WASHINGTON – Congressman Vernon J. Ehlers released the following statement today after the House of Representatives passed the Emergency Economic Stabilization Act:

“Today, I voted to approve a comprehensive plan to rescue American families and taxpayers from a potentially catastrophic breakdown in our financial system. The bill Congress passed today is not a bailout of Wall Street, but rather a plan to protect Main Street, to help families, workers, students, and taxpayers from the consequences of allowing the financial industry to continue its meltdown.

            “Our credit system as we know it would have come to a complete halt if this crisis were allowed to continue. Liquidity and the availability of credit affects all Americans: It allows employers to borrow money to make payroll and buy inventory, it ensures credit cards work when consumers want to purchase goods or services, and it supports loans for purchasing a house or a car, or making home improvements. I have heard from people in West Michigan who already find it very difficult to obtain credit. Others are finding their retirement investments plummet as the market reacts to this credit crisis. I cannot overstate the necessity of the action approved today. Our country is facing a massive crisis in its credit system, which is already affecting many families and businesses. If we did nothing, the consequences would have affected almost every American.

            “I have heard from hundreds of my constituents who are concerned about our nation’s current economic situation. I would have preferred that we did not have to take these steps. I did not like this bill; I did not like the way it was originally presented by the Bush administration, and I wish the government did not have to commit any taxpayer money to halt this crisis. Unfortunately, we have reached a point where our nation’s entire banking system economic well-being is threatened, and Congress had to act decisively to prevent a collapse of our financial system.

            “The crisis stems primarily from the sharp decline in the housing market. Banks sell mortgages and mortgage-based securities to provide capital for the loans they give to businesses and consumers. These mortgages lost value as more and more homes were foreclosed upon, and many banks became unable to continue lending, even to other banks. The bipartisan plan we passed today will allow the Treasury to purchase these assets at a price lower than what financial institutions originally paid, and sell them back once these banks are financially stable, ideally at a profit to the government. Purchasing these assets will allow for desperately needed liquidity in our economy.

            “The plan originally presented by Treasury Secretary Henry Paulson last month was an absurd free-for-all of spending authority for the Treasury Department with virtually no oversight from Congress or the taxpayer. It was poorly conceived when presented to the American people and Congress. The plan we passed today is vastly better than the one proposed by Secretary Paulson. It limits the Treasury’s authority to purchase troubled assets, and requires the Treasury to establish an insurance program for mortgage-related assets, in which firms may participate.

“The people who helped get us into this mess will not be rewarded under this bill. Executives are prevented from receiving excessive pay or unearned bonuses, and the bill establishes an oversight board made up of banking regulators. A special Inspector General will watch over the program to ensure taxpayer money is being used in the most responsible manner possible.

            “The legislation passed today provides direct help for people in West Michigan. It increases the Federal Deposit Insurance Corporation (FDIC) insurance limit from $100,000 to $250,000 through 2009, an improvement upon earlier proposals considered by Congress. This will encourage individuals to keep their money and assets in their bank accounts by protecting their funds in these accounts.

            “The impact of this plan will be seen gradually. This is a long-term investment which I expect will stabilize our financial system, restore credit, and protect people in West Michigan against the crisis that has developed. Some banks may still fail, and credit may be hard to come by for a period of time, but this plan is far better than the alternative of doing nothing. I lived through the Great Depression, and it was horrible. I do not want anyone in West Michigan, or the rest of America, to ever have to go through anything like that again. This is the first step toward recovering our economy, and I will continue to work in Congress to be sure this does not happen again.”