accrued benefit 
     shall be treated as having been received by such individual 
     on the day before the expatriation date as a distribution 
     under the plan, and
       ``(ii) with respect to any deferred compensation item 
     referred to in paragraph (4)(D), the rights of the covered 
     expatriate to such item shall be treated as becoming 
     transferable and not subject to a substantial risk of 
     forfeiture on the day before the expatriation date,
       ``(B) no early distribution tax shall apply by reason of 
     such treatment, and
       ``(C) appropriate adjustments shall be made to subsequent 
     distributions from the plan to reflect such treatment.
       ``(3) Eligible deferred compensation items.--For purposes 
     of this subsection, the term `eligible deferred compensation 
     item' means any deferred compensation item with respect to 
     which--
       ``(A) the payor of such item is--
       ``(i) a United States person, or
       ``(ii) a person who is not a United States person but who 
     elects to be treated as a United States person for purposes 
     of paragraph (1) and meets such requirements as the Secretary 
     may provide to ensure that the payor will meet the 
     requirements of paragraph (1), and
       ``(B) the covered expatriate--
       ``(i) notifies the payor of his status as a covered 
     expatriate, and
       ``(ii) makes an irrevocable waiver of any right to claim 
     any reduction under any treaty with the United States in 
     withholding on such item.
       ``(4) Deferred compensation item.--For purposes of this 
     subsection, the term `deferred compensation item' means--
       ``(A) any interest in a plan or arrangement described in 
     section 219(g)(5),
       ``(B) any interest in a foreign pension plan or similar 
     retirement arrangement or program,
       ``(C) any item of deferred compensation, and
       ``(D) any property, or right to property, which the 
     individual is entitled to receive in connection with the 
     performance of services to the extent not previously taken 
     into account under section 83 or in accordance with section 
     83.
       ``(5) Exception.--Paragraphs (1) and (2) shall not apply to 
     any deferred compensation item which is attributable to 
     services performed outside the United States while the 
     covered expatriate was not a citizen or resident of the 
     United States.
       ``(6) Special rules.--
       ``(A) Application of withholding rules.--Rules similar to 
     the rules of subchapter B of chapter 3 shall apply for 
     purposes of this subsection.
       ``(B) Application of tax.--Any item subject to the 
     withholding tax imposed under paragraph (1) shall be subject 
     to tax under section 871.
       ``(C) Coordination with other withholding requirements.--
     Any item subject to withholding under paragraph (1) shall not 
     be subject to withholding under section 1441 or chapter 24.
       ``(e) Treatment of Specified Tax Deferred Accounts.--
       ``(1) Account treated as distributed.--In the case of any 
     interest in a specified tax deferred account held by a 
     covered expatriate on the day before the expatriation date--
       ``(A) the covered expatriate shall be treated as receiving 
     a distribution of his entire interest in such account on the 
     day before the expatriation date,
       ``(B) no early distribution tax shall apply by reason of 
     such treatment, and
       ``(C) appropriate adjustments shall be made to subsequent 
     distributions from the account to reflect such treatment.
       ``(2) Specified tax deferred account.--For purposes of 
     paragraph (1), the term `specified tax deferred account' 
     means an individual retirement plan (as defined in section 
     7701(a)(37)) other than any arrangement described in 
     subsection (k) or (p) of section 408, a qualified tuition 
     program (as defined in section 529), a Coverdell education 
     savings account (as defined in section 530), a health savings 
     account (as defined in section 223), and an Archer MSA (as 
     defined in section 220).
       ``(f) Special Rules for Nongrantor Trusts.--
       ``(1) In general.--In the case of a distribution (directly 
     or indirectly) of any property from a nongrantor trust to a 
     covered expatriate--
       ``(A) the trustee shall deduct and withhold from such 
     distribution an amount equal to 30 percent of the taxable 
     portion of the distribution, and
       ``(B) if the fair market value of such property exceeds its 
     adjusted basis in the hands of the trust, gain shall be 
     recognized to the trust as if such property were sold to the 
     expatriate at its fair market value.
       ``(2) Taxable portion.--For purposes of this subsection, 
     the term `taxable portion' means, with respect to any 
     distribution, that portion of the distribution which would be 
     includible in the gross income of the covered expatriate if 
     such expatriate continued to be subject to tax as a citizen 
     or resident of the United States.
       ``(3) Nongrantor trust.--For purposes of this subsection, 
     the term `nongrantor trust' means the portion of any trust 
     that the individual is not considered the owner of under 
     subpart E of part I of subchapter J. The determination under 
     the preceding sentence shall be made immediately before the 
     expatriation date.
       ``(4) Special rules relating to withholding.--For purposes 
     of this subsection--
       ``(A) rules similar to the rules of subsection (d)(6) shall 
     apply, and
       ``(B) the covered expatriate shall be treated as having 
     waived any right to claim any reduction under any treaty with 
     the United States in withholding on any distribution to which 
     paragraph (1)(A) applies unless the covered expatriate agrees 
     to such other treatment as the Secretary determines 
     appropriate.

[[Page 23080]]

       ``(5) Application.--This subsection shall apply to a 
     nongrantor trust only if the covered expatriate was a 
     beneficiary of the trust on the day before the expatriation 
     date.
       ``(g) Definitions and Special Rules Relating to 
     Expatriation.--For purposes of this section--
       ``(1) Covered expatriate.--
       ``(A) In general.--The term `covered expatriate' means an 
     expatriate who meets the requirements of subparagraph (A), 
     (B), or (C) of section 877(a)(2).
       ``(B) Exceptions.--An individual shall not be treated as 
     meeting the requirements of subparagraph (A) or (B) of 
     section 877(a)(2) if--
       ``(i) the individual--

       ``(I) became at birth a citizen of the United States and a 
     citizen of another country and, as of the expatriation date, 
     continues to be a citizen of, and is taxed as a resident of, 
     such other country, and
       ``(II) has been a resident of the United States (as defined 
     in section 7701(b)(1)(A)(ii)) for not more than 10 taxable 
     years during the 15-taxable year period ending with the 
     taxable year during which the expatriation date occurs, or

       ``(ii)(I) the individual's relinquishment of United States 
     citizenship occurs before such individual attains age 18\1/
     2\, and
       ``(II) the individual has been a resident of the United 
     States (as so defined) for not more than 10 taxable years 
     before the date of relinquishment.
       ``(C) Covered expatriates also subject to tax as citizens 
     or residents.--In the case of any covered expatriate who is 
     subject to tax as a citizen or resident of the United States 
     for any period beginning after the expatriation date, such 
     individual shall not be treated as a covered expatriate 
     during such period for purposes of subsections (d)(1) and (f) 
     and section 2801.
       ``(2) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes his 
     citizenship, and
       ``(B) any long-term resident of the United States who 
     ceases to be a lawful permanent resident of the United States 
     (within the meaning of section 7701(b)(6)).
       ``(3) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date on which the individual ceases to be a 
     lawful permanent resident of the United States (within the 
     meaning of section 7701(b)(6)).
       ``(4) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing his United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces his United States 
     nationality before a diplomatic or consular officer of the 
     United States pursuant to paragraph (5) of section 349(a) of 
     the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.

     Subparagraph (A) or (B) shall not apply to any individual 
     unless the renunciation or voluntary relinquishment is 
     subsequently approved by the issuance to the individual of a 
     certificate of loss of nationality by the United States 
     Department of State.
       ``(5) Long-term resident.--The term `long-term resident' 
     has the meaning given to such term by section 877(e)(2).
       ``(6) Early distribution tax.--The term `early distribution 
     tax' means any increase in tax imposed under section 72(t), 
     220(e)(4), 223(f)(4), 409A(a)(1)(B), 529(c)(6), or 530(d)(4).
       ``(h) Other Rules.--
       ``(1) Termination of deferrals, etc.--In the case of any 
     covered expatriate, notwithstanding any other provision of 
     this title--
       ``(A) any time period for acquiring property which would 
     result in the reduction in the amount of gain recognized with 
     respect to property disposed of by the taxpayer shall 
     terminate on the day before the expatriation date, and
       ``(B) any extension of time for payment of tax shall cease 
     to apply on the day before the expatriation date and the 
     unpaid portion of such tax shall be due and payable at the 
     time and in the manner prescribed by the Secretary.
       ``(2) Step-up in basis.--Solely for purposes of determining 
     any tax imposed by reason of subsection (a), property which 
     was held by an individual on the date the individual first 
     became a resident of the United States (within the meaning of 
     section 7701(b)) shall be treated as having a basis on such 
     date of not less than the fair market value of such property 
     on such date. The preceding sentence shall not apply if the 
     individual elects not to have such sentence apply. Such an 
     election, once made, shall be irrevocable.
       ``(3) Coordination with section 684.--If the expatriation 
     of any individual would result in the recognition of gain 
     under section 684, this section shall be applied after the 
     application of section 684.
       ``(i) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Tax on Gifts and Bequests Received by United States 
     Citizens and Residents From Expatriates.--
       (1) In general.--Subtitle B (relating to estate and gift 
     taxes) is amended by inserting after chapter 14 the following 
     new chapter:

           ``CHAPTER 15--GIFTS AND BEQUESTS FROM EXPATRIATES

``Sec. 2801. Imposition of tax.

     ``SEC. 2801. IMPOSITION OF TAX.

       ``(a) In General.--If, during any calendar year, any United 
     States citizen or resident receives any covered gift or 
     bequest, there is hereby imposed a tax equal to the product 
     of--
       ``(1) the highest rate of tax specified in the table 
     contained in section 2001(c) as in effect on the date of such 
     receipt (or, if greater, the highest rate of tax specified in 
     the table applicable under section 2502(a) as in effect on 
     the date), and
       ``(2) the value of such covered gift or bequest.
       ``(b) Tax To Be Paid by Recipient.--The tax imposed by 
     subsection (a) on any covered gift or bequest shall be paid 
     by the person receiving such gift or bequest.
       ``(c) Exception for Certain Gifts.--Subsection (a) shall 
     apply only to the extent that the value of covered gifts and 
     bequests received by any person during the calendar year 
     exceeds the dollar amount in effect under section 2503(b) for 
     such calendar year.
       ``(d) Tax Reduced by Foreign Gift or Estate Tax.--The tax 
     imposed by subsection (a) on any covered gift or bequest 
     shall be reduced by the amount of any gift or estate tax paid 
     to a foreign country with respect to such covered gift or 
     bequest.
       ``(e) Covered Gift or Bequest.--
       ``(1) In general.--For purposes of this chapter, the term 
     `covered gift or bequest' means--
       ``(A) any property acquired by gift directly or indirectly 
     from an individual who, at the time of such acquisition, is a 
     covered expatriate, and
       ``(B) any property acquired directly or indirectly by 
     reason of the death of an individual who, immediately before 
     such death, was a covered expatriate.
       ``(2) Exceptions for transfers otherwise subject to estate 
     or gift tax.--Such term shall not include--
       ``(A) any property shown on a timely filed return of tax 
     imposed by chapter 12 which is a taxable gift by the covered 
     expatriate, and
       ``(B) any property included in the gross estate of the 
     covered expatriate for purposes of chapter 11 and shown on a 
     timely filed return of tax imposed by chapter 11 of the 
     estate of the covered expatriate.
       ``(3) Exceptions for transfers to spouse or charity.--Such 
     term shall not include any property with respect to which a 
     deduction would be allowed under section 2055, 2056, 2522, or 
     2523, whichever is appropriate, if the decedent or donor were 
     a United States person.
       ``(4) Transfers in trust.--
       ``(A) Domestic trusts.--In the case of a covered gift or 
     bequest made to a domestic trust--
       ``(i) subsection (a) shall apply in the same manner as if 
     such trust were a United States citizen, and
       ``(ii) the tax imposed by subsection (a) on such gift or 
     bequest shall be paid by such trust.
       ``(B) Foreign trusts.--
       ``(i) In general.--In the case of a covered gift or bequest 
     made to a foreign trust, subsection (a) shall apply to any 
     distribution attributable to such gift or bequest from such 
     trust (whether from income or corpus) to a United States 
     citizen or resident in the same manner as if such 
     distribution were a covered gift or bequest.
       ``(ii) Deduction for tax paid by recipient.--There shall be 
     allowed as a deduction under section 164 the amount of tax 
     imposed by this section which is paid or accrued by a United 
     States citizen or resident by reason of a distribution from a 
     foreign trust, but only to the extent such tax is imposed on 
     the portion of such distribution which is included in the 
     gross income of such citizen or resident.
       ``(iii) Election to be treated as domestic trust.--Solely 
     for purposes of this section, a foreign trust may elect to be 
     treated as a domestic trust. Such an election may be revoked 
     with the consent of the Secretary.
       ``(f) Covered Expatriate.--For purposes of this section, 
     the term `covered expatriate' has the meaning given to such 
     term by section 877A(g)(1).''.
       (2) Clerical amendment.--The table of chapters for subtitle 
     B is amended by inserting after the item relating to chapter 
     14 the following new item:

         ``Chapter 15. Gifts and Bequests From Expatriates.''.

       (c) Definition of Termination of United States 
     Citizenship.--
       (1) In general.--Section 7701(a) is amended by adding at 
     the end the following new paragraph:
       ``(50) Termination of united states citizenship.--
       ``(A) In general.--An individual shall not cease to be 
     treated as a United States citizen before the date on which 
     the individual's citizenship is treated as relinquished under 
     section 877A(g)(4).
       ``(B) Dual citizens.--Under regulations prescribed by the 
     Secretary, subparagraph (A) shall not apply to an individual 
     who became at birth a citizen of the United States and a 
     citizen of another country.''.
       (2) Conforming amendments.--
       (A) Paragraph (1) of section 877(e) is amended to read as 
     follows:

[[Page 23081]]

       ``(1) In general.--Any long-term resident of the United 
     States who ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)) 
     shall be treated for purposes of this section and sections 
     2107, 2501, and 6039G in the same manner as if such resident 
     were a citizen of the United States who lost United States 
     citizenship on the date of such cessation or commencement.''.
       (B) Paragraph (6) of section 7701(b) is amended by adding 
     at the end the following flush sentence:

     ``An individual shall cease to be treated as a lawful 
     permanent resident of the United States if such individual 
     commences to be treated as a resident of a foreign country 
     under the provisions of a tax treaty between the United 
     States and the foreign country, does not waive the benefits 
     of such treaty applicable to residents of the foreign 
     country, and notifies the Secretary of the commencement of 
     such treatment.''.
       (C) Section 7701 is amended by striking subsection (n) and 
     by redesignating subsections (o) and (p) as subsections (n) 
     and (o), respectively.
       (d) Information Returns.--Section 6039G is amended--
       (1) by inserting ``or 877A'' after ``section 877(b)'' in 
     subsection (a), and
       (2) by inserting ``or 877A'' after ``section 877(a)'' in 
     subsection (d).
       (e) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 is amended by 
     inserting after the item relating to section 877 the 
     following new item:

``Sec. 877A. Tax responsibilities of expatriation.''.

       (f) Effective Date.--
       (1) In general.--Except as provided in this subsection, the 
     amendments made by this section shall apply to expatriates 
     (as defined in section 877A(g) of the Internal Revenue Code 
     of 1986, as added by this section) whose expatriation date 
     (as so defined) is on or after the date of the enactment of 
     this Act.
       (2) Gifts and bequests.--Chapter 15 of the Internal Revenue 
     Code of 1986 (as added by subsection (b)) shall apply to 
     covered gifts and bequests (as defined in section 2801 of 
     such Code, as so added) received on or after the date of the 
     enactment of this Act from transferors whose expatriation 
     date is on or after such date of enactment.

     SEC. 205. SPECIAL ENROLLMENT OPTION BY EMPLOYER HEALTH PLANS 
                   FOR MEMBERS OF UNIFORM SERVICES WHO LOSE HEALTH 
                   CARE COVERAGE.

       (a) In General.--Section 9801(f) (relating to special 
     enrollment periods) is amended by adding at the end the 
     following new paragraph:
       ``(3) Loss of military health coverage.--
       ``(A) In general.--Notwithstanding paragraphs (1) and (2), 
     a group health plan shall permit an employee who is eligible, 
     but not enrolled, for coverage under the terms of the plan 
     (or a dependent of such an employee if the dependent is 
     eligible, but not enrolled, for coverage under such terms) to 
     enroll for coverage under the terms of the plan if each of 
     the following conditions is met:
       ``(i) The employee or dependent, by reason of service in 
     the uniformed services (within the meaning of section 4303 of 
     title 38, United States Code), was covered under a Federal 
     health care benefit program (including coverage under the 
     TRICARE program (as that term is defined in section 1072 of 
     title 10, United States Code) or by reason of entitlement to 
     health care benefits under the laws administered by the 
     Secretary of Veterans Affairs or as a member of the uniformed 
     services on active duty), and the employee or dependent loses 
     eligibility for such coverage.
       ``(ii) The employee or dependent is otherwise eligible to 
     enroll for coverage under the terms of the plan.
       ``(iii) The employee requests such coverage not later than 
     90 days after the date on which the coverage described in 
     clause (i) terminated.
       ``(B) Effective date of coverage.--Coverage requested under 
     subparagraph (A)(iii) shall become effective not later than 
     the first day of the first month after the date of such 
     request.''.
       (b) Employee Retirement Income Security Act of 1974.--
     Section 701(f) of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1181(f)) is amended by adding at the end 
     the following:
       ``(3) Loss of military health coverage.--
       ``(A) In general.--Notwithstanding paragraphs (1) and (2), 
     a group health plan, and a health insurance issuer offering 
     group health insurance coverage in connection with a group 
     health plan, shall permit an employee who is eligible, but 
     not enrolled, for coverage under the terms of the plan (or a 
     dependent of such an employee if the dependent is eligible, 
     but not enrolled, for coverage under such terms) to enroll 
     for coverage under the terms of the plan if each of the 
     following conditions is met:
       ``(i) The employee or dependent, by reason of service in 
     the uniformed services (within the meaning of section 4303 of 
     title 38, United States Code), was covered under a Federal 
     health care benefit program (including coverage under the 
     TRICARE program (as that term is defined in section 1072 of 
     title 10, United States Code) or by reason of entitlement to 
     health care benefits under the laws administered by the 
     Secretary of Veterans Affairs or as a member of the uniformed 
     services on active duty), and the employee or dependent loses 
     eligibility for such coverage.
       ``(ii) The employee or dependent is otherwise eligible to 
     enroll for coverage under the terms of the plan.
       ``(iii) The employee requests such coverage not later than 
     90 days after the date on which the coverage described in 
     clause (i) terminated.
       ``(B) Effective date of coverage.--Coverage requested under 
     subparagraph (A)(iii) shall become effective not later than 
     the first day of the first month after the date of such 
     request.''.
       (c) Public Health Service Act.--Section 2701(f) of the 
     Public Health Service Act (42 U.S.C. 300gg(f)) is amended by 
     adding at the end the following:
       ``(3) Loss of military health coverage.--
       ``(A) In general.--Notwithstanding paragraphs (1) and (2), 
     a group health plan, and a health insurance issuer offering 
     group health insurance coverage in connection with a group 
     health plan, shall permit an employee who is eligible, but 
     not enrolled, for coverage under the terms of the plan (or a 
     dependent of such an employee if the dependent is eligible, 
     but not enrolled, for coverage under such terms) to enroll 
     for coverage under the terms of the plan if each of the 
     following conditions is met:
       ``(i) The employee or dependent, by reason of service in 
     the uniformed services (within the meaning of section 4303 of 
     title 38, United States Code), was covered under a Federal 
     health care benefit program (including coverage under the 
     TRICARE program (as that term is defined in section 1072 of 
     title 10, United States Code) or by reason of entitlement to 
     health care benefits under the laws administered by the 
     Secretary of Veterans Affairs or as a member of the uniformed 
     services on active duty), and the employee or dependent loses 
     eligibility for such coverage.
       ``(ii) The employee or dependent is otherwise eligible to 
     enroll for coverage under the terms of the plan.
       ``(iii) The employee requests such coverage not later than 
     90 days after the date on which the coverage described in 
     clause (i) terminated.
       ``(B) Effective date of coverage.--Coverage requested under 
     subparagraph (A)(iii) shall become effective not later than 
     the first day of the first month after the date of such 
     request.''.
       (d) Regulations.--The Secretary of the Treasury, the 
     Secretary of Labor, and the Secretary of Health and Human 
     Services, consistent with section 104 of the Health Insurance 
     Portability and Accountability Act of 1996 (42 U.S.C. 300gg-
     92 note), may promulgate such regulations as may be necessary 
     or appropriate to require the notification of individuals (or 
     their dependents) of their rights under the amendment made by 
     this Act.
       (e) Effective Date.--The amendments made by this section 
     shall take effect 90 days after the date of the enactment of 
     this Act.

                  TITLE III--TAX TECHNICAL CORRECTIONS

     SEC. 301. SHORT TITLE.

       This title may be cited as the ``''.

     SEC. 302. AMENDMENT RELATED TO THE TAX RELIEF AND HEALTH CARE 
                   ACT OF 2006.

       (a) Amendment Related to Section 402 of Division A of the 
     Act.--Subparagraph (A) of section 53(e)(2) is amended to read 
     as follows:
       ``(A) In general.--The term `AMT refundable credit amount' 
     means, with respect to any taxable year, the amount (not in 
     excess of the long-term unused minimum tax credit for such 
     taxable year) equal to the greater of--
       ``(i) $5,000,
       ``(ii) 20 percent of the long-term unused minimum tax 
     credit for such taxable year, or
       ``(iii) the amount (if any) of the AMT refundable credit 
     amount determined under this paragraph for the taxpayer's 
     preceding taxable year (as determined before any reduction 
     under subparagraph (B)).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the provision of the Tax 
     Relief and Health Care Act of 2006 to which it relates.

     SEC. 303. AMENDMENTS RELATED TO TITLE XII OF THE PENSION 
                   PROTECTION ACT OF 2006.

       (a) Amendment Related to Section 1201 of the Act.--
     Subparagraph (D) of section 408(d)(8) is amended by striking 
     ``all amounts distributed from all individual retirement 
     plans were treated as 1 contract under paragraph (2)(A) for 
     purposes of determining the inclusion of such distribution 
     under section 72'' and inserting ``all amounts in all 
     individual retirement plans of the individual were 
     distributed during such taxable year and all such plans were 
     treated as 1 contract for purposes of determining under 
     section 72 the aggregate amount which would have been so 
     includible''.
       (b) Amendment Related to Section 1203 of the Act.--
     Subsection (d) of section 1366 is amended by adding at the 
     end the following new paragraph:
       ``(4) Application of limitation on charitable 
     contributions.--In the case of any charitable contribution of 
     property to which the second sentence of section 1367(a)(2) 
     applies, paragraph (1) shall not apply to the extent of the 
     excess (if any) of--
       ``(A) the shareholder's pro rata share of such 
     contribution, over
       ``(B) the shareholder's pro rata share of the adjusted 
     basis of such property.''.
       (c) Amendment Related to Section 1215 of the Act.--
     Subclause (I) of section 170(e)(7)(D)(i) is amended by 
     striking ``related'' and inserting ``substantial and 
     related''.
       (d) Amendments Related to Section 1218 of the Act.--
       (1) Section 2055 is amended by striking subsection (g) and 
     by redesignating subsection (h) as subsection (g).
       (2) Subsection (e) of section 2522 is amended--

[[Page 23082]]

       (A) by striking paragraphs (2) and (4),
       (B) by redesignating paragraph (3) as paragraph (2), and
       (C) by adding at the end of paragraph (2), as so 
     redesignated, the following new subparagraph:
       ``(C) Initial fractional contribution.--For purposes of 
     this paragraph, the term `initial fractional contribution' 
     means, with respect to any donor, the first gift of an 
     undivided portion of the donor's entire interest in any 
     tangible personal property for which a deduction is allowed 
     under subsection (a) or (b).''.
       (e) Amendments Related to Section 1219 of the Act.--
       (1) Paragraph (2) of section 6695A(a) is amended by 
     inserting ``a substantial estate or gift tax valuation 
     understatement (within the meaning of section 6662(g)),'' 
     before ``or a gross valuation misstatement''.
       (2) Paragraph (1) of section 6696(d) is amended by striking 
     ``or under section 6695'' and inserting ``, section 6695, or 
     6695A''.
       (f) Amendment Related to Section 1221 of the Act.--
     Subparagraph (A) of section 4940(c)(4) is amended to read as 
     follows:
       ``(A) There shall not be taken into account any gain or 
     loss from the sale or other disposition of property to the 
     extent that such gain or loss is taken into account for 
     purposes of computing the tax imposed by section 511.''.
       (g) Amendment Related to Section 1225 of the Act.--
       (1) Subsection (b) of section 6104 is amended--
       (A) by striking ``Information'' in the heading, and
       (B) by adding at the end the following: ``Any annual return 
     which is filed under section 6011 by an organization 
     described in section 501(c)(3) and which relates to any tax 
     imposed by section 511 (relating to imposition of tax on 
     unrelated business income of charitable, etc., organizations) 
     shall be treated for purposes of this subsection in the same 
     manner as if furnished under section 6033.''.
       (2) Clause (ii) of section 6104(d)(1)(A) is amended to read 
     as follows:
       ``(ii) any annual return which is filed under section 6011 
     by an organization described in section 501(c)(3) and which 
     relates to any tax imposed by section 511 (relating to 
     imposition of tax on unrelated business income of charitable, 
     etc., organizations),''.
       (3) Paragraph (2) of section 6104(d) is amended by striking 
     ``section 6033'' and inserting ``section 6011 or 6033''.
       (h) Amendment Related to Section 1231 of the Act.--
     Subsection (b) of section 4962 is amended by striking ``or 
     D'' and inserting ``D, or G''.
       (i) Amendment Related to Section 1242 of the Act.--
       (1) Subclause (II) of section 4958(c)(3)(A)(i) is amended 
     by striking ``paragraph (1), (2), or (4) of section 509(a)'' 
     and inserting ``subparagraph (C)(ii)''.
       (2) Clause (ii) of section 4958(c)(3)(C) is amended to read 
     as follows:
       ``(ii) Exception.--Such term shall not include--

       ``(I) any organization described in paragraph (1), (2), or 
     (4) of section 509(a), and
       ``(II) any organization which is treated as described in 
     such paragraph (2) by reason of the last sentence of section 
     509(a) and which is a supported organization (as defined in 
     section 509(f)(3)) of the organization to which subparagraph 
     (A) applies.''.

       (j) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the 
     Pension Protection Act of 2006 to which they relate.

     SEC. 304. AMENDMENTS RELATED TO THE TAX INCREASE PREVENTION 
                   AND RECONCILIATION ACT OF 2005.

       (a) Amendments Related to Section 103 of the Act.--
     Paragraph (6) of section 954(c) is amended by redesignating 
     subparagraph (B) as subparagraph (C) and inserting after 
     subparagraph (A) the following new subparagraph:
       ``(B) Exception.--Subparagraph (A) shall not apply in the 
     case of any interest, rent, or royalty to the extent such 
     interest, rent, or royalty creates (or increases) a deficit 
     which under section 952(c) may reduce the subpart F income of 
     the payor or another controlled foreign corporation.''.
       (b) Amendments Related to Section 202 of the Act.--
       (1) Subparagraph (A) of section 355(b)(2) is amended to 
     read as follows:
       ``(A) it is engaged in the active conduct of a trade or 
     business,''.
       (2) Paragraph (3) of section 355(b) is amended to read as 
     follows:
       ``(3) Special rules for determining active conduct in the 
     case of affiliated groups.--
       ``(A) In general.--For purposes of determining whether a 
     corporation meets the requirements of paragraph (2)(A), all 
     members of such corporation's separate affiliated group shall 
     be treated as one corporation.
       ``(B) Separate affiliated group.--For purposes of this 
     paragraph, the term `separate affiliated group' means, with 
     respect to any corporation, the affiliated group which would 
     be determined under section 1504(a) if such corporation were 
     the common parent and section 1504(b) did not apply.
       ``(C) Treatment of trade or business conducted by acquired 
     member.--If a corporation became a member of a separate 
     affiliated group as a result of one or more transactions in 
     which gain or loss was recognized in whole or in part, any 
     trade or business conducted by such corporation (at the time 
     that such corporation became such a member) shall be treated 
     for purposes of paragraph (2) as acquired in a transaction in 
     which gain or loss was recognized in whole or in part.
       ``(D) Regulations.--The Secretary shall prescribe such 
     regulations as are necessary or appropriate to carry out the 
     purposes of this paragraph, including regulations which 
     provide for the proper application of subparagraphs (B), (C), 
     and (D) of paragraph (2), and modify the application of 
     subsection (a)(3)(B), in connection with the application of 
     this paragraph.''.
       (3) The Internal Revenue Code of 1986 shall be applied and 
     administered as if the amendments made by section 202 of the 
     Tax Increase Prevention and Reconciliation Act of 2005 and by 
     section 410 of division A of the Tax Relief and Health Care 
     Act of 2006 had never been enacted.
       (c) Amendment Related to Section 515 of the Act.--
     Subsection (f) of section 911 is amended to read as follows:
       ``(f) Determination of Tax Liability.--
       ``(1) In general.--If, for any taxable year, any amount is 
     excluded from gross income of a taxpayer under subsection 
     (a), then, notwithstanding sections 1 and 55--
       ``(A) if such taxpayer has taxable income for such taxable 
     year, the tax imposed by section 1 for such taxable year 
     shall be equal to the excess (if any) of--
       ``(i) the tax which would be imposed by section 1 for such 
     taxable year if the taxpayer's taxable income were increased 
     by the amount excluded under subsection (a) for such taxable 
     year, over
       ``(ii) the tax which would be imposed by section 1 for such 
     taxable year if the taxpayer's taxable income were equal to 
     the amount excluded under subsection (a) for such taxable 
     year, and
       ``(B) if such taxpayer has a taxable excess (as defined in 
     section 55(b)(1)(A)(ii)) for such taxable year, the amount 
     determined under the first sentence of section 55(b)(1)(A)(i) 
     for such taxable year shall be equal to the excess (if any) 
     of--
       ``(i) the amount which would be determined under such 
     sentence for such taxable year (subject to the limitation of 
     section 55(b)(3)) if the taxpayer's taxable excess (as so 
     defined) were increased by the amount excluded under 
     subsection (a) for such taxable year, over
       ``(ii) the amount which would be determined under such 
     sentence for such taxable year if the taxpayer's taxable 
     excess (as so defined) were equal to the amount excluded 
     under subsection (a) for such taxable year.
       ``(2) Special rules.--
       ``(A) Regular tax.--In applying section 1(h) for purposes 
     of determining the tax under paragraph (1)(A)(i) for any 
     taxable year in which, without regard to this subsection, the 
     taxpayer's net capital gain exceeds taxable income (hereafter 
     in this subparagraph referred to as the capital gain 
     excess)--
       ``(i) the taxpayer's net capital gain (determined without 
     regard to section 1(h)(11)) shall be reduced (but not below 
     zero) by such capital gain excess,
       ``(ii) the taxpayer's qualified dividend income shall be 
     reduced by so much of such capital gain excess as exceeds the 
     taxpayer's net capital gain (determined without regard to 
     section 1(h)(11) and the reduction under clause (i)), and
       ``(iii) adjusted net capital gain, unrecaptured section 
     1250 gain, and 28-percent rate gain shall each be determined 
     after increasing the amount described in section 1(h)(4)(B) 
     by such capital gain excess.
       ``(B) Alternative minimum tax.--In applying section 
     55(b)(3) for purposes of determining the tax under paragraph 
     (1)(B)(i) for any taxable year in which, without regard to 
     this subsection, the taxpayer's net capital gain exceeds the 
     taxable excess (as defined in section 55(b)(1)(A)(ii))--
       ``(i) the rules of subparagraph (A) shall apply, except 
     that such subparagraph shall be applied by substituting `the 
     taxable excess (as defined in section 55(b)(1)(A)(ii))' for 
     `taxable income', and
       ``(ii) the reference in section 55(b)(3)(B) to the excess 
     described in section 1(h)(1)(B) shall be treated as a 
     reference to such excess as determined under the rules of 
     subparagraph (A) for purposes of determining the tax under 
     paragraph (1)(A)(i).
       ``(C) Definitions.--Terms used in this paragraph which are 
     also used in section 1(h) shall have the respective meanings 
     given such terms by section 1(h), except that in applying 
     subparagraph (B) the adjustments under part VI of subchapter 
     A shall be taken into account.''.
       (d) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall take 
     effect as if included in the provisions of the Tax Increase 
     Prevention and Reconciliation Act of 2005 to which they 
     relate.
       (2) Modification of active business definition under 
     section 355.--
       (A) In general.--Except as otherwise provided in this 
     paragraph, the amendments made by subsection (b) shall apply 
     to distributions made after May 17, 2006.
       (B) Transition rule.--The amendments made by subsection (b) 
     shall not apply to any distribution pursuant to a transaction 
     which is--
       (i) made pursuant to an agreement which was binding on May 
     17, 2006, and at all times thereafter,
       (ii) described in a ruling request submitted to the 
     Internal Revenue Service on or before such date, or
       (iii) described on or before such date in a public 
     announcement or in a filing with the Securities and Exchange 
     Commission.
       (C) Election out of transition rule.--Subparagraph (B) 
     shall not apply if the distributing corporation elects not to 
     have such subparagraph apply to distributions of such 
     corporation. Any such election, once made, shall be 
     irrevocable.

[[Page 23083]]

       (D) Special rule for certain pre-enactment distributions.--
     For purposes of determining the continued qualification under 
     section 355(b)(2)(A) of the Internal Revenue Code of 1986 of 
     distributions made on or before May 17, 2006, as a result of 
     an acquisition, disposition, or other restructuring after 
     such date, such distribution shall be treated as made on the 
     date of such acquisition, disposition, or restructuring for 
     purposes of applying subparagraphs (A) through (C) of this 
     paragraph. The preceding sentence shall only apply with 
     respect to the corporation that undertakes such acquisition, 
     disposition, or other restructuring, and only if such 
     application results in continued qualification under section 
     355(b)(2)(A) of such Code.
       (3) Amendment related to section 515 of the act.--The 
     amendment made by subsection (c) shall apply to taxable years 
     beginning after December 31, 2006.

     SEC. 305. AMENDMENTS RELATED TO THE SAFE, ACCOUNTABLE, 
                   FLEXIBLE, EFFICIENT TRANSPORTATION EQUITY ACT: 
                   A LEGACY FOR USERS.

       (a) Amendments Related to Section 11113 of the Act.--
       (1) Paragraph (3) of section 6427(i) is amended--
       (A) by inserting ``or under subsection (e)(2) by any person 
     with respect to an alternative fuel (as defined in section 
     6426(d)(2))'' after ``section 6426'' in subparagraph (A),
       (B) by inserting ``or (e)(2)'' after ``subsection (e)(1)'' 
     in subparagraphs (A)(i) and (B), and
       (C) by striking ``alcohol fuel and biodiesel mixture 
     credit'' and inserting ``mixture credits and the alternative 
     fuel credit'' in the heading thereof.
       (2) Subparagraph (F) of section 6426(d)(2) is amended by 
     striking ``hydrocarbons'' and inserting ``fuel''.
       (3) Section 6426 is amended by adding at the end the 
     following new subsection:
       ``(h) Denial of Double Benefit.--No credit shall be 
     determined under subsection (d) or (e) with respect to any 
     fuel with respect to which credit may be determined under 
     subsection (b) or (c) or under section 40 or 40A.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the 
     SAFETEA-LU to which they relate.

     SEC. 306. AMENDMENTS RELATED TO THE ENERGY POLICY ACT OF 
                   2005.

       (a) Amendment Related to Section 1306 of the Act.--
     Paragraph (2) of section 45J(b) is amended to read as 
     follows:
       ``(2) Amount of national limitation.--The aggregate amount 
     of national megawatt capacity limitation allocated by the 
     Secretary under paragraph (3) shall not exceed 6,000 
     megawatts.''.
       (b) Amendments Related to Section 1342 of the Act.--
       (1) So much of subsection (b) of section 30C as precedes 
     paragraph (1) thereof is amended to read as follows:
       ``(b) Limitation.--The credit allowed under subsection (a) 
     with respect to all qualified alternative fuel vehicle 
     refueling property placed in service by the taxpayer during 
     the taxable year at a location shall not exceed--''.
       (2) Subsection (c) of section 30C is amended to read as 
     follows:
       ``(c) Qualified Alternative Fuel Vehicle Refueling 
     Property.--For purposes of this section, the term `qualified 
     alternative fuel vehicle refueling property' has the same 
     meaning as the term `qualified clean-fuel vehicle refueling 
     property' would have under section 179A if--
       ``(1) paragraph (1) of section 179A(d) did not apply to 
     property installed on property which is used as the principal 
     residence (within the meaning of section 121) of the 
     taxpayer, and
       ``(2) only the following were treated as clean-burning 
     fuels for purposes of section 179A(d):
       ``(A) Any fuel at least 85 percent of the volume of which 
     consists of one or more of the following: ethanol, natural 
     gas, compressed natural gas, liquified natural gas, liquefied 
     petroleum gas, or hydrogen.
       ``(B) Any mixture--
       ``(i) which consists of two or more of the following: 
     biodiesel (as defined in section 40A(d)(1)), diesel fuel (as 
     defined in section 4083(a)(3)), or kerosene, and
       ``(ii) at least 20 percent of the volume of which consists 
     of biodiesel (as so defined) determined without regard to any 
     kerosene in such mixture.''.
       (c) Amendments Related to Section 1351 of the Act.--
       (1) Paragraph (3) of section 41(a) is amended by inserting 
     ``for energy research'' before the period at the end.
       (2) Paragraph (6) of section 41(f) is amended by adding at 
     the end the following new subparagraph:
       ``(E) Energy research.--The term `energy research' does not 
     include any research which is not qualified research.''.
       (d) Amendments Related to Section 1362 of the Act.--
       (1)(A) Paragraph (1) of section 4041(d) is amended by 
     adding at the end the following new sentence: ``No tax shall 
     be imposed under the preceding sentence on the sale or use of 
     any liquid if tax was imposed with respect to such liquid 
     under section 4081 at the Leaking Underground Storage Tank 
     Trust Fund financing rate.''.
       (B) Paragraph (3) of section 4042(b) is amended to read as 
     follows:
       ``(3) Exception for fuel on which leaking underground 
     storage tank trust fund financing rate separately imposed.--
     The Leaking Underground Storage Tank Trust Fund financing 
     rate under paragraph (2)(B) shall not apply to the use of any 
     fuel if tax was imposed with respect to such fuel under 
     section 4041(d) or 4081 at the Leaking Underground Storage 
     Tank Trust Fund financing rate.''.
       (C) Notwithstanding section 6430 of the Internal Revenue 
     Code of 1986, a refund, credit, or payment may be made under 
     subchapter B of chapter 65 of such Code for taxes imposed 
     with respect to any liquid after September 30, 2005, and 
     before the date of the enactment of this Act under section 
     4041(d)(1) or 4042 of such Code at the Leaking Underground 
     Storage Tank Trust Fund financing rate to the extent that tax 
     was imposed with respect to such liquid under section 4081 at 
     the Leaking Underground Storage Tank Trust Fund financing 
     rate.
       (2)(A) Paragraph (5) of section 4041(d) is amended--
       (i) by striking ``(other than with respect to any sale for 
     export under paragraph (3) thereof)'', and
       (ii) by adding at the end the following new sentence: ``The 
     preceding sentence shall not apply with respect to subsection 
     (g)(3) and so much of subsection (g)(1) as relates to vessels 
     (within the meaning of section 4221(d)(3)) employed in 
     foreign trade or trade between the United States and any of 
     its possessions.''.
       (B) Section 4082 is amended--
       (i) by striking ``(other than such tax at the Leaking 
     Underground Storage Tank Trust Fund financing rate imposed in 
     all cases other than for export)'' in subsection (a), and
       (ii) by redesignating subsections (f) and (g) as 
     subsections (g) and (h), respectively, and by inserting after 
     subsection (e) the following new subsection:
       ``(f) Exception for Leaking Underground Storage Tank Trust 
     Fund Financing Rate.--
       ``(1) In general.--Subsection (a) shall not apply to the 
     tax imposed under section 4081 at the Leaking Underground 
     Storage Tank Trust Fund financing rate.
       ``(2) Exception for export, etc.--Paragraph (1) shall not 
     apply with respect to any fuel if the Secretary determines 
     that such fuel is destined for export or for use by the 
     purchaser as supplies for vessels (within the meaning of 
     section 4221(d)(3)) employed in foreign trade or trade 
     between the United States and any of its possessions.''.
       (C) Subsection (e) of section 4082 is amended--
       (i) by striking ``an aircraft, the rate of tax under 
     section 4081(a)(2)(A)(iii) shall be zero.'' and inserting 
     ``an aircraft--
       ``(1) the rate of tax under section 4081(a)(2)(A)(iii) 
     shall be zero, and
       ``(2) if such aircraft is employed in foreign trade or 
     trade between the United States and any of its possessions, 
     the increase in such rate under section 4081(a)(2)(B) shall 
     be zero.''; and
       (ii) by moving the last sentence flush with the margin of 
     such subsection (following the paragraph (2) added by clause 
     (i)).
       (D) Section 6430 is amended to read as follows:

     ``SEC. 6430. TREATMENT OF TAX IMPOSED AT LEAKING UNDERGROUND 
                   STORAGE TANK TRUST FUND FINANCING RATE.

       ``No refunds, credits, or payments shall be made under this 
     subchapter for any tax imposed at the Leaking Underground 
     Storage Tank Trust Fund financing rate, except in the case of 
     fuels--
       ``(1) which are exempt from tax under section 4081(a) by 
     reason of section 4082(f)(2),
       ``(2) which are exempt from tax under section 4041(d) by 
     reason of the last sentence of paragraph (5) thereof, or
       ``(3) with respect to which the rate increase under section 
     4081(a)(2)(B) is zero by reason of section 4082(e)(2).''.
       (3) Paragraph (5) of section 4041(d) is amended by 
     inserting ``(b)(1)(A),'' after ``subsections''.
       (e) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall take 
     effect as if included in the provisions of the Energy Policy 
     Act of 2005 to which they relate.
       (2) Nonapplication of exemption for off-highway business 
     use.--The amendment made by subsection (d)(3) shall apply to 
     fuel sold for use or used after the date of the enactment of 
     this Act.
       (3) Amendment made by the safetea-lu.--The amendment made 
     by subsection (d)(2)(C)(ii) shall take effect as if included 
     in section 11161 of the SAFETEA-LU.

     SEC. 307. AMENDMENTS RELATED TO THE AMERICAN JOBS CREATION 
                   ACT OF 2004.

       (a) Amendments Related to Section 339 of the Act.--
       (1)(A) Section 45H is amended by striking subsection (d) 
     and by redesignating subsections (e), (f), and (g) as 
     subsections (d), (e), and (f), respectively.
       (B) Subsection (d) of section 280C is amended to read as 
     follows:
       ``(d) Credit for Low Sulfur Diesel Fuel Production.--The 
     deductions otherwise allowed under this chapter for the 
     taxable year shall be reduced by the amount of the credit 
     determined for the taxable year under section 45H(a).''.
       (C) Subsection (a) of section 1016 is amended by striking 
     paragraph (31) and by redesignating paragraphs (32) through 
     (37) as paragraphs (31) through (36), respectively.
       (2)(A) Section 45H, as amended by paragraph (1), is amended 
     by adding at the end the following new subsection:
       ``(g) Election to Not Take Credit.--No credit shall be 
     determined under subsection (a) for the taxable year if the 
     taxpayer elects not to

[[Page 23084]]

     have subsection (a) apply to such taxable year.''.
       (B) Subsection (m) of section 6501 is amended by inserting 
     ``45H(g),'' after ``45C(d)(4),''.
       (3)(A) Subsections (b)(1)(A), (c)(2), (e)(1), and (e)(2) of 
     section 45H (as amended by paragraph (1)) and section 179B(a) 
     are each amended by striking ``qualified capital costs'' and 
     inserting ``qualified costs''.
       (B) The heading of paragraph (2) of section 45H(c) is 
     amended by striking ``capital''.
       (C) Subsection (a) of section 179B is amended by inserting 
     ``and which are properly chargeable to capital account'' 
     before the period at the end.
       (b) Amendments Related to Section 710 of the Act.--
       (1) Clause (ii) of section 45(c)(3)(A) is amended by 
     striking ``which is segregated from other waste materials 
     and''.
       (2) Subparagraph (B) of section 45(d)(2) is amended by 
     inserting ``and'' at the end of clause (i), by striking 
     clause (ii), and by redesignating clause (iii) as clause 
     (ii).
       (c) Amendments Related to Section 848 of the Act.--
       (1) Paragraph (2) of section 470(c) is amended to read as 
     follows:
       ``(2) Tax-exempt use property.--
       ``(A) In general.--The term `tax-exempt use property' has 
     the meaning given to such term by section 168(h), except that 
     such section shall be applied--
       ``(i) without regard to paragraphs (1)(C) and (3) thereof, 
     and
       ``(ii) as if section 197 intangible property (as defined in 
     section 197), and property described in paragraph (1)(B) or 
     (2) of section 167(f), were tangible property.
       ``(B) Exception for partnerships.--Such term shall not 
     include any property which would (but for this subparagraph) 
     be tax-exempt use property solely by reason of section 
     168(h)(6).
       ``(C) Cross reference.--For treatment of partnerships as 
     leases to which section 168(h) applies, see section 
     7701(e).''.
       (2) Subparagraph (A) of section 470(d)(1) is amended by 
     striking ``(at any time during the lease term)'' and 
     inserting ``(at all times during the lease term)''.
       (d) Amendments Related to Section 888 of the Act.--
       (1) Subparagraph (A) of section 1092(a)(2) is amended by 
     striking ``and'' at the end of clause (ii), by redesignating 
     clause (iii) as clause (iv), and by inserting after clause 
     (ii) the following new clause:
       ``(iii) if the application of clause (ii) does not result 
     in an increase in the basis of any offsetting position in the 
     identified straddle, the basis of each of the offsetting 
     positions in the identified straddle shall be increased in a 
     manner which--

       ``(I) is reasonable, consistent with the purposes of this 
     paragraph, and consistently applied by the taxpayer, and
       ``(II) results in an aggregate increase in the basis of 
     such offsetting positions which is equal to the loss 
     described in clause (ii), and''.

       (2)(A) Subparagraph (B) of section 1092(a)(2) is amended by 
     adding at the end the following flush sentence:

     ``A straddle shall be treated as clearly identified for 
     purposes of clause (i) only if such identification includes 
     an identification of the positions in the straddle which are 
     offsetting with respect other positions in the straddle.''.
       (B) Subparagraph (A) of section 1092(a)(2) is amended--
       (i) by striking ``identified positions'' in clause (i) and 
     inserting ``positions'',
       (ii) by striking ``identified position'' in clause (ii) and 
     inserting ``position'', and
       (iii) by striking ``identified offsetting positions'' in 
     clause (ii) and inserting ``offsetting positions''.
       (C) Subparagraph (B) of section 1092(a)(3) is amended by 
     striking ``identified offsetting position'' and inserting 
     ``offsetting position''.
       (3) Paragraph (2) of section 1092(a) is amended by 
     redesignating subparagraph (C) as subparagraph (D) and 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Application to liabilities and obligations.--Except 
     as otherwise provided by the Secretary, rules similar to the 
     rules of clauses (ii) and (iii) of subparagraph (A) shall 
     apply for purposes of this paragraph with respect to any 
     position which is, or has been, a liability or obligation.''.
       (4) Subparagraph (D) of section 1092(a)(2), as redesignated 
     by paragraph (3), is amended by inserting ``the rules for the 
     application of this section to a position which is or has 
     been a liability or obligation, methods of loss allocation 
     which satisfy the requirements of subparagraph (A)(iii),'' 
     before ``and the ordering rules''.
       (e) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall take 
     effect as if included in the provisions of the American Jobs 
     Creation Act of 2004 to which they relate.
       (2) Identification requirement of amendment related to 
     section 888 of the american jobs creation act of 2004.--The 
     amendment made by subsection (d)(2)(A) shall apply to 
     straddles acquired after the date of the enactment of this 
     Act.

     SEC. 308. AMENDMENTS RELATED TO THE ECONOMIC GROWTH AND TAX 
                   RELIEF RECONCILIATION ACT OF 2001.

       (a) Amendments Related to Section 617 of the Act.--
       (1) Subclause (II) of section 402(g)(7)(A)(ii) is amended 
     by striking ``for prior taxable years'' and inserting 
     ``permitted for prior taxable years by reason of this 
     paragraph''.
       (2) Subparagraph (A) of section 3121(v)(1) is amended by 
     inserting ``or consisting of designated Roth contributions 
     (as defined in section 402A(c))'' before the comma at the 
     end.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the 
     Economic Growth and Tax Relief Reconciliation Act of 2001 to 
     which they relate.

     SEC. 309. AMENDMENTS RELATED TO THE TAX RELIEF EXTENSION ACT 
                   OF 1999.

       (a) Amendment Related to Section 507 of the Act.--Clause 
     (i) of section 45(e)(7)(A) is amended by striking ``placed in 
     service by the taxpayer'' and inserting ``originally placed 
     in service''.
       (b) Amendment Related to Section 542 of the Act.--Clause 
     (ii) of section 856(d)(9)(D) is amended to read as follows:
       ``(ii) Lodging facility.--The term `lodging facility' means 
     a--

       ``(I) hotel,
       ``(II) motel, or
       ``(III) other establishment more than one-half of the 
     dwelling units in which are used on a transient basis.''.

       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the provisions of the Tax 
     Relief Extension Act of 1999 to which they relate.

     SEC. 310. AMENDMENT RELATED TO THE INTERNAL REVENUE SERVICE 
                   RESTRUCTURING AND REFORM ACT OF 1998.

       (a) Amendment Related to Section 3509 of the Act.--
     Paragraph (3) of section 6110(i) is amended by inserting 
     ``and related background file documents'' after ``Chief 
     Counsel advice'' in the matter preceding subparagraph (A).
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the provision of the 
     Internal Revenue Service Restructuring and Reform Act of 1998 
     to which it relates.

     SEC. 311. CLERICAL CORRECTIONS.

       (a) In General.--
       (1) Paragraph (5) of section 21(e) is amended by striking 
     ``section 152(e)(3)(A)'' in the flush matter after 
     subparagraph (B) and inserting ``section 152(e)(4)(A)''.
       (2) Paragraph (3) of section 25C(c) is amended by striking 
     ``section 3280'' and inserting ``part 3280''.
       (3) Paragraph (2) of section 26(b) is amended by 
     redesignating subparagraphs (S) and (T) as subparagraphs (U) 
     and (V), respectively, and by inserting after subparagraph 
     (R) the following new subparagraphs:
       ``(S) sections 106(e)(3)(A)(ii), 223(b)(8)(B)(i)(II), and 
     408(d)(9)(D)(i)(II) (relating to certain failures to maintain 
     high deductible health plan coverage),
       ``(T) section 170(o)(3)(B) (relating to recapture of 
     certain deductions for fractional gifts),''.
       (4) Subsection (a) of section 34 is amended--
       (A) in paragraph (1), by striking ``with respect to 
     gasoline used during the taxable year on a farm for farming 
     purposes'',
       (B) in paragraph (2), by striking ``with respect to 
     gasoline used during the taxable year (A) otherwise than as a 
     fuel in a highway vehicle or (B) in vehicles while engaged in 
     furnishing certain public passenger land transportation 
     service'', and
       (C) in paragraph (3), by striking ``with respect to fuels 
     used for nontaxable purposes or resold during the taxable 
     year''.
       (5) Paragraph (2) of section 35(d) is amended--
       (A) by striking ``paragraph (2) or (4) of'', and
       (B) by striking ``(within the meaning of section 
     152(e)(1))'' and inserting ``(as defined in section 
     152(e)(4)(A))''.
       (6) Subsection (b) of section 38 is amended--
       (A) by striking ``and'' each place it appears at the end of 
     any paragraph,
       (B) by striking ``plus'' each place it appears at the end 
     of any paragraph, and
       (C) by inserting ``plus'' at the end of paragraph (30).
       (7) Paragraphs (2) and (3) of section 45L(c) are each 
     amended by striking ``section 3280'' and inserting ``part 
     3280''.
       (8) Subsection (c) of section 48 is amended by striking 
     ``subsection'' in the text preceding paragraph (1) and 
     inserting ``section''.
       (9) Paragraphs (1)(B) and (2)(B) of section 48(c) are each 
     amended by striking ``paragraph (1)'' and inserting 
     ``subsection (a)''.
       (10) Clause (ii) of section 48A(d)(4)(B) is amended by 
     striking ``subsection'' both places it appears.
       (11) The last sentence of section 125(b)(2) is amended by 
     striking ``last sentence'' and inserting ``second sentence''.
       (12) Subclause (II) of section 167(g)(8)(C)(ii) is amended 
     by striking ``section 263A(j)(2)'' and inserting ``section 
     263A(i)(2)''.
       (13)(A) Clause (vii) of section 170(b)(1)(A) is amended by 
     striking ``subparagraph (E)'' and inserting ``subparagraph 
     (F)''.
       (B) Clause (ii) of section 170(e)(1)(B) is amended by 
     striking ``subsection (b)(1)(E)'' and inserting ``subsection 
     (b)(1)(F)''.
       (C) Clause (i) of section 1400S(a)(2)(A) is amended by 
     striking ``subparagraph (F)'' and inserting ``subparagraph 
     (G)''.
       (D) Subparagraph (A) of section 4942(i)(1) is amended by 
     striking ``section 170(b)(1)(E)(ii)'' and inserting ``section 
     170(b)(1)(F)(ii)''.
       (14) Subclause (II) of section 170(e)(1)(B)(i) is amended 
     by inserting ``, but without regard to clause (ii) thereof'' 
     after ``paragraph (7)(C)''.
       (15)(A) Subparagraph (A) of section 170(o)(1) and 
     subparagraph (A) of section 2522(e)(1) are

[[Page 23085]]

     each amended by striking ``all interest in the property is'' 
     and inserting ``all interests in the property are''.
       (B) Section 170(o)(3)(A)(i), and section 2522(e)(2)(A)(i) 
     (as redesignated by section 403(d)(2)), are each amended--
       (i) by striking ``interest'' and inserting ``interests'', 
     and
       (ii) by striking ``before'' and inserting ``on or before''.
       (16)(A) Subparagraph (C) of section 852(b)(4) is amended to 
     read as follows:
       ``(C) Determination of holding periods.--For purposes of 
     this paragraph, in determining the period for which the 
     taxpayer has held any share of stock--
       ``(i) the rules of paragraphs (3) and (4) of section 246(c) 
     shall apply, and
       ``(ii) there shall not be taken into account any day which 
     is more than 6 months after the date on which such share 
     becomes ex-dividend.''.
       (B) Subparagraph (B) of section 857(b)(8) is amended to 
     read as follows:
       ``(B) Determination of holding periods.--For purposes of 
     this paragraph, in determining the period for which the 
     taxpayer has held any share of stock or beneficial interest--
       ``(i) the rules of paragraphs (3) and (4) of section 246(c) 
     shall apply, and
       ``(ii) there shall not be taken into account any day which 
     is more than 6 months after the date on which such share or 
     interest becomes ex-dividend.''.
       (17) Paragraph (2) of section 856(l) is amended by striking 
     the last sentence and inserting the following: ``For purposes 
     of subparagraph (B), securities described in subsection 
     (m)(2)(A) shall not be taken into account.''.
       (18) Subparagraph (F) of section 954(c)(1) is amended to 
     read as follows:
       ``(F) Income from notional principal contracts.--
       ``(i) In general.--Net income from notional principal 
     contracts.
       ``(ii) Coordination with other categories of foreign 
     personal holding company income.--Any item of income, gain, 
     deduction, or loss from a notional principal contract entered 
     into for purposes of hedging any item described in any 
     preceding subparagraph shall not be taken into account for 
     purposes of this subparagraph but shall be taken into account 
     under such other subparagraph.''.
       (19) Paragraph (1) of section 954(c) is amended by 
     redesignating subparagraph (I) as subparagraph (H).
       (20) Paragraph (33) of section 1016(a), as redesignated by 
     section 407(a)(1)(C), is amended by striking ``section 
     25C(e)'' and inserting ``section 25C(f)''.
       (21) Paragraph (36) of section 1016(a), as redesignated by 
     section 407(a)(1)(C), is amended by striking ``section 
     30C(f)'' and inserting ``section 30C(e)(1)''.
       (22) Subparagraph (G) of section 1260(c)(2) is amended by 
     adding ``and'' at the end.
       (23)(A) Section 1297 is amended by striking subsection (d) 
     and by redesignating subsections (e) and (f) as subsections 
     (d) and (e), respectively.
       (B) Subparagraph (G) of section 1260(c)(2) is amended by 
     striking ``subsection (e)'' and inserting ``subsection (d)''.
       (C) Subparagraph (B) of section 1298(a)(2) is amended by 
     striking ``Section 1297(e)'' and inserting ``Section 
     1297(d)''.
       (24) Paragraph (1) of section 1362(f) is amended--
       (A) by striking ``, section 1361(b)(3)(B)(ii), or section 
     1361(c)(1)(A)(ii)'' and inserting ``or section 
     1361(b)(3)(B)(ii)'', and
       (B) by striking ``, section 1361(b)(3)(C), or section 
     1361(c)(1)(D)(iii)'' in subparagraph (B) and inserting ``or 
     section 1361(b)(3)(C)''.
       (25) Paragraph (2) of section 1400O is amended by striking 
     ``under of'' and inserting ``under''.
       (26) The table of sections for part II of subchapter Y of 
     chapter 1 is amended by adding at the end the following new 
     item:

``Sec. 1400T. Special rules for mortgage revenue bonds.''.

       (27) Subsection (b) of section 4082 is amended to read as 
     follows:
       ``(b) Nontaxable Use.--For purposes of this section, the 
     term `nontaxable use' means--
       ``(1) any use which is exempt from the tax imposed by 
     section 4041(a)(1) other than by reason of a prior imposition 
     of tax,
       ``(2) any use in a train, and
       ``(3) any use described in section 4041(a)(1)(C)(iii)(II).

     The term `nontaxable use' does not include the use of 
     kerosene in an aircraft and such term shall not include any 
     use described in section 6421(e)(2)(C).''.
       (28) Paragraph (4) of section 4101(a) (relating to 
     registration in event of change of ownership) is redesignated 
     as paragraph (5).
       (29) Paragraph (6) of section 4965(c) is amended by 
     striking ``section 4457(e)(1)(A)'' and inserting ``section 
     457(e)(1)(A)''.
       (30) Subpart C of part II of subchapter A of chapter 51 is 
     amended by redesignating section 5432 (relating to 
     recordkeeping by wholesale dealers) as section 5121.
       (31) Paragraph (2) of section 5732(c), as redesignated by 
     section 11125(b)(20)(A) of the SAFETEA-LU, is amended by 
     striking ``this subpart'' and inserting ``this subchapter''.
       (32) Subsection (b) of section 6046 is amended--
       (A) by striking ``subsection (a)(1)'' and inserting 
     ``subsection (a)(1)(A)'', and
       (B) by striking ``paragraph (2) or (3) of subsection (a)'' 
     and inserting ``subparagraph (B) or (C) of subsection 
     (a)(1)''.
       (33)(A) Subparagraph (A) of section 6103(b)(5) is amended 
     by striking ``the Canal Zone,''.
       (B) Section 7651 is amended by striking paragraph (4) and 
     by redesignating paragraph (5) as paragraph (4).
       (34) Subparagraph (A) of section 6211(b)(4) is amended by 
     striking ``and 34'' and inserting ``34, and 35''.
       (35) Subparagraphs (A) and (B) of section 6230(a)(3) are 
     each amended by striking ``section 6013(e)'' and inserting 
     ``section 6015''.
       (36) Paragraph (3) of section 6427(e) (relating to 
     termination), as added by section 11113 of the SAFETEA-LU, is 
     redesignated as paragraph (5) and moved after paragraph (4).
       (37) Clause (ii) of section 6427(l)(4)(A) is amended by 
     striking ``section 4081(a)(2)(iii)'' and inserting ``section 
     4081(a)(2)(A)(iii)''.
       (38)(A) Section 6427, as amended by section 1343(b)(1) of 
     the Energy Policy Act of 2005, is amended by striking 
     subsection (p) (relating to gasohol used in noncommercial 
     aviation) and redesignating subsection (q) as subsection (p).
       (B) The Internal Revenue Code of 1986 shall be applied and 
     administered as if the amendments made by paragraph (2) of 
     section 11151(a) of the SAFETEA-LU had never been enacted.
       (39) Subsection (a) of section 6695A is amended by striking 
     ``then such person'' in paragraph (2) and inserting the 
     following:

     ``then such person''.
       (40) Subparagraph (C) of section 6707A(e)(2) is amended by 
     striking ``section 6662A(e)(2)(C)'' and inserting ``section 
     6662A(e)(2)(B)''.
       (41)(A) Paragraph (3) of section 9002 is amended by 
     striking ``section 309(a)(1)'' and inserting ``section 
     306(a)(1)''.
       (B) Paragraph (1) of section 9004(a) is amended by striking 
     ``section 320(b)(1)(B)'' and inserting ``section 
     315(b)(1)(B)''.
       (C) Paragraph (3) of section 9032 is amended by striking 
     ``section 309(a)(1)'' and inserting ``section 306(a)(1)''.
       (D) Subsection (b) of section 9034 is amended by striking 
     ``section 320(b)(1)(A)'' and inserting ``section 
     315(b)(1)(A)''.
       (42) Section 9006 is amended by striking ``Comptroller 
     General'' each place it appears and inserting ``Commission''.
       (43) Subsection (c) of section 9503 is amended by 
     redesignating paragraph (7) (relating to transfers from the 
     trust fund for certain aviation fuels taxes) as paragraph 
     (6).
       (44) Paragraph (1) of section 1301(g) of the Energy Policy 
     Act of 2005 is amended by striking ``shall take effect of the 
     date of the enactment'' and inserting ``shall take effect on 
     the date of the enactment''.
       (45) The Internal Revenue Code of 1986 shall be applied and 
     administered as if the amendments made by section 1(a) of 
     Public Law 109-433 had never been enacted.
       (b) Clerical Amendments Related to the Tax Relief and 
     Health Care Act of 2006.--
       (1) Amendment related to section 209 of division a of the 
     act.--Paragraph (3) of section 168(l) is amended by striking 
     ``enzymatic''.
       (2) Amendments related to section 419 of division a of the 
     act.--
       (A) Clause (iv) of section 6724(d)(1)(B) is amended by 
     inserting ``or (h)(1)'' after ``section 6050H(a)''.
       (B) Subparagraph (K) of section 6724(d)(2) is amended by 
     inserting ``or (h)(2)'' after ``section 6050H(d)''.
       (3) Effective date.--The amendments made by this subsection 
     shall take effect as if included in the provision of the Tax 
     Relief and Health Care Act of 2006 to which they relate.
       (c) Clerical Amendments Related to the Gulf Opportunity 
     Zone Act of 2005.--
       (1) Amendments related to section 402 of the act.--
     Subparagraph (B) of section 24(d)(1) is amended--
       (A) by striking ``the excess (if any) of'' in the matter 
     preceding clause (i) and inserting ``the greater of'', and
       (B) by striking ``section'' in clause (ii)(II) and 
     inserting ``section 32''.
       (2) Effective date.--The amendments made by this subsection 
     shall take effect as if included in the provisions of the 
     Gulf Opportunity Zone Act of 2005 to which they relate.
       (d) Clerical Amendments Related to the Safe, Accountable, 
     Flexible, Efficient Transportation Equity Act: A Legacy for 
     Users.--
       (1) Amendments related to section 11163 of the act.--
     Subparagraph (C) of section 6416(a)(4) is amended--
       (A) by striking ``ultimate vendor'' and all that follows 
     through ``has certified'' and inserting ``ultimate vendor or 
     credit card issuer has certified'', and
       (B) by striking ``all ultimate purchasers of the vendor'' 
     and all that follows through ``are certified'' and inserting 
     ``all ultimate purchasers of the vendor or credit card issuer 
     are certified''.
       (2) Effective date.--The amendments made by this subsection 
     shall take effect as if included in the provisions of the 
     Safe, Accountable, Flexible, Efficient Transportation Equity 
     Act: A Legacy for Users to which they relate.
       (e) Clerical Amendments Related to the Energy Policy Act of 
     2005.--
       (1) Amendment related to section 1344 of the act.--
     Subparagraph (B) of section 6427(e)(5), as redesignated by 
     subsection (a)(36), is amended by striking ``2006'' and 
     inserting ``2008''.
       (2) Amendments related to section 1351 of the act.--
     Subparagraphs (A)(ii) and (B)(ii) of section 41(f)(1) are 
     each amended by striking ``qualified research expenses and 
     basic research

[[Page 23086]]

     payments'' and inserting ``qualified research expenses, basic 
     research payments, and amounts paid or incurred to energy 
     research consortiums,''.
       (3) Effective date.--The amendments made by this subsection 
     shall take effect as if included in the provisions of the 
     Energy Policy Act of 2005 to which they relate.
       (f) Clerical Amendments Related to the American Jobs 
     Creation Act of 2004.--
       (1) Amendment related to section 301 of the act.--Section 
     9502 is amended by striking subsection (e) and redesignating 
     subsection (f) as subsection (e).
       (2) Amendment related to section 413 of the act.--
     Subsection (b) of section 1298 is amended by striking 
     paragraph (7) and by redesignating paragraphs (8) and (9) as 
     paragraphs (7) and (8), respectively.
       (3) Amendment related to section 895 of the act.--Clause 
     (iv) of section 904(f)(3)(D) is amended by striking ``a 
     controlled group'' and inserting ``an affiliated group''.
       (4) Effective date.--The amendments made by this subsection 
     shall take effect as if included in the provisions of the 
     American Jobs Creation Act of 2004 to which they relate.
       (g) Clerical Amendments Related to the FSC Repeal and 
     Extraterritorial Income Exclusion Act of 2000.--
       (1) Subclause (I) of section 56(g)(4)(C)(ii) is amended by 
     striking ``921'' and inserting ``921 (as in effect before its 
     repeal by the FSC Repeal and Extraterritorial Income 
     Exclusion Act of 2000)''.
       (2) Clause (iv) of section 54(g)(4)(C) is amended by 
     striking ``a cooperative described in section 927(a)(4)'' and 
     inserting ``an organization to which part I of subchapter T 
     (relating to tax treatment of cooperatives) applies which is 
     engaged in the marketing of agricultural or horticultural 
     products''.
       (3) Paragraph (4) of section 245(c) is amended by adding at 
     the end the following new subparagraph:
       ``(C) FSC.--The term `FSC' has the meaning given such term 
     by section 922.''.
       (4) Subsection (c) of section 245 is amended by inserting 
     at the end the following new paragraph:
       ``(5) References to prior law.--Any reference in this 
     subsection to section 922, 923, or 927 shall be treated as a 
     reference to such section as in effect before its repeal by 
     the FSC Repeal and Extraterritorial Income Exclusion Act of 
     2000.''.
       (5) Paragraph (4) of section 275(a) is amended by striking 
     ``if'' and all that follows and inserting ``if the taxpayer 
     chooses to take to any extent the benefits of section 901.''.
       (6)(A) Subsection (a) of section 291 is amended by striking 
     paragraph (4) and by redesignating paragraph (5) as paragraph 
     (4).
       (B) Paragraph (1) of section 291(c) is amended by striking 
     ``subsection (a)(5)'' and inserting ``subsection (a)(4)''.
       (7)(A) Paragraph (4) of section 441(b) is amended by 
     striking ``FSC or''.
       (B) Subsection (h) of section 441 is amended--
       (i) by striking ``FSC or'' each place it appears, and
       (ii) by striking ``FSC's and'' in the heading thereof.
       (8) Subparagraph (B) of section 884(d)(2) is amended by 
     inserting before the comma ``(as in effect before their 
     repeal by the FSC Repeal and Extraterritorial Income 
     Exclusion Act of 2000)''.
       (9) Section 901 is amended by striking subsection (h).
       (10) Clause (v) of section 904(d)(2)(B) is amended--
       (A) by inserting ``and'' at the end of subclause (I), by 
     striking subclause (II), and by redesignating subclause (III) 
     as subclause (II),
       (B) by striking ``a FSC (or a former FSC)'' in subclause 
     (II) (as so redesignated) and inserting ``a former FSC (as 
     defined in section 922)'', and
       (C) by adding at the end the following:
     ``Any reference in subclause (II) to section 922, 923, or 927 
     shall be treated as a reference to such section as in effect 
     before its repeal by the FSC Repeal and Extraterritorial 
     Income Exclusion Act of 2000.''.
       (11) Subsection (b) of section 906 is amended by striking 
     paragraph (5) and redesignating paragraphs (6) and (7) as 
     paragraphs (5) and (6), respectively.
       (12) Subparagraph (B) of section 936(f)(2) is amended by 
     striking ``FSC or''.
       (13) Section 951 is amended by striking subsection (c) and 
     by redesignating subsection (d) as subsection (c).
       (14) Subsection (b) of section 952 is amended by striking 
     the second sentence.
       (15)(A) Paragraph (2) of section 956(c) is amended--
       (i) by striking subparagraph (I) and by redesignating 
     subparagraphs (J) through (M) as subparagraphs (I) through 
     (L), respectively, and
       (ii) by striking ``subparagraphs (J), (K), and (L)'' in the 
     flush sentence at the end and inserting ``subparagraphs (I), 
     (J), and (K)''.
       (B) Clause (ii) of section 954(c)(2)(C) is amended by 
     striking ``section 956(c)(2)(J)'' and inserting ``section 
     956(c)(2)(I)''.
       (16) Paragraph (1) of section 992(a) is amended by striking 
     subparagraph (E), by inserting ``and'' at the end of 
     subparagraph (C), and by striking ``, and'' at the end of 
     subparagraph (D) and inserting a period.
       (17) Paragraph (5) of section 1248(d) is amended--
       (A) by inserting ``(as defined in section 922)'' after ``a 
     FSC'', and
       (B) by adding at the end the following new sentence: ``Any 
     reference in this paragraph to section 922, 923, or 927 shall 
     be treated as a reference to such section as in effect before 
     its repeal by the FSC Repeal and Extraterritorial Income 
     Exclusion Act of 2000.''.
       (18) Subparagraph (D) of section 1297(b)(2) is amended by 
     striking ``foreign trade income of a FSC or''.
       (19)(A) Paragraph (1) of section 6011(c) is amended by 
     striking ``or former DISC or a FSC or former FSC'' and 
     inserting ``, former DISC, or former FSC (as defined in 
     section 922 as in effect before its repeal by the FSC Repeal 
     and Extraterritorial Income Exclusion Act of 2000)''.
       (B) Subsection (c) of section 6011 is amended by striking 
     ``and FSC's'' in the heading thereof.
       (20) Subsection (c) of section 6072 is amended by striking 
     ``a FSC or former FSC'' and inserting ``a former FSC (as 
     defined in section 922 as in effect before its repeal by the 
     FSC Repeal and Extraterritorial Income Exclusion Act of 
     2000)''.
       (21) Section 6686 is amended by inserting ``FORMER'' before 
     ``FSC'' in the heading thereof.

