[Congressional Record Volume 155, Number 35 (Friday, February 27, 2009)]
[Senate]
[Pages S2578-S2581]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           FINANCIAL BAILOUTS

  Mr. DORGAN. Mr. President, this morning's newspapers, once again, 
chronicle the difficulty that exists in this country. There is 
obviously a financial crisis, a collapse of the banking system, 
particularly on Wall Street.
  Just to name two, today's paper says there is a place in the budget 
that is a holding pattern for a potential $750 billion of additional 
funding that might be necessary for the big bank bailouts in this 
country. We also know from the newspapers and from news this morning 
that Citigroup has reached some sort of a deal with the Federal 
Government in order to make Citigroup viable. So each day we see more 
and more discussion about these kinds of issues. It begs the question 
about who is doing what? What do we know about all of this? How open is 
this? How much

[[Page S2579]]

should the American people know about how their money is used?
  I have come to the Senate floor today to talk about just one part of 
it. At a time when there is so much discussion here about hundreds of 
millions of dollars, billions of dollars, tens of billions, hundreds of 
billions of dollars, and now trillions of dollars, I wish to trace just 
$3.6 billion. That is a lot of money: $3.6 billion that the American 
taxpayers paid in bonuses to some big shot executives that steered 
their institution into the ground. Let me tell my colleagues about the 
story.
  This is a story about Bank of America buying Merrill Lynch. Our 
previous Secretary of the Treasury was concerned about Merrill Lynch 
having serious problems. He let Lehman go bankrupt, believed that was a 
mistake, and so Merrill Lynch is adrift and we have to find a marriage 
for Merrill Lynch. Apparently, the Treasury Department worked to get 
Bank of America to agree to buy Merrill Lynch. By the way, Bank of 
America had already purchased Countrywide Mortgage, which was a 
complete mess and a collapse and one of the big mortgage companies 
that, in my judgment, has caused much of this problem. Bank of America 
already had purchased Countrywide and the assets of Countrywide 
Mortgage. Now it was being encouraged to purchase Merrill Lynch. So 
that marriage was arranged by the Treasury Secretary and others, and 
that marriage was announced, by the way, last September and consummated 
in early January of this year.
  Now what we discover is that Bank of America got substantial amounts 
of taxpayers' money in TARP funds and other guarantees. So Bank of 
America has taxpayers' money, and $10 billion of the taxpayers' money 
that went to Bank of America would have been destined for Merrill Lynch 
had Bank of America not purchased it. Merrill Lynch, it turns out, when 
they were taken over, had just suffered a loss of some $15 billion in 
the fourth quarter of 2008. That caused problems for Bank of America 
which had agreed to purchase Merrill Lynch because Bank of America, 
before buying Countrywide and Merrill Lynch, was a healthy company, and 
now all of a sudden it is not a healthy company and needs substantial 
funds from the American taxpayers. But now we find that Merrill Lynch 
paid bonuses to its employees in December of last year just before the 
takeover by Bank of America was completed.
  Now, as I indicated, Merrill Lynch lost $15 billion late last year, 
and they paid $3.6 billion in bonuses in December. Let me describe the 
magnitude of these bonuses. Six hundred ninety-four employees at 
Merrill Lynch, according to reports, received bonuses in excess of $1 
million. Let me say that again. Nearly 700 employees in that failed 
company--a company that lost $15 billion in the fourth quarter of 2008 
received bonuses of over $1 million. It is unbelievable. Four top 
executives in that bank received $121 million. The top 14 employees in 
that institution got $250 million. Think of that: $3.6 billion paid in 
bonuses in December to people at an institution that lost $25 billion 
in the year. That $3.6 billion could have just as well been transported 
through a pipeline from the pockets of the American taxpayers to these 
700 people who got over $1 million apiece because that is taxpayers' 
money. That money from TARP funds--$25 billion and further money which 
guaranteed bad assets--that comes from the American taxpayers.
  Had they not paid the $3.6 billion in bonuses to these folks, their 
loss in the fourth quarter of 2008 would not have been $15 billion, it 
would have been $11.4 billion. Taxpayers would not have had to come up 
with that kind of funding through the TARP program. So I know where 
$3.6 billion went; American taxpayers were asked to pay that $3.6 
billion in bonuses to the 700 people who got $1 million apiece from a 
