For Immediate Release
October 6, 2008
The economy of our state and
nation continues to be of vital concern and this past week has
been a tumultuous one for both. As Federal lawmakers enacted a
financial rescue plan in Washington, our own Wachovia bank found
itself involved in complicated negotiations with two financial
institutions who are attempting to purchase the bank. The impact
of the sale on Charlotte, Winston-Salem, and other communities
in our state isn’t entirely clear at this time.
Recently, I shared an update
with you about what the General Assembly has done over the past
two years to try to protect our state’s strong economy. We have
created tax credits for families and small businesses,
strengthened mortgage foreclosure laws and provided incentives
for businesses to create jobs in this state. I welcome any
additional ideas you may have for the coming session.
Although the North Carolina
General Assembly and I had no vote nor involvement in Congress’
“bailout” vote last week, I am providing the following
information for your review. I encourage you to contact your
congressman and senators with any views you may want to share on
this important federal legislation.
SUMMARY OF THE "EMERGENCY ECONOMIC STABILIZATION ACT OF 2008”
I.
Stabilizing the Economy The Emergency Economic Stabilization Act
of 2008 (EESA) provides up to $700 billion to the Secretary of
the Treasury to buy mortgages and other assets that are clogging
the balance sheets of financial institutions and making it
difficult for working families, small businesses, and other
companies to access credit, which is vital to a strong and
stable economy. EESA also establishes a program that would allow
companies to insure their troubled assets.
II.
Homeownership Preservation EESA requires the Treasury to modify
troubled loans - many the result of predatory lending practices
- wherever possible to help American families keep their homes.
It also directs other federal agencies to modify loans that they
own or control. Finally, it improves the HOPE for Homeowners
program by expanding eligibility and increasing the tools
available to the Department of Housing and Urban Development to
help more families keep their homes.
III. Taxpayer
Protection Taxpayers should not be expected to pay for Wall
Street's mistakes. The legislation requires companies that sell
some of their bad assets to the government to provide warrants
so that taxpayers will benefit from any future growth these
companies may experience as a result of participation in this
program. The legislation also requires the President to submit
legislation that would cover any losses to taxpayers resulting
from this program by charging a small, broad-based fee on all
financial institutions.
IV. No
Windfalls for Executives Executives who made bad decisions
should not be allowed to dump their bad assets on the
government, and then walk away with millions of dollars in
bonuses. In order to participate in this program, companies will
lose certain tax benefits and, in some cases, must limit
executive pay. In addition, the bill limits "golden parachutes"
and requires that unearned bonuses be returned.
V. Strong
Oversight 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). The Treasury must report on the use of the funds
and the progress in addressing the crisis. EESA also establishes
an Oversight Board so that the Treasury cannot act in an
arbitrary manner. It also establishes a special inspector
general to protect against waste, fraud and abuse.