  TITLE IV--PARITY IN APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH 
                                BENEFITS

     SEC. 401. PARITY IN APPLICATION OF CERTAIN LIMITS TO MENTAL 
                   HEALTH BENEFITS.

       (a) Amendment to the Internal Revenue Code of 1986.--
     Section 9812(f)(3) of the Internal Revenue Code of 1986 is 
     amended by striking ``2007'' and inserting ``2008''.
       (b) Amendment to the Employee Retirement Income Security 
     Act of 1974.--Section 712(f) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1185a(f)) is amended 
     by striking ``2007'' and inserting ``2008''.
       (c) Amendment to the Public Health Service Act.--Section 
     2705(f) of the Public Health Service Act (42 U.S.C. 300gg-
     5(f)) is amended by striking ``2007'' and inserting ``2008''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to benefits for services furnished after December 
     31, 2007.


              Motion Offered by Mr. Frank of Massachusetts

  The text of the motion is as follows:

       Mr. Frank of Massachusetts moves that the House concur in 
     the Senate amendment to the House amendment to the Senate 
     amendment with an amendment.

  The text of the House amendment to the Senate amendment to the House 
amendment to the Senate amendment is as follows:

       In lieu of the matter proposed to be inserted by the 
     amendment of the Senate to the amendment of the House to the 
     amendment of the Senate, insert the following:

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Emergency 
     Economic Stabilization Act of 2008''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Purposes.
Sec. 3. Definitions.

                TITLE I--TROUBLED ASSETS RELIEF PROGRAM

Sec. 101. Purchases of troubled assets.
Sec. 102. Insurance of troubled assets.
Sec. 103. Considerations.
Sec. 104. Financial Stability Oversight Board.
Sec. 105. Reports.
Sec. 106. Rights; management; sale of troubled assets; revenues and 
              sale proceeds.
Sec. 107. Contracting procedures.
Sec. 108. Conflicts of interest.
Sec. 109. Foreclosure mitigation efforts.
Sec. 110. Assistance to homeowners.
Sec. 111. Executive compensation and corporate governance.
Sec. 112. Coordination with foreign authorities and central banks.
Sec. 113. Minimization of long-term costs and maximization of benefits 
              for taxpayers.
Sec. 114. Market transparency.
Sec. 115. Graduated authorization to purchase.
Sec. 116. Oversight and audits.
Sec. 117. Study and report on margin authority.
Sec. 118. Funding.
Sec. 119. Judicial review and related matters.
Sec. 120. Termination of authority.
Sec. 121. Special Inspector General for the Troubled Asset Relief 
              Program.
Sec. 122. Increase in statutory limit on the public debt.
Sec. 123. Credit reform.
Sec. 124. HOPE for Homeowners amendments.
Sec. 125. Congressional Oversight Panel.
Sec. 126. FDIC authority.
Sec. 127. Cooperation with the FBI.
Sec. 128. Acceleration of effective date.
Sec. 129. Disclosures on exercise of loan authority.
Sec. 130. Technical corrections.
Sec. 131. Exchange Stabilization Fund reimbursement.
Sec. 132. Authority to suspend mark-to-market accounting.
Sec. 133. Study on mark-to-market accounting.
Sec. 134. Recoupment.
Sec. 135. Preservation of authority.

[[Page 23087]]

                  TITLE II--BUDGET-RELATED PROVISIONS

Sec. 201. Information for congressional support agencies.
Sec. 202. Reports by the Office of Management and Budget and the 
              Congressional Budget Office.
Sec. 203. Analysis in President's Budget.
Sec. 204. Emergency treatment.

                       TITLE III--TAX PROVISIONS

Sec. 301. Gain or loss from sale or exchange of certain preferred 
              stock.
Sec. 302. Special rules for tax treatment of executive compensation of 
              employers participating in the troubled assets relief 
              program.
Sec. 303. Extension of exclusion of income from discharge of qualified 
              principal residence indebtedness.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to immediately provide authority and facilities that 
     the Secretary of the Treasury can use to restore liquidity 
     and stability to the financial system of the United States; 
     and
       (2) to ensure that such authority and such facilities are 
     used in a manner that--
       (A) protects home values, college funds, retirement 
     accounts, and life savings;
       (B) preserves homeownership and promotes jobs and economic 
     growth;
       (C) maximizes overall returns to the taxpayers of the 
     United States; and
       (D) provides public accountability for the exercise of such 
     authority.

     SEC. 3. DEFINITIONS.

       For purposes of this Act, the following definitions shall 
     apply:
       (1) Appropriate committees of congress.--The term 
     ``appropriate committees of Congress'' means--
       (A) the Committee on Banking, Housing, and Urban Affairs, 
     the Committee on Finance, the Committee on the Budget, and 
     the Committee on Appropriations of the Senate; and
       (B) the Committee on Financial Services, the Committee on 
     Ways and Means, the Committee on the Budget, and the 
     Committee on Appropriations of the House of Representatives.
       (2) Board.--The term ``Board'' means the Board of Governors 
     of the Federal Reserve System.
       (3) Congressional support agencies.--The term 
     ``congressional support agencies'' means the Congressional 
     Budget Office and the Joint Committee on Taxation.
       (4) Corporation.--The term ``Corporation'' means the 
     Federal Deposit Insurance Corporation.
       (5) Financial institution.--The term ``financial 
     institution'' means any institution, including, but not 
     limited to, any bank, savings association, credit union, 
     security broker or dealer, or insurance company, established 
     and regulated under the laws of the United States or any 
     State, territory, or possession of the United States, the 
     District of Columbia, Commonwealth of Puerto Rico, 
     Commonwealth of Northern Mariana Islands, Guam, American 
     Samoa, or the United States Virgin Islands, and having 
     significant operations in the United States, but excluding 
     any central bank of, or institution owned by, a foreign 
     government.
       (6) Fund.--The term ``Fund'' means the Troubled Assets 
     Insurance Financing Fund established under section 102.
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.
       (8) TARP.--The term ``TARP'' means the Troubled Asset 
     Relief Program established under section 101.
       (9) Troubled assets.--The term ``troubled assets'' means--
       (A) residential or commercial mortgages and any securities, 
     obligations, or other instruments that are based on or 
     related to such mortgages, that in each case was originated 
     or issued on or before March 14, 2008, the purchase of which 
     the Secretary determines promotes financial market stability; 
     and
       (B) any other financial instrument that the Secretary, 
     after consultation with the Chairman of the Board of 
     Governors of the Federal Reserve System, determines the 
     purchase of which is necessary to promote financial market 
     stability, but only upon transmittal of such determination, 
     in writing, to the appropriate committees of Congress.

                TITLE I--TROUBLED ASSETS RELIEF PROGRAM

     SEC. 101. PURCHASES OF TROUBLED ASSETS.

       (a) Offices; Authority.--
       (1) Authority.--The Secretary is authorized to establish 
     the Troubled Asset Relief Program (or ``TARP'') to purchase, 
     and to make and fund commitments to purchase, troubled assets 
     from any financial institution, on such terms and conditions 
     as are determined by the Secretary, and in accordance with 
     this Act and the policies and procedures developed and 
     published by the Secretary.
       (2) Commencement of program.--Establishment of the policies 
     and procedures and other similar administrative requirements 
     imposed on the Secretary by this Act are not intended to 
     delay the commencement of the TARP.
       (3) Establishment of treasury office.--
       (A) In general.--The Secretary shall implement any program 
     under paragraph (1) through an Office of Financial Stability, 
     established for such purpose within the Office of Domestic 
     Finance of the Department of the Treasury, which office shall 
     be headed by an Assistant Secretary of the Treasury, 
     appointed by the President, by and with the advice and 
     consent of the Senate, except that an interim Assistant 
     Secretary may be appointed by the Secretary.
       (B) Clerical amendments.--
       (i) Title 5.--Section 5315 of title 5, United States Code, 
     is amended in the item relating to Assistant Secretaries of 
     the Treasury, by striking ``(9)'' and inserting ``(10)''.
       (ii) Title 31.--Section 301(e) of title 31, United States 
     Code, is amended by striking ``9'' and inserting ``10''.
       (b) Consultation.--In exercising the authority under this 
     section, the Secretary shall consult with the Board, the 
     Corporation, the Comptroller of the Currency, the Director of 
     the Office of Thrift Supervision, and the Secretary of 
     Housing and Urban Development.
       (c) Necessary Actions.--The Secretary is authorized to take 
     such actions as the Secretary deems necessary to carry out 
     the authorities in this Act, including, without limitation, 
     the following:
       (1) The Secretary shall have direct hiring authority with 
     respect to the appointment of employees to administer this 
     Act.
       (2) Entering into contracts, including contracts for 
     services authorized by section 3109 of title 5, United States 
     Code.
       (3) Designating financial institutions as financial agents 
     of the Federal Government, and such institutions shall 
     perform all such reasonable duties related to this Act as 
     financial agents of the Federal Government as may be 
     required.
       (4) In order to provide the Secretary with the flexibility 
     to manage troubled assets in a manner designed to minimize 
     cost to the taxpayers, establishing vehicles that are 
     authorized, subject to supervision by the Secretary, to 
     purchase, hold, and sell troubled assets and issue 
     obligations.
       (5) Issuing such regulations and other guidance as may be 
     necessary or appropriate to define terms or carry out the 
     authorities or purposes of this Act.
       (d) Program Guidelines.--Before the earlier of the end of 
     the 2-business-day period beginning on the date of the first 
     purchase of troubled assets pursuant to the authority under 
     this section or the end of the 45-day period beginning on the 
     date of enactment of this Act, the Secretary shall publish 
     program guidelines, including the following:
       (1) Mechanisms for purchasing troubled assets.
       (2) Methods for pricing and valuing troubled assets.
       (3) Procedures for selecting asset managers.
       (4) Criteria for identifying troubled assets for purchase.
       (e) Preventing Unjust Enrichment.--In making purchases 
     under the authority of this Act, the Secretary shall take 
     such steps as may be necessary to prevent unjust enrichment 
     of financial institutions participating in a program 
     established under this section, including by preventing the 
     sale of a troubled asset to the Secretary at a higher price 
     than what the seller paid to purchase the asset. This 
     subsection does not apply to troubled assets acquired in a 
     merger or acquisition, or a purchase of assets from a 
     financial institution in conservatorship or receivership, or 
     that has initiated bankruptcy proceedings under title 11, 
     United States Code.

     SEC. 102. INSURANCE OF TROUBLED ASSETS.

       (a) Authority.--
       (1) In general.--If the Secretary establishes the program 
     authorized under section 101, then the Secretary shall 
     establish a program to guarantee troubled assets originated 
     or issued prior to March 14, 2008, including mortgage-backed 
     securities.
       (2) Guarantees.--In establishing any program under this 
     subsection, the Secretary may develop guarantees of troubled 
     assets and the associated premiums for such guarantees. Such 
     guarantees and premiums may be determined by category or 
     class of the troubled assets to be guaranteed.
       (3) Extent of guarantee.--Upon request of a financial 
     institution, the Secretary may guarantee the timely payment 
     of principal of, and interest on, troubled assets in amounts 
     not to exceed 100 percent of such payments. Such guarantee 
     may be on such terms and conditions as are determined by the 
     Secretary, provided that such terms and conditions are 
     consistent with the purposes of this Act.
       (b) Reports.--Not later than 90 days after the date of 
     enactment of this Act, the Secretary shall report to the 
     appropriate committees of Congress on the program established 
     under subsection (a).
       (c) Premiums.--
       (1) In general.--The Secretary shall collect premiums from 
     any financial institution participating in the program 
     established under subsection (a). Such premiums shall be in 
     an amount that the Secretary determines necessary to meet the 
     purposes of this Act and to provide sufficient reserves 
     pursuant to paragraph (3).

[[Page 23088]]

       (2) Authority to base premiums on product risk.--In 
     establishing any premium under paragraph (1), the Secretary 
     may provide for variations in such rates according to the 
     credit risk associated with the particular troubled asset 
     that is being guaranteed. The Secretary shall publish the 
     methodology for setting the premium for a class of troubled 
     assets together with an explanation of the appropriateness of 
     the class of assets for participation in the program 
     established under this section. The methodology shall ensure 
     that the premium is consistent with paragraph (3).
       (3) Minimum level.--The premiums referred to in paragraph 
     (1) shall be set by the Secretary at a level necessary to 
     create reserves sufficient to meet anticipated claims, based 
     on an actuarial analysis, and to ensure that taxpayers are 
     fully protected.
       (4) Adjustment to purchase authority.--The purchase 
     authority limit in section 115 shall be reduced by an amount 
     equal to the difference between the total of the outstanding 
     guaranteed obligations and the balance in the Troubled Assets 
     Insurance Financing Fund.
       (d) Troubled Assets Insurance Financing Fund.--
       (1) Deposits.--The Secretary shall deposit fees collected 
     under this section into the Fund established under paragraph 
     (2).
       (2) Establishment.--There is established a Troubled Assets 
     Insurance Financing Fund that shall consist of the amounts 
     collected pursuant to paragraph (1), and any balance in such 
     fund shall be invested by the Secretary in United States 
     Treasury securities, or kept in cash on hand or on deposit, 
     as necessary.
       (3) Payments from fund.--The Secretary shall make payments 
     from amounts deposited in the Fund to fulfill obligations of 
     the guarantees provided to financial institutions under 
     subsection (a).

     SEC. 103. CONSIDERATIONS.

       In exercising the authorities granted in this Act, the 
     Secretary shall take into consideration--
       (1) protecting the interests of taxpayers by maximizing 
     overall returns and minimizing the impact on the national 
     debt;
       (2) providing stability and preventing disruption to 
     financial markets in order to limit the impact on the economy 
     and protect American jobs, savings, and retirement security;
       (3) the need to help families keep their homes and to 
     stabilize communities;
       (4) in determining whether to engage in a direct purchase 
     from an individual financial institution, the long-term 
     viability of the financial institution in determining whether 
     the purchase represents the most efficient use of funds under 
     this Act;
       (5) ensuring that all financial institutions are eligible 
     to participate in the program, without discrimination based 
     on size, geography, form of organization, or the size, type, 
     and number of assets eligible for purchase under this Act;
       (6) providing financial assistance to financial 
     institutions, including those serving low- and moderate-
     income populations and other underserved communities, and 
     that have assets less than $1,000,000,000, that were well or 
     adequately capitalized as of June 30, 2008, and that as a 
     result of the devaluation of the preferred government-
     sponsored enterprises stock will drop one or more capital 
     levels, in a manner sufficient to restore the financial 
     institutions to at least an adequately capitalized level;
       (7) the need to ensure stability for United States public 
     instrumentalities, such as counties and cities, that may have 
     suffered significant increased costs or losses in the current 
     market turmoil;
       (8) protecting the retirement security of Americans by 
     purchasing troubled assets held by or on behalf of an 
     eligible retirement plan described in clause (iii), (iv), 
     (v), or (vi) of section 402(c)(8)(B) of the Internal Revenue 
     Code of 1986, except that such authority shall not extend to 
     any compensation arrangements subject to section 409A of such 
     Code; and
       (9) the utility of purchasing other real estate owned and 
     instruments backed by mortgages on multifamily properties.

     SEC. 104. FINANCIAL STABILITY OVERSIGHT BOARD.

       (a) Establishment.--There is established the Financial 
     Stability Oversight Board, which shall be responsible for--
       (1) reviewing the exercise of authority under a program 
     developed in accordance with this Act, including--
       (A) policies implemented by the Secretary and the Office of 
     Financial Stability created under sections 101 and 102, 
     including the appointment of financial agents, the 
     designation of asset classes to be purchased, and plans for 
     the structure of vehicles used to purchase troubled assets; 
     and
       (B) the effect of such actions in assisting American 
     families in preserving home ownership, stabilizing financial 
     markets, and protecting taxpayers;
       (2) making recommendations, as appropriate, to the 
     Secretary regarding use of the authority under this Act; and
       (3) reporting any suspected fraud, misrepresentation, or 
     malfeasance to the Special Inspector General for the Troubled 
     Assets Relief Program or the Attorney General of the United 
     States, consistent with section 535(b) of title 28, United 
     States Code.
       (b) Membership.--The Financial Stability Oversight Board 
     shall be comprised of--
       (1) the Chairman of the Board of Governors of the Federal 
     Reserve System;
       (2) the Secretary;
       (3) the Director of the Federal Housing Finance Agency;
       (4) the Chairman of the Securities Exchange Commission; and
       (5) the Secretary of Housing and Urban Development.
       (c) Chairperson.--The chairperson of the Financial 
     Stability Oversight Board shall be elected by the members of 
     the Board from among the members other than the Secretary.
       (d) Meetings.--The Financial Stability Oversight Board 
     shall meet 2 weeks after the first exercise of the purchase 
     authority of the Secretary under this Act, and monthly 
     thereafter.
       (e) Additional Authorities.--In addition to the 
     responsibilities described in subsection (a), the Financial 
     Stability Oversight Board shall have the authority to ensure 
     that the policies implemented by the Secretary are--
       (1) in accordance with the purposes of this Act;
       (2) in the economic interests of the United States; and
       (3) consistent with protecting taxpayers, in accordance 
     with section 113(a).
       (f) Credit Review Committee.--The Financial Stability 
     Oversight Board may appoint a credit review committee for the 
     purpose of evaluating the exercise of the purchase authority 
     provided under this Act and the assets acquired through the 
     exercise of such authority, as the Financial Stability 
     Oversight Board determines appropriate.
       (g) Reports.--The Financial Stability Oversight Board shall 
     report to the appropriate committees of Congress and the 
     Congressional Oversight Panel established under section 125, 
     not less frequently than quarterly, on the matters described 
     under subsection (a)(1).
       (h) Termination.--The Financial Stability Oversight Board, 
     and its authority under this section, shall terminate on the 
     expiration of the 15-day period beginning upon the later of--
       (1) the date that the last troubled asset acquired by the 
     Secretary under section 101 has been sold or transferred out 
     of the ownership or control of the Federal Government; or
       (2) the date of expiration of the last insurance contract 
     issued under section 102.

     SEC. 105. REPORTS.

       (a) In General.--Before the expiration of the 60-day period 
     beginning on the date of the first exercise of the authority 
     granted in section 101(a), or of the first exercise of the 
     authority granted in section 102, whichever occurs first, and 
     every 30-day period thereafter, the Secretary shall report to 
     the appropriate committees of Congress, with respect to each 
     such period--
       (1) an overview of actions taken by the Secretary, 
     including the considerations required by section 103 and the 
     efforts under section 109;
       (2) the actual obligation and expenditure of the funds 
     provided for administrative expenses by section 118 during 
     such period and the expected expenditure of such funds in the 
     subsequent period; and
       (3) a detailed financial statement with respect to the 
     exercise of authority under this Act, including--
       (A) all agreements made or renewed;
       (B) all insurance contracts entered into pursuant to 
     section 102;
       (C) all transactions occurring during such period, 
     including the types of parties involved;
       (D) the nature of the assets purchased;
       (E) all projected costs and liabilities;
       (F) operating expenses, including compensation for 
     financial agents;
       (G) the valuation or pricing method used for each 
     transaction; and
       (H) a description of the vehicles established to exercise 
     such authority.
       (b) Tranche Reports to Congress.--
       (1) Reports.--The Secretary shall provide to the 
     appropriate committees of Congress, at the times specified in 
     paragraph (2), a written report, including--
       (A) a description of all of the transactions made during 
     the reporting period;
       (B) a description of the pricing mechanism for the 
     transactions;
       (C) a justification of the price paid for and other 
     financial terms associated with the transactions;
       (D) a description of the impact of the exercise of such 
     authority on the financial system, supported, to the extent 
     possible, by specific data;
       (E) a description of challenges that remain in the 
     financial system, including any benchmarks yet to be 
     achieved; and
       (F) an estimate of additional actions under the authority 
     provided under this Act that may be necessary to address such 
     challenges.
       (2) Timing.--The report required by this subsection shall 
     be submitted not later than 7 days after the date on which 
     commitments to purchase troubled assets under the authorities 
     provided in this Act first reach an aggregate of 
     $50,000,000,000 and not later than 7 days after each 
     $50,000,000,000 interval of such commitments is reached 
     thereafter.

[[Page 23089]]

       (c) Regulatory Modernization Report.--The Secretary shall 
     review the current state of the financial markets and the 
     regulatory system and submit a written report to the 
     appropriate committees of Congress not later than April 30, 
     2009, analyzing the current state of the regulatory system 
     and its effectiveness at overseeing the participants in the 
     financial markets, including the over-the-counter swaps 
     market and government-sponsored enterprises, and providing 
     recommendations for improvement, including--
       (1) recommendations regarding--
       (A) whether any participants in the financial markets that 
     are currently outside the regulatory system should become 
     subject to the regulatory system; and
       (B) enhancement of the clearing and settlement of over-the-
     counter swaps; and
       (2) the rationale underlying such recommendations.
       (d) Sharing of Information.--Any report required under this 
     section shall also be submitted to the Congressional 
     Oversight Panel established under section 125.
       (e) Sunset.--The reporting requirements under this section 
     shall terminate on the later of--
       (1) the date that the last troubled asset acquired by the 
     Secretary under section 101 has been sold or transferred out 
     of the ownership or control of the Federal Government; or
       (2) the date of expiration of the last insurance contract 
     issued under section 102.

     SEC. 106. RIGHTS; MANAGEMENT; SALE OF TROUBLED ASSETS; 
                   REVENUES AND SALE PROCEEDS.

       (a) Exercise of Rights.--The Secretary may, at any time, 
     exercise any rights received in connection with troubled 
     assets purchased under this Act.
       (b) Management of Troubled Assets.--The Secretary shall 
     have authority to manage troubled assets purchased under this 
     Act, including revenues and portfolio risks therefrom.
       (c) Sale of Troubled Assets.--The Secretary may, at any 
     time, upon terms and conditions and at a price determined by 
     the Secretary, sell, or enter into securities loans, 
     repurchase transactions, or other financial transactions in 
     regard to, any troubled asset purchased under this Act.
       (d) Transfer to Treasury.--Revenues of, and proceeds from 
     the sale of troubled assets purchased under this Act, or from 
     the sale, exercise, or surrender of warrants or senior debt 
     instruments acquired under section 113 shall be paid into the 
     general fund of the Treasury for reduction of the public 
     debt.
       (e) Application of Sunset to Troubled Assets.--The 
     authority of the Secretary to hold any troubled asset 
     purchased under this Act before the termination date in 
     section 120, or to purchase or fund the purchase of a 
     troubled asset under a commitment entered into before the 
     termination date in section 120, is not subject to the 
     provisions of section 120.

     SEC. 107. CONTRACTING PROCEDURES.

       (a) Streamlined Process.--For purposes of this Act, the 
     Secretary may waive specific provisions of the Federal 
     Acquisition Regulation upon a determination that urgent and 
     compelling circumstances make compliance with such provisions 
     contrary to the public interest. Any such determination, and 
     the justification for such determination, shall be submitted 
     to the Committees on Oversight and Government Reform and 
     Financial Services of the House of Representatives and the 
     Committees on Homeland Security and Governmental Affairs and 
     Banking, Housing, and Urban Affairs of the Senate within 7 
     days.
       (b) Additional Contracting Requirements.--In any 
     solicitation or contract where the Secretary has, pursuant to 
     subsection (a), waived any provision of the Federal 
     Acquisition Regulation pertaining to minority contracting, 
     the Secretary shall develop and implement standards and 
     procedures to ensure, to the maximum extent practicable, the 
     inclusion and utilization of minorities (as such term is 
     defined in section 1204(c) of the Financial Institutions 
     Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 
     note)) and women, and minority- and women-owned businesses 
     (as such terms are defined in section 21A(r)(4) of the 
     Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4)), in that 
     solicitation or contract, including contracts to asset 
     managers, servicers, property managers, and other service 
     providers or expert consultants.
       (c) Eligibility of FDIC.--Notwithstanding subsections (a) 
     and (b), the Corporation--
       (1) shall be eligible for, and shall be considered in, the 
     selection of asset managers for residential mortgage loans 
     and residential mortgage-backed securities; and
       (2) shall be reimbursed by the Secretary for any services 
     provided.

     SEC. 108. CONFLICTS OF INTEREST.

       (a) Standards Required.--The Secretary shall issue 
     regulations or guidelines necessary to address and manage or 
     to prohibit conflicts of interest that may arise in 
     connection with the administration and execution of the 
     authorities provided under this Act, including--
       (1) conflicts arising in the selection or hiring of 
     contractors or advisors, including asset managers;
       (2) the purchase of troubled assets;
       (3) the management of the troubled assets held;
       (4) post-employment restrictions on employees; and
       (5) any other potential conflict of interest, as the 
     Secretary deems necessary or appropriate in the public 
     interest.
       (b) Timing.--Regulations or guidelines required by this 
     section shall be issued as soon as practicable after the date 
     of enactment of this Act.

     SEC. 109. FORECLOSURE MITIGATION EFFORTS.

       (a) Residential Mortgage Loan Servicing Standards.--To the 
     extent that the Secretary acquires mortgages, mortgage backed 
     securities, and other assets secured by residential real 
     estate, including multifamily housing, the Secretary shall 
     implement a plan that seeks to maximize assistance for 
     homeowners and use the authority of the Secretary to 
     encourage the servicers of the underlying mortgages, 
     considering net present value to the taxpayer, to take 
     advantage of the HOPE for Homeowners Program under section 
     257 of the National Housing Act or other available programs 
     to minimize foreclosures. In addition, the Secretary may use 
     loan guarantees and credit enhancements to facilitate loan 
     modifications to prevent avoidable foreclosures.
       (b) Coordination.--The Secretary shall coordinate with the 
     Corporation, the Board (with respect to any mortgage or 
     mortgage-backed securities or pool of securities held, owned, 
     or controlled by or on behalf of a Federal reserve bank, as 
     provided in section 110(a)(1)(C)), the Federal Housing 
     Finance Agency, the Secretary of Housing and Urban 
     Development, and other Federal Government entities that hold 
     troubled assets to attempt to identify opportunities for the 
     acquisition of classes of troubled assets that will improve 
     the ability of the Secretary to improve the loan modification 
     and restructuring process and, where permissible, to permit 
     bona fide tenants who are current on their rent to remain in 
     their homes under the terms of the lease. In the case of a 
     mortgage on a residential rental property, the plan required 
     under this section shall include protecting Federal, State, 
     and local rental subsidies and protections, and ensuring any 
     modification takes into account the need for operating funds 
     to maintain decent and safe conditions at the property.
       (c) Consent to Reasonable Loan Modification Requests.--Upon 
     any request arising under existing investment contracts, the 
     Secretary shall consent, where appropriate, and considering 
     net present value to the taxpayer, to reasonable requests for 
     loss mitigation measures, including term extensions, rate 
     reductions, principal write downs, increases in the 
     proportion of loans within a trust or other structure allowed 
     to be modified, or removal of other limitation on 
     modifications.

     SEC. 110. ASSISTANCE TO HOMEOWNERS.

       (a) Definitions.--As used in this section--
       (1) the term ``Federal property manager'' means--
       (A) the Federal Housing Finance Agency, in its capacity as 
     conservator of the Federal National Mortgage Association and 
     the Federal Home Loan Mortgage Corporation;
       (B) the Corporation, with respect to residential mortgage 
     loans and mortgage-backed securities held by any bridge 
     depository institution pursuant to section 11(n) of the 
     Federal Deposit Insurance Act; and
       (C) the Board, with respect to any mortgage or mortgage-
     backed securities or pool of securities held, owned, or 
     controlled by or on behalf of a Federal reserve bank, other 
     than mortgages or securities held, owned, or controlled in 
     connection with open market operations under section 14 of 
     the Federal Reserve Act (12 U.S.C. 353), or as collateral for 
     an advance or discount that is not in default;
       (2) the term ``consumer'' has the same meaning as in 
     section 103 of the Truth in Lending Act (15 U.S.C. 1602);
       (3) the term ``insured depository institution'' has the 
     same meaning as in section 3 of the Federal Deposit Insurance 
     Act (12 U.S.C. 1813); and
       (4) the term ``servicer'' has the same meaning as in 
     section 6(i)(2) of the Real Estate Settlement Procedures Act 
     of 1974 (12 U.S.C. 2605(i)(2)).
       (b) Homeowner Assistance by Agencies.--
       (1) In general.--To the extent that the Federal property 
     manager holds, owns, or controls mortgages, mortgage backed 
     securities, and other assets secured by residential real 
     estate, including multifamily housing, the Federal property 
     manager shall implement a plan that seeks to maximize 
     assistance for homeowners and use its authority to encourage 
     the servicers of the underlying mortgages, and considering 
     net present value to the taxpayer, to take advantage of the 
     HOPE for Homeowners Program under section 257 of the National 
     Housing Act or other available programs to minimize 
     foreclosures.
       (2) Modifications.--In the case of a residential mortgage 
     loan, modifications made under paragraph (1) may include--
       (A) reduction in interest rates;
       (B) reduction of loan principal; and
       (C) other similar modifications.
       (3) Tenant protections.--In the case of mortgages on 
     residential rental properties, modifications made under 
     paragraph (1) shall ensure--
       (A) the continuation of any existing Federal, State, and 
     local rental subsidies and protections; and

[[Page 23090]]

       (B) that modifications take into account the need for 
     operating funds to maintain decent and safe conditions at the 
     property.
       (4) Timing.--Each Federal property manager shall develop 
     and begin implementation of the plan required by this 
     subsection not later than 60 days after the date of enactment 
     of this Act.
       (5) Reports to congress.--Each Federal property manager 
     shall, 60 days after the date of enactment of this Act and 
     every 30 days thereafter, report to Congress specific 
     information on the number and types of loan modifications 
     made and the number of actual foreclosures occurring during 
     the reporting period in accordance with this section.
       (6) Consultation.--In developing the plan required by this 
     subsection, the Federal property managers shall consult with 
     one another and, to the extent possible, utilize consistent 
     approaches to implement the requirements of this subsection.
       (c) Actions With Respect to Servicers.--In any case in 
     which a Federal property manager is not the owner of a 
     residential mortgage loan, but holds an interest in 
     obligations or pools of obligations secured by residential 
     mortgage loans, the Federal property manager shall--
       (1) encourage implementation by the loan servicers of loan 
     modifications developed under subsection (b); and
       (2) assist in facilitating any such modifications, to the 
     extent possible.
       (d) Limitation.--The requirements of this section shall not 
     supersede any other duty or requirement imposed on the 
     Federal property managers under otherwise applicable law.

     SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE.

       (a) Applicability.--Any financial institution that sells 
     troubled assets to the Secretary under this Act shall be 
     subject to the executive compensation requirements of 
     subsections (b) and (c) and the provisions under the Internal 
     Revenue Code of 1986, as provided under the amendment by 
     section 302, as applicable.
       (b) Direct Purchases.--
       (1) In general.--Where the Secretary determines that the 
     purposes of this Act are best met through direct purchases of 
     troubled assets from an individual financial institution 
     where no bidding process or market prices are available, and 
     the Secretary receives a meaningful equity or debt position 
     in the financial institution as a result of the transaction, 
     the Secretary shall require that the financial institution 
     meet appropriate standards for executive compensation and 
     corporate governance. The standards required under this 
     subsection shall be effective for the duration of the period 
     that the Secretary holds an equity or debt position in the 
     financial institution.
       (2) Criteria.--The standards required under this subsection 
     shall include--
       (A) limits on compensation that exclude incentives for 
     senior executive officers of a financial institution to take 
     unnecessary and excessive risks that threaten the value of 
     the financial institution during the period that the 
     Secretary holds an equity or debt position in the financial 
     institution;
       (B) a provision for the recovery by the financial 
     institution of any bonus or incentive compensation paid to a 
     senior executive officer based on statements of earnings, 
     gains, or other criteria that are later proven to be 
     materially inaccurate; and
       (C) a prohibition on the financial institution making any 
     golden parachute payment to its senior executive officer 
     during the period that the Secretary holds an equity or debt 
     position in the financial institution.
       (3) Definition.--For purposes of this section, the term 
     ``senior executive officer'' means an individual who is one 
     of the top 5 highly paid executives of a public company, 
     whose compensation is required to be disclosed pursuant to 
     the Securities Exchange Act of 1934, and any regulations 
     issued thereunder, and non-public company counterparts.
       (c) Auction Purchases.--Where the Secretary determines that 
     the purposes of this Act are best met through auction 
     purchases of troubled assets, and only where such purchases 
     per financial institution in the aggregate exceed 
     $300,000,000 (including direct purchases), the Secretary 
     shall prohibit, for such financial institution, any new 
     employment contract with a senior executive officer that 
     provides a golden parachute in the event of an involuntary 
     termination, bankruptcy filing, insolvency, or receivership. 
     The Secretary shall issue guidance to carry out this 
     paragraph not later than 2 months after the date of enactment 
     of this Act, and such guidance shall be effective upon 
     issuance.
       (d) Sunset.--The provisions of subsection (c) shall apply 
     only to arrangements entered into during the period during 
     which the authorities under section 101(a) are in effect, as 
     determined under section 120.

     SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES AND CENTRAL 
                   BANKS.

       The Secretary shall coordinate, as appropriate, with 
     foreign financial authorities and central banks to work 
     toward the establishment of similar programs by such 
     authorities and central banks. To the extent that such 
     foreign financial authorities or banks hold troubled assets 
     as a result of extending financing to financial institutions 
     that have failed or defaulted on such financing, such 
     troubled assets qualify for purchase under section 101.

     SEC. 113. MINIMIZATION OF LONG-TERM COSTS AND MAXIMIZATION OF 
                   BENEFITS FOR TAXPAYERS.

       (a) Long-Term Costs and Benefits.--
       (1) Minimizing negative impact.--The Secretary shall use 
     the authority under this Act in a manner that will minimize 
     any potential long-term negative impact on the taxpayer, 
     taking into account the direct outlays, potential long-term 
     returns on assets purchased, and the overall economic 
     benefits of the program, including economic benefits due to 
     improvements in economic activity and the availability of 
     credit, the impact on the savings and pensions of 
     individuals, and reductions in losses to the Federal 
     Government.
       (2) Authority.--In carrying out paragraph (1), the 
     Secretary shall--
       (A) hold the assets to maturity or for resale for and until 
     such time as the Secretary determines that the market is 
     optimal for selling such assets, in order to maximize the 
     value for taxpayers; and
       (B) sell such assets at a price that the Secretary 
     determines, based on available financial analysis, will 
     maximize return on investment for the Federal Government.
       (3) Private sector participation.--The Secretary shall 
     encourage the private sector to participate in purchases of 
     troubled assets, and to invest in financial institutions, 
     consistent with the provisions of this section.
       (b) Use of Market Mechanisms.--In making purchases under 
     this Act, the Secretary shall--
       (1) make such purchases at the lowest price that the 
     Secretary determines to be consistent with the purposes of 
     this Act; and
       (2) maximize the efficiency of the use of taxpayer 
     resources by using market mechanisms, including auctions or 
     reverse auctions, where appropriate.
       (c) Direct Purchases.--If the Secretary determines that use 
     of a market mechanism under subsection (b) is not feasible or 
     appropriate, and the purposes of the Act are best met through 
     direct purchases from an individual financial institution, 
     the Secretary shall pursue additional measures to ensure that 
     prices paid for assets are reasonable and reflect the 
     underlying value of the asset.
       (d) Conditions on Purchase Authority for Warrants and Debt 
     Instruments.--
       (1) In general.--The Secretary may not purchase, or make 
     any commitment to purchase, any troubled asset under the 
     authority of this Act, unless the Secretary receives from the 
     financial institution from which such assets are to be 
     purchased--
       (A) in the case of a financial institution, the securities 
     of which are traded on a national securities exchange, a 
     warrant giving the right to the Secretary to receive 
     nonvoting common stock or preferred stock in such financial 
     institution, or voting stock with respect to which, the 
     Secretary agrees not to exercise voting power, as the 
     Secretary determines appropriate; or
       (B) in the case of any financial institution other than one 
     described in subparagraph (A), a warrant for common or 
     preferred stock, or a senior debt instrument from such 
     financial institution, as described in paragraph (2)(C).
       (2) Terms and conditions.--The terms and conditions of any 
     warrant or senior debt instrument required under paragraph 
     (1) shall meet the following requirements:
       (A) Purposes.--Such terms and conditions shall, at a 
     minimum, be designed--
       (i) to provide for reasonable participation by the 
     Secretary, for the benefit of taxpayers, in equity 
     appreciation in the case of a warrant or other equity 
     security, or a reasonable interest rate premium, in the case 
     of a debt instrument; and
       (ii) to provide additional protection for the taxpayer 
     against losses from sale of assets by the Secretary under 
     this Act and the administrative expenses of the TARP.
       (B) Authority to sell, exercise, or surrender.--The 
     Secretary may sell, exercise, or surrender a warrant or any 
     senior debt instrument received under this subsection, based 
     on the conditions established under subparagraph (A).
       (C) Conversion.--The warrant shall provide that if, after 
     the warrant is received by the Secretary under this 
     subsection, the financial institution that issued the warrant 
     is no longer listed or traded on a national securities 
     exchange or securities association, as described in paragraph 
     (1)(A), such warrants shall convert to senior debt, or 
     contain appropriate protections for the Secretary to ensure 
     that the Treasury is appropriately compensated for the value 
     of the warrant, in an amount determined by the Secretary.
       (D) Protections.--Any warrant representing securities to be 
     received by the Secretary under this subsection shall contain 
     anti-dilution provisions of the type employed in capital 
     market transactions, as determined by the Secretary. Such 
     provisions shall protect the value of the securities from 
     market transactions such as stock splits, stock 
     distributions, dividends, and other distributions, mergers, 
     and other forms of reorganization or recapitalization.

[[Page 23091]]

       (E) Exercise price.--The exercise price for any warrant 
     issued pursuant to this subsection shall be set by the 
     Secretary, in the interest of the taxpayers.
       (F) Sufficiency.--The financial institution shall guarantee 
     to the Secretary that it has authorized shares of nonvoting 
     stock available to fulfill its obligations under this 
     subsection. Should the financial institution not have 
     sufficient authorized shares, including preferred shares that 
     may carry dividend rights equal to a multiple number of 
     common shares, the Secretary may, to the extent necessary, 
     accept a senior debt note in an amount, and on such terms as 
     will compensate the Secretary with equivalent value, in the 
     event that a sufficient shareholder vote to authorize the 
     necessary additional shares cannot be obtained.
       (3) Exceptions.--
       (A) De minimis.--The Secretary shall establish de minimis 
     exceptions to the requirements of this subsection, based on 
     the size of the cumulative transactions of troubled assets 
     purchased from any one financial institution for the duration 
     of the program, at not more than $100,000,000.
       (B) Other exceptions.--The Secretary shall establish an 
     exception to the requirements of this subsection and 
     appropriate alternative requirements for any participating 
     financial institution that is legally prohibited from issuing 
     securities and debt instruments, so as not to allow 
     circumvention of the requirements of this section.

     SEC. 114. MARKET TRANSPARENCY.

       (a) Pricing.--To facilitate market transparency, the 
     Secretary shall make available to the public, in electronic 
     form, a description, amounts, and pricing of assets acquired 
     under this Act, within 2 business days of purchase, trade, or 
     other disposition.
       (b) Disclosure.--For each type of financial institutions 
     that sells troubled assets to the Secretary under this Act, 
     the Secretary shall determine whether the public disclosure 
     required for such financial institutions with respect to off-
     balance sheet transactions, derivatives instruments, 
     contingent liabilities, and similar sources of potential 
     exposure is adequate to provide to the public sufficient 
     information as to the true financial position of the 
     institutions. If such disclosure is not adequate for that 
     purpose, the Secretary shall make recommendations for 
     additional disclosure requirements to the relevant 
     regulators.

     SEC. 115. GRADUATED AUTHORIZATION TO PURCHASE.

       (a) Authority.--The authority of the Secretary to purchase 
     troubled assets under this Act shall be limited as follows:
       (1) Effective upon the date of enactment of this Act, such 
     authority shall be limited to $250,000,000,000 outstanding at 
     any one time.
       (2) If at any time, the President submits to the Congress a 
     written certification that the Secretary needs to exercise 
     the authority under this paragraph, effective upon such 
     submission, such authority shall be limited to 
     $350,000,000,000 outstanding at any one time.
       (3) If, at any time after the certification in paragraph 
     (2) has been made, the President transmits to the Congress a 
     written report detailing the plan of the Secretary to 
     exercise the authority under this paragraph, unless there is 
     enacted, within 15 calendar days of such transmission, a 
     joint resolution described in subsection (c), effective upon 
     the expiration of such 15-day period, such authority shall be 
     limited to $700,000,000,000 outstanding at any one time.
       (b) Aggregation of Purchase Prices.--The amount of troubled 
     assets purchased by the Secretary outstanding at any one time 
     shall be determined for purposes of the dollar amount 
     limitations under subsection (a) by aggregating the purchase 
     prices of all troubled assets held.
       (c) Joint Resolution of Disapproval.--
       (1) In general.--Notwithstanding any other provision of 
     this section, the Secretary may not exercise any authority to 
     make purchases under this Act with regard to any amount in 
     excess of $350,000,000,000 previously obligated, as described 
     in this section if, within 15 calendar days after the date on 
     which Congress receives a report of the plan of the Secretary 
     described in subsection (a)(3), there is enacted into law a 
     joint resolution disapproving the plan of the Secretary with 
     respect to such additional amount.
       (2) Contents of joint resolution.--For the purpose of this 
     section, the term ``joint resolution'' means only a joint 
     resolution--
       (A) that is introduced not later than 3 calendar days after 
     the date on which the report of the plan of the Secretary 
     referred to in subsection (a)(3) is received by Congress;
       (B) which does not have a preamble;
       (C) the title of which is as follows: ``Joint resolution 
     relating to the disapproval of obligations under the 
     Emergency Economic Stabilization Act of 2008''; and
       (D) the matter after the resolving clause of which is as 
     follows: ``That Congress disapproves the obligation of any 
     amount exceeding the amounts obligated as described in 
     paragraphs (1) and (2) of section 115(a) of the Emergency 
     Economic Stabilization Act of 2008.''.
       (d) Fast Track Consideration in House of Representatives.--
       (1) Reconvening.--Upon receipt of a report under subsection 
     (a)(3), the Speaker, if the House would otherwise be 
     adjourned, shall notify the Members of the House that, 
     pursuant to this section, the House shall convene not later 
     than the second calendar day after receipt of such report;
       (2) Reporting and discharge.--Any committee of the House of 
     Representatives to which a joint resolution is referred shall 
     report it to the House not later than 5 calendar days after 
     the date of receipt of the report described in subsection 
     (a)(3). If a committee fails to report the joint resolution 
     within that period, the committee shall be discharged from 
     further consideration of the joint resolution and the joint 
     resolution shall be referred to the appropriate calendar.
       (3) Proceeding to consideration.--After each committee 
     authorized to consider a joint resolution reports it to the 
     House or has been discharged from its consideration, it shall 
     be in order, not later than the sixth day after Congress 
     receives the report described in subsection (a)(3), to move 
     to proceed to consider the joint resolution in the House. All 
     points of order against the motion are waived. Such a motion 
     shall not be in order after the House has disposed of a 
     motion to proceed on the joint resolution. The previous 
     question shall be considered as ordered on the motion to its 
     adoption without intervening motion. The motion shall not be 
     debatable. A motion to reconsider the vote by which the 
     motion is disposed of shall not be in order.
       (4) Consideration.--The joint resolution shall be 
     considered as read. All points of order against the joint 
     resolution and against its consideration are waived. The 
     previous question shall be considered as ordered on the joint 
     resolution to its passage without intervening motion except 
     two hours of debate equally divided and controlled by the 
     proponent and an opponent. A motion to reconsider the vote on 
     passage of the joint resolution shall not be in order.
       (e) Fast Track Consideration in Senate.--
       (1) Reconvening.--Upon receipt of a report under subsection 
     (a)(3), if the Senate has adjourned or recessed for more than 
     2 days, the majority leader of the Senate, after consultation 
     with the minority leader of the Senate, shall notify the 
     Members of the Senate that, pursuant to this section, the 
     Senate shall convene not later than the second calendar day 
     after receipt of such message.
       (2) Placement on calendar.--Upon introduction in the 
     Senate, the joint resolution shall be placed immediately on 
     the calendar.
       (3) Floor consideration.--
       (A) In general.--Notwithstanding Rule XXII of the Standing 
     Rules of the Senate, it is in order at any time during the 
     period beginning on the 4th day after the date on which 
     Congress receives a report of the plan of the Secretary 
     described in subsection (a)(3) and ending on the 6th day 
     after the date on which Congress receives a report of the 
     plan of the Secretary described in subsection (a)(3) (even 
     though a previous motion to the same effect has been 
     disagreed to) to move to proceed to the consideration of the 
     joint resolution, and all points of order against the joint 
     resolution (and against consideration of the joint 
     resolution) are waived. The motion to proceed is not 
     debatable. The motion is not subject to a motion to postpone. 
     A motion to reconsider the vote by which the motion is agreed 
     to or disagreed to shall not be in order. If a motion to 
     proceed to the consideration of the resolution is agreed to, 
     the joint resolution shall remain the unfinished business 
     until disposed of.
       (B) Debate.--Debate on the joint resolution, and on all 
     debatable motions and appeals in connection therewith, shall 
     be limited to not more than 10 hours, which shall be divided 
     equally between the majority and minority leaders or their 
     designees. A motion further to limit debate is in order and 
     not debatable. An amendment to, or a motion to postpone, or a 
     motion to proceed to the consideration of other business, or 
     a motion to recommit the joint resolution is not in order.
       (C) Vote on passage.--The vote on passage shall occur 
     immediately following the conclusion of the debate on a joint 
     resolution, and a single quorum call at the conclusion of the 
     debate if requested in accordance with the rules of the 
     Senate.
       (D) Rulings of the chair on procedure.--Appeals from the 
     decisions of the Chair relating to the application of the 
     rules of the Senate, as the case may be, to the procedure 
     relating to a joint resolution shall be decided without 
     debate.
       (f) Rules Relating to Senate and House of 
     Representatives.--
       (1) Coordination with action by other house.--If, before 
     the passage by one House of a joint resolution of that House, 
     that House receives from the other House a joint resolution, 
     then the following procedures shall apply:
       (A) The joint resolution of the other House shall not be 
     referred to a committee.
       (B) With respect to a joint resolution of the House 
     receiving the resolution--
       (i) the procedure in that House shall be the same as if no 
     joint resolution had been received from the other House; but
       (ii) the vote on passage shall be on the joint resolution 
     of the other House.
       (2) Treatment of joint resolution of other house.--If one 
     House fails to introduce or consider a joint resolution under 
     this

[[Page 23092]]

     section, the joint resolution of the other House shall be 
     entitled to expedited floor procedures under this section.
       (3) Treatment of companion measures.--If, following passage 
     of the joint resolution in the Senate, the Senate then 
     receives the companion measure from the House of 
     Representatives, the companion measure shall not be 
     debatable.
       (4) Consideration after passage.--
       (A) In general.--If Congress passes a joint resolution, the 
     period beginning on the date the President is presented with 
     the joint resolution and ending on the date the President 
     takes action with respect to the joint resolution shall be 
     disregarded in computing the 15-calendar day period described 
     in subsection (a)(3).
       (B) Vetoes.--If the President vetoes the joint resolution--
       (i) the period beginning on the date the President vetoes 
     the joint resolution and ending on the date the Congress 
     receives the veto message with respect to the joint 
     resolution shall be disregarded in computing the 15-calendar 
     day period described in subsection (a)(3), and
       (ii) debate on a veto message in the Senate under this 
     section shall be 1 hour equally divided between the majority 
     and minority leaders or their designees.
       (5) Rules of house of representatives and senate.--This 
     subsection and subsections (c), (d), and (e) are enacted by 
     Congress--
       (A) as an exercise of the rulemaking power of the Senate 
     and House of Representatives, respectively, and as such it is 
     deemed a part of the rules of each House, respectively, but 
     applicable only with respect to the procedure to be followed 
     in that House in the case of a joint resolution, and it 
     supersedes other rules only to the extent that it is 
     inconsistent with such rules; and
       (B) with full recognition of the constitutional right of 
     either House to change the rules (so far as relating to the 
     procedure of that House) at any time, in the same manner, and 
     to the same extent as in the case of any other rule of that 
     House.

     SEC. 116. OVERSIGHT AND AUDITS.

       (a) Comptroller General Oversight.--
       (1) Scope of oversight.--The Comptroller General of the 
     United States shall, upon establishment of the troubled 
     assets relief program under this Act (in this section 
     referred to as the ``TARP''), commence ongoing oversight of 
     the activities and performance of the TARP and of any agents 
     and representatives of the TARP (as related to the agent or 
     representative's activities on behalf of or under the 
     authority of the TARP), including vehicles established by the 
     Secretary under this Act. The subjects of such oversight 
     shall include the following:
       (A) The performance of the TARP in meeting the purposes of 
     this Act, particularly those involving--
       (i) foreclosure mitigation;
       (ii) cost reduction;
       (iii) whether it has provided stability or prevented 
     disruption to the financial markets or the banking system; 
     and
       (iv) whether it has protected taxpayers.
       (B) The financial condition and internal controls of the 
     TARP, its representatives and agents.
       (C) Characteristics of transactions and commitments entered 
     into, including transaction type, frequency, size, prices 
     paid, and all other relevant terms and conditions, and the 
     timing, duration and terms of any future commitments to 
     purchase assets.
       (D) Characteristics and disposition of acquired assets, 
     including type, acquisition price, current market value, sale 
     prices and terms, and use of proceeds from sales.
       (E) Efficiency of the operations of the TARP in the use of 
     appropriated funds.
       (F) Compliance with all applicable laws and regulations by 
     the TARP, its agents and representatives.
       (G) The efforts of the TARP to prevent, identify, and 
     minimize conflicts of interest involving any agent or 
     representative performing activities on behalf of or under 
     the authority of the TARP.
       (H) The efficacy of contracting procedures pursuant to 
     section 107(b), including, as applicable, the efforts of the 
     TARP in evaluating proposals for inclusion and contracting to 
     the maximum extent possible of minorities (as such term is 
     defined in 1204(c) of the Financial Institutions Reform, 
     Recovery, and Enhancement Act of 1989 (12 U.S.C. 1811 note), 
     women, and minority- and women-owned businesses, including 
     ascertaining and reporting the total amount of fees paid and 
     other value delivered by the TARP to all of its agents and 
     representatives, and such amounts paid or delivered to such 
     firms that are minority- and women-owned businesses (as such 
     terms are defined in section 21A of the Federal Home Loan 
     Bank Act (12 U.S.C. 1441a)).
       (2) Conduct and administration of oversight.--
       (A) GAO presence.--The Secretary shall provide the 
     Comptroller General with appropriate space and facilities in 
     the Department of the Treasury as necessary to facilitate 
     oversight of the TARP until the termination date established 
     in section 120.
       (B) Access to records.--To the extent otherwise consistent 
     with law, the Comptroller General shall have access, upon 
     request, to any information, data, schedules, books, 
     accounts, financial records, reports, files, electronic 
     communications, or other papers, things, or property 
     belonging to or in use by the TARP, or any vehicles 
     established by the Secretary under this Act, and to the 
     officers, directors, employees, independent public 
     accountants, financial advisors, and other agents and 
     representatives of the TARP (as related to the agent or 
     representative's activities on behalf of or under the 
     authority of the TARP) or any such vehicle at such reasonable 
     time as the Comptroller General may request. The Comptroller 
     General shall be afforded full facilities for verifying 
     transactions with the balances or securities held by 
     depositaries, fiscal agents, and custodians. The Comptroller 
     General may make and retain copies of such books, accounts, 
     and other records as the Comptroller General deems 
     appropriate.
       (C) Reimbursement of costs.--The Treasury shall reimburse 
     the Government Accountability Office for the full cost of any 
     such oversight activities as billed therefor by the 
     Comptroller General of the United States. Such reimbursements 
     shall be credited to the appropriation account ``Salaries and 
     Expenses, Government Accountability Office'' current when the 
     payment is received and remain available until expended.
       (3) Reporting.--The Comptroller General shall submit 
     reports of findings under this section, regularly and no less 
     frequently than once every 60 days, to the appropriate 
     committees of Congress, and the Special Inspector General for 
     the Troubled Asset Relief Program established under this Act 
     on the activities and performance of the TARP. The 
     Comptroller may also submit special reports under this 
     subsection as warranted by the findings of its oversight 
     activities.
       (b) Comptroller General Audits.--
       (1) Annual audit.--The TARP shall annually prepare and 
     issue to the appropriate committees of Congress and the 
     public audited financial statements prepared in accordance 
     with generally accepted accounting principles, and the 
     Comptroller General shall annually audit such statements in 
     accordance with generally accepted auditing standards. The 
     Treasury shall reimburse the Government Accountability Office 
     for the full cost of any such audit as billed therefor by the 
     Comptroller General. Such reimbursements shall be credited to 
     the appropriation account ``Salaries and Expenses, Government 
     Accountability Office'' current when the payment is received 
     and remain available until expended. The financial statements 
     prepared under this paragraph shall be on the fiscal year 
     basis prescribed under section 1102 of title 31, United 
     States Code.
       (2) Authority.--The Comptroller General may audit the 
     programs, activities, receipts, expenditures, and financial 
     transactions of the TARP and any agents and representatives 
     of the TARP (as related to the agent or representative's 
     activities on behalf of or under the authority of the TARP), 
     including vehicles established by the Secretary under this 
     Act.
       (3) Corrective responses to audit problems.--The TARP 
     shall--
       (A) take action to address deficiencies identified by the 
     Comptroller General or other auditor engaged by the TARP; or
       (B) certify to appropriate committees of Congress that no 
     action is necessary or appropriate.
       (c) Internal Control.--
       (1) Establishment.--The TARP shall establish and maintain 
     an effective system of internal control, consistent with the 
     standards prescribed under section 3512(c) of title 31, 
     United States Code, that provides reasonable assurance of--
       (A) the effectiveness and efficiency of operations, 
     including the use of the resources of the TARP;
       (B) the reliability of financial reporting, including 
     financial statements and other reports for internal and 
     external use; and
       (C) compliance with applicable laws and regulations.
       (2) Reporting.--In conjunction with each annual financial 
     statement issued under this section, the TARP shall--
       (A) state the responsibility of management for establishing 
     and maintaining adequate internal control over financial 
     reporting; and
       (B) state its assessment, as of the end of the most recent 
     year covered by such financial statement of the TARP, of the 
     effectiveness of the internal control over financial 
     reporting.
       (d) Sharing of Information.--Any report or audit required 
     under this section shall also be submitted to the 
     Congressional Oversight Panel established under section 125.
       (e) Termination.--Any oversight, reporting, or audit 
     requirement under this section shall terminate on the later 
     of--
       (1) the date that the last troubled asset acquired by the 
     Secretary under section 101 has been sold or transferred out 
     of the ownership or control of the Federal Government; or
       (2) the date of expiration of the last insurance contract 
     issued under section 102.

     SEC. 117. STUDY AND REPORT ON MARGIN AUTHORITY.

       (a) Study.--The Comptroller General shall undertake a study 
     to determine the extent to which leverage and sudden 
     deleveraging of financial institutions was a factor behind 
     the current financial crisis.

[[Page 23093]]

       (b) Content.--The study required by this section shall 
     include--
       (1) an analysis of the roles and responsibilities of the 
     Board, the Securities and Exchange Commission, the Secretary, 
     and other Federal banking agencies with respect to monitoring 
     leverage and acting to curtail excessive leveraging;
       (2) an analysis of the authority of the Board to regulate 
     leverage, including by setting margin requirements, and what 
     process the Board used to decide whether or not to use its 
     authority;
       (3) an analysis of any usage of the margin authority by the 
     Board; and
       (4) recommendations for the Board and appropriate 
     committees of Congress with respect to the existing authority 
     of the Board.
       (c) Report.--Not later than June 1, 2009, the Comptroller 
     General shall complete and submit a report on the study 
     required by this section to the Committee on Banking, 
     Housing, and Urban Affairs of the Senate and the Committee on 
     Financial Services of the House of Representatives.
       (d) Sharing of Information.--Any reports required under 
     this section shall also be submitted to the Congressional 
     Oversight Panel established under section 125.

     SEC. 118. FUNDING.

       For the purpose of the authorities granted in this Act, and 
     for the costs of administering those authorities, the 
     Secretary may use the proceeds of the sale of any securities 
     issued under chapter 31 of title 31, United States Code, and 
     the purposes for which securities may be issued under chapter 
     31 of title 31, United States Code, are extended to include 
     actions authorized by this Act, including the payment of 
     administrative expenses. Any funds expended or obligated by 
     the Secretary for actions authorized by this Act, including 
     the payment of administrative expenses, shall be deemed 
     appropriated at the time of such expenditure or obligation.

     SEC. 119. JUDICIAL REVIEW AND RELATED MATTERS.

       (a) Judicial Review.--
       (1) Standard.--Actions by the Secretary pursuant to the 
     authority of this Act shall be subject to chapter 7 of title 
     5, United States Code, including that such final actions 
     shall be held unlawful and set aside if found to be 
     arbitrary, capricious, an abuse of discretion, or not in 
     accordance with law.
       (2) Limitations on equitable relief.--
       (A) Injunction.--No injunction or other form of equitable 
     relief shall be issued against the Secretary for actions 
     pursuant to section 101, 102, 106, and 109, other than to 
     remedy a violation of the Constitution.
       (B) Temporary restraining order.--Any request for a 
     temporary restraining order against the Secretary for actions 
     pursuant to this Act shall be considered and granted or 
     denied by the court within 3 days of the date of the request.
       (C) Preliminary injunction.--Any request for a preliminary 
     injunction against the Secretary for actions pursuant to this 
     Act shall be considered and granted or denied by the court on 
     an expedited basis consistent with the provisions of rule 
     65(b)(3) of the Federal Rules of Civil Procedure, or any 
     successor thereto.
       (D) Permanent injunction.--Any request for a permanent 
     injunction against the Secretary for actions pursuant to this 
     Act shall be considered and granted or denied by the court on 
     an expedited basis. Whenever possible, the court shall 
     consolidate trial on the merits with any hearing on a request 
     for a preliminary injunction, consistent with the provisions 
     of rule 65(a)(2) of the Federal Rules of Civil Procedure, or 
     any successor thereto.
       (3) Limitation on actions by participating companies.--No 
     action or claims may be brought against the Secretary by any 
     person that divests its assets with respect to its 
     participation in a program under this Act, except as provided 
     in paragraph (1), other than as expressly provided in a 
     written contract with the Secretary.
       (4) Stays.--Any injunction or other form of equitable 
     relief issued against the Secretary for actions pursuant to 
     section 101, 102, 106, and 109, shall be automatically 
     stayed. The stay shall be lifted unless the Secretary seeks a 
     stay from a higher court within 3 calendar days after the 
     date on which the relief is issued.
       (b) Related Matters.--
       (1) Treatment of homeowners' rights.--The terms of any 
     residential mortgage loan that is part of any purchase by the 
     Secretary under this Act shall remain subject to all claims 
     and defenses that would otherwise apply, notwithstanding the 
     exercise of authority by the Secretary under this Act.
       (2) Savings clause.--Any exercise of the authority of the 
     Secretary pursuant to this Act shall not impair the claims or 
     defenses that would otherwise apply with respect to persons 
     other than the Secretary. Except as established in any 
     contract, a servicer of pooled residential mortgages owes any 
     duty to determine whether the net present value of the 
     payments on the loan, as modified, is likely to be greater 
     than the anticipated net recovery that would result from 
     foreclosure to all investors and holders of beneficial 
     interests in such investment, but not to any individual or 
     groups of investors or beneficial interest holders, and shall 
     be deemed to act in the best interests of all such investors 
     or holders of beneficial interests if the servicer agrees to 
     or implements a modification or workout plan when the 
     servicer takes reasonable loss mitigation actions, including 
     partial payments.

     SEC. 120. TERMINATION OF AUTHORITY.

       (a) Termination.--The authorities provided under sections 
     101(a), excluding section 101(a)(3), and 102 shall terminate 
     on December 31, 2009.
       (b) Extension Upon Certification.--The Secretary, upon 
     submission of a written certification to Congress, may extend 
     the authority provided under this Act to expire not later 
     than 2 years from the date of enactment of this Act. Such 
     certification shall include a justification of why the 
     extension is necessary to assist American families and 
     stabilize financial markets, as well as the expected cost to 
     the taxpayers for such an extension.

     SEC. 121. SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSET 
                   RELIEF PROGRAM.

       (a) Office of Inspector General.--There is hereby 
     established the Office of the Special Inspector General for 
     the Troubled Asset Relief Program.
       (b) Appointment of Inspector General; Removal.--(1) The 
     head of the Office of the Special Inspector General for the 
     Troubled Asset Relief Program is the Special Inspector 
     General for the Troubled Asset Relief Program (in this 
     section referred to as the ``Special Inspector General''), 
     who shall be appointed by the President, by and with the 
     advice and consent of the Senate.
       (2) The appointment of the Special Inspector General shall 
     be made on the basis of integrity and demonstrated ability in 
     accounting, auditing, financial analysis, law, management 
     analysis, public administration, or investigations.
       (3) The nomination of an individual as Special Inspector 
     General shall be made as soon as practicable after the 
     establishment of any program under sections 101 and 102.
       (4) The Special Inspector General shall be removable from 
     office in accordance with the provisions of section 3(b) of 
     the Inspector General Act of 1978 (5 U.S.C. App.).
       (5) For purposes of section 7324 of title 5, United States 
     Code, the Special Inspector General shall not be considered 
     an employee who determines policies to be pursued by the 
     United States in the nationwide administration of Federal 
     law.
       (6) The annual rate of basic pay of the Special Inspector 
     General shall be the annual rate of basic pay provided for 
     positions at level IV of the Executive Schedule under section 
     5315 of title 5, United States Code.
       (c) Duties.--(1) It shall be the duty of the Special 
     Inspector General to conduct, supervise, and coordinate 
     audits and investigations of the purchase, management, and 
     sale of assets by the Secretary of the Treasury under any 
     program established by the Secretary under section 101, and 
     the management by the Secretary of any program established 
     under section 102, including by collecting and summarizing 
     the following information:
       (A) A description of the categories of troubled assets 
     purchased or otherwise procured by the Secretary.
       (B) A listing of the troubled assets purchased in each such 
     category described under subparagraph (A).
       (C) An explanation of the reasons the Secretary deemed it 
     necessary to purchase each such troubled asset.
       (D) A listing of each financial institution that such 
     troubled assets were purchased from.
       (E) A listing of and detailed biographical information on 
     each person or entity hired to manage such troubled assets.
       (F) A current estimate of the total amount of troubled 
     assets purchased pursuant to any program established under 
     section 101, the amount of troubled assets on the books of 
     the Treasury, the amount of troubled assets sold, and the 
     profit and loss incurred on each sale or disposition of each 
     such troubled asset.
       (G) A listing of the insurance contracts issued under 
     section 102.
       (2) The Special Inspector General shall establish, 
     maintain, and oversee such systems, procedures, and controls 
     as the Special Inspector General considers appropriate to 
     discharge the duty under paragraph (1).
       (3) In addition to the duties specified in paragraphs (1) 
     and (2), the Inspector General shall also have the duties and 
     responsibilities of inspectors general under the Inspector 
     General Act of 1978.
       (d) Powers and Authorities.--(1) In carrying out the duties 
     specified in subsection (c), the Special Inspector General 
     shall have the authorities provided in section 6 of the 
     Inspector General Act of 1978.
       (2) The Special Inspector General shall carry out the 
     duties specified in subsection (c)(1) in accordance with 
     section 4(b)(1) of the Inspector General Act of 1978.
       (e) Personnel, Facilities, and Other Resources.--(1) The 
     Special Inspector General may select, appoint, and employ 
     such officers and employees as may be necessary for carrying 
     out the duties of the Special Inspector General, subject to 
     the provisions of title 5, United States Code, governing 
     appointments in the competitive service, and the

[[Page 23094]]

     provisions of chapter 51 and subchapter III of chapter 53 of 
     such title, relating to classification and General Schedule 
     pay rates.
       (2) The Special Inspector General may obtain services as 
     authorized by section 3109 of title 5, United States Code, at 
     daily rates not to exceed the equivalent rate prescribed for 
     grade GS-15 of the General Schedule by section 5332 of such 
     title.
       (3) The Special Inspector General may enter into contracts 
     and other arrangements for audits, studies, analyses, and 
     other services with public agencies and with private persons, 
     and make such payments as may be necessary to carry out the 
     duties of the Inspector General.
       (4)(A) Upon request of the Special Inspector General for 
     information or assistance from any department, agency, or 
     other entity of the Federal Government, the head of such 
     entity shall, insofar as is practicable and not in 
     contravention of any existing law, furnish such information 
     or assistance to the Special Inspector General, or an 
     authorized designee.
       (B) Whenever information or assistance requested by the 
     Special Inspector General is, in the judgment of the Special 
     Inspector General, unreasonably refused or not provided, the 
     Special Inspector General shall report the circumstances to 
     the appropriate committees of Congress without delay.
       (f) Reports.--(1) Not later than 60 days after the 
     confirmation of the Special Inspector General, and every 
     calendar quarter thereafter, the Special Inspector General 
     shall submit to the appropriate committees of Congress a 
     report summarizing the activities of the Special Inspector 
     General during the 120-day period ending on the date of such 
     report. Each report shall include, for the period covered by 
     such report, a detailed statement of all purchases, 
     obligations, expenditures, and revenues associated with any 
     program established by the Secretary of the Treasury under 
     sections 101 and 102, as well as the information collected 
     under subsection (c)(1).
       (2) Nothing in this subsection shall be construed to 
     authorize the public disclosure of information that is--
       (A) specifically prohibited from disclosure by any other 
     provision of law;
       (B) specifically required by Executive order to be 
     protected from disclosure in the interest of national defense 
     or national security or in the conduct of foreign affairs; or
       (C) a part of an ongoing criminal investigation.
       (3) Any reports required under this section shall also be 
     submitted to the Congressional Oversight Panel established 
     under section 125.
       (g) Funding.--(1) Of the amounts made available to the 
     Secretary of the Treasury under section 118, $50,000,000 
     shall be available to the Special Inspector General to carry 
     out this section.
       (2) The amount available under paragraph (1) shall remain 
     available until expended.
       (h) Termination.--The Office of the Special Inspector 
     General shall terminate on the later of--
       (1) the date that the last troubled asset acquired by the 
     Secretary under section 101 has been sold or transferred out 
     of the ownership or control of the Federal Government; or
       (2) the date of expiration of the last insurance contract 
     issued under section 102.

     SEC. 122. INCREASE IN STATUTORY LIMIT ON THE PUBLIC DEBT.

       Subsection (b) of section 3101 of title 31, United States 
     Code, is amended by striking out the dollar limitation 
     contained in such subsection and inserting 
     ``$11,315,000,000,000''.

     SEC. 123. CREDIT REFORM.

       (a) In General.--Subject to subsection (b), the costs of 
     purchases of troubled assets made under section 101(a) and 
     guarantees of troubled assets under section 102, and any cash 
     flows associated with the activities authorized in section 
     102 and subsections (a), (b), and (c) of section 106 shall be 
     determined as provided under the Federal Credit Reform Act of 
     1990 (2 U.S.C. 661 et. seq.).
       (b) Costs.--For the purposes of section 502(5) of the 
     Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5))--
       (1) the cost of troubled assets and guarantees of troubled 
     assets shall be calculated by adjusting the discount rate in 
     section 502(5)(E) (2 U.S.C. 661a(5)(E)) for market risks; and
       (2) the cost of a modification of a troubled asset or 
     guarantee of a troubled asset shall be the difference between 
     the current estimate consistent with paragraph (1) under the 
     terms of the troubled asset or guarantee of the troubled 
     asset and the current estimate consistent with paragraph (1) 
     under the terms of the troubled asset or guarantee of the 
     troubled asset, as modified.

     SEC. 124. HOPE FOR HOMEOWNERS AMENDMENTS.

       Section 257 of the National Housing Act (12 U.S.C. 1715z-
     23) is amended--
       (1) in subsection (e)--
       (A) in paragraph (1)(B), by inserting before ``a ratio'' 
     the following: ``, or thereafter is likely to have, due to 
     the terms of the mortgage being reset,'';
       (B) in paragraph (2)(B), by inserting before the period at 
     the end ``(or such higher percentage as the Board determines, 
     in the discretion of the Board)'';
       (C) in paragraph (4)(A)--
       (i) in the first sentence, by inserting after ``insured 
     loan'' the following: ``and any payments made under this 
     paragraph,''; and
       (ii) by adding at the end the following: ``Such actions may 
     include making payments, which shall be accepted as payment 
     in full of all indebtedness under the eligible mortgage, to 
     any holder of an existing subordinate mortgage, in lieu of 
     any future appreciation payments authorized under 
     subparagraph (B).''; and
       (2) in subsection (w), by inserting after ``administrative 
     costs'' the following: ``and payments pursuant to subsection 
     (e)(4)(A)''.

     SEC. 125. CONGRESSIONAL OVERSIGHT PANEL.

