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Senator Ben on the Economy!

9 October 2008:

Dear Fred:

Thank you for contacting me regarding the Emergency Economic Stabilization Act, P.L. 110‑343. America's financial crisis - and the so-called "bailout" - ranks high among the most difficult issues I have faced during my tenure in the Senate. I was grateful for your input as Congress considered this measure, and I appreciate this opportunity to respond to your concerns.

I share the anger and frustration felt by many Nebraskans that America's taxpayers have been asked to bear the expense of this rescue of our financial system. At the same time, I also share the anxiety and unease which Nebraskans feel regarding the state of our financial markets and our economy. When the time came to cast my vote, I joined 73 of my colleagues in reluctantly supporting P.L. 110‑343 for one reason and one reason only: Ultimately, the cost of inaction would be significantly higher than the cost of doing what is necessary to address the global financial crisis. Our economic strength, in Nebraska and across the country, depends on the availability of credit; this was a vote to restore functionality to our credit markets so that they can once again work to grow our economy.

Credit is crucial to our families, businesses, local governments, and other institutions such as our hospitals and schools. We all need credit for things such as buying homes, receiving student loans, and continuing to use credit cards for everyday purchases. In addition, America's small businesses need credit to obtain operating loans which carry them from one season to the next; our farmers need credit to get all of the fertilizer, seed and other materials needed to plant their crops; and our cities and towns need credit just to meet payroll. Although I am proud that Nebraska's economy is relatively vibrant and that our financial institutions are strong and sound, already the negative effects of the credit crisis are being felt across the Heartland. Decisive action was necessary to avoid further pain; and I believe the program authorized in P.L. 110‑343 was necessary to help protect Nebraskans from feeling the full effect of a credit market failure.

Nevertheless, I agree the original proposal submitted by the U.S. Department of the Treasury was an unacceptable "blank check" to attempt to rescue Wall Street with no accountability to either the law or Congress - not to mention the American taxpayer, our nation's struggling homeowners, or Main Street's economic interests. Immediately upon receiving this proposal, I contacted Senate leaders and demanded strong protection of our taxpayers' investment, together with accountability, shared responsibility and benefit, and strong oversight. I believed these components were the bare necessities for a rescue package to be worthy of consideration of taxpayer investment; had these changes not been included, I would have been unable to support the legislation.

I emphasized that our taxpayers should come first, and that all the proceeds of this program should be used to retire the public debt. I said there could be no free rides for these institutions - that compensation for executives must be addressed to eliminate taxpayer-subsidized golden parachutes, and that participation in the program should require an equity or debt stake so that our taxpayers could share in future profits of the firms reaping the benefits. I said there should be shared responsibility with the rest of the world, and shared benefit between the holders of securities and the borrowers struggling to stay out of foreclosure. I demanded full Congressional and legal oversight of the program. In the end, these and other important changes were adopted into P.L. 110‑343, which was signed by the President on October 3, 2008.

Now that we have taken this extraordinary action to address the current crisis, the Senate must turn its attention to re-regulating Wall Street so that never again will the cost of their recklessness and greed be borne by taxpayers. I look forward to working with my colleagues on comprehensive reform of America's financial system.

Again, let me say that I supported the final rescue proposal - not for Wall Street, but rather for our local communities' Main Streets - because the fundamental truth is that the fate of our financial system and the fate of our hometown economic prosperity are linked. Only time will tell whether this action will avert the crisis we all fear, but the risk of inaction was just too great.

Thank you again for contacting me on this crucially important issue. The legislative process will only work with the input of concerned citizens, and I encourage you to continue sharing your thoughts and ideas.


Ben Nelson
U.S. Senator