[Congressional Record Volume 155, Number 81 (Tuesday, June 2, 2009)]
[House]
[Page H6055]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          THE BANKS' ARROGANCE

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.
  Ms. KAPTUR. Mr. Speaker, today the New York Times lead editorial 
``Foreclosures: No End in Sight,'' states there will be no economic 
recovery until there is a halt in the relentless rise in foreclosures. 
Foreclosures threaten millions of families with financial ruin, and by 
driving prices down, they sap the wealth of all homeowners. They 
exacerbate bank losses putting pressure on the still-fragile financial 
system.
  Let's give Wall Street credit. They've accomplished the biggest 
transfer of wealth from the middle class to the super rich in U.S. 
history. And still, no one is holding them accountable. What a crying 
shame.
  Study this picture. Five Wall Street money center banks had 
subsidiaries involved in the subprime mortgage loan fraud which led to 
our economic meltdown--JPMorgan Chase, Citi-group, Bank of America, 
Wachovia, and Wells Fargo--yet we, the American taxpayers, continue to 
bail out their bad business practices.
  The Dow, in fact, removed Citigroup today from their listed 
companies. The very people who originated subprime loans, bundled them 
and passed them on are the very winners of taxpayer largesse with no 
strings attached. Those who come out on top are the same five, arrogant 
and recalcitrant. They don't even return phone calls from local 
Realtors trying desperately to resurrect their local housing stock.
  Nonresponse is but the tip of the iceberg. The banks' arrogance has 
led them to use their inordinate power to hold up our Republic. Elected 
officials tiptoe around them. Some even protect them. And any group 
with that much power needs to be reined in in a democratic republic. If 
you're too big to fail, you're too big to exist.
  But who will do it? Last year, Treasury Secretary Paulson struck fear 
in a skittish Congress a mere 6 weeks before elections--how convenient 
that timing was--to pass the $700 billion taxpayer bailout of Wall 
Street saying America was on the verge of an economic disaster. 
Congress stampeded to pass that bill, and the economy melted down 
anyway.
  Paulson held his conversations behind closed doors--no records--
banking on, both literally and figuratively, the honor of politicians 
to not repeat his exact words. But a few weeks after Paulson got his 
hands on the public spigot, he changed direction. Originally he said, 
We asked for $700 billion to purchase troubled assets and at the time 
we believed that would be the most effective means of getting credit 
flowing. But, in fact, after the bill was passed on October 3, in 
consultation with the Federal Reserve, he determined that the most 
timely, effective step to improve market conditions was to put the 
money into the banks themselves.

                              {time}  2000

  So rather than holding banksters accountable in the courts and in the 
system, Washington has been systematically rewarding them.
  Since then, every clever bill Congress has cooked up to address the 
credit crisis engendered by the housing market meltdown has just picked 
at the edges. Look at your districts. Look at our country.
  The headlines and signing ceremonies look good. But there are over 5 
million families' mortgages now under water, and it's rising. The 
economic fundamentals are out of whack. Legislation that looks good on 
the surface keeps being pushed forward, but in effect, the bills simply 
allow the government to become a bigger dumping ground for Wall 
Street's housing excess. Neither justice nor prudence are being brought 
to Wall Street.
  When Louis Brandeis wrote ``Other People's Money,'' his conscience 
moved a Nation to regulate banks that were plundering our republic 
during the Roosevelt years. This included Ferdinand Pecora, who 
directed Senate hearings over a period of 2 years, examining and 
illuminating Wall Street practices. And those exhaustive hearings 
turned Wall Street inside-out to public view. We should do no less.
  But who will be our Pecora? Where is this Congress? Where is our 
President? And what has happened to our democratic government?

                [From the New York Times, June 2, 2009]

                     Foreclosures: No End in Sight

       A continuing steep drop in home prices combined with rising 
     unemployment is powering a new wave of foreclosures. 
     Unfortunately, there is little evidence, so far, that the 
     Obama administration's anti-foreclosure plan will be able to 
     stop it.
       The plan offers up to $75 billion in incentives to lenders 
     to reduce loan payments for troubled borrowers. Since it went 
     into effect in March, some 100,000 homeowners have been 
     offered a modification, according to the Treasury Department, 
     though a tally is not yet available on how many offers have 
     been accepted.
       That's a slow start given the administration's goal of 
     preventing up to four million foreclosures. It is even more 
     worrisome when one considers the size of the problem and the 
     speed at which it is spreading. The Mortgage Bankers 
     Association reported last week that in the first three months 
     of the year, about 5.4 million mortgages were delinquent or 
     in some stage of foreclosure.
       Not all of those families will lose their homes. Some will 
     find the money to catch up on their payments. Others will 
     qualify for loan modifications that allow them to hang on. 
     But as borrowers become more hard pressed, lenders--whose 
     participation in the Obama plan is largely voluntary--may not 
     be able or willing to keep up with the spiraling demand for 
     relief.
       One of the biggest problems is that the plan focuses almost 
     entirely on lowering monthly payments. But overly onerous 
     payments are only part of the problem. For 15.4 million 
     ``underwater'' borrowers--those who owe more on their 
     mortgages than their homes are worth--a lack of home equity 
     puts them at risk of default, even if their monthly payments 
     have been reduced. They have no cushion to fall back on in 
     the event of a setback, like job loss or illness.
       This page has long argued that a robust anti-foreclosure 
     plan should directly address the plight of underwater 
     homeowners by reducing the loans' principal balance. That 
     would restore some equity to borrowers-- and give them a 
     further incentive to hold on to their homes--in addition to 
     lowering monthly payments. The mortgage industry has resisted 
     this approach, and the Obama plan does not emphasize it.
       With joblessness rising, lower monthly payments could 
     quickly become unaffordable for many Americans. In a recent 
     report, researchers at the Federal Reserve Bank of Boston 
     argued that unemployment is driving foreclosures and to make 
     a difference, anti-foreclosure policy should focus on helping 
     unemployed homeowners. The report suggests a temporary 
     program of loans or grants to help them pay their mortgages 
     while they look for another job.
       The government will also have to make far more aggressive 
     efforts to create jobs. The federal stimulus plan will 
     preserve and generate a few million jobs, but that will 
     barely make a dent--in the overall economic crisis or the 
     foreclosure disaster. Since the recession began in December 
     2007, nearly six million jobs have been lost, and millions 
     more are bound to go missing before this downturn is over.
       President Obama needs to put more effort and political 
     capital into promoting the middle-class agenda that he 
     outlined during the campaign, including a push for new jobs 
     in new industries, expanded union membership and a fairer 
     distribution of profits among shareholders, executives and 
     employees.
       There will be no recovery until there is a halt in the 
     relentless rise in foreclosures. Foreclosures threaten 
     millions of families with financial ruin. By driving prices 
     down, they sap the wealth of all homeowners. They exacerbate 
     bank losses, putting pressure on the still fragile financial 
     system. Lower monthly payments are a balm, but they are no 
     substitute for home equity. And until more Americans can find 
     a good job and a steady paycheck, the number of foreclosures 
     will continue to rise.

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