       (a) Establishment.--There is hereby established the 
     Congressional Oversight Panel (hereafter in this section 
     referred to as the ``Oversight Panel'') as an establishment 
     in the legislative branch.
       (b) Duties.--The Oversight Panel shall review the current 
     state of the financial markets and the regulatory system and 
     submit the following reports to Congress:
       (1) Regular reports.--
       (A) In general.--Regular reports of the Oversight Panel 
     shall include the following:
       (i) The use by the Secretary of authority under this Act, 
     including with respect to the use of contracting authority 
     and administration of the program.
       (ii) The impact of purchases made under the Act on the 
     financial markets and financial institutions.
       (iii) The extent to which the information made available on 
     transactions under the program has contributed to market 
     transparency.
       (iv) The effectiveness of foreclosure mitigation efforts, 
     and the effectiveness of the program from the standpoint of 
     minimizing long-term costs to the taxpayers and maximizing 
     the benefits for taxpayers.
       (B) Timing.--The reports required under this paragraph 
     shall be submitted not later than 30 days after the first 
     exercise by the Secretary of the authority under section 
     101(a) or 102, and every 30 days thereafter.
       (2) Special report on regulatory reform.--The Oversight 
     Panel shall submit a special report on regulatory reform not 
     later than January 20, 2009, analyzing the current state of 
     the regulatory system and its effectiveness at overseeing the 
     participants in the financial system and protecting 
     consumers, and providing recommendations for improvement, 
     including recommendations regarding whether any participants 
     in the financial markets that are currently outside the 
     regulatory system should become subject to the regulatory 
     system, the rationale underlying such recommendation, and 
     whether there are any gaps in existing consumer protections.
       (c) Membership.--
       (1) In general.--The Oversight Panel shall consist of 5 
     members, as follows:
       (A) 1 member appointed by the Speaker of the House of 
     Representatives.
       (B) 1 member appointed by the minority leader of the House 
     of Representatives.
       (C) 1 member appointed by the majority leader of the 
     Senate.
       (D) 1 member appointed by the minority leader of the 
     Senate.
       (E) 1 member appointed by the Speaker of the House of 
     Representatives and the majority leader of the Senate, after 
     consultation with the minority leader of the Senate and the 
     minority leader of the House of Representatives.
       (2) Pay.--Each member of the Oversight Panel shall each be 
     paid at a rate equal to the daily equivalent of the annual 
     rate of basic pay for level I of the Executive Schedule for 
     each day (including travel time) during which such member is 
     engaged in the actual performance of duties vested in the 
     Commission.
       (3) Prohibition of compensation of federal employees.--
     Members of the Oversight Panel who are full-time officers or 
     employees of the United States or Members of Congress may not 
     receive additional pay, allowances, or benefits by reason of 
     their service on the Oversight Panel.
       (4) Travel expenses.--Each member shall receive travel 
     expenses, including per diem in lieu of subsistence, in 
     accordance with applicable provisions under subchapter I of 
     chapter 57 of title 5, United States Code.
       (5) Quorum.--Four members of the Oversight Panel shall 
     constitute a quorum but a lesser number may hold hearings.
       (6) Vacancies.--A vacancy on the Oversight Panel shall be 
     filled in the manner in which the original appointment was 
     made.
       (7) Meetings.--The Oversight Panel shall meet at the call 
     of the Chairperson or a majority of its members.
       (d) Staff.--
       (1) In general.--The Oversight Panel may appoint and fix 
     the pay of any personnel as the Commission considers 
     appropriate.
       (2) Experts and consultants.--The Oversight Panel may 
     procure temporary and intermittent services under section 
     3109(b) of title 5, United States Code.
       (3) Staff of agencies.--Upon request of the Oversight 
     Panel, the head of any Federal department or agency may 
     detail, on a reimbursable basis, any of the personnel of that 
     department or agency to the Oversight Panel to assist it in 
     carrying out its duties under this Act.
       (e) Powers.--
       (1) Hearings and sessions.--The Oversight Panel may, for 
     the purpose of carrying out

[[Page 23095]]

     this section, hold hearings, sit and act at times and places, 
     take testimony, and receive evidence as the Panel considers 
     appropriate and may administer oaths or affirmations to 
     witnesses appearing before it.
       (2) Powers of members and agents.--Any member or agent of 
     the Oversight Panel may, if authorized by the Oversight 
     Panel, take any action which the Oversight Panel is 
     authorized to take by this section.
       (3) Obtaining official data.--The Oversight Panel may 
     secure directly from any department or agency of the United 
     States information necessary to enable it to carry out this 
     section. Upon request of the Chairperson of the Oversight 
     Panel, the head of that department or agency shall furnish 
     that information to the Oversight Panel.
       (4) Reports.--The Oversight Panel shall receive and 
     consider all reports required to be submitted to the 
     Oversight Panel under this Act.
       (f) Termination.--The Oversight Panel shall terminate 6 
     months after the termination date specified in section 120.
       (g) Funding for Expenses.--
       (1) Authorization of appropriations.--There is authorized 
     to be appropriated to the Oversight Panel such sums as may be 
     necessary for any fiscal year, half of which shall be derived 
     from the applicable account of the House of Representatives, 
     and half of which shall be derived from the contingent fund 
     of the Senate.
       (2) Reimbursement of amounts.--An amount equal to the 
     expenses of the Oversight Panel shall be promptly transferred 
     by the Secretary, from time to time upon the presentment of a 
     statement of such expenses by the Chairperson of the 
     Oversight Panel, from funds made available to the Secretary 
     under this Act to the applicable fund of the House of 
     Representatives and the contingent fund of the Senate, as 
     appropriate, as reimbursement for amounts expended from such 
     account and fund under paragraph (1).

     SEC. 126. FDIC AUTHORITY.

       (a) In General.--Section 18(a) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1828(a)) is amended by adding at the 
     end the following new paragraph:
       ``(4) False advertising, misuse of fdic names, and 
     misrepresentation to indicate insured status.--
       ``(A) Prohibition on false advertising and misuse of fdic 
     names.--No person may represent or imply that any deposit 
     liability, obligation, certificate, or share is insured or 
     guaranteed by the Corporation, if such deposit liability, 
     obligation, certificate, or share is not insured or 
     guaranteed by the Corporation--
       ``(i) by using the terms `Federal Deposit', `Federal 
     Deposit Insurance', `Federal Deposit Insurance Corporation', 
     any combination of such terms, or the abbreviation `FDIC' as 
     part of the business name or firm name of any person, 
     including any corporation, partnership, business trust, 
     association, or other business entity; or
       ``(ii) by using such terms or any other terms, sign, or 
     symbol as part of an advertisement, solicitation, or other 
     document.
       ``(B) Prohibition on misrepresentations of insured 
     status.--No person may knowingly misrepresent--
       ``(i) that any deposit liability, obligation, certificate, 
     or share is insured, under this Act, if such deposit 
     liability, obligation, certificate, or share is not so 
     insured; or
       ``(ii) the extent to which or the manner in which any 
     deposit liability, obligation, certificate, or share is 
     insured under this Act, if such deposit liability, 
     obligation, certificate, or share is not so insured, to the 
     extent or in the manner represented.
       ``(C) Authority of the appropriate federal banking 
     agency.--The appropriate Federal banking agency shall have 
     enforcement authority in the case of a violation of this 
     paragraph by any person for which the agency is the 
     appropriate Federal banking agency, or any institution-
     affiliated party thereof.
       ``(D) Corporation authority if the appropriate federal 
     banking agency fails to follow recommendation.--
       ``(i) Recommendation.--The Corporation may recommend in 
     writing to the appropriate Federal banking agency that the 
     agency take any enforcement action authorized under section 8 
     for purposes of enforcement of this paragraph with respect to 
     any person for which the agency is the appropriate Federal 
     banking agency or any institution-affiliated party thereof.
       ``(ii) Agency response.--If the appropriate Federal banking 
     agency does not, within 30 days of the date of receipt of a 
     recommendation under clause (i), take the enforcement action 
     with respect to this paragraph recommended by the Corporation 
     or provide a plan acceptable to the Corporation for 
     responding to the situation presented, the Corporation may 
     take the recommended enforcement action against such person 
     or institution-affiliated party.
       ``(E) Additional authority.--In addition to its authority 
     under subparagraphs (C) and (D), for purposes of this 
     paragraph, the Corporation shall have, in the same manner and 
     to the same extent as with respect to a State nonmember 
     insured bank--
       ``(i) jurisdiction over--

       ``(I) any person other than a person for which another 
     agency is the appropriate Federal banking agency or any 
     institution-affiliated party thereof; and
       ``(II) any person that aids or abets a violation of this 
     paragraph by a person described in subclause (I); and

       ``(ii) for purposes of enforcing the requirements of this 
     paragraph, the authority of the Corporation under--

       ``(I) section 10(c) to conduct investigations; and
       ``(II) subsections (b), (c), (d) and (i) of section 8 to 
     conduct enforcement actions.

       ``(F) Other actions preserved.--No provision of this 
     paragraph shall be construed as barring any action otherwise 
     available, under the laws of the United States or any State, 
     to any Federal or State agency or individual.''.
       (b) Enforcement Orders.--Section 8(c) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1818(c)) is amended by 
     adding at the end the following new paragraph:
       ``(4) False advertising or misuse of names to indicate 
     insured status.--
       ``(A) Temporary order.--
       ``(i) In general.--If a notice of charges served under 
     subsection (b)(1) specifies on the basis of particular facts 
     that any person engaged or is engaging in conduct described 
     in section 18(a)(4), the Corporation or other appropriate 
     Federal banking agency may issue a temporary order 
     requiring--

       ``(I) the immediate cessation of any activity or practice 
     described, which gave rise to the notice of charges; and
       ``(II) affirmative action to prevent any further, or to 
     remedy any existing, violation.

       ``(ii) Effect of order.--Any temporary order issued under 
     this subparagraph shall take effect upon service.
       ``(B) Effective period of temporary order.--A temporary 
     order issued under subparagraph (A) shall remain effective 
     and enforceable, pending the completion of an administrative 
     proceeding pursuant to subsection (b)(1) in connection with 
     the notice of charges--
       ``(i) until such time as the Corporation or other 
     appropriate Federal banking agency dismisses the charges 
     specified in such notice; or
       ``(ii) if a cease-and-desist order is issued against such 
     person, until the effective date of such order.
       ``(C) Civil money penalties.--Any violation of section 
     18(a)(4) shall be subject to civil money penalties, as set 
     forth in subsection (i), except that for any person other 
     than an insured depository institution or an institution-
     affiliated party that is found to have violated this 
     paragraph, the Corporation or other appropriate Federal 
     banking agency shall not be required to demonstrate any loss 
     to an insured depository institution.''.
       (c) Unenforceability of Certain Agreements.--Section 13(c) 
     of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)) is 
     amended by adding at the end the following new paragraph:
       ``(11) Unenforceability of certain agreements.--No 
     provision contained in any existing or future standstill, 
     confidentiality, or other agreement that, directly or 
     indirectly--
       ``(A) affects, restricts, or limits the ability of any 
     person to offer to acquire or acquire,
       ``(B) prohibits any person from offering to acquire or 
     acquiring, or
       ``(C) prohibits any person from using any previously 
     disclosed information in connection with any such offer to 
     acquire or acquisition of,

     all or part of any insured depository institution, including 
     any liabilities, assets, or interest therein, in connection 
     with any transaction in which the Corporation exercises its 
     authority under section 11 or 13, shall be enforceable 
     against or impose any liability on such person, as such 
     enforcement or liability shall be contrary to public 
     policy.''.
       (d) Technical and Conforming Amendments.--Section 18 of the 
     Federal Deposit Insurance Act (12 U.S.C. 1828) is amended--
       (1) in subsection (a)(3)--
       (A) by striking ``this subsection'' the first place that 
     term appears and inserting ``paragraph (1)''; and
       (B) by striking ``this subsection'' the second place that 
     term appears and inserting ``paragraph (2)''; and
       (2) in the heading for subsection (a), by striking 
     ``Insurance Logo.--'' and insert-
     ing ``Representations of Deposit Insurance.--''.

     SEC. 127. COOPERATION WITH THE FBI.

       Any Federal financial regulatory agency shall cooperate 
     with the Federal Bureau of Investigation and other law 
     enforcement agencies investigating fraud, misrepresentation, 
     and malfeasance with respect to development, advertising, and 
     sale of financial products.

     SEC. 128. ACCELERATION OF EFFECTIVE DATE.

       Section 203 of the Financial Services Regulatory Relief Act 
     of 2006 (12 U.S.C. 461 note) is amended by striking ``October 
     1, 2011'' and inserting ``October 1, 2008''.

     SEC. 129. DISCLOSURES ON EXERCISE OF LOAN AUTHORITY.

       (a) In General.--Not later than 7 days after the date on 
     which the Board exercises its authority under the third 
     paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 
     343; relating to discounts for individuals, partnerships, and 
     corporations) the

[[Page 23096]]

     Board shall provide to the Committee on Banking, Housing, and 
     Urban Affairs of the Senate and the Committee on Financial 
     Services of the House of Representatives a report which 
     includes--
       (1) the justification for exercising the authority; and
       (2) the specific terms of the actions of the Board, 
     including the size and duration of the lending, available 
     information concerning the value of any collateral held with 
     respect to such a loan, the recipient of warrants or any 
     other potential equity in exchange for the loan, and any 
     expected cost to the taxpayers for such exercise.
       (b) Periodic Updates.--The Board shall provide updates to 
     the Committees specified in subsection (a) not less 
     frequently than once every 60 days while the subject loan is 
     outstanding, including--
       (1) the status of the loan;
       (2) the value of the collateral held by the Federal reserve 
     bank which initiated the loan; and
       (3) the projected cost to the taxpayers of the loan.
       (c) Confidentiality.--The information submitted to the 
     Congress under this section may be kept confidential, upon 
     the written request of the Chairman of the Board, in which 
     case it shall made available only to the Chairpersons and 
     Ranking Members of the Committees described in subsection 
     (a).
       (d) Applicability.--The provisions of this section shall be 
     in force for all uses of the authority provided under section 
     13 of the Federal Reserve Act occurring during the period 
     beginning on March 1, 2008 and ending on the after the date 
     of enactment of this Act, and reports described in subsection 
     (a) shall be required beginning not later than 30 days after 
     that date of enactment, with respect to any such exercise of 
     authority.
       (e) Sharing of Information.--Any reports required under 
     this section shall also be submitted to the Congressional 
     Oversight Panel established under section 125.

     SEC. 130. TECHNICAL CORRECTIONS.

       (a) In General.--Section 128(b)(2) of the Truth in Lending 
     Act (15 U.S.C. 1638(b)(2)), as amended by section 2502 of the 
     Mortgage Disclosure Improvement Act of 2008 (Public Law 110-
     289), is amended--
       (1) in subparagraph (A), by striking ``In the case'' and 
     inserting ``Except as provided in subparagraph (G), in the 
     case''; and
       (2) by amending subparagraph (G) to read as follows:
       ``(G)(i) In the case of an extension of credit relating to 
     a plan described in section 101(53D) of title 11, United 
     States Code--
       ``(I) the requirements of subparagraphs (A) through (E) 
     shall not apply; and
       ``(II) a good faith estimate of the disclosures required 
     under subsection (a) shall be made in accordance with 
     regulations of the Board under section 121(c) before such 
     credit is extended, or shall be delivered or placed in the 
     mail not later than 3 business days after the date on which 
     the creditor receives the written application of the consumer 
     for such credit, whichever is earlier.
       ``(ii) If a disclosure statement furnished within 3 
     business days of the written application (as provided under 
     clause (i)(II)) contains an annual percentage rate which is 
     subsequently rendered inaccurate, within the meaning of 
     section 107(c), the creditor shall furnish another disclosure 
     statement at the time of settlement or consummation of the 
     transaction.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect as if included in the amendments made by 
     section 2502 of the Mortgage Disclosure Improvement Act of 
     2008 (Public Law 110-289).

     SEC. 131. EXCHANGE STABILIZATION FUND REIMBURSEMENT.

       (a) Reimbursement.--The Secretary shall reimburse the 
     Exchange Stabilization Fund established under section 5302 of 
     title 31, United States Code, for any funds that are used for 
     the Treasury Money Market Funds Guaranty Program for the 
     United States money market mutual fund industry, from funds 
     under this Act.
       (b) Limits on Use of Exchange Stabilization Fund.--The 
     Secretary is prohibited from using the Exchange Stabilization 
     Fund for the establishment of any future guaranty programs 
     for the United States money market mutual fund industry.

     SEC. 132. AUTHORITY TO SUSPEND MARK-TO-MARKET ACCOUNTING.

       (a) Authority.--The Securities and Exchange Commission 
     shall have the authority under the securities laws (as such 
     term is defined in section 3(a)(47) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to suspend, by 
     rule, regulation, or order, the application of Statement 
     Number 157 of the Financial Accounting Standards Board for 
     any issuer (as such term is defined in section 3(a)(8) of 
     such Act) or with respect to any class or category of 
     transaction if the Commission determines that is necessary or 
     appropriate in the public interest and is consistent with the 
     protection of investors.
       (b) Savings Provision.--Nothing in subsection (a) shall be 
     construed to restrict or limit any authority of the 
     Securities and Exchange Commission under securities laws as 
     in effect on the date of enactment of this Act.

     SEC. 133. STUDY ON MARK-TO-MARKET ACCOUNTING.

       (a) Study.--The Securities and Exchange Commission, in 
     consultation with the Board and the Secretary, shall conduct 
     a study on mark-to-market accounting standards as provided in 
     Statement Number 157 of the Financial Accounting Standards 
     Board, as such standards are applicable to financial 
     institutions, including depository institutions. Such a study 
     shall consider at a minimum--
       (1) the effects of such accounting standards on a financial 
     institution's balance sheet;
       (2) the impacts of such accounting on bank failures in 
     2008;
       (3) the impact of such standards on the quality of 
     financial information available to investors;
       (4) the process used by the Financial Accounting Standards 
     Board in developing accounting standards;
       (5) the advisability and feasibility of modifications to 
     such standards; and
       (6) alternative accounting standards to those provided in 
     such Statement Number 157.
       (b) Report.--The Securities and Exchange Commission shall 
     submit to Congress a report of such study before the end of 
     the 90-day period beginning on the date of the enactment of 
     this Act containing the findings and determinations of the 
     Commission, including such administrative and legislative 
     recommendations as the Commission determines appropriate.

     SEC. 134. RECOUPMENT.

       Upon the expiration of the 5-year period beginning upon the 
     date of the enactment of this Act, the Director of the Office 
     of Management and Budget, in consultation with the Director 
     of the Congressional Budget Office, shall submit a report to 
     the Congress on the net amount within the Troubled Asset 
     Relief Program under this Act. In any case where there is a 
     shortfall, the President shall submit a legislative proposal 
     that recoups from the financial industry an amount equal to 
     the shortfall in order to ensure that the Troubled Asset 
     Relief Program does not add to the deficit or national debt.

     SEC. 135. PRESERVATION OF AUTHORITY.

       With the exception of section 131, nothing in this Act may 
     be construed to limit the authority of the Secretary or the 
     Board under any other provision of law.

                  TITLE II--BUDGET-RELATED PROVISIONS

     SEC. 201. INFORMATION FOR CONGRESSIONAL SUPPORT AGENCIES.

       Upon request, and to the extent otherwise consistent with 
     law, all information used by the Secretary in connection with 
     activities authorized under this Act (including the records 
     to which the Comptroller General is entitled under this Act) 
     shall be made available to congressional support agencies (in 
     accordance with their obligations to support the Congress as 
     set out in their authorizing statutes) for the purposes of 
     assisting the committees of Congress with conducting 
     oversight, monitoring, and analysis of the activities 
     authorized under this Act.

     SEC. 202. REPORTS BY THE OFFICE OF MANAGEMENT AND BUDGET AND 
                   THE CONGRESSIONAL BUDGET OFFICE.

       (a) Reports by the Office of Management and Budget.--Within 
     60 days of the first exercise of the authority granted in 
     section 101(a), but in no case later than December 31, 2008, 
     and semiannually thereafter, the Office of Management and 
     Budget shall report to the President and the Congress--
       (1) the estimate, notwithstanding section 502(5)(F) of the 
     Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)(F)), as 
     of the first business day that is at least 30 days prior to 
     the issuance of the report, of the cost of the troubled 
     assets, and guarantees of the troubled assets, determined in 
     accordance with section 123;
       (2) the information used to derive the estimate, including 
     assets purchased or guaranteed, prices paid, revenues 
     received, the impact on the deficit and debt, and a 
     description of any outstanding commitments to purchase 
     troubled assets; and
       (3) a detailed analysis of how the estimate has changed 
     from the previous report.

     Beginning with the second report under subsection (a), the 
     Office of Management and Budget shall explain the differences 
     between the Congressional Budget Office estimates delivered 
     in accordance with subsection (b) and prior Office of 
     Management and Budget estimates.
       (b) Reports by the Congressional Budget Office.--Within 45 
     days of receipt by the Congress of each report from the 
     Office of Management and Budget under subsection (a), the 
     Congressional Budget Office shall report to the Congress the 
     Congressional Budget Office's assessment of the report 
     submitted by the Office of Management and Budget, including--
       (1) the cost of the troubled assets and guarantees of the 
     troubled assets,
       (2) the information and valuation methods used to calculate 
     such cost, and
       (3) the impact on the deficit and the debt.
       (c) Financial Expertise.--In carrying out the duties in 
     this subsection or performing analyses of activities under 
     this Act, the Director of the Congressional Budget Office may 
     employ personnel and procure the services of experts and 
     consultants.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as may be necessary to produce 
     reports required by this section.

[[Page 23097]]



     SEC. 203. ANALYSIS IN PRESIDENT'S BUDGET.

       (a) In General.--Section 1105(a) of title 31, United States 
     Code, is amended by adding at the end the following new 
     paragraph:
       ``(35) as supplementary materials, a separate analysis of 
     the budgetary effects for all prior fiscal years, the current 
     fiscal year, the fiscal year for which the budget is 
     submitted, and ensuing fiscal years of the actions the 
     Secretary of the Treasury has taken or plans to take using 
     any authority provided in the Emergency Economic 
     Stabilization Act of 2008, including--
       ``(A) an estimate of the current value of all assets 
     purchased, sold, and guaranteed under the authority provided 
     in the Emergency Economic Stabilization Act of 2008 using 
     methodology required by the Federal Credit Reform Act of 1990 
     (2 U.S.C. 661 et seq.) and section 123 of the Emergency 
     Economic Stabilization Act of 2008;
       ``(B) an estimate of the deficit, the debt held by the 
     public, and the gross Federal debt using methodology required 
     by the Federal Credit Reform Act of 1990 and section 123 of 
     the Emergency Economic Stabilization Act of 2008;
       ``(C) an estimate of the current value of all assets 
     purchased, sold, and guaranteed under the authority provided 
     in the Emergency Economic Stabilization Act of 2008 
     calculated on a cash basis;
       ``(D) a revised estimate of the deficit, the debt held by 
     the public, and the gross Federal debt, substituting the 
     cash-based estimates in subparagraph (C) for the estimates 
     calculated under subparagraph (A) pursuant to the Federal 
     Credit Reform Act of 1990 and section 123 of the Emergency 
     Economic Stabilization Act of 2008; and
       ``(E) the portion of the deficit which can be attributed to 
     any action taken by the Secretary using authority provided by 
     the Emergency Economic Stabilization Act of 2008 and the 
     extent to which the change in the deficit since the most 
     recent estimate is due to a reestimate using the methodology 
     required by the Federal Credit Reform Act of 1990 and section 
     123 of the Emergency Economic Stabilization Act of 2008.''
       (b) Consultation.--In implementing this section, the 
     Director of Office of Management and Budget shall consult 
     periodically, but at least annually, with the Committee on 
     the Budget of the House of Representatives, the Committee on 
     the Budget of the Senate, and the Director of the 
     Congressional Budget Office.
       (c) Effective Date.--This section and the amendment made by 
     this section shall apply beginning with respect to the fiscal 
     year 2010 budget submission of the President.

     SEC. 204. EMERGENCY TREATMENT.

       All provisions of this Act are designated as an emergency 
     requirement and necessary to meet emergency needs pursuant to 
     section 204(a) of S. Con. Res 21 (110th Congress), the 
     concurrent resolution on the budget for fiscal year 2008 and 
     rescissions of any amounts provided in this Act shall not be 
     counted for purposes of budget enforcement.

                       TITLE III--TAX PROVISIONS

     SEC. 301. GAIN OR LOSS FROM SALE OR EXCHANGE OF CERTAIN 
                   PREFERRED STOCK.

       (a) In General.--For purposes of the Internal Revenue Code 
     of 1986, gain or loss from the sale or exchange of any 
     applicable preferred stock by any applicable financial 
     institution shall be treated as ordinary income or loss.
       (b) Applicable Preferred Stock.--For purposes of this 
     section, the term ``applicable preferred stock'' means any 
     stock--
       (1) which is preferred stock in--
       (A) the Federal National Mortgage Association, established 
     pursuant to the Federal National Mortgage Association Charter 
     Act (12 U.S.C. 1716 et seq.), or
       (B) the Federal Home Loan Mortgage Corporation, established 
     pursuant to the Federal Home Loan Mortgage Corporation Act 
     (12 U.S.C. 1451 et seq.), and
       (2) which--
       (A) was held by the applicable financial institution on 
     September 6, 2008, or
       (B) was sold or exchanged by the applicable financial 
     institution on or after January 1, 2008, and before September 
     7, 2008.
       (c) Applicable Financial Institution.--For purposes of this 
     section:
       (1) In general.--Except as provided in paragraph (2), the 
     term ``applicable financial institution'' means--
       (A) a financial institution referred to in section 
     582(c)(2) of the Internal Revenue Code of 1986, or
       (B) a depository institution holding company (as defined in 
     section 3(w)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(w)(1))).
       (2) Special rules for certain sales.--In the case of--
       (A) a sale or exchange described in subsection (b)(2)(B), 
     an entity shall be treated as an applicable financial 
     institution only if it was an entity described in 
     subparagraph (A) or (B) of paragraph (1) at the time of the 
     sale or exchange, and
       (B) a sale or exchange after September 6, 2008, of 
     preferred stock described in subsection (b)(2)(A), an entity 
     shall be treated as an applicable financial institution only 
     if it was an entity described in subparagraph (A) or (B) of 
     paragraph (1) at all times during the period beginning on 
     September 6, 2008, and ending on the date of the sale or 
     exchange of the preferred stock.
       (d) Special Rule for Certain Property Not Held on September 
     6, 2008.--The Secretary of the Treasury or the Secretary's 
     delegate may extend the application of this section to all or 
     a portion of the gain or loss from a sale or exchange in any 
     case where--
       (1) an applicable financial institution sells or exchanges 
     applicable preferred stock after September 6, 2008, which the 
     applicable financial institution did not hold on such date, 
     but the basis of which in the hands of the applicable 
     financial institution at the time of the sale or exchange is 
     the same as the basis in the hands of the person which held 
     such stock on such date, or
       (2) the applicable financial institution is a partner in a 
     partnership which--
       (A) held such stock on September 6, 2008, and later sold or 
     exchanged such stock, or
       (B) sold or exchanged such stock during the period 
     described in subsection (b)(2)(B).
       (e) Regulatory Authority.--The Secretary of the Treasury or 
     the Secretary's delegate may prescribe such guidance, rules, 
     or regulations as are necessary to carry out the purposes of 
     this section.
       (f) Effective Date.--This section shall apply to sales or 
     exchanges occurring after December 31, 2007, in taxable years 
     ending after such date.

     SEC. 302. SPECIAL RULES FOR TAX TREATMENT OF EXECUTIVE 
                   COMPENSATION OF EMPLOYERS PARTICIPATING IN THE 
                   TROUBLED ASSETS RELIEF PROGRAM.

       (a) Denial of Deduction.--Subsection (m) of section 162 of 
     the Internal Revenue Code of 1986 is amended by adding at the 
     end the following new paragraph:
       ``(5) Special rule for application to employers 
     participating in the troubled assets relief program.--
       ``(A) In general.--In the case of an applicable employer, 
     no deduction shall be allowed under this chapter--
       ``(i) in the case of executive remuneration for any 
     applicable taxable year which is attributable to services 
     performed by a covered executive during such applicable 
     taxable year, to the extent that the amount of such 
     remuneration exceeds $500,000, or
       ``(ii) in the case of deferred deduction executive 
     remuneration for any taxable year for services performed 
     during any applicable taxable year by a covered executive, to 
     the extent that the amount of such remuneration exceeds 
     $500,000 reduced (but not below zero) by the sum of--

       ``(I) the executive remuneration for such applicable 
     taxable year, plus
       ``(II) the portion of the deferred deduction executive 
     remuneration for such services which was taken into account 
     under this clause in a preceding taxable year.

       ``(B) Applicable employer.--For purposes of this 
     paragraph--
       ``(i) In general.--Except as provided in clause (ii), the 
     term `applicable employer' means any employer from whom 1 or 
     more troubled assets are acquired under a program established 
     by the Secretary under section 101(a) of the Emergency 
     Economic Stabilization Act of 2008 if the aggregate amount of 
     the assets so acquired for all taxable years exceeds 
     $300,000,000.
       ``(ii) Disregard of certain assets sold through direct 
     purchase.--If the only sales of troubled assets by an 
     employer under the program described in clause (i) are 
     through 1 or more direct purchases (within the meaning of 
     section 113(c) of the Emergency Economic Stabilization Act of 
     2008), such assets shall not be taken into account under 
     clause (i) in determining whether the employer is an 
     applicable employer for purposes of this paragraph.
       ``(iii) Aggregation rules.--Two or more persons who are 
     treated as a single employer under subsection (b) or (c) of 
     section 414 shall be treated as a single employer, except 
     that in applying section 1563(a) for purposes of either such 
     subsection, paragraphs (2) and (3) thereof shall be 
     disregarded.
       ``(C) Applicable taxable year.--For purposes of this 
     paragraph, the term `applicable taxable year' means, with 
     respect to any employer--
       ``(i) the first taxable year of the employer--

       ``(I) which includes any portion of the period during which 
     the authorities under section 101(a) of the Emergency 
     Economic Stabilization Act of 2008 are in effect (determined 
     under section 120 thereof), and
       ``(II) in which the aggregate amount of troubled assets 
     acquired from the employer during the taxable year pursuant 
     to such authorities (other than assets to which subparagraph 
     (B)(ii) applies), when added to the aggregate amount so 
     acquired for all preceding taxable years, exceeds 
     $300,000,000, and

       ``(ii) any subsequent taxable year which includes any 
     portion of such period.
       ``(D) Covered executive.--For purposes of this paragraph--
       ``(i) In general.--The term `covered executive' means, with 
     respect to any applicable taxable year, any employee--

       ``(I) who, at any time during the portion of the taxable 
     year during which the authorities under section 101(a) of the 
     Emergency Economic Stabilization Act of 2008 are in effect 
     (determined under section 120 thereof), is the chief 
     executive officer of the applicable employer or the chief 
     financial officer of

[[Page 23098]]

     the applicable employer, or an individual acting in either 
     such capacity, or
       ``(II) who is described in clause (ii).

       ``(ii) Highest compensated employees.--An employee is 
     described in this clause if the employee is 1 of the 3 
     highest compensated officers of the applicable employer for 
     the taxable year (other than an individual described in 
     clause (i)(I)), determined--

       ``(I) on the basis of the shareholder disclosure rules for 
     compensation under the Securities Exchange Act of 1934 
     (without regard to whether those rules apply to the 
     employer), and
       ``(II) by only taking into account employees employed 
     during the portion of the taxable year described in clause 
     (i)(I).

       ``(iii) Employee remains covered executive.--If an employee 
     is a covered executive with respect to an applicable employer 
     for any applicable taxable year, such employee shall be 
     treated as a covered executive with respect to such employer 
     for all subsequent applicable taxable years and for all 
     subsequent taxable years in which deferred deduction 
     executive remuneration with respect to services performed in 
     all such applicable taxable years would (but for this 
     paragraph) be deductible.
       ``(E) Executive remuneration.--For purposes of this 
     paragraph, the term `executive remuneration' means the 
     applicable employee remuneration of the covered executive, as 
     determined under paragraph (4) without regard to 
     subparagraphs (B), (C), and (D) thereof. Such term shall not 
     include any deferred deduction executive remuneration with 
     respect to services performed in a prior applicable taxable 
     year.
       ``(F) Deferred deduction executive remuneration.--For 
     purposes of this paragraph, the term `deferred deduction 
     executive remuneration' means remuneration which would be 
     executive remuneration for services performed in an 
     applicable taxable year but for the fact that the deduction 
     under this chapter (determined without regard to this 
     paragraph) for such remuneration is allowable in a subsequent 
     taxable year.
       ``(G) Coordination.--Rules similar to the rules of 
     subparagraphs (F) and (G) of paragraph (4) shall apply for 
     purposes of this paragraph.
       ``(H) Regulatory authority.--The Secretary may prescribe 
     such guidance, rules, or regulations as are necessary to 
     carry out the purposes of this paragraph and the Emergency 
     Economic Stabilization Act of 2008, including the extent to 
     which this paragraph applies in the case of any acquisition, 
     merger, or reorganization of an applicable employer.''.
       (b) Golden Parachute Rule.--Section 280G of the Internal 
     Revenue Code of 1986 is amended--
       (1) by redesignating subsection (e) as subsection (f), and
       (2) by inserting after subsection (d) the following new 
     subsection:
       ``(e) Special Rule for Application to Employers 
     Participating in the Troubled Assets Relief Program.--
       ``(1) In general.--In the case of the severance from 
     employment of a covered executive of an applicable employer 
     during the period during which the authorities under section 
     101(a) of the Emergency Economic Stabilization Act of 2008 
     are in effect (determined under section 120 of such Act), 
     this section shall be applied to payments to such executive 
     with the following modifications:
       ``(A) Any reference to a disqualified individual (other 
     than in subsection (c)) shall be treated as a reference to a 
     covered executive.
       ``(B) Any reference to a change described in subsection 
     (b)(2)(A)(i) shall be treated as a reference to an applicable 
     severance from employment of a covered executive, and any 
     reference to a payment contingent on such a change shall be 
     treated as a reference to any payment made during an 
     applicable taxable year of the employer on account of such 
     applicable severance from employment.
       ``(C) Any reference to a corporation shall be treated as a 
     reference to an applicable employer.
       ``(D) The provisions of subsections (b)(2)(C), (b)(4), 
     (b)(5), and (d)(5) shall not apply.
       ``(2) Definitions and special rules.--For purposes of this 
     subsection:
       ``(A) Definitions.--Any term used in this subsection which 
     is also used in section 162(m)(5) shall have the meaning 
     given such term by such section.
       ``(B) Applicable severance from employment.--The term 
     `applicable severance from employment' means any severance 
     from employment of a covered executive--
       ``(i) by reason of an involuntary termination of the 
     executive by the employer, or
       ``(ii) in connection with any bankruptcy, liquidation, or 
     receivership of the employer.
       ``(C) Coordination and other rules.--
       ``(i) In general.--If a payment which is treated as a 
     parachute payment by reason of this subsection is also a 
     parachute payment determined without regard to this 
     subsection, this subsection shall not apply to such payment.
       ``(ii) Regulatory authority.--The Secretary may prescribe 
     such guidance, rules, or regulations as are necessary--

       ``(I) to carry out the purposes of this subsection and the 
     Emergency Economic Stabilization Act of 2008, including the 
     extent to which this subsection applies in the case of any 
     acquisition, merger, or reorganization of an applicable 
     employer,
       ``(II) to apply this section and section 4999 in cases 
     where one or more payments with respect to any individual are 
     treated as parachute payments by reason of this subsection, 
     and other payments with respect to such individual are 
     treated as parachute payments under this section without 
     regard to this subsection, and
       ``(III) to prevent the avoidance of the application of this 
     section through the mischaracterization of a severance from 
     employment as other than an applicable severance from 
     employment.''.

       (c) Effective Dates.--
       (1) In general.--The amendment made by subsection (a) shall 
     apply to taxable years ending on or after the date of the 
     enactment of this Act.
       (2) Golden parachute rule.--The amendments made by 
     subsection (b) shall apply to payments with respect to 
     severances occurring during the period during which the 
     authorities under section 101(a) of this Act are in effect 
     (determined under section 120 of this Act).

     SEC. 303. EXTENSION OF EXCLUSION OF INCOME FROM DISCHARGE OF 
                   QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.

       (a) Extension.--Subparagraph (E) of section 108(a)(1) of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``January 1, 2010'' and inserting ``January 1, 2013''.
       (b) Effective Date.--The amendment made by this subsection 
     shall apply to discharges of indebtedness occurring on or 
     after January 1, 2010.

  The SPEAKER pro tempore. Pursuant to House Resolution 1517, the 
gentleman from Massachusetts (Mr. Frank) and the gentleman from Alabama 
(Mr. Bachus) each will control 90 minutes.
  The Chair recognizes the gentleman from Massachusetts.


                             General Leave

  Mr. FRANK of Massachusetts. Madam Speaker, I ask unanimous consent 
that all Members may have 5 legislative days to revise and extend their 
remarks and include extraneous material on H.R. 3997.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Massachusetts?
  There was no objection.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield myself such time 
as I may consume.
  Madam Speaker, rarely have the Members had so many reasons for 
wishing we weren't here.
  First, it's a couple of days into what was supposed to be the time 
when Members can return to their districts to engage in campaigning. 
Members had a number of important events scheduled with their 
constituents, with their families, with others that have already had to 
be cancelled, and we are into the third day of that.
  Secondly, Members would rather not be here because this is a tough 
vote. This is a vote where many of us feel that the national interest 
requires us to do something which is in many ways unpopular because 
what we are talking about, to many of us, is the need to act to avoid 
something worse from happening than is already happening.

                              {time}  0930

  It is hard to get political credit for avoiding something that hasn't 
yet happened but you think is going to happen.
  Most of all, though, we regret being here because we all deeply 
regret the economic conditions which have made this decision day 
necessary. No one is happy that we have seen the failures that we have 
seen in our economic system. We differ as to whether or not those 
failures, as they have had a cumulative effect, require us to act. I 
believe it is possible to debate whether or not 2 weeks ago it was 
necessary to act quickly. I believe that it was. The bad news 
continues. There has been a lack of confidence in the financial system 
that is pervasive. Unfortunately, a lack of sensible regulation allowed 
the financial system to get itself into a position where so many people 
owe other people so much more money than they have or can reasonably be 
expected to get, that as confidence ebbs and people are called upon to 
make good on promises they should never have made, we face a declining 
cycle of activity.
  People have said, well, you're bailing out Wall Street. The people in 
the financial industry who made a lot of money still have it. Their 
institutions

[[Page 23099]]

may not have it, but they do. No high executive of a failed institution 
will be showing up soon at the unemployment office. None of them will 
be hurting. They will be fine personally. The people who will be hurt, 
in our judgment, are those who are trying to buy or sell cars, because 
there won't be credit for the automobile industry. There won't be 
ability to refinance your house or buy a house because there won't be 
any money there for any purchase that requires credit of any size, 
people will get hurt and it will have a cumulative effect.
  Now you might have argued that the tremendous lack of confidence that 
is causing this over-leveraging to be a problem would not have had to 
be addressed a week ago. But let's remember what happened. Ten days 
ago, on Thursday, not far from here, in the office of the Speaker, the 
bipartisan congressional leadership and those of us who have leadership 
roles in the Financial Services and the Banking Committees were asked 
to meet with the Secretary of the Treasury and the Chairman of the 
Federal Reserve. In our country, under our system, the executive has a 
lot of the initiative. We have an ability to shape. We have an ability 
to respond. But in emergency situations--let's be clear--the initiative 
is inevitably with the executive. And the two leading appointees of 
President Bush concerned with economic activities, the people the 
financial community looks to, came to us and said, you need to give us 
this authority, and if you don't give it to us very quickly, there will 
be a disaster.
  We have not given it to them as quickly as they asked because we felt 
that we needed, even if we agreed with the premise of the need for 
action, that we had to make some improvements. And we have made many of 
them, not as many as I would like, but we have made many of them. But 
we were able to do that, I believe, because we have been able to show 
progress.
  At all times from the time they came on Thursday night, this body has 
been engaged. I have been here 27, 28 years. I have never seen a piece 
of legislation which was so open to Member participation in which there 
has been so much discussion. People have said, not enough time is being 
spent. Well, let me say this. The hours spent on this bill exceed the 
hours spent on most bills. And the staffs of the committee I chair, of 
other committees of Members, have done extraordinary work. What we have 
done is substantially change what they have done, but we have been able 
to say at all points that we're making progress.
  Today is decision day. I wish it weren't the case. But I am convinced 
that if we defeat this bill today, it will be a very bad day for the 
financial sector of the American economy. And the people who will feel 
the pain are not the top bankers and the top corporate executives, but 
average Americans. They don't see it yet. And pain averted is not a 
basis on which you get a lot of gratitude. But that is what is coming 
if we do not do something today, in my judgment, positive. If this bill 
dies, I think we get negative.
  And again part of the reason is this--and I disagree with Secretary 
Paulson and Chairman Bernanke on some policy issues. I regard them both 
as men of high integrity and total commitment to the national interest. 
And I believe they are absolutely and legitimately convinced about 
this. And by the way, they cannot, in my judgment, be accused of 
excessive pessimism. If anything, they can be accused of being too 
optimistic. Because you will recall that beginning with the Bear 
Stearns intervention, they have tried a series of interventions much 
less intrusive than this and they haven't worked. These are not men 
whose first impulse was to do something this broad. These are men whose 
experience was that something systemic was required because, again, of 
the depths of the problem.
  Let's not forget the cause as we debate the consequence. The cause 
was too little regulation and the financial market getting itself into 
serious trouble. And now we have to, through government action, work 
with them to clean this up. And by the way, we have committed, I think 
almost everybody in this Chamber, certainly a large majority, that next 
year we will put in place the kind of regulations that we wish we had 
had before so this won't recur. So nobody needs to worry that we do 
this once and we will have to do it again another time and another 
time. We know how, I believe, to prevent this from recurring. But that 
doesn't help us as we deal with it today.
  And the point is this: No matter what you thought about the crisis 10 
days ago, when these two internationally respected highest officials of 
the Bush administration of the greatest economic power in the world 
come up and say, if you don't do this, we will have a crisis, then even 
if that hadn't been true before, they have made it more true. And I 
don't accuse them of doing it for that reason. That is just the 
reality.
  If we repudiate George Bush's Secretary of the Treasury and Chairman 
of the Federal Reserve, joined as they were by previous Secretaries of 
the Treasury, if we repudiate them and say, nah, calm down, we'll get 
over it, I believe the consequences will be severe.
  So I hope that this bill is passed. It is a first step. We have a 
task next year to do with regulation. We have oversight that must be 
done about how we got here. But here is the choice: George Bush's two 
chief economic officials have said to us, if you do not act, there will 
be terrible, negative consequences for the financial sector, and they 
will very soon exacerbate an economy that is already troubled, that 
already has 6 percent unemployment and is on track already to lose more 
than 1 million private sector jobs in the year. If we add to this 
weakened economy, and this is the headline, ``The House Repudiates Top 
Economic Advisers,'' there is nothing, I believe, that will then stand 
between us and--it's not the end of the world, this is a strong 
country, people will still get up the next morning and still send their 
kids to school, but fewer of them will be going to work. And fewer of 
them will be buying cars. And fewer of them will be able to refinance 
their homes. And the consequences will be a much more dismal near 
economic future for the United States.
  So I hope the bill passes.
  I reserve the balance of my time.
  Mr. BACHUS. I yield such time to the gentleman from California as he 
may consume.
  Mr. GARY G. MILLER of California. Madam Speaker, as Chairman Frank 
said, I have yet to talk to a Member who wants to have to vote on this 
today. This is probably the toughest vote any of us have taken since we 
have been in Congress. And if you just solely rely on the telephone 
calls we are getting from home and listen to people who really don't 
understand the complexity of our marketplace and what we are trying to 
deal with here, the easiest vote for you to make would be a ``no'' vote 
today. But you have to go beyond that. You have to say what happens to 
the family next week who wants to buy a house and they can't get a 
loan? What happens to the family next week who wants to get a car loan 
and they can't get a car loan? Or they want to send their kids to the 
university and they go to get a student loan, and there are no loans 
available?
  And right now when the marketplace is running as it is, people say, 
well, that is not likely to happen. But if you look at the systemic 
problem we have in the marketplace, there is a probability that it 
could happen.
  Now we can roll dice today. We can say, let's not vote, and let's 
hope everything goes okay. And for Members, it's a very difficult 
situation. They say, if I vote for this bill and the bill passes and 
the marketplace does not crash and it continues and it improves, people 
are going to be mad at me because I voted to continue the process they 
think is bad. If you vote ``no'' on this bill and we have a crash in 
the marketplace and illiquidity occurs and people go to get loans, the 
businessman who normally relies on his loans to make payroll, he goes 
to the bank and the bank says, like the bank said to McDonald's, we 
will no longer fund expansion of McDonald's, which is the

[[Page 23100]]

largest fast-food chain in the United States, when that occurs, then 
the Member has to say, what is the consequence to voting ``no'' for 
this bill? So it's almost a catch-22. You're darned if you do, and 
you're darned if you don't.
  There are some things in this bill that I think should have happened 
earlier. We are having mark-to-market that deals specifically with 
assets banks have to hold that are devalued. Chairman Bernanke said 
last week, accounting rules require banks to value many assets at 
something close to very low fire-sale prices rather than at hold-to-
maturity prices, which is not unreasonable in its given face of 
illiquidity. Banks are forced today to write down the value of the 
assets they have and set huge reserves aside for losses they have 
already taken.
  The bad thing about this, I put language into the housing bill in 
April as an amendment. It came out of this House and went to the 
Senate. When the bill came back from the Senate, that language 
mysteriously disappeared. We could have done that then and perhaps not 
be quite in the situation we're in today.
  The subprime marketplace that people are angry about today, the 
subprime marketplace is a good marketplace. But when you mix predatory 
lending in the market, it's bad. When you make loans to people when a 
trigger kicks in in the interest rate that they cannot make, you have 
committed a predatory loan. We should have defined that in law 4 or 5 
years ago. But we did not.
  If you look at the rates of interest today, they have been held down 
so low that the euro in recent years has increased in value 
dramatically, and the result of commodity prices in the U.S. is that 
oil, grain, coal, metal, and currency premiums are basically suffering 
a 20 to 30 percent hit.
  If you look at the marketplace today, the declining home prices we've 
had out there today, and the subprime loans that they're going to be 
buying, they are going to be buying them at 40 percent of market value. 
And if you look at what is happening on the prime loans, which are good 
loans, they are only worth 90 percent of market value.
  Members today need to look at what we're doing. Are we going to 
change the market or are we going to let the market continue to decline 
and roll dice and say perhaps nothing will happen? I think there is 
something we need to do in the coming months that really bothers me 
that is not in this bill. I think we need to look at public-private 
partnerships involving local communities, investors, in these assets we 
buy and basically maximizing the benefit and the value of these assets. 
If we involve the local people in what we're doing here, they will put 
their assets with the assets of the Federal Government, increasing the 
benefit to the marketplace and ensuring that the yield to these 
investments will produce a profit. What we don't want to have happen is 
like what happened during the savings and loan debacle where assets 
were bought by the Federal Government, dumped on the marketplace at low 
prices, calling the market to continually decline farther than it had 
currently done, and end up with a worse problem than we face.
  Members need to look at what we're doing today. Some Members have 
worked very, very hard to come up with a compromise package that we 
believe is not pleasing either side. The Democrats are not happy. The 
Republicans are not happy. But it is something that is going to work. 
We need to look at that. We need to weigh our conscience for what is 
best for our community and what is best for our country. And we need to 
vote what is right for this Nation.
  Mr. FRANK of Massachusetts. I yield 3 minutes to one of the most 
thoughtful members of our committee and a gentleman who represents in 
North Carolina one of the banking centers and has a great deal of 
knowledge of the subject under discussion, the gentleman from North 
Carolina (Mr. Watt).
  Mr. WATT. I thank the gentleman for yielding time.
  There is probably no worse instance to be doing legislation than 
having to do it in response to a crisis. Legislating to clean up a mess 
is just not as fun as it is if you do something thoughtfully looking 
forward to try to prevent a mess from occurring.
  And we've been, for the last several years, trying to legislate. We 
had predatory lending legislation. We've been on the forefront of that. 
But we've been having difficulty getting people to recognize that a 
crisis was coming if we didn't respond to cut back on irresponsibility 
in the market.
  There are two problems here. The first is, is there a real crisis 
that needs to be responded to? And that is really the question that I 
have gotten a lot more calls from my constituents about. The second 
issue of course is what do you do about it if there is a crisis? So let 
me talk about the first of those first. Is there a crisis? And that 
question I really don't have an answer for other than the answer that 
we were given by the Secretary of the Treasury and the Chairman of the 
Federal Reserve 1 week ago Thursday which was that we are in a real 
crisis situation that could mushroom into something worse than the 
Great Depression.
  It's not my responsibility as an individual Member of Congress to go 
and prove that. But when the Secretary of the Treasury and the Chairman 
of the Federal Reserve tell me that there is a real problem, the stakes 
become too high for me not to take it seriously. It's not my 
responsibility to go and convince the American people, and I wish we 
had a President that had enough communication skills and enough 
credibility with the American people to convince them that there is a 
real problem. Unfortunately, that burden hadn't been carried 
sufficiently by the administration.

                              {time}  0945

  But I am convinced that the odds are bad enough that if we don't do 
something today, we will regret it for a long, long time to come. 
Having jumped across that threshold, we have shaped this package as 
responsibly as we can shape it, and I encourage my colleagues to 
support the bill.
  Mr. BACHUS. Madam Speaker, I yield to the gentleman from California 
(Mr. Lewis) for the purpose of making a unanimous consent request.
  Mr. LEWIS of California. Madam Speaker, I rise in support of the 
measure before us.
  Madam Speaker, there is a sense of urgency in the Capitol. We all 
know that this urgency is real: we have seen the largest U.S. bank 
failure in history, the demise of century-old Wall Street firms, and a 
nearly total freeze of our credit system.
  Everyone, Republican and Democrat, is keenly aware that our economy 
is in dire straits. It seems increasingly clear that unless we in 
Congress allow the Federal Government to take bold steps, we are facing 
a serious recession or worse.
  Treasury Chief Henry Paulson--backed by President Bush--has laid out 
a plan that would commit up to $700 billion to relieve the pressure on 
the credit system by buying bad mortgage debts and other ``toxic 
assets.''
  The American people are rightly furious that their tax dollars will 
go to ``reward'' the businesses and business people who they believe 
got us into this mess. Most who have called my office forcefully said 
``I've paid my bills, I shouldn't have to pay their bills, too.''
  Frankly, I'm furious, also. The idea of spending taxpayer dollars to 
prop up risky investments keeps me awake at night. It goes against all 
the principles I have lived by--personal responsibility, smaller 
government, reliance on the free market.
  But we cannot afford to simply look at this as angry taxpayers who 
believe we should just let the greed gamblers fail. The stakes are too 
great for that.
  Uncle Sam has been involved in controversial bailouts before. There 
was the bailout of Chrysler in the '80s and later of Mexico in the 
'90s. On the optimistic side, in both instances, the dollars delivered 
were repaid including interest. Thus, some suggest that as our own 
marketplace improves, these bailouts could very well be repaid and 
perhaps even lead to some profits.
  Earlier this week Chairman Bernanke reminded us that Wall Street is 
an abstraction. The internal credit markets that allow banks to borrow 
money from each other are hard to understand for our constituents--and 
for most of us, as well. I have heard constituents--and some members--
say we shouldn't worry about the lack of credit between banks.

[[Page 23101]]

  But the failure of our credit system has broad. implications, not 
only for the high rollers in Manhattan, but also for the families and 
small businesses of the Inland Empire.
  When local business owners do not have cash today for payroll but 
know they will in the future, they can turn to their bank and get a 
short-term loan to pay their employees, stay open and help build the 
local economy.
  When families do not have cash to buy a home or a car, they turn to 
their bank to get a mortgage, create wealth and help build the local 
economy.
  When high school students do not have cash to pay for college, they 
turn to their bank to get a student loan. When those students graduate, 
they enter the workforce and help build the local economy.
  When banks stop lending between themselves, they soon stop lending to 
everyone else and economic expansion at the local level stops. The 
crisis on Wall Street becomes the crisis on Main Street.
  The liquidity crisis is a linchpin of the broader economic crisis 
facing our constituents. This crisis has already hit our seniors in 
retirement and those looking at retirement. Even savvy retirement age 
constituents who made sound investment choices are not immune to our 
current market downturn. Should we refuse to act swiftly, those who 
rely on investment income and do not have the luxury of time to wait 
for long-term market adjustments will have even less money for food, 
housing and medical needs.
  In my own district and yours, we are seeing clear signs that a 
downturn in the financial markets impacts city and county investments 
and puts important public projects at risk. Can we afford to increase 
that risk to local growth?
  There is no question that investing in the market also poses risks, 
but if we can reduce market uncertainty, those risks are reduced for 
everyone. That is the only way to protect the investments made by 
seniors who built our economy's foundation and localities serving our 
constituents.
  Allowing the markets to crash and leaving Wall Street to its own 
devices does punish the decisionmakers who fueled this crisis. But we 
all know it won't stop there. Millions of Americans will suffer the 
consequences, even those who felt they were being careful with their 
retirement nest egg.
  There is no question that we in Congress must move deliberately and 
do everything we can to reduce or eliminate the risk to taxpayer funds. 
And whatever action is taken by Congress, we must make certain that 
those who got us into this mess do not profit further from the 
solutions we develop.
  But we cannot avoid risk. Ultimately, we must face the realization 
that doing nothing will cause a potential catastrophe, and the 
suffering won't be felt just on Wall Street. It will be on every Main 
Street in America.
  Mr. BACHUS. Madam Speaker, I yield such time as he may consume to the 
gentleman from Florida (Mr. Putnam).
  Mr. PUTNAM. Madam Speaker, I thank the gentleman from Alabama for 
yielding.
  There is an old Chinese proverb, ``may you live in interesting 
times,'' and these are interesting and remarkable times.
  In the past 2 weeks, we have seen the five largest investment banks 
in the United States be reduced to two. Last week, the largest bank in 
the United States failed. Over 2,000 branches spread out across this 
country, retail outlets where ordinary Americans, downtown merchants, 
farmers, students, seniors, savers relied on that bank to meet their 
needs, it failed last week. This morning, another major bank on the 
brink of collapse was purchased for $1 a share.
  Last week a money market fund announced that, for the first time, 
they had ``broken the buck,'' that they could not guarantee that every 
dollar you put into that money market account would be retrievable on 
your request, and a second major money market account announced that 
they were closing and not accepting any new deposits for fear of the 
same thing happening to them.
  Now, when you get beyond credit swaps and derivatives and all these 
complicated things that obviously not even the Wall Street traders who 
are engaging in them understood and start talking about the bank on the 
corner failing and the money market funds where every small business 
holds their payroll, where every saver is trying to wring out an extra 
half a point of interest, you have reached Main Street. You are now 
standing at the brink of a financial collapse that is well beyond the 
financial capitals of the world.
  I also failed to mention, since we are not just talking about an 
American problem, that this weekend alone, three of the largest banks 
in Europe either failed or were nationalized.
  So we live in interesting times, and we are watching one domino after 
another fall that are the pillars of our financial system here in the 
United States.
  Now, I tried to think of the right analogy, and it dawned on me that, 
being from Florida, we get a lot of hurricanes, and in 2004 we had 
three hurricanes come across Central Florida, my home, in nine weeks, 
bam, bam, bam. Then a year later we watched a storm come across Florida 
and build in the Gulf, and it got bigger and bigger and moved faster 
and faster and had a bull's eye on New Orleans, and I, like a lot of 
Americans, wondered why more people weren't leaving, why more people 
weren't heeding the warnings that were so obvious from the weather map 
of what was building into a monster in the Gulf of Mexico.
  If you have ever wondered why people don't get out of the way of an 
oncoming storm, a hurricane that is barreling down on top of you, 
despite days of notice, despite satellite imagery, despite all of the 
best advancements in communications, then you have to apply that same 
analogy to what we are seeing now; one bank after another failing, 
rolling out of New York, rolling out of Brussels, out of London, out of 
these places that seem so foreign, into our Main Streets, into our 
merchants' associations, into our farmer cooperatives.
  You are watching this happen. So how could you as a Member of 
Congress in seeing that roll across the countryside not do everything 
in your power to prevent it?
  The previous speaker made an outstanding reference to the fact that 
Congress is known for producing fairly bad legislation in the aftermath 
of a crisis. What we have before us today is an attempt to avert that 
crisis and all of the rushed legislation that would follow a collapse, 
the likes of which we have not seen in this country since the 1930s.
  This bill is a substantially different bill than what Secretary 
Paulson and the President sent up here a week ago. It is a better bill 
than what they sent up here, and it is a bipartisan bill.
  We talked about how remarkable these times are. Last week, two 
candidates who have spent 2 years, two difficult, hard-fought years 
looking for a way to beat the other one to become the next President of 
the United States, both hit the pause button and released a joint 
statement of principles in agreement that Congress needs to act to 
avert a financial collapse.
  This body has come together to produce a bill that is distasteful to 
most, that required both sides to give up many of the individual items 
that they thought would be helpful--pro-growth capital gains policies 
that Republicans thought would be helpful, affordable housing trust 
funds issues that the Democrats thought would be helpful, both gone 
from the draft of this bill--and instead focusing on the central goal, 
which is to avert the financial collapse that all of the experts and 
all of the evidence and all of the bank failures and all of the money 
market closings indicate is very possible if Congress doesn't act.
  So, by virtue of Congress coming together and improving the Paulson 
plan, by virtue of the people's elected representatives having the 
opportunity to weigh in on this issue and to hash out these problems 
and to work around the clock on the weekends to make this a better 
bill, it will not cost $700 billion, as has been widely reported in the 
original draft, for a variety of reasons; the potential upside of the 
assets that the government is buying, the insurance program.
  The most recent intervention that this Congress passed in the GSEs 
was estimated at $300 billion in costs. It was actually scored at $25 
billion in costs.
  So it is important that the taxpayers understand that because the 
Congress has moved forward on this issue, it will

[[Page 23102]]

be a smaller tab for the taxpayer. But it will be an effective 
intervention to restore the confidence necessary to avoid the kind of 
panic that we haven't seen in generations in this country.
  This is no longer the Paulson-President's plan. Because of the work 
that Chairman Frank and the Republican negotiators have done, this is a 
better bill; better for the taxpayer, no golden parachutes for CEO's 
who drive their companies into the ground and walk away with millions, 
none of the special interest projects that concerned so many people on 
our side.
  But, most importantly, the evidence is overwhelming that we must act. 
It is always difficult to compile legislation this complex under such a 
short timeframe, and we are up against a short timeframe because of the 
markets, because of the holidays, because of the natural calendar in 
our political cycle. The only thing worse than that is the kind of 
legislation that will result in the aftermath of the debris that 
remains after a financial collapse.
  So I stand here today willing to support this bipartisan compromise 
that has been hashed out over these last several days that is such an 
improvement over what we began with a week ago, but is so important to 
the financial architecture, not just of investment firms and 
speculators and people who got too cute by half with someone else's 
money, but someone who is willing to support this bill because it is so 
important to the seniors, the savers, the merchants and the farmers who 
need to understand that the confidence will be there in their banking 
system; that they don't have to withdraw their funds and stick them 
under the mattress; that our country's free market system is still the 
greatest in the world; and that this intervention will allow those 
credit markets to unlock and we will be able to unwind and deleverage 
this marketplace and move forward together.
  So I compliment my chairman, I compliment our Republican negotiators, 
Mr. Blunt and Mr. Cantor, and I urge my colleagues to support this 
bill.
  Mr. FRANK of Massachusetts. I thank the gentleman for his words, and 
I now recognize the gentlewoman from California (Ms. Woolsey) for 2\1/
2\ minutes.
  Ms. WOOLSEY. Thank you, Mr. Chairman, for allowing time for the 
opposition.
  There are some major questions, Madam Speaker, to be answered by a 
bailout package that fails to address the root cause of the financial 
crisis facing our Nation, one that does little or nothing to secure the 
underlying problem of mortgage foreclosure and economic suffering that 
hardworking Americans are facing every single day.
  Question one: Where is the comprehensive economic stimulus package 
that will assist 95 percent of the taxpayers, a package that includes 
unemployment benefits, food stamps, infrastructure investment, and, of 
course, foreclosure relief? Stability should come from the bottom up; 
an economic stimulus package that will allow those in foreclosure to 
pay their mortgages and stay in their homes, bringing value back to the 
mortgage-backed securities that are clogging the financial system.
  Question two: Why isn't Wall Street paying for the mess they created? 
By reinstating a one quarter of 1 percent surcharge on stock trades, we 
can raise nearly $150 billion a year from those who have actually 
caused this mess and profited from it also.
  Finally, question three: With only 3 months left of this current 
administration, why are we willing to even make available $700 billion 
to this administration? President Bush and Secretary Paulson have been 
wrong from the start on just about everything. If you think they will 
be responsible with this money, think again.
  I, for one, will be in opposition of this bailout with these major 
questions unanswered.
  Mr. BACHUS. Madam Speaker, I yield 3 minutes to the gentleman from 
Michigan (Mr. McCotter).
  Mr. McCOTTER. I rise today not to change anyone's mind, but to 
express to my constituents my reasons for opposing this bill.
  There will always be time and pretext enough for people to compromise 
their principles and put forward poor public policy that may in the 
short run be popular, but in the wrong run will be detrimental to the 
long-term interests of the American people. We learn this through 
history.
  In the 1832 bank panics, Andrew Jackson had the question of whether 
he would remove the Bank of the United States' charter. The people in 
the bank did not like that. They threatened the prosperity of the 
American people. In the middle of the panic, Andrew Jackson looked at 
these bankers and he said, ``There are no necessary evils in 
government. The Treasury to you, gentlemen, is closed.''
  This was an act of courage on the part of President Jackson, because 
he understood what was at stake was not merely an ephemeral prosperity 
or a panic caused by the very people with their handout. Andrew Jackson 
understood this was about majoritarian rule; it was about the faith in 
the people's representative institutions and those who inhabit the 
seats in which they are entrusted.
  Today we are in a global financial bank panic. It is the first of our 
global economy. We are seeing a leveraged bailout of the United States 
Treasury. In the end, these interests that want your money are 
threatening your prosperity, and the choice you face is this: You will 
lose potentially your prosperity for a short period of time at the 
expense of your long-term liberty. Once the Federal Government has got 
you to take that risk and pass it on to you as a ``moral hazard,'' they 
will be in the marketplace. And as the free market is diminished, your 
freedom itself is diminished, and as your Congress does not stand up to 
these and put forward a better plan that truly protects the taxpayers, 
that truly has the long-term interests of the United States at heart, 
you will be in jeopardy of losing both your prosperity and your 
liberty.
  The choice is stark, and it was put forward in the book by 
Dostoevsky. In ``The Brothers Karamazov,'' the grand inquisitor came to 
Jesus and he said, ``If you wish to subject the people, give them 
miracle, mystery and authority; but above all, give them bread.''
  It has always been the temptation in a crisis especially to sacrifice 
liberty for short-term promises of prosperity, and it was no mistake 
that during the 1917 Bolshevik Revolution the slogan was ``peace, land 
and bread.''

                              {time}  1000

  Today you are being asked to choose between bread and freedom. I 
suggest that the people on Main Street have said that they prefer their 
freedom, and I am with them.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield 2 minutes to the 
gentleman from Virginia (Mr. Moran).
  Mr. MORAN of Virginia. Chairman Frank, thank you for trying to save 
America's economy. I don't know anyone who could have understood the 
intricacies of this bill, held your own with the Bush-Cheney 
administration on behalf of the taxpayer and navigated Congress' 
political waters as skillfully as you have. If this bill passes and the 
markets have stabilized, it will be to your credit and perhaps, more 
importantly, when the taxpayer reaps the benefit of this bill, they 
will look back to your leadership and your legacy.
  I want to say a word about that latter point. This is a good deal for 
the taxpayer, and let me explain why with the help of a current 
analysis from the staff of Barron's magazine. This is the time to be 
buying--when everyone else wants to sell. But the government is the 
only agency that can do so because we can borrow at 3 percent with no 
collateral requirement. There is such a gap today between today's panic 
prices and tomorrow's inherent value that the taxpayer is in an 
enviable position. But the Treasury must act as a proxy for the 
taxpayer. There's no alternative to that.
  Now, once we start buying tranches of securities, even with a third 
of the money authorized by this bill, the securities markets will 
bounce back and, more importantly, so will the value of residential 
real estate. Treasury is

[[Page 23103]]

likely to be buying mortgage debt at an average of 65 cents on the 
dollar. Since Treasury borrowing is about 3 percent with no collateral 
requirement, we will get about $35 billion in annual interest on $250 
billion or $70 billion on $500 billion from these mortgage securities 
because they will yield a net of about 7 to 8 percent return. I know 
those are just numbers but this is about numbers.
  More importantly, Treasury has the luxury of time. With proper 
oversight and regulatory discipline, markets will be back on their feet 
within a year and at that time the taxpayer is likely to recoup a 25 to 
30 percent nontaxable capital gain on many of these security packages, 
on top of the underlying maturity value.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. FRANK of Massachusetts. I yield the gentleman an additional 
minute.
  Mr. MORAN of Virginia. Thank you, Mr. Frank.
  More importantly, American consumers, who are the real drivers of 
this economy, will be back in the drivers seat, able to borrow loans on 
businesses, cars, college and, most importantly, their homes.
  That is why we need to pass this bill now. Greed is the accelerator 
in a capitalist economy, but unless we're willing to tap on the 
regulatory brakes once in a while, the economy is going to crash. We 
learned that 75 years ago. Let us not repeat that mistake again. We 
need to put some fundamental disciplines into this market to turn us 
back in the right direction so that we can continue to be the most 
prosperous country in the world. But right now what we have to do is to 
steer this economy from the edge of the abyss. That's what this bill 
does and that's why we need to pass it today.
  Mr. BACHUS. Madam Speaker, I yield 3 minutes to the gentleman from 
Texas (Mr. Hensarling).
  Mr. HENSARLING. I thank the gentleman for yielding.
  Madam Speaker, this is clearly one of the most important votes that 
many of us will cast in our congressional careers. We are all concerned 
about the state of our economy. We are all concerned about the state of 
our capital markets. What has infected Wall Street may soon reach Main 
Street. Inaction has never been an option. But, again, the Paulson plan 
should never have been our only option. I fear other options, Madam 
Speaker, have never been considered seriously in the body. Although I 
certainly want to congratulate our ranking member, Spencer Bachus; our 
Republican leadership--Eric Cantor of Virginia, Paul Ryan of 
Wisconsin--for the work they've done to improve this bill, this is 
clearly a better bill, Madam Speaker, than it was a week ago, but 
that's not the relevant test. The relevant test is when you look at the 
good in the bill, when you look at the bad in the bill, does it take 
America in a direction that you believe America should go? By that 
test, Madam Speaker, I will vote ``no'' on this legislation.
  I fear this legislation before us is fraught with unintended 
consequences. I fear that ultimately it may not work. I fear that it is 
too much bailout and not enough workout. I fear that taxpayers may end 
up inheriting the mother of all debts. Now, some have come to the House 
floor and said, well, the taxpayer's going to make money on this. You 
know what, Madam Speaker: They may be right. I can tell you this much, 
Madam Speaker: as history as our guide, the taxpayer lost $200 billion 
on the S&L bailout. I can raid my neighbor's college fund for his 
children, go put it on a roulette table in Las Vegas, maybe I'll triple 
his money for him, but you know what, Madam Speaker, it's not a risk my 
neighbor voluntarily assumed.
  I fear that under this plan, ultimately the Federal Government will 
become the guarantor of last resort and, Madam Speaker, that does put 
us on the slippery slope to socialism. If you lose your ability to 
fail, soon you will lose your ability to succeed. That's why, Madam 
Speaker, House conservatives have put forth an alternative plan, and we 
are happy to work on it today and all next week. As important as it is 
to act quickly, it is more important to act rightly. We would hope this 
plan would get serious consideration.
  And, Madam Speaker, once it does, we hope that we can go on--that we 
can address the taxpayer crisis, as our fellow citizens are looking at 
the largest tax increase in American history; the spending crisis of an 
out-of-control Congress; the energy crisis where we see too many of our 
fellow citizens struggling to pay their bills.
  Madam Speaker, as we look at this legislation, and I respect all 
regardless of what side they come down on, if in doubt, err on the side 
of freedom.
  Mr. FRANK of Massachusetts. Madam Speaker, I now yield 3 minutes to 
the chairman of the Armed Services Committee, the gentleman from 
Missouri (Mr. Skelton).
  Mr. SKELTON. Madam Speaker, article 1, section 8, of the Constitution 
grants Congress the responsibility of raising and maintaining the 
military of our country. Our Founding Fathers were wise to put this 
power in the hands of Congress, the branch of our national government 
most closely connected to the American people. As chairman of the House 
Armed Services Committee, I take seriously Congress' role with respect 
to national security policy. In a series of recent committee hearings 
designed to study the need for a new comprehensive strategy for 
advancing American interests, it was evident that America must use all 
elements of national power--military, diplomatic, and economic--to 
remain the indispensable nation, acting as a consistent and ever-
present global force.
  If our economy were to falter, it would undercut America's global 
military and diplomatic strength. And it would be far more difficult 
for Congress, working with the President, to properly address our 
international challenges. It is through the lens of national security 
that I have examined the economic rescue bill before the Congress 
today.
  The economic crisis is real. Cash flow in the market has slowed, and 
some of America's top financial firms have failed. If action is not 
taken immediately, experts warn that the average American, including 
those in rural Missouri, will find it difficult or impossible to obtain 
credit for a mortgage, a car loan, a farm loan, a college loan or a 
small business loan, bringing economic activity to a standstill.
  At the request of the President of the United States, Congress has 
worked over the last week to build consensus around a bipartisan plan 
to stabilize the financial markets. Luckily, the bill being considered 
today bears little resemblance to the $700 billion blank check that the 
President initially requested back on September 20. That approach was 
totally unacceptable. So Congress improved it in a way that better 
protects the American taxpayers.
  Like many of the Fourth District residents from whom I have heard in 
the last week, I am angry that we find ourselves considering an 
economic rescue bill. But as I have studied the specifics of the 
crisis, I am convinced the consequences of inaction would be dire for 
America's economic and national security and for our country's overall 
standing in the world community.
  While I support this particular bill, I urge Congress to continue 
studying the economic turmoil we are facing and to consider additional 
legislative solutions to it. We must get to the bottom of what caused 
this crisis so that it does not happen again.
  Madam Speaker, I intend to vote in favor of this bill.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Culberson).
  Mr. CULBERSON. I thank the gentleman for yielding, and I want to 
point out that this legislation is giving us the choice between 
bankrupting our children or bankrupting a few of these big financial 
institutions on Wall Street that made bad decisions. Now, my daughter 
didn't do anything to deserve this. I know what the banks on Wall 
Street did.
  Look at the bill itself. Let me just point to a couple of sections in 
the brief 2 minutes that I've got to see that the Secretary of the 
Treasury is being given authority absolutely unprecedented in the 
history of this Nation.

