September 15, 2008
Congressman Mike Capuano (MA-08), a member of the House Financial Services Committee, today expressed strong reservations about the Federal Reserve's recent actions to weaken the collateral standards for the Primary Dealer Credit Facility (PDCF) and the Term Securities Lending Facility Term (TSLF).
While commending Treasury and the Federal Reserve for not providing direct financial assistance this time, Congressman Capuano wrote: "By allowing riskier types of collateral to be accepted in exchange for these federal loans, taxpayer money is put further at risk."
The current financial crisis continues to intensify. As the troubles with Lehman Brothers and Merrill Lynch are addressed, other financial firms are facing difficulties and they too could seek federal assistance at some point.
"I am not convinced that providing increasing amounts of taxpayer dollars, whether through lending facilities or direct bailouts, is an appropriate or efficient step to address this crisis. At what point and under what conditions will the federal government stop intervening?" Congressman Capuano wrote.
Congressman Capuano urged Secretary Paulson and Federal Reserve Chairman Bernanke to delay committing additional taxpayer dollars until the Congressional Budget Office (CBO) responds to his request to provide an estimate of federal dollars committed to date, including the cost of efforts to help Bear Stearns, Fannie Mae and Freddie Mac. The letters were sent on Monday September 15, 2008.
Letter to the Congressional Budget Office PDF
Letter to the Federal Reserve Board PDF
Contact: Alison M. Mills (617) 621-6208