failed institution. Now Bank of America has this issue because Bank of 
America purchased Merrill Lynch. Bank of America now has serious 
financial trouble, and they have received even more funds as well. One 
of the questions about this is, How do we know the details about these 
bonuses? It is because an attorney general in the State government in 
New York had the guts and the intelligence to subpoena this information 
and demand that it be turned over to him. Question: Why is it that some 
committee in the Congress doesn't have this information? Why is no 
subpoena coming from the Congress on these issues? Why is there no 
systematic, significant investigation here? After all, this Congress is 
the institution that has triggered the funding. Yet these 
investigations are occurring with an attorney general in State 
government.
  This Congress needs to do a lot more. There needs to be 
investigations and accountability. I have offered those amendments. We 
ought to get to the bottom of who did what, who got the money, and who 
left town with the cash from the American taxpayers. This morning's 
news about Citigroup being rescued--do you know what? We are told 
Citigroup is too big to fail. How did it become too big? The Federal 
Reserve Board, Alan Greenspan, Treasury folks, and both Republican and 
Democratic Members pushed legislation that allowed them to create big 
holding companies and become too big to fail. I understand you need 
banks, and I understand you need big banks. But the big banks don't 
have to be so big that they are too big to fail, so when they make 
reckless decisions, the American taxpayers are told: We are too big to 
fail and you must bail us out. There is no inherent right for the 
biggest financial institutions in this country to continue to exist. I 
understand the circulatory system in this country and that a necessary 
part of it is the banking institutions. I understand how critical that 
is.
  My point is not that we can do without banking institutions. My point 
is that there is no inherent right to exist for those banks that have 
their current names and are declared too big to fail. What about 
putting them through some sort of a ``bank carwash'' and getting rid of 
all that tar--those bad assets--and sell the good assets to an 
institution that is reconstituted as a new bank? What inherent right is 
there for banks that have run this country into the ditch and destroyed 
their financial capability--what inherent right do they have for them 
to continue to exist?
  I am not suggesting we shut down the banking system. But perhaps this 
lesson ought to suggest to us that ``too big to fail'' is a doctrine 
that is a failure, because if you have decided you are going to allow 
institutions to become too big to fail, you have sent yourself down a 
road that is a dead end, in my judgment.
  The culture, it seems to me, that is on Wall Street, and the culture 
in this town--precisely in Treasury and some in Congress--is a culture 
that suggests that what was is what has to be in the future. That is 
not the case at all. I have talked ad nauseam about 1999 on the floor 
of this Senate, when both Republicans and Democrats steered a different 
course and said let's get rid of those old protections we put in place 
after the Great Depression--Glass-Steagall and those things, those old-
fashioned notions--and let's dump them and create the Nation of one-
stop shopping for securities and virtually everything you want to do in 
securities, real estate, and finance. So the Congress did dump all 
those old-fashioned rules and laws that were put into place after the 
Great Depression. I was one of eight Senators who stood on the floor 
and said no--one of eight who voted no. I said then on the floor of the 
Senate that I think within a decade we are going to see massive 
taxpayer bailouts. It was a disastrous decision to have done it. Now we 
must reconnect it. There is no discussion here, and there needs to be 
about what do you reconnect? Do you go back to some semblance of 
whether it is Glass-Steagall, or some approach to Glass-Steagall, in 
which you begin to separate the essential functions of banking from 
other areas of substantial risk? If you don't do that, what do you do 
to provide protections that this would not happen again?
  There is a culture here that suggests you cannot do that, it is 
impossible. There is a culture here that suggests we have to keep 
bailing out whatever it is. We have pumped $700 billion out of this 
Chamber into something called a TARP fund to be used for the big banks. 
Now we are told there needs to be a marker to protect the potential of 
another $750 billion. That is nearly $1.5 trillion pumped into the top 
of our banking institutions, like putting oil