[[Page 23104]]

We're essentially creating a King Henry here who is going to be able to 
buy any type of financial instrument he wants from any financial 
institution anywhere in the world, anywhere in the world owned by 
anybody, the Secretary can step in using his authority to buy any 
troubled asset he wishes--not just limited to residential mortgage-
backed securities--any financial instrument owned by any foreign 
entity, any American entity anywhere in the world and, quote, the 
Secretary is authorized to take such actions as the Secretary deems 
necessary to carry out this act.
  It is also unprecedented that you can't sue him to stop him. The 
judicial review section of this bill says that if you attempt to sue 
the Secretary, you can only overturn his decision if he does something 
that's arbitrary, capricious or an abuse of discretion, essentially 
something that's completely irrational. That's an absolutely 
unbelievable standard that gives the Secretary unbridled discretion, 
and you'll never be able to overturn or go after what he's doing in 
court.
  It also allows the Federal Government for the first time, quoting 
from the bill here, page 28, the Federal property manager who holds, 
owns or controls mortgages even has the authority to get into 
negotiating and changing the terms of individual mortgages. It is an 
unprecedented, unaffordable and unacceptable expansion of Federal power 
that our kids cannot afford, that we have never seen in the history of 
this country, and I urge the Members to remember that there's a better 
alternative.
  We, fiscal conservatives in the House, laid out sound alternatives 
that we need to take time to breathe and think about this and consider 
thoughtfully in committee. For example, just changing the mark-to-
market accounting rule would make a tremendous difference. We could go 
in and examine, for example, why don't we repeal the capital gains tax 
and take it to zero as they do in so many other successful economies?
  Don't vote to bankrupt our kids at the expense of saving some of the 
big Wall Street banks.
  Mr. FRANK of Massachusetts. I yield 2 minutes to the gentleman from 
Texas (Mr. Doggett).
  Mr. DOGGETT. Thank you.
  Like the Iraq war and the PATRIOT Act, this bill is fueled by fear 
and hinges on haste. So much is missing. There is:
  No requirement that Wall Street pay a dime for the damage it caused 
or the cleanup cost; though a future President can request that 
Congress do what it declines to do today.
  No meaningful limitation on outrageous executive pay; like the war, 
there is no shared sacrifice; only rewards for the greedy and more 
burdens for the needy.
  No complete bar on American taxpayers having to bail out the Bank of 
China--and the entire world.
  No guarantee taxpayers will not be overcharged for buying toxic debts 
that no one else wants.
  No guarantee taxpayers get a fair share in future profits of those 
who are bailed out.
  Yes, every one of these concerns receives cosmetic attention in this 
bill. Not even Avon or Mary Kay can compete with the cosmetics in this 
bill. It's 100 pages--much better indeed--but three pages of what 
Secretary Paulson would do and 97 pages of what Secretary Paulson could 
do, plus excuses for approving most of his three pages.

                              {time}  1015

  It aspires, but it seldom requires. All of us want to avoid further 
economic deterioration. Action or inaction today—that is a false 
choice. It is a matter of having never seriously considered any 
alternative in these negotiations to handing over $700 billion to the 
same Bush Administration that has done so much to create this crisis, 
so little to prevent it, and for whom the vultures have now come home 
to roost.
  Congressman Lloyd Doggett's assertions about the shortcomings of the 
legislation are supported by the following citations to the bill:
  (1) ``No requirement that Wall Street pay a dime.'' Section 134 
(After 5 years, the President need only submit a proposal, which he may 
or may not support, to Congress, which it may or may not approve, for 
recouping any shortfall from the financial industry.)
  (2) ``No meaningful limitation on outrageous executive pay.'' See 
Section 111 (Providing limited and vague restrictions on executive 
compensation and golden parachute payments. Even these very modest 
provisions apply only during the period of the bailout or as long as 
the Treasury actually holds the company's debt or equity.)
  (3) ``No bar on American taxpayers having to bailout the Bank of 
China.'' See Section 101(e) (Includes no prohibition on any American 
institution acquiring troubled assets owned by foreign institutions and 
reselling them to the Treasury.); Section 3(9) (Subsection (a) defines 
bailout-qualified ``troubled assets'' as mortgage-related securities 
created before March 14, 2008, but then subsection (b) then grants 
essentially unlimited authority for the Treasury Secretary to buy any 
asset he chooses; neither subsection applies a limitation regarding the 
date upon which the asset was acquired); see also Section 112 (In 
certain circumstances, foreign banks holding troubled assets may also 
sell these assets to the Treasury.)
  (4) ``No guarantee that taxpayers will not be overcharged for buying 
toxic debts.'' See Section 101(e) (expresses concern about unjust 
enrichment while at the same time granting the Secretary of the 
Treasury unfettered discretion in purchasing troubled assets.)
  (5) ``No guarantee that taxpayers really share in future profits of 
those bailed out.'' See Section 113(d) (The value of any stock warrants 
received for troubled assets is at the discretion of the same Treasury 
Secretary who has made clear he does not want the warrants.)
  Mr. BACHUS. Madam Speaker, I yield 4 minutes to the gentleman from 
Indiana (Mr. Pence).
  Mr. PENCE. Madam Speaker, I thank the gentleman for yielding.
  I rise in opposition to the Emergency Economic Stabilization Act and 
urge my colleagues respectfully to oppose it.
  Our Nation has been confronted by a crisis in our financial markets. 
The President and this Congress are right to act with all deliberate 
speed in addressing this crisis. We now have a bill that promises to 
bring near-term stability to our financial turmoil, but at what price?
  Benjamin Franklin in 1759 said, ``They that can give up liberty to 
purchase a little temporary safety, deserve neither liberty nor 
safety.''
  Economic freedom means the freedom to succeed and the freedom to 
fail. The decision to give the Federal Government the ability to 
nationalize almost every bad mortgage in America interrupts this basic 
truth of our free market economy.
  It must be said that Republicans in this Congress improved this bill. 
But it remains, in my judgment, the largest corporate bailout in 
American history, forever changes the relationship between government 
and the financial sector, and passes the cost along to the American 
people. And I cannot support it.
  There are no easy answers, but the American people deserve to know 
there are alternatives to massive Federal spending. The Bush 
administration and this Congress have acted quickly, but ignored free 
market solutions to this crisis. The House Republican plan, as a solid 
alternative, would have set up an FDIC-style mandatory insurance 
program in which Wall Street firms would have paid to insure their 
mortgage-backed securities. Doing so would have made Wall Street pay 
the cost of this rescue instead of Main Street. And while there is an 
option for an insurance plan in this bill, it falls far short of the 
substitute that Republicans desired.
  The House Republican plan would have injected liquidity into our 
markets through fast-acting tax strategies, releasing the economic 
power inherent in the American economy. Temporarily reducing the 
repatriation tax, as we did in 2005, would have brought hundreds of 
millions of dollars back into this economy. And there were other 
business deductions that would help the financial

[[Page 23105]]

sector get back on its feet. There were alternatives.
  So I say to my colleagues: before you vote, ask yourselves why you 
came here, and vote with courage and integrity to those principles. If, 
like me, you came here because you believe in limited government and 
the freedom of the American marketplace, I urge you vote in accordance 
with your convictions.
  Duty is ours; outcomes belong to God. The American people and our 
posterity deserve to know that there were men and women in this 
Congress who opposed the leviathan state in this hour. If you do this, 
I promise you, I will stand with you. And I believe with all my heart, 
the American people will stand with you as well. Stand up for limited 
government and economic freedom. Stand up for the American taxpayer. 
Reject this bailout and vote ``no'' on the Emergency Economic 
Stabilization Act.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield 2 minutes to the 
gentleman from California (Mr. Costa) for the purpose of a colloquy.
  Mr. COSTA. Madam Speaker, to the chairman of the Financial Services 
Committee, it is my understanding that section 132 of the bill 
authorizes the Securities and Exchange Commission to suspend by rule, 
regulation or order, statement 157 of FASB if the commission determines 
it is necessary and appropriate and in the public interest and that 
this discretionary authority would grant banks flexibility in meeting 
their accounting requirements; is this correct?
  Mr. FRANK of Massachusetts. Yes, this reaffirms existing law, but we 
did it explicitly to underline its importance. There is very legitimate 
concern in this body on both sides of the aisle for the community 
banks. They are, in many cases, victims of practices from which they, 
themselves, abstained.
  There is language in here that tries to give them some relief that 
they would get from the preferred tax situation with Fannie Mae and 
Freddie Mac. Other Members have raised the question of increasing the 
FDIC insurance limit next year, and this one in particular on the 
accounting, obviously none of us want the legislative accounting. But 
the gentleman has raised a very important point, and yes, we agree 
absolutely with how he has framed it.
  Mr. COSTA. And I understand, Mr. Chairman, the section does not 
require the SEC to grant such discretion. Is it the intent of the 
gentleman and the chairman of the SEC to ensure that banks are granted 
accounting discretion, to the extent that such discretion is consistent 
with the intent of the language in section 132, including but not 
limited to in reports that will be required at the end of this month?
  Mr. FRANK of Massachusetts. The gentleman is again correct. It does 
not require it, but we would clearly hope that they would look at this 
very seriously.
  Mr. COSTA. And the legislation doesn't speak to it, but it is my 
understanding that the chairman of the committee will work on all 
regulatory agencies, including the banking regulatory agencies, to 
ensure that banks have the necessary and appropriate flexibility to 
address the changing market environment regarding capital requirements, 
accounting, audits and reports, and to do so in a timely manner for 
reports as of September 30, the end of the next reporting period, and 
would include but not be limited to the section 132 discretion?
  Mr. FRANK of Massachusetts. Yes. There are two separate things here. 
One is the mark to market accounting due to the consequences that 
follow that.
  The SPEAKER pro tempore. The gentleman's time has expired.
  Mr. FRANK of Massachusetts. I yield an additional 30 seconds.
  One thing we talk about as you study what the appropriate accounting 
ought to be, not legislative but as they study it, there is room for 
flexibility in how quickly various consequences attach to that, and we 
are discussing that with the regulators.
  Mr. COSTA. Finally, Mr. Chairman, I would like to commend you and the 
staff for the hard work that has been done on assimilating this very 
important package.
  While it is unfortunate that we are in this position here today, the 
economic security of our Nation is at risk. We are talking about Main 
Street here. To do nothing is not an option. I look forward to 
supporting this effort and your efforts in the next Congress to do the 
reforms that are necessary to bring back economic sanity to our 
country. I would urge an ``aye'' vote.
  Mr. BACHUS. Madam Speaker, I yield 3 minutes to the gentleman from 
California (Mr. Daniel E. Lungren).
  Mr. DANIEL E. LUNGREN of California. Madam Speaker, I rise in support 
of the Emergency Economic Stabilization Act of 2008.
  Years ago when I was much younger, I was a lifeguard. And I recall 
one of the first lessons you learn as a lifeguard is that if you know 
there is a dangerous undertow, you get the people back on the beach and 
out of the water.
  Maybe we can reflect and say we didn't see the undertows coming and 
we didn't get the people out of the water and onto the beach. But the 
other thing that I learned when I was a lifeguard was that if you found 
someone that was in the undertow, you attempted to rescue them. You 
didn't stand there and curse Mother Nature. You didn't say, Why didn't 
they do something yesterday? Or, Why didn't we do something an hour 
ago? Or, Why didn't we blow the alarm 10 minutes ago? You went and you 
tried to rescue the individual or individuals who were in distress.
  That's where we find ourselves today. We are in distress. I am not an 
expert on the international financial markets, but when bank after bank 
after bank appears to be going down in Europe, when we have bank 
failures here, when it appears to be a consensus of this House and the 
Senate and the executive branch that we have a difficult time, someone 
called it crisis, some would say that we are on the verge of a 
cataclysmic event, that we ought to take note and do something about 
it.
  So I would say to my conservative friends, if we want to protect the 
taxpayer, we ought to try to get the best deal we possibly can under 
the circumstances. Under these circumstances, as we stand here today, I 
believe this is the best possible solution we can get.
  Would I prefer something else, yes. I voted against the previous 
question because I wanted the Republican alternative, but we don't have 
the votes for that. So we need to do something to protect the taxpayer. 
But more importantly, let's bring this down to the very basic level. 
This is a question of jobs. It is a question about whether people in 
our districts are going to have jobs supplied by small businesses, 
medium-sized businesses. Can they go to the bank to get the credit so 
they can put out the payroll.
  Now, here is the problem. The chairman of the committee mentioned 
this awhile ago. We don't have the catastrophe right yet. If we prevent 
the catastrophe, will anybody notice? But it again reminds me of the 
time when I was a lifeguard. There were a lot of people who didn't get 
in trouble because I ran a pretty good pool.
  The SPEAKER pro tempore. The gentleman's time has expired.
  Mr. BACHUS. I yield 1 additional minute to the gentleman.
  Mr. DANIEL E. LUNGREN of California. I didn't allow small children 
who didn't know how to swim to jump into the pool. I didn't allow 
people to dive into the pool where I knew it was too shallow and they 
could break their necks. I didn't get credit for saving them after they 
dove in the pool and broke their necks. I didn't get credit for saving 
a little child from jumping in the water and nobody noticing that child 
and having that child drown. But I know. I did my job, and I prevented 
some possible tragedies.
  So I would ask Members on my side of the aisle, think about it. If 
you truly believe we have the possibility of this economic breakdown, 
at least attempt to save the people in the pool. It isn't what I would 
desire. It is not what I would have brought to the floor had I had the 
unique chance to do it, but it is the best opportunity we have. Let's 
not miss it.

[[Page 23106]]


  Mr. FRANK of Massachusetts. Madam Speaker, I yield to the gentleman 
from Indiana (Mr. Visclosky) for a unanimous consent request.
  Mr. VISCLOSKY. Madam Speaker, I rise in opposition to H.R. 3997.
  Madam Speaker, in 1991, when Congress was considering repealing the 
Glass-Steagall Act and its regulatory framework, Representative John 
Dingell stated that repealing the Glass-Steagall Act would usher in a 
``golden age of thievery.'' Mr. Dingell has been proven correct.
  As recently as September 15, President Bush was saying that 
``Americans have good reason to be confident in our economic 
strength,'' and that ``We have a flexible and resilient system that 
absorbs challenges and makes corrections and bounces back.'' Henry 
Paulson was saying that the current turmoil in markets and financial 
institutions ultimately would ``make things better.''
  Now suddenly, we have a crisis. The Bush Administration would have us 
believe that this crisis is a sudden accident of nature, that it just 
happened, and could not have been prevented. This crisis is not an 
accident of nature. The stage was set for this crisis with the repeal 
of Glass-Steagall in 1999, but this crisis is not the result of a 
single error in policy. It is the direct result of years and years of 
deliberate and cynical exploitation by the captains of an unregulated 
industry, aided and abetted by an Administration that has willfully 
failed to enforce our laws and regulations, and that has selected 
individuals from the very institutions that need oversight to watch 
over their friends and former colleagues. This crisis is what happens 
when you set the foxes to guard the henhouse for 8 long years.
  Now we are being asked to solve this crisis that has been building 
for most of the last decade in 7 days. But is the solution being 
foisted on us really going to help Main Street? Or is it simply meant 
to clean up Wall Street's mess, cloak the Bush Administration's abysmal 
failure to protect the people of this country from financial predators, 
and further enrich those whose covetousness has caused this problem? Is 
it going to help the people we represent, or is it going simply add to 
the profits of foreign banks?
  Additionally, the Washington Post of September 27, 2008, reports that 
the six largest banks in the world are going to emerge from this crisis 
even larger than before. But what about the small community banks that 
have been following the rules and dealing fairly with borrowers, and 
who will bear the brunt of the financial dislocation caused by 
irresponsible financial giants? Why are we leaving our smaller banks to 
fend for themselves, while bailing out foreign banks? Why does the 
Royal Bank of Scotland, with $3.5 trillion in assets, need welfare from 
the American taxpayer?
  The Bush Administration is rushing us into spending $700 billion 
without stopping to think things through, because there just isn't time 
for thinking. They say, trust us, this is necessary.
  I've heard this before.
  To me it sounds like what we were told about Iraq: that we had to go 
to war right away, because of the Weapons of Mass Destruction that 
Saddam Hussein possessed. Oh, that's right, they didn't exist. We were 
told ``Trust us.''
  It sounds like what we were told when we had to pass the Patriot Act 
immediately to allow the government to eavesdrop on our private 
communications and to get the list of books you checked out of the 
library without probable cause; because there was a risk of terrorism. 
We were told that we had to fall in line quickly and trust the 
President.
  Now it's ``trust us'' again. I didn't then, and I don't now!
  What about the people we're supposed to be protecting? Contrast the 
President's urgency to help the minions of Wall Street with his disdain 
for the most vulnerable members of society: our children. During the 
last two years we asked President Bush to help provide health insurance 
to 4 million additional children in our country. He refused to do so-- 
twice--but now he says we have to bail out 4 million brokers in 7 days.
  Where was the bailout when real people, the people I am here to 
represent, experienced financial crisis?
  When LTV went bankrupt and thousands of people lost their jobs, 
President Bush didn't sound the alarm. All I know is that Richard Fuld 
of Lehman Brothers made $34,832,036 last year.
  When many Bethlehem Steel retirees had their pensions cut, did 
President Bush provide a helping hand? All I know is that when Stan 
O'Neal retired from Merrill Lynch, his compensation package was worth 
$161.5 million.
  When National Steel went bankrupt, did this Administration ask for a 
bailout? All I know is that Freddie Mac's Richard F. Syron made 
$18,289,575 in 2007.
  When Republic Steel went bust under this Administration, they ceased 
to exist. On the other hand, AIG ceased to exist after a federal 
bailout, and no one asked Martin J. Sullivan of AIG to give back the 
$14,330,736 he was paid last year.
  Let us also look ahead. This year, we are projected to have a deficit 
of $407 billion, on top of our national debt of $9.68 trillion. Our 
Inland Waterway Trust Fund will be broke by June of next year. Our 
Highway Trust fund needed an infusion of $8 billion this year because 
it was out of money. Medicare is slated to be insolvent in 2019. Today 
we're being asked to provide the titans of Wall Street $700 billion 
that we will have to borrow because no one wants to pay for it. Think 
of our poor children, and I mean that literally. And think about the 
next administration that will have to live with the consequences of 
this Wall Street bailout for its entire term.
  It is clear that the problems in our current financial system are not 
temporary aberrations in an otherwise healthy system, and will not be 
easily addressed with a one-time infusion of cash. I know that I am not 
alone in saying this. On September 25, 2008, 200 independent economists 
who don't work on Wall Street, who don't work for the Federal Reserve, 
who don't work for the U.S. Treasury, signed a petition stating that 
this plan could create perverse incentives, that it is too vague, and 
that its long-run effects are unclear. Gary Aguirre, a former employee 
of the Securities and Exchange Commission, points out that as much as 
half of the $700 billion dollars could be wasted if there is not 
careful oversight over the valuation of the bonds we would be buying, 
resulting in a $350 billion gift to Wall Street.
  Now, these economists and Mr. Aguirre may be wrong too, but they have 
a lot more veracity with me than the supposed experts promoting this 
bailout plan, who are from the same institutions that created this mess 
in the first place. Given the gravity and systematic nature of our 
problems, and given the lack of information with which we have been 
provided, I believe that Congress should be deliberate and conduct a 
comprehensive examination of alternative solutions.
  Chairman Dingell was right: We are now in the golden age of thieves. 
And where I come from we put thieves in jail, we don't bail them out. 
We should reject this proposal.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield 2 minutes to the 
Chair of the Financial Institutions Subcommittee, a very creative 
legislator, the gentlewoman from New York (Mrs. Maloney).
  Mrs. MALONEY of New York. Madam Speaker, this is a difficult vote. 
This bill is not popular, but it is necessary. A wholesale failure of 
the banking system would be the financial equivalent of an economic 
heart attack, the consequences of which could severely affect the lives 
and livelihoods of millions of ordinary American citizens.
  The bill before us endeavors to prevent such a calamity. I do not 
pretend that it is a perfect bill, and taxpayers are rightfully 
outraged at the prospect of bailing out irresponsible banks and those 
that lead them.
  Speaker Pelosi and Chairman Frank have made improvements in this 
bill. We have imposed stronger oversight, allowed judicial review, and 
mandated transparency through the publication of asset purchase prices. 
We have directed the Treasury to safeguard taxpayer interest while 
reducing foreclosure, allowed the government to obtain equity warrants 
so taxpayers may participate in the upside of rescued banks. We have 
created a system under which the banks themselves will pay to insure 
each other's assets.
  Perhaps most importantly, half the funds, $350 billion, will not be 
made available until after a 4-month cooling off period, during which 
time we in Congress can use that transparent reporting to examine the 
prices paid for the assets, the warrants obtained, and the program's 
effectiveness in stabilizing the financial system and aiding American 
taxpayers and homeowners.

                              {time}  1030

  We will continue our work on October 6 in hearings before the 
Government Reform and Oversight Committee in ways to reform the 
financial system and stabilize our economy.
  I urge a ``yes'' vote.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
Georgia (Mr. Broun).

[[Page 23107]]


  Mr. BROUN of Georgia. I thank the gentleman for yielding.
  This is probably the most important vote that Members of Congress are 
going to take this year and for many, many years. Unfortunately, this 
bill is not going to solve the problem. This bill is going to bail out 
foreign banks. It's going to bail out Wall Street. But it's not going 
to bail out banks, and it's going to hurt the taxpayer.
  During the negotiations, we've had some changes to the Paulson bill, 
but this essentially is Mr. Paulson's bill to help his friends, and I 
can't buy it.
  Frankly, Madam Speaker, I see this bill as just a stopgap that's 
going to push us a little further down the road. We're still going to 
have the economic collapse, we're still going to have the stock market 
crash, we're still going to have all of the problems that this is 
supposed to fix. We heard the same argument with the Fannie Mae bailout 
and Freddie Mac. We've heard it in the discussion about Bear Stearns 
and AIG. It's the same old story. We're just going further down the 
road. We're getting deeper and deeper. The cliff is getting steeper and 
steeper.
  We need to slow this down. We need to stop this process. We need to 
vote against this bill and find something that really makes sense 
economically that's going to secure the bank situation.
  We have a capital problem, not a liquidity problem in our banks, 
Madam Speaker, and we've got to find a solution. And there are 
solutions. This is not the only one. This one is the only one to bail 
out Wall Street, but it's going to cost our taxpayers dearly.
  Madam Speaker, this is a huge cow patty with a piece of marshmallow 
stuck in the middle of it, and I'm not going to eat that cow patty.
  I would encourage all of the Members of my conference and your 
conference to vote against this bill so we can find something that 
makes sense.
  Mr. FRANK of Massachusetts. Mr. Speaker, I'm sure the Members will be 
relieved to learn that I have no matching metaphor.
  I recognize for 3 minutes the gentleman from California (Mr. 
Sherman).
  Mr. SHERMAN. Just because your constituents hate this bill--and will 
hate it more when they learn the details--does not mean that voting for 
it is an act of courageous patriotism. Just because this bill is 
unpopular doesn't mean we have to pass it immediately. Some 400 eminent 
economists, including three Noble Laureates, are asking us to come back 
and do our job and write a good bill in the next week or so.
  They state--and their chart is here so you might want to read along--
``We ask Congress not to rush, to hold appropriate hearings and to 
carefully consider the right course of action.'' Four hundred 
economists, three Noble Laureates.
  Now, we know that this bill will allow million-dollar-a-month 
salaries to executives at bailed out firms, and it allows hundreds of 
billions of dollars to be used to buy the toxic assets currently held 
by foreign investors. But we're told not to worry because this $700 
billion bill isn't going to cost us anything. We're going to recoup all 
of the costs from some future revenue bill that we will enact.
  Now, the bill does not automatically enact any revenue increase, nor 
does it protect a revenue bill from filibuster or veto. Congress is 
highly unlikely to pass a multi-hundred billion dollar tax increase in 
2013 or any other year. Tax increase bills are anathema to many. Forty-
one Senators can block the plan, and we're giving Wall Street enough 
money to hire 4,100 lobbyists.
  In recent years, Wall Street has effectively defeated every attempt 
to close every loophole they currently exploit, no matter how 
pernicious, including those involving Cayman Island tax havens used by 
hedge fund managers to pay zero tax.
  Section 134 of the bill says the tax will be on the entire 
``financial services industry''--good banks who don't need a bail out; 
bad banks who used a bailout; community banks, maybe even credit 
unions.
  It is absolutely impossible to draft a tax that will hit only those 
firms who receive bailout payments and even more impossible to draft 
one that taxes each bank in proportion to how much money we lose on the 
toxic assets we happen to buy from them. In fact, there are no 
provisions in this bill that even keep track of the losses on the 
assets we acquire from an individual bank as we manage them, combine 
them, put them together in pools with assets we acquire from other 
banks and then sell them off.
  Now, these bailed-out firms, many of them won't exist in 2013. Some 
are going to go under. Some of the bailed-out firms are just shell 
companies anyway. For example, if the Bank of Shanghai currently owes 
$30 billion of toxic assets to its tiny subsidiary it has already 
incorporated in California, the subsidiary will sell those toxic assets 
to the Treasury; the bailout went to that tiny subsidiary in 2009; it's 
not even going to exist in 2013.
  Many of the bailed-out firms are going to be unprofitable in 2013. 
And therefore you're not going to be able to put an income tax on them. 
Some of the bailed-out firms are going to move offshore before 2013. 
Wall Street gets their money now, and we get it back never.
  Mr. BACHUS. Madam Speaker, I yield 3 minutes to the gentleman from 
South Carolina (Mr. Barrett).
  Mr. BARRETT of South Carolina. First off, I want to commend my 
colleagues, especially Minority Leader John Boehner, Roy Blunt, Eric 
Cantor, and certainly Ranking Member Spencer Bachus, for their hard 
work in improving this bill. However, Madam Speaker, after careful and 
agonizing consideration, I cannot support H.R. 3997 and will be voting 
``no.''
  I understand the need to act, and I understand the urge to act 
quickly. We must restore the flow of credit. I firmly subscribe to the 
belief that Main Street and Wall Street are inextricably linked. 
Instability in the financial markets leads to instability in taxpayers' 
personal accounts and their personal funds.
  Meanwhile, that capital that flows through our financial markets is 
vital to the continued success of our businesses, large and small. We 
should all agree that a failure of our credit markets would be an 
enormous catastrophe, and the government does have a role in ensuring 
that the financial markets function soundly.
  At the same time, we cannot allow the American taxpayer to become the 
insurance policy for financial decisions that didn't quite turn out as 
planned. Whether you're talking about someone from South Carolina who 
took a mortgage they couldn't afford or a Wall Street banker who gave 
that mortgage, we see just how important personal responsibility must 
be to the American society. And I fear that this legislation erodes 
this accountability and the freedom that comes with it.
  Unfortunately, Madam Speaker, our government is in debt, and we're in 
a lot of it. In fact, this whole crisis is built around debt, where 
much bad debts has caused an inability to get new credit--otherwise 
known as debt. My daddy always told me that you can't borrow your way 
out of debt. And he was right.
  There are other reasonable options that we should explore to help the 
markets heal themselves and that would not burden our country under 
even greater mounds of debt. I was pushing for a plan that would use 
more free market principles, such as suspension of capital gains, a 
repatriation of earnings to help spur economic growth by helping all 
Americans whose retirement accounts are invested in the stock market or 
own a house or business so they can jump start the flow of funds back 
in the system.
  There is no doubt we find ourselves in a precarious situation, and 
the people are angry, and rightfully so. I'm angry. But we must not 
allow this anger to cloud our judgment and make choices that will 
divide this country. This is not a matter of Main Street versus Wall 
Street.
  But when it comes time to vote on this bill, Madam Speaker, I will be 
voting ``no.'' I understand my colleagues for their reasoning, and I'm 
confident that we all want to do the best for this country. But I 
believe so strongly in the principles of the free market and

[[Page 23108]]

the belief in the word ``freedom.'' That's why I'm opposing this bill.
  My fear is that today the government will forever change the face of 
the American free market.
  Mr. FRANK of Massachusetts. Madam Speaker, for the purpose of a 
colloquy, I yield 2 minutes to the gentleman from Georgia (Mr. 
Marshall).
  Mr. MARSHALL. Thank you, Mr. Chairman.
  I want to begin by complimenting the negotiators on addressing an 
issue that's very important to small community banks generally, and 
that is authorizing the deduction of the Fannie Mae losses against 
ordinary income as soon as possible. That will help all community 
banks.
  Many of my banks, Mr. Chairman, are suffering from loans on their 
books from typically builders and developers who are now unable to 
complete their projects. And these banks feel strongly that they would 
be assisted greatly if there were an opportunity for them to borrow 
from the Fed window at 1, maybe 2 percent--but a very low interest 
rate--the funds to cover these loans on their books that currently 
they're illiquid.
  Mr. FRANK of Massachusetts. Will the gentleman yield?
  Mr. MARSHALL. Yes.
  Mr. FRANK of Massachusetts. I think the gentleman makes a very good 
point. It's not anything obviously that we would legislate. I know he 
knows better than most, and he's not asking for that. But it is 
something I will join him in urging on the Federal Reserve.
  The community banks are the innocent victims overwhelmingly of this. 
They were regulated. They didn't make subprime loans. By the way, they 
were the ones covered by CRA. The bad loans were made by the 
institutions not covered by the Community Reinvestment Act.
  But the gentleman is right. These banks play a vital function that 
will be even more vital as other sources dry up, and I will work with 
him to try to get that kind of relief.
  Mr. MARSHALL. I thank the chairman for his interest in this 
particular issue. I agree with the chairman's analysis of the 
importance of these banks, and I look forward to working with the 
chairman to assist these banks.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
Georgia (Mr. Westmoreland).
  Mr. WESTMORELAND. I want to thank my friend from Alabama for yielding 
the time.
  Madam Speaker, I've often said as I have stood up that when the 
process is broken, the product is flawed. And I appreciate all of the 
meetings that the chairman and ranking member and others have attended 
and the time that they have spent. There was only one hearing that I 
know of in the Financial Services Committee that was held before this 
bill, and that was to have Secretary Paulson and Chairman Bernanke come 
and testify. Those were the only two witnesses. And I'm not sure what 
alternatives are out there, what the plans are for a free market, for 
capital infusion and not just buying these toxic assets.
  And I think that's going to be the key to any plan working is the 
infusion of capital. But the process is broken because there was no 
markup on the bill. The bill was introduced about 24 hours ago. It's 
106 pages. And as we saw earlier in the week with some of the tax 
extender bills and some of the other bills that were introduced early 
in the morning, brought to the floor early afternoon, had problems in 
it, having to recommit, redo the rules.
  You cannot do this type of bailout of $700 billion without adequate 
hearings, without adequate testimony, without hearing other 
alternatives that can be injected into this that we could do some of 
the things as the net operating loss, how that can help a business. 
Doing away with the capital gains tax, the repatriation of money to 
come back into this country. The last time we did that, $350 billion 
came in.
  These banks need cash. They need capital. They do not need somebody 
buying these assets when they still have mark-to-market. They still 
have accounting rules that don't allow them to have the amount of money 
they need to loan to small businesses and individuals to keep our 
economy going.
  This is a rush. We need to defeat this bill.
  Mr. FRANK of Massachusetts. Madam Speaker, there's been reference in 
this debate to very good provisions that help community banks and 
others that are tax provisions.
  I now want to recognize for 3 minutes the author of those, the 
chairman of the Committee on Ways and Means, the gentleman from New 
York (Mr. Rangel).
  Mr. RANGEL. Madam Speaker, this is a serious issue for those of us in 
government. I don't know where the advocates of reduced government 
really are today.

                              {time}  1045

  The marketplace should work as well, and now we're asking the 
government to come in with close to $1 trillion in order to bail out 
the private sector.
  The administration has come up with a proposal that, to me, reminds 
me of roulette, and they're challenging us to just take the bullets. As 
Chairman Frank has said so often, this is a no-win proposition because, 
in support of this--and I will be supporting it--no one is going to 
thank us for what they don't know and how serious it is, but I do know 
one thing, that those who have caused the problem somehow have managed 
to get away without any blame, without any penalty, and the crisis now 
falls on the American people.
  Well, for some people, it will be just an inconvenience. They'll sell 
a couple of houses; they'll get rid of some of their stocks, and 
they'll continue to game the system, but for the poor, they won't have 
these options since we live in a country and, indeed, in a world that 
is dependent on credit. So the poor will not be inconvenienced, but 
irreparable harm could be done to the dreams that it took so long for 
the middle income to achieve to be able to own a home, to be able to 
send their kids to college, to be able to put food on the table, to 
clothe them, and to have the respect that the middle class in America 
has stood for for so long.
  We have seen in recent months that this class of people has had their 
dreams dampened by the increase in gasoline prices, in health costs, in 
education to such an extent that the government just gave them a 
handout with $1,000 here and there to try to restore their dignity. 
Obviously, that didn't work. How is it that we couldn't find money to 
give them jobs? to create a fair and equitable tax system? to increase 
education? to increase health? to make certain that our infrastructure 
was conducive of America's being competitive? No, it costs too much 
money.
  Somehow, the conservatives in the other party can find an exposure to 
American taxpayers for close to $1 trillion, and not too long ago it 
was just another $300 billion. For war and for these types of things, 
we can always find the money, but to make certain that the underclass--
the poor folks--and the middle class are able to get an investment in 
America and into their lives so that they can become more prosperous 
and can enjoy the dreams of America, we can't seem to find it.
  So now we have the Secretary of the Treasury. We don't know where he 
goes after December, and we will forever have to staple him to whatever 
excuses we give for being frightened to death that he just might be 
right. It is wrong to do this to a country. It is wrong to do this to 
the Congress, but it just seems to me that I can't afford to take the 
risk.
  I support the work of Barney Frank and of all those who work 
diligently to try to make certain that we don't allow the sky to fall 
on American's middle class and poor folks.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Paul).
  Mr. PAUL. Madam Speaker, I rise in strong opposition to this bill. 
This is only going to make the problem that much worse. The problem 
came about because we spent too much; we borrowed too much, and we 
printed too much money; we inflated too much,

[[Page 23109]]

and we overregulated. This is all that this bill is about is more of 
the same.
  So you can't solve the problem. We are looking at a symptom. We are 
looking at the collapsing of a market that was unstable. It was 
unstable because of the way it came about. It came about because of a 
monopoly control of money and credit by the Federal Reserve System, and 
that is a natural consequence of what happens when a Federal Reserve 
System creates too much credit.
  Now, there have been a fair number of free market economists around 
who have predicted this would happen. Yet do we look to them for 
advice? No. We totally exclude them. We don't listen to them. We don't 
look at them. We look to the people who created the problem, and then 
we perpetuate the problem.
  The most serious mistake that could be made here today is to blame 
free market capitalism for this problem. This has nothing to do with 
free market capitalism. This has to do with a managed economy, with an 
inflationary system, with corporatism, and with a special interest 
system. It has nothing to do with the failure of free markets and 
capitalism. Yet we're resorting now, once again, to promoting more and 
more government.
  Long term, this is disastrous because of everything we're doing here 
and because of everything we've done for 6 months. We've already pumped 
in $700 billion. Here is another $700 billion. This is going to destroy 
the dollar. That's what you should be concerned about. Yes, Wall Street 
is in trouble. There are a lot of problems, and if we don't vote for 
this, there are going to be problems. Believe me: If you destroy the 
dollar, you're going to destroy a worldwide economy, and that's what 
we're on the verge of doing, and it is inevitable, if we continue this, 
that that's what's going to happen. It's going to be a lot more serious 
than what we're dealing with today.
  We need to get our house in order. We need more oversight--that is a 
certainty--but we need oversight of the Federal Reserve System, of the 
Exchange Stabilization Fund and of the President's Working Group on 
Financial Markets. Find out what they're doing. How much have they been 
meddling in the market?
  What we're doing today is going to make things much worse.
  The process of this bailout reminds me of a panic-stricken swimmer 
thrashing in the water only making his situation worse. Even a 
``bipartisan deal''--whatever that is supposed to mean--will not stop 
the Congress from thrashing about.
  The beneficiaries of the corrupt monetary system of the last 3 
decades are now desperately looking for victims to stick with the bill 
after they have reaped decades of profit and privilege.
  The difficulties in our economy will continue because the legislative 
and the executive branches have not yet begun to address the real 
problems. The housing bubble's collapse, as was the dot corn bubble's 
collapse, was predictable and is merely a symptom of the monetary 
system that brought us to this point.
  Indeed, we do face a major crisis, but it is much bigger than the 
freezing up of Wall Street and dealing with worthless assets on the 
books of major banks. The true crisis is the pending collapse of the 
fiat dollar system that emerged after the breakdown of the Bretton 
Woods agreement in 1971.
  For 37 years the world built a financial system based on the dollar 
as the reserve currency of the world in an attempt to make the dollar 
serve as the new standard of value. However since 1971, the dollar has 
had no intrinsic value, as it is not tied to gold. The dollar is simply 
a fiat currency, which has fluctuated in value on a daily, if not 
hourly, bias. This worked to some degree until the market realized that 
too much debt and malinvestment existed and a correction was required.
  Because of our economic and military strength, compared to other 
countries, trust in America's currency lasted longer than deserved. 
This resulted in the biggest worldwide economic distortion in all of 
history. The problem is much bigger than the fears of a temporary 
decline on Wall Street if the bailout is not agreed to.
  Money's most important function is to serve as a means of exchange--a 
measurement of value. If this crucial yardstick is not stable, it 
becomes impossible for investors, entrepreneurs, savers, and consumers 
to make correct decisions; these mistakes create the bubble that must 
eventually be corrected.
  Just imagine the results if a construction company was forced to use 
a yardstick whose measures changed daily to construct a skyscraper. The 
result would be a very unstable and dangerous building. No doubt the 
construction company would try to cover up their fundamental problem 
with patchwork repairs, but no amount of patchwork can fix a building 
with an unstable inner structure. Eventually, the skyscraper will 
collapse, forcing the construction company to rebuild--hopefully this 
time with a stable yardstick. This $700 billion package is more 
patchwork repair and will prove to be money down a rat hole and will 
only make the dollar crisis that much worse.
  But what politicians are willing to say that the financial 
``skyscraper''--the global financial and monetary system-is a house of 
cards. It is not going to happen at this juncture. They're not even 
talking about this. They talk only of bailouts, more monetary 
inflation, more special interest spending, more debt, and more 
regulations. There is almost no talk of the relationship of the 
Community Reinvestment Act, HUD, and government assisted loans to the 
housing bubble. And there is no talk of the oversight that is 
desperately needed for the Federal Reserve, the Exchange Stabilization 
Fund, and all the activities of the President's Working Group on 
financial markets. When these actions are taken we will at last know 
that Congress is serious about the reforms that are really needed.
  In conclusion, there are three good reasons why Congress should 
reject this legislation:
  It is immoral--Dumping bad debt on the innocent taxpayers is an act 
of theft and is wrong.
  It is unconstitutional--There is no constitutional authority to use 
government power to serve special interests.
  It is bad economic policy--By refusing to address the monetary system 
while continuing to place the burdens of the bailout on the dollar, we 
can be certain that in time, we will be faced with another, more severe 
crisis when the market figures out that there is no magic government 
bailout or regulation that can make a fraudulent monetary system work.
  Monetary reform will eventually come, but, unfortunately, Congress' 
actions this week make it more likely the reform will come under dire 
circumstances, such as the midst of a worldwide collapse of the dollar. 
The question then will be how much of our liberties will be sacrificed 
in the process. Just remember what we lost in the aftermath of 9-11.
  The best result we can hope for is that the economic necessity of 
getting our fiscal house in order will, at last, force us to give up 
our world empire. Without the empire we can then concentrate on 
rebuilding the Republic.
  Mr. FRANK of Massachusetts. I yield 2 minutes to the gentlewoman from 
California (Ms. Lee).
  Ms. LEE. Let me thank Chairman Frank for your efforts to improve this 
administration's $700 billion blank check bill.
  Madam Speaker, as a former member of the House Financial Services 
Committee for 8 years, I can tell you that the situation that we find 
ourselves in today is the direct result of the deregulation-happy, 
turn-a-blind-eye approach of this administration and its allies in 
Congress.
  Now we see the horrific price of these reckless deregulation 
policies. More than 600,000 Americans have lost their jobs since 
January. People need jobs to obtain credit, to pay their rent, to pay 
their house notes, to buy a 401(k) or to really have a retirement 
account. Millions of people are living paycheck to paycheck if they 
really have a paycheck. Home foreclosures are skyrocketing; home values 
are plunging; banks are failing, and we are still spending more than 
$10 billion every month on a war in Iraq that did not have to be waged.
  So I'm convinced that this bailout is not the solution to this mess. 
It does little to address the underlying problem--the foreclosure 
crisis. We need a moratorium on foreclosures, and we need bankruptcy 
reform to help people stay in their homes. This bill should be paid for 
by the high-flying industry that created this problem. $700 billion 
should not be given to Wall Street and to the Bush administration 
unless those who caused this mess pay for it.
  As my bill indicates, the Income Equity Act, we should also prohibit 
the tax deductibility of executive compensation in any company where 
the highest paid corporate officer's compensation exceeds by 25-1 that 
of a worker's of the lowest wage.

[[Page 23110]]

  Third, we need an economic stimulus package to deal with the crushing 
reality of the recession that is hitting people hard each and every 
day. I cannot vote to reward those predatory and subprime lenders who 
are really creating havoc in the lives of millions of Americans. There 
has got to be a better way.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
Virginia (Mr. Davis).
  Mr. DAVIS of Virginia. Madam Speaker, I wish there were a better way, 
but I haven't seen it yet, and I think this is a good bipartisan work 
product. It is a difficult vote for all of us. Either we're promoting 
unprecedented Federal interference in the marketplace or we're bailing 
out Wall Street millionaires and are rewarding bad business decisions. 
There's a grain of truth in all of this, but it's also true that this 
doesn't address some of the fundamental problems with our current 
economic slowdown.
  This helps, on the margin, the housing situation. It will allow some 
people to renegotiate in a better posture, but it doesn't solve the 
rising unemployment and the rising deficits and the falling dollar, but 
it's also true that with credit drying up and with the failure of the 
mortgage banks and banks that the failure to act would bring even 
greater economic devastation.
  We saw the future a couple of weeks ago: Markets plunged. Lehman 
Brothers failed. AIG, Freddie and Fannie needed bailouts. Credit 
virtually disappeared across the spectrum. We have to take economic 
recovery one step at a time. If there is no credit, nothing else 
matters. Failure to take this step today will almost certainly worsen 
the situation, perhaps beyond repair.
  This is a compromise. There is a lot not to like. We could pick this 
bill to death on both sides of the aisle. We could play the blame game 
forever, but politics is the art of the possible, not the art of the 
perfect. If this bill goes down, I don't think most of my colleagues 
want ownership of what's going to follow. I'm hopeful that some of the 
money that we're putting forward will be returned to taxpayers 
eventually, but there are no guarantees, but doing nothing or delaying 
this indefinitely is not a viable option.
  I urge my colleagues to show leadership and to take the tough vote 
and vote ``yes.''
  Mr. FRANK of Massachusetts. Madam Speaker, I now yield 4 minutes to 
the very able Chair of our Capital Markets Subcommittee, a man who has 
played a very important role in our trying to stabilize this situation, 
the gentleman from Pennsylvania (Mr. Kanjorski).
  Mr. KANJORSKI. Mr. Chairman, if I may just make a comment in the 
beginning here and ask you the question:
  Is it correct to say that nothing in this act is meant to distract 
from any rights of recovery against private parties to redress 
wrongdoing that exists under Federal or State law?
  Mr. FRANK of Massachusetts. If the gentleman would yield, he is 
absolutely correct.
  By the way, one of the points in the original bill the Treasury 
Secretary gave us inappropriately freed him from a number of judicial 
restraints. We have restored those, and we have taken away no existing 
legal right whatsoever in this bill.
  Mr. KANJORSKI. Thank you, Mr. Chairman.
  Madam Speaker, I rise today with a heavy heart. The reality is, as my 
friend from Virginia (Mr. Davis) said, we don't have a perfect bill 
here. We do have a perfect storm, however, and we have a bad situation. 
The inaction, or the failure to act, could be exacerbating to this 
situation to the extent that most of us can't even imagine how bad it 
could get.
  I'm not here in defense of Wall Street fat cats nor am I here in 
defense of those who perpetrated this greed and this expansion over the 
last 5 to 7 years that has caused this problem. I'm not here as a 
faultfinder of who is responsible politically, economically, socially 
or otherwise.
  I am here because I recognize that there is going to be hurt, extreme 
hurt, if we do nothing, and I want to make sure that my constituents 
and that the rest of the public watching this understand that we're not 
bailing someone out in a far-off place called Wall Street. We're making 
sure that next week and that next month a worker in my hometown of 
Nanticoke, Pennsylvania will be able to go to his ATM machine and draw 
out money, that he will be able to be paid by a check or by a cash 
transfer that will give money to his account so that he can spend it on 
his family. I'm here so that he can continue to negotiate to buy a new 
home or a used home or so that he can provide for his family goods or 
services that are necessary and that may disappear.
  So often, many of us get so far removed from history and from 
circumstances of the past that we hardly remember or recall what people 
told us could be. I think it would be a good thing for all of us to 
refer back to some of the movies that depicted the Great Depression and 
for all of us to just look at what can happen when there is the total 
collapse and failure of an economic system. I don't want to see that 
happen again in America.
  In order to see that that does not happen, it is necessary that we 
take action on this bill. This is not an easy vote for any Member in 
this Chamber, and I will be the last one who will cast dispersions as 
to what the motivations for voting ``yes'' or ``no'' will be by my 
fellow Members. However, I will tell you this:
  It is time for all good men to come to the defense of their country 
and to the times. In my opinion, that means we must put aside our own 
personal careers and our own personal thoughts and even our own ideas 
of what would be the right thing and vote to save this country's 
economic system. If we fail to do this in this 11th hour, we are 
already starting to see around the world, through the window of 
television, just what can happen to the markets of this world and, 
eventually, to all of the small towns across this world.

                              {time}  1100

  I think that we've done a hard job in trying to put into this bill 
the safeguards for the taxpayers, the modifications that are necessary. 
It was an extreme bill, three and a half pages, giving total 
dictatorial power to the Secretary Treasurer.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. FRANK of Massachusetts. I yield the gentleman an additional 30 
seconds.
  Mr. KANJORSKI. We have modified it over these last 7 to 10 days to 
make it more livable, but not perfect. What I urge my colleagues to do 
is put aside partisanship, put aside fear, and realize why we're here. 
Only a couple of times in a decade are we asked to stand up and be 
counted; this is one of those historic moments. I urge my colleagues to 
show the fortitude to vote ``yes.''


                              Introduction

  Madam Speaker, as our great Nation faces one of the most severe 
economic crises in its history, I share the sense of outrage of the 
American people that we find ourselves in this situation. I am angry at 
our regulators who did not do enough to prevent this deeply troubling 
situation. I am angry that we have reached a moment in which those who 
followed the rules are now being asked to help those who flaunted the 
rules. But most of all, I am furious at the greed of the fat cats on 
Wall Street who created the financial products that led to this mess.
  Today, the Members of this storied institution must choose between 
two bad alternatives. First, we could opt to do nothing. According to 
many reputable economists, this choice carries the grave risk of 
resulting in an almost certain global financial meltdown. Second, we 
could choose to act by voting for the legislation before us. This 
choice--while admittedly an expensive and imperfect one--provides the 
urgent injection of vast government resources to unclog the financial 
arteries of our capital markets so that our economy can, hopefully, 
begin to function more normally once again.
  Ironically, the choice of inaction, which is the risky choice for the 
good of our Nation, is the safer choice for the good of the lawmaker. 
But political expediency must sometimes yield to practical necessity. 
In this situation, we ultimately have to do what is right. So, to 
resist the call of duty by voting against this package is, for me, 
simply not an option. I urge my colleagues to be brave, put 
partisanship aside,

[[Page 23111]]

and send a message of consensus to the Amierican people. By working to 
restore confidence in our credit markets, we will ultimately prevent 
severe economic consequences for the families living and the small 
businesses operating on Main Street.
  In the midst of another global economic crisis 75 years ago, 
President Franklin Roosevelt said, ``One thing is sure. We have to do 
something. We have to do the best we know how at the moment. If it 
doesn't turn out right, we can modify it as we go along.'' I have 
concluded that this bill is the best we know how to do at this moment. 
We should all support it for the good of our Nation, and we can always 
change it later.
  In sum, only action will protect the hard-working American people 
who, if we do not act, will lose their jobs, their paychecks, their 
pensions, their homes, and their very way of life as a result of the 
severe hardships a severe economic downturn will bring. Because I 
cannot in good conscience sit idly by as disaster is looming, and 
because I understand the potentially devastating effects on middle 
class families and retirees if we fail to act, I must vote for this 
bill.


                   How the Economy Reached this Point

  The causes of our current financial turmoil are many. Some of the 
contributors to this paralyzing credit crisis include an environment of 
easy credit and low interest rates, lax mortgage underwriting 
standards, and a national housing bubble, wherein prices rose to levels 
well beyond the reasonable values of homes.
  My concerns about the rapid growth in home values led me in July 2002 
to question Alan Greenspan about the potential of a valuation bubble in 
the housing markets and about what could happen to the economy if the 
bubble burst. Chairman Greenspan responded that he saw ``no evidence'' 
of ``a national bubble in home values'' and that the matter did not 
need to be addressed by policy reforms. If only he had answered 
differently, we might have been able to take action in time to prevent 
the economic turmoil that we are now experiencing.
  The unfettered creation of new, complex financial products also 
contributed to the present crisis. Financial wizards first packaged 
faulty loans into securities and then divided and combined these 
financial instruments into novel products like collateralized debt 
obligations, which received strong estimates of creditworthiness from 
ratings agencies. The geniuses of Wall Street also insured their bets 
with flawed credit default swaps. They additionally developed and sold 
financial derivatives whose risks few participants in the marketplace 
fully appreciated.
  This financial house of cards began to collapse once borrowers with 
subprime mortgages began to default on their loans in greater and 
greater numbers. These defaults undermined the associated mortgage-
backed securities, collateralized debt obligations, credit default 
swaps, and derivatives. Eventually, the collapse of the subprime 
mortgage market infected the prime mortgage market, which in turn 
infected the American financial system.
  Once the contagion spread into our increasingly interconnected global 
financial system, banks and other financial institutions began to lose 
confidence in one another as they could not determine the true exposure 
of their partners to the underlying problems. As a result, they stopped 
lending to one another.
  Our present predicament also results from one of the cardinal sins: 
greed. The titans at investment banks simply could not make enough 
money, and they increasingly leveraged their investments with fewer and 
fewer assets. Further, they created, bought, and sold financial 
instruments for which they neither completely understood nor fully 
appreciated the risks. In pursuit of the dream of homeownership, far 
too many Americans also borrowed too much and lived beyond their means 
with the help of low interest rates and access to easy credit.
  Rather than lament the past, however, we must rise up to overcome 
this challenge, correct our mistakes, and reestablish an economically 
sound America for ourselves and future generations. The economy is a 
man-made construct. Man made it, and man can fix it. We are working to 
fix our economy with this legislation.


                          Why We Must Act Now

  We should not underestimate the urgency that this credit crisis 
demands. Money and credit are the lifeblood of an economy, and during 
the last year the credit markets have become increasingly clogged as 
financial institutions' trust in one another has worn away because of 
the troubled assets that they hold. As a result of this lack of 
confidence, bank lending to other banks has come to a virtual halt. 
When banks stop lending to one another and hoard their cash reserves, 
small businesses and consumers are the ones who are ultimately hurt the 
most.
  Lines of credit that were once open could be, and in some cases have 
already been, closed. Without access to credit, businesses might not 
have the money they need to pay their workers and workers could lose 
their jobs. A shutdown of the credit system would also result in 
difficulty in getting loans to go to school, buy a home, pay for 
emergency needs, or expand a business. It could also result in further 
significant drops in the prices of stocks and bonds held in the 
retirement plans of workers and the pensions of senior citizens.
  Moreover, a pervasive lack of confidence by the participants in our 
capital markets has now created a vicious cycle. After pursuing in 
recent months a number of piecemeal, makeshift fixes at several 
financial services companies to address specific problems resulting 
from the credit crisis, Treasury Secretary Henry Paulson and Federal 
Reserve Chairman Ben Bernanke determined on September 18 that they 
needed even more power to repair the problems in the credit markets, 
restore confidence, and promote a sense of optimism.
  Secretary Paulson and Chairman Bernanke, along with many highly 
regarded experts, have therefore advised the Congress to take bold 
action to shield average Americans from the harm caused by the credit 
crisis. In analyzing the contributing factors that led to the Great 
Depression, many have concluded that the Government should have taken 
decisive action earlier to prevent, forestall, and lessen the effects 
of that sizable economic downturn. By taking bold action now in 
response to this latest economic crisis, we are learning from the 
lessons of the past.
  Many Americans view this Government intervention as a bailout of Wall 
Street and as an unjust reward for bad decisions and irresponsible 
behavior. Americans have good instincts, and they are not wrong to view 
the situation in this light. After all, irresponsibility and greed on 
Wall Street have provoked anger in nearly all of us in recent days.
  Americans also feel isolated from the consequences of the current 
economic strife because most of them have yet to experience its direct 
effects. As countless economists, however, have warned us, Americans 
have a false sense of security about their current economic prospects: 
They wake up, go to work, get paid, make a withdrawal from an ATM, fill 
up their gas tank, buy some food, and go home. To them, things still 
seem relatively normal.
  To protect hard-working Americans and retirees from this economic 
tidal wave, the Congress must act now before it is too late. In voting 
for this legislation, I am not voting to help Wall Street fat cats. 
Instead, I am voting to safeguard the jobs, paychecks, pensions, 
savings, homes, and security of average Americans. In short, I am 
voting to protect their very way of life.


                        The Faulty Initial Plan

  Like every American who read the initial 3-page legislative proposal, 
I had very strong concerns about the plan that Treasury Secretary 
Paulson sent to the Congress to create a program of $700 billion to 
permit the Government to purchase the troubled assets of financial 
institutions. It would have essentially provided the Treasury Secretary 
with an open-ended, blank check. It lacked needed controls, it failed 
to reform business-as-usual on Wall Street, and it did not do enough to 
protect the interests of taxpayers. Moreover, the initial plan would 
have granted the Treasury Secretary vast, unchecked powers without 
oversight by the courts and the Congress.
  This unacceptable package would have given Americans a raw deal 
because executives suffered no consequences for their reckless 
behavior. Taxpayers also received no promise of repayment for their 
contribution. Corporations additionally would have been bailed out by 
the taxpayers and then allowed to walk away with all of the profits, 
leaving average Americans to fall behind even further.
  In sum, the first version of the plan that the Congress received from 
Secretary Paulson was ill-conceived and unfair to the taxpayers. The 
Congress rightly rejected this first draft.


                        The Vastly Improved Plan

  Fortunately, we live in a democracy, and as the Chairman of the House 
Financial Services Capital Markets Subcommittee, I worked with 
Financial Services Committee Chairman Barney Frank and other leaders in 
the Congress to make significant changes, negotiate a bipartisan 
compromise, and improve this legislation as much as possible and as 
quickly as possible. In brief, we revised the plan to protect 
taxpayers, limit executive pay at distressed companies getting help, 
establish strong oversight and accountability, and cut overall costs. 
As a result, the original proposal of less than 3 pages grew into a 
final bill of 110 pages.
  The final bill protects taxpayers in many ways. It cuts the initial 
outlay of $700 billion in half and conditions the installment above 
$350 billion on legislative review. It also gives taxpayers an 
ownership stake in the companies

[[Page 23112]]

assisted by the program. This change will ensure that Americans share 
in any future profits of the distressed entities that it helps with the 
chance to buy stocks low and sell them high. The bill also protects 
taxpayers by requiring the program's managers to minimize short-term 
costs, maximize long-term gains, establish fair contracting procedures, 
and curtail conflicts of interest.
  This bill now protects taxpayers in one other important way. During 
my opening comments to Secretary Paulson and Chairman Bernanke at last 
week's hearing of the Financial Services Committee, I said that we 
needed to seek ways to pay for this massive Government intervention, 
including placing surcharges on millionaires' incomes and raising fees 
on securities transactions. I am therefore pleased that the final bill 
now before us guarantees that taxpayers will be paid in full, if other 
protections have failed to produce a profit. Specifically, if after 5 
years the program has a shortfall, then the President must submit to 
the Congress a proposal that recoups from the financial industry any 
projected losses to the taxpayer. This reform is sensible and prudent.
  In developing this bill, I also sought to prevent those who 
contributed the most to this crisis from further profiting by revising 
the initial Treasury plan to ensure that the Wall Street executives who 
ask for the Government's help do not continue to get fat paychecks. The 
final bill also blocks multi-million dollar golden parachutes at 
distressed companies so that CEOs land just as hard as average workers 
when they lose their jobs. Moreover, the final bill claws back big 
bonuses earned by CEOs as a result of financial statements later found 
to be false or inaccurate.
  The final bill also checks the Treasury Department's power in several 
ways. The Congress will now have the full authority and resources to 
examine executive decisions with a Congressional Oversight Panel. The 
revised legislation additionally provides for meaningful judicial 
review. Our constitutional system works well because of a balance of 
powers among the branches of government. In short, the final bill 
recognizes the importance of this balance. These changes helped to 
correct some of the most flagrant excesses of the initial Treasury 
plan.
  In addition, I worked to ensure that the final bill provides for 
strong accountability and real transparency. The final bill puts in 
place a permanent, in-house watchdog to stop waste, fraud, and abuse. 
It also provides for the real-time disclosure of business transactions 
on the Internet so that the American public can inspect the assets they 
are buying. I strongly support the provisions in the bill to force 
Federal financial regulators to cooperate with the Federal Bureau of 
Investigation in its efforts to find the wrongdoers who committed 
crimes in the development, advertising, and sale of the financial 
products that contributed to this crisis.
  This final bill, moreover, will help struggling homeowners because it 
allows the Government, as the holder of mortgages and mortgage-backed 
securities, to do all that it reasonably can to prevent foreclosures 
through loss mitigation efforts. Among these provisions is a new duty 
for servicers to modify loans based on the best interest of all 
investors in a pool of mortgages rather than the interest of any 
individual investor. This change in the law is based on those reforms 
found in the Emergency Mortgage Loan Modification Act, which I 
introduced with the gentleman from Delaware (Mr. Castle). This reform 
and the other foreclosure mitigation requirements in the final bill 
will help to keep people in their homes and spur economic recovery by 
preventing real estate prices from falling further and perhaps even 
helping prices to rise.


            Providing Oversight and Regulation Going Forward

  The public should view passage of an economic stabilization package 
to forestall disastrous consequences for average Americans as only the 
beginning of our work in the Congress. In the months ahead, we must all 
commit to examining what went wrong and to writing tough new laws to 
improve the regulation of our financial system and safeguard consumers. 
We must also enact new laws to control excessive greed and protect 
against future risks to our entire economic system.
  Our capital markets have evolved significantly in recent years, and 
our outdated regulatory structure was clearly not up to the task of 
regulating today's marketplace. Moreover, the recent events in our 
markets have clearly put a tombstone on the era of deregulation. As 
many of us on this side of the aisle have long believed, only 
Government can save capitalism from its own excess. To control a free 
market, I therefore believe that we need sensible regulation and strong 
enforcement. We also need greater coordination in our financial 
regulation, as is the case in other countries like the United Kingdom.
  Our regulatory system must also have the flexibility to respond to 
innovation. The financial services industry has created a number of 
complex products like derivatives and credit default swaps in recent 
years, but we have yet to properly regulate these instruments. In July, 
before American International Group collapsed under the weight of its 
sizable credit default swaps, I began working with the Government 
Accountability Office to identify appropriate legislative and 
regulatory reforms to improve the oversight for structured finance 
products.
  Because we live in a global economy that is interconnected, 
protecting against systemic risk must additionally become one of our 
highest reform priorities. If one proverbial domino falls, we cannot 
allow the chain to continue. The recent crisis has vividly demonstrated 
the consequences of not effectively regulating against systemic risk. 
Failure in one segment of the market inevitably brings other segments 
down with it.
  Still further, we must act to pass new laws to protect consumers from 
lax underwriting standards, compromised appraisals, and faulty mortgage 
servicing practices. I introduced a strong consumer protection bill to 
achieve these goals more than 3 years ago, and last year the House 
passed H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act. 
This latest bill to crack down on predatory lending practices is 
substantially similar to the content of the bill I first proposed in 
2005. The Senate now needs to complete its work on these matters.


