For Immediate Release
Office of the Press Secretary
October 3, 2008
Fact Sheet: Safeguarding the Financial Future of American Workers and Families
Emergency Economic Stabilization Act Is Vital To Help America Get Back On The Path To Growth And Job Creation
In Focus: Economy
Today, the Bureau of Labor Statistics released new jobs figures for September. Nonfarm payroll employment decreased by 159,000 jobs in September and the unemployment rate remained at 6.1 percent.
- The House of Representatives must pass the Senate financial rescue package immediately.
We are in the midst of a serious financial crisis the financial system is clogged, and credit is not available to many families and business owners who need it. Problems that originated in the credit markets and first showed up in the area of subprime mortgages have spread throughout our financial system and are threatening Main Street. To protect the broader economy from the financial crisis, President Bush proposed legislation to remove troubled assets from the financial markets as the housing market recovers.
Bipartisan Legislation Will Protect Taxpayers And Ensure Credit Flows To American Businesses And Families
The Senate version of this legislation added important provisions. This new version, in addition to addressing the financial crisis, protects millions of taxpayers from the Alternative Minimum Tax (AMT), extends tax incentives for businesses and tax relief for families and individuals, extends renewable energy tax credits, and increases federally insured deposits.
- The AMT patch will protect about 26 million American taxpayers from an unwelcome tax increase.
- The bill will extend the research and experimentation tax credit, which provides an important incentive for businesses to invest in the development of new products and technologies. The legislation also improves and extends tax incentives for charitable giving by individuals and businesses.
- The bill extends deductions for State and local sales taxes and for tuition expenses, and it extends an additional standard deduction for property taxes paid.
- This bill will extend broad-based tax incentives for renewable investments in wind, solar, biofuels, and other renewable energy investments.
- The legislation includes a provision that would temporarily raise the cap on federally insured deposits from $100,000 to $250,000. That provision would expire at the end of 2009.
- This legislation will grant tax relief for victims of floods, storms, and tornadoes between May 20 and August 1 in Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, and Wisconsin.
The President commends the Senate for its strong bipartisan vote in favor of the financial rescue plan. This bill is essential to the financial security of every American. It is aimed at helping American families, small businesses, and State and local governments. The original proposal was revised to include strong oversight that strengthened the legislation:
- This legislation places limits on executive compensation. When the Treasury Department buys assets directly, the financial institution selling them must observe standards limiting incentives and prohibiting golden parachutes. When the Treasury Department buys more than $300 million in assets at auction from a single institution, executive compensation above $500,000 will not be tax-deductible and the institution will be subject to penalties for golden parachute payments triggered by events other than retirement.
- The Treasury Department will receive warrants for non-voting stock from participating financial institutions, if needed, to cover losses and administrative costs while allowing taxpayers to benefit from equity appreciation.
- Under this bipartisan agreement, the Treasury Secretary would be authorized to remove troubled assets in stages. Initially, the Treasury Secretary will have the ability to immediately purchase or insure up to $250 billion. In order to access the next $100 billion, the President must certify the need for the authority and report to Congress. For the final $350 billion, the President must request the authority through a written report to Congress. The Treasury Secretary will then have the authority unless Congress passes a joint resolution of disapproval within 15 days.
It is projected that much, if not all, of the tax dollars invested by the Federal government into these troubled financial institutions will be paid back over time. Under the purchase program, the government would sell or hold the acquired assets, with the proceeds going back to the Treasury, to offset much, if not all, of the initial cost. Under the program to guarantee troubled assets, the Treasury Department would charge risk-based premiums to cover any anticipated claims.
Our Economy Is Depending On Decisive Action By The Government
In recent weeks, the Federal government has taken a series of measures to help promote stability in the overall economy. We have boosted confidence in money market mutual funds and acted to prevent major investors from intentionally driving down stocks for their own personal gain. But more action is needed. We must address the root cause behind much of the instability in our markets the mortgage assets that have lost value during the housing decline.
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