[[Page S2580]]

in a crank case--and these are failed institutions. Yet the only 
investigation I see happening is coming out of an office in the 
attorney general's office in Albany, NY. It is unbelievable to me.
  Does anybody here understand that $3.6 billion was put in a hose 
directly from the taxpayers' pockets to bonuses for 700 people in a 
failed banking institution, so each of those 700 people got $1 million 
or more, and the 4 top people, by the way, got $120 million. By the 
way, let me point out that one of those top four people in Merrill 
Lynch, according to a news article in New York, got $24.9 million and 
was just hired in September of last year. So he got almost $25 million 
for 3 months of work. Then he quit. The day he quit, according to the 
news record, his wife closed on a $36 million luxury co-op on Park 
Avenue. Pretty unbelievable. By the way, another top executive, Thomas 
Montage, who headed global sales and trading at Merrill Lynch, was 
reportedly given a guaranteed payment of $39.4 million for 2008. Does 
this sound like fiction? It does to me.
  This week, we were treated to a rant on television by a guy I saw 
standing on a trading floor, a derivatives trader, who was ranting 
about losers and about reckless behavior, about the losers who might 
get help to stay in their homes. We have had millions of people lose 
their jobs, some 2.6 million people last year. A good number of them 
are also losing their homes. Somebody says maybe you can try to find a 
way to help some of them stay in their homes, and that derivatives 
trader stood and ranted about the losers who have lost jobs and are 
about to lose their homes. I wonder if that derivatives trader might 
stand on the floor of an exchange and describe losers as people who 
make $24.9 million for 3 months of work in a failed institution. Are 
they losers? How about the nearly 700 people who got over $1 million 
each in bonuses from the American taxpayer? Are they losers? Or is it 
just the little folks, the casualties at the bottom of this economic 
wreckage, the people who lost their jobs, their homes, and who are 
losing hope? Then they see these stories about ``too big to fail.'' 
When 700 people get bonuses of $1 million each in an institution that 
lost $15 billion in just one quarter last year and the institution pays 
$3.6 billion in bonuses, I wonder if the folks who are having an itch 
to rant today might want to rant about that kind of nonsense.
  How about laying off the folks who don't have it so good, the folks 
who are struggling and trying to get by, hoping beyond hope that maybe 
they are not going to get laid off; or if they just got laid off, 
hoping beyond hope they might be able to find another job; or hoping 
beyond hope that if they got laid off and haven't yet found a job, they 
can find some way to scrape up enough money to make the next house 
payment so they will not be kicked out of their house. These people are 
losers, you say? I mean, of all the unbelievable things I have heard, 
for a derivatives trader to stand on the exchange floor and rant about 
the losers at the bottom of the economic scale, shame on him, in my 
judgment. I will tell you where the losers are. The losers are the 
folks who have wallowed in big bucks, getting bonuses from institutions 
that have failed and then asking for taxpayer money and then asking us 
to pry those bonus numbers out of the bowels of their financial 
records. They didn't give them up exactly voluntarily. It was an 
attorney general of New York who forced that information into the open. 
Well, where is the outrage about these things? Where is the outrage? 
Let me hear a rant from somebody standing on a trading floor about 
that--just one.
  This Congress has a lot of work to do. This Congress has not begun to 
do the investigations that are necessary. We should not learn these 
things from an attorney general in New York who is issuing subpoenas. 
We should learn them by substantial investigations here to find out 
what happened, who got the money, and what happened to the first $700 
billion.

  I have used the term ``bank robbery,'' and I understand it is a 
pejorative term. When we think of bank robbers, we think of Jesse James 
in Northfield, MN, with a mask over his face and a gun and a fast 
horse. Well, a whole lot of folks have robbed big banks in this country 
of their financial viability and of their strength, through horrible, 
bad decisions--even as they have taken massive amounts of money from 
the banks for themselves. That is bank robbery. I know it is a 
different kind--with no violence and they are wearing suits and flying 
in private jets--but it is robbing America's financial institutions. As 
I have described, I think it also robs American taxpayers.
  I want this country to do well. I want this financial wreckage to 
end. I want us to put America back on track. I want us to do the things 
that are necessary to prevent this from ever happening again. But you 
cannot do that unless you understand what happened. Accountability is 
looking backward and forward. I am talking about all this because when 
we have to discover by reading the newspaper that a State official has 
finally subpoenaed records to find out that a company that lost 25 
billion last year gave out $3.6 billion in bonuses, probably from $10 
billion of the American taxpayers' money, we have a right to know that. 
I have indicated on the floor of the Senate before that much of this is 
about economic recovery. If we are going to get by this and through 
this--and I think we will--it is about confidence. It is about 
restoring confidence in the American people about their future. When 
the American people are confident about their future, they do things 
that expand the economy. When they are not confident, they do things 
that contract the economy. It is as simple as that.
  I ask, how can Americans be confident when, day after day, they read 
these stories about how folks at the top get off with a lot of money 
and then their friends call the folks at the bottom losers. That is 
hardly inspiring, in my judgment. We have a lot of things to do. First, 
is to investigate all this and, at the same time, to understand what 
has happened; we need to begin working to figure out what kind of a 
banking and financial future we want. We are going to try to put people 
back to work with the economic recovery package, building 
infrastructure, trying to put people back on the payroll. That will 
give confidence and also build an asset for our country. All those 
things are necessary.
  The other steps that are necessary is for us to think, what did we do 
in 1999 to say let's allow big bank holding companies to be created and 
grow banks that are too big to fail, and let's decide we don't want to 
regulate anything. How are we going to put that back together? Should 
we not revisit that decision that turned out to be so wrong and the 
issue of Glass-Steagall or some form of it? Shouldn't we revisit 
exactly what we want in terms of future regulatory oversight?