                               summation

  In conclusion, the bill before us is still imperfect, but for the 
good of our Nation we should pass it. The adoption of this legislation 
will, first and foremost, help to safeguard the jobs, pensions, and 
paychecks of average Americans. We have made significant improvements 
to this bill during the last 10 days to protect taxpayers, provide 
robust oversight, and limit excessive compensation for CEOs and 
executives, among other things. This bill is now much better, and it 
deserves everyone's support because our Nation's economy depends on it.
  Today, the eye of an economic hurricane is fast approaching. To 
protect the way of life for average Americans, we must rise up to meet 
this challenge and come together. We cannot sit on our hands. Instead, 
we must act and pass this bill. As my fellow Pennsylvanian, Benjamin 
Franklin, said at the founding of our country, ``We must all hang 
together, or surely we will all hang separately.'' I urge support for 
the Emergency Economic Stabilization Act of 2008.
  Mr. BACHUS. Madam Speaker, may I inquire as to the remaining time on 
each side.
  The SPEAKER pro tempore. The gentleman from Alabama has 49\1/2\ 
minutes, and the gentleman from Massachusetts has 50 minutes.
  Mr. BACHUS. Madam Speaker, I yield 1 minute to the gentleman from 
Virginia (Mr. Goode).
  Mr. GOODE. Madam Speaker, first, I want to thank all who have worked 
on this measure; but I do regret that Ranking Member Bachus did not 
have greater opportunity for more input.
  I will be voting ``no'' on this measure because this is a Band-aid 
approach that will not save America. We need to infuse capital into our 
banking system and not more Federal debt. Federal debt is not the way 
to go.
  We also must look at the fundamental cause of encouraging those who 
have little chance to repay to get loans. Over-encouragement was a 
fundamental cause, and it is not addressed in this bill.
  I hope we will vote ``no'' for a better day and a better bill.
  Mr. FRANK of Massachusetts. Madam Speaker, one of the most valuable 
members of the Finance subcommittee, the gentlewoman from New York 
(Mrs. McCarthy), is recognized for 2 minutes.
  Mrs. McCARTHY of New York. Madam Speaker, I rise today in support of 
the Emergency Economic Stabilization Act of 2008.
  In the past couple of weeks we have seen many Americans wondering 
what's going on; what's going on with our economy; what is going on 
down in Washington. People have watched anxiously as the markets and 
the banks have stumbled and many of us have seen investments that we 
spent years building up now disappearing within days.
  Within only a couple of days, some of the world's largest financial 
institutions shut their doors and the U.S. Treasury Secretary had begun 
talks

[[Page 23113]]

with Congress in an effort to avoid a potential collapse of our 
economy.
  In recent days, we have seen and heard a variety of proposals to 
address the financial crisis. Americans have rightly been disturbed by 
the idea that Congress would bail out Wall Street and CEOs, but we also 
know that we could not just stand by and watch our economy crumble.
  People needed to know that Congress was acting in their best 
interests and that their hard-earned money is going to be safer. We 
needed to make sure that not only was Wall Street going to remain 
solvent, but so was all our small towns and villages across this 
country.
  We also needed to make sure that every proposal we put forward would 
protect those Americans who were hoping to retire within this year or 
next year so they don't lose their savings they need to live on.
  I am pleased that we have been able to come up with a comprehensive 
package that strikes a fair balance and can potentially offer the 
relief we need to restore confidence in the markets. Both sides 
certainly don't like what's been put in front of us to have us in this 
position, but both sides, both leaders of our political parties have 
worked together--Barney Frank, Mr. Bachus, Mr. Boehner, Roy Blunt, 
Nancy Pelosi.
  This is a crisis that is facing our country. And I know it's a tough 
vote, especially right before an election. This might cost some of us 
our election, but that's why we're here, we're here to certainly 
protect the American people. I'm here to protect my constituents back 
home, making sure that they have jobs in the next coming months.
  We have to make sure this bill passes.
  The SPEAKER pro tempore. The time of the gentlewoman has expired.
  Mr. FRANK of Massachusetts. I yield the gentlewoman 30 seconds.
  Mrs. McCARTHY of New York. We have to make sure that people 
understand we're trying to stop the hemorrhaging to protect the people 
back home. That is the most important thing we are doing. That is why 
``yes'' is the right vote.
  Mr. BACHUS. Madam Speaker, I yield 3 minutes to the gentleman from 
Connecticut (Mr. Shays).
  Mr. SHAYS. Most of my constituents consider this a bailout. Some of 
them, in fact, are willing to walk bread lines in order to see wealthy 
Wall Street tycoons pay for their greed. The fact is, that would be 
irresponsible.
  While this is not 1929 all over again, it could be if we step aside 
and let the wonders of the market work its will in this environment. We 
can't let the foolishness and greed on Wall Street bring down Main 
Street; at least I don't intend to.
  We are witnessing the economy coming to a grinding halt. Money is 
simply not being lent to individuals who need it. For businesses, this 
has meant an inability to borrow, to expand, invest in new equipment, 
stock shelves, or even meet short-term cash needs, such as payroll. For 
individuals, it has threatened the assets of everyone who has an IRA or 
401(k), college savings, pension plans, or owns a home.
  It has been difficult for me to hear so many Members act like they 
were not responsible for this credit crisis when they had the 
opportunity to advocate reform or at least support it, but chose not 
to.
  We will have plenty of time to determine what went wrong and what 
individuals and institutions are responsible, but this is not the day 
or time to focus on who is at fault and what systemic changes need to 
be made.
  I recognize today's liquidity injection is a short-term solution to a 
long-term systemic problem. Those of us who return--and I make no 
assumptions about my own election--have our work cut out for us in the 
next Congress.
  I will vote for the Emergency Economic Stabilization Act and thank my 
colleagues in both Chambers, and on both sides of the aisle, for their 
bipartisan effort to avert a more serious economic crisis.
  I believe the negotiators have worked in good faith, but we all have 
lingering questions. My own continue to be whether $700 billion is 
actually enough; why we aren't increasing FDIC insurance above $100,000 
so deposits don't withdraw their funds, and why we aren't addressing 
directly the capital markets problem like we did in the early 1980s.
  I believe this legislation will address the short-term liquidity 
problem. And in the end, I believe taxpayers, at a minimum, will be 
held harmless, or even see a positive return on this expenditure.
  If this bill passes and puts liquidity in the market like we hope, we 
should be given the time we need to make some long-term changes.
  I urge my colleagues to carefully weigh the effects of action, or 
inaction, and allow this solution not only to pass, but to work.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield 2 minutes to the 
Representative from one of our great urban quarters, the gentleman from 
Philadelphia, Mr. Fattah.
  Mr. FATTAH. Madam Speaker, I rise in support of this bill. Now, I 
know that we're tempted to see this just as another train wreck of the 
Bush administration, but we have to look past that to protecting the 
jobs of our constituents, their 401ks, their pension funds, their 
ability to own and run and borrow to establish small businesses. We 
have to see this as a responsibility to protect community banking 
institutions.
  Now, there is a lot at stake in this vote, and there are Members who 
have varying positions, but I just look at the facts. We have some 
9,800 people who are being foreclosed on every day. We have seen 
600,000 people lose their jobs since the beginning of this year. We 
have an economic catastrophe that has taken place on Wall Street and is 
now showing up in other financial capitals around the world.
  We have a responsibility to defend this country and to stand on 
behalf of our constituents. And I do that reluctantly in some respects, 
but on this day, I think all of us should rise to the occasion and 
support this bill. And with those who can't, we understand that you 
think that there should be a better way. There is a bill in front of us 
today to stand in the breach, and I stand in favor of it. And I commend 
Barney Frank for his leadership on it. Thank you.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Poe).
  Mr. POE. I thank the gentleman for yielding.
  Madam Speaker, because Wall Street money grabbers have made bad 
judgment calls, the American taxpayer is being forced to bail them out 
at $700 billion. Why is it, Madam Speaker, that the bigger the 
business, the more the Federal Government thinks it should swoop in and 
save incompetent businesses? Small businesses, mom and pop grocery 
stores, don't get this break. When they make bad financial decisions, 
they go out of business. But the rich and famous Wall Street New York 
City fat cats expect Joe Six-Pack to buck it up and pay for all this 
nonsense.
  Reward people for being irresponsible and expect responsible people 
to pay for the sins of the financial industry? I think not. Putting a 
financial gun to the head of each American is not the answer.
  Madam Speaker, I have this bill; it's over 100 pages long. That means 
it's seven billion dollars a page. The New York City fat cats expect us 
to pay for it. I think not.
  This year alone, Madam Speaker, it's a sad time to be an American 
taxpayer. Here's Uncle Sam, all beat up because he's broke, and the 
reason is we have paid out Bear Stearns, a bailout, $28 billion, Fannie 
Mae and Freddie Mac, $200 billion, AIG bailout, $85 billion. Last week, 
the automobile industry got $26 billion. And today, lo and behold, $700 
billion.
  The American taxpayer is tired of paying for the sins of other 
people. It's time for them to pay and be responsible for their own 
misconduct.
  And that's just the way it is.
  Mr. FRANK of Massachusetts. Madam Speaker, while I believe the

[[Page 23114]]

gentleman is a little bit too harsh on the Bush administration, I 
understand his point of view.
  Madam Speaker, I now yield to the gentleman from Michigan, the dean 
of the House, for purposes of a colloquy.
  Mr. DINGELL. Madam Speaker, I want to commend the distinguished 
gentleman from Massachusetts for the outstanding job he and the 
leadership have done on crafting this legislation. They took a bad 
piece of legislation and they have significantly improved it to make it 
much better.
  I rise to support the legislation. And I would like to engage in a 
colloquy with my dear friend, Mr. Frank. I would note that the colloquy 
is an important one.
  Madam Speaker, the automobile manufacturers face the most difficult 
conditions they've faced in decades. We need to do something to help 
unfreeze the credit markets that are hurting our industry.
  As I read the legislation, the Secretary has the authority to 
purchase from a motor vehicle finance company traditional car loans and 
mortgage-related paper, such as a home equity loan used to purchase 
cars or trucks. Is my interpretation correct?
  I yield to my good friend.
  Mr. FRANK of Massachusetts. I thank the gentleman, who comes to us 
with great authority here because of having chaired the committee for 
years and had some of this jurisdiction, and having been right when 
other people were resistant, he speaks with a great deal of 
credibility. And the answer to his question is, yes, it does require 
that there be consultation with the Chairman of the Federal Reserve, 
but the Treasury Secretary is empowered to do exactly that.
  And I would add, as the gentleman knows, in my judgment, one of the 
major areas of damage we will see if this bill fails is that we will 
start to see a real contraction in credit for automobiles. So the 
automobile makers and the people who sell automobiles will all be hurt. 
And the answer is yes to the gentleman's question.
  Mr. DINGELL. I have an additional question to my dear friend. If the 
Federal Reserve Board were to use the authority it has to address 
extraordinary circumstances in the credit market, motor vehicle 
companies would have access to capital that would help them to finance 
dealer floor plans and to make consumer loans. Am I correct in this? 
And would my good friend support such a decision by the Federal Reserve 
Bank to make funds available as long as these companies face unusual 
and extraordinary market conditions?
  Mr. FRANK of Massachusetts. If the gentleman would yield, yes. Again, 
that is well within the legal authority that this Federal Reserve Chair 
has described to us that he has under the statute from the Depression.
  And given the centrality of the automobile industry--and we're 
talking, I want to again stress, not just making cars, but selling them 
and servicing them and repairing them, and of course providing great 
mobility to the American people. Clearly, this a worthy subject for the 
Federal Reserve to intervene with, when appropriate.
  Mr. DINGELL. Madam Speaker, I want to thank my good friend, the 
chairman of the subcommittee. He has worked very hard on an extremely 
difficult subject, and has perfected a very difficult piece of 
legislation in a remarkable way. The House and the country owe the 
gentleman a great debt.
  Mr. FRANK of Massachusetts. If the gentleman would yield, that would 
mean a great deal to me coming from anyone, but from the gentleman from 
Michigan, with his long record here in these areas, it means a 
particularly great deal.
  Mr. DINGELL. I thank my good friend.
  Madam Speaker, in the last few months we have watched the Bush 
administration negotiate the sale of Bear Stearns and Merrill Lynch, 
nationalize Fannie Mae and Freddie Mac, take an 80 percent stake in 
A.I.G., and let Lehman Brothers enter bankruptcy. When it became clear 
that this inconsistent, ad hoc approach was not going to be enough to 
keep our Nation from economic crisis, the Bush administration presented 
Congress with a plan that would give the Treasury Secretary unfettered 
authority to purchase up to $700 billion in troubled assets. In 2 days 
of hearings, Treasury Secretary Paulson and Federal Reserve Chairman 
Bernanke were asked by members of the Senate Banking Committee and the 
House Financial Services Committee to explain why such unprecedented 
and unfettered authority should be granted to a single individual, and 
it was clear that there was no answer.
  Since the Bush administration's proposal was first introduced, a 
consensus has emerged that this bailout package is needed but that it 
needs to be improved through the inclusion of a number of important 
provisions. I congratulate Chairman Frank and Ranking Member Bachus of 
the Financial Services Committee and Senators Dodd and Bennett of the 
Senate Banking Committee for working together to turn an unacceptable 
proposal into a bipartisan bill that will hopefully help bring us out 
of this crisis.
  I had a number of concerns about what is in the President's proposal: 
I was concerned about the potential cost, I was concerned about how the 
Treasury would determine a price for these assets, and I was concerned 
that there may have been other, more effective ways of giving these 
institutions access to the capital they need. I am happy to say that 
thanks to the hard work of the congressional negotiators, many of my 
concerns have been addressed.
  One concern that remains about this legislation is that it does 
nothing to address the underlying causes of this crisis. When Congress 
passed the Gramm-Leech-Bliley Act in 1999 and deregulated the financial 
sector, I warned my colleagues that tearing down the regulatory 
structure enacted after the Great Depression would lead to huge 
institutions that would be free to engage in risky behavior and that 
the failure of those institutions would result in massive government 
bailouts. I wish that my prediction had been wrong, but today that is 
exactly the situation we are faced with. The American people need to 
understand that nothing in this plan will address that issue. The plan 
does not reduce the amount of risk that these institutions are allowed 
to take on, it does not create a new agency or empower an existing one 
to review the actions of currently unregulated financial institutions, 
and it does not create any new standards to guide them in the future.
  Many Americans, who have seen their paycheck shrink over the last 8 
years, who have watched some of their neighbors lose their jobs, who 
are struggling to pay increased costs for things like gas, groceries, 
or health care services, and who resisted the temptation to take out a 
risky loan and instead bought a house they were sure they could afford 
and made every payment, do not understand this bailout. They do not 
understand what this plan will do, they do not understand why it costs 
so much, and they do not understand why their tax dollars are going to 
be spent to bail out the same Wall Street banks whose risky behavior 
contributed to this mess. Most importantly, they do not understand why 
the Government is offering so little to help their family.
  To all of my constituents who want to know why they are being asked 
to foot the bill to pay for this bailout, I can tell you only one 
thing: The cost of inaction to you and your family is greater than the 
cost of this bailout. Should Wall Street decline further and the value 
of the dollar continue to fall, it will mean greater unemployment, even 
higher prices for basic commodities, and access to credit for things 
like college education or home improvements will be even harder to 
obtain. The impact on the broader economy will be felt by every 
American. In fact, the credit crisis is already having an impact on the 
automobile industry that is so important to my constituents in Michigan 
and to hundreds of thousands of families around the country. If access 
to credit continues to dry up, the automobile financing companies will 
be unable to keep vehicles on dealership lots and help customers obtain 
financing. The automobile financing companies are not responsible for 
the current credit crisis, but they will be eligible to participate in 
this program to obtain the credit they need to keep vehicle sales 
strong.
  Furthermore, the package that we are voting on today is a far cry 
from the bailout proposal first offered by the President. It contains 
important provisions assuring greater transparency and oversight and 
ensures that there will be no golden parachutes for the executives 
whose recklessness contributed to this crisis. It also includes 
provisions that will assist families who are struggling to keep their 
homes by requiring the Federal Government to modify the terms of the 
mortgages it acquires.
  Most importantly, Speaker Pelosi, Chairman Frank, and others were 
able to negotiate into this package important provisions designed to 
protect taxpayer dollars and ensure

[[Page 23115]]

our investment is recouped. For example, the Government will have the 
option to take equity in the companies that participate in the bailout 
and will create an insurance program for and collect premiums from 
those holding toxic assets. If after 5 years these provisions have not 
allowed the Government to recoup 100 percent of the cost of the 
bailout, the losses will be recaptured directly from the financial 
industry itself.
  I do not, however, want to commit to anyone that this imperfect bill 
will work. It may not. Scholars of the Great Depression have told us 
that had the Government addressed the liquidity problem the economic 
collapse might have been a lot shorter or less forceful in its impact, 
or both. This bill may not work. But we have to try. Inaction is not an 
option.
  I understand the anger and frustration that exists about this 
bailout. I pledge to my constituents that this will not be the only 
congressional response to this situation. This legislation creates a 
Congressional Oversight Panel, tasked with drafting a special report on 
regulatory reform that will be ready in time for the 111th Congress. 
Should the voters in Michigan's 15th Congressional District see fit to 
return me to Congress next year I will work to see that report turned 
into legislation that restores the regulatory structure that is 
supposed to protect the financial system from this kind of failure and 
that provides much needed assistance to the hard working men and women 
who are suffering because of the economic climate created by 
irresponsible parties on Wall Street and here in Washington.
  I again want to thank the leadership of both parties in both the 
House and the Senate, and in particular Chairman Frank for the work 
that they have done to improve upon the plan sent to us by the Bush 
administration. I know that many of my colleagues are as skeptical of 
this plan as I am, and I know that for many of you it may be easier to 
vote against this plan than it will be to vote for it and have to 
explain to voters back home why we had to take this difficult step, but 
we must join together and pass this legislation now for the good of the 
country. I urge my colleagues to support this bill.
  The SPEAKER pro tempore. The gentleman from New Jersey is recognized 
to yield time managed by the gentleman from Alabama.
  Mr. GARRETT of New Jersey. Madam Speaker, I yield 3 minutes to the 
gentlelady from Illinois.
  Mrs. BIGGERT. I thank the gentleman for yielding.
  Madam Speaker, I rise today in reluctant opposition to this massive 
bailout of Wall Street. I understand why many of my colleagues are 
inclined to support it; the urge to act now and do something--
anything--to restore investor confidence is very compelling.

                              {time}  1115

  Our economy faces great risks, and I agree wholeheartedly that the 
government must intervene in some way to restore stability. But the 
plan that we are considering today is not what my constituents want, 
it's not what's best for the average American taxpayer, and it's not 
what's best for this economy.
  As a member of the working group assigned by GOP Leader Boehner to 
explore alternatives to a massive taxpayer-funded bailout, I was very 
pleased this weekend when we were able to develop a very realistic, 
workable alternative option to shore up these mortgage-backed 
securities. We took a long, hard look at the market and saw that a 
government-backed insurance plan could go a long way toward returning 
market value to many of these assets. It would address the market's 
aversion to these investments, and it would be entirely funded by risk-
based premiums leveled on the holders of the assets, not taxpayers.
  Our premise for this plan was and remains that Wall Street should pay 
for Wall Street's mistake.
  In addition, we outlined a tax proposal that would have injected 
billions into the private market, restoring liquidity and credit 
available on Main Street America. By temporarily removing the 
disincentive to repatriate, or bring back to America, profits made by 
American companies overseas, we could open the floodgates of capital 
into our marketplace.
  These are ideas that can work. But instead leaders have only agreed 
to attach a watered-down version of the insurance proposal to the same 
$700 billion bailout that the administration originally proposed. It 
creates an insurance purchase option for financial firms but then 
offers them the alternative of free taxpayer money. I wonder which one 
they will take?
  I'm very pleased that this plan has been improved over the past few 
days, especially the provisions limiting golden parachutes and allowing 
the public to share in the profits that may be made. But I am not 
convinced that we have taken the time to really come up with a strategy 
that truly protects the taxpayers.
  Let's take another look. Maybe we should start over. We discussed 
looking at the S and L crisis. The administration discounted that. 
Let's go back and look at the FDIC and doing away with mark to 
marketing. Instead of banks using fair value accounting, the SEC should 
use true value, giving immediate positive impact on the financial 
industry.
  Madam Speaker, we can and should do better. Main Street Americans 
deserve no less.
  Mr. FRANK of Massachusetts. Madam Speaker, I now yield 2 minutes to 
the gentleman from Oregon (Mr. DeFazio).
  Mr. DeFAZIO. I thank the gentleman for yielding.
  Madam Speaker, we started here a week ago with the Paulson plan. It 
was simple: Give him the keys to the Treasury and suspend all the laws. 
What we are doing, or proposing here today, is infinitely better, and 
the Democrats have labored hard to put in taxpayer protections and 
provide consequences for Wall Street executives.
  But what we consider today is still built on the Paulson-Bush 
premise; that is, President Bush and his Treasury Secretary, Mr. 
Paulson, say that dumping $700 billion of taxpayer-financed debt--we'll 
borrow the money--on top of Wall Street and buying up Wall Street's bad 
debts will solve the liquidity problem. It will trickle down through 
the economy to benefit small business. It will solve the underlying 
problem with the housing market, and it will stem job loss.
  I don't buy it. There are less expensive, less risky, targeted 
regulatory reforms and programs that could work better.
  But bottom line, President George Bush and his Treasury Secretary, 
Henry Paulson, insisted on a top-down Wall Street bailout solution. 
It's sort of like the financial surge strategy. And just like the surge 
in Iraq, as we go into it at the outset, we know it's not sustainable 
and we know it won't solve the underlying problems.
  Even worse, President Bush and Secretary Paulson and the Republicans 
insisted upon watering down the most critical portions of the bill. 
There is no mandatory way to pay for this bailout, no fee, no tax, just 
a proposal from a future President to a Congress that a Congress might 
think about to help take taxpayers off the hook. That's not protection. 
The golden parachutes, yes, they were exchanged for camouflaged 
parachutes. The execs on Wall Street are still going to get millions. 
Look at the loopholes there. We have added back in, at the insistence 
of the Secretary, credit card debt, auto loans.
  We can do better. We should start again on a new package, come back 
next week.
  Mr. GARRETT of New Jersey. Madam Speaker, I yield 2 minutes to the 
gentleman from California (Mr. Issa).
  Mr. ISSA. Madam Speaker, I rise in opposition to this bill.
  I am resolute in my opposition, not because it was easy to vote 
against your President, but our President and his administration are 
wrong. And if we vote here today for this bill, it is truly the end of 
the Reagan era.
  It's the end of the Reagan era because, in fact, under Ronald 
Reagan's time, we dealt with similar problems, a huge financial 
problem, and we worked our way out of it without unnecessarily buying 
assets. We closed institutions but we also saved institutions.
  Madam Speaker, my Governor often says, ``I'll be back.'' Madam 
Speaker, I have no doubt I'll be back, and I have no doubt that we will 
be trying to fix the problems next year that we don't fix here today. 
The mark-to-market problem, which Secretary Paulson has refused to deal 
with, in fact, in his own bill is very clearly being denounced. He

[[Page 23116]]

is raising the price of the assets we buy above mark-to-market while 
refusing to have the other assets allowed to be flowed to their true 
value. By definition today we are picking winners and losers in assets 
rather than going to creditworthy companies and helping them get the 
capital they need so they can make loans to men and women and companies 
and entrepreneurs out there who desperately need it to grow our 
economy.
  Madam Speaker, we are deleveraging the very capital and the very 
enterprises we need to date. GE Capital has said they are openly 
deleveraging. Why? Because that's the signal we're sending. We are 
collapsing this country into, in fact, a recession at a time in which 
the Ronald Reagan policy would be to expand opportunity, to find ways 
to give people who have great ideas an opportunity to reinvent America.
  So today we are ending the Reagan era if we vote for this, and if we 
can't come back and fix it next year, we will have permanently put a 
coffin on top of the coffin of Ronald Reagan.
  Mr. FRANK of Massachusetts. Madam Speaker, no one in this House has 
done more to fight for affordable housing and to prevent foreclosures 
and no one has had more of an impact and is trying within this bill to 
do the maximum that political constraints allow. So I now recognize for 
3 minutes the Chair of the Housing Subcommittee, the gentlewoman from 
California (Ms. Waters).
  Ms. WATERS. First, I would like to thank Barney Frank for his 
extraordinary work, accepting the impossible task of making sense of 
the economic crisis we are facing.
  Madam Speaker, $700 billion is a lot of money. Bailout for Wall 
Street? I don't think so. I could care less about Wall Street and the 
high-priced schemers and their tricky products: hedge funds, short 
selling, and insider trading. I care about Main Street and Martin 
Luther King, Jr. Drive.
  I am voting ``yes'' on this bill because this $700 billion will 
purchase the nonperforming loans, the bad debt, and the toxic paper 
which, if left to the market, could cause the greatest financial crisis 
our country has ever seen. These nonperforming loans represent people, 
real Americans in trouble. Yes, some got in over their heads. They 
contracted for mortgages they could not afford. But many Americans are 
the victims of predatory lending, suckered into adjustable rate 
mortgages that lured them with a low interest rate, no down payment, or 
no documentation loans that adjusted or reset within 6 months, 1 year, 
2 years, or 3 years. Homeowners were not always told the truth. Upon 
reset, homeowners were then faced with mortgages that doubled, tripled, 
or quadrupled with the new interest rates and the margins that were 
added to the existing interest rates.
  There's enough blame to go around. Greed, a regulatory system that 
turned a blind eye to these exotic schemes and products, brokers and 
banks who peddled these products, and investment banks who invested in 
these products all share some of the blame. We must correct the 
problems caused by these loans. We must modify these loans and stop the 
foreclosures and help American families keep their homes. We must 
reform our Federal regulatory agencies and never allow this subprime 
exploitation to occur again.
  Today we have financial institutions that will fail if we do not act. 
Credit will dry up for home mortgages, auto purchases, student loans, 
and small businesses. More jobs will be lost and the economy will 
crash.
  I would have preferred to have a strong bankruptcy provision in this 
bill, giving Americans a real option to work themselves out of debt. I 
would have also liked to have seen a provision providing a substantial 
fee to Wall Street firms that participate in this program. But, 
unfortunately, there was not the support or political will to get these 
things done.
  I have worked on this bill to strengthen the ability for the 
servicers who collect those mortgage payments and fees to modify these 
loans. I have worked to assist small regional and minority banks. I 
have included language to open up the ability for women and minorities 
to participate in asset management and all the other business 
opportunities, including opportunities for the newspapers, ad agencies, 
consulting firms, real estate professionals, legal services, financial 
managers, and information systems consulting services that will be 
created as we use these funds to clean up this mess.
  The SPEAKER pro tempore. The time of the gentlewoman has expired.
  Mr. FRANK of Massachusetts. I yield an additional minute to the 
gentlewoman.
  Ms. WATERS. Madam Speaker, I am also pleased that the bill creates a 
Financial Stability Oversight Board to oversee the work that is to be 
done in this Emergency Economic Stabilization Act of 2008.
  Finally, I cannot take the chance that people who have worked all of 
their lives to save for their retirement will lose their pension funds 
and 401(k) savings nor can I take the chance that the stock market will 
be weakened and Americans will lose their investments. There will be 
many who will say ``I don't believe the average person will be hurt if 
we do not act.'' I refuse to take that chance. Today we do what we 
truly believe must be done. But believe me, we must and we will tighten 
the screws on Wall Street. This bill will support the idea that we must 
get rid of these outrageous compensation packages for CEOs and 
executives. We must prosecute those who violate the law and ignore 
their responsibilities.
  Today I vote ``yes,'' but there is much more to be done. We must 
never again allow the risk to our economy that's been created by greed 
to ever occur again.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
New Jersey (Mr. Garrett).
  Mr. GARRETT of New Jersey. Madam Speaker, I came to the floor this 
week, and, America, I said, you should be concerned about what 
Washington is about to do. Last night I came to the floor and I said 
you should be alarmed about what Washington is doing because of the 
lack of deliberation. Today I come and say, America, you should be 
outraged about what Washington is about to do because Washington is not 
listening to you.
  Whether you are Republican or Democrat, our offices have been hearing 
phone calls, 10-1, 100-1 against this proposal. But Washington is not 
listening. They are going ahead with the proposal as well.
  There is a problem. We recognize the problem. We must work on it now. 
But we should not go for the solutions to that problem to the same 
people who have brought that problem to us. We should not go to the 
administration, who has brought this problem to us through their 
actions in the past; the Federal Reserve with their roller coaster 
interest rates from 2001 to 2004, 6 percent to 1 percent down; and then 
2004 to 2007, 1 to 5 percent up; bubbles and bursts from the Fed and 
their false promises with Bear Stearns and AIG and GSEs.
  Nor should we turn to the Democrat leadership that has signed on to 
this bill; that Democrat leadership who has given us CRAs in the past 
that has led to the meltdown in the subprime market. Nor should we turn 
to the Democrat leadership who has blocked reform in the past to these 
GSEs and unbelievably say they will block any reform in the future to 
the GSEs.

                              {time}  1130

  No. The stakes are too high to turn back to those who have brought us 
the problem in the first place. We should look for new solutions. And 
there are solutions.
  But I will close on this, Madam Speaker. The noted University of 
Chicago economist, Robert Schimer, tells us that the U.S. has long been 
a beacon of free markets in the world. When economic conditions turn 
sour in Argentina or Indonesia, we give very clear instructions on what 
to do: Balance the budget. Cut government employment. Maintain free 
trade and the rule of law. And don't prop up failing enterprises. Those 
approaches by the U.S. are correct.
  But when the U.S. ignores its own advice in this situation, it 
reduces our credibility in the future. Rewriting the rules of the game 
at this stage will

[[Page 23117]]

therefore have serious ramifications not only for the people in this 
country but for the future of the globe. The social cost is far, far 
greater than any $700 billion.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield myself 30 seconds 
to correct an egregious misrepresentation of history.
  The gentleman just said that the Democratic leadership, I'm sorry, he 
said the Democrat leadership, I wouldn't want to misquote his 
adjective. He said the Democrat leadership, a point of great rhetorical 
significance to the large-minded on the other side, says that the 
Democrats fought GSE reform.
  The Republicans controlled this Congress from 1995 to 2006. No bill 
passing GSE reform went through. The Democrats took over in 2007. 
Within a couple of months this House, 4 months, this House passed----
  The SPEAKER pro tempore. The time of the gentleman from Massachusetts 
has expired.
  Mr. FRANK of Massachusetts. I yield myself 30 additional seconds.
  The House passed the GSE reform that the Bush administration 
requested. We then asked the Secretary of the Treasury to put that into 
the stimulus. He said no. The Senate then did it in July--and the bill 
became law. So 12 years of Republican rule, zero action on GSE reform, 
a year and a half of the Democrats being in power and GSE reform was 
passed.
  I now yield 3 minutes to the gentleman from Tennessee.
  Mr. TANNER. I thank the chairman for yielding. And I know if anybody 
has been keeping up with this weekend, I know that they realize and 
understand that this is not an ordinary time. I believe personally we 
are here because in this decade we have witnessed financial 
mismanagement and regulatory neglect which leads us to this morning.
  Unfortunately, when the Secretary of the Treasury came over and we 
looked at the proposal, or the bare bones of the proposal, it appeared 
to some of us that it was all about private gain and public risk. And 
that was unacceptable for the taxpayers to take the risk to help those 
referred to as Wall Street.
  So I have been asked to talk about this recoupment clause, section 
134 of the bill, that was finally accepted in negotiations. It says the 
following: ``Upon the expiration of the 5-year period beginning upon 
the date of enactment of this Act, the Director of the Office of 
Management and Budget, in consultation with the Director of the 
Congressional Budget Office, shall submit a report to the Congress on 
the net amount within the Troubled Asset Relief Program''--this bill. 
``In any case there is a shortfall, the President shall submit a 
legislative proposal that recoups from the financial industry an amount 
equal to the shortfall in order to ensure that the Troubled Asset 
Relief Program does not add to the deficit or national debt.''
  What this means is we have taken away the private gain-public risk 
aspects of this act and made sure that the people who are eligible to 
participate in it will pay back to the Treasury any shortfall that may 
occur at the end of the program.
  With this section 134, it is my opinion that this is no longer about 
Wall Street. This is about the IRAs, the 401(k)s, the pension plans 
that all American citizens have and that all State governments have at 
stake in their pension programs. This is no longer, then, about bailing 
out anyone. It is about trying to put together a plan that will do less 
harm than we would do otherwise by our inaction to every American 
citizen's financial security, IRA, 401(k) pension programs.
  If we have, as Chairman Bernanke, Secretary Paulson, the President 
and others has said, a colossal or a catastrophic situation happen 
because of our inaction, it's not going to be Wall Street; it's going 
to be the 401(k)s, the IRAs and the pension plans that all of us share.
  Mr. KINGSTON. Madam Speaker, I yield 2 minutes to the gentleman from 
Florida (Mr. Miller).
  Mr. MILLER of Florida. Madam Speaker, almost 2 weeks ago, Secretary 
Henry Paulson came to this Congress requesting $700 billion of taxpayer 
money for his friends and former colleagues on Wall Street. The former 
chairman of the investment bank of Goldman Sachs also asked this 
Congress to pass a law ensuring that his actions ``are nonreviewable 
and committed to agency discretion, and may not be reviewed by any 
court of law or any administrative agency.''
  The Founders of this great Nation set up an ingenious system of 
government to ensure that power was not disproportionately given to any 
one individual. The goal was to avoid tyranny, to avoid tyranny at all 
costs. But Secretary Paulson most likely skipped class that day and was 
hoping that we had as well. Many wonder how such a poorly constructed 
piece of legislation could even come to the Congress in the first 
place. And I wonder how our President approved this as well.
  By demanding this bailout money, the administration attempted to 
circumvent the legislative process. Moreover, the administration 
continues to insist that their way is the only way to avoid an imminent 
crisis.
  And perhaps most stunning is that the administration officials that 
are responsible for protecting American taxpayers and our free-market 
system were asleep at the switch. Securities and Exchange Commission 
Chairman Chris Cox recently admitted his culpability in this matter and 
amazingly, the Secretary of the Treasury recently admitted he had seen 
this crisis coming for almost a year and just now has come to our 
Congress.
  Such large-scale government interference in our government ensures 
that the correction process will take much longer. And what would help 
toward long-term stability is an injection of private capital, private 
capital into our economy. We need to lower tax rates on capital gains 
and corporate income, allowing people to invest more of their money and 
relieving American companies from one of the highest corporate tax 
rates in the world.
  The Democrats didn't care to address the capital gains tax issue. And 
in fact their response to the administration's bailout plan was just as 
bad.
  The SPEAKER pro tempore. The time of the gentleman from Florida has 
expired.
  Mr. KINGSTON. I yield the gentleman 15 additional seconds.
  Mr. MILLER of Florida. The plan was just as bad.
  I can tell you that an overwhelming majority of my constituents have 
called, e-mailed and written to my office stating their outright 
opposition to any sort of bailout. The American taxpayer deserves 
better than what we are getting here today. And we must not sacrifice 
long-term freedom for short-term financial gain.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield myself 15 seconds. 
On page 58 the gentleman was right to object to the provision in the 
original bill sent to us by the Secretary exempting him from judicial 
review. We have disexempted him. If Members will look at page 58, he is 
now subject to appropriate judicial review.
  I now yield 2 minutes to the gentleman from Minnesota.
  Mr. OBERSTAR. Madam Speaker, I thank the chairman for the time. We've 
been here before at this precipice, looking into the abyss of 
uncertainty--of Lockheed, of New York City's financial crisis, of 
Chrysler and of post-9/11 airlines, perhaps not all of us personally, 
but we, this body. And in each of those cases where great uncertainty 
shadowed over this body, we found a way to make the right decision. And 
in each of those cases, the government was called upon, the Federal 
Government, to help the private sector, or in the case of New York 
City, the city, and through it, the private sector.
  And in each case, our good judgment was rewarded. Lockheed paid off 
its loan. Chrysler paid off its securitized loan from the Federal 
Government with interest. The New York City financial crisis was not 
limited to New York. It spread into every State of this country. And we 
saved each hometown bank by coming to the rescue of New York City.
  And I stood here in the well of this House with the gentleman from 
Alaska

[[Page 23118]]

(Mr. Young), then the chairman of the Committee on Transportation and 
Infrastructure, to ask this body to look over the horizon to what would 
happen on Monday if on Friday we didn't propose to rescue the airlines 
who had been shut down by the Federal Government in a national security 
interest and provide loan guarantees.
  And while it stumbled, the proposal stumbled and faltered that 
evening, it was a commitment to come back the following week and to do 
it and to do the right thing. And in those negotiations, I remember 
very well Speaker Hastert.
  The SPEAKER pro tempore. The time of the gentleman from Minnesota has 
expired.
  Mr. FRANK of Massachusetts. I yield the gentleman another 15 seconds.
  Mr. OBERSTAR. I remember Speaker Hastert saying, no, this is the 
right thing. We have to do it.
  We are again at that point. Chairman Frank has crafted an 
extraordinarily talented proposal that protects the public interest. 
And once again, we have to do it.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
Arizona (Mr. Flake).
  Mr. FLAKE. Mr. Speaker, I rise today in opposition to this bailout 
not because I don't believe we face financial crisis in this country. I 
rise in opposition to this bailout because I know we are in a financial 
crisis, one that will be prolonged with this legislation.
  The premise of this unprecedented government intervention is that the 
free market has failed and that government must come to its rescue.
  In reality, the crisis we now face is a result of government 
intervention in the market. We are in this predicament largely because 
implicit, and eventually explicit, Federal guarantees in Fannie Mae and 
Freddie Mac shielded the financial services sector from market 
discipline.
  Madam Speaker, those who believe that they can control and direct the 
market's invisible hand will eventually be slapped by it. That is the 
painful and embarrassing situation we find ourselves in today. We don't 
have enough money in the Federal Treasury, nor can we responsibly 
borrow enough money, to keep the market from finding its natural 
bottom.
  Now is the time to act on the free market principles we profess to 
believe in. Let's vote down this bill and instead pass legislation that 
is consistent with those principles.
  Mr. FRANK of Massachusetts. I yield 2 minutes to the gentleman from 
Oregon (Mr. Blumenauer).
  Mr. BLUMENAUER. I appreciate the gentleman's courtesy as I credit his 
mastery for bringing this bill before us today. Thanks to his 
leadership, the leadership of Speaker Pelosi, and the cooperation of 
the Republicans, it is a far better bill.
  But, unfortunately, this is not likely to be the end of the bubbles. 
We must with our actions be extraordinarily careful if we don't want to 
compromise the next rescue. Remember Long-Term Capital Management, the 
hedge fund? What happens if the hedge fund industry is next? The 
article in today's New York Times wasn't very comforting. Any real 
rescue must include bankruptcy equality for homeowners. This is not 
just a moral issue. Fairness to our Nation's homeowners is the key to 
stabilizing home values currently in free fall.
  We cannot continue to bail out failing industries with borrowed 
money. No bill should be enacted without a payback from the financial 
services sector to be rescued, not merely a hint of a promise to pay 
back in 5 years. At the core, we are ignoring the fundamental question 
about the size and scale of the financial services industry in trouble 
not just because of a lack of regulation, but because we had too many 
people pursuing unsustainable business practices.
  We have seen change from an irresponsible White House proposal into a 
responsible bill. But it's not as good as it should be. And sadly, may 
be besides the point if more bubbles explode.
  I will vote ``no,'' reluctantly hoping I am wrong, but fearing that I 
am right.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Gohmert).
  Mr. GOHMERT. Madam Speaker, we've heard a number of comments about 
we've just got to bite the bullet and do this. We heard the same things 
about let's bail out Fannie Mae and Freddie Mac. We've got to take this 
one step. And then we heard from the former chairman of the FDIC, guys, 
you don't realize, if you do this, you are going to start the dominoes 
falling.
  People have talked about this precipice.
  Making this vote, passing this bill is jumping into the precipice 
because next we have got to come bail out the community banks that are 
doing just fine. If we would allow the banks to value these mortgage-
based securities at the very value Paulson wants to take taxpayer money 
and buy them, they would be okay. Washington Mutual wouldn't have 
failed. We hear about we did the right thing with Chrysler and New 
York. Those were loans. This is putting the government in the position 
of buying all these things.
  And as the FDIC former Chair said, when the Federal Government buys 
them, they immediately become worth less. That is the way it is. That 
is the way it will be.
  And nobody seems to ask, who is it that is going to manage these 
assets? I have been asking. And finally the answer I got was, well, of 
course, we're going to have to outsource that.
  You're going to outsource it to the very people that caused the 
problem. We're going to give them billions for assets they have 
mismanaged. And then we're going to hire them to manage those assets.
  Please, please don't betray this Nation's great history. The 
committees used to do good work and ferret this stuff out.

                              {time}  1145

  They haven't been allowed to do their work, or they would have done a 
better job. Let the committees do the work. Let's get a better bill, 
and save America from Congress hurting it by jumping off this 
precipice.
  Mr. FRANK of Massachusetts. I yield 2 minutes to the gentlewoman from 
Michigan (Ms. Kilpatrick).
  Ms. KILPATRICK. Madam Speaker, I have the highest respect for my 
chairman, Barney Frank, and your genius, thank you very much, as well 
as Speaker Pelosi for her leadership.
  A week ago today we were sent a three-page bill, $700 billion, send 
it back to us and never ask us any questions. I am proud that the 
chairman and Speaker and leadership on both sides of the aisle have 
come to some agreement.
  Contrary to popular belief, our financial crisis was not due to just 
people who couldn't afford the loans. It was Wall Street's problem, the 
people who managed this process over the years, with a lack of 
regulation from this administration. It was also predatory lending, 
lending from predators, banks in many instances, the very people we are 
going to give the money to, who took the loans, who made the loans, and 
didn't require the proper oversight. It is not the little people.
  It is the loss of jobs. In America we have lost over 600,000 jobs 
over the last 8 years, good jobs, manufacturing jobs. The American 
Dream has slipped away, speculation from Wall Street, from developers. 
All of us have been affected by this crisis, and all of us believe 
there ought to be some end to this.
  We must work as elected representatives of the people. Over 400 
economists, as has been said earlier and we have the documentation, are 
opposed to the process and the way we are going about it. Three of them 
are Nobel Laureates who have come to this conclusion, and economists, 
professionals extraordinaire.
  Unfortunately, there is no judicial review in this to protect the 
average citizen. We talk about the mortgages, but this helps the banks 
in their book of mortgages. It does not help the little person who 
needs it. There is no judicial review to come to her aid or his aid.
  It is unfortunate that we are here today talking about $700 billion, 
and, as an appropriator, $1 trillion is probably what it will be and 
more. We do not yet know how much it will be.

[[Page 23119]]

  We need to take our time on this. We have been talking about it now 7 
days nonstop. We can do better. There is a better process. I hope that 
we can slow down this train.
  We will probably vote in a few hours, less than an hour now. The 
Senate is not going to vote until later this week. We can do better, 
the American people deserve more, and I urge a ``no'' vote on this 
legislation.
  Mr. BACHUS. Madam Speaker, I yield 5 minutes to the gentleman from 
Wisconsin (Mr. Ryan).
  Mr RYAN of Wisconsin. I thank the gentleman for yielding. I want to 
thank our distinguished ranking member of the Financial Services 
Committee for all the work he has done this week. A lot of us have lost 
a lot of sleep, a lot of us who have looked at this situation.
  When Secretary Paulson came to us about a week ago, he gave us a 
three-page bill that said give me a blank checkbook and put $700 
billion in it. I was offended at that time.
  So what happened since then? We added 107 pages of taxpayer 
protection to that bill. We understand the gravity of this situation, 
and we worked with our colleagues on the other side to make this bill a 
better bill.
  We made sure that there is an upside for the taxpayer so that when 
this happens, when profits come to these companies, we get their stock 
warrants, so the first person in line to get those profits is the 
American taxpayers so they can get their money back. We made sure that 
there is an insurance program that makes sure that Wall Street shares 
in the cost of this recovery plan. And we also made sure that the 
executives of these companies that made these bad bets don't profit 
from this rescue recovery plan. We cut the initial cost in half of this 
bill. Congress will have to approve the second half of this next year.
  Why did we do all of this? Because this Wall Street crisis is quickly 
becoming a Main Street crisis. It is quickly becoming a banking crisis.
  What does that mean? Why does that matter to us? Why does that matter 
to Janesville, Wisconsin? If it goes the way it could go, that means 
credit shuts down; businesses can't get money to pay their payroll, to 
pay their employees; students can't get student loans for next 
semester; people can't get car loans; seniors may not have access to 
their savings. Are we standing at the edge of this abyss? Nobody knows. 
But maybe. It is very probable.
  Madam Speaker, this bill offends my principles. But I am going to 
vote for this bill in order to preserve my principles, in order to 
preserve this free enterprise system.
  This is a Herbert Hoover moment. He made some big mistakes after the 
Great Depression, and we lived those consequences for decades. Let's 
not make that mistake. There is a lot of fear and a lot of panic out 
there. A lot of what this is about is getting that fear and panic out 
of the market.
  I think the White House bumbled this thing. They have brought this 
issue up to a crescendo, to a crisis, so that all eyes of the world 
markets are here on Congress. It is a heavy load to bear. We have to 
deal with this panic. We have to deal with this fear.
  Colleagues, we are in the moment. This bill doesn't have everything I 
want in it. It has a lot of good things it. But we are here. We are in 
this moment. And if we fail to do the right thing, heaven help us. If 
we fail to pass this, I fear the worst is yet to come.
  The problem we have here is we are one month away from an election. 
We are all worried about losing our jobs, and all of us, most of us, 
say this thing needs to pass, but I want you to vote for it, not me.
  Unfortunately, a majority of us are going to have to vote for this, 
and we are going to have to do that because we have a chance of 
arresting that crash. Just maybe this will work.
  And so for me and for my own conscience, so I can look at myself in 
the mirror tonight, so I can go to sleep with a clear conscience, I 
want to know that I did everything I could to stop it from getting 
worse, to stop this Wall Street problem from infecting Main Street.
  I want to get on my airplane and go home and see my three kids and my 
wife that I haven't seen in a week, and look them in the eye and know 
that I did what I thought was right for them and their future. And I 
believe with all my heart, as bad as this is, it could get a whole lot 
worse, and that is why I think we have to pass this bill.
  Ms. BEAN. I yield 2 minutes to the Congresswoman from Texas (Ms. 
Jackson-Lee).
  Ms. JACKSON-LEE of Texas. Madam Speaker, the Constitution of the 
United States is present to protect Main Street. The full faith and 
credit of this constitutional document will protect the men and women 
of America.
  I will not stand here today and suggest that we do not have some 
challenges. I frankly believe that the bill we have before us is a 
miracle, and I thank the leadership for their strength in 
recharacterizing the two-page bill that anointed the Secretary of the 
Treasury that came from the White House.
  But my question is, where was the Securities and Exchange Commission? 
Where was the FDIC, the Federal Reserve? Under the control and 
domination of this administration. So when we ask the question why, we 
need to look back at those who controlled the policies of America for 
the last 8 years. Where was the Secretary of the Treasury?
  But I don't stand here to cast aspersions. I will say to you that 
this has been diagnosed, but America needs a second opinion. There is 
no enforcement in this legislation. The Financial Stability Oversight 
Board, no enforcement provisions; the Congressional Board, no 
enforcement provisions; the Inspector General, no enforcement 
provision. There are no criminal penalties for those who have been 
charged with malfeasance and criminal activities, no barring of 
individuals who are convicted of malfeasance and criminal activities 
from doing business with the United States.
  So, in essence we give this money, and who does it go to? No listing 
by the Secretary of the Treasury where the first dollar will go. No 
separating a certain amount to help those in foreclosure in America in 
the small towns, hamlets and villages, when in fact we know that we 
could establish a Homeowners Loan Corporation and help those on Main 
Street.
  Yes, I do believe we are challenged. But I believe we can come back, 
watch the markets, and work forward. This is a bill that hands out; it 
doesn't hand up. I ask my colleagues to consider the fact that we are 
protecting Main Street, not Wall Street.
  Madam Speaker, I rise with great concern regarding H.R. 3997, the 
Emergency Economic Stabilization Act of 2008. I would like to thank 
Chairman of Financial Services Barney Frank for bringing this important 
piece of legislation to the floor. I also rise with a sense of the 
solemness of this moment. However, I rise today with the confidence 
that our system of Government is strong and the constitutional 
protections of the full faith and and credit of our Government will 
protect Main Street America while we reform America's Wall Street.
  Leadership has worked without tiring to alter the language provided 
by the administration for the betterment of the American people. Our 
leadership has created a miracle by modifying the 2 page document sent 
by the Treasury Department last week into a 109 page document. I thank 
leadership for that. We toiled long into the night to incorporate 
Democratic principles--many of which have still not been included.
  Where was the FDIC? Where was the SEC? Where was the Federal Reserve?
  I have worked with leadership to offer consistent amendments that 
would have strengthened the punitive measures over the past week to 
change the administration's proposal to make it more encompassing, 
effective, and better for the American people. While the present 
legislation is impressive, it is also impressive regarding what is 
absent from this legislation. For example, the legislation is devoid of 
bankruptcy restructuring, devoid of real enforcement, and devoid of any 
meaningful judicial review. These are all issues that I have been very 
concerned about.
  In fact, it is because I am concerned and desire that the maximum 
number of Americans get relief from this bill, that I offered 
amendments yesterday. To ensure that this bill provides relief for 
Americans, I offered the following amendments:

[[Page 23120]]

  Set aside $125 million (in fact the amount could been more) as a firm 
allotment to address the question of individual American homeowners 
facing foreclosure in light of the absence of a bankruptcy provision;
  Add Sense of the Congress language that Bankruptcy Code should be 
reviewed and amended in the future to permit bankruptcy judges to 
address the question of individual home mortgage restructuring;
  Allow the courts to exercise rigorous judicial review and provide 
those courts with the discretion to grant injunctive and/or equitable 
relief if the courts determine that such relief would not destabilize 
financial markets;
  Create a new, independent commission to exercise oversight over the 
current financial situation with enforcement powers;
  Allow criminal liability for persons or corporate entities that have 
engaged in criminal malfeasance;
  Bar persons/corporate entities found to have engaged in criminal 
malfeasance with malicious intent in financial markets from doing 
business with the Federal Government in the future.


                          The bill in context

  Segments of the economy have the ability to be strong. America needs 
to employ its full faith and credit to back its commitments. I feel 
strongly that this bill should have set aside $125 million to help 
homeowners who are facing mortgage foreclosure. This is important 
because it is money that would have been used to help the aggrieved: 
Main Street.
  It is important to note that all five big investment firms--Bear 
Sterns, Merrill Lynch, Lehman Brothers, Goldman Sachs, and Morgan 
Stanley have altogether disappeared or morphed into regular banks. 
Given this phenomenon, the question arises and no one has or can seem 
to explain: Is this bailout still necessary?
  Dr. James K. Gailbraith, of the University of Texas, wrote in the 
Washington Post on September 25, 2008, that the bailout is not 
necessary because the point of the bailout has been articulated as 
buying assets that are illiquid ``but not worthless. But regular banks 
hold assets like that all the time. They are called `loans.'
  With banks, runs occur only when depositors panic, because they fear 
the loan book is bad. Deposit insurance takes care of that.''
  Deposit insurance presently is capped at $100,000. We should have 
considered raising the FDIC insurance cap, increased the amount of 
capitalization in the FDIC corporation, increased the amount of 
reserves in the Treasury Department.
  Dr. Galbraith wrote, ``In Texas, recovery from the 1980s oil bust 
took 7 years and the pull of strong national economic growth. The 
present slump is national, and it can't be cured by legislation alone. 
But it could be resolved in 3 years, by a new Home Owners Loan Corp., 
which would rewrite mortgages, manage rental conversions, and decide 
when vacant, degraded properties should be demolished.''
  As I consider this piece of legislation, three of the themes are 
consistent throughout it are (1) where is the enforcement; (2) who 
receives the first dollar; and (3) what is the disastrous and 
catastrophic event that will occur if this bill is not passed today? 
Because of the complexity of the nature and extent of the problems 
within the financial markets, I would rather that Congress carefully 
review and consider the right solution.
  Congress should order the SEC, FDIC, the Federal Revenue Service to 
use their current powers and prevent the consequences with some 
extraordinary powers such as cited above regulating lifting the caps at 
the FDIC and allowing the SEC to suspend certain accounting practices; 
all this can be done without the massive bailout all at once.
  This legislation was considered at 10 p.m. in a closed rule last 
night; debate on the rule immediately transpired with fewer than 10 
members participating at approximately midnight. In less than 10 hours, 
members are expected to have read, understand, and speak intelligently 
upon this complex piece of legislation.
  When we consider the magnitude and extent of the financial problem, 
we must consider how America has gotten here in the first place. During 
the past administration, America underwent a housing boom. Depressed 
housing markets around the country experienced unparalleled increases 
in price. Middle-class, working Americans sought to achieve the 
American dream by purchasing a home.
  At the same time, banks and financial institutions were selling 
unsophisticated consumers unconventional and creative mortgage 
financing alternatives. Financial institutions were apt to qualify 
borrowers for more house than they could afford. Financial institutions 
were lending subprime mortgages and engaged in predatory lending. 
Adjustable rate mortgages, which had an interest rate that would adjust 
within 1, 3, or more years, became more common within the last 7 years. 
Interest-only names became common names within the first home 
purchaser's market. Borrowers who were considered a credit risk were 
allowed to purchase home. The banks and financial institutions were not 
paying attention to a borrower's credit rating, their ability to pay, 
or a borrower's potential to default.


                      Present Financial Situation

  According to Bloomberg, this morning stocks around the world tumbled, 
the euro and the pound plunged and bonds rose as governments raced to 
prop up banks. Hong Kong's Hang Seng Index plunged 4.31 percent to 
17,876.41, and Tokyo's benchmark Nikkei lost 1.3 percent to close at 
11,743.61.
  Europe's Dow Jones Stoxx 100 Index declined 3.2 percent. MSCI Asia 
Pacific Index lost 2.7 percent after Dexia SA sank the most since it 
began trading 12 years ago, and ICICI Bank Ltd. retreated to a 2-year 
low. Futures on the S&P's 500 Index fell 1.7 percent as Wachovia Corp. 
tumbled 91 percent. Citigroup Inc. agreed to buy the company's banking 
operations in a transaction the Federal Deposit Insurance Corp. helped 
arrange.
  The British pound dropped the most against the dollar in 15 years, 
and the euro weakened after European governments stepped in to rescue 
Bradford & Bingley Plc, Fortis, and Hypo Real Estate Holding AG.
  So far, the $700 billion package to shore up banks hammered out by 
Treasury Secretary Henry Paulson and congressional leaders over the 
weekend failed to convince investors it will shore up banks saddled 
with growing mortgages losses. The crisis that began with bad home 
loans to subprime borrowers in the U.S. is threatening to push the 
global economy into a recession as consumers lose confidence as banks 
cut back on lending.
  It is difficult to have a $700 billion dollar rescue bill when the 
President failed to sign for $60 billion dollars to provide economic 
stimulus to working-class Americans.
  In September, Fannie Mae, Freddie Mac, and Lehman Brothers all filed 
for bankruptcy. Merrill Lynch agreed to sell itself to Bank of America, 
MG was taken over by the Treasury, and Washington Mutual was seized by 
regulators in the biggest U.S. bank failure in history. Financial 
institutions worldwide have reported more than $550 billion of credit 
losses and asset writedowns since the beginning of 2007, according to 
data compiled by Bloomberg.
  Even after the announcement of the rescue package, the worldwide 
markets are still declining. I fail to see the specific catastrophic 
events/consequences that the U.S. public will experience if this 
bailout does not occur.
  I am cautious because I believe that we as members of Congress need 
to take the time to craft a real recovery plan for our economy, a plan 
that puts people first and addresses our multiple economic crises, 
including good jobs, affordable housing, health care, retirement 
security, infrastructure, and disaster relief (Katrina, Ike, etc.).
  Last week, New York Mayor Michael Bloomberg announced $1.5 billion in 
public spending cuts. I do not believe that this was prudent. Schools, 
fire departments, police stations, parks, libraries, and water projects 
are getting cut. The persons who are feeling the effects of this 
economic decision are the more vulnerable populations, the elderly, the 
children, and the working- class. Mayor Bloomberg's reaction is not the 
solution either.
  It is clear that something must be done, but this bill does not 
provide the answer that America seeks.
  Recently, Congress sent an economic stimulus package to the President 
that would have provided $60 billion dollars in relief to middle-class 
working Americans. The President vetoed this bill. However, the 
Administration sends to us today this bill requesting $700 billion 
dollars to bail out Wall Street.
  I would offer that we need to restructure our present financial 
system. However, the kinds of reform that I believe are necessary are 
not included in this bill. For example, the Federal Reserve itself 
needs to be reformed. As members of Congress we should be looking at 
establishing greater oversight, preventing predatory practices, and 
establishing public alternatives to the reckless privatized system that 
brought us the crisis in the first place. We need to prevent the 
victims of predatory lending from losing their homes and restrict 
lobbying by the financial sector.
  I have heard from my constituents that they are not supportive of 
this bill. Many themselves were community bankers. One community 
banker, for example, wrote:
  ``I am a community banker who is deeply concerned about the recent 
developments on Wall Street and the bailouts that our government has 
undertaken. The great, great majority of banks in this country never 
made one

[[Page 23121]]

subprime loan, and 98 percent are well-captialized . . . we don't ask 
for or need a bailout.''


               Little Relief for the Nation's Homeowners

  Because of the way that the bill is written, few if any homeowners 
will get mortgage relief, which is why I offered an amendment that 
would give $125 million directly to the homeowners facing mortgage 
foreclosure. The bill does not contain any provision allowing the terms 
of a mortgage to be changed without the consent of all the investors 
who own the mortgage. Few homeowners will benefit. For example, the 
bill would not provide relief to the majority of homeowners. The bill 
is little more than a Wall Street earmark and is not really a bill for 
homeowners. Although the bill does not provide for parachutes for 
executives, the executives' compensation remains the same.
  This is because the Treasury will chiefly purchase mortgage-backed 
securities which will make the Federal Government one of several co-
owners of millions of mortgages. Whether or not any mortgages modified 
will be determined by the loan servicer acting on behalf of all the 
various investors who own a piece of the mortgage. That is why Section 
108(d) states in part ``The Secretary shall request loan services 
servicing the mortgage loans to avoid preventable foreclosures.'' 
Congress has already requested all loan servicers nationwide to avoid 
preventable foreclosures, so an additional request from the Treasury is 
unlikely to change current behavior.


                         Republican Commentary

  Republican critics of the bill argue that the bill rescues persons 
that lack financial responsibility because they were living beyond 
their means or that the bill helps minorities who did not exercise 
fiscal responsibility. There is simply no credibility to these 
arguments. As I have attempted to stress today, the mortgage 
foreclosure crisis affects all Americans. Financial institutions 
engaged in speculation on Wall Street that we now see has had a 
deleterious effect on Main Street.
  Speculation, in a financial context, is the assumption of the risk of 
loss, in return for the uncertain possibility of a reward. Speculation 
is one of the main causes of various economic crises around the world. 
In fact, speculators have played a major role in the present crisis. 
The speculators were greedy.
  Nonprofits such as ACORN, NACA, and Homefree USA, among many others, 
have long been waging consumer campaigns to educate borrowers about the 
various financial instruments. And I am resoundingly grateful to them 
for their hard work. We cannot make them the scapegoats. These 
organizations have allowed persons who might not otherwise have the 
knowledge or the opportunity to purchase a home, the opportunity to do 
so in the right way. These nonprofits should be applauded.
  Everyone deserves the economic dream of owning their own home. But 
the financial institutions were dilatory in their responsibility to 
assess the borrower's ability to pay for loans and purchase a home. It 
was the squandering of this responsibility and preoccupation with greed 
and avarice that has led us to where we are today.
  There are substantial improvements in the present version of the bill 
compared to the Bush administration proposal. However, the bill as it 
is presently written does not provide the necessary relief to middle-
class America. Frankly, the bill provides no panacea to our present 
economic woes. Our markets will have the full faith and credit of the 
United States. This bill has not sent a sufficiently clear message 
because it lacks enforcement.
  There are provisions now that address accountability measures by 
requiring a plan to ensure the taxpayer is repaid in full, and 
requiring congressional review after the first $350 billion for future 
payments.
  Principally, there are three phases of a financial rescue with strong 
taxpayer protections: reinvest, reimburse, and reform. One of the 
phases is to reinvest in the troubled financial markets to stabilize 
the markets. Another reimburses the taxpayer and requires a plan to 
guarantee that they will be repaid in full. The last is to reform how 
business is done on Wall Street. The current legislation provides for 
fewer golden parachutes and, to its credit, provides sweeping 
congressional oversight.
  There are critical improvements to the rescue plan that yield greater 
protection to the American taxpayers and even to Main Street. The 
protection for taxpayers include the following:
  Gives taxpayers a share of the profits of participating companies, or 
puts taxpayers first in line to recover assets if a company fails; and
  Allows the Government to also purchase troubled assets from pension 
plans, local governments, and small banks that serve low- and middle-
income families.
  For companies publicly auctioning over $300 million: There will be no 
multi-million dollar golden parachutes for top five executives after 
auction, although nothing prevents these executives from still reaping 
enormous salaries. There will be no tax deduction for executive 
compensation over $500,000.
  However, with a ``pause'' we can help the financial markets and make 
America secured.


                         my amendment language

  While the bill has some improvements, what is missing from the bill 
are serious enforcement mechanisms. The language of the bill was good 
and was marked improvement over what the administration sent to us last 
week, but more work needs to be done on the bill. There are still 
elements that need to be added to the bill.
  The bill provides for the creation of a Financial Stability Oversight 
Board in Section 104. The bill also establishes a special inspector 
general for the troubled asset relief program in Section 121. Last, 
section 125 establishes the Congressional Oversight Panel. Importantly, 
these sections lack any real enforcement. These sections require 
reports and investigation; however, there is no criminal sanction for 
any malfeasance perpetrated by employers.
  One of my amendments would have established an Oversight Board that 
would have had the authority to issue criminal penalties and civil 
sanctions. My amendment would have provided a strong enforcement 
mechanism and would have been effective in ensuring that this crisis 
does not occur again. It would send a clear message to Wall Street.
  Another of one of my amendments would have added serious judicial 
review to Section 119. Section 119 presently provides that no 
injunction or other form of equitable relief shall be issued against 
the Secretary other than to remedy a violation of the Constitution. My 
amendment would have allowed meaningful judicial review because it 
would have allowed injunctive and other forms of equitable relief 
insofar as the grant of such relief did not disrupt financial markets. 
These are remedies available at law and in equity. I see no compelling 
reason why such relief should not be granted in the financial context.
  The bill has no bankruptcy provisions. The bill does not permit 
homeowners who are presently in mortgage foreclosure from declaring 
Chapter 11 and 13 bankruptcy. Importantly, my amendment would allow 
homeowners in default of their mortgages to restructure their loan, 
thus providing immediate relief to the homeowner.
  Because the bill is devoid of bankruptcy relief, I offered another 
amendment to set aside $125 million as a firm allotment to address the 
question of individual American homeowners facing foreclosure. I 
believe that this would have provided relief in the absence of any 
extension of the bankruptcy code to address current homeowners in 
mortgage foreclosure.
  I believe that Wall Street is an important and vital part of the 
Nation's economy. I believe that the people who work there are good. It 
is a well known fact that financial markets do not always serve small 
businesses and minorities. I have personally had experiences where 
good, hardworking people and small business owners were denied access 
to financial markets.
  I believe in America, and I believe in its Constitution. I believe 
that we can create a bill that would allow constant monitoring and 
vigilance and would help the American people.
  I am reminded of the Preamble to our Constitution, which reads:
  ``We the People of the United States, in Order to form a more perfect 
Union, establish Justice, insure domestic Tranquility, provide for the 
common defence, promote the general Welfare, and secure the Blessings 
of Liberty to ourselves and our Posterity, do ordain and establish this 
Constitution for the United States America.''
  I would like to end with a quote from Alexander Hamilton: ``The 
sacred rights of mankind are not to be rummaged for, among old 
parchments, or musty records. They are written, as with a sun beam in 
the whole volume of human nature, by the hand of the divinity itself 
and can never be erased or obscured by mortal power.''
  Let us work to provide the American people with the sun beam. Let us 
work to provide legislation that works and that serves the American 
people.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
Nebraska (Mr. Fortenberry).
  Mr. FORTENBERRY. Madam Speaker, undoubtedly America is facing a very 
serious financial challenge. There is a threat of systemic failure. Yet 
the central issue before us is twofold: First, is this situation as 
dire as predicted? And, second, is this construct, this bill, this type 
of government intervention, with its huge expenditure and

[[Page 23122]]

taxpayer exposure, the correct approach?
  While I recognize the economic dangers this Nation faces, I deeply 
regret that we have accepted artificial deadlines in a rush to do 
something.
  The bill before us today, while much improved from the original 
administration proposal, relieves bad assets from the market which have 
no defined market value. But it overlooks more fundamental issues, such 
as accounting rules called mark to market, that are forcing banks to 
artificially write down assets, many of which have real economic value 
but technically no or little book value. This in turn erodes the 
ability to leverage these assets to meet capital requirements, 
resulting in shrinking credit and an inability to make loans.
  Simple measures to change this problem are not even being considered. 
Should we also increase the Federal Deposit Insurance Corporation 
guarantees to restore depositor confidence? Could we give banks some 
breathing room to work out these problems, rather than a taxpayer 
assumption of these underlying assets?
  The taxpayer exposure of this bill started at $700 billion. It 
remains $700 billion. Nebraskans and most other Americans have made 
responsible financial decisions. Now we are forcing them to foot the 
bill for the financial industrialists of Wall Street who created this 
mess for Main Street, and perhaps we have not addressed the underlying 
fundamental problems.
  We are falling into a trap of sequential decisionmaking. Once we 
adopt this construct, we shut the door on alternatives that may be less 
costly, easier to implement, and may provide a way through this crisis.
  The choice between action or inaction today is a false one. In good 
conscience, I cannot support this legislation.
  Mr. FRANK of Massachusetts. Madam Speaker, our committee was joined 
this year by an extremely thoughtful Member who brings a wide range of 
relevant experience, the gentleman from Illinois (Mr. Foster). I yield 
him 2 minutes.
  Mr. FOSTER. Thank you, Chairman Frank. I rise this morning in support 
of this legislation.
  As a scientist and a businessman, I accept the need for speed and 
overpowering force in this situation. With the credit system locked, 
small and large businesses are being told to prepare contingency plans 
for what to do if their operating lines of credit are not extended. 
Banks are refusing to lend to each other at normal rates or not at all. 
Banks are failing every day. If nothing is done and the situation 
persists for even a few weeks, both experts and common sense say that 
we are facing the real prospect of entering a depression.
  This morning's Wall Street Journal describes how the credit crisis is 
now extending on to franchises, the McDonald's, the Paneras, the 
Dunkin' Donuts, and threatening the jobs of thousands of their 
employees. So my vote in favor of this legislation will in fact be a 
vote to protect the interests of hardworking Americans, and don't let 
anyone ever tell you otherwise.
  I am going to support this bill because it is not a three-page blank 
check to dispense 700 billion taxpayer dollars. It contains many 
important protections for taxpayers. It limits CEO compensation, no 
golden parachutes, and restructures that compensation to discourage the 
risk-taking behavior that got us into this mess in the first place.
  It provides three useful paths out of this crisis: an auction 
mechanism favored by the administration to buy up troubled assets at 
market prices; an insurance program with support on both sides of the 
aisle that could well be the most useful method for reestablishing 
markets in the least risky of the bad securities out there; and my 
favorite, the possibility of an AIG-style rescue, where we can go back 
to the taxpayers and say, yeah, we saved their butts, but guess what? 
We own 80 percent of the profits when they recover, as was the case for 
AIG. This is exactly why Warren Buffett supports this plan.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. FRANK of Massachusetts. I yield the gentleman an additional 30 
seconds.

                              {time}  1200

  Mr. FOSTER. I ran for Congress because of the widespread feeling that 
Washington was broken. I believe that what is needed to fix it is a 
little less pandering to the ideological extremes, and a lot more 
compromise by reasonable people in both parties--particularly in this 
time of national crisis.
  So, will the spirit of bipartisan compromise carry the day? In less 
than an hour, I guess we will find out.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
Missouri (Mr. Akin).
  Mr. AKIN. My colleagues, a week ago we were approached by Secretary 
Paulson, and he told us that there was a crisis and that he had a 
solution. He gave us the horns of a dilemma, two sharp, shiny points 
that we could impale ourselves on. One, that the financial system was 
going to collapse and implode, and the sky was going to fall. Certainly 
we wouldn't want to choose that. The other, we could write a $700 
billion blank check. Those were our two choices.
  Reasonable people started to ask there has got to be a better 
alternative than this, and at every turn, we saw a resistance to a 
clear definition of the problem and an ability to talk about the 
different alternatives or possibilities.
  Now, one of the things that is very dangerous in problem solving is 
not being careful in defining what the real problem is. What we find 
when we look back and start to talk to other authorities is that this 
is not the first time this kind of thing has happened, and that it did 
not need $700 billion. It needed very little public money to solve the 
problem back in the Reagan days in the savings and loan crisis.
  So what we have before us, and our leadership has led us into, first 
into the Pelosi Congress not allowing the committee process to operate 
properly; and, second, by some Republican leadership also trying to 
force us onto one of these two alternatives, is a solution that doesn't 
fix the problem. Mark my words, that if we pass this bill, in another 
couple of months we will be back here with a lot of failed banks and 
say, oh, my goodness, something is wrong. The banks are failing.
  The problem is, this doesn't solve the problem. It's nice to take a 
bullet for the team if it's going to do some good, but this isn't going 
to solve the problem. All the people I hear in favor of this say we 
have got to give up some principal in order to save principal. You 
never save principal by giving it up.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield for a unanimous 
consent request to the gentleman from New York (Mr. Engel).
  Mr. ENGEL. Madam Speaker, I rise in support of the bill.
  I will vote for this bill because it is important financially to my 
home State and City of New York, and frankly to the country. To those 
who say let the greedy Wall Street pigs go down without money from the 
taxpayers, I say, if they go down, we all go down. This won't only 
affect them, it will affect all of us. Jobs will be lost, people will 
not be able to get loans, IRAs, 401ks, pension plans, and retirement 
savings would be jeopardized, banks will fall, our economy would slip 
into deep recession or even depression.
  Madam Speaker, the American people have told us to stop the partisan 
bickering in Washington. The American people want us to come together 
to solve problems. And that is what we, Democrats and Republicans have 
done in this bill.
  Is this a perfect bill? Of course not. I would have liked to have 
seen a bill structured differently. I would have liked to see more 
emphasis in helping the average person who may be facing bankruptcy or 
foreclosure. I would have liked to see an economic stimulus package 
designed to help middle class people in the bill. But this bill has to 
pass both Houses and get signed by the President, so compromises had to 
be made.
  Our democratic negotiators have done a good job in modifying the 
original bill put forth by the Secretary of the Treasury. This bill now 
enables the taxpayers to recoup the money from Wall Street in 5 years, 
if the taxpayers are not fully paid back. There is now much more 
oversight at our insistence. Excessive compensation is curtailed for 
CEOs, and the

[[Page 23123]]

money is not being dispersed all at once. We are also able to help some 
people being foreclosed upon.
  Madam Speaker, I am not thrilled with this bill, but passing it is 
the right thing to do for my city, my State, and my country. Wall 
Street drives so much of the New York economy and the economy of the 
United States as well. Today Madam Speaker, we have only 2 choices: 
vote for this bailout bill or do nothing. We cannot wait another few 
months, weeks, or even days to try to craft something else at this late 
date. If we wait, I fear that the very underpinning of our Nation's 
finances would very well be in great jeopardy. In that light, Madam 
Speaker, I will hold my nose and vote for this bill.
  Mr. FRANK of Massachusetts. Madam Speaker, there has been a great 
deal of discussion about the budgetary implications. No one in my 
experience here has had a better mastery of that process and had a more 
responsible approach to it than the current chairman of the Budget 
Committee, and I recognize for 4 minutes the gentleman from South 
Carolina (Mr. Spratt).
  Mr. SPRATT. Madam Speaker, no one comes to the well of this House 
today with any relish or enthusiasm. This bill is as unappealing to 
those of us who will vote for it as it is to those of us who will vote 
against it. The President has sent us an unprecedented request for $700 
billion and asked for its immediate consideration.
  The request came to us--all three pages--much like two bookends with 
contents to follow. When we read it, we found that the President sought 
a massive grant of money accompanied by a sweeping grant of authority. 
The President asked for speedy action. The people asked for diligence 
and deliberation, and that's what we have given them over the past 8 
days. The result is a vastly improved bill.
  If you think that $700 billion in one fell swoop is too much, as I 
do, the bill before you addresses that concern. It splits the funds 
into three stages and makes the third tranche of $350 billion subject 
to a vote of disapproval by Congress. In any event, everyone should 
understand that the cost of this bill is not $700 billion, as CBO has 
told us in testimony. The bill's cost would be substantially smaller 
than $700 billion. The cost would be the difference between the amount 
spent by the government and the amount received in earnings and 
proceeds when all the assets are finally sold. The CBO expects that 
``since the acquired assets will have value, the net impact will be 
substantially less than $700 billion.''
  If you think, nevertheless, that the financial industry that benefits 
from this bill should ultimately pay for the losses it causes, as I do, 
then this bill offers a mechanism to accomplish that. And though the 
recoupment is not as ironclad as I would like, the principle is there 
embodied in the bill.
  If you think that a grant of this amount calls for extraordinary 
oversight internally and externally, this bill is replete with 
oversight. If you think that the whole regulatory system needs to be 
overhauled, this bill initiates the process.
  If you think that executive compensation should be capped, as I did, 
then this bill has limits and controls, and though they are not nearly 
as strict as I would like, they are present, they will be enacted and 
they can be built upon. If you want equity sweeteners for risks the 
government is taking, to cushion the downside losses and to give us a 
piece of the upside gains, this bill provides for warrants to go along 
with the notes, bonds and mortgages that we will be taking.
  There is a lot that's better about this bill after almost 100 pages 
of substantive changes. But the question remains, is this bill 
necessary? Is this the best way to inject credit liquidity into our 
markets? Should we even shore up insolvent firms?
  I can't answer that question definitively, but I have to listen when 
Ben Bernanke, the chairman of the Fed, answers it by saying: ``This is 
the most significant financial crisis of the post-war period. I see the 
financial markets as quite fragile . . . Credit will be restricted 
further. It will affect spending; it will affect economic activity; it 
will affect the unemployment rate; it will affect real income; it will 
affect everybody's standard of living . . . Despite the efforts of the 
Federal Reserve, the Treasury, and other agencies, global financial 
markets remain under extraordinary stress. Action by Congress is 
urgently required to avert what could otherwise be grave consequences 
for financial markets and for our economy.''
  Ben Bernanke is an accomplished economist who has made a life-long 
study of economic crises. He has no axes to grind, and he is not given 
to exaggeration. When he warns that the situation is dire and that the 
cost of doing nothing could be catastrophic, we have to listen. Indeed, 
we ignore his advice at our peril--the peril that this crisis will 
become a wider economic debacle.
  Many Members like me come from districts that are rural and made up 
of small towns. We tend to think that we are far removed from the 
ripple effects of a crisis like this. But when we get up on a Monday 
morning and find right in our yard that Wachovia has been acquired at 
the instigation of the FDIC, we know that the crisis can reach us all 
sooner or later unless we act now and act decisively.
  I urge support for the bill.
  Mr. BACHUS. Madam Speaker, I yield 3 minutes to the gentleman from 
California (Mr. Campbell).
  Mr. CAMPBELL of California. Madam Speaker, I have heard it said that 
this bill is a $700 billion bailout for Wall Street. It is none of 
those things.
  The $700 billion is not being spent. It will be used to buy assets. 
Those assets will have value. And there are three mechanisms built into 
the bill that are very likely to recover all of that $700 billion for 
the taxpayer and, perhaps, even earn a profit over time. It's said to 
be a bailout, but the people whose assets will be bought will probably 
get 30 cents or 20 cents or 40 or 50 cents on the dollar that they paid 
maybe just a year or so ago.
  I don't think anybody here would consider getting 30 cents on the 
dollar for something you invested in a year ago or 2 years ago as a 
bailout. I think that's taking a bath, as well they should.
  They made an investment. They took a risk. It didn't turn out well.
  They say it's for Wall Street. Let there be no denying this. The 
impact of this financial crisis will extend to every American with a 
job, with a bank account and with a pension plan. We cannot allow that 
to happen.
  I have come down to this floor many times talking about the benefits 
of Republican ideas and the problems with Democratic ideas. This is not 
a time for that. We cannot and should not be Republicans or Democrats 
or liberals or conservatives today. This issue is too grave. The 
consequences are too dire.
  We have two choices in front of us. One is to do nothing. If there is 
consensus amongst everyone who has spoken today, it is that to do 
nothing will result in unconscionable consequences to this economy that 
will cause people to lose their jobs, lose their retirement, lose their 
savings. We do not want that to happen.
  The other option is to take the bill that is before us, which has 
been working for 9 days, which has things in it which, it's not 
everything any of us want, but it is the product of extensive 
negotiations from all concerned parties. We can take that bill today, 
and we can give it a chance to work and save this economy.
  I desperately hope and pray that we as a body, Republicans and 
Democrats alike, have the courage today to do the right thing and pass 
this bill.
  Mr. FRANK of Massachusetts. Madam Speaker, the gentlewoman from 
Illinois (Ms. Bean) is a member of this committee who brings great 
business experience. I am delighted to yield her 2 minutes at this 
point.
  Ms. BEAN. I thank Chairman Frank for yielding and for his hard work 
and extraordinary bipartisan leadership this week.
  Madam Speaker, I rise in support of the Emergency Economic 
Stabilization Act of 2008, recognizing how unhappy we all are as 
Americans to be in this situation.
  As co-chair of the New Dems Working Group on Regulatory 
Modernization, I am committed to ensuring that

[[Page 23124]]

this body fast-tracks regulatory reform of our markets, particularly 
oversight for the innovative, complex new instruments that have enabled 
so much high-risk leverage of so many of our financial institutions so 
this never happens again.
  Tomorrow we can discuss the state of our broader economy, our 
struggling middle class, and the consequences of an anti-regulation 
ideology taken to such an extreme that it threatens the very fabric of 
our Nation's economic security. But today the question before the House 
is the cost of action versus inaction. This is a time that our Nation's 
economy is at a precipice of potential collapse, the likes of which we 
have not seen in our lifetime.
  Chairman Bernanke has likened the consequences of inaction to those 
of the Great Depression. Will we lead our country out of this crisis 
and avert such consequences, or stand aside and let the chips fall? 
Americans in the world markets are watching. Our decisions today speak 
to them.
  This bill is an imperfect solution, but in times of crisis, our 
Members have put politics aside and pulled together to mandate vast 
improvements from what was originally proposed by the administration. 
It now includes oversight and accountability on a bipartisan basis with 
a judicial review of this unprecedented level of authority; it limits 
compensation for failed executives who contributed to this crisis; and 
it protects taxpayers by providing profits, both on the assets that we 
buy and sell, but also by sharing in the profits from those 
institutions that we help; and a recruitment plan to ensure that, over 
5 years, the financial industry, not taxpayers, picks up the tab.
  The cost of inaction is real for American families and businesses, 
business closings, and jobs loss, and the wiping out of savings and 
pensions.
  The SPEAKER pro tempore. The time of the gentlewoman has expired.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield the gentlewoman an 
additional 15 seconds.
  Ms. BEAN. I urge my colleagues to stand up, not aside, and support 
this bill to stabilize the economy of our great Nation.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentlelady from 
Florida (Ms. Ginny Brown-Waite).
  Ms. GINNY BROWN-WAITE of Florida. Madam Speaker, I rise today because 
of my grave concern over what is surely one of the biggest bailouts in 
American history. Make no mistake: A vote for this bailout is a vote to 
ratify business as usual in Washington. The compromise was crafted with 
some of the same people who brought us this mess, except this time we 
have a gun to our head. This isn't legislation; this is extortion. We 
could actually call it the in-out plan. As the FBI is going in, we are 
bailing out. That's not what the taxpayers want.
  Do you like $10 trillion in debt? In one stroke of the pen, Congress 
will have expanded this debt by another trillion to $11.3 trillion.
  What happens if this money is repaid, as some are claiming? Certainly 
there will be all sorts of expenditures, and we will continue to grow 
that debt. This brings me to another financial mess buried in the pages 
of this bill. Any premium paid by companies will be put into a fund, 
kind of like that of the Social Security trust fund, and Americans know 
that was never, ever, a good idea.
  If you aren't angry enough about this bailout, foreign banks get 
special treatment right there in section 112. The Treasury Secretary 
has the discretion to bail out foreign banks at the expense of the 
American taxpayer, no restrictions and no guarantees.

