Published: October 09, 2008 11:30 am            

Hensarling airs concerns about financial rescue

By Raymond Billy

rbilly@jacksonvilleprogress.com

U.S. Rep. Jeb Hensarling on Wednesday visited Jacksonville to give his take on the state of the union. Hensarling, R-Dallas, sought to explain his votes on critical issues tackled in Congress of late, particularly the $700 billion legislation designed to jump start the nation’s credit market.

On Sept. 28, the bill — which is designed to allow the Treasury Department, led by Henry Paulson, to buy ailing mortgage-related assets — was taken to the House floor and defeated 228-205 with Hensarling joining the majority. In an effort to save the bill, the Senate added provisions to entice conservatives, such as raising from $100,000 to $250,000 the limit the FDIC can insure bank deposits. The bill also included $110 billion in tax breaks, policies that Hensarling supports.

The Senate approved the bill with the changes and sent it back to the House, which passed the revised measure 263-171 Friday. This time, Hensarling was in the minority, voting “no” once again. He said although he was pleased with the changes implemented as a result of the bill’s initial rejection, he still could not support such dramatic government intervention into the nation’s financial system.

“I believe action was needed in the midst of our nation’s credit crisis, but the Paulson plan was not the only option,” Hensarling said.

Hensarling said Congress was hasty in the way it pushed the bill through both chambers. He said there were “creditable” counter-proposals to the bill that should have been considered and debated, but such a discussion would have taken several more weeks. He said, given the magnitude of what the Treasury Department and President Bush were proposing, that debate should have been allowed to take place to ensure the most prudent action was taken.

“I wanted a workout, not a bailout,” Hensarling said. “I’m skeptical of this deal because I think it will cost taxpayers money that they will never get back.”

Hensarling introduced legislation requiring the Treasury Department to guarantee losses resulting from the failure of timely payments and interest from mortgage-backed securities in order to provide value to those securities and a foundation for which they could then be sold. Rather than having the taxpayers fund this insurance program, all holders of mortgage-backed securities would have been required to pay premiums. In order to increase capital, Hensarling proposed a two-year suspension of capital gains rates, which he said would unleash funds with which to create jobs and grow the economy. Hensarling’s proposal also included limiting federal backing for high-risk loans; privatizing government sponsored enterprises like Fannie Mae and Freddie Mac; suspending mark-to-market accounting provisions for certain long-term, non-trading assets to allow firms to mark those assets to their true, long-term economic value; and prohibiting excessive executive compensation or golden parachutes, according to a press release outlining Hensarling’s counter-proposal.

While Hensarling lamented the fact his proposal was not given wide consideration, he celebrated what he called the success of his and other petitions to get Congressional Democrats to back offshore oil drilling off the Atlantic and Pacific coasts. Hensarling traveled throughout East Texas in August to gather signatures for his petition. As a result of political pressure, Democrats allowed the quarter-century old ban on offshore drilling to expire Oct. 1.

“I want to thank the citizens of East Texas for supporting this energy petition,” Hensarling said. “House Speaker (Nancy) Pelosi heard all of your voices when she and Congressional Democrats dropped the ban.”

Hensarling said tapping into the nation’s oil supply will be a huge step not only toward U.S. energy independence, but in improving the nation’s economy.

        

• Click to discuss this story with other readers on our forums.