Wednesday, March 11, 2009

my letter from Sen. McCaskill

A while back I sent Senator McCaskill an email that basically said "I like the idea of people getting bailouts not making more than the president. The more important part of my letter said that I have a business in the horseshoe on Pennsylvania and would she please ask her staff to stop parking in our lot.

This is what I got in response some weeks later.

Dear Mrs. Krulewich:

Thank you for contacting me regarding the turmoil in the financial markets and federal government’s response to it. I appreciate hearing from you, and I welcome the chance to respond.

I do not have to tell you how grim things look for our nation’s economy. Working families were facing stagnating wages and a rising cost of living even before crisis hit Wall Street, but seizures in the credit markets have exacerbated these problems. Millions have lost retirement savings, lending has stopped, consumers are frightened, and all of this has led to more job losses. If we cannot stop this downward spiral, the country will face hard times that we have not seen in generations.

Missourians are right to be angry about this situation. Financial firms packaged risky subprime loans into securities which they said were as safe as government bonds, and investors made reckless bets on these new products. The new products were so complex that, when they started to go bad, no one knew which securities were affected and to what extent. What’s more, some firms had borrowed huge amounts of money to buy these products, which put their creditors on the hook as well. Confidence dropped to zero throughout the whole market. The federal government was asleep at the wheel during all of this. Regulation was inadequate and oversight was nonexistent.

I do not like how we got here, and I do not like what we have had to do to get out. The Emergency Economic Stabilization Act (EESA), which became law in early October, 2008, authorized the Treasury to use up to $700 billion to stabilize the banking system. The new law allowed the Treasury to spend up to $350 billion immediately, but gave Congress the power to stop the Treasury from accessing the second half by passing a resolution of disapproval. The Senate voted down such a resolution in January 2009.

I reluctantly supported the EESA, and I reluctantly opposed the resolution blocking the funds. I took no pleasure in either vote. Even though the credit markets have improved since the EESA passed, it is infuriating to see taxpayer money go to the same banks and financial institutions that got us into this mess while ordinary Americans are losing jobs and homes and small businesses are losing access to financing. Like many Americans, I also had serious concerns about the lack of transparency in the use of the first half of the money. No one had any idea what the banks were doing with the money and whether or not it was having an impact. With that said, I also recognize that the economy cannot recover unless the banking system recovers, and it is in a very fragile state. As bad as the EESA was, failing to commit enough resources to addressing the crisis would be the worst possible thing we could have done.

However, just because the funds have been released does not mean I will stop demanding accountability. The new administration assured my office that it would be more open and more transparent when deploying stabilization funds. It also promised that it would dedicate a significant portion of the funds to help homeowners struggling with their mortgages stay in their homes. I plan on holding it to its word. So far, the Treasury has asked the 20 biggest recipients of stabilization funds, including Citigroup and Bank of America, to issue monthly reports detailing what they are doing with the money. I find this encouraging, but I will be pressing the administration to do more.

In the meantime, I will be working to ensure that sufficient oversight is being conducted. For instance, when there were questions about whether the Inspector General would have the authority to hire staff quickly or investigate all aspects of the program, I wrote legislation, which passed the Senate, to make it clear that he did have that authority. I will continue to be active on this front going forward.

While I hope that the stabilization funds will prevent calamity in the credit markets, I also recognize that this plan will not be a silver bullet. We will need to do a lot more to get our economy back on track, including investing in education, job training, and renewable energy. We also need to get to work to establish strong, common sense rules and regulations to undo the damage of the last decade of deregulation that turned our financial markets into the world's largest casino. As your Senator, I will be pushing hard to address all of these issues.

Thank you again for contacting me. I hope you will continue to reach out in the future with your thoughts and advice.

All best,
Senator Claire McCaskill

I'm still looking for the part that relates to my email.


May said...

This is why I just delete all the email responses that representatives send out.

Stacey K said...

yeah, I should delete them, but I always open them.

I just wish that when form letters are sent out they wouldn't pretend that it's in response to an actual email.