                              {time}  1215

  Certainly another point is that it makes two categories of 
homeowners, those who make every mortgage payment and pay every bill 
and struggle to meet their commitments, and those homeowners who didn't 
meet their obligation, skipped out on the bill and now want taxpayers 
to bail them out.
  This is so embarrassing, it turns the stomach of most Americans. Make 
no mistake, a vote for this bailout is a vote to ratify business as 
usual in Washington.
  Mr. FRANK of Massachusetts. I yield for a unanimous consent request 
to the gentlewoman from California (Ms. Loretta Sanchez).
  Ms. LORETTA SANCHEZ of California. I thank the gentleman for 
yielding.
  I reluctantly rise today to express concerns about the current 
economic crisis and the proposed financial recovery package.
  For several years I ave been concerned about the road our economy was 
heading down.
  In June 2005 at a Joint Economic Committee hearing I asked then 
Federal Reserve Chairman Allen Greenspan about the dangers of the 
housing bubble.
  And he responded that there was no ``substantial'' threat of a 
housing bubble and that even if home prices were to decline they were 
``not likely to have substantial macroeconomic implications.''
  Unfortunately, he was wrong.
  If the severity of the financial situation had been acted on back in 
2005, or even 1 year ago, I think we would be in a better situation 
today.
  However, instead of pro actively addressing this brewing financial 
crisis, as recently as April 2008 the goal of this Administration was 
to reduce regulation with the expectation that ``market-discipline'' 
will be the ultimate regulator.
  Well, we have learned that there is no ``market-discipline'' without 
regulation and without the threat that people and I companies will have 
to pay for the mistakes they made.
  And so today we are considering a financial recovery package to save 
the financial industry from its mistakes, a package that is paid for 
with tax dollars earned by hardworking Americans.
  My constituents in Orange County, CA, are asking me: Where was the 
Government to save my house from foreclosure last year? Where was the 
Government to save my neighborhood when half the houses on my block 
were foreclosed on?
  Unfortunately the Government was not there to help my constituents 
and the millions of Americans that have lost their homes.
  Since the Bush administration requested a $700 billion blank check 
from Congress and the American people, our leadership in Congress has 
worked very hard to negotiate a more responsible package.
  The recovery package on the floor reflects a big improvement over the 
original Bush-Paulson plan.
  I am pleased that this package includes safeguards to protect any 
taxpayer investment in saving the financial industry.
  These safeguards include: Warrants from financial institutions that 
receive assistance so the Government can recover the taxpayers' money 
once the financial industry recovers; an insurance program funded by 
the financial industry to guarantee troubled assets and protect 
taxpayers; and a plan to charge the financial industry fees to recoup 
the taxpayers' investment if there are still losses after 5 years.
  However, this package does not do enough to help the average American 
keep their home, and to ensure that the Wall Street executives that got 
us into this mess don't walk away with millions of dollars.


                        Preventing Foreclosures

  This bill does not guarantee that the Government will be able to make 
the reasonable modifications to mortgages that many homeowners 
desperately need to avoid foreclosure.
  In purchasing mortgage backed securities the Government will just be 
one of many co-owners of millions of mortgages. It will require the 
consent of all owners for the terms of the loans to be changed.
  Congress has already requested that all loan servicers nationwide act 
to avoid preventable foreclosures, so it is unclear that additional 
requests from the Treasury will have any additional impact.


                             Executive Pay

  This legislation makes some commonsense reforms of executive 
compensation, but I do not think it does enough.
  I am very concerned that this bill will still allow executives to 
receive million dollar a month salaries, and that there are multiple 
loopholes for corporations to escape the limitations on golden 
parachutes, incentives, bonuses, and corporate deductions for executive 
salaries.
  Despite the improvements that have been made since the original 
Treasury proposal, I cannot in good conscience support a package that 
does not do enough to help endangered homeowners, and that does not 
tightly limit unreasonable compensation for executives.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield 2 minutes to the 
gentlewoman from Ohio (Ms. Kaptur).
  Ms. KAPTUR. I thank the able Chairman Barney Frank for yielding me

[[Page 23125]]

this time, and say America needs the right deal, not a fast deal.
  This Congress must step up to its constitutional responsibilities as 
a deliberative body to craft that right deal, not an insider trade. 
Actually, this bill is the wrong medicine. It concentrates financial 
power even more in the hands of Wall Street's mega banks and its 
buddies at the U.S. Treasury.
  It bails out their bad behavior with no reform to prevent further 
abuse, and it ignores Main Street's real housing challenges. There is a 
much better way. The Bush administration says we are facing the worst 
financial crisis in modern history. That is not true.
  The market problems of the 1980s were much worse than today. Then, 
over 3,000 banks failed, interest rates were 21 percent, and all the 
banks in Texas went down. The economic instability was resolved by the 
financial system in a much more disciplined and rigorous way than 
taxpayers printing money for Wall Street.
  In those days the FDIC, not through a taxpayer bailout, but through 
careful use of FDIC's considerable power, resolved thousands of problem 
situations. No cash changed hands. The FDIC used its powers, its 
regular powers to regulate transactions with banks through a system of 
subordinated debentures and promissory notes. Even curbs on executive 
salaries and controlled dividends were exacted through that process. 
The cost of the entire enterprise was $1.8 billion, resolving over $100 
billion in problem institutions from the FDIC insurance fund, paid for 
by the banks, not the taxpayers.
  Today's economic challenge is a credit and housing crisis, not a 
liquidity crisis, precipitated by SEC accounting rules that are 
rewarding high-risk speculators and penalizing sound banks.
  Mr. Chairman, I say we go back to the drawing board. This bill does 
not do it for the American people. Draft the right deal, not the fast 
deal. Draft the best deal.

               [From moneynews.newsmax.com, June 3, 2008]

              Isaac: Banking Crisis? What Banking Crisis?

       The former chairman of the Federal Deposit Insurance Corp., 
     William M. Isaac, says the current turmoil in financial 
     markets is not remotely comparable to the Great Depression.
       He disputes even the notion of a crisis.
       ``If there is a banking crisis, I have seen no evidence of 
     it. I can count on my fingers and toes every sizeable bank 
     about which I have had any concern during the past year,'' 
     Isaac wrote recently in The Wall Street Journal.
       By comparison, Isaac says, during the 1980s and early 
     1990s, the U.S. suffered from 4,000 bank and savings and loan 
     failures. There were still more than 1,430 banks on the 
     FDIC's ``problem list'' by the end of 1991.
       ``I'm sure the problem banks list will grow during the next 
     year, but it totaled only 76 at last count,'' Isaac says.
       ``Banks continue to have incredible access to the capital 
     markets and over 99 percent of banks are considered well-
     capitalized by regulators.''
       Additionally, Isaac says, a 20 percent decline in housing 
     prices was not really all that big of a deal economically for 
     the U.S.
       The widely cited S&P/Case-Shiller home-price index declined 
     14.4 percent in March from a year earlier. The gauge has 
     fallen every month since January 2007.
       Isaac notes that in Sarasota, Fla., where he resides, 
     housing prices increased by 35 percent in one year alone, in 
     2005.
       Isaac argues that such a rate of increase is 
     ``unsustainable'' and was ``pushing housing prices beyond the 
     reach of most people.''
       Why is all this happening now? Politics, says Isaac.
       Americans have been ``spoiled'' by 25 consecutive years of 
     prosperity and, during this year's election cycle, one in 
     which a Democrat has a chance to take over the White House, 
     ``roughly half of the population wants us to feel angst,'' he 
     writes.
       Some economic experts agree with Isaac's assessment of the 
     banking industry.
       ``Asset bubbles result in the misallocation of capital, 
     which adversely affects economic growth,'' Donald P. Gould, 
     president of Gould Asset Management, tells Moneynews.
       ``Probably it is safer to let the market undo its own 
     bubble.''
       Federal intervention in the market could result in a 
     deflationary period just like that seen in Japan during the 
     1990s.
       ``Witness what happened when the Bank of Japan pierced the 
     Japanese real estate bubble,'' says Gould. ``A decade-plus of 
     recession.''
       Ken Kamen, president of Mercadien Asset Management, tells 
     Moneynews that an overreaction is not needed, as, ultimately, 
     ``market forces will decide where money needs to be.''
                                  ____


                    BAILOUT FEVER: RUSH TO JUDGMENT

                         (By William M. Isaac)

       It is disheartening that Congressional leaders are on the 
     verge of enacting the largest bailout program in history--a 
     $700 billion real estate loan purchase from Wall Street 
     proposed by Treasury.
       The current crisis in our financial system can be handled 
     effectively without any expenditure of any taxpayer funds. A 
     time tested model is already in place.
       We handled far more credit problems in a far harsher 
     economic environment in the 1980s than we are facing today. 
     Three thousand bank and thrift failures were handled without 
     producing depositor panics and massive instability in the 
     financial system.
       One explanation proffered for the urgency of this program 
     is that money market funds were under a great deal of 
     pressure last week as investors were losing confidence and 
     withdrawing their money. If this is Treasury's primary 
     concern, putting the government's guarantee behind money 
     market funds--as Treasury did last week--should have taken 
     care of the problem.
       The other rationale I have heard for acting immediately on 
     the $700 billion bailout is that bank depositors are getting 
     panicky--mostly in reaction to the failure of IndyMac in 
     which uninsured depositors were exposed to loss.
       Does this fear mean that we need to enact an emergency 
     program to purchase $700 billion of real estate loans? If the 
     problem is depositor confidence, perhaps we need to be 
     clearer about the fact that the FDIC fund is backed by the 
     full faith and credit of the government.
       If we want to take stronger action, the FDIC should 
     announce that it will handle all bank failures, except those 
     involving significant fraudulent activities, as assisted 
     mergers that will protect all depositors and other general 
     creditors. The FDIC should do this in the current climate 
     anyway, so why not announce it as a temporary program and 
     calm depositors?
       An additional benefit of this approach is that community 
     banks would be put on a par with the largest banks because 
     depositors are less convinced that the government will 
     protect uninsured depositors in a small bank than a large 
     bank.
       The potential instability of funding for money market funds 
     (and perhaps banks) is the primary justification I have heard 
     for acting urgently on the bailout program. There are clearly 
     more efficient and less expensive ways to handle this 
     problem.
       If we enact the $700 billion bailout, will it work--will 
     banks be willing to part with the loans and will the 
     government be able to sell them in the marketplace on terms 
     the taxpayers would find acceptable? I have my doubts.
       To get the banks to sell the loans, the government will 
     need to buy them at an inflated price compared to what the 
     private sector would pay for the loans today. There are lots 
     of investors who would only be too happy to purchase the 
     loans today, but the financial institutions and investors 
     cannot agree on a price. The money is sitting on the 
     sidelines until there is clear evidence we are at the bottom 
     in real estate.
       Having financial institutions sell the loans to the 
     government at inflated prices so the government can turn 
     around and sell the loans to well-heeled investors at lower 
     prices strikes me as a very good deal for everyone but U.S. 
     taxpayers.
       Surely we can do better. One alternative is a ``net worth 
     certificate'' program along the lines of the program Congress 
     enacted in the 1980s for the deeply troubled savings bank 
     industry. It was a big success and could work in the current 
     climate. The FDIC resolved a $100 billion insolvency in the 
     savings banks (had they been marked to market) for a total 
     cost of $1.8 billion.
       The net worth certificate program was designed to shore up 
     the capital of weak banks to give them more time to resolve 
     their problems. The program involved no subsidy and no cash 
     outlay.
       The FDIC purchased net worth certificates (subordinated 
     debentures) in troubled savings banks that the FDIC 
     determined could be viable if they were given more time. 
     Banks entering the program had to agree to strict oversight 
     from the FDIC, including oversight of compensation of top 
     executives and removal of poor management.
       The FDIC paid for the net worth certificates by issuing 
     FDIC senior notes to the banks so there was no cash outlay. 
     The interest rate on the net worth certificates and the FDIC 
     notes was identical so there was no subsidy.
       If we were to enact this program today, the capital 
     position of banks with real estate holdings would be 
     bolstered, which would give those banks the ability to sell 
     and restructure assets and get on with their rehabilitation. 
     No taxpayer money would be spent, and the asset sale 
     transactions would remain in the private sector where they 
     belong.
       If we were to (i) implement a program to ease the fears of 
     depositors and other general creditors of banks, (ii) keep 
     tight restrictions on short sellers of financial stocks, 
     (iii) suspend fair value accounting (which has contributed 
     mightily to our current problems by marking assets to 
     unrealistic fire-

[[Page 23126]]

     sale prices), and (iv) authorize a net worth certificate 
     program, I believe we would settle the financial markets 
     without significant expense to taxpayers.
       If Congress spends $700 billion of taxpayer money on the 
     loan purchase proposal, what do we do next? If we implement 
     the program suggested above, we will have $700 billion of dry 
     powder we can put to work in targeted tax incentives to get 
     the economy moving again.
       The banks do not need taxpayers to carry their loans, they 
     need proper accounting and regulatory policies that will 
     allow them time to work through their problems.
                                  ____



                                   Branch Banking & Trust Co.,

                            Winston-Salem, NC, September 23, 2008.
     Hon. (Name),
     Senate Building,
     Washington, DC.
       Or
     Hon. (Name),
     House of Representatives,
     Washington, DC.
       Dear Senator/Congressman/Representative: BB&T is a $136 
     billion multi-state banking company. We have 1,500 branches 
     throughout the mid-Atlantic and southeast states. While we 
     have been impacted by the real estate markets, we continue to 
     have healthy profitability and a strong capital position.
       We think it is important that Congress hear from the well 
     run financial institutions as most of the concerns have been 
     focused on the problem companies. It is inappropriate that 
     the debate is largely being shaped by the financial 
     institutions who made very poor decisions.
       Attached are the issues that we believe are relevant from 
     the perspective of healthy banks. Your consideration of these 
     issues is greatly appreciated.
           Sincerely,
                                                     John Allison,
     Chairman and Chief Executive Officer.
                                  ____


    Key Points on ``Rescue'' Plan From A Healthy Bank's Perspective

       1. Freddie Mac and Fannie Mae are the primary cause of the 
     mortgage crisis. These government supported enterprises 
     distorted normal market risk mechanisms. While individual 
     private financial institutions have made serious mistakes, 
     the problems in the financial system have been caused by 
     government policies including, affordable housing (now sub-
     prime), combined with the market disruptions caused by the 
     Federal Reserve holding interest rates too low and then 
     raising interest rates too high.
       2. There is no panic on Main Street and in sound financial 
     institutions. The problems are in high-risk financial 
     institutions and on Wall Street.
       3. While all financial intermediaries are being impacted by 
     liquidity issues, this is primarily a bailout of poorly run 
     financial institutions. It is extremely important that the 
     bailout not damage well run companies.
       4. Corrections are not all bad. The market correction 
     process eliminates irrational competitors. There were a 
     number of poorly managed institutions and poorly made 
     financial decisions during the real estate boom. It is 
     important that any rules post ``rescue'' punish the poorly 
     run institutions and not punish the well run companies.
       5. A significant and immediate tax credit for purchasing 
     homes would be a far less expensive and more effective cure 
     for the mortgage market and financial system than the 
     proposed ``rescue'' plan.
       6. This is a housing value crisis. It does not make 
     economic sense to purchase credit card loans, automobile 
     loans, etc. The government should directly purchase housing 
     assets, not real estate bonds. This would include lots and 
     houses under construction.
       7. The guaranty of money funds by the U.S. Treasury creates 
     enormous risk for the banking industry. Banks have been 
     paying into the FDIC insurance fund since 1933. The fund has 
     a limit of $100,000 per client. An arbitrary, ``out of the 
     blue'' guarantee of money funds creates risk for the 
     taxpayers and significantly distorts financial markets.
       8. Protecting the banking system, which is fundamentally 
     controlled by the Federal Reserve, is an established 
     government function. It is completely unclear why the 
     government needs to or should bail out insurance companies, 
     investment banks, hedge funds and foreign companies.
       9. It is extremely unclear how the government will price 
     the problem real estate assets. Priced too low, the real 
     estate markets will be worse off than if the bail out did not 
     exist. Priced too high, the taxpayers will take huge losses. 
     Without a market price, how can you rationally determine 
     value?
       10, The proposed bankruptcy ``cram down'' will severely 
     negatively impact mortgage markets and will damage well run 
     institutions. This will provide an incentive for homeowners 
     who are able to pay their mortgages, but have a loss in their 
     house, to take bankruptcy and force losses on banks. (Banks 
     would not have received the gains had the houses 
     appreciated.) This will substantially increase the risk in 
     mortgage lending and make mortgage pricing much higher in the 
     future.
       11. Fair Value accounting should be changed immediately. It 
     does not work when there are no market prices. If we had Fair 
     Value accounting, as interpreted today, in the early 1990's 
     the United States financial system would have crashed. 
     Accounting should not drive economic activity, it should 
     reflect it.
       12. The proposed new merger accounting rules should be 
     deferred for at least five years. The new merger accounting 
     rules are creating uncertainty for high quality companies who 
     might potentially purchase weaker companies.
       13. The primary beneficiaries of the proposed rescue are 
     Goldman Sachs and Morgan Stanley. The Treasury has a number 
     of smart individuals, including Hank Paulson. However, 
     Treasury is totally dominated by Wall Street investment 
     bankers. They do not have knowledge of the commercial banking 
     industry. Therefore, they can not be relied on to objectively 
     assess all the implications of government policy on all 
     financial intermediaries. The decision to protect the money 
     funds is a clear example of a material lack of insight into 
     the risk to the total financial system.
       14. Arbitrary limits on executive compensation will be self 
     defeating. With these limits, only the failing financial 
     institutions will participate in the ``rescue,'' effectively 
     making this plan a massive subsidy for incompetence. Also, 
     how will companies attract the leadership talent to manage 
     their business effectively with irrational compensation 
     limits?

  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentleman from 
Ohio (Mr. LaTourette).
  Mr. LaTOURETTE. Madam Speaker, I want to congratulate the chairman of 
the Financial Services Committee, Chairman Frank, for noble work in 
being handed really a pile of garbage and trying to make it better. 
Sadly, I cannot endorse the legislation he has worked so hard to bring 
today; and say this mess is not of his making.
  Our leader, Mr. Boehner, appointed about 14 of us to do a working 
group to find an alternative to $700 billion, thinking that $700 
billion is a lot of money.
  And our recommendations had a number of principles. One is that the 
people that made the mess should clean up the mess. Thankfully, that 
was the insurance program which Chairman Frank and the Democrats have 
acceded to. And it also dealt with CEO compensation in the bill, which 
I am happy to see.
  But there were three market reforms that could have taken this bill 
from $700 billion to maybe $100 billion, and it is what the folks that 
have been calling me asked for. Some have already been talked about on 
the floor, and that is the mark to market. And basically, to give an 
example, if you are a bank and you have a million dollar building in 
your portfolio but because the real estate market isn't doing so well, 
the bank examiners have come in and they have said your building is 
only worth $400,000 today. You haven't sold it. Nothing has happened to 
it. You are still collecting rent on it, but you have taken a $600,000 
hit on your balance sheet. That has a doubled-edged effect in that now 
that you have a reduced balance sheet, you have to squirrel more cash 
so you can't make loans to people wanting to engage in business, people 
wanting to buy homes. It is fake.
  The latest figures that I have seen indicate that this mark down by 
the bank examiners has taken $500 billion of assets down, with the 
multiplier effect of about $5 trillion that is not available.
  We could double the FDIC reform and do the FDIC reform which I 
believe the chairman supports. And not one American has lost one penny 
in an FDIC-insured account of $100,000 or less. We could make it 
$200,000.
  Lastly, the principle was that the taxpayer shouldn't pay for this. 
Private money should pay for this. Repatriate offshore funds from 
American corporations, and we could fix this problem.
  Mr. FRANK of Massachusetts. Madam Acting Speaker, the leadership that 
we have been given throughout this crisis by the permanent Speaker of 
this House has been extraordinary, and I am honored to yield her 1 
minute.
  The SPEAKER pro tempore. The gentlewoman from California is 
recognized for 1 minute.
  Ms. PELOSI. Thank you very much, Madam Speaker, for recognizing me, 
and also to the distinguished chairman for his extraordinary leadership 
which I will address in a moment.

[[Page 23127]]

  Madam Speaker, when was the last time anyone ever asked you for $700 
billion? It is a staggering figure. And many questions have arisen from 
that request, and we have been hearing I think a very informed debate 
on all sides of this issue today. I am very proud of the debate. Seven 
hundred billion dollars, a staggering number, but only a part of the 
cost of the failed Bush economic policies to our country, policies that 
were built on budget recklessness.
  When President Bush took office, he inherited President Clinton's 
surpluses; 4 years in a row budget surpluses on a trajectory of $5.6 
trillion in surplus. And with his reckless economic policies, within 2 
years he had turned that around. And now 8 years later, the foundation 
of that fiscal irresponsibility, combined with an anything-goes 
economic policy, has taken us to where we are today.
  They claim to be free market advocates when it is really an anything-
goes mentality. No regulation, no supervision, no discipline. And if 
you fail, you will have a golden parachute and the taxpayer will bail 
you out. Those days are over. The party is over in that respect.
  Democrats believe in a free market. We know that it can create jobs, 
it can create wealth and many things in our economy. But in this case, 
in its unbridled form, as encouraged, supported by the Republicans, 
some in the Republican Party, not all, it has created not jobs, not 
capital, it has created chaos. And it is about that chaos that the 
Secretary of the Treasury and the chairman of the Fed came to see us 
just about a week and a half ago. It seems like an eternity, doesn't 
it. So much has happened, the news was so bad.
  They described a very, very dismal situation, a dismal situation 
describing the state of our economy, the fragility of our financial 
institutions, and the instability of our markets--our equity markets, 
our credit markets, our bond markets. And here we were, listening to 
people who know of what they spoke. The Secretary of the Treasury 
brings long credentials and knowledge of the markets. More fearful, 
though, to me, more scary, were the statements of Chairman Bernanke 
because Chairman Bernanke is probably one of the foremost authorities 
in America on the subject of the Great Depression. I don't know what 
was so great about the depression, but that's the name they give it.
  And we heard the Secretary and the Chairman tell us that this was a 
once in a hundred-year phenomenon, this fiscal crisis was so drastic. 
Certainly once in 50 years, probably once in 100 years. And how did it 
sneak up on us so silently, almost on little cat's feet, that they 
would come in on that day. And they didn't actually ask for that much 
money that night. It took 2 days until we saw the legislation that they 
were proposing to help calm the markets. It was on that day that we 
learned of a $700 billion request.
  But it wasn't just the money that was alarming, it was the nature of 
the legislation. It gave the Secretary of the Treasury czar-like 
powers, unlimited powers, latitude to do all kinds of things; and 
specifically prohibited judicial review or review of any other Federal 
administrative agency to review their actions.
  Another aspect that was alarming, it gave the Secretary the power to 
use any money that came back from these infusions of cash to be used at 
the discretion of the Secretary, not to reduce the deficit, not to go 
into the general fund so we could afford other priorities, to be used 
at the discretion of the Secretary. It was shocking.
  Working together in a bipartisan way, we were able to make major 
improvements on that proposal even though its fundamental basis was 
almost arrogant and insulting.
  The American people responded almost immediately. Overwhelmingly they 
said that they know something needs to be done. Seventy-eight percent 
of the American people said: Congress must act. Fifty-eight percent 
said: but not to accept the Bush proposal.
  And so here we are today, a week and a couple of days later, coming 
to the floor with a product, not a bill that I would have written, one 
that has major disappointments for me beginning with the fact that it 
does not have bankruptcy in this bill, and we will continue to persist 
and work to achieve that.
  It is interesting to me, though, when they described the magnitude of 
the challenge and the precipice that we were on and how we had to act 
quickly and we had to act boldly and we had to act now, that it never 
occurred to them that the consequences of this market were being felt 
well in advance by the American people. That unemployment is up; and, 
therefore, we need unemployment insurance. That jobs are lacking; and, 
therefore, we need a stimulus package.
  So how on the one hand could this be so urgent at the moment, and yet 
so unnecessary for us to address the effects of this poor economy in 
the households of America across our country? We will come back to that 
in a moment.
  Working together, we put together some standards. I am really proud 
of what Barney Frank did in this regard.
  That first night, Thursday night when we got the very, very dismal 
news he immediately said: If we are going to do this--and Spencer 
Bachus was part of this as well--if we are going to do this, we must 
have equity for the American people. We are putting $700 billion; we 
want the American people to get some of the upside. So fairness for the 
American people.
  Secondly, as they described the root of the problem as the mortgage-
backed securities, Barney insisted that we would have forbearance on 
foreclosure. If we are now going to own that paper, that we would have 
forbearance to help responsible homeowners stay in their homes.
  In addition to that, we had to have strong, strong oversight. We 
didn't even have to see the $700 billion or the full extent of their 
bill to know that we needed equity and upside for the taxpayer, 
forbearance for the homeowner, oversight by the government on what they 
were doing, and something that the American people understand full 
well, an end to the golden parachutes and a review and reform of the 
compensation for CEOs.
  Let's get this straight. We have a situation where on Wall Street, 
people are flying high. They are making unconscionable amounts of 
money. They make a lot of money. They privatize the gain. The minute 
things go tough, they nationalize the risk. They get a golden parachute 
as they drive their firm into the ground, and the American people have 
to pick up the tab.

                              {time}  1230

  Something is very, very wrong with this picture.
  So just on first blush that Thursday night, we made it clear--meeting 
much resistance on the part of the administration--those four things, 
equity, forbearance, oversight, and reform of compensation.
  Overriding all of this is the protection of the taxpayer. We need to 
stabilize the markets, and in doing so, we need to protect the 
taxpayers. And that's why I'm so glad that this bill contains 
suggestions made by Mr. Tanner that if at the end of the day, say, in 5 
years when we can take a review of the success or whatever of this 
initiative, that if there is a shortfall and we don't get our whole 
$700 billion back that we have invested, that there will be an 
initiative to have the financial institutions that benefited from this 
program to make up that shortfall. But not one penny of this should be 
carried by the American people.
  People ask--and Mr. Spratt spoke with great knowledge and eloquence 
on the budget and aspects of the budget--$700 billion; what is the 
impact, what is the opportunity cost for our country of the investments 
that we would want to make?
  Okay. Now we have it at a place where the taxpayer is going to be 
made whole, and that was very important for us. But why on the drop of 
a hat can they ask us for $700 billion and we couldn't get any support 
from the administration on a stimulus package that would also help grow 
the economy?

[[Page 23128]]

  People tell me all over the world that the biggest emerging economic 
market in the world is rebuilding the infrastructure of America: roads, 
bridges, waterways, water systems in addition to waterways, the grid, 
broadband, schools, housing. We're trillions of dollars in deficit 
there. We know what we need to do to do it in a fiscally sound way, in 
a fiscally sound way that creates good paying jobs in America 
immediately, brings money into the Treasury by doing so and, again, 
does all of this in an all-American way: good paying jobs here in 
America. We can't get the time of day for $25, $35 billion for that 
which we know guarantees jobs, et cetera, but $700 billion.
  So make no mistake: When this Congress adjourns today to observe Rosh 
Hashanah and have Members go home for a bit, we are doing so at the 
call of the Chair because this subject is not over, this discussion 
about how we save our economy. And we must insulate Main Street from 
Wall Street.
  As Congresswoman Waters said, Martin Luther King Drive, and in my 
district Martin Luther King Drive and Cesar Chavez Road, and all of the 
manifestations of community and small businesses in our community, we 
must insulate them from that.
  So we have difficult choices, and so many of the things that were 
said on both sides of this issue in terms of its criticisms of the bill 
we have and the bill that we had at first and the very size of this, I 
share. You want to go home, so I'm not going to list all of my concerns 
that I have with it.
  But it just comes down to one simple thing. They have described a 
precipice. We are on the brink of doing something that might pull us 
back from that precipice. I think we have a responsibility. We have 
worked in a bipartisan way. I want to acknowledge Mr. Blunt and Mr. 
Boehner of the work that we've done together in trying to find as much 
common ground as possible on this.
  But we insisted the taxpayer be covered. We all insisted that we have 
a party-is-over message to Wall Street, and we insisted that the 
taxpayers at risk must recover; any risks must be recovered. I have 
told you that already.
  So, my colleagues, let's recognize that this legislation is not the 
end of the line. Mr. Waxman will be having vigorous oversight this 
week, hearings this week, on regulatory reform and other aspects of it. 
I hope you will pursue fraud and mismanagement and the rest.
  Mr. Frank and his committee will continue to pursue other avenues 
that we can stabilize the markets and protect the taxpayer.
  For too long this government in 8 years has followed a right-wing 
ideology of anything goes: no supervision, no discipline, no 
regulation. Again, all of us are believers in free markets, but we have 
to do it right.
  Now let me again acknowledge the extraordinary leadership of Mr. 
Frank. He's been an exceptional leader in the Congress, but never has 
his knowledge and his experience and his judgment been more needed than 
now. And I thank you, Mr. Frank, for your exceptional leadership, Mr. 
Chairman.
  So many people worked on this, but I also want to acknowledge the 
distinguished Chair of our caucus, Mr. Emanuel. His knowledge of the 
markets, the respect he commands on those subjects, and his boundless 
energy on the subject served us well in these negotiations.
  But this is a bipartisan initiative that we are bringing to the 
floor. We have to have a bipartisan vote on this. That is the only 
message that will send a message of confidence to the markets.
  I know that we will be able to live up to our side of the bargain. I 
hope the Republicans will, too.
  But my colleagues, as you go home and see your families and observe 
the holiday and the rest, don't get settled in too far because as long 
as this challenge is there for the American people--the threat of 
losing their jobs, their credit, their savings, their retirement, the 
opportunity for them to send their children to college--as long as in 
the households of America this crisis is being felt very immediately 
and being addressed at a different level, we must come back. And we 
will come back as soon and as often as necessary to make the change 
that is necessary.
  And before long, we will have a new Congress, a new President of the 
United States, and we will be able to take our country in a new 
direction.
  Thank you.
  Mr. BACHUS. Madam Speaker, I yield 2 minutes to the gentlelady from 
Minnesota (Mrs. Bachmann).
  Mrs. BACHMANN. I thank the gentleman for yielding.
  I also want to thank the Speaker of the House for making the case why 
so many Republicans are unwilling at this point to sign on to this 
legislation that's before us. However, I do believe also, Madam 
Speaker, that Democrats and Republicans are both committed to finding a 
way out of this financial challenge, and we think we have one. But the 
answer we believe needn't cost taxpayers $700 billion.
  The problem is a lack of credit for creditworthy people, people who 
are fully capable of paying that credit back. Why is there a lack of 
credit? It's because the SEC has mandated accounting rules that have 
forced banks to value assets well below their actual economic value.
  So what does this mean? It means that if a bank has $1 worth of 
deposits, they can make $10 in loans. But if accounting rules are 
forcing banks to devalue assets, $500 billion, then that means that 
banks are prohibited from making $5 trillion worth of loans. And that's 
why we have a credit crunch.
  Unfortunately, the bill that we have before us today doesn't even 
address this credit crisis.
  Let's first direct the SEC to suspend mark-to-market accounting rules 
for assets for which there is no market. That only makes sense. Second, 
stop naked short selling. Then the FDIC can issue net asset 
certificates that saved banks during the S&L crisis and the FDIC can 
write a letter to United States banks telling them in the absence of 
fraud that the FDIC will fully back all deposits for first-tier 
creditors.
  Let's try these practical solutions before we pull the trigger on a 
$700 billion bailout that doesn't even address the underlying program.
  Today, Madam Speaker, Republicans and Democrats agree. It's time for 
a rest. It's time for a break. Let's embrace a practical solution 
before we tie a $700 billion bailout around the neck of the American 
people.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield 2 minutes to a 
Member who has played a leading role in bringing us together, the 
gentleman from Illinois (Mr. Emanuel).
  Mr. EMANUEL. There have been a number of important lessons learned in 
this last year. One, you cannot have a strong economy on a foundation 
of a weakened middle class. For the last 7 years, the middle class has 
seen median household incomes decline by $1,200 and costs go up by 
$4,800. They are working harder, making less, and paying more to 
maintain their standard of living.
  And, second, that this problem is not an earthquake, it's not a 
natural disaster. It's a manmade disaster, and one in which a 
philosophy of unregulation created that type of damage. You can come to 
the conclusion that capitalism is too important to be left to 
capitalists alone, that the banks that are surviving are the ones that 
are regulated. The unregulated are the ones that are going under.
  People have figured out this problem. The financial industry created 
things that they don't, themselves, know what the value are. People 
were buying homes that were being flipped as if they were pancakes. And 
the regulators that were supposed to be policing this were asleep at 
the switch; and they're angry at all three, and they have every right 
to be.
  The substance of this legislation has been improved because last 
Saturday the Treasury Department sent a bill to calm the markets down. 
And what Congress did in the remaining 7 days is put in there 
protections for the taxpayers. It had nothing to start with as it 
related to the taxpayers. The last 7 days was to make sure that the 
public markets were as protected as the financial markets were calmed. 
And we have

[[Page 23129]]

made dramatic improvements in this legislation.
  But make no doubts about it: While this may try to avert the 
recession in the financial sector, our job is not done until we avert 
the recession on Main Street, that we once again get a growth in jobs, 
we once again get a growth in median household incomes.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield an additional 20 
seconds.
  Mr. EMANUEL. Until we deal with the standard of living of the middle 
class and return the foundations of this economy to a middle class that 
is strong, we will never have a healthy economy.
  We are doing what is responsible putting out this fire. But make no 
doubts about it: The remaining days are to also figure out who created 
the fire and make sure that that arsonist is put in jail.
  Mr. BACHUS. Madam Speaker, I yield 1 minute to Mr. Inglis, the 
gentleman from South Carolina.
  Mr. INGLIS of South Carolina. I thank the gentleman for yielding.
  The question before us, I think, is this: Is the risk of doing 
nothing greater than the risk of buying $700 billion of illiquid 
securities? The argument for it, of course, is that illiquid securities 
may turn out to be an okay investment. The best argument against it is 
it's basically socializing losses after Wall Street-types have pocketed 
profits. But, you know, when knowledgeable people tell us that there is 
a substantial chance of a depression, it's time to act.
  Our financial markets have overdosed on credit. Truth be known, we 
have all overdosed on credit. The Federal Government, businesses large 
and small, families wealthy and poor. Working that overdose out of our 
system is going to take some time. But by buying up some of the 
securities that have fallen to a price below their value, the 
government might be able to stabilize the market and later sell off 
some of those securities at a profit. Some will be found to be 
worthless because they are so far removed from the original collateral, 
but some will have value, and we may just come out of this okay.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield 2 minutes to the 
gentleman from Ohio (Mr. Kucinich).
  Mr. KUCINICH. I thank the gentleman.
  Today we're being told that what is good for Wall Street is good for 
Main Street, yet this bailout plan will fail to keep families in their 
homes. Treasury will own troubled assets without any control. Terms of 
bad mortgages cannot be changed absent controlling share of underlying 
securities.
  If you support this legislation because you think it will keep people 
in their homes, think again. In fact, Treasury will not be able to 
change the terms of bad mortgages because the act does not require 
Treasury to purchase a controlling share in the underlying mortgage-
backed securities and collateralized debt obligations.

                              {time}  1245

  The Secretary will be powerless to make any real and substantive 
change in the terms of mortgages. The Secretary will have no power to 
avoid foreclosures and keep families in their homes.
  Last night, I received a letter from Frank Alexander, a professor of 
law at Emory University. He has testified before my subcommittee on 
domestic policy, on targeting Federal assistance to help neighborhoods 
affected by the foreclosure crisis. He is an expert on housing law.
  I would like to put his letter in the Record.
  Professor Alexander clearly demonstrates that the Emergency Economic 
Stabilization Act will not fulfill its stated goal of preserving 
homeownership. Unless the Secretary of the Treasury is required to 
prioritize assets that will give the Treasury a controlling share in 
the underlying home mortgage, the Secretary will hold bad assets with 
no power to make them solid again. So much for the homeowners.
  If we had a plan which focused on saving families' homes, it would 
actually do more for the economy than this bill. Economist Nouriel 
Roubini has written that the lack of debt relief to distressed 
households is behind the financial crisis and the deepening recession. 
With $700 billion directed towards helping or towards trying to save 
homes, we could really stimulate the economy and could give real 
economic security to millions on Main Street, but that's not what this 
bill is about. It's about Wall Street. What is good for Wall Street is 
good for Main Street? Not today.

                                          Emory School of Law,

                             Atlanta, Georgia, September 28, 2008.
     Re Emergency Economic Stabilization Act of 2008.

     Hon. Dennis J. Kucinich,
     Chairman, Domestic Policy Subcommittee, Committee on 
         Governmental Oversight and Reform, House of 
         Representatives, Rayburn House Office Building, 
         Washington, DC.
       Dear Representative Kucinich: As the text of the Emergency 
     Economic Stabilization Act of 2008 approaches final 
     negotiations and a possible vote in Congress, I want to share 
     my concern over the lack of any clear connection between the 
     Troubled Asset Relief Program, and the provisions of this 
     legislation that appear to relate to Homeownership 
     Preservation.
       This legislation, in its most recent form as of Sunday 
     evening, September 28, has many provisions that make it far 
     superior to the bill that was submitted on behalf of 
     Secretary Paulson eight days ago. The two dominant purposes 
     of the current draft of this legislation appear to be first 
     the desire to enhance financial market liquidity through the 
     acquisition (or insurance) of Troubled Assets, and second the 
     desire to facilitate home preservation through loan 
     modifications. The problem is that there is, quite simply, no 
     clear or necessary connection between the Troubled Assets 
     that may be purchased by the Secretary, and the capacity of 
     the Secretary to engage in or facilitate loan modification or 
     foreclosure avoidance strategies.
       As presently drafted, the Secretary will engage in a 
     program of acquisition (or insurance) of Troubled Assets, the 
     purchase of which ``promotes financial market stability''. 
     The liquidity crisis primarily stems from mortgage backed 
     securities, or derivatives of mortgage backed securities, 
     which contain or are perceived to contain mortgages with high 
     rates of delinquencies or defaults. Mortgage related 
     securities that are composed of a single class of prime 
     mortgages are not illiquid, and are not likely to be the 
     target of acquisition by the Secretary. Instead, the illiquid 
     securities are most frequently those that are highly 
     subdivided and fractured into separate classes or tranches, 
     and often further securitized by derivatives.
       The problem is that when and if the Secretary elects to 
     acquire the mortgage related asset of any single financial 
     institution, the Secretary will not be acquiring a portfolio 
     of whole loans, or even a controlling interest in a 
     securitization of loans.
       If the Secretary acquires a partial interest or whole 
     interest in a given tranche of mortgage backed securities, or 
     in a derivative of a mortgage back security, the Secretary 
     will lack the authority to authorize, require or even permit 
     a program designed to encourage or facilitate homeownership 
     preservation or foreclosure avoidance actions. As an owner of 
     a minority interest in a securitization or security 
     derivative, there is little if anything that the Secretary 
     will be able to do to accomplish the professed goals of 
     Homeownership Preservation in this legislation.
       If in fact this legislation is to have as one of its goals 
     that of homeownership preservation, then the Troubled Asset 
     Relief Program should have, at a minimum, as one of its goals 
     the acquisition by the Secretary of Troubled Assets which 
     will provide the Secretary will a controlling or majority 
     interest in the underlying pool of whole mortgage loans. In 
     such a context the Secretary will be in a position to 
     implement the Homeownership Preservation goals of this 
     legislation.
       The most direct way to modify the current text of the 
     Emergency Economic Recovery Act of 2008 to create the 
     necessary tie between market liquidity and homeownership 
     preservation is to modify Section 101(d)(5) to add the 
     following:
       ``(5) Priority acquisition of troubled assets when such 
     acquisition provides the Secretary with a controlling or 
     majority interest in the underlying pool of whole mortgage 
     loans.''
       In the absence of any functional tie between Troubled Asset 
     acquisition and control with respect to modifications of the 
     underlying residential mortgages, there is likely to be very 
     little significance to the homeownership preservations 
     provisions of this legislation.
           Sincerely,
     Frank S. Alexander,
       Professor of Law, Director, Project on Affordable Housing

[[Page 23130]]

     and Community Development.

  Ms. GINNY BROWN-WAITE of Florida. I recognize Mr. Tiahrt of Kansas 
for 1 minute.
  Mr. TIAHRT. Madam Speaker, fundamentally, there is something wrong 
with the way we are proceeding. The arguments use fear to build 
confidence. We are on an artificial deadline, rushing to judgment, 
fearful we can't get there in time. No one has addressed the 
fundamental reason that has brought us to this state of fear. No one 
has talked about it because this bill does not fix the underlying 
problems. Your fear drives you away from reasoning.
  So now the worm turns. Those of you who complained the rich are 
getting richer want to take money away from those who can't afford it 
and give it to those who live the life style of the rich and famous. 
Those of you who curse corporate welfare pursue the biggest corporate 
welfare bill in history. Why? Because of fear. Taxpayers don't want to 
throw good money--their money--after bad behavior.
  Vote against this. Fix the underlying problem. Don't let fear drive 
you to a bad decision. Vote ``no.''
  Mr. FRANK of Massachusetts. I yield 1 minute to a very committed 
member of our committee, the gentleman from New York (Mr. Meeks).
  Mr. MEEKS of New York. Thank you, Mr. Chairman. I thank you for your 
hard work.
  Madam Speaker, I think what we are subjected to here today is similar 
to what the drunk driver syndrome is. We have a situation where none of 
us likes it, where none of us cares what's taking place here--the drunk 
driver, the one who is intoxicated. Well, the drunk drivers here are 
these markets that now have had a crash on a thoroughfare, the same 
thoroughfare that many individuals drive on, and that thoroughfare is 
blocked. Unfortunately, with the drunk driver, we have to come in and 
rescue that drunk driver and open up that thoroughfare so that traffic 
can flow through it. Well, that is what we have right here.
  We have individuals who were drunk. The regulators are the bartenders 
who continued to pour the drinks and who didn't stop them from 
drinking. Now they're drunk. They've gotten on the main thoroughfare 
and have had an accident. The accident has closed the highway. 
Unfortunately, this highway is also the highway where we have our IRAs. 
It's the highway where we have our 401(k)s. It's the highway where we 
have our pension funds. It's the highway where we have our car loans 
and our mortgages. We have to clear the highway so that Main Street can 
go through it and can continue to survive.
  I support this.
  Ms. GINNY BROWN-WAITE of Florida. Madam Speaker, I yield 1 minute to 
Mr. Murphy of the great State of Pennsylvania.
  Mr. TIM MURPHY of Pennsylvania. Madam Speaker, as we pursue this, 
there are several things that still are of concern to me. We need to 
make sure we enact real consequences for those who are accountable for 
this mess and make sure that we enact real change to the system. We 
need to make sure that we say loud and clear to those who gamble with 
public funds that they have an obligation to the taxpayer. We need to 
also make sure that those who are offered loans with a wink and a nod 
who have no ability to pay, no identification, no credit, and no money 
down can't get these loans anymore until we get this system fixed.
  We also need to understand that what we're talking about is a $700 
billion bailout. It happens to be the same amount of money, $700 
billion, that we send every year to foreign oil. If this Congress had 
taken care of our energy problems and had allowed drilling in the Outer 
Continental Shelf and of the Colorado shale oil, we would have had a 
real commodity to sell. We would have had real investments in the 
market and not just paper that we would have been shuffling around and 
would have been hoping that someone would have bought at auction.
  Trillions of dollars in our economy and hundreds of thousands of 
jobs, that's what we should be doing to fix our economy, not just 
selling more paper.
  Mr. FRANK of Massachusetts. I yield 1 minute to the chairman of the 
Oversight and Government Reform Committee who has been playing an 
important role here, the gentleman from California (Mr. Waxman).
  Mr. WAXMAN. Madam Speaker, this is an easy bill to vote against. It 
was presented to us by a Republican President and by a Republican 
administration so blinded by their ideology of deregulation that it 
kept them from preventing this crisis.
  Because of the masterful work of Chairman Barney Frank and of others, 
it is incredibly improved. We hope it will work to stabilize the 
economy. Nobel Prize economists have recommended alternative 
approaches, but almost all of them have said, ``Don't leave without 
passing something.'' This is a Republican bill which must pass with 
bipartisan votes. Many Democrats don't like it. Many Republicans are 
choking on it. We aren't going to get another bill or a better bill 
this year, but we will be back to make real reforms, more reforms next 
year. For now, it would be irresponsible to do nothing.
  I will vote for this bill.
  Mr. BACHUS. Madam Speaker, I yield 1 minute to the gentleman from 
Arizona (Mr. Shadegg).
  Mr. SHADEGG. Madam Speaker, I rise to say that this bill is 
tragically flawed. It contains no increase in FDIC insurance, which 
would make people comfortable and safe when they're rushing to their 
banks right now. It contains no capital gains tax, no tax changes, no 
attempt to deal systematically with the problem. Most importantly, it 
contains no change in the mark-to-market rules.
  This morning, a banker of mine called me from Arizona. He said, 
``Mark to market is destroying the capital in the market, and is 
dragging down the value of these markets.'' He explained that bank 
examiners are not even enforcing their own rule. Their own rule says an 
asset shouldn't be marked down until, one, its value drops and, two, 
until the people stop making payments, but bank examiners are now 
saying that they must call it mark to market and destroy its value even 
if the owner of the property is still making those payments.
  We have asked over and over again for FDIC insurance to be increased 
and for a change in the mark-to-market rules. Again and again and again 
and again, those requests have been rejected.
  Mr. FRANK of Massachusetts. I yield to the gentleman from New York 
(Mr. Crowley) 1 minute.
  Mr. CROWLEY. I thank the chairman for all of his work on this 
bipartisan piece of this legislation.
  Madam Speaker, I rise not as a representative of Wall Street in New 
York but of 65th Street in Woodside, Queens, New York.
  First, let me state that everyone is angry that we're here this 
afternoon enacting this piece of legislation, but immediate action must 
be taken or our Nation's credit system and banking system will dry up. 
What that means is pension plans and retirement savings will be 
threatened by the wild fluctuations of the stock market. It will mean 
the tightening of credit, which means even the most creditworthy 
Americans won't be able to afford homes or be able to refinance their 
homes. Student loans will evaporate, making college more expensive. 
Auto loans will dry up and, finally, salaries. If employers cannot 
access banks and credit, they will not be able to meet their payroll, 
and layoffs will begin.
  This was a 3-page bill when we first got it, ladies and gentlemen, 
but we, the Democrats, made this a better bill. We added both the civil 
and criminal accountability of Wall Street executives. Government 
should be giving out metal bracelets, ankle bracelets, and not golden 
parachutes.
  Madam Speaker, this is not a perfect bill, but it is a much better 
bill than we got initially. I will be supporting this legislation.
  Mr. BACHUS. Madam Speaker, I yield 1 minute to the gentlewoman from 
Colorado (Mrs. Musgrave).
  Mrs. MUSGRAVE. Madam Speaker, I am pleased that the strong opposition

[[Page 23131]]

to the initial administration proposal has helped to force some very 
important changes such as the bipartisan oversight board, which is an 
online database that will allow greater oversight of the Secretary's 
actions, but this is still a bailout for Wall Street that will cost the 
average Colorado household thousands.
  I simply cannot stomach transferring that kind of money from the 
middle class families to a bunch of Wall Street bankers whose avarice 
and greed put us in this situation in the first place. It's interesting 
that, when working families were being crushed by soaring energy prices 
this summer, Congress went on vacation. Yet, when Wall Street faced the 
consequences of its actions, we worked around the clock to help them. 
We should place the same priority on helping Main Street that we place 
on helping Wall Street.
  Mr. FRANK of Massachusetts. I yield to the gentleman from Minnesota 
(Mr. Ellison), a member of our committee, 1 minute.
  Mr. ELLISON. Madam Speaker, a good friend of mine who runs a charter 
school needed to get a line of credit recently to float her payroll. 
She couldn't get it. In the past, she had. That puts the teachers, the 
custodial staff, the people who work in the kitchen, and all of those 
folks in line for a payless payday, which means that we've got 60 folks 
who will not be able to make car notes, mortgages or who will not, 
perhaps, be able to pay credit cards and who knows what.
  This kind of problem is bleeding throughout the economy. That's why 
the unemployment rate is 6.2 percent. We can wait to see the pain, and 
then we will be motivated to act, but do you really want to see 8 
percent or 9 percent unemployment?
  Mr. BACHUS. Madam Speaker, I yield myself 3 minutes, and I'd like to 
go to the well.
  It's 11 days later, and our time has run out. We're going to have a 
vote. We're going to make a decision. There are no more alternatives. 
There are no other choices--just this one choice. I don't know about 
you. I believe every Member of this body feels as if there is an 
awesome responsibility on our shoulders. This will be the most 
difficult decision I make in my 16 years in this body, and I have 
decided that the cost of not acting outweighs the cost of acting.
  I've been able to calculate the financial cost of acting, and I know 
that it's something less than $700 billion. I could go into a long 
explanation, but I am actually optimistic that almost all of that money 
will be recovered by the taxpayer. But I'll tell you, like an explorer 
in uncharted territory, none of us in this body has any really good 
judgment or insight into what happens if we fail to pass this bill.
  It could mean companies will go out of business. We've been told it 
would. It could mean more bank failures. It probably will. It will mean 
the impairment of our parents' and grandparents' pensions. I'm not 
willing to put that bullet in the revolver and spin it. I'm not willing 
to take that gamble. I'm not willing to pull that trigger because I am 
not willing to subject the American people to the worst case scenario.
  I don't have a crystal ball. That is one reason that I'll be voting 
``yes.'' I will take the political risk, but I will not take a risk on 
the American people and their future, and on the prosperity of my 
children and of my grandchildren.
  Thank you very much.
  Mr. FRANK of Massachusetts. Madam Speaker, I know this has been as 
difficult for the ranking member as it has been for me, and I 
appreciate the generosity of spirit he has brought to this.
  I now yield 1 minute to the gentlewoman from Connecticut (Ms. 
DeLauro).

                              {time}  1300

  Ms. DeLAURO. Our first goal as Members of Congress is to rescue the 
economy, get it moving again, and make sure the middle class and small 
businesses get on their feet.
  I hate that near criminal mismanagement of our economy and near 
criminal contempt for our values has forced us to act today. Today's 
financial crisis could lead to an economic meltdown unseen since the 
Great Depression, and I have a responsibility to avert it in the 
interest of the country, though I know it will be unpopular.
  For too long, the policies of this administration and the previous 
majority in Congress put middle class families at risk. I am under no 
illusions about how we got here. And I act today not to help the banks, 
but to help hardworking, struggling middle class Americans, small 
business people.
  If we do not act, unemployment will rise, small businesses will not 
meet payroll, and a credit freeze closes the door on families who need 
loans to pay for schools, cars and housing.
  The administration offered a plan; it was unacceptable. This 
legislation, while imperfect, offers a different approach. It should be 
coupled with investing in job-creating infrastructure, new green jobs, 
and measures that give consumers more income.
  Mr. BACHUS. Madam Speaker, I yield 5 minutes to the gentleman from 
Missouri, our whip, Mr. Blunt.
  Mr. BLUNT. I thank the gentleman for yielding. I thank him for his 
leadership today and his leadership during this discussion.
  None of us want to be here today. All of us would rather not be 
dealing with this situation. None of us wanted to see the worldwide 
economic news over the weekend, but it all happened. And we see things 
happening in our country today that have to be dealt with, and this 
body has an opportunity today to deal with those things.
  We've reached out to try to compromise on both sides of the aisle on 
a solution. Now, frankly, I think every speech here today on either 
side that gets into wanting to allocate blame as part of this vote is 
not helpful. I do think what could be helpful is this solution. I don't 
think it is helpful the way we started talking about a ``solution, but 
it's not this one.'' We started talking about a bailout, and we truly 
have gotten, with lots of effort, to a program that could be a workout.
  These are not valueless assets; these are just assets that don't 
reflect in today's economy the value that they truly have. And this is 
a program that, through a number of ways, would begin to stabilize and 
establish that value again. Whether it was going in and purchasing some 
of these mortgages, whether it was insuring these mortgages and other 
assets that are out there, you begin to make money available again for 
families in America; you begin to make money available again for 
businesses that want to expand; you begin to make money available again 
for student loans; you begin to make money available again for the 
person who wants to pave the parking area at the service station.
  This is not about Wall Street; it's about Main Street. And this is 
not about the government going in and buying things that don't have 
value, it's about the government helping establish what that value is. 
If that's done right, and we believe that all of the transparency that 
you could possibly hope to have in a government program is here, all of 
the oversight is here--in fact, if anything, we may have overdone the 
oversight, but none of us want to have underdone the oversight--and 
that's all here.
  And this program would ensure, if administered as I think it now has 
to be under the protections in it, that taxpayers don't lose money. And 
if, at the end of the process 5 years from now, the Director of the 
Office of Management and Budget would say to the President there is 
still some taxpayer loss here, the President then has to come back to 
the Congress and say to the Congress, here's how we, over the next 
number of years, recover the remaining money from the people who 
participated in the program, not the entire financial sector, not every 
person in America, but the people who benefited from, who participated 
in the program.
  Taxpayers, unless a future Congress loses its ability to do what the 
law says they need to do, taxpayers won't lose anything. And, frankly, 
I think if this is administered the way it almost has to be now, that 5 
years from now it will be apparent that taxpayers won't have lost, they 
will have gained. And

[[Page 23132]]

while they were gaining, America gets started on the right direction.
  If you're watching the stock market over the next few days and we 
don't act, whether you have portfolios that you know about or not, if 
you have a pension plan, if you have a son or daughter who wants to go 
to college, if you have a home improvement you would like to make, 
you're going to be affected if the economy doesn't begin to reflect the 
true strength that this economy has.
  This bill helps us re-establish the floor for that strength. This 
bill helps us ensure that taxpayers don't pay any cost. This bill 
ensures that everybody can watch all the time to see what's going on.
  I urge my colleagues to vote for it. I thank my colleagues who have 
worked hard to get it to this point. I encourage my colleagues, too, 
that this is no time to try to seek partisan advantage; this is the 
time to try to seek a bipartisan solution.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield to my colleague 
from Massachusetts, who has one of the best records in dealing with 
this set of issues in the Congress, the gentleman from Massachusetts 
(Mr. Markey).
  Mr. MARKEY. When the markets go up, Wall Street cleans up. When the 
markets go down, Main Street gets cleaned out.
  Nobody wants to do this. Nobody wants to clean up the mess created by 
Wall Street recklessness. Nobody thinks this is perfect. But, if we 
don't act now, we won't just punish Wall Street, but punish innocent 
people on Main Street who will get cleaned out.
  This is the greatest threat to those people since the Great 
Depression. This bill, because of Barney Frank, protects taxpayers, 
prevents golden parachutes, and limits excessive CEO compensation, 
helps prevent home foreclosures, provides strong, independent oversight 
and transparency. Not just Main Street, but the whole world is looking 
at us. Our very system of capitalism is under assault.
  We must pass this today. We must give support to this. We must 
protect Main Street across this entire country. Vote ``yes'' on this 
protection of citizens of our country.
  I rise in support of this bill.
  After careful consideration of the bill to provide emergency 
assistance to stabilize our economy, I have decided to support this 
bill.
  For years, I have fought hard for tougher oversight and regulation of 
Wall Street. I fought for tougher laws against insider trading, market 
manipulation, and other financial fraud; I fought to give the SEC 
expanded powers to obtain risk assessment reports regarding the risks 
posed by derivatives and other risky investments; I fought against 
efforts to deregulate Wall Street and make it tougher for defrauded 
investors to sue the scam artists who have ripped them off.
  But 12 years of Republican-led deregulation and lax controls have 
fueled Wall Street's greed and recklessness in an inexcusable manner. I 
don't like having to vote for this kind of legislation. Still, I 
believe that a failure to act now wouldn't merely punish Wall Street, 
but also would put hardworking Americans at risk of losing their homes, 
their jobs, and their savings.
  When the Bush administration presented its plan to Congress a week 
ago, I believed it did not contain the safeguards needed to protect 
taxpayers from billions of dollars in losses that could result from 
this rescue plan.
  But over the past week, as a result of round-the-clock negotiations 
with the Bush Administration, essential taxpayer protections were 
added. For example, the plan now:
  Protects taxpayers by requiring a plan for full repayment of all 
funds used to assist troubled financial firms;
  Helps prevent home foreclosures by granting the Government authority 
to work with loan servicers to change the terms of mortgages to keep 
Americans in their homes;
  Prevents golden parachutes by limiting excessive compensation for 
CEOs and executives of firms selling assets to the Government as part 
of the plan;
  Creates strong, independent oversight and transparency to prevent 
waste and fraud and protect taxpayers.
  I believe that failure to take action now would mean considerable 
risk of serious economic pain for America. The pain would not be 
limited to Wall Street bankers who made risky bets that didn't pay off.
  Without relief now, Americans across the country struggling to pay 
their mortgages would be at greater risk of losing their homes. 
Responsible companies seeking credit to keep their businesses afloat 
already have seen financing dry up--if the Government fails to 
intervene now, more companies could close their doors, putting more 
Americans out of work.
  The bill provides tough oversight and commits Congress and the 
President to the principle that whatever the ultimate cost is, it will 
be borne by the financial services industry directly, not taxpayers in 
general.
  Our economy is facing the biggest Wall Street crisis since the Great 
Depression. Congress must respond to stop further declines that could 
wipe out savings accounts and hurt everyday Americans around the 
country if the crisis spreads even further.
  Our entire economy depends on this critical legislation, but the 
taxpayers should not be on the hook to pay for risky business on Wall 
Street and lax oversight by the Bush administration. The taxpayers' 
insurance guarantee in the bill is one of the many taxpayer protections 
Democrats included to improve the original Bush-Paulson plan to 
stabilize American financial markets.
  I urge adoption of the bill.
  The SPEAKER pro tempore. The gentleman from Alabama has 2 minutes 
remaining. The gentleman from Massachusetts has 4 minutes remaining.
  Mr. BACHUS. Madam Speaker, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield for a unanimous 
consent request to the gentleman from California.
  Mr. GEORGE MILLER of California. Madam Speaker, I rise in support of 
this legislation.
  Madam Speaker, I rise today in support of the Emergency Economic 
Stabilization Act, a bill to respond to what could be one of the worst 
financial crises to face our country.
  Just over 10 days ago, in response to this crisis, President Bush 
asked Congress to immediately approve a 2\1/2\-page plan to grant 
never-before-seen powers to the Secretary of the Treasury to spend a 
staggering $700 billion in taxpayer money to bail out Wall Street 
firms, with no strings attached, no accountability, and no guarantee of 
success.
  This President, who has overseen one of the worst economic records in 
American history, asked us for a blank check.
  The Speaker of the House, my colleagues, and I said, ``No.'' We 
rejected his blank check plan.
  But we did not dismiss the need to take action on behalf of American 
workers and families already hurt by our economic problems and who 
would be severely hurt further if this financial crisis becomes a full 
scale economic meltdown.
  Instead, we said that if we are to rescue failing institutions 
because it is in the public's interest then we must ensure that the 
plan protects the taxpayer and holds officials accountable.
  The plan that we are voting on today is a far cry from what we were 
first asked to approve. It is the result of hundreds of hours of 
negotiations between the House, the Senate, and the White House and 
between Democrats and Republicans.
  The result is a plan that:
  Provides money to rescue firms in stages, not all at once;
  Limits the compensation of CEOs whose firms the government rescues. 
No more golden parachutes for Wall Street tycoons who get government 
assistance.
  Provides immediate and ongoing tough oversight by independent boards 
including the Inspector General and the Government Accountability 
Office;
  Gives taxpayers ownership of the companies that they would rescue, 
giving them a share of the profits in those companies;
  Helps families going through foreclosure, and;
  Provides a mechanism for paying for any losses the taxpayer might 
face from this plan.
  You would think that these protective measures would have been 
obvious to the President when he asked us to approve his plan.
  The fact is, Democrats in the House and Senate had to fight for them. 
We had to fight to limit CEO pay for rescued firms. We had to fight for 
tough oversight. We had to fight to give taxpayers ownership of the 
companies we help. And we had to fight to get some mechanism of paying 
for this plan.
  So, with great deliberation and a lot of hard work, we made this a 
much better bill.
  This bill does not have everything in it that I or others here 
wanted. It is a compromise. But it is a compromise that I believe is 
far preferable to the alternative of not acting at all.
  The American economy is in its weakest condition in many, many years. 
Rising unemployment, stagnant and declining wages,

[[Page 23133]]

record high energy costs, and soaring food prices.
  Mortgage foreclosures continue to rise and home values continue to 
decline.
  Fundamental investments in our economy remain unmet--for health care, 
aging roads, bridges and schools, new energy sources and energy 
conservation, and for education.
  Amidst this economic crisis we face the potential for a sudden 
meltdown of our nation's financial markets of a magnitude that few of 
us have ever seen in our lifetime and that would reach into every 
corner of our nation and further weaken the living standards of every 
American.
  No one can say with certainty, but if you believe the experts' 
predictions the collapse of the financial markets will not just result 
in the bankruptcy of banks and other firms on Wall Street.
  The financial collapse would cripple the credit markets and would 
prevent the economy from growing, hurting Americans' ability to borrow 
at reasonable rates to make payroll at small businesses, invest in new 
equipment, borrow for college, take out a mortgage, start new 
businesses, or buy new cars. It would hurt our ability to create new 
jobs.
  As we are seeing in California, school districts, counties, and 
cities are losing millions of dollars because of the collapse of Wall 
Street firms in which they held investments.
  The question of whether to help rescue Wall Street firms and 
stabilize the credit markets is daunting and one that I know each of my 
colleagues is considering with greatest sense of caution, obligation 
and responsibility.
  Americans are furious with the CEOs of Wall Street, and they have 
every right to be. Just as they should be furious with 8 years of the 
Bush Administration and 12 years of the Republican-led Congress that 
did nothing but cut taxes for the rich and help Wall Street with 
deregulation of the banks and provide no oversight from Washington.
  With the Republicans' help, the barons of Wall Street have taken the 
upside of the economy with relish. They invented and mastered the 
golden parachutes and eye popping executive compensation schemes that 
have created their own economic class in our country.
  They created new, complex financing mechanisms that were beyond even 
their own understanding and they violated every common sense rule of 
corporate transparency and financial soundness.
  Armed with their powerful lobbyists, Wall Street cunningly held off 
fair regulations by Congress, arguing that left to their own devices 
Americans would be better off.
  The American people are the victims of this go-go, Wild West approach 
to governing.
  Well, the damage is done, and the damage is devastating. And now, the 
party is over.
  Congress and the American people are going to have to step up to the 
plate and right the pieces. It will not be easy.
  But the taxpayers should not be asked to do so without the 
protections that we have fought to include.
  That is our primary concern--the American people who have had to 
withstand a devastating economic downturn during the last eight years, 
who had to shoulder the mounting costs of bailing out one large bank or 
financial firm after another, and who have not had anyone come to their 
own rescue when times got hard.
  This bill is intended to stabilize the credit markets, slow the 
decline of foreclosures, slow the decline in home values, and begin to 
free up credit so that the economy can have a chance to grow.
  Based on what I have learned from a wide range of experts across the 
country, I believe the financial crisis is real and that the 
consequences of not acting now will be far, far worse for average 
Americans than if we do nothing at all.
  This bill is not just about trying to prop up the stock market. 
Markets will rise and fall for a variety of reasons. But the dramatic 
decline in the stock market clearly hurts tens of millions of Americans 
with pension funds, retirement accounts, college funds, and other 
savings that are invested in the stock markets.
  What we are attempting to do is stabilize the credit markets because 
that is what fuels our economy and creates jobs and good incomes. The 
crisis that started on Wall Street does not end on Wall Street, it ends 
on Main Street, in every small town and big city in our country.
  If this bill were just about Wall Street, given their behavior, I 
wouldn't walk across the street to save them. But this is really about 
our communities and families and people's access to credit, and jobs 
and economic growth. This is an important step but clearly much more 
needs to be done to create jobs and try to stop the slide in home 
values.
  For example, the House passed a bill to spend $60 billion quickly on 
a stimulus plan, for infrastructure and unemployment insurance. The 
Administration has opposed it and has threatened to veto our plan.
  Our plan would have created good paying jobs in California and in 
America, providing an infusion of money for mass transit, highways, 
water projects, bridges, water recycling, and broadband technology, all 
of which are an investment in the economic future of America.
  The President is wrong to oppose this. At a time of rising 
unemployment, it is unfortunate that the President has opposed us and 
refuses to support our investment plan. But I will continue to fight 
for our economic plan that is essential to our long-term economic 
recovery.
  I have fought to protect homeowners, taxpayers and consumers. I urge 
my colleagues to support this plan and to continue to work together to 
make further investments in the economy that are crying out for our 
approval to get America moving forward and get Americans working again.
  Mr. FRANK of Massachusetts. Madam Speaker, I yield myself 3 minutes.
  Madam Speaker, I have mostly appreciated the kind words directed at 
me. I say ``mostly'' because it has been my experience here that there 
is often an inverse ratio between the nice things people say about you 
and their inclination to vote for your bill. I hope we can overcome 
that in this situation.
  But I want to talk now--and we've worked on this in a compromise way, 
and I am proud to have worked with the whip and my ranking member 
counterpart and others across the ideological spectrum. And meeting a 
national crisis does not give any of us the luxury of doing everything 
we want.
  I hope we will come back here with more votes. And if we have more 
votes, the next time we negotiate I'll be tougher, but you have got to 
accept reality.
  I wish this was a bill that reflected more of my priorities. I wish I 
could eat more and not gain weight, but I have learned that acting 
imprudently on my wishes that cannot be realized is not helpful. But I 
do want to address those who share with me a commitment to dealing with 
people who are low on the economic spectrum.
  Madam Speaker, I do my work, and I work on a lot of the general 
issues. But if there weren't poor people in this world and if we didn't 
have discrimination, I wouldn't be here. That's why I'm here.
  What I have tried to do every time we've had a major bill, I'll be 
honest, is to use the leverage I get as chairman because there are 
things that everybody needs to put in for the poor people, to put in 
something for the people who don't otherwise get a fair shake. And 
sometimes there's a lot of other things in there. But I will tell my 
colleagues this, particularly my fellow liberals, if we aren't prepared 
to accept some of the things we don't like, we will not have the power 
to deliver for the people we care about. We do not unilaterally have 
the power to impose policies we would like, and therefore, a compromise 
is required.
  What do we have in this bill? I've got a letter I'm putting in the 
Record from every liberal advocacy group--not ACORN, I want to assure 
my colleagues over there before they have a conniption--but every other 
group, the Low-Income Housing Coalition, the Legal Aid Society, 
National Coalition for the Homeless. And it says: ``We are writing to 
thank you for the inclusion of measures to protect renters.''
  People all over this country who rented, who didn't make an imprudent 
decision to buy a house, found themselves being evicted because 
somebody didn't pay the mortgage. We try to protect them against this. 
We try to keep subsidies. I tell you this, the lower-income people, the 
poor people, they will get nothing if we're not prepared to compromise 
some.
  Secondly, we have in here--and I understood what the gentleman from 
Ohio (Mr. Kucinich) was saying--very good language on foreclosure. Is 
it everything I wanted? No. But I'll tell you this, if this bill 
passes, we will have a Federal Government empowered to do, for the 
first time, significant reductions in foreclosures. Now, I don't know 
who's going to win in November, but I will tell you this, this will put 
in the hands of whoever the President is the power to do a great deal 
of good.

