Jeff Bingaman United States Senator from New Mexico

WASHINGTON – U.S. Senator Jeff Bingaman today reported the Senate has approved legislation (74-25) aimed at shoring up our financial markets to boost the American economy, prevent further job losses, and protect Americans' savings. Bingaman voted for the bill.

The legislation will authorize the Treasury Secretary to purchase mortgage-related assets from banks, which will enable banks to resume lending to individuals and businesses. In the past few weeks alone, the United States has witnessed the collapse or near-collapse of three of the five independent U.S. investment banks, alongside the failure or near-failure of many additional institutions that play a central role in our nation's financial services infrastructure. 

Because credit has frozen up, it has become increasingly difficult for individuals and businesses to borrow money to purchase vehicles and homes, or to finance their child's college education. Equally important, as a result of the financial market turmoil, many Americans have lost at least a portion of their savings. 

"These challenges come at a time when America is hardly in the position to weather a storm. To take just a few indicators: One in 11 mortgages is delinquent or in foreclosure; credit card defaults have increased by 15 percent from 2001; and more than half of our states have moved to cut spending, use reserves, or raise revenues to address funding shortfalls," Bingaman said. 

"Based on this evidence, I have concluded that Congress faces an imperative to act. Of course, in doing so, we must be responsive and politically realistic. The plan before us did not represent the best possible solution – but it is a responsive and realistic one," he said.

Bingaman pointed out that New Mexico communities are directly suffering because of the liquidity crisis. For example, in Ruidoso the credit crunch left the municipal school district with just one bidder for a $3 million bond issue. Unable to delay the school repairs and expansions that these bonds will finance, the school board was forced last month to sell the bonds at far less than it would have received just weeks earlier. 

In Carlsbad, the Community Foundation's endowment has declined significantly with the stock market, prompting the Foundation to say that it may be forced to scale back grant awards and scholarships. And in northwestern New Mexico, along our state's border with Arizona, the Navajo Nation's Budget and Finance Committee has been meeting to identify which projects to cut because of financial losses directly tied to the credit crisis. 

At the state level, Lehman Brothers' failure has forced the Transportation Department to refinance bonds for highway construction. The refinanced terms will cost our state an additional $78,000 annually in debt service payments.

           To address the liquidity problem, the bill authorizes the Treasury Secretary to purchase troubled mortgage-related assets, beginning with $250 billion, with the option to access an additional $100 billion if the President certifies that it is needed, and the option to obtain the remaining $350 billion if the President issues a written request. Bingaman praised Congressional leaders for adding significant improvements over the Treasury Department's initial proposal, including:

?       Reinvesting in the financial markets by providing the Treasury Department graduated authorization to purchase troubled mortgages, mortgage-backed securities, and pensions;

?       Reimbursing the American taxpayer, beginning with a share in the profits gained by participating companies; and

?       Reforming financial institutions by strengthening oversight, increasing transparency, and limiting executive compensation.

"My decision to vote for this plan is not to say that it represents what I see as the ideal solution. In particular, we should be doing more for Americans who are struggling to keep their homes," Bingaman said.

"We cannot afford to sit by idly and let this economic crisis take a further toll on the economy. But we also must be realistic about the limitations of this legislation: It is a band-aid intended to stop the bleeding. It will not address the inadequate regulatory framework that enabled this crisis, and Congress must commit to enacting comprehensive reforms that will ensure we never again find ourselves in such a precarious position," he said.