[Congressional Record Volume 155, Number 50 (Tuesday, March 24, 2009)]
[House]
[Pages H3790-H3791]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      OUR CURRENT ECONOMIC CRISIS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.
  Ms. KAPTUR. I thank the Speaker very much for that, and wish to say 
that I recently entered into the Congressional Record an account of 
some of the key legislative history and executive actions that have led 
our Nation into our current economic crisis, a meltdown of people's 
accumulated savings, a loss of value in their homes and pensions, a 26-
year high in unemployment, and major damage to our financial 
institutions and their ability to lend.
  One of the individuals I talked about was the woman who headed the 
Commodity Futures Trading Commission back in 1998, in the late 1990s, 
and her name was Brooksley Born. She was an esteemed attorney, and she 
knew the field of regulation well. She said we had to regulate 
derivatives and, if we didn't, we would get in trouble. She was 
prescient and she was right.
  Three of the men that ultimately caused her resignation were pictured 
on the front of Time Magazine about a year later: Alan Greenspan who 
then headed the Federal Reserve, Robert Rubin who chaired Citigroup, 
and Larry Summers who was then Secretary of Treasury.
  You know, it is good to remember history so you are not doomed to 
repeat it. The unemployment figures just announced nationally and for 
my home State of Ohio reveal the grim situation: The State unemployment 
rate is marching toward double digits, the city of Toledo is facing a 
massive deficit that grows with each passing day, and around our 
district families, businesses, and local governments are struggling to 
make ends meet.
  Let me offer a seven-step restoration program to put our economy back 
on track.
  First of all, we ought to bring the ``too big to fail'' institutions 
back under control for the sake of the American people. They should 
never have been allowed to get so big that the failure of a Citigroup 
that this man used to head or an AIG insurance company, which is much 
more than an insurance company, or Lehman Brothers could threaten the 
entire global financial system. These raging beasts have got to be 
brought back under control; and, last week Federal Reserve Chairman 
Bernanke said, ``The `too big to fail' issue has emerged as an enormous 
problem both for policymakers and financial institutions generally.'' 
He is right. Job number one should be bringing the big institutions 
back under control and, in my opinion, breaking them up.
  Number two, we should restore the goal of financial security; that 
is, people should have more equity and less debt, and it needs to be 
restored at all levels, from our kitchen tables to the government of 
the United States. Read chapters 8 and 9 of Kevin Phillips' book, 
American Theocracy. Treat yourself to a real understanding of how we 
have gotten ourselves into the situation we face today. Form a book 
club. Think about it.
  Number three, we need to restore our national ethic that values 
savings over debt both in our households and in our government. Our 
government should set a national standard for prudent and responsible 
financial behavior for our citizenry and institutions. The fact that JP 
Morgan could take a dollar of home equity and leverage it 100 times 
beyond the value of the underlying asset goes well beyond the realm of 
reason.
  Number four, we need to restore the word ``banking,'' ``prudent 
banking'' to our vocabulary, and excise the word ``financial 
services.'' And we ought to start right here in the House of 
Representatives by renaming the committee of jurisdiction what it used 
to

[[Page H3791]]

be called, the Banking Committee. This means deposits and prudent 
lending must be unwound, separated, and regulated differently from the 
securitization process for a major portion of economic activity.
  Number five, we ought to incentivize the accumulation of equity by 
ordinary citizens, and I was pleased to see that President Obama's 
budget includes savings proposals. And, we ought to restore an ethic of 
service to bank customers by those working in banks, not using them to 
empty out the limited savings of the American people.
  Number seven, we ought to restore the balance of power between Wall 
Street and the megabanks on the one end of the scale with community-
based banks and credit unions at the other end of the scale. We ought 
to ask Chairman Bernanke for more on that score.
  And, finally, we ought to investigate, investigate, investigate. In 
an article last week titled, ``Then It's Securities Fraud,'' journalist 
Froma Harrop wrote that law professor William Black of the University 
of Missouri Kansas City, who is also renowned for his work in ethics, 
has mounted a campaign for a new Pecora-type investigation here in the 
Congress. That was a series of hearings held by the Senate Banking 
Committee into financial wrongdoing at the end of the Great Depression.
  Harrop writes, ``As the bottom was falling out of derivatives 
trading, AIG was reporting healthy profits. That's not allowed under 
the law. Meanwhile, the company created a short-term bonus system for 
its top executives.''
  Professor Black's call for a Pecora Commission should not go unheeded 
by this Congress. The issue of securities fraud is not a small matter.
  The first order of business is to get the financial system righted so 
the ship doesn't sink. We owe that to the American people who are 
trying to hold on to their own dreams.

                              {time}  1615

  Then the Congress must launch an investigation like no other into the 
causes of this crisis. And frankly, it is a conundrum to this Member 
why that set of investigations has not already begun. We need to learn 
every detail about what happened and why and bring the wrongdoers to 
justice so that this never, ever happens again.
  Next week, I'm going to offer greater detail about what America needs 
to do from this point forward. But certainly one of the actions that 
should be taken today is that the Federal Deposit Insurance Corporation 
and the Securities and Exchange Commission should immediately employ 
reforms in mark-to-market accounting so that we can actually help our 
banks begin to lend again, because we can never possibly replace the 
capital being destroyed every day by mark to market with the infusions 
from the taxpayers of the United States.

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