[[Page 23134]]

Please don't throw it out because you're unhappy with some other 
provisions.
                                               September 29, 2008.
     Hon. Barney Frank,
     Chair, Committee on Financial Services, House of 
         Representatives, Washington, DC.
       Dear Chairman Frank, we are writing to thank you for the 
     inclusion of measures to protect renters in this Emergency 
     Economic Stabilization Act of 2008. The provisions that will 
     allow renters with leases to stay in place and that provide 
     for the continuance of existing protections for tenants, 
     including rental subsidies, are very important to ensure that 
     this financial crisis does not disrupt the lives of some of 
     our most vulnerable citizens.
       Thank you for your leadership on this issue.
           Yours truly,
       Center on Budget and Policy Priorities; City of New York; 
     Coalition on Homelessness and Housing in Ohio; Community 
     Economic Development Assistance Corporation; Community 
     Service Society of New York; Jesuit Conference USA; Housing 
     Preservation Project; Legal Aid Society; and National 
     Coalition for the Homeless.
       National Housing Conference; National Housing Law Project; 
     National Housing Trust; National Law Center on Homelessness & 
     Poverty; National Low Income Housing Coalition; National 
     Policy and Advocacy Council on Homelessness; Stewards for 
     Affordable Housing for the Future; The Community Builders--
     DC; and Urban Homesteading Assistance Board.
                                  ____

                                              National Association


                                             of Home Builders,

                               Washington, DC, September 29, 2008.
     Hon. John Boehner,
     Minority Leader, House of Representatives, Washington, DC.
       Dear Minority Leader Boehner: On behalf of the 235,000 
     members of the National Association of Home Builders (NAHB), 
     I am writing to urge your support for the Emergency Economic 
     Stabilization Act of 2008. NAHB strongly believes this 
     bipartisan proposal will help remedy the extreme turmoil and 
     uncertainty currently facing the nation's financial markets.
       Falling home prices, mounting foreclosures, and a frozen 
     credit market have taken a severe toll on the nation's 
     economy. As the financial markets struggle, mortgage credit 
     costs are increasing and home builders are finding it more 
     and more difficult to obtain any business credit. The 
     Emergency Economic Stabilization Act of 2008 will provide an 
     outlet and patient market for troubled mortgage assets, thus 
     restoring confidence in global financial markets and allowing 
     credit to once again flow to businesses. Ensuring that 
     credit-worthy home buyers, builders and other small 
     businesses have access to credit is absolutely essential to 
     putting the American economy back on track.
       Again, NAHB believes that the Emergency Economic 
     Stabilization Act of 2008 represents the best opportunity to 
     address the turmoil facing the U.S. economy, and we urge your 
     support for this carefully-crafted, bipartisan legislation. 
     We look forward to working with Congress to move this 
     legislation forward in an expeditious manner.
           Sincerely,
     Joseph M. Stanton.
                                  ____


     Board of Governors of the Federal Reserve System Press Release

       I welcome the agreement by the Congress and the 
     Administration on a comprehensive plan to stabilize our 
     financial system and support our economy. This legislation 
     should help to restore the flow of credit to households and 
     businesses that is essential for economic growth and job 
     creation, while at the same time affording strong and 
     necessary protections for taxpayers. I look forward to swift 
     passage of the legislation.
       In addition, the Federal Reserve Board supports the timely 
     actions taken by the Federal Deposit Insurance Corporation, 
     which demonstrate our government's unwavering commitment to 
     financial and economic stability.
                                  ____

                                                American Financial


                                         Services Association,

                                               September 28, 2008.
     Hon. Nancy Pelosi,
     Speaker, House of Representatives, Washington, DC.
     Hon. Harry Reid,
     Senate Majority Leader, U.S. Senate, Washington, DC.
     Hon. John A. Boehner,
     House Minority Leader, House of Representatives, Washington, 
         DC.
     Hon. Mitch McConnell,
     Senate Minority Leader U.S. Senate, Washington, DC.
       Dear Speaker Pelosi, Senator Reid, Leader Boehner, and 
     Leader McConnell, The American Financial Services Association 
     (AFSA) is pleased to support the Emergency Economic 
     Stabilization Act of 2008. AFSA hopes that Congress will pass 
     this critically important legislation and send it to the 
     President's desk as soon as possible. The plan is essential 
     to restoring certainty, stability and liquidity to the credit 
     markets.
       AFSA is encouraging the Securities and Exchange Commission 
     to use its new authority in the bill to suspend mark to 
     market accounting standards as quickly as possible. In 
     addition, AFSA is urging the Secretary of the Treasury to use 
     the authority given to him in the legislation to make finance 
     companies eligible to participate in the rescue plan, as well 
     as to include auto, small business and student loans as 
     eligible assets under the definition of troubled assets.
           Sincerely,

                                                 Bill Himpler,

                        Executive Vice President, Federal Affairs,
     American Financial Services Association.
                                  ____


                                  Memo

     Date: September 29, 2008.
     To: Members of the U.S. Senate and House of Representatives.
     From: Edward L. Yingling, President and CEO, Floyd E. Stoner, 
         Executive Vice President, Congressional Relations & 
         Public Policy, American Bankers Association.
     Re: Support for the Emergency Economic Stabilization Act of 
         2008.

       I am writing on behalf of the entire banking industry to 
     express our support for the compromise legislative package 
     that Congress is considering to address the current financial 
     crisis.
       The crisis on Wall Street and in financial centers around 
     the world has reached a point where extraordinary action is 
     required. The proposal put forth by Treasury Secretary Henry 
     Paulson and modified by Members on both sides of the aisle is 
     a constructive solution to the crisis we face. It will 
     provide the financial backstop needed to unfreeze the 
     financial markets and provide for greater transparency and 
     accountability for firms that participate in the program.
       The action that Congress is taking is not one that the 
     regulated banking industry sought, but is necessary to 
     address this financial crisis to ensure that credit is 
     available to consumers and businesses on Main Street. There 
     can be no doubt that the freezing up of the world's credit 
     markets and the loss of confidence we are seeing will, if 
     left unchecked, dramatically impact consumers and businesses 
     of all sizes.
       While we support the basic construct of the compromise 
     package, we are concerned about the provision that was added 
     at the end of the process to have the President assess the 
     final costs to the government, after five years, and make a 
     legislative proposal on how to recoup those costs from the 
     financial services industry, possibly through the assessment 
     of a fee. As Secretary Paulson, Chairman Bernanke, and many 
     Members of Congress have consistently pointed out, this 
     crisis was the result of actions of unregulated mortgage 
     brokers and failures on Wall Street, not of actions of 
     regulated, FDIC-insured banks.
       We support this compromise package because we recognize the 
     impact that a failure to pass this legislation would have on 
     the national economy.

  The SPEAKER pro tempore. The gentleman from Alabama has 2 minutes 
remaining.
  Mr. BACHUS. Thank you, Madam Speaker, and thank you, Chairman Frank.
  Madam Speaker, at this time, I yield the balance of our time to our 
very capable leader, Mr. John Boehner from Ohio.
  Mr. BOEHNER. Let me thank my colleague from Alabama for yielding and 
thank him for his words.
  The gentleman, along with the chairman, have been through a tough 
period. And it's not just been the last week or 11 days; it's been 
really over the last year. And I want to thank both of them for their 
good work.
  You know, the American people are angry, angry that this is happening 
to them, angry about their future. They're scared. And there isn't a 
Member in this room that isn't as angry as they are and not a Member in 
this room that isn't just as scared about where we are.
  I've been here for a long time, a lot of you have been here for a 
long time; and we've cast a lot of tough votes along the way. I don't 
know that they get much tougher than this because nobody wants to vote 
for this, nobody wants to be anywhere around it. And I don't blame you, 
I don't want to be around it.
  We have a bill in front of us that is a bipartisan bill. We've got 
Members on the Democrat side who have all kinds of things they want in 
this bill that aren't in here. I have a lot of my Republican friends 
who are irritated that this issue and that issue aren't in here, that 
we don't do more to attract private capital to help fix this problem. I 
understand that.

[[Page 23135]]

  And so we have an imperfect product. But we have a product that may 
work, a product that may work if we can get the votes to pass it, 
which, I don't have to tell any of you, is in serious doubt.
  I just want everybody to think about where we are. While there is a 
lot of risk to any Member who votes for this, both sides of the aisle, 
just think about what happens if we don't pass this bill. Think about 
what happens to your friends, your neighbors, your constituents. Think 
about those retired people whose retirement income will shrivel up to 
zero. Think about the jobs that will be lost. If I didn't think we were 
on the brink of an economic disaster it would be the easiest thing in 
the world for me to say no to this; but I believe the risk in not 
acting is much higher than the risk in acting.
  This Congress has to do its job. None of us came here to have to vote 
for this mud sandwich--I can describe it a lot of different ways, you 
all know how awful it is. I didn't come here to do this. I didn't come 
here to vote for bills like this. But let me tell you this, I believe 
Congress has to act, and that means each and every one of us have to 
act. These are the votes that separate the men from the boys and the 
girls from the women.

                              {time}  1315

  These are the votes. These are the votes that your constituents sent 
you here to decide on their behalf. They didn't tell you it was going 
to be easy. They didn't tell you that it's going to be black and white, 
you won't have any shades of gray. These are the kind of votes that we 
have to look into our soul and understand and ask ourselves the 
question: What is in the best of our country?
  I believe what's in the best interest of our country, as I stand here 
today, is to vote for this bill. While imperfect, while not having 
everything everybody wants, I believe that we have to vote for this 
bill and do our very best to keep ourselves from the brink of an 
economic disaster that will harm all of our constituents.
  So I ask all of you, both sides of the aisle, what's in the best 
interest of our country? Not what's in the best interest of our party. 
Not what's in the best interest of our own re-election. What's in the 
best interest of our country?
  Vote ``yes.''
  Mr. FRANK of Massachusetts. Madam Speaker, I now have the privilege, 
to the regret of absolutely nobody, of closing out this debate by 
yielding 1 minute to the very able majority leader, who has played such 
a constructive role, the gentleman from Maryland (Mr. Hoyer).
  Mr. HOYER. I thank the gentleman for yielding.
  Madam Speaker, we swore an oath to protect this country, to protect 
our Constitution, and protect our people.
  Most days in the House of Representatives, we make judgments. Those 
judgments are between what we think are good and better and perhaps 
bad. Most days are not like today. This is a day of consequence for the 
American people. This is a day of consequence to our country. This is a 
day when the Democratic leader, myself, rises to follow the Republican 
leader, and they speak with one voice as America faces crisis. That's 
what Americans want us to do.
  I congratulate Mr. Boehner for his courage and for his leadership. 
And I congratulate my good friend Roy Blunt, with whom I have worked on 
issue after issue to try to bring us together, not on behalf of 
Republicans or Democrats but on behalf of our people.
  Why should taxpayers lend out their own money to solve a crisis 
brought on by someone else's greed? Because when it comes to our 
economy, none of us, none of us is an island. We are all bound together 
in boom or bust, in growth or collapse, from the bankers on Wall Street 
to the smallest rural community that we represent.
  Imagine, my colleagues, that we do nothing. A million more homes will 
likely be foreclosed on. Banks would likely be unable to lend. Credit, 
the lifeblood of any economy, might dry up across America. That means 
families unable to take out a loan to buy an appliance when their 
washing machine or refrigerator breaks, or send a child to college. It 
means retirement savings devastated. It means businesses shrinking all 
over America unable to meet their payrolls, and jobs lost and families 
at risk. That's what Mr. Boehner said and that's what I say. That's 
what Mr. Paulson has said. That's what Mr. McCain has said. That's what 
Mr. Obama has said. America faces a crisis, and Americans call out for 
us to come together to confront that crisis on their behalf.
  It means workers losing their jobs on top of the more than 600,000 
that we have lost this year. The meltdown would begin, it is true, in a 
few square miles in Manhattan. But before it was over, all of us know 
no city or town in America would be untouched.
  With this bipartisan rescue plan, I am hopeful, every one of us in 
this body is hopeful, the President of the United States is hopeful, 
and I know that every American that we have the honor and privilege of 
representing hopes that we will prevent the worst-case scenario.
  Under a plan put forward by President Bush, the government would 
purchase the bad assets clogging up our financial system, with the goal 
of restoring the flow of necessary lending and credit.
  The original plan gave unchecked power to the Secretary of the 
Treasury to spend $700 billion as he saw fit. We, who represent the 
American public, who will be at risk, we hope they will not lose and we 
think they may not, but we said, no, we cannot do that. Our 
responsibility is to ensure transparency and oversight so that we know 
how their money is being spent and can ensure to the extent possible 
that it is spent in as honest and as effective fashion as we can 
effect. We made clear that this Congress does not write blank checks.
  Both Chambers and both parties negotiated around the clock. I 
especially want to thank my colleague, as I have before, my friend 
Minority Whip Roy Blunt. Roy Blunt came to the table, and everybody 
that has been at that table has said Roy Blunt represented the American 
public at that table, as Barney Frank represented the American public 
at that table.
  We've made significant improvement to the President's plan. First, we 
fought to add provisions ensuring that if and when financial 
institutions helped by this rescue begin to grow again, taxpayers will 
be the first to share in their profits; so even though this bill 
authorizes a total of $700 billion, as Mr. Spratt pointed out earlier 
today, the Congressional Budget Office does not believe that it will be 
anywhere near that price tag.
  Some of you have heard me say that I was sworn in to the Maryland 
State Senate in January of 1967. On that same day in my State, Spiro T. 
Agnew was sworn in as Governor of the State of Maryland. And in his 
inaugural address, he said to all of us that the cost of failure far 
exceeds the price of progress. I think that is what is at stake here 
today, that the cost of our failure will far exceed the price of the 
progress we try to effect in this bill.
  Secondly, we added a repayment clause originally championed by 
Congressman Tanner. And after 5 years the administration will have to 
tell us the true net cost to taxpayers and submit a plan laying out how 
Wall Street and financial institutions will pay back the taxpayer. 
While the final provision we negotiated with Republicans is not as 
strong as either of us would have liked, it is a step in the direction 
that both of us sought.
  Thirdly, this bill restricts the compensation of executives. We ought 
not ask taxpayers to take a risk and advantage people who are making 
millions either as they work or as they leave successful or failed 
institutions.
  Fourth, the Treasury Secretary's decisions will be subject to 
oversight and judicial review.
  Finally, we will help homeowners change the terms of their mortgages 
to forestall the 2 million projected foreclosures that could further 
cripple our economy and devastate our neighborhoods. I know that it is 
not as good as some would like, but the alternative is nothing, and 
that is not acceptable.
  We have ensured that this bill will not reward Wall Street for bad 
risks.

[[Page 23136]]

Instead, it will keep local banks open. It will protect retirement 
accounts. It will help families get the credit they need. It will help 
small businesses stay alive and hiring.
  But we must also reform our financial sector to safeguard against 
another collapse like this, and we will do so. Fiscal irresponsibility 
and regulatory neglect were at the core of this crisis. We must and we 
will investigate just how that failure occurred. And we will strengthen 
regulation and put economic referees back on the field. Responsible 
oversight must return to Wall Street.
  Today, though, today, we are doing our best to forestall what 
Secretary Paulson and Federal Reserve Chairman Bernanke are predicting 
would be a disaster.
  I opened by saying America was in crisis and that this was a day of 
consequence for our country. They have sent us here to respond. Today, 
this is not a Republican House or a Democratic House. It is the 
People's House. And the people, by an overwhelming majority, have asked 
us to act. They have not said act on this bill in this way because, 
like us, they're not sure. But what they do know is that inaction is 
not an option, that inaction will result in greater pain for our people 
and for our country.
  So I rise with my friend John Boehner and my friend Roy Blunt and 
with Speaker Pelosi and with President Bush and with John McCain and 
with Barak Obama and say this day of consequence, let us meet the 
challenge, let us act, let us confront this crisis, let us be the best 
of the people's House.
  Mr. HOLT. Madam Speaker, I rise in support of H.R. 3997, the 
Emergency Economic Stabilization Act.
  As we work to rescue our economy we must understand how we got to 
this point. The speculation and greed of Wall Street in recent years--
coupled with years of failures, excesses, arrogance and 
irresponsibility of the Bush Administration and some in Congress--has 
resulted in the meltdown of our Nation's financial markets. The 
subprime mortgage meltdown that started a few years ago has trickled up 
from Main Street to decimate Wall Street. The largest financial 
institutions in our nation, Bear Stearns, Lehman Brothers, AIG, have 
fallen into brink of bankruptcy.
  I am voting in favor of the Financial Rescue Legislation because it 
is a significant improvement--by including taxpayer protections and 
strong oversight--over Secretary Paulson's original $700 billion 
proposal, and because inaction could have a devastating impact on our 
already unstable economy. I still will work to ensure that Congress 
does more to rescue our economy in the long term, sensitive to the 
variety of kinds of work New Jerseyans perform from factory to 
financial district from farm to pharma. There are thousands of my 
constituents who are not traders or high powered executives but still 
work in these impacted industries. Furthermore, millions of Americans 
who have retired or are nearing retirement have seen the value of their 
pensions shrink or dwindle away. If day to day credit tightens up, 
small business may not be able to make payroll and farmers may not be 
able to get by until the harvest is sold. We need to act to ensure that 
retirement funds and pension plans are not devastated by investments 
that have lost value in a jittery market.
  President Bush and Secretary Paulson have told us that this rescue 
must be done immediately or else our fiscal house would collapse. 
Indeed we must act--but we must act wisely and thoughtfully to stand 
behind our institutions, restore confidence in our markets, and protect 
millions Americans who would be affected by a continuing meltdown.
  If the President had his way again, he would have ridden a wave of 
fear and railroaded Congress into passing Secretary Paulson's original 
three-page proposal asking for $700 billion--with no oversight--to 
bailout the financial services agencies. I would not support the 
original plan, and while I have reservations of the compromise bill 
before us today, after careful and thoughtful review I believe it is a 
significant improvement to the original Bush-Paulson plan.
  For the last 9 days the President, the leadership in both parties and 
Secretary Paulson worked to come up with a more palatable proposal. The 
over 100-page bill that this body is considering today is a far 
improvement over what we started with. I wish that we had more time to 
look at this proposal closely and determine that we are using the 
taxpayer's money wisely. If there is one thing we in this body should 
know it is that acting quickly can be worse than not acting at all. 
However it is essential that the world know that Congress will stand 
behind our institutions and avoid a financial collapse.
  There are some vast improvements over the Paulson-Bush proposal in 
H.R. 3997. This legislation includes taxpayer protections and does not 
simply hand over $700 billion to the treasury. My constituents rightly 
are concerned about what they would get for $700 billion. Instead this 
legislation would parcel out this funding in much smaller amounts so we 
can monitor the effect that it is having on the economy. It would 
release $250 billion immediately, another $100 billion if the President 
can certify the need for such an investment, and the final $350 billion 
would require the approval of Congress and the President before it 
would be available to the Treasury Department. It would give taxpayers 
a share of the assets recovered, and it is likely that we would recoup 
much of our investment. The CBO estimates that this bill would only 
truly cost $10 to $30 billion, and requires the President in 5 years to 
come up with legislation which would recoup funds lost from the 
financial industry. And it would help keep families in their homes by 
allowing the Government to work with loan servicers to change the terms 
of mortgages.
  The bill includes strong oversight and transparency, creating an 
oversight board appointed by Congress and instituting GAO oversight and 
audits at Treasury. It would include limits on excessive compensation 
for CEOs and executives. This legislation would also require the study 
of the way that our markets are regulated to make sure that this type 
of crisis does not happen again.
  This is a far from perfect bill. I have concerns about the amount of 
power that we are vesting in the Secretary of the Treasury. I believe 
that we should have included a provision requiring assets to be valued 
at their actual worth rather than just requiring a study of the flawed 
mark to market industry. This legislation should have had stricter 
restrictions on ``golden parachutes'' to ensure that CEOs do not profit 
from the Federal Government's stepping in to correct their bad 
decisions. It was my hope that we would decide to shore up the bad 
mortgages and help the American families struggling to make ends meet 
similar to the Home Owners' Loan Corporation, a Federal program that 
shored up a collapsing market in the past.
  Today's vote does not preclude us from acting further. We also must 
invest in the real economy and act to shore up the bad mortgages and 
help American families struggling to make ends meet. One approach would 
be similar to the Home Owner' Loan Corporation, a 1930s-era Federal 
program that shored up a collapsing market in the past. We also must 
reform the way the FDIC manages risk to accurately reflect the assets 
that banks hold, rather than the flawed ``mark-to-market'' requirements 
that led to this mess. Ultimately, we must change the failed philosophy 
that favored no regulation and no oversight and allowed this crisis to 
happen in the first place.
  Ms. SCHAKOWSKY. Madam Speaker, I rise to say that I will support H.R. 
3997, the Emergency Economic Stabilization Act, not happily, and not 
because I think the titans of Wall Street are deserving of our help. I 
am casting my yes vote because I am concerned about hardworking 
families in my district, the homeowners, small businesses and those who 
rely on modest pensions and investments. These are the people who knew 
well before the President or Wall Street woke up to the fact that our 
economy was in serious trouble, because they have friends and loved 
ones who have lost their jobs or house; they saw the price of gas and 
milk hit $4 a gallon, and they are struggling to afford good health 
insurance.
  Yes, we must do something and today is the day. But we must also 
recognize how we got here. This is, in fact, the predictable result of 
years of misguided policies of the Bush Administration, the misguided 
belief that regulation of the markets, any regulation, was bad. Couple 
this with a lack of enforcement of regulations that did exist, and now 
we have a financial crisis that requires government intervention.
  As a freshman member of the House Financial Services Committee, I was 
one of only 57 Members of Congress to vote against the Gramm-Leach-
Bliley Act in 1999. By deregulating the financial services industry and 
removing consumer protections, that legislation set in motion the 
crisis that we are facing today. My colleague and friend, Barney Frank, 
now the chairman of the Financial Services Committee, a true 
progressive and the chief negotiator for this bill, also voted against 
that reckless measure.
  I have consulted with many of the Nation's top economists, including 
top progressive economists, and virtually all have agreed that a 
failure to act would have devastating effects on the global economy--
including your block

[[Page 23137]]

and mine. Without quick action, employers might fail to make payroll, 
private student loans are already drying up, pensions would continue to 
lose value, and mortgages would become sparse. While I am not certain 
that this legislation will be able to fully stabilize the economic 
turmoil, I believe that we need to vote for the possibility of success 
over the certainty of failure.
  The House Democratic leadership, and especially Chairman Frank, has 
worked to make the very bad bill presented by President Bush and 
Treasury Secretary Henry Paulson better. The administration came to 
Congress with a breathtakingly arrogant plan--a mere three pages, 800 
words, which basically said give us $700 billion for a plan that is 
``non-reviewable and committed to agency discretion, and may not be 
reviewed by any court of law or any administrative agency.'' Today, we 
are offering our 110-page reply, and while it is certainly not perfect, 
I believe it is substantially improved.
  Today we are saying ``no'' to a blank check! Congress cut in half the 
Administration's automatic $700 billion, requiring Congressional review 
for future payments. We are making sure that none of the CEO's who have 
run their companies into the ground and created this mess will retire 
with a ``Golden Parachute.'' We make sure that taxpayers get a share of 
the profits of participating companies, and require the next President 
to submit a plan to ensure that taxpayers are repaid in full by Wall 
Street. We help prevent home foreclosures destroying our neighborhoods 
by allowing Government to work with loan servicers on new mortgage 
terms. Finally, we ensure tough, independent oversight and 
transparency, including judicial review of the Treasury Secretary's 
actions.
  Unfortunately, because of the need to obtain bipartisan support to 
move a bill quickly, this bill is by no means perfect. I believe that 
this legislation should have included bankruptcy protections and 
mandatory mortgage restructuring for homeowners in or at risk of 
foreclosure. I believe that we need to crack down on the lobbying 
practices and stop campaign contributions from companies which are 
clearly too irresponsible to manage themselves.
  I am extremely disappointed that, even as we address part of the 
economic crisis, we failed to enact a second economic stimulus that 
would immediately create jobs and put money in the pockets of middle 
class families and struggling State and local governments. 
Unfortunately, the plan to extend unemployment compensation, increase 
food stamp and health care funding, and create jobs by rebuilding our 
infrastructure failed in the Senate last week. This is clearly 
unfinished business.
  Today's vote represents the first step in reforming Wall Street and 
restarting our economy. For the first time in history, this Congress is 
addressing the excesses in executive compensation. This legislation 
gives the Treasury Secretary authority that could be used, if he or the 
next Secretary so choose, to significantly help low-income and working 
families. Finally, we are setting in motion the process of a 
comprehensive reform of the financial services industry.
  Wall Street better get the message that Congress will never be ready 
with a blank check to clean up the messes that they made in the first 
place. I look forward to working with the next Administration and my 
colleagues in Congress to enact sensible regulations to ensure that 
this will not happen again.
  Mr. COSTELLO. Madam Speaker, I rise today to oppose H.R. 3997, the 
Emergency Economic Stabilization Act. While I realize this bill is a 
product of intense and lengthy negotiations between Congress and the 
Bush administration and between Democrats and Republicans--and I 
greatly appreciate the efforts of Speaker Pelosi, Leader Hoyer and 
Chairman Frank--I remain unconvinced that this bill will solve the 
problems we face on Wall Street.
  This bill is an unprecedented $700 billion bailout of the financial 
industry on the backs of the American taxpayer. I oppose this bill 
because I am not convinced that it is imperative we act right now; I 
believe we are moving too quickly to rush this proposal through and 
have not adequately considered other approaches to solving the problem 
of bad debt and tight credit. Numerous economists have expressed that 
this proposal might actually make the problem worse. We should take 
more time to consider alternatives, as the deadline we are up against 
today has been set solely by the Bush administration.
  American taxpayers are being told by the President that they must 
rescue Wall Street, despite the fact that the Bush administration and 
Wall Street have opposed Government oversight in the financial industry 
for years. I believe the financial industry should help pay for any 
program to heal the economy. $700 billion is too much to ask taxpayers 
to bear without a requisite sacrifice from the industry that bears much 
of the responsibility for bringing us to this point.
  Madam Speaker, this is a historic vote, and we should be taking more 
time to ensure we have considered all options. I am not convinced that 
this is the best way to proceed, so I must, and will, vote no.
  Mr. UDALL of Colorado. Madam Speaker, for eight years, the Bush 
administration and its allies in Congress have allowed Wall Street to 
gamble with America's economy, and the results have been devastating 
for Main Street. The Administration consistently ignored the experts 
and failed to adequately oversee America's financial markets. 
Administration officials were warned that Wall Street's risky 
investments, combined with the mortgage industry's irresponsible 
practices, could produce a perfect storm that would threaten Americans' 
homes, jobs and life savings. Yet they did nothing.
  When Wall Street's dangerous behavior began to undermine America's 
economy, the Bush Administration proposed a bailout that would have 
given the Treasury unprecedented power to spend taxpayer money without 
adequate oversight or an actual plan for fixing the systemic problems 
that led America to this crisis. At the time, I spoke out against the 
Bush bailout and called for a better proposal, one that would protect 
taxpayers, help homeowners and benefit Main Street, not just Wall 
Street. More importantly, I demanded that any plan to shore up 
America's financial markets include reasonable rules to ensure that 
Wall Street does not continue to gamble with our future.
  We could have, and we should have, taken the time to do this right. 
Four hundred of the country's top economists, including three Nobel 
laureates, asked Congress to take more time to improve this proposal. 
With a proposal this far-reaching and complex, we had a responsibility 
to produce the best possible piece of legislation. The bill we are 
voting on today falls short. Instead of reforming Wall Street, we are 
using taxpayer dollars to insulate financial firms from the 
consequences of their own actions. The American taxpayer is on the hook 
for $700 billion to cover Wall Street's mistakes, and that is not 
right. Even worse, Wall Street is not being forced to change its 
behavior. This can only encourage more irresponsibility.
  At the same time, the provisions that limit executive compensation in 
this bill are weak, meaning that corporate executives who ran their 
companies into the ground could still walk away with millions in 
taxpayer-funded compensation in the forms of golden parachutes or other 
lavish benefits packages. Again, this sends exactly the wrong message 
to Wall Street. This legislation may still use taxpayer dollars to 
reward executives who have failed their companies and subsequently hurt 
the American economy.
  In addition, at a time when America's middle class is severely 
stretched to make ends meet, this $700 billion bailout not only seeks 
to rescue our taxpayer dollars to bail out foreign comapnies. We must 
protect American taxpayers before we seek to rescue foreign companies 
while their governments do nothing.
  Finally, this legislation does too little to help responsible 
homeowners. As a result, tens of thousands of families could lose their 
homes. More importantly, families who had nothing to do with failed 
mortgages could lose billions in assets as foreclosures continue to 
drive down property values.
  I believe strongly that Washington must act to protect Main Street 
from the crisis on Wall Street. I supported an economic stimulus plan 
that puts working families before corporate CEOs by creating jobs, 
protecting children's access to healthcare and ensuring that struggling 
families do not go hungry. I have consistently supported strong action 
to protect middle class New Mexicans. But I could not vote to give Wall 
Street $700 billion of taxpayer money without solving the underlying 
problems with our economy.
  I will continue working with my colleagues to reform America's 
financial markets, so Wall Street is not allowed to make the same 
mistakes over and over again. I will also continue fighting to support 
middle class New Mexico families that find themselves struggling in an 
economy devastated by the irresponsible acts of others. They are the 
true victims of the Bush administration's malign neglect of our 
economy. We must do what's right for them.
  Ms. KILPATRICK. Madam Speaker, as we prepare to vote on one of the 
most important pieces of legislation in history, I rise in opposition 
to the Troubled Asset Relief Program, TARP. While I have nothing but 
respect, admiration and trust in Speaker Pelosi and House Financial 
Services Committee Chairman Barney Frank, this legislation, which was 
forced upon Congress by the Bush administration,

[[Page 23138]]

provides no judicial review of individual home mortgages for my senior 
citizens, single parents and working families; is opposed by over 400 
of our Nation's top economists and three Nobel laureates; does not 
adequately protect the American taxpayer; was not considered under 
regular order and does nothing to stimulate our stagnant economy.
  The state of Michigan is one of the states hardest hit by home 
foreclosures, unemployment, and the loss of jobs. For poor people and 
low income people and many ethnic minorities, the Court is the option 
of last resort when you are on the brink of losing your home. As 
Chairwoman of the Congressional Black Caucus, I sent a letter to 
Speaker Pelosi requesting that such language--that would allow a 
citizen under the threat of foreclosure--to go to court to have a non-
partisan, objective judge review their financial circumstances and, if 
warranted, lower the principal of the mortgage. Under this legislation, 
judges do not have that option. Instead, this discretion is left up to 
the Secretary of the Treasury. While we are busy bailing out the 
financial markets, this bill does little for the folks on Main Street. 
This bill does not bailout my senior citizens who are behind on their 
mortgage. This bill does not help my working single parents who are 
facing foreclosure. This bill does not work for the majority of the 
people in the State of Michigan, who are staring down the barrel of 
losing their largest asset--their home.
  Over 400 of our Nation's top economists, including three Nobel 
laureates in economics, oppose this bill. The Washington Post reported 
on September 26, 2008, that over 200 economists ``have signed a 
petition organized by a University of Chicago professor objecting to 
the plan on the grounds that it could create perverse incentives, that 
it is too vague and that its long-run effects are unclear.'' While 
their reasons are many, Dean Baker of the Center on Economic and Policy 
Research, one of these economists, says that ``suppose the Paulson plan 
goes through. It is virtually certain that the economy will weaken 
further and the number of foreclosures and people without jobs will 
continue to rise. This is the fallout from a collapsing housing bubble 
. . . this bailout will make further stimulus much more difficult to 
sell.''
  The Treasury Department admits that it has absolutely no factual 
basis for asking for $700 billion. We have asked the hard, tough and 
important questions of the Secretary and this administration, only to 
come up short.
  This bill was not considered under Congress's regular order of 
conducting informational hearings from all sides, a mark-up of the bill 
in subcommittee bill in subcommittee and full committee, and finally, a 
floor vote. When we do not exercise the rules of this institution, we 
debase the rules, the regulations, and the standards we have to conduct 
the people's business. This deliberate process allows everyone to 
support, oppose, and amend legislation--an opportunity we did not have 
during this process. I have recommended that Congress establish a 
select committee, made up of the Chairmen and Ranking Minority Members 
of the Committees with jurisdiction, including the administration, to 
arrive at legislation that addresses the problem of illiquidity of 
credit markets, insolvency of businesses, and the hardship of 
foreclosures. This Committee would meet for three weeks, or a time 
certain, and would guarantee that as representatives of the American 
people, we have done our job.
  This bill does not adequately protect the American taxpayer. As an 
Appropriator, I am designated as the protector of the people's purse. 
While the administration does not have $35 billion to spend on the 
health care for the children of families of working women and men; 
while the administration does not have the money to provide for Low 
Income Home Energy Assistance Program to help my seniors, low- and 
middle-income families pay for their lights, gas and oil heat; while 
the administration does not have the money to extend unemployment 
benefits; while the administration does not have the money for a summer 
jobs program for teens, adults and senior citizens; while the 
administration has $10 billion per month and one trillion dollars to 
spend on wars in Iraq and Afghanistan; when the Administration argues 
over $22 billion--less than 1 percent of the overall budget--on 
virtually every issue before the Appropriations--Committee, we do not 
have the money. However, we have $700 billion--and believe me, it will 
soon be $1 trillion--to bail out Wall Street. Something is wrong with 
this analysis, America.
  We are being asked, once again, to ``trust'' the administration, when 
time is supposedly running out, and if nothing is done, the worse will 
befall all of us. Regrettably, as a Congress, we have been in this 
position before. Under duress, we were supposed to trust the 
administration that these tax cuts were going to save America. Under 
duress, we were told that if a bill that authorized wiretapping of law 
abiding, American taxpayers was needed as terrorists were at our door 
steps. Under duress, we were told that America was imminently under 
threat from Iraq. Now, again, at the last minute, we are being asked, 
under duress, to trust one trillion dollars to a Treasury Secretary who 
is out of office in less than three months?
  Must we do something? Of course. There is a better way. We must 
ensure on regular order for this bill. We can use fewer American tax 
payer dollars--who did not get us into this problem in the first 
place--to ensure the stability of our financial markets. There are 
clearly better and safer alternatives. I am not an economics expert, 
but I do know that as the steward of the people's purse, I have a 
higher standard to which I am held accountable.
  Mrs. CAPPS. Madam Speaker, I rise in very reluctant support of this 
bipartisan effort to address our nation's economic crisis.
  I do so because the very core of our American economy is at risk and 
we must act now in order to prevent its collapse. This is the diagnosis 
presented to us by Treasury Secretary Paulson, Federal Reserve Chairman 
Bernanke and countless economists. In my own survey of the finance and 
banking world, I have heard the same analysis of our current 
predicament and the need for Congress to act quickly.
  What we face here is an economic meltdown brought on by a housing 
bubble, fueled in part by the subprime mortgage scandals, and made 
possible by the lack of regulatory oversight by the Bush 
Administration. Wall Street now sits on billions of dollars of 
mortgages it cannot price and it cannot sell. The response to this 
uncertainty has been a near freeze of credit markets, increasing 
unemployment and a slowing of our economy. Already, car, home, student 
and business loans are drying up across the economy and should this 
continue--or get worse--the markets would likely drop precipitously and 
the economy would come to a standstill or worse.
  Obviously, my concern is not with the effect on large financial 
institutions. They got themselves into this mess and if we could just 
turn our head while they failed that would be fine with me. My concern 
is how this economic calamity would affect ordinary Americans. And here 
the prediction is truly dire.
  If the Secretary is correct, lending would come to a near halt. That 
means it would be much, much more difficult--and expensive--to obtain 
loans to buy a car, a home or to run a business. Small, medium and 
large businesses alike would begin layoffs because the ability to 
obtain a loan is such a critical part of running a business today, much 
less growing a business. We have already seen over job losses of over 
600,000 people in the U.S. this year. The unemployment rate in 
California has increased to 7.7 percent, the highest in over 12 years 
and up from 5.5 percent only 12 months ago.
  Foreclosures would continue unabated. So far this year, over half a 
million foreclosures have been filed in California, and the state is on 
pace to see more than 841,000 foreclosure filings this year. Eight of 
the 10 metropolitan areas with the highest foreclosure rates in the 
nation are in California. As bad as those foreclosures are for the 
people losing their homes, they also contribute to the downward 
pressure on home values for other properties in the neighborhood, 
hurting homeowners who are totally innocent in all this.
  In addition, more innocent and hardworking Americans could see their 
life savings sapped, as IRAs and 401Ks lose value in a plummeting stock 
market. And increased unemployment also means lower tax revenues and 
greater calls for government assistance, resulting in even more 
exploding federal deficits.
  In short, we could be facing a huge recession if we're lucky, a 
depression if we aren't. This is what our economic leaders tell us is 
the future we face if we don't act now.
  I share my constituents' disgust with this situation. The idea that 
hardworking taxpayers have to put their money at risk to stabilize the 
economy because of the bad choices, nefarious actions and utter 
incompetence of Wall Street, its regulators and the Bush Administration 
is nauseating. But, if Secretary Paulson and the others are correct, 
the alternative is much worse and a serious threat to every single 
American.
  Madame Speaker, the proposal originally offered by President Bush to 
address this crisis was completely unacceptable. True to form, the 
President simply asked the Congress to provide him with a blank check, 
no questions asked.
  The Administration wanted no oversight--by Congress, the courts or 
anyone--of how it would spend the money it asked for. It rejected calls 
to limit CEO pay in companies that

[[Page 23139]]

would be bailed out by taxpayers. It refused to help the growing number 
of Americans facing foreclosure and the millions of Americans whose 
housing values affected by those foreclosures. And it failed to ensure 
taxpayers would benefit as much as the Wall Street firms getting this 
federal assistance.
  The legislation before us today is very much the President's product. 
But Democrats have made critical improvements. Most importantly, the 
bill contains mechanisms to ensure taxpayers get their money back by 
requiring taxpayer ownership stakes in companies that benefit from this 
rescue plan, so if the companies return to profitability then taxpayers 
prosper as well. And it sets up insurance collections measures and a 
potential new tax on the financial services industry after 5 years if 
repayment of taxpayer rescue funds hasn't occurred.
  We limit the compensation of top corporate executives whose companies 
benefit from taxpayer assistance, put a halt to ``golden parachutes,'' 
and require repayment of bonuses based on company profits that may 
vanish at a later date. We establish an oversight board and a special 
inspector general to oversee Secretary Paulson's actions, and require 
the details of his actions to be posted on the Internet.
  The bill also should help small business and families that need 
credit by aiding smaller banks hurt by the mortgage crisis, expanding 
eligibility for mortgage refinancing help and encouraging loan 
servicers to make problem loans more affordable. While these steps are 
helpful to homeowners potentially facing foreclosure, they are critical 
to innocent families whose home values are plummeting from record 
foreclosure rates and abandoned, foreclosed properties in their 
neighborhoods.
  Finally, while the immediate need is to stabilize the markets and get 
our economy back on track, we begin the process of reestablishing 
common sense regulation protecting consumers and encouraging stability 
in our markets. Much of this current mess arises from the governing 
choices of President Bush and his party, especially their undying faith 
in deregulation and a systematic policy to dismantle vital consumer 
protections. That has to be reversed. On President Bush's watch we have 
seen widening income inequality, anemic job creation, skyrocketing 
energy prices, record federal budget deficits and now a potential 
historic financial meltdown. This record of failure is clear and we 
have to turn a page on it.
  Madam Speaker, this is not an easy vote to cast, but it is necessary 
for the future stability of our economy and the lives of everyday 
Americans.
  Mr. MAHONEY of Florida. Madam Speaker, 11 days ago, the Bush 
administration came to Congress with a $700 billion emergency ``handout 
plan'' for its friends on Wall Street. The Bush plan had zero 
accountability and allowed Wall Street executives to push their bad 
investments and losses on to American taxpayers. Then, after the 
American people cleaned up the mess and we righted the ship, the Bush 
plan would allow these same Wall Street executives to once again make 
obscene incomes and bonuses. A return to business as usual.
  Madam Speaker, the good news today is that the bipartisan legislation 
negotiated with the Bush Administration coming before Congress holds 
Wall Street accountable. It provides for independent oversight and 
transparency. It protects taxpayers by requiring the Administration to 
report back on the program's progress and allows for corrections to be 
made if the program does not work. It eliminates excessive executive 
compensation and ensures that every tax dollar spent to purchase 
illiquid assets is an equity investment that gives taxpayers an upside. 
Once we are through this crisis, the legislation ensures that any 
taxpayer losses are repaid by the industry.
  The events over the past weeks have shown that Main Street has 
rightfully lost confidence in Wall Street because this Administration 
has eliminated safeguards and turned regulatory oversight over to the 
industry. I want Americans to know that this legislation is not a 
silver bullet, and that by itself will not fix the economy. We still 
have tough times ahead. I can tell you as an entrepreneur and 
businessman for almost thirty years that our economy is on the brink 
and inaction is not an option. A vote for this legislation is a vote to 
protect every American's investment in their homes, their savings, and 
their businesses. I call on all my colleagues to support this bill.
  Mr. STEARNS. Madam Speaker, I rise today to address the historic vote 
we are holding on the largest government bailout in our Nation's 
history.
  I do want to applaud the legislation we have on the floor, because it 
is much improved from the 2\1/2\-page document put forth by Secretary 
Paulson. However, while I commend my colleagues on their bipartisan 
efforts to improve the bill and insure better protections for American 
taxpayers, I still have strong reservations.
  Our Nation faces a growing financial crisis that deserves strong 
Federal intervention, and I had hoped to support a proposal to shore up 
our Nation's financial markets while protecting taxpayers. However, I 
believe this legislation takes the wrong course in supporting troubled 
financial institutions while simultaneously exposing taxpayers to 
excessive risk.
  To begin, this bill comes with a $700 billion price tag which will be 
paid for by the American people. Billions of taxpayer dollars are going 
to benefit an indiscriminate number of private financial institutions 
that utilized reckless investment strategies.
  Even more troubling than the cost of this bailout is a provision that 
allows foreign banks to participate in the Treasury's purchase plan. 
Under this bill, a foreign bank, such as the Bank of China, could sell 
a portfolio of toxic assets to a U.S.-headquartered investment bank and 
then that bank could sell those same assets to the Treasury Department.
  Unfortunately, this bill deals exclusively with the asset side of 
these troubled institutions and does not address the key issue of 
liability. Furthermore, it is very possible that we will still face the 
risk of a run on our banks.
  Having gone through the Savings and Loan crisis as a freshman Member 
of Congress in the 1980s, I can better understand ways we can address 
this financial crisis. In putting forward $700 billion in public funds, 
I would like to see Congress pursue a more deliberative process in 
identifying the ills affecting our financial markets. We need to hold 
hearings and call in the best financial and economic experts in the 
Nation and take a careful look at our alternatives. One plan I 
recommended was providing low-interest loans to these institutions 
combined with giving warrants to taxpayers so that they too can gain 
from any future upside. Furthermore, we should expand the FDIC to cover 
all transaction accounts and put in place an oversight board that is 
separate from the Congress and the administration.
  It is troubling that under this bill the Treasury will be ceded vast 
powers. Secretary Paulson and successors will decide how $700 billion 
in taxpayer dollars will be spent, and may buy not only mortgages and 
mortgage-backed securities, but also any other financial instrument he 
deems necessary.
  And while the bill does set up an oversight board, Mr. Paulson would 
be one of the five members of the Board monitoring his own actions. 
Thus, if Mr. Paulson wishes to use his authority to buy financial 
assets not linked to mortgages, he can do so after consulting with the 
Fed Chairman, but he does not need his approval or the approval of the 
Oversight Board. Granting a single person this much power over our 
financial future is not acceptable in a democracy.
  The bill also gives the SEC Chairman the ability to suspend the 
accounting rules that require banks to report on the market value of 
their assets if he believes it is in the best interest of the public. 
The bill also allows the Government to purchase troubled assets from 
pension plans and local governments and small banks that serve low and 
middle-income families. This expands the intended scope of the bill to 
allow the government to buy the toxic debt of States, cities and 
municipalities in places like Detroit and Chicago. This begs the 
question--who is going to make the basic decision on what cities, 
States and municipalities are going to be rescued?
  However, the heart of the problem of the bill we are considering 
today is that the Government should not be deciding the winners and the 
losers. The investors who made mistakes should be held responsible, and 
those who navigated the Federal distorted market should be rewarded for 
their wisdom and prudence.
  If we, as Americans, believe in the viability of the free market 
system, we should allow it to work by not perpetuating a continuing 
bailout strategy that places immense risk on the shoulders of American 
taxpayers.
  Mr. LANGEVIN. Madam Speaker, we're here today with the unenviable 
task of considering H.R. 3997, the Emergency Economic Stabilization 
Act. During this difficult economic crisis, I am proud of this Congress 
for coming together at a critical moment to reach a bipartisan 
compromise to rescue our financial markets and, indeed, our entire 
economy. However, no one is celebrating today about the tough decisions 
that had to be made.
  Over the last week hundreds of Rhode Islanders have contacted my 
office expressing serious concerns about the proposal and a firm belief 
that the taxpayers' needs must be a priority. I share their anger and 
frustration that for far too long, many on Wall Street were given carte 
blanche to make increasingly risky investments--investments which, in 
some

[[Page 23140]]

cases, the firms themselves didn't even fully understand. There is 
plenty of blame to go around, from Wall Street to government regulators 
to Congress. Unfortunately, the actions of these firms do not take 
place in a bubble: they are inextricably linked to the everyday 
transactions of everyday American families. Our economy is in dire 
shape and drastic action is needed. If we do not act now, a domino 
effect could easily trigger major job losses and a significant period 
of economic downturn with negative consequences not just on Wall 
Street, but on every street in our country.
  This crisis originated with faulty lending practices and the creation 
of subprime mortgages made to people who often could not afford to pay 
them back. These subprime mortgages were then pooled together into 
packages that were transformed into highly rated securities purchased 
around the world. The eventual collapse of the subprime mortgage market 
then infected the prime mortgage market, which in turn poisoned the 
entire financial system. In response, Treasury Secretary Hank Paulson 
proposed a plan under which the Federal Government would buy--at a deep 
discount--so-called ``toxic'' assets, which currently no one is willing 
to buy. These assets include home mortgages which have been bundled 
into such complex packages that there is great uncertainty about their 
underlying value. Secretary Paulson considers these purchases to be 
investments by the Federal Government, which could return a substantial 
proportion of their value to American taxpayers once the market has 
settled down.
  I recognize the urgency of the situation and understand that 
Secretary Paulson and all responsible government leaders are trying to 
ward off even worse outcomes. This year, we have seen the fall of some 
of the largest investment banks in the world--Bear Stearns, Lehman 
Brothers, and Merrill Lynch--and the last two standing--Morgan Stanley 
and Goldman Sachs--last week chose to be switched over to commercial 
banks, seeking greater protection at the price of greater regulation. 
Meanwhile, the Federal Government loaned $85 billion to American 
Insurance Group, Inc. (AIG), the 18th largest company in the world, 
when it was unable to access credit for its daily operations. On 
September 26, we also saw the biggest bank failure of our country's 
history when Washington Mutual collapsed. Just this morning, Wachovia 
was bought out by another bank. Even Bank of America recently decided 
it would no longer extend new lines of credit to McDonald's 
franchisees, which have been turning a profit for years and run a clean 
balance sheet.
  When the credit market seizes up at the highest levels, it is not 
just a problem for Wall Street. It quickly impacts all of us, making it 
harder for average families to secure car loans, home loans or mortgage 
refinancing. It means that small business owners can't access the quick 
capital they need to make payroll or invest in their companies. It 
impacts the student loan market, where more than 50 firms have 
abandoned or cut back their student loan programs. And it threatens the 
pensions and savings that our retirees are counting on. While no one 
wanted to be in this position, I do believe that passing this rescue 
plan is essential for Rhode Island families.
  However, I have been vocal about my own concerns with the 
administration's original proposal, and I have outlined priorities that 
must be included in any bill I would be able to support. I am pleased 
that the legislation before us today is a vast improvement over the 
initial plan Secretary Paulson presented 10 days ago, and it contains 
significant protections for families across the country who had nothing 
to do with creating this crisis but are feeling its effects in many 
ways. First, this bill protects taxpayers by requiring strong 
congressional oversight over expenditures under the plan; giving 
taxpayers a share of profits in participating companies; and requiring 
a President to ensure taxpayers are repaid in full, with Wall Street 
making up any difference. Furthermore, we have ensured that CEOs do not 
benefit from risky behavior by severely limiting executive compensation 
and ``golden parachute'' packages for any firms that take advantage of 
the Government assistance. Finally, the bill requires the Government to 
implement a plan to reduce foreclosures as it buys troubled financial 
assets like mortgage backed securities.
  At its core, H.R. 3997 authorizes $700 billion for the Treasury 
Department to buy distressed mortgage-backed securities, expiring on 
December 31, 2009. Of that total, $250 billion would be for immediate 
release, with another $100 billion upon a Presidential certification of 
need. The final $350 billion could be made available if the President 
transmits a written report to Congress requesting the funds, and 
Congress would have the right to disapprove this last installment. 
Spending authority would be overseen by a new Financial Stability 
Oversight Board, which will review the Treasury Department's actions 
and its effects on the financial markets and the housing market, and by 
a special inspector general office to conduct and supervise audits and 
investigations of the actions taken under this bill. Treasury must also 
report to Congress 60 days after it begins using this authority, and 
every 30 days thereafter.
  Furthermore, H.R. 3997 establishes a joint congressional oversight 
panel to review the current state of the financial markets and the 
regulatory system. This panel will submit a report on the current 
regulatory system and its effectiveness at overseeing the participants 
in the financial system and protecting consumers. This provision is 
critical, since going forward, we must ensure that our financial sector 
is no longer allowed to put ordinary Americans in danger by pursuing 
high-risk behavior with little to no oversight. We must investigate 
companies that took advantage of lenient regulation or possibly acted 
outside of Federal regulations entirely. And we must learn from our 
mistakes, establishing new regulations and ensuring the laws already on 
the books are enforced.
  Madam Speaker, let me assure my colleagues and my constituents that 
if I thought the bill before us today was nothing more than a hand-out 
to high-flying Wall Street investors who suddenly found themselves in 
trouble and decided they didn't like losing money, I would be the first 
in line to cast a no vote. Unfortunately, this problem is much bigger 
and much less selective about who it might hurt. We need to take 
action, and we need to do it now. This legislation represents a good, 
bipartisan solution to a situation none of us wanted to find ourselves 
in. I want to thank Speaker Pelosi, Chairman Frank and many other 
colleagues for their tireless work on this bill. I encourage all my 
colleagues to vote for this bill.
  Mrs. McCARTHY of New York. Madam Speaker, my number one concern as we 
debate the Emergency Economic Stabilization Act of 2008 is my 
constituents and how the instability and lack of confidence in our 
financial markets is going to affect them.
  I am concerned that if we do not act soon we will find ourselves in a 
recession, the effects of which will be felt for many years to come.
  In my district on Long Island, New York, we have already felt the 
effects of the foreclosure crisis. A large number of foreclosures in my 
district have already resulted in a decrease in home values for 
families and property tax revenue for Municipalities.
  Now, my constituents are beginning to see the effects of the current 
economic crisis.
  Small businesses in my district are seeing a decrease in activity. 
After seeing a decrease in the value of their 401k's, individuals who 
were thinking of retiring in the next year are having to reconsider 
that decision. Families preparing to send a child to college are 
finding it more difficult to obtain a loan.
  All these things have consequences: Small- and medium-sized business 
owners may have to lay off workers or shut down; those planning for 
retirement may not be able to do so; and parents may have to tell their 
children that college just isn't an option.
  If we do not act, this will only be the beginning. As unemployment 
rises, more people are unable to spend money on items large and small 
and the downward spiral begins. As banks make it difficult to obtain a 
loan for a house or car those industries begin to decline and the 
downward spiral continues.
  This will all occur at the same time that families are being required 
to spend more money on gas and facing another cold winter with almost 
double the home heating costs compared to last year.
  The causes of the problem are complicated but easy to identify. The 
proponents of deregulation have been able to slowly peal away 
requirements that would have kept companies like Bear Stearns from 
being too big to fail. Additionally, what little regulations we have 
been able to save from opponents of regulations were not properly 
enforced by an Administration who thought that the markets would 
regulate themselves.
  It is unfortunate that the actions on Wall Street are going to affect 
Merrick Road and Hempstead Turnpike. But this is the reality of the 
situation we are faced with today. Merrick Road and Hempstead Turnpike 
are why I am going to vote for this bill today.
  I am pleased that we have been able to come up with a compromise 
package that strikes a fair balance and can potentially offer the 
relief we need to restore confidence in the markets to ensure economic 
stability for the families in my district.
  We will first reinvest in our troubled financial markets. Stabilizing 
our economy will insulate our communities from the mistakes and bad 
decisions of Wall Street. The Secretary of the Treasury will be allowed 
to invest $350 billion

[[Page 23141]]

and potentially up to $700 billion in troubled assets held by financial 
institutions that are currently unwilling to extend lines of credit to 
each other or to small businesses.
  The Secretary will buy up the securities that no one wants and that 
have almost no short-term value. This does not mean that they do not 
have any value. In fact, many of these securities have substantial 
long-term value and the U.S. taxpayer will realize this value over 
time.
  We will then reimburse the taxpayer for this reinvestment. We have 
required that the Secretary take an interest on behalf of the taxpayer 
in any financial institution that sells troubled assets to the U.S. 
This will allow the taxpayer to be reimbursed for reinvesting in Wall 
Street.
  If full reimbursement is not realized at the end of five years, the 
President is required to submit a plan to Congress to recoup any losses 
to the taxpayer.
  In order to ensure that this program works for the American people, 
provisions requiring strong independent oversight and transparency have 
been included. Within 48-hours the Secretary is required to post 
details of every transaction. There will be periodic reports on 
everything from whether taxpayer dollars are used effectively to 
whether conflicts of interests are managed properly. Every $50 billion 
investment by the Secretary must be followed by a report justifying all 
transactions and the pricing of each purchase.
  We will also reform how business is done on Wall Street.
  Golden parachutes for executives are prohibited, compensation that 
encourages unnecessary risk-taking putting shareholders investment at 
risk is limited and bonuses can be recovered that are paid to 
executives who promise gains based on false and inaccurate information.
  In evaluating transactions, the Secretary must protect the taxpayer 
and encourage the modification of home loans at-risk of foreclosure. As 
the one holding these mortgage-backed securities, we will have put the 
Secretary in a position to work with servicers to ensure that those who 
can afford their homes are able to modify their mortgages in order to 
stay in their homes.
  At the end of the day, this compromise will ensure unemployment does 
not increase, families will be able to access lines of credit to make 
purchases, small businesses are able to make payroll, and 
municipalities are able to continue providing the services our 
communities rely on.
  I will vote in favor of this compromise so that the families in my 
district who are already struggling under high gas prices and property 
taxes and facing high home heating prices will not be further burdened 
by the mistakes of Wall Street.
  Mr. CONYERS. Madam Speaker, I rise in opposition to the Emergency 
Economic Stabilization Act of 2008. As an elected official tasked with 
the tremendous responsibility of protecting the taxpayers' interests 
and money, I cannot in good conscience support this fundamentally 
flawed legislation before us today.
  As Chairman of the House Judiciary Committee, I am often required to 
engage in oversight of the enforcement of our nation's antitrust laws, 
the statutes which ensure the competitive balance of our free market 
economy. One of the important things I have learned during my tenure is 
that the free market serves America best when it keeps prices low for 
the people on Main Street and doesn't cater to the titans of Wall 
Street. The only way this properly functioning market can be realized, 
is when no corporation or bank is allowed to become too big or too 
powerful to fail. Otherwise, corporations grow too bold, and begin to 
take more risks than a prudent business afraid of bankruptcy should.
  For the last 8 years, President Bush has governed from the 
intersection of Pennsylvania Avenue and Wall Street; leaving Main 
Street behind. Desperately needed priorities like children's health 
insurance and heating fuel for the poor have gone unfulfilled, while 
the top one tenth of one percent have benefited from dramatic cuts to 
the capital gains and income taxes. During this same time, President 
Bush's Justice Department sat by as the financial juggernauts grew 
larger and larger and their financial wheeling and dealing grew more 
and more reckless.
  Now, President Bush has proposed a $700 billion dollar bailout of 
Wall Street. And why is the Congress held hostage? Because financial 
institutions and investment banks are too big to be allowed to fail. 
Unless the American tax payer foots the bill for Wall Street's risky 
behavior, credit will freeze, investment will cease, and the economy 
will crash and burn.
  Or so the President's former Goldman Sachs executive, Treasury 
Secretary Paulson, would have us believe. I am not sure, considering 
the source here.
  True, buying the worthless mortgage backed securities from these 
firms and banks would likely improve their ability to lend. I'm sure 
it's just a coincidence that this approach also magically turns 
institutions on the verge of collapse back into profitable business 
ventures.
  If injecting credit into our financial industry is the solution to 
the current supposed credit squeeze, why hasn't this body been given 
the option to vote for other proposals, like giving tax payers a no-
risk equity stake in the bailout recipients or supporting the direct 
injection of capitol into the financial industry, as we did during the 
Savings and Loan crisis of the 1980s? The likely reason is because Wall 
Street would have to give up a piece of its wealth; something this 
crony-capitalist Administration is loathe to do.
  Although the President's radical proposal has gradually been improved 
over the last week by the Leadership, the fundamental structure and 
capital delivery method remains flawed. No number of federal loan 
modifications or oversight boards will alter that.
  People all over the country are up in arms over this bailout, not 
because it's not necessary, but because it is just more of the same. 
The American people can't take another transfer of wealth from the 
working class to the upper crust. I encourage my colleagues to vote 
today to scrap this deal so that we can put together a real plan that 
addresses the credit crunch by directly injecting capital into the 
markets, updating our outdated regulatory structure, helping people who 
are struggling to stay in their homes, legitimately providing for the 
recoupment of taxpayer dollars, and restoring the competitive balance 
of the free market by ensuring that no firm is too big to fail.
  Mr. WAXMAN. Madam Speaker, I rise today in reluctant support of H.R. 
3997, the Emergency Economic Stabilization Act.
  This is an easy bill to vote against. It was presented to us by a 
Republican President and Republican Administration so blinded by their 
ideology of deregulation that it kept them from preventing this crisis. 
This is a Republican bill which must pass with bipartisan votes. Many 
Democrats don't like it. Many Republicans are choking on it.
  But for now, it would be irresponsible to do nothing and I will vote 
for this bill.
  Our economy has been imperiled by a combination of runaway greed on 
Wall Street and stunning indifference to oversight and regulation from 
Washington. It is fundamentally unfair that the taxpayers are being 
asked to pay $700 billion to bail out Wall Street, while the executives 
who made the reckless investments can walk away with millions. Yet that 
is what the Administration asked us to do.
  Because of the masterful work of Chairman Barney Frank and others, 
this bill is much improved. Some of the worst elements of the 
Administration's plan have been modified. But at its core, what we are 
voting on is the Bush bailout plan.
  In essence, the Administration has forced us to choose between 
adopting their plan or doing nothing. This is a Hobson's choice.
  I would have preferred that we take a different approach. Nobel Prize 
economists have recommended alternative approaches. A broad range of 
economists have urged the Administration and Congress to take more time 
and to consider alternatives that would put less burden on the 
taxpayers.
  But the Bush Administration has been adamant that Congress adopt its 
approach. They have steadfastly resisted considering other options to 
protect the taxpayer.
  I have reluctantly decided to vote for the plan, but I do so only 
because the alternative of doing nothing is worse. Even the economists 
who question the structure and effectiveness of the Administration's 
proposal say that doing nothing would imperil our economy. That is a 
risk we should not take.
  We urgently need to enact comprehensive reform of our financial 
markets. That is why the Oversight Committee will be conducting a 
series of hearings starting next week to examine what went wrong and 
who should be held accountable. These hearings will help provide all 
members with a roadmap to the reforms we will need to place into law 
under the next Administration.
  I want to comment specifically on the provisions in the bill which 
ensure that the Government Accountability Office will have adequate 
access to documents and persons involved in the Troubled Asset Relief 
Program. As the chair of the committee with jurisdiction over GAO, I 
was involved in writing this important language.
  GAO oversight is a critical component in ensuring the $700 billion is 
spent wisely and responsibly. To do its important job, GAO will need 
broad access to information. The legislative language reflects this by 
providing GAO with access to ``any information, data, schedules, books, 
accounts, financial records, reports, files, electronic communication, 
or other

[[Page 23142]]

papers, things, or property belonging to or in use by the TARP, or any 
vehicles established by the Secretary under this Act, and to the 
officers, directors, employees, independent public accountants, 
financial advisors, and other agents and representatives of the TARP . 
. . or any such vehicle at such reasonable time as the Comptroller may 
request.''
  This right of access covers both papers and people. GAO has a right 
to review any documents and communications that relate to the financial 
rescue program, regardless of whether they are federal records or the 
records of contractors hired to help run the program. Equally 
important, the language gives GAO the right to interview the federal 
officials and the private accountants, advisors, and others who are 
involved in administering the program. The transactions envisioned by 
the Act are going to be complex by their very nature. To understand 
these complex transactions, GAO will need direct access to the 
individuals most knowledgeable about the program, and this legislation 
gives them this right.
  The legislation provides that GAO's access is provided ``to the 
extent otherwise consistent with law.'' This phrase ensures that where 
the rights of access provided by this legislation overlap with existing 
rights of access, they should be applied consistently. A good example 
involves GAO's right to enforce its right of access to federal records. 
Another provision of law, 31 U.S.C. 716, spells out in detail the steps 
GAO must take to enforce its right to documents. In the event of a 
conflict with the Treasury Department over access to documents, GAO 
should use its existing authority under section 716 to enforce its 
right of access.
  In some important respects, the GAO language in this bill goes beyond 
existing law. For example, it gives GAO rights to interview federal 
officials that GAO does not have under other laws. These new rights are 
being extended to GAO because of the importance of GAO oversight to the 
success of this unprecedented intervention in the markets.
  This is not an easy vote for any member, and it is not an easy vote 
for me. But in the end, we cannot let our anger at the excesses on Wall 
Street lead us to reject a bill that could avoid a calamity for Main 
Street. That is why I am going to support this legislation.
  Mr. HUNTER. Madam Speaker, as we move to vote on the ``bailout'' of 
weakened institutions in the U.S. and abroad, it is appropriate to 
address the emerging question: Where does the U.S. go from here? Most 
instructive is the fact that the nations which appear to be cash-rich 
in the financial crisis are those which have strong manufacturing based 
economies . . . China and Japan. China presently holds $502 billion of 
American debt followed by Japan which tops the list of American 
creditors with $592 billion in U.S. debt. Following the bailout and the 
sale of toxic assets to U.S. taxpayers, China and Japan will have 
additional cash, some of which can be loaned back to the U.S. to pay 
for the bailout.
  A few years ago, an American manufacturer seeking a loan package from 
a major Wall Street firm recalled the threshold condition, ``before we 
talk about your loan package, you must tell us when, not if, you are 
moving your production facility to China.'' This has been the reality 
for U.S. manufacturers for the past 10 years or so. The defacto tariff, 
of 17 percent in China's case and 15 percent in Japan's case dampens 
U.S. exports to those countries and the same tariff; know as the VAT 
tax subsidizes Japan's and China's industries when those nations rebate 
the tax to them upon export to the U.S. This built in trade advantage 
of the VAT tax is not limited to the ``big two'' but is employed by 130 
other trading nations to disadvantage the U.S. manufacturers.
  As a result, thousands of financial advisors last year told their 
clients that for tax and tariff reasons it made sense to move their 
production offshore, even when their operations in the U.S. were 
healthy.
  The manufacturing bases of Japan and China are now generating the 
cash needed to purchase big pieces of the U.S. financial community. 
Mitsubishi UFJ has now acquired about 20 percent of Morgan Stanley for 
$8.4 billion, China Investment Corporation picked up 10 percent of the 
bank earlier this year for $5.5 billion.
  The movement of U.S. manufacturing offshore damages the U.S. in two 
major ways. The cause of the present economic crisis, the devaluation 
of U.S. real estate, is contributed to by the growing inability of our 
citizens to meet substantial mortgage payments with their wages. 
Service sector jobs do not produce the take home pay that can carry the 
payment schedule of appreciated homes in the U.S. Manufacturing jobs 
have historically supported the heart of the 1500 to 2000 square foot 
home market but now they are scarce. For a long time the housing market 
itself has represented the last of the major manufacturing effort in 
the U.S. Homes are simply a composite of material and labor, called 
``product'' by home builders. Every community which has experienced a 
strong home building surge understands the ripple effect of high wages 
from construction operations. Now this last major manufacturing 
initiative in the U.S. has ebbed and the toxic-debt left in the wake of 
over valued real estate packages is resulting in a new debt package, 
this time for taxpayers, which could reach $700 billion.
  Now is the time for the U.S. to rebuild our manufacturing base. We 
should now:
  (1) Eliminate taxes on U.S. manufacturing. This would offset the 15 
to 20 percent tariffs now being charged on U.S. exports by our trading 
competitors.
  (2) Adopt ``mirror trade'' rules with our trading partners that treat 
foreign exports from any given nation in the same way they treat ours. 
For example, a 15 percent Japanese border tax will be met with a 
reciprocal tax for their exports at U.S. borders.
  (3) Have a commission review unfair trade practices by other nations, 
including lack of enforcement for intellectual property rights and 
impose tariffs or other penalties to balance unfair foreign treatment.
  (4) Reduce rate licenses from U.S. government laboratories and U.S. 
government sponsored research when the intellectual property created is 
used in U.S. manufacturing.
  (5) Fund the development of robotics and manufacturing sciences with 
emphasis on our academic institutions.
  A few years ago when roadside bombs began to massively increase U.S. 
casualties in Iraq, I detailed our staff teams from the House Armed 
Services Committee to locate steel companies in the U.S. which produced 
high grade armor plate. Only one such company remained in the U.S. This 
dissolution of the U.S. defense industrial base, once known as the 
arsenal of democracy is a by-product of the manufacturing exodus. 
National security requirements should compel a restoration of U.S. 
manufacturing, as much as our present economic situation does.
  Rebuilding U.S. manufacturing should be America's next step forward 
toward solid economic footing.
  Mr. VAN HOLLEN. Madam Speaker, let's be clear: we are facing this 
crisis today because of the reckless economic policies of the Bush 
Administration and its deregulatory ideology run amok. No one likes the 
choice before us. But we must deal with the world as it is today, not 
the world that might have been had the Bush policies not driven the 
economy and our financial system to the brink of collapse. If this 
rescue plan were simply an effort to indemnify Wall Street from the 
consequences of its own excesses, I would have none of it. 
Unfortunately, that's not why we're here today.
  We're here because we cannot let the toxic contagion on Wall Street 
spill over to Main Street. We must not let the colossal failures of 
irresponsible corporate executives wipe out innocent small businesses 
and citizens who had nothing to do with this mess. At the end of the 
day, we are here out of the conviction that acting decisively now will 
mean less expense and pain than waiting for the crisis to get even 
worse.
  Make no mistake: this legislation is a far cry from the original 
blank check the Administration so brazenly requested. Secretary Paulson 
and his successor at Treasury will have real time oversight regarding 
the decisions they make--and robust judicial review of those decisions 
after the fact. There will be no golden parachutes for the corporate 
executives whose poor judgment and failed leadership created this 
crisis. Qualified homeowners struggling to pay their mortgages will get 
the help they need to stay in their homes. The $700 billion authorized 
in this bill will be broken up and made available in separate tranches 
so that Congress can exercise ongoing oversight before additional funds 
are spent. And taxpayers will receive additional, vital protections in 
the form of a non-voting equity or senior creditor interest in the 
companies they are helping to rescue, a preferred position for 
distribution of assets should a company fail and the ability to resell 
the assets the government purchases at a potential profit once the 
markets recover.
  In that regard, while no one has a crystal ball, the Congressional 
Budget Office has testified that it believes the final cost for this 
rescue package will be substantially less than $700 billion because the 
assets the government will be purchasing will have at least some value. 
Moreover, it is reasonable to expect that at least some of these assets 
could over time actually increase in value, giving taxpayers the 
opportunity to make money on their investments and help recoup the 
initial costs of this plan. However, in the event a full recovery of 
taxpayer funds is not complete within five years, this legislation 
requires the President to submit a plan that would impose

