PITIFUL PARTISAN HACK: HERE'S REPRESENTATIVE JOHN MICA'S FORM LETTER ON THE HOUSE BAILOUT LEGISLATION (HINT: BLAMES IT ON HIS BETE NOIR, BILL CLINTON)

REP. JOHN MICA -- IT'S ALL ABOUT HIM, NOT THE PEOPLE LOSING THEIR HOMES/CAREERS!
MICA uses the words I, me or my nine (9) times but never refers to the middle class or working families once.


Dear xxx:

Thank you for contacting me to express your opposition to the proposed taxpayer bailout of speculative Wall Street investments. I voted no on that measure in the House and as you may know it failed on a 207 to 228 vote.


Unfortunately, Congress opened the door for financial institutions to invest in speculative ventures when it repealed provisions of the Glass-Steagall Act in 1999. This allowed banks to expand portfolios and invest in unstable instruments in financial markets such as subprime and other risky ventures.


On July 1, 1999, when that proposal first came to the House floor, it passed with a vote of 343–86. I voted against allowing this type of speculation by banking institutions. Furthermore, on November 4, 1999, I was one of only a handful of members to vote against the final version bill that passed. For your further information, a newspaper recently published an article regarding this vote: http://www.politico.com/news/stories/0908/13887.html

My vote reflects my past business experience and my strong belief today that financial institutions should not stray from their primary role. It should now be abundantly clear why banks and financial institutions should not be allowed to engage in speculative, competitive and risky business investment activities.

My concern in 2002 relating to the policy changes in lending practices adopted by rule in the Clinton Administration by Fannie Mae and Freddie Mac led me to cosponsor H.R. 4071, the Uniform Securities Disclosure Act. This legislation sought to amend both institutions’ charters to extend Federal securities registration and reporting requirements to their mortgage-backed and other housing-related securities.

Lax lending practices beginning in the late 1990s led to irresponsible lending and irresponsible borrowing. The subprime crisis was created by allowing investment banks and lenders loan to unqualified borrowers, and then spread unregulated new securities products throughout financial markets. Now, the taxpayer is being asked to pick up the tab for those reckless and abusive practices.

During the Clinton Administration by rule change Fannie Mae and Freddie Mac were allowed to lower cash reserves from 10 percent to 2.5 percent. Clinton HUD Secretary Andrew Cuomo from 1997 to 2001 opened the door to allowing those agencies to take on huge exposure to the sub prime markets.

We now know the stewardship of Franklin Raines as Fannie Mae CEO, President Clinton’s former White House Office of Management and Budget Director, turned out to be an example that significantly helped to lead to today’s problem. Raines overstated Fannie Mae’s earnings by $10.6 billion so that Raines and his senior management could receive massive bonuses. In fact, Raines personally raked in nearly $100 million at Freddie Mac between 1998 and 2004. Dramatic reform in that institution was needed but ignored.

To view actual video of Congressional hearings relating to what was said by Democrats and Republicans concerning the status of Fannie Mae and Freddie Mac at that time, please access http://www.youtube.com/watch?v=_MGT_cSi7Rs

In recent years the race to create loans, to trade “no doc” and “no income” loans, and other non-regulated financial instruments helped bring on our current financial crisis. Many of the proposed new regulations now under consideration have been discussed and vetted over the last several years but were continually blocked by Democrats in Congress.

President Bush in 2003 proposed major reforms in mortgage lending, especially noteworthy due to the administration’s focus at the time of fighting terrorism. The initiative was so big that even the New York Times referred to it as “the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.” Unfortunately, Senate Democrats blocked this effort.

Other Bush White House attempts to reform the housing financial players failed because of Congressional Democrats. In 2005, when Republicans passed Fannie Mae and Freddie Mac reforms out of the Senate Banking Committee, Senate Democrats uniformly voted down a Republican proposal to significantly increase the regulations on Freddie Mac and Fannie Mae. In the last two years alone, the Bush Administration went to the new Congressional Democrat majority in Congress 17 times to reform both institutions but was stymied each time by them.

With these Republican initiatives blocked by Congressional Democrats, the Bush Administration on its own took several measures on a case-by-case basis to try to keep the U.S. financial markets from collapsing. With federal action to rescue Bear Stearns, the re-taking of Fannie and Freddie, and its intervention to prevent AIG’s failure, federal regulators realized the crisis was deepening so they decided we must address the systemic problems that are dragging down our economy.

During the aftermath of the 9-11 attack as the former Chairman of the House Aviation Subcommittee the responsibility fell on me to assist in securing finances of our faltering Aviation Industry. I am pleased to report that the tough workout plan I helped establish just completed its mission. Rather than loans we established a guarantee plan with rigid guidelines. As of last quarter all loans were repaid and the taxpayers earned $323 million. We can and we must do better with any Wall Street relief package.

Please know that as Congress continues to address the financial crisis, I will do everything possible to protect your hard earned tax dollars and at the same time work to help stabilize and expand our economy.


With my regards and best wishes, I remain

Sincerely,

John L. Mica
Member of Congress


JLM:gl