Rep. Eshoo Testifies on Lehman Brothers Collapse

Announces Legislation to Recoup Local Government Losses

April 20, 2010

Washington, D.C. - Rep. Anna G. Eshoo (D-Palo Alto) testified as the opening witness during today's hearing in the House Financial Services Committee about the dubious business practices of Lehman Brothers, as uncovered in the Lehman Bankruptcy Examiner's report.

At the hearing, Rep. Eshoo spoke to the Committee about the $155 million San Mateo County lost when Lehman collapsed, unlike other large financial institutions which were saved. Rep. Eshoo also announced that she will introduce the Restitution for Local Government Act of 2010 to assist counties that are still suffering as a result of the Lehman collapse.

Rep. Eshoo released the following statement after her testimony:

"The Examiner's report laid bare how the collapse of Lehman Brothers resulted from risky, deceptive practices which exemplify the worst excesses of Wall Street and the root causes of the financial crisis that led us into the deepest recession since the Great Depression. These practices may not be illegal, but they are criminal. The report underscores the fundamental need in our nation for common-sense financial reform to bring transparency to the market place, as well as protection of investors and taxpayers.

"More than 40 municipalities, including San Mateo County in my Congressional District, had invested over a billion dollars in the purportedly stable and safe financial products of Lehman Brothers. When Lehman collapsed, all of these taxpayer funds were lost. The affects of this loss are still being felt today-teachers are being laid off, schools are not being built or renovated, roads are not being improved, and transportation plans are being scrapped.

"That's why I announced during today's hearing that I will introduce the Restitution for Local Government Act of 2010. The federal government has already received more than $15 billion from the sale of bank stock that it purchased through the TARP program. These transactions total more than ten times the amount of money that all public institutions lost when Lehman collapsed. My legislation will require the Secretary of the Treasury to provide relief to the counties affected by the Lehman collapse.

"The counties who invested in Lehman and their residents are victims who had no hand in the crisis, but suffered the worst for it, and they deserve more than just reform-they deserve redress. I look forward to moving this legislation forward, assisting the public agencies who invested in Lehman, and ending the irresponsible, immoral financial practices which led the entire nation to recession."

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Click here to read Rep. Eshoo's full testimony from the Hearing.