[[Page 23143]]

a fee on the financial industry to make up the difference and make the 
taxpayers whole.
  Finally, Madam Speaker, we would not be doing our job today if we did 
not assure our constituents that, even as we address the immediate 
crisis before us, we are firmly committed to analyzing what went wrong 
and fixing it so that this kind of crisis never happens again. In 
addition to the provisions in this legislation requiring a top to 
bottom review of our regulatory system, Congress--and the House 
Oversight and Government Reform Committee on which I sit--will 
immediately begin an investigation designed to give this Congress a 
comprehensive blueprint for 21st century regulatory reform.
  Mr. HALL of New York. Madam Speaker, the events of the last few weeks 
have been unprecedented. Following a summer of economic disarray and 
confusion the rapid failure of Fannie Mae and Freddie Mac, Lehman 
Brothers and AIG have rocked our economy, roiled our financial markets, 
and left many Americans fearing that we may be on the verge of the 
greatest economic collapse since the Great Depression. This would 
imperil the economy of the Hudson Valley and New York State, costing us 
jobs and revenue that the State and local governments rely on.
  In the wake of massive federal intervention to keep these former 
pillars of the financial industry afloat, it has quickly become clear 
that a cascade of financial collapse on Wall Street threatens to spill 
over into the credit markets, wreaking havoc on the broader business 
community and our entire economy unless swift, responsible, and 
effective steps are taken to stabilize the situation.
  In response to these events, the Bush Administration asked Congress 
for a $700 billion blank check to bail out failing companies as it saw 
fit without limits, restrictions, or oversight.
  It's hardly surprising that following this proposal, the outcry from 
my constituents came through loud and clear that it was unacceptable to 
throw a life line with no strings attached to the same reckless, 
irresponsible CEOs who have driven our economy to the brink through 
dangerous, greedy speculation on mortgage values. I share their view 
that the original Paulsen plan had too little oversight, too little 
protection for taxpayers and too little accountability for Wall Street. 
It was unacceptable.
  I share the anger we're hearing from Americans about the fact that 
Congress may be poised to bail out greedy, freewheeling CEOs while 
average families are struggling with flat wages and higher costs. 
However, one of my most important responsibilities, and one of the most 
sacred obligations of Congress, is to ensure the security of the people 
of the United States, including their economic security. As satisfying 
as it would be to let these irresponsible companies flounder and fail 
as a result of their actions, the bottom line is that their instability 
has created an economic contagion that must be contained, or it will 
spread into the rest of our economy and present a clear and present 
danger to our prosperity and the quality of life of every American.
  It is that need for action that has driven Members of Congress from 
both sides of the aisle to work feverishly over the last several days 
to come up with a plan. While far from perfect, it attempts to address 
the economic crisis in a responsible way that helps Wall Street while 
still looking out for Main Street and protecting our tax dollars.
  It is outrageous to think that the CEOs who ran their companies into 
the ground and have brought us to the precipice of disaster could 
receive fat corporate bonuses, and the bill before us today would put a 
stop to that by instituting limits on executive compensation and golden 
parachutes for the executives of companies that take part in the plan. 
There is real oversight, from the courts, from Congress and from a new 
Inspector General's office. There will finally be significant 
government supervision and regulation of the companies that helped to 
put us in the situation we're in now.
  Perhaps most importantly, the bill puts in place mechanisms to make 
sure that taxpayer dollars will be protected to the maximum extent 
possible. When the market improves, and I believe it will, our 
investment will allow the taxpayers to share in the profits. To the 
extent that our investment is not recouped, the President will have to 
come up with a plan to make sure that the companies taking out this 
government loan will have to pay back the American taxpayer.
  The proposal we have before us today is a substantial improvement 
over what was originally presented to us just a week ago. It has 
safeguards to protect the taxpayers' investment and it has 
comprehensive oversight so we will always know where our money is 
going. While I would take great personal satisfaction in seeing Wall 
Street deal with this crisis on its own, I have a responsibility to the 
people who elected me to do everything in my power to keep the economy 
in good order.
  New York State depends on the continued success of our financial 
institutions for tax revenue and jobs. The Hudson Valley is especially 
vulnerable to difficulties on Wall Street. If we could contain the 
damage to Wall Street I would be tempted to vote no, but I have become 
convinced that the situation has already begun to have ripple effects 
through our economy that could do permanent damage to retirement 
accounts, individual investments, and small businesses. This would be 
unacceptable, and that is why for the sake of our economic security I 
believe that I must reluctantly support this measure.
  We must also be clear that passage of this plan is only a first step. 
One of the conditions that created this crisis is the tendency by the 
Bush Administration to turn a blind eye to the recklessness on Wall 
Street, and we cannot allow that to happen again. Congress must remain 
vigilant, aware of how this tremendous authority is being exercised by 
the Administration and in the markets, and ready to intervene at the 
first hint of abuse or ineffectiveness.
  Mr. DICKS. Madam Speaker, less than 2 weeks ago, Treasury Secretary 
Henry Paulson and Federal Reserve Board Chairman Ben Bernanke issued a 
solemn warning to the President and Congress about the increasingly 
fragile state of the Nation's economic and banking system. They 
expressed their belief that, without prompt congressional action, 
widespread failure of financial institutions on Wall Street and across 
America threatened to send the Nation into an economic crisis not 
experienced since the Great Depression.
  In the past few months, as my colleagues know, several financial 
institutions in the United States have failed, have been acquired by 
other companies through government intervention, or have been sustained 
only with Federal assistance. In the last 2 weeks, the number of 
failures has accelerated at an alarming rate, including the failure of 
Washington Mutual in my State, resulting in the loss of thousands of 
jobs. The Washington Mutual situation has underscored for me and my 
constituents the depth and seriousness of the crisis and has emphasized 
how our action is needed not simply for Wall Street, but also for Main 
Street.
  Even without the collapse of Washington Mutual, it is clear to me 
that the growing crisis of liquidity could have devastating effect on 
my constituents and on the middle class throughout America. Companies 
failing because of an inability to manage their debt would not just be 
isolated to lower Manhattan; indeed, all of our congressional districts 
have businesses large and small that rely on the ability to access 
credit to survive. These businesses may well fail, too, if this crisis 
is allowed to continue without intervention. Retirees and workers alike 
are facing the loss of their retirement funds and pensions if they are 
invested in the markets on a scale not seen in 80 years.
  It is that backdrop and with the advice of some of the wisest and 
most financially astute members of the House a well as financial 
experts from my state, that I am now convinced Congress must act 
quickly to avoid these disastrous consequences.
  It was obvious to me that the legislative proposal initially drafted 
by the Bush administration was overly broad and lacking of any 
substantive or independent oversight by Congress or any clear 
safeguards for American taxpayers. After 10 days of intense, often 
around-the-clock negotiations, the original proposal drafted by 
Treasury Secretary Paulson has been dramatically improved in the 
legislation that is under consideration by the House of Representatives 
today. In addition to helping stabilize the U.S. economy by authorizing 
the Treasury to acquire mortgage-backed securities, enabling the 
release of credit for American consumer and businesses, this bill 
provides strict, independent oversight to assure that the program is 
carried out properly. The provisions of this legislation will help 
existing homeowners to stay in their homes and continue to make 
payments and the bill includes specific provisions to ensure that 
taxpayers are insulated from any losses sustained in this program. And 
I am encouraged that, for the first time, the bill places clear 
restrictions on so-called ``golden parachutes'' and executive 
compensation for companies participating in the new program.
  I believe the revised version of this legislation represents a 
substantially more responsible and prudent means of addressing this 
crisis, and it is my intention to support it. I recognize that many of 
my own constituents have deep reservations about this package. So do I. 
I recognize that it may not be perfect. But I believe it is a 
responsible action and that it is in the best interests of our Nation 
at this

[[Page 23144]]

critical time. And I also believe that the consequences of not acting 
today could be devastating. It is therefore my intention to support 
this legislation.
  Ms. EDDIE BERNICE JOHNSON of Texas. Madam Speaker, my constituents 
are justifiably anxious about the threats this financial chaos poses to 
their savings, their children's future and their retirement security. I 
share their outrage that this administration and its supporters in 
Congress failed to prevent this foreseeable crisis and punish those 
responsible. I appreciate their anger and their opposition to using 
their tax dollars to bailout the executives of corporations who 
profited from the lax oversight of the past 8 years.
  I have been told that this crisis is called an economic Pearl Harbor. 
In those war days, American credit, which is necessary for all 
commerce, had stalled. Investors were pulling record amounts of money 
from even the safest investments, which meant that money for the short-
term loans that businesses use every day were either unavailable or 
cost three to four times more than they had cost just a few days prior.
  If allowed to continue, the result would have been catastrophic for 
individuals and businesses alike. The war-time government developed a 
plan to have the government buy the troublesome securities on the books 
of financial institutions in order to rescue our Nation's and world's 
economy.
  Since the Reagan administration, deregulation has spiraled out of 
control. Executive compensation and buyout packages have outraged 
millions of Americans, and rightfully so. We cannot continue with the 
path we currently are on. This measure is aimed to do that.
  Madam Speaker, I truly understand that the cost of this rescue 
package may also limit discretionary spending. Federal spending also 
might be hampered by the much larger commitments that the government 
has made for Medicare, Medicaid and Social Security.
  Regional economies, such as ours in north Texas, may have to fight 
even harder for scarce Federal dollars for roads, bridges and sewer 
projects. Creative solutions will be needed to find pragmatic ways to 
fund these needs.
  We need credit in order for this country to operate economically.
  Madam Speaker, state and local governments rely on their ability to 
borrow to finance special projects. Think of how new schools get built: 
a district issues bonds through a bond house, the bonds are sold to 
raise money, the money is paid back over time with interest. It's like 
a mortgage.
  Texas companies rely on free-flowing credit to finance both day-to-
day operations and long-term needs. Credit is tighter for businesses 
across the region at the moment, something of particular concern to 
manufacturers. And individuals rely on credit to buy homes, cars, and 
to pay for college.
  In a troubled economy, now made more difficult by the credit crisis, 
it is more important than ever to work together to nurture job growth 
in north Texas. From worker training to transit to luring new business 
to helping existing businesses expand, a lot is at stake right now.
  If this really is our economic Pearl Harbor, then the way we, as a 
nation and as individuals, act in the coming days will be the measure 
of whether we meet the challenge with the same resolve as our parents 
and grandparents.
  For that, I intend to vote for this measure.
  Mr. SMITH of Texas. Madam Speaker, much of our economic crisis today 
is rooted in misguided policies of the past. Permitting home mortgages 
with nothing down was a disaster waiting to happen when home prices 
fell. Unfortunately, all the bad mortgages and the resulting credit 
crisis have dragged down our economy and threatened the financial well-
being of all Americans.
  If companies big and small cannot access funds they need to operate 
and pay employees, this will adversely impact the entire economy and 
punish hard-working Americans. If credit to buy homes, cars and other 
purchases dries up, home prices will fall even further and loans will 
become even harder to get.
  Many people felt the original proposal was unfair. It would have been 
far more unfair to do nothing and allow a recession to occur, which 
would hurt everyone. Changes were made to the plan to address those 
concerns. Measures were successfully included to ensure Wall Street 
pays its share and taxpayers are protected.
  We were facing the economic equivalent of a cattle stampede. To stop 
a stampede, you have to act quickly and decisively and get ahead of the 
herd to turn it. This plan, while not perfect, does that.
  This is not about bailing out Wall Street. It's about protecting 
American jobs, the financial security of families, and the economy of 
our Nation.
  Since half of all households own stocks either directly or indirectly 
through 401(k) accounts, IRAs, and pension plans, we had to find a 
solution to this crisis.
  The money in the compromise plan will be used to purchase the 
mortgage-related assets at the center of the problem. When the 
financial markets stabilize, many of those assets will regain their 
value and will be sold by the Federal Government to recover a 
substantial portion of the cost for taxpayers.
  This plan will stabilize the economy, strengthen home values, and 
prevent a devastating recession. It's an investment in the future of 
the American people.
  Ms. ESHOO. Madam Speaker, I rise today to express my support for the 
H.R. 3997 Emergency Economic Stabilization Act.
  Each of us is outraged about the circumstances that have brought our 
financial system to near collapse. In my view, this was brought on by 
the Bush administration's failed economic policies and their support 
for ``cowboy capitalism,'' believing the markets must be allowed to run 
free and unfettered. Instead, Wall Street has been allowed to run wild 
without accountability, without transparency and without effective 
enforcement or regulations to protect the American taxpayer.
  The legislation the President presented to Congress on Monday, 
September 22, requested Congress to approve a $700 billion bailout, 
with the Treasury Secretary empowered to set the rules for all 
transactions. The bill included no safeguards, no transparency, no 
accountability, and no oversight. This plan was wrong for the American 
people and we rejected it.
  Over the past week, legislation has been completely reshaped and it 
now includes three essential elements to rebuild our financial system. 
First, we will reinvest in troubled financial markets to stabilize our 
economy and insulate Main Street from Wall Street. Second, the taxpayer 
will be reimbursed through ownership shares and asset recovery as the 
plan begins to work. Finally, the bill will reform how business is done 
on Wall Street including the prohibition of golden parachutes.
  This legislation ensures that taxpayers have an equity share in any 
profits and gives taxpayers an ownership stake and profit sharing of 
participating companies. It puts taxpayers first in line to recover 
assets if a participating company fails, and allows the Government to 
purchase troubled assets from pension plans, local government, and 
small banks that serve low- and middle-income families.
  H.R. 3997 includes strong independent oversight and transparency 
through an establishment of an independent bipartisan board to provide 
oversight, review and accountability of taxpayer funds. The Government 
Accountability Office will have a presence at Treasury to oversee the 
program and conduct audits to ensure strong internal controls, and to 
prevent waste, fraud, and abuse. There will be an independent Inspector 
General to monitor the Treasury Secretary's decisions in regard to this 
program and all transactions will be posted online for the public to 
review.
  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, and 
there are limits on golden parachutes for executives whose companies 
participate in the program. We will help homeowners by allowing the 
Government to change the terms of mortgages to help reduce the 2 
million projected foreclosures in the next year. It will also assist 
school districts, cities and counties who had investments in failed 
institutions.
  I firmly believe if we do nothing, our ability to obtain home 
mortgages, car loans, student loans, loans for small businesses, or 
even credit cards will become highly difficult or impossible. Even more 
financial institutions could fail and millions could lose their 
pensions and retirement savings, thousands of jobs could be lost, and 
large parts of our economy could cease to function. The repercussions 
would be far greater than the cost of a financial rescue program.
  This is as tough a vote as any I've ever taken during my time in 
Congress. Today, I will vote ``yes'' because I believe we've shaped a 
good bill which is fair to taxpayers and a plan to address the many 
critical issues plaguing the U.S. financial system.
  Having said this, I know that no legislation is perfect; it is a 
product of human beings. But doing nothing I believe is a higher risk 
to our country and would hurt millions of Americans across the nation. 
I didn't come to Congress to hurt people. My ``yes'' vote is to help 
the country move forward, protect taxpayers, help Main Street, protect 
pensions, protect 401(k)s, and restore our credit markets and, with no 
rewards for those whose greed and foolishness have so jeopardized our 
economy.

[[Page 23145]]


  Ms. SPEIER. Madam Speaker, we never should have reached this point.
  But a perfect storm of greed and poor risk-management on Wall Street, 
along with a decade of lax oversight and deregulation, has our markets 
teetering on the edge of collapse.
  We should never have reached this point--but here we are, and we must 
lead.
  Leadership and our democracy require elected officials to make 
difficult decisions. Last Saturday Congress was presented with 
Secretary Paulson's plan. The proposal was a blank check for bad 
actors. It carried no oversight and, indeed, placed an administration 
appointee beyond the arm of the courts.
  This is not Paulson's plan. This legislation is crafted with 
taxpayers, not bankers, in mind.
  This begins a new era of strong congressional oversight. If we, the 
Congress, are asking the American taxpayer to foot the bill, then we 
must protect their investment.
  At the beginning of the week, I laid out specifics that needed to be 
in this bill: taxpayers deserved an equity position, there needed to be 
guarantees that taxpayers wouldn't be funding exorbitant executive 
compensation packages, and that this would not be a lump-sum and a 
blank check without the ability to stop payments if this proves the 
wrong solution.
  These taxpayer protections were included.
  To protect taxpayers going forward, Congress must bring back the 
firewalls between investment houses and banks repealed by Gramm-Leach-
Bliley; we need strict controls on exotic financial instruments that 
provide great wealth for a few at the expense of the rest of society 
like ``naked short selling,'' and we need conflict of interest measures 
that ensure Wall Street does not subvert the public's trust in any way.
  Some have characterized our action here as the Government butting 
into the free market. On the contrary, what we are doing is reasserting 
the Government's rightful role in maintaining the stability of our 
economy for the good of all Americans.
  Congress finds itself choosing between two unfortunate choices--
between a massive Government expenditure or inaction that could lead to 
a calamitous collapse of our economy.
  It would be easy to vote against this bill, it would also be 
irresponsible. I was not sent to Congress to be a slave to public 
opinion polls, but to make decisions after listening to my 
constituents, hearing from experts and fashioning solutions that are in 
the public's best interest.
  Inaction in the face of adversity is not an option. Inaction is not 
leadership. None of us want to be here, none of us is happy about the 
decision before us, but our duty is to act in the best interests of 
everyone.
  More hardship is on the horizon, like greater unemployment, a run on 
banks, and further collapse in value of a great many Americans' only 
financial security: Their homes and their pensions.
  I look forward to working with Chairman Frank and with the Speaker as 
this House protects the American taxpayer and stabilizes our financial 
markets.
  Mr. THORNBERRY. Madam Speaker, the issue before us is one of the most 
difficult decisions I have faced during my time in Congress. The reason 
it is so difficult is the concern about what will happen to our economy 
if this bill is not passed. But the bottom line is that this bill is an 
unprecedented intrusion by government into the economy of the country 
and is contrary to the common sense principles in which I believe. I 
have carefully weighed the opinion of many different sources, including 
those who have spent their professional lives in the financial sector 
and the American taxpayers I am privileged to represent.
  I am convinced that the United States faces a serious economic 
crisis, centered on Wall Street and high risk financial institutions 
but with shock waves that could extend throughout the country. I am 
further convinced that in this situation some sort of government action 
is needed and appropriate.
  In fact, Congress is partly responsible for this situation. Over the 
years, some in Congress have pushed government agencies and lenders to 
provide more loans than many could repay. Too many people borrowed too 
much money. Yet, those laws and regulations which helped to create this 
problem are not corrected in this legislation.
  Despite the fact that action is needed, I am not convinced that the 
bill before us is the type of government action that is appropriate or 
that it will be effective in solving our problems.
  In order to support a measure of this size and scope, there should be 
some reasonable belief that it will work--that it will solve the 
underlying causes of the problem. Of course, there are no 
``guarantees,'' as we keep hearing, but $700 billion of taxpayer money 
should not be used as a hopeful experiment.
  Yet, many believe that this bill will not be effective in preventing 
an economic downturn, and, in fact, does nothing to address the 
underlying issues that created the problems we face. It does little to 
bring more private capital into the market. It has no systemic reform 
of the regulatory agencies that helped contribute to the problem. The 
Fair Accounting Rules, which are widely believed to have aggravated the 
situation, are only studied, not changed.
  The bill is far better than it was as originally offered and now has 
more oversight and some checks and balances. But there is still 
enormous discretion with the Secretary of the Treasury, more power than 
seems wise to give to anyone. The core of the plan is to have the 
federal government buy assets which cannot be sold to anyone else. 
Those who have the most of these assets, often based on ``zero-down 
loans'' and ``no doc/low doc'' mortgage loans, will obviously benefit 
the most. Those who were more prudent in their lending will benefit 
less.
  I understand that any measure will be somewhat unfair in that some of 
those who took the excessive risks and made unwise decisions will be 
protected from the full consequences of their decisions. Some degree of 
unfairness is inevitable.
  But it is important to keep foremost in our minds that the foundation 
of the American economy is not Wall Street traders or multi-national 
banks. The foundation of our economy is American businesses and workers 
who pay their bills and taxes on time, who borrow responsibly and take 
reasonable risks, and create economic value, jobs, and a higher 
standard of living. If this measure damages them, it damages our 
present economy and our future. I am afraid that this bill does damage 
well-run companies and institutions, and it certainly damages the 
American taxpayer.
  The only compelling argument I can find on behalf of this bill is 
that we will confront a credit crisis and severe recession if it does 
not pass. Obviously, I hope that will not happen. But failure of this 
specific proposal should not mean that we stop trying to find common 
sense answers to support our economy. Congress can return to work 
immediately, listening not just to the Secretary of the Treasury this 
time, but to commercial bankers and economists and taxpayers across the 
country. There are a number of good ideas which can be considered in a 
thorough but timely way. We should not rush into a flawed proposal that 
will have consequences that last for generations.
  Mrs. DAVIS of California. Madam Speaker, my constituents have every 
right to be angry about our economic situation. I am angry too.
  But I believe that going forward with this legislation enables us to 
begin to right our economy.
  It does not address all the requisite steps that should be taken.
  That is why I am urging the chairman and the Congress to work with 
the Treasury and the SEC to promulgate rules on accounting practices 
that reflect the true value of assets they will be working with.
  This bill is not a magic bullet but the cost of doing nothing may be 
far greater than the painful steps we take today.
  I thank the Chairman and all of my colleagues from both sides of the 
aisle. We may disagree but people have worked hard over the past week 
to listen to one another no matter where you come down on this issue.
  Mr. MILLER of North Carolina. Madam Speaker, this bill is a very 
bitter pill for me. I probably have become the leading critic in 
Congress of the mortgage lending industry, including the financial 
institutions that bought predatory mortgages knowing full well the 
consequences of those mortgages for middle class homeowners.
  The industry has not always taken my criticism with good humor.
  The industry hated the legislation that I introduced more than five 
years ago to prohibit predatory mortgage lending practices. And the 
industry really, really hated the legislation that I introduced last 
year to let bankruptcy courts modify predatory mortgages.
  But I do think we are in a worsening financial crisis that will 
affect ordinary Americans, not just financial institutions. The economy 
will slow dramatically if every business and every American family has 
to operate on cash. If credit is not readily available and affordable, 
middle class American families will have a hard time buying a new car, 
with disastrous results for the Americans who depend on the automobile 
industry for their livelihood. The story is the same in industry after 
industry.
  This bill is a dramatic improvement on what the Bush Administration 
presented Congress not quite a week ago. There is now real 
transparency, and vastly improved accountability and oversight. The 
bill takes pains to shift the ultimate cost to the industry that made 
the mess, not innocent taxpayers.

[[Page 23146]]

  I regret that this bill does not do more for families with houses 
that they can afford, but abusive mortgages that they can't. Millions 
of families will lose their homes to foreclosure, and foreclosures are 
pulling down home values for millions of other families. I will push 
hard for bankruptcy reform early next year.
  I wish the limitations on the compensation of top executives were 
tougher, another issue we need to come back to.
  I wish there were real reforms in consumer lending practices that 
cheat middle class families with deceptive penalties and fees, and trap 
struggling families in a cycle of debt.
  And I know that no matter what Congress does, we are all in for 
several tough months, and maybe longer. Many financial institutions are 
carrying assets on their books for far more than the assets are really 
worth. Banks won't trust each other enough to lend freely until 
insolvent institutions collapse, and taxpayers will foot much of the 
bill to pick up the pieces.
  I reluctantly voted for this bill today, but I'm not finished with 
the fight against the heedless greed that is responsible for so much 
grief for so many Americans.
  Mr. ETHERIDGE. Madam Speaker, I rise in support of H.R. 3997. Today, 
the United States faces the most significant financial crisis since the 
Great Depression. While we wish this action was unnecessary, this 
emergency requires bold steps to protect homeowners, small businesses, 
retirement savings plans, and community banks and to ensure that our 
economy can weather this storm. This bill should put us on the right 
path to recovery for our financial system.
  Over the last several months we have seen the collapse of some our 
largest financial institutions, throwing our nation's financial system 
into turmoil. As one collapse has followed another, a dangerous lack of 
liquidity has beset the entire system. This freeze in the flow of 
capital means that remaining banks have ceased lending to one another, 
and loans for businesses and individuals are starting to become almost 
as scarce. If lending does not resume, Americans will be unable to grow 
their small business, buy a car, pay for college, or buy a home. 
Without action, this financial crisis will threaten the entire American 
economy.
  I have spoken with the leaders of some of North Carolina's local and 
state banks and credit unions about the effect of this crisis on the 
communities they serve. They told me clearly: if we do not take action 
now, these problems could overtake the entire economy, affecting jobs, 
the vibrancy of our communities, and harming North Carolinians.
  This bill is not the blank check that the Bush Administration 
originally proposed. H.R. 3997 contains key provisions, negotiated by 
Democratic leaders in Congress, to ensure this bill benefits Main 
Street. As I demanded when this plan was first proposed, this bill 
protects taxpayer money, provides help for struggling homeowners, 
prevents Wall Street CEOs from gaining a windfall at taxpayer expense, 
and provides the accountability and oversight that have been missing. 
While it contains strict oversight provisions, the plan also contains 
the flexibility needed to address a problem of this magnitude.
  First and foremost, this plan protects taxpayer money. In taking 
action authorized by H.R. 3997, the Treasury Secretary must consider 
the interests of taxpayers, preserving home ownership, the needs of all 
financial institutions including small institutions and credit unions, 
and the needs of local communities. To ensure that the public shares in 
the benefit of the economic relief provided, Democratic leaders fought 
to add provisions that allow taxpayers, to share in profits if a 
financial institution we invest in grows healthy in the future. At the 
same time, H.R. 3997 requires any losses to the government to be 
recouped from financial institutions in the future. Additionally, this 
bill includes a fiscally responsible requirement that any profit 
resulting from this plan be used to reduce the growing national debt.
  In order to further ensure that assistance benefits Main Street, H.R. 
3997 includes provisions to coordinate and increase efforts to modify 
mortgages for homeowners. The bill provides authorization for loan 
guarantees and credit enhancement to prevent foreclosures, and requires 
a plan to encourage mortgage servicers to modify loans through the 
Federal Housing Administration's Hope for Homeowners and other 
initiatives. We will work to ensure people can remain in their homes 
when possible.
  H.R. 3977 makes sure that the people who made this mess do not unduly 
profit at the public's expense. There are limits on executive 
compensation and golden parachutes for the financial institutions that 
receive this government assistance. It also allows taxpayers to recover 
bonuses paid to executives who promise gains that later turn out to be 
false or inaccurate.
  Congress has also increased oversight and transparency in H.R. 3997. 
The final bill includes $250 billion as an initial effort to stabilize 
the markets, and authorizes the rest of the $700 billion request only 
after Presidential notification and Congressional oversight of the 
Treasury Department's actions. Any purchase by the Secretary must be 
publicly disclosed within two business days of the action. A strong 
oversight board has authority over the Treasury Secretary's actions, 
and the bill mandates detailed reports to Congress at regular 
intervals. Additionally, H.R. 3997 establishes an independent Inspector 
General to monitor the use of the Secretary's authority.
  Given the extent and range of the problems in our financial markets, 
it is critical that the Treasury Secretary have a variety of tools to 
address these problems. H.R. 3997 includes a Republican proposal that 
gives the Treasury Department the option to guarantee companies' 
troubled assets, including mortgage-backed securities, purchased before 
March 18, 2008, with insurance that is paid for through risk-based 
premiums paid by the financial industry.
  H.R. 3997 provides liquidity to the market so that our banks have the 
confidence to make loans again. It is our hope that this will enable 
our financial markets to recover, but we cannot be certain that it will 
do so. The oversight provisions in H.R. 3997 will ensure that we can 
react to any further developments and take further action as necessary.
  Madam Speaker, this crisis is wide-spread and threatens the financial 
security of this generation and the well-being of our children and 
grandchildren. I fervently wish that this action was not necessary, and 
that the markets could correct themselves. However, in order to protect 
Main Street from the impact of Wall Street's problems, I support H.R. 
3997, and I urge my colleagues to join me in voting for its passage.
  Mr. KIND. Madam Speaker, I rise today in support of H.R. 3997, the 
Emergency Economic Stabilization Act of 2008. The financial crisis that 
has been gripping our country reached a point last week where 
extraordinary action is now required.
  Supporting this legislation was not a decision that I came to easily 
or without tremendous thought and consultation. It is based on 
imperfect information. Initially I was very angry and skeptical of the 
plan that the administration proposed because it gave too much 
discretion to the Treasury Secretary and included no accountability for 
the burden that was going to be placed on the taxpayer.
  Fortunately, the administration has listened to the concerns from me 
and my colleagues and has returned the focus of the rescue plan from 
Wall Street to Main Street. This plan protects taxpayers, not executive 
compensation. It includes strong transparency, accountability, and 
oversight functions for Congress.
  The goal of this plan is to take the poison out of the market, get it 
stabilized, and ensure the free flow of credit. Most importantly 
though, it guarantees that taxpayers will be reimbursed for their 
investment at the end of the day. Furthermore, in the longer term, I 
support a comprehensive review and reform of our financial market 
structure and associated regulations.
  This is a rescue plan for the American economy. The reality is that 
without action, there is a good chance that Americans could lose 
everything they have worked so hard for. We are loaning banks money so 
they can loan money to Americans for their everyday lives to buy a car, 
pay for college, start a small business, or buy a house. The risk of 
inaction far outweighs the risk of action. This bill will allow us to 
continue moving forward.
  Madam Speaker, I support this important legislation that will shore 
up our economy and urge my colleagues to join me in voting for its 
passage.
  Mr. RAMSTAD. Madam Speaker, I rise today to oppose the Bush 
administration's $700 billion bailout plan for Wall Street firms and 
banks.
  The administration's bailout plan imposes great risk to taxpayers and 
no guarantee of success.
  Because this bill was considered in such haste, without adequate 
hearings or debate, nobody knows what this complex financial scheme 
will produce so the final cost to taxpayers is uncertain.
  Four hundred of the Nation's top economists signed a petition to 
Congress objecting to the bailout plan, as they are skeptical of the 
Federal Government buying up toxic mortgage-backed assets from banks 
and hoping the benefits trickle down from Wall Street to Main Street.
  According to these economists, the long-term effects of this 
financial scheme--higher inflation, a weakened dollar and a greater 
National debt--will outweigh any short-term stabilization of the credit 
markets.

[[Page 23147]]

  Rather than providing $700 billion of taxpayer money to buy frozen 
mortgage assets to solve the current problem, Congress should adopt the 
plan to insure mortgage-backed securities through payment of insurance 
premiums by the holders of these assets.
  I urge my colleagues to oppose this bailout.
  Mr. BISHOP of Georgia. Madam Speaker, Never in my 16 years in 
Congress have I so grudgingly voted ``yes'' on a piece of legislation. 
And hopefully, with this action, never again will I have to do so.
  The so-called financial titans of this country and those who for 
years have favored lax regulatory oversight put us up against a wall. 
For some time now, Wall Street has been turning a tidy profit by 
playing with other people's money, manipulating balance sheets, and 
using complex financial instruments that few people, if anyone, 
understood. And through it all, the Bush administration has turned a 
blind eye and insisted that our ``fundamentals were strong.''
  It turns out they were fundamentally wrong. And now we are all going 
to pay because of it.
  I certainly do not disagree with the many constituents who have 
called my office and exclaimed, ``$700 billion!'' It is, without a 
doubt, an enormous sum. But it is less expensive than a deep economic 
recession.
  During the Great Depression, the Federal Government waited too long 
to aid the battered banks. Today, the whims of a Wall Street Gone Wild 
have so afflicted our credit markets that I am convinced if we don't do 
something soon--and more importantly, if that action is not taken 
responsibly, and with strict oversight--we will regret it for a long, 
long time to come.
  Everyone in this country, from individuals, to small businesses, to 
farmers, and multinational corporations, relies on credit. The local 
supermarket needs a reliable credit line to stock its shelves, farmers 
need to borrow money to plant their crops, students and parents have to 
borrow for college, and, right now at this very moment thousands of 
Second District residents facing foreclosure desperately need a chance 
to keep their homes by drawing upon a re-financed line of credit.
  We must learn the lessons from history and act quickly to prevent an 
economic calamity. And, we are staring down the barrel of a gun that, 
if fired, would wound our economy so badly that even those with 
impeccable credit histories will not be able to secure a loan.
  Members from both parties have come together to craft this consensus 
package. Each side made its views known. Neither party got everything 
it wanted. But I think we have a good plan in place to prevent a 
deepening of the current crisis and put us back on our feet.
  And, we have secured the taxpayer protections absent from the 
administration's initial proposal: Taxpayers will have an ownership 
stake in these investments with profit-making opportunities, will be 
given a priority position to recover assets in the event a company 
fails, and will be included in a plan to recover any potential 
remaining costs from Wall Street firms after five years.
  Taxpayers will also benefit from six different oversight entities, 
including an oversight board, an inspector general to monitor the 
Treasury Secretary's decisions, a review and audit program within the 
Government Accountability Office, public disclosure of any bailout-
related transaction by the Treasury Secretary, and monthly reports to 
Congress on every $50 billion spent by Treasury. The Treasury 
Secretary's actions will also be subject to judicial review.
  For the poor, for those who have been financially prudent, for the 
unemployed, for those who saw their 401(k)s dwindle--this is not the 
end. In the coming months, it is my hope that Congress pours as much 
effort into investigating the financiers whose actions precipitated 
this crisis and who walked away with millions for themselves, as they 
have put into crafting this bill. Meantime, I encourage my colleagues 
to join me in supporting this first step toward regaining our financial 
footing and setting in place a new system, one that lacks the greed and 
the excess that brought us to this point in the first place.
  Mr. DAVIS of Illinois. Madam Speaker, although I am voting to support 
this bailout plan, I am concerned that we do not have enough of an 
equity remedy for small institutions that held preferred stock in 
Fannie Mae and Freddie Mac. I was recently contacted by Standard Life 
Insurance Company of Indiana (``Standard Life'') regarding an 
unintended consequence of the Fannie Mae and Freddie Mac government 
bailout. Standard Life is a small life insurance company domiciled and 
headquartered in Indiana, with executive offices in Kentucky. They have 
approximately 100 employees (all in Indiana and Kentucky) and 30,000 
policyholders. They sell traditional annuities for pre-retirement 
savings and retirement income purposes. Their average customer is 
approximately 65 years old and average size policy is approximately 
$50,000.
  I understand that between late 2007 and early 2008, based on repeated 
representations by Treasury and Regulatory officials that Fannie Mae 
and Freddie Mac were adequately capitalized and were safe and sound, 
Standard Life purchased $31 million of Fannie Mae and Freddie Mac 
perpetual preferred stock.
  On September 7, 2008, Secretary Paulson announced the conservatorship 
of Fannie Mae and Freddie Mac, a part of which was the elimination of 
dividends on all preferred stock. The consequence of that action was to 
cause the securities to be rated near default, requiring Standard Life 
to carry them at a market value of 10 cents on the dollar for 
regulatory capital purposes, an immediate reduction of Standard Life's 
capital from $113 million to $85 million (or diminution of $28 million 
dollars, or 25 percent).
  It is my understanding that this result has potentially dire 
consequences for Standard Life's survival, Kentucky and Indiana jobs 
and, most importantly, Standard Life's policyholders, if corrective 
action is not taken by September 30, 2008. Standard Life has been 
informed by the rating agency A.M. Best that its rating will be cut if 
the lost capital is not replaced by that time. The rating cut will be 
from a ``secure'' B++ to a likely ``unsecure'' B or lower. This will 
likely result in a cascade of negative events:
  Shut down of sales; extended withdrawal activity (``run on bank''); 
and regulatory intervention, up to and including receivership and 
liquidation, which will result in delayed policyholder access to their 
funds and possible reduction of interest earned on their policies.
  I believe this was an unintended consequence of the government moving 
quickly to stabilize Fannie Mae and Freddie Mac. There are a number of 
ideas being discussed to help companies like Standard Life. It is my 
hope and desire that the government rescue plan include an equitable 
remedy for Standard Life and companies in a similar position. I trust 
that before we finalize this legislation and the President signs it, we 
will have adequately addressed this very serious issue.
  Ms. BROWN-WAITE of Florida. Madam Speaker, I rise today because of my 
grave concerns over what is surely one of the largest bailouts in 
American history.
  I recognize that this is the product of compromise and therefore 
imperfect; but the serious problems with this bill make it impossible 
for me to support.
  Make no mistake; a vote for this bailout is a vote to ratify business 
as usual in Washington. This compromise was crafted by the same people 
who brought you this mess, except this time they are putting a gun to 
your head and saying give me more.
  This isn't legislation; this is extortion. We could actually call it 
the ``in-out plan,'' as the FBI is going in, we are bailing out. That's 
not what the taxpayers want.
  My greatest concern is that this bill creates yet another opportunity 
for the Federal Government to meddle in the economy. The scope and size 
of this bill, however, means that the bailout will come at greater harm 
to equity holders, businesses, and homeowners.
  In order to participate in this bailout, a company will essentially 
give stock options to the Treasury Secretary, who will be able to 
exercise those options at whatever price he decides.
  How will the markets be changed when the Federal Government is the 
largest single stockholder in the country? Senator Obama is the most 
liberal Senator in the history of this country, someone who seeks to 
socialize large sectors of the economy.
  With passage of this bill, it is now pertinent to ask how will our 
companies and markets fare under Obama and Federal Government and 
consolidated liberal Democrat controlled government?
  I think not well, and for any company forced into this deal with the 
devil, they are barred from negotiating, complaining or seeking 
judicial recourse.
  Do you like 10 trillion in debt? In one stroke of the pen, Congress 
will have expanded the debt by another trillion to 11.3 trillion.
  What happens if any of this money is repaid? Democrats won't have to 
make any effort to expand their spending for more Federal Government; 
that spending will have already been authorized in this bill.
  Which brings me to another financial mess buried in these pages. Any 
premium paid by companies will be put into a fund, like the Social 
Security trust fund. And we all know how well that has worked out well 
for Social Security.
  What's worse, these premiums will be counted against the deficit, 
allowing for more spending, higher pay-go, and will finance more

[[Page 23148]]

federal bureaucracy. Democrats are rapacious for more spending. You can 
count on this.
  If you weren't angry enough about this bailout, foreign banks get 
special treatment. Right there in Section 112, the Treasury Secretary 
has the discretion to bailout foreign banks at the expense of the 
American taxpayer. No restrictions and no guarantees.
  Madam Speaker, the American homeowner has paid for your energy 
schemes this year with higher gas prices. Now you want the middle class 
homeowner to pay for your housing schemes.
  My biggest concern is that this bill creates two classes of 
homeowners.
  There are those homeowners who make every mortgage payment, and pay 
every bill and struggle to meet their commitments, and there are those 
homeowners, like Representative Richardson, who didn't meet their 
obligations, skipped out on the bills and now want the taxpayer to bail 
them out.
  This is all too embarrassing and it turns my stomach.
  Make no mistake; a vote for this bailout is a vote to ratify business 
as usual in Washington. This is the same crowd delivering the same 
bills and expecting the middle class homeowner to pick up the tab.
  Madam Speaker, the American homeowner is tired of being your piggy 
bank. The American homeowner is sick of your promises and platitudes 
and is simply not going to stand for this.
  Mr. NADLER. Madam Speaker, I rise reluctantly in support of this 
rescue package. I have great reservations about this legislation, but 
after looking at the situation carefully, reviewing the facts, and 
speaking with economists whose views and expertise I value, I believe 
that the threat to our credit markets is both real and urgent.
  Is the danger severe enough to warrant supporting a bill about which 
I have strenuous reservations? I believe so.
  In the past, I have been very skeptical of proposals brought to us by 
this administration with the warning that the situation was dire, that 
we could not afford to be more deliberate, and that we must give the 
administration broad new powers. I opposed the USA PATRIOT Act, the 
recent FISA legislation, and the vote to authorize the war in Iraq. In 
each instance, we were told that the danger was great and imminent. The 
administration went so far as to warn of a smoking gun in the form of a 
mushroom cloud.
  Unfortunately, these tactics worked, and Congress was stampeded into 
doing the wrong thing. In each case, it was not easy to stand in the 
way of the stampede, but, in my judgment, after examining all the known 
facts, it was the right and necessary thing to do.
  In this case, the administration should have seen this crisis coming 
years ago. Many of us warned that the administration's deregulation 
policies were leading us toward disaster, but so long as unprecedented 
profits were rolling in, the voices of caution were ignored.
  The near-religious belief that unrestrained markets would bring 
nothing but good times, that real estate prices would spiral upward 
forever, that financial instruments that even the directors of the 
firms selling them did not understand, would always bring prosperity, 
permeated thinking in government and out.
  History should have taught us otherwise. Our current situation proves 
otherwise.
  When the final accounting came, the boom was revealed for what it 
was: history's largest and most costly ponzi scheme.
  Finally, the administration acted--belatedly and arrogantly. Only a 
week ago, they told us that the situation was dire, that they needed 
$700 billion--more even than the President's Iraq adventure has cost so 
far--and presented us with a three page proposal that said essentially, 
``Give the Treasury Secretary a free hand with nearly a trillion 
dollars, make sure no one can go to court to stop him if he gets out of 
hand, forget any oversight or transparency, don't worry about paying 
for it, don't do anything to help the middle class, then buzz off.''
  In defense of that request, they said we should just trust them--the 
same people who got us into this crisis--with power even the Vice 
President only dreams of.
  As the old joke goes: how do you say ``drop dead'' in Washington? 
``Trust me.'' Only this time, it's not funny.
  The legislation before us today is not very attractive, but it is 
greatly improved from the President's proposal. The bill has increased 
transparency. It leaves available court remedies, although not as many 
as I would want. It partially repays the taxpayers by providing for 
acquiring an equity stake in participating firms. It does have real 
oversight.
  I am deeply disappointed that some very important provisions for 
which I fought were not included.
  The package should have been paid for with a repeal of tax breaks on 
the wealthy, and of giveaway tax benefits for oil companies and other 
big corporations and for the industry that caused this mess. The 
shareholders should have borne more of the cost of this package. They 
are the ones who profited, and they are the ones who should pay. I do 
not believe in privatizing profits while socializing risk. That's not 
capitalism, that's lemon socialism--the people get only the lemons.
  It is clear that the taxpayers will not be on the hook for the full 
$700 billion authorized, because the securities that will be acquired 
are not as worthless as the market now assumes, although we do not know 
how much they are really worth.
  I believe that the Bankruptcy Code should have been fixed so that 
families with predatory or subprime mortgages could restructure their 
mortgages. Mortgages are the only secured debts in bankruptcy that 
cannot be restructured. Investors can do it with their properties; The 
Senator from Arizona [Senator McCain] can do it with six of his seven 
houses; you can do it with airplanes, yachts, steel plants, or anything 
else. The only exception is the family home. That's wrong, and we 
should have fixed it in this bill.
  We need comprehensive regulatory reform in order to stave off the 
next financial catastrophe, and we need a President and regulators 
willing to enforce the laws we have on the books. The bill does not do 
that, but the next Congress must enact comprehensive regulatory reform. 
We need to take away from this experience the lesson I had thought the 
nation learned in 1929. Sound regulation in markets is necessary to 
maintain stability.
  So, as I said, I am angry that we are in a situation we could and 
should have avoided, and I am disappointed with the bill we are voting 
on today. I am especially angry that we are now at a point where, as 
unpopular as this is--and my constituents have told me that they do not 
like this any more than I do--we must act.
  The crisis is real and immediate. If the credit markets freeze, as 
they started to do last week, and as we are warned by almost all 
credible economists they will if we do not act, we will face a 
calamity. All economic activity dependent on credit will cease. 
Businesses will not get loans to expand or to meet their payrolls. 
Thousands of banks will fail, ATM machines will dispense no funds, 
credit cards will be worthless, millions will be thrown out of work, 
and we could face a repeat of the Great Depression of the 1930s. We 
cannot be certain this bill will stave off this calamity, but it might. 
When faced with a choice between a certainty of catastrophe and a 
possibility of averting a catastrophe, the choice is clear.
  Madam Speaker, I reluctantly support this legislation, and I urge my 
colleagues to do the same.
  Mr. HARE. Madam Speaker, I rise in support of the Emergency Economic 
Stabilization Act, and commend Speaker Pelosi, Chairman Frank, and all 
Members and staff of the House leadership and Financial Services 
Committee who worked tirelessly, spending untold hours negotiating this 
bill with their Senate counterparts, the President, Treasury, and the 
Federal Reserve.
  Madam Speaker, we as a nation find ourselves in an alarming financial 
crisis. But this crisis is bigger than a few failing banks or a stock 
market in disarray. It's more about family budgets than corporate 
balance sheets. Americans are losing their homes. Many are concerned 
about the future of their retirement savings. Some fear they won't have 
enough money to send their kids to college. The unwise and purely 
ideological decision to deregulate Wall Street has threatened our very 
way of life. It is with the best interests of working families in mind 
that I rise today to support this comprehensive rescue package. It is 
not a decision I made lightly.
  Madam Speaker, the original plan which President Bush proposed to 
Congress was completely unacceptable. It was nothing more than a $700 
billion handout to Wall Street. It gave unregulated authority to one 
person--the Secretary of the Treasury--to spend 700 billion of 
taxpayers' hard-earned dollars without any accountability. The 
President's plan did virtually nothing to prevent more Americans from 
losing their homes, and provided no return to the taxpayers responsible 
for funding it. Finally, the Bush Plan did nothing to limit executive 
compensation--known as golden parachutes--for top executives who made 
the disastrous decisions that helped lead to this crisis. At a time 
when we need to more closely regulate Wall Street, the President's 
package actually rewarded it.
  Under the leadership of Chairman Frank, a new bill was crafted to 
authorize, with strict independent oversight, limited funding to the 
Treasury to transparently buy the debts of troubled firms. This is not 
a gift. It is not a blank check. It is a loan. Any financial recovery 
that results from our action must be

[[Page 23149]]

shared with the taxpayers. We are loaning these banks money so they can 
resume lending to ordinary people--families who need help with their 
homes, cars and college tuition; farmers to continue to buy equipment, 
seed and fertilizer; and small town banks to deduct losses from 
investments in Fannie Mae and Freddie Mac.
  This bill also gives the government a financial stake in some of 
these firms, which means not only will taxpayers get their money back, 
but they will also have the opportunity to turn a profit. Additionally, 
this bill limits pay for the executives of the firms to which the 
Treasury loans. Unlike the Bush proposal, it does not reward corporate 
greed.
  Madam Speaker, this bill is certainly not perfect. While it does give 
the government some ability to protect homeowners facing foreclosure, I 
feel much more work needs to be done. My family lost its home growing 
up. It broke our hearts. Congress must continue its efforts to address 
the housing crisis, a large contributor to our current economic woes.
  In the final review of this bill, I believe the good outweighs the 
bad. It is a necessary step to protect Main Street from Wall Street. I 
urge all my colleagues to support it.
  Ms. SCHWARTZ. Madam Speaker, during the past 8 years, the economic 
policies of President Bush have failed American families and 
destabilized our nation's economy.
  Now my constituents and hard working families across this country are 
rightfully concerned about what this all means to them.
  Let us be clear--it is the Bush policies of deregulation, non-
existent oversight, disregard for our nation's infrastructure, 
irresponsible tax policies, and excessive deficit spending that 
exploded our national debt and lead us into the worst financial crisis 
since the Great Depression.
  The action we take today is difficult, but it is the responsible one. 
The potential downside for everyday Americans is simply too great not 
to act.
  The instability in the financial markets creates serious difficulty 
for every company seeking to meet payroll, every retirement plan 
seeking to meet their obligation to retirees, and every family who 
needs to borrow money for a car, for college, for a home, or for just 
getting by.
  My constituents want to trust Washington to do the right thing to 
turn the economy around, but they want us to protect their interests 
and address their everyday concerns.
  That is why the American people and members of Congress were appalled 
when President Bush asked us to hand over $700 billion with no 
oversight, no accountability, and no reforms to the fundamentally 
flawed policies that allowed this crisis to occur.
  Because of Democratic leadership, this economic recovery proposal is 
fundamentally different than the proposal first brought to us by 
President Bush.
  We now have an economic recovery proposal that will protect the 
interests of hardworking Americans by:

       Restoring investor confidence in our economy and the 
     financial markets;
       Protecting taxpayers by requiring full transparency of 
     actions taken by the Treasury Secretary, creating a strong 
     oversight board appointed by Congress, and establishing an 
     independent Inspector General to guarantee compliance;
       Ensuring fiscal responsibility by making resources 
     available in installments that require Congressional and 
     Presidential approval, and guaranteeing that the financial 
     services industry repays any losses to the U.S. Treasury;
       Helping distressed homeowners avoid foreclosure by 
     facilitating loan modifications; and
       Limiting the compensation for the corporate executives that 
     created this crisis, by eliminating multi-million dollar 
     golden parachutes.

  Responsible action to stabilize our economy is required and warrants 
bipartisan support. But, efforts to rebuild our economy cannot stop 
here.
  Moving forward we must focus on the regulation of our financial 
markets, strong enforcement, and sound fiscal policies in government 
and in the private sector that are all necessary to restore the economy 
to one of prosperity, opportunity and growth--not just for a few--but 
for all Americans.
  Ms. DeGETTE. Madam Speaker, after careful review of this package, I 
rise today to support the ``Emergency Economic Stabilization Act of 
2008.''
  While I am hesitant about putting taxpayers on the hook for the 
mistakes of Wall Street, doing nothing is simply not an option. No one 
likes this bill, but without it, credit markets would seize up, more 
companies would have trouble making payroll, consumers would be unable 
to get loans for cars and homes and credit cards, their pensions would 
deteriorate, and the crisis in our financial markets would spread to 
the entire economy and across the globe.
  This bill will not fix our troubled economy on its own, and we have 
much work ahead of us to reform our financial regulatory system. But 
our Nation's top economic experts have concluded that without this 
legislation our economic problems would have gotten much worse.
  This bill is a vast improvement from President Bush's initial 
proposal, which contained no oversight, no protections for taxpayers, 
and amounted to a blank check to the Treasury Department.
  But working in a bipartisan fashion, Congress was able to agree on a 
compromise that includes rigorous oversight and transparency, provides 
funding in installments subject to congressional review, and prevents 
golden parachutes for CEOs that drive their companies into the ground. 
This legislation will inject liquidity into the credit markets so 
businesses and consumers can continue to utilize their credit and keep 
our economy moving.
  Madam Speaker, I hope that following passage of this bill, with a new 
president in office, Congress can begin work on a comprehensive, top-
to-bottom review of our Nation's financial laws, and enact meaningful 
reform that prevents the abuses we have seen in recent years.
  Mr. STARK. Madam Speaker, I rise today to oppose H.R. 3997, the 
Emergency Economic Stabilization Act of 2008.
  President Bush tells us that we face unparalleled financial doom if 
this $700 billion bailout is not approved today. He and his Treasury 
Secretary--a former Wall Street fat cat--tell us that we have reached 
the point of ``crisis.'' That is a familiar line from this President. 
It sounds like the disastrous rush to war in Iraq and the subsequent 
stampede to enact the Patriot Act. As I opposed the Iraq War and the 
Patriot Act, I stand in opposition to his latest rush to judgment.
  We are not in a sudden crisis. It has been building over the past 8 
years of the Bush Administration. Lax oversight of the financial 
industry ballooned into a house of cards.
  Homeowners throughout the country have seen property values decline 
as their mortgage rates adjusted upward. As a result, millions of 
people across our country have already lost their homes to foreclosure 
and many more are on the way.
  It is easy to blame consumers for purchasing homes they couldn't 
afford. However, these consumers weren't informed of the extreme risk 
they were assuming. Creative financiers invented a market for these 
risky mortgages and preyed upon consumers by peddling the American 
dream of homeownership to make that market flourish.
  While those were poor choices by consumers, they pale in comparison 
to the irresponsible bets made on Wall Street. These mortgages and 
their declining collateral values are the root of this financial 
crisis.
  We now face a choice. President Bush tells us we must inject $700 
billion into this market to avoid a total meltdown. He and Secretary 
Paulson say it is the only answer. Many economists--who don't have a 
financial stake in Wall Street or an 8-year record of bad decisions--
tell us it isn't the only choice. An option would be to assist 
homeowners with their mortgage payments. By making sure these mortgages 
remain viable, the market should stabilize.
  The bill before us today is basically the same three-page Wall Street 
give away first put forth by President Bush. The fig leaf adjustments 
are not enough to outweigh the fact that, no one knows if this bill is 
what's needed. I'm not willing to make a $700 billion gamble that 
President Bush is right after 8 years of seeing all that he's done 
wrong.
  Mr. NEAL of Massachusetts. Madam Speaker, I rise today in support of 
the Emergency Economic Stabilization Act of 2008. I want to applaud the 
work of my friend, Chairman Barney Frank, in negotiating this agreement 
on behalf of the House. Compared with the proposal of a week ago from 
the Bush administration, this agreement has much improved.
  I have already heard from a number of my constituents this morning 
who oppose the bill and I understand their opposition. I think it is 
clear that we are not done with this matter. There is more to do, and 
even under this bill, Congress will revisit the agreement in 5 years to 
determine whether the taxpayers are due some repayment from the 
industry saved by this bailout.
  At this time, though, it is important that we proceed forward with 
this limited authority, which is only provided with substantial 
oversight. It is an appropriate balance and that is why I will support 
the bill.
  But as I said, there is more to be done. John F. Kennedy said that 
victory has a thousand fathers, but defeat is an orphan. It is true

[[Page 23150]]

that no one has stepped forward to claim responsibility for the 
economic quandary we find ourselves in. But if we simply look back to 
the last time the financial services industry teetered on the brink of 
disaster, we can see roots that lead to the crisis we confront today.
  A decade ago, Long Term Capital Management, a billion-dollar hedge 
fund lost half its value due to sour derivative contracts and the 
Federal Reserve Chairman had to arrange a bailout. Complexity is the 
name of the game in the derivatives market, and that fact has not 
changed over the last decade. Derivatives are financial products with a 
value derived from an underlying asset, such as a stock or commodity. 
The accounting and tax rules regarding these products, though, are 
anything but clear and that part of the game has also not changed over 
the last decade.
  I am concerned about one section of the bill we are considering today 
which would grant the SEC authority to suspend mark-to-market 
accounting. This accounting rule requires companies to declare the 
market value of assets. With financial products, this may differ from 
the purchase price. Plus, the value might be hard to determine until 
the contract expires some time in the future. However, in valuing 
derivatives, I believe it is important that there be transparency in 
the market, and mark-to-market accounting is probably the closest to 
the actual value and is therefore, an essential tool for investors. 
Think of it this way: if someone asked you for a loan and their only 
asset is their house which could be sold for $100,000, would you care 
that they had paid $200,000 for it a year ago?
  Should we care about accounting rules for derivatives? Well, clearly 
yes. It would be easy to assume regulators are taking care of these 
issues, but recent events show us that is not the case. It would be 
easy for us to dismiss the threat of derivatives since only 
sophisticated investors hold them, but as Warren Buffet warned in 2002, 
``Derivates are financial weapons of mass destruction, carrying dangers 
that, while now latent, are potentially lethal.''
  In March, the Ways and Means Subcommittee on Select Revenue Measures, 
which I chair, held a hearing on the taxation of derivatives. At that 
hearing, I referred to the threat of AIG directly as one reason our 
hearing was timely. AIG had just the week before devalued its holdings 
by $5 billion because of one complex derivative--the credit default 
swap. I asked the Treasury Department, which appeared before my 
subcommittee that day, what guidance we might expect on the appropriate 
tax treatment of credit default swaps, since in their absence, 
investors were free to choose whatever seemed most convenient. Treasury 
said it was still under review.
  Taxpayers and investors need clarity in the market with respect to 
these complex products. While some may blame mark-to-market accounting 
for the problems of individual companies, it merely exposed that these 
companies were holding worthless paper. And I believe news like that is 
better known earlier rather than later, and to all investors, not just 
insiders.
  The global market for derivatives exceeds $500 trillion in notional 
value, according to the Bank for International Settlements. Hedging 
risks via derivatives is a normal practice of businesses, but the 
``Wild West'' trading in these products must be addressed by regulation 
and transparency. Of course, all businesses would prefer to choose 
whichever accounting method makes them look the most profitable to 
investors and the least profitable to the IRS. But we need consistent 
rules and a system of valuing businesses which is fair to investors, 
regulators, and the tax collector.
  A decade ago, I stood on the floor lamenting the near-crisis that 
Long Term Capital Management had created. I chastised Congress for 
ignoring the request of the regulator, CFTC, which had asked for more 
oversight over derivatives. Since then, we have seen Enron collapse and 
now our current crisis. Will things be different this time? I certainly 
hope that is the case. But changing the accounting rules mid-game, I 
believe, is a move in the wrong direction. I hope that the SEC will 
take the long view on this and study the issue before reversing any 
current accounting rules meant to provide greater transparency.
  In 1999, I filed legislation to strengthen the constructive ownership 
rules so that investors in a hedge fund via a derivative could not 
avoid current taxation on income earned. This legislation was directly 
aimed at Long Term Capital Management and based on legislation my 
colleague and friend Representative Barbara Kennelly had previously 
filed. In 2002, I filed legislation to end the game of corporations 
betting on their own stock via derivatives. The Tax Code does not allow 
corporations to claim gains or losses when trading in its own stock, 
but that provision can be avoided through derivative transactions. This 
year, I filed legislation to require current taxation on prepaid 
forward contracts, as investors had been taking the position that no 
taxation was appropriate until the end of the contract, which could be 
30 years hence.
  I will continue my efforts to bring transparency to these products 
and to end the tax game on derivatives. Further, this bill affords us 
the opportunity to implement a regulatory structure that will result in 
a healthier market. On both fronts, I hope we will see action.
  Mr. EDWARDS of Texas. Madam Speaker, having opposed the original 
Paulson plan, I will vote for the bipartisan economic recovery bill for 
two reasons. First, I believe our economy is dangerously close to a 
meltdown that could dramatically increase unemployment, hurt family 
businesses and put the retirement security of millions of working 
families and seniors at risk. Second, a number of taxpayer protections 
were added to the new bill, so that the cost of this bill will be 
ultimately paid by Wall Street and not by everyday citizens.
  Had it not been for the ill-advised banking deregulation law passed 
in 1999, which I opposed, we would not be in this economic mess today. 
I hope some of the greedy Wall Street executives who have put our 
economy at risk will end up in: prison, but in the meantime we have a 
responsibility to try to stabilize our economy for the benefit of 
families and businesses on Main Street.
  Unlike the original Paulson proposal, which had no oversight and very 
little protection for taxpayers, this bipartisan bill includes a number 
of key improvements in it. First, it cuts in half--from $700 billion to 
$350 billion--the funding available to Secretary Paulson without 
additional congressional approval. Second, the bill sets up an 
extensive, independent oversight process rather than giving Mr. Paulson 
complete control of the funds. Third, and this is important, the bill 
says that after 5 years, any taxpayer costs not recouped by the sale of 
government purchased assets must be repaid by financial services 
corporations, not by everyday taxpayers. Fourth, the bill cracks down 
on any new golden parachutes for executives whose companies benefit 
from this bill.
  There is no guarantee that this bill will prevent a recession, 
because our economy faces a lot of challenges right now, but I believe 
a failure to pass recovery legislation could potentially start a 
downward economic spiral that could put millions of jobs and families 
at risk. I am angered that Wall Street greed has put us in this' 
position, but as imperfect as this bill is, I believe the risk of 
inaction is far greater for our country and everyday citizens than the 
risk of this action.
  Ms. HARMAN. Madam Speaker, recklessness on Wall Street and 
fecklessness in Washington have brought the American economy to the 
brink of disaster. Mounting corporate debts and collapsing real estate 
markets have all but frozen the flow of credit that is the life-blood 
of our system.
  It is now clear that without immediate and dramatic action, we face 
an economic calamity--not just for Wall Street, but for small 
businesses, communities, and families around the country.
  But while I agree that quick action is necessary, the Treasury 
Department's original three-page proposal--in essence ``Dear Congress, 
please send a $700 billion blank check, love, Hank.''--was a 
nonstarter.
  We have come a long way in the past week, thanks mostly to tough 
negotiations by Democrats and the inclusion of improvements demanded by 
Senator Obama, my constituents, and others. The result is legislation 
that I can support.
  The bill addresses the concerns of three important groups: families 
who are struggling to stay in their homes; small businesses and their 
employees; and taxpayers.
  First, the legislation requires that the government renegotiate the 
terms, including principal, interest rates, or duration, of any 
mortgage owned in whole or in part by the Federal Government to prevent 
foreclosures and keep people in their homes. These provisions are 
vitally important.
  The Government now controls Fannie Mae and Freddie Mac, which 
together own or back nearly 50 percent of the mortgages in America, and 
will be purchasing many thousands of new mortgages or shares of 
mortgages under this bill. The bill requires that the Government use 
its new market power to rework many of the flawed mortgages that are at 
the heart of this crisis. Done right, this effort can help families 
avoid the wrenching experiences of foreclosure and bankruptcy.
  Second, it will allow all financial entities--big banks, regional 
banks, and local community banks--to sell off the toxic assets that 
have crippled the credit markets.
  It also allows a 1-year write-off of losses stemming from the 
Government takeover of

[[Page 23151]]

Fannie Mae and Freddie Mac, removing a major burden from the financial 
hubs of our communities.
  This means capital that breathes life into our economy will flow not 
just to Wall Street, but to Artesia, Sepulveda, and Rosecrans 
Boulevards. As one of my constituents, a former auto mechanic, puts it: 
``If there's no oil in the engine, the car won't run. You have to put 
the oil in from the top and clean the parts from the bottom.''
  Third, the bill includes a number of provisions intended to minimize 
the costs to taxpayers. It requires that the Government buy assets, 
rather than merely cover corporate losses. These assets give the 
Government an equity stake in the companies it helps--like the stake 
Warren Buffett just bought in Goldman Sachs. Just like Buffett, 
taxpayers will profit from increases in these companies' stock prices 
when the economy recovers.
  The bill includes tough new oversight and transparency provisions, 
including an oversight board appointed by Congress. It provides funding 
in installments--$250 billion at first; $100 billion after the 
President certifies that it's necessary; and the final $350 billion 
only if Congress allows funding to continue. It limits executive 
compensation and bans so-called ``golden parachutes'' for companies 
participating in the program.
  And, if after 5 years the program has resulted in a loss to the 
Federal Government, the President must propose a fee on financial 
services companies to recoup the costs of the program. This means that 
those whose greed caused the problem will pay for it.
  The bill is by no means perfect. Among other things, my preference 
would have been to include provisions that allow bankruptcy judges to 
rewrite mortgages of primary homes. But as a mother of four and now 
grandmother of three, I know life requires compromise.
  Our action today does not mark the end of America's financial peril. 
Critical next steps must include substantial reform of the financial 
regulatory system, a task that will be a priority for a Democratic 
President and a larger Democratic majority in Congress.
  But passage of this bill, I am now convinced, is urgent and necessary 
to reassure the American people and global financial markets that our 
economy is secure and major reforms are coming.
  Mr. ROHRABACHER. Madam Speaker, today's vote reaffirms the 
independence of Congress and makes it clear that we will not be 
stampeded into spending hundreds of billions of taxpayer dollars in a 
precipitous manner. This legislation would have directed $700 billion 
of the people's money to bailout rich and powerful interests who acted 
irresponsibly. It would have been a classic example of taking from 
those who have been responsible and giving it to those who have not.
  We were told without this effort our country would suffer a financial 
calamity of historic proportion. However, Congress has spoken, and 
today's defeat of the bill is a rebuke of such scare tactics. These 
tactics made many of us even more skeptical of being rushed to act, 
especially when we are being asked to allocate hundreds of billions of 
taxpayer dollars.
  There were no reforms included in the bill that would have addressed 
the initial root causes of this financial mess, so there is no reason 
to believe if we passed the bill that we would not find ourselves in a 
similar crisis and on the edge of a similar economic abyss over and 
over again. The elites in the financial industry wanted us to give them 
a blank check. Well, that's not responsible, and it doesn't take a 
financial genius to predict the resulting special interests feeding 
frenzy. Whether this feeding would ever avert an economic debacle is 
yet to be seen.
  Effective reform takes time, commitment, and cooperation, which were 
obviously not a part of this speeded up, hysteria driven proposal. I 
remain willing to work with all of my colleagues in the House to fix 
our broken financial system. In the end, this bailout proposal was 
socialism for the rich, or better, socialism without a human face. It 
deserved to be defeated.
  The SPEAKER pro tempore. All time for debate has expired.
  Pursuant to House Resolution 1517, the previous question is ordered.
  The question is on the motion by the gentleman from Massachusetts 
(Mr. Frank).
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. LINDER. Madam Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, this 15-
minute vote on the motion to concur with an amendment will be followed 
by a 5-minute vote on the motion to suspend the rules and pass H.R. 
7175, if ordered.
  The vote was taken by electronic device, and there were--ayes 205, 
noes 228, not voting 1, as follows:

                             [Roll No. 674]

                               AYES--205

     Ackerman
     Allen
     Andrews
     Arcuri
     Bachus
     Baird
     Baldwin
     Bean
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blunt
     Boehner
     Bonner
     Bono Mack
     Boozman
     Boren
     Boswell
     Boucher
     Boyd (FL)
     Brady (PA)
     Brady (TX)
     Brown (SC)
     Brown, Corrine
     Calvert
     Camp (MI)
     Campbell (CA)
     Cannon
     Cantor
     Capps
     Capuano
     Cardoza
     Carnahan
     Castle
     Clarke
     Clyburn
     Cohen
     Cole (OK)
     Cooper
     Costa
     Cramer
     Crenshaw
     Crowley
     Cubin
     Davis (AL)
     Davis (CA)
     Davis (IL)
     Davis, Tom
     DeGette
     DeLauro
     Dicks
     Dingell
     Donnelly
     Doyle
     Dreier
     Edwards (TX)
     Ehlers
     Ellison
     Ellsworth
     Emanuel
     Emerson
     Engel
     Eshoo
     Etheridge
     Everett
     Farr
     Fattah
     Ferguson
     Fossella
     Foster
     Frank (MA)
     Gilchrest
     Gonzalez
     Gordon
     Granger
     Gutierrez
     Hall (NY)
     Hare
     Harman
     Hastings (FL)
     Herger
     Higgins
     Hinojosa
     Hobson
     Holt
     Honda
     Hooley
     Hoyer
     Inglis (SC)
     Israel
     Johnson, E. B.
     Kanjorski
     Kennedy
     Kildee
     Kind
     King (NY)
     Kirk
     Klein (FL)
     Kline (MN)
     LaHood
     Langevin
     Larsen (WA)
     Larson (CT)
     Levin
     Lewis (CA)
     Lewis (KY)
     Loebsack
     Lofgren, Zoe
     Lowey
     Lungren, Daniel E.
     Mahoney (FL)
     Maloney (NY)
     Markey
     Marshall
     Matsui
     McCarthy (NY)
     McCollum (MN)
     McCrery
     McDermott
     McGovern
     McHugh
     McKeon
     McNerney
     McNulty
     Meek (FL)
     Meeks (NY)
     Melancon
     Miller (NC)
     Miller, Gary
     Miller, George
     Mollohan
     Moore (KS)
     Moore (WI)
     Moran (VA)
     Murphy (CT)
     Murphy, Patrick
     Murtha
     Nadler
     Neal (MA)
     Oberstar
     Obey
     Olver
     Pallone
     Pelosi
     Perlmutter
     Peterson (PA)
     Pickering
     Pomeroy
     Porter
     Price (NC)
     Pryce (OH)
     Putnam
     Radanovich
     Rahall
     Rangel
     Regula
     Reyes
     Reynolds
     Richardson
     Rogers (AL)
     Rogers (KY)
     Ross
     Ruppersberger
     Ryan (OH)
     Ryan (WI)
     Sarbanes
     Saxton
     Schakowsky
     Schwartz
     Sessions
     Sestak
     Shays
     Simpson
     Sires
     Skelton
     Slaughter
     Smith (TX)
     Smith (WA)
     Snyder
     Souder
     Space
     Speier
     Spratt
     Tancredo
     Tanner
     Tauscher
     Towns
     Tsongas
     Upton
     Van Hollen
     Velazquez
     Walden (OR)
     Walsh (NY)
     Wasserman Schultz
     Waters
     Watt
     Waxman
     Weiner
     Weldon (FL)
     Wexler
     Wilson (NM)
     Wilson (OH)
     Wilson (SC)
     Wolf

                               NOES--228

     Abercrombie
     Aderholt
     Akin
     Alexander
     Altmire
     Baca
     Bachmann
     Barrett (SC)
     Barrow
     Bartlett (MD)
     Barton (TX)
     Becerra
     Berkley
     Biggert
     Bilbray
     Bilirakis
     Bishop (UT)
     Blackburn
     Blumenauer
     Boustany
     Boyda (KS)
     Braley (IA)
     Broun (GA)
     Brown-Waite, Ginny
     Buchanan
     Burgess
     Burton (IN)
     Butterfield
     Buyer
     Capito
     Carney
     Carson
     Carter
     Castor
     Cazayoux
     Chabot
     Chandler
     Childers
     Clay
     Cleaver
     Coble
     Conaway
     Conyers
     Costello
     Courtney
     Cuellar
     Culberson
     Cummings
     Davis (KY)
     Davis, David
     Davis, Lincoln
     Deal (GA)
     DeFazio
     Delahunt
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doggett
     Doolittle
     Drake
     Duncan
     Edwards (MD)
     English (PA)
     Fallin
     Feeney
     Filner
     Flake
     Forbes
     Fortenberry
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Giffords
     Gillibrand
     Gingrey
     Gohmert
     Goode
     Goodlatte
     Graves
     Green, Al
     Green, Gene
     Grijalva
     Hall (TX)
     Hastings (WA)
     Hayes
     Heller
     Hensarling
     Herseth Sandlin
     Hill
     Hinchey
     Hirono
     Hodes
     Hoekstra
     Holden
     Hulshof
     Hunter
     Inslee
     Issa
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson (GA)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Jordan
     Kagen
     Kaptur
     Keller
     Kilpatrick
     King (IA)
     Kingston
     Knollenberg
     Kucinich
     Kuhl (NY)
     Lamborn
     Lampson
     Latham
     LaTourette
     Latta
     Lee
     Lewis (GA)
     Linder
     Lipinski
     LoBiondo
     Lucas
     Lynch
     Mack
     Manzullo
     Marchant
     Matheson
     McCarthy (CA)
     McCaul (TX)
     McCotter
     McHenry
     McIntyre
     McMorris Rodgers
     Mica
     Michaud
     Miller (FL)
     Miller (MI)
     Mitchell
     Moran (KS)
     Murphy, Tim
     Musgrave
     Myrick
     Napolitano
     Neugebauer
     Nunes
     Ortiz
     Pascrell
     Pastor
     Paul
     Payne
     Pearce
     Pence
     Peterson (MN)
     Petri
     Pitts
     Platts
     Poe
     Price (GA)
     Ramstad
     Rehberg
     Reichert
     Renzi
     Rodriguez
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roskam

[[Page 23152]]


     Rothman
     Roybal-Allard
     Royce
     Rush
     Salazar
     Sali
     Sanchez, Linda T.
     Sanchez, Loretta
     Scalise
     Schiff
     Schmidt
     Scott (GA)
     Scott (VA)
     Sensenbrenner
     Serrano
     Shadegg
     Shea-Porter
     Sherman
     Shimkus
     Shuler
     Shuster
     Smith (NE)
     Smith (NJ)
     Solis
     Stark
     Stearns
     Stupak
     Sullivan
     Sutton
     Taylor
     Terry
     Thompson (CA)
     Thompson (MS)
     Thornberry
     Tiahrt
     Tiberi
     Tierney
     Turner
     Udall (CO)
     Udall (NM)
     Visclosky
     Walberg
     Walz (MN)
     Wamp
     Watson
     Welch (VT)
     Westmoreland
     Whitfield (KY)
     Wittman (VA)
     Woolsey
     Wu
     Yarmuth
     Young (AK)
     Young (FL)

                             NOT VOTING--1

     Weller

                              {time}  1407

  Messrs. SULLIVAN and RUSH changed their vote from ``aye'' to ``no.''
  Mr. RADANOVICH changed his vote from ``no'' to ``aye.''
  So the motion was rejected.
  The result of the vote was announced as above recorded.


                         Parliamentary Inquiry

  Mr. BARTON of Texas. Madam Speaker, I have a parliamentary inquiry.
  The SPEAKER pro tempore. The gentleman will state his parliamentary 
inquiry.
  Mr. BARTON of Texas. As the vote currently stands, the ``noes'' have 
it, and I am on the prevailing side.
  If I were to move to reconsider, when would the Chair bring the bill 
back up?
  The SPEAKER pro tempore. The motion to reconsider would be 
entertained and disposed of at this time.
  Mr. BARTON of Texas. It would be immediately. Is that not at the 
discretion of the Chair?
  The SPEAKER pro tempore. If the motion is offered, the Chair will put 
the question.
  Mr. BARTON of Texas. Madam Speaker, I withdraw.
  The SPEAKER pro tempore. Without objection, the motion to reconsider 
is laid upon the table.
  There was no objection.

                          ____________________