  Let me make one other point while I talk about this. I sat across the 
table from a North Dakota banker some while ago at what was called a 
sauerkraut festival. I said to him--this is a town of 1,200 people or 
so. I said to this community banker: Do you have money to lend?
  He said: Oh, sure.
  I said: If the biggest company in your town--which is a small 
manufacturing company--if that company needed some funding for an 
expansion, would you have money?
  He said: Oh, sure, we have money. We have done banking the old-
fashioned way. We take deposits and we make loans, but we do 
underwriting for those loans. We sit across the table from someone who 
wants a loan to be sure they are able to pay that loan. That is called 
underwriting. We bank the old-fashioned way.
  Would it not have been nice if some of the biggest institutions 
banked the old-fashioned way?
  I got a call the other day from a woman who runs a company that makes 
steel buildings. She has lost 80 percent of her business; 80 percent of 
her business is gone. Maybe they won't make it. But she asked the 
question: Is there any help for us? Is there any program out there that 
would help bail out our company because we were doing pretty well; this 
was a good economy for us; we were selling steel buildings, and it was 
not our fault this thing took a bad turn. Is there anything that can 
help us stay in business? We have people on our payroll. Is there 
anything that can help us because every day, she said, I read about the 
big banks getting all this money.
  I assume she will probably read something I have said that not only 
do they get all that money in Merrill Lynch, they got $3.6 billion in 
bonuses

[[Page S2581]]

for the very executives who helped lose $25 billion last year.
  The answer to that woman is, no, there is nobody here who has a 
program that says: You know what, let's pay as much attention to the 
Main Street business that is struggling this morning as is being paid 
to the biggest banks that are too big to fail. Nobody is talking about 
that small business.
  By the way, when they lose, they lose everything. That small 
business, that dream, that risk of, in most cases, all the assets that 
family has, when that is gone, it is gone. Is there anybody here who 
has put together some structure that says: Let's help those folks. 
Maybe the economic engine also runs well when you help folks at the 
bottom. Maybe things percolate up in America.
  I think it is a fair question to ask. It is a fair question to ask 
that many ask about rewarding reckless behavior, about what do you do 
in a country to try to put an economy that has been so savaged by bad 
decisions and, in some cases, bad luck, but also greed, a carnival of 
greed, what do you do to put it on track, to give people confidence 
about the future? There is not one solution. There is not one answer. 
There are a series of things to be done. It seems to me, first and 
foremost, we have to try to understand that the American people cannot 
continue to read this. They cannot continue to read that they are asked 
to come up with another $750 billion because these institutions are too 
big to fail but apparently not smart enough to understand you don't 
need to give $3.6 billion in bonuses to people who lost $25 billion. 
There is no Main Street in America where that decision would be made.
  As I conclude, let me say that I want this country to succeed so 
badly. The President said it the other day. He had a room full of 
Republicans and Democrats in a joint session of Congress, and he said: 
I know everybody in this room loves their country. And we do. This 
country is in a lot of difficulty. It is not some natural disaster. 
This was not some Hurricane Katrina. This difficulty was caused by a 
lot of terrible decisions. Some people can call our offices and look at 
this Government and they can say: It was all Government policies. Let 
me just make this case as well that the consumer debt by the American 
people has gone up, up, up, straight up. That is not Government debt; 
that is consumer debt. That is also a problem. Giant trade deficits 
through unbelievably incompetent trade agreements, at $700 billion a 
year. We have a lot of problems, and we need to address them all right 
now and begin fixing them and putting this country on course so that we 
have an economy people can believe in and so they can believe life will 
be better for their kids than it was for them because this is a country 
that cares about expanding the middle class and lifting everybody up.
  We can do this. We can do it. But we won't do it by ignoring the 
things about which I just talked. We ought to face them and face them 
now.
  Mr. President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Alaska.
  Ms. MURKOWSKI. I thank the Chair.
  (The remarks of Ms. Murkowski pertaining to the introduction of S. 
503 are printed in today's Record under ``Statements on Introduced 
Bills and Joint Resolutions.'')
  Ms. MURKOWSKI. Mr. President, I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. SESSIONS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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