Over the last few months – and culminating in the failure of a number of financial companies last week – our economy has been experiencing a crisis created by the underwriting of loans that borrowers could not repay and the unchecked spreading of this risk across the entire financial system.

The Administration’s response to this crisis came last weekend in the form of a three-page proposal from Treasury Secretary Henry Paulson asking Congress for unlimited authority over $700 billion to buy this bad debt at taxpayer expense. Unsurprisingly, this proposal was met by stiff resistance – especially by me and my Republican colleagues in the House of Representatives who believe in smaller government and limiting taxpayer exposure.

Since its initial proposal, the press has widely reported that House Financial Services Committee Chairman Barney Frank and Senate Banking Chairman Chris Dodd have negotiated a number of changes with the Administration intended to shore up liberal support, including tax increases and giving judges new authorities that would drive up costs for homeowners who play by the rules and pay their mortgages on time.

In response, House Republicans have offered their own counter-proposal to the constantly-evolving compromise between the Administration and Democrat Leadership. The Republican proposal would insure mortgage-backed securities through the payment of insurance premiums instead of providing taxpayer-funded purchases of frozen mortgage assets as the current proposal would do. At the end of this email please find a broad outline of this Republican economic rescue plan for your review.

This proposal also includes measures to increase transparency and prevent Wall Street Executives from benefiting from taxpayer funding, as well as measures that would increase private capital involvement in the recovery and reduce taxpayer exposure while addressing the underlying issues creating the crisis in our capital markets.

As negotiations over this unfinished package proceed, I will continue to insist on the inclusion of the following principles in the final package:

- Reforming the market failures that allowed this crisis to happen;

- Protecting taxpayer assets;

- Preventing executives from personally benefiting from private sector failure, and;

- Encouraging private capital to fix the underlying problems in order to limit taxpayer exposure.

As your Congressman, I take my responsibility to the taxpayer very seriously. Rest assured that before I vote on the final proposal (whatever form it takes), I will seriously consider your comments and put the best interests of taxpayers and homeowners who play by the rules first. If you have any questions or comments that you would like to share, feel free to contact my Chief of Staff Guy Harrison or Deputy Chief of Staff Josh Saltzman at 202.225.2231.

Sincerely,

Pete Sessions

Member of Congress

paulsur on September 26, 2008 at 11:43 PM