[Congressional Record Volume 155, Number 191 (Wednesday, December 16, 2009)]
[House]
[Pages H15474-H15476]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    CREDIT IS FROZEN IN THIS COUNTRY

  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, the job market is bleak. A major reason is 
that bank credit is frozen in this country still. Business can't get 
loans to hire and function. The Federal Deposit Insurance Corporation 
reports that lending has declined for the last five consecutive 
quarters.

[[Page H15475]]

  This chart amply demonstrates that. It was in the Washington Post 
yesterday.
  Credit in the real banking sector has dried up. I'm not talking about 
the political TARP bailout fund banking sector being managed by 
Treasury. I'm talking about the impact of that on the rest of the 
banking system where credit is simply not being lent across this 
country. Businesses are clamoring to get loans, only to be rejected 
from coast to coast. The normal banking sector is not functioning. TARP 
destroyed over $600 billion of real bank capital as the Treasury moved 
itself into the driver's seat of picking winners and losers. Wall 
Street banks literally, and the way they've been handled, have blunted 
real economic recovery as businesses cannot get loans to conduct their 
affairs, to hire new employees, to pay current employees or buy 
equipment because they simply don't have access to credit.
  Sadly, what's happened over this period of time is our local banks 
and the non Big 5 banks in the country have tried to compete in this 
economy. The Big 5--the ones that got the TARP funds from the 
taxpayers--have gone from holding 30 percent of the deposits in this 
country to 40 percent. They're getting bigger, which means it's even 
harder for the other thousands of banks across this country to compete.
  Our financial system started seizing up after TARP was passed when 
normal banks refused to lend to each other in overnight transactions, 
and this has just gotten worse ever since. They lost confidence in the 
banking system itself.
  So, where does small business go to get operating loans? The 
Washington Post gave us a little insight on that yesterday, and I wish 
to place that article in the Record. Some of what it says is:
  ``The administration's options continue to be constrained by the 
belief of many officials that meddling in the details of banking is 
counterproductive.''
  Well, what do they think the TARP is? It's ultimate meddling. It's 
total meddling. And, in fact, it prevents normal lending from being 
restored as banks across this country see that some banks get a special 
deal if they go to the Treasury and others get thrown aside or merged. 
A lot of those big banks have used the money to buy other banks, making 
our banking system much less competitive, much more concentrated.
  While the White House has raised the temperature of its rhetoric in 
recent weeks about what's going wrong, their policy measures simply 
have not followed. Indeed, they extended the TARP for another year.
  Now there are some activists across this country calling on the 
President to do much more. One of them, Reverend Jesse Jackson, left a 
meeting in Atlanta on Monday with ministers and others who are facing 
foreclosure even on their churches and homes. The Reverend Jackson, as 
the article reports, called on President Obama to use future Federal 
fair lending laws to force the banks to help struggling communities. He 
said, and I quote, ``Banks got Federal money at zero interest, but 
homeowners and churches are paying pre-TARP prices for their losses. 
The banking system must be made accountable. The Attorney General 
should have been in that meeting as well.'' I agree with Reverend 
Jackson.
  ``The banking industry,'' the article says, ``has reduced lending''--
as this chart demonstrates--``for five consecutive quarters, even as it 
has regained profitability thanks to vast public aid from the people of 
the United States. The amount of money on loan from banks fell by about 
$600 billion, or 7.2 percent, from September 2008 to September 2009, 
according to the Federal Deposit Insurance Corporation.''

                              {time}  1930

  This is not a recipe for economic recovery, not in the real economy. 
This is the second time the President has convened bank executives to 
urge their increased lending. The first was in March. But you know what 
the article says, it did little to slow the slide.
  There are two actions that immediately could make a difference. One 
deals with the President meeting with the Securities and Exchange 
Commission and the Financial Accounting Standards Board and looking at 
mark-to-market accounting, which has destroyed over $600 billion of 
capital in our financial system. Credit is frozen. The very banks we 
have bailed out have decreased their lending over these five quarters 
that I've talked about, and Treasury, who is in charge of the TARP, 
literally is picking winners and losers.
  We need reform of mark-to-market accounting, and we need somebody in 
the administration to look at the Making Home Affordable program to 
make sure that we allow people to remain in their homes so we don't 
have increasing foreclosures, particularly over these winter months. 
The problem is that they can't see the forest because the big trees, 
the big five, are blocking their view of what is happening across this 
country.

               [From the Washington Post, Dec. 15, 2009]

    In White House Meeting, Obama Calls on Banks To Increase Lending

            (By Binyamin Appelbaum and Michael A. Fletcher)

       President Obama exhorted the nation's biggest banks on 
     Monday to make ``extraordinary'' efforts to increase lending, 
     even as some of those firms are racing to distance themselves 
     from government control.
       The nation's most powerful bankers sat in the Roosevelt 
     Room at the White House and nodded as the president spoke, 
     but some executives and industry officials said afterward 
     that increasing lending is largely beyond their ability.
       Meanwhile, Citigroup and Wells Fargo announced plans Monday 
     to spend billions of dollars--not on lending, but to repay 
     federal aid. Citigroup chief executive Vikram Pandit missed 
     the White House meeting to rally investor support.
       Bank executives say they itch to make profitable loans, as 
     many as possible, but are struggling to find qualified 
     borrowers. They also say that the administration is asking 
     for increased lending even as it pursues financial reforms 
     that will limit the ability of banks to make loans.
       Some note that a recession caused by an orgy of lending 
     must be solved in part through greater restraint.
       Obama has come under increasing pressure to demonstrate his 
     concern for the plight of Americans caught in a rising tide 
     of joblessness, even as the larger economy appears headed to 
     recovery. The White House portrayed Monday's meeting as a 
     chance for the president to channel the anger of Americans 
     who think federal programs intended to revive the broader 
     economy have succeeded only in restoring Wall Street's 
     profitability.
       ``America's banks received extraordinary assistance from 
     American taxpayers to rebuild their industry,'' the president 
     said after the meeting. ``And now that they're back on their 
     feet, we expect an extraordinary commitment from them to help 
     rebuild our economy.''
       Obama added that he expects not just effort but 
     ``results.''
       Some administration officials privately conceded that 
     borrowing always declines during recessions, and that they 
     are struggling to find effective ways of spurring new 
     lending. Furthermore, the administration's options continued 
     to be constrained by the belief of many officials that 
     meddling in the details of banking is counterproductive.
       The administration also is surrendering a measure of 
     leverage over the industry as banks repay federal aid 
     provided under the Troubled Assets Relief Program--although 
     officials are eager to shed the political baggage of aiding 
     big Wall Street firms. With the announcements Monday by 
     Citigroup and Wells Fargo that they would repay federal aid, 
     all of the nine major banks that got money late last year 
     will be on track to pay it back.
       As a result, while the White House has raised the 
     temperature of its rhetoric in recent weeks, policy measures 
     have not followed.
       Some activists are calling on the president to do more. 
     Just after leaving an Atlanta meeting Monday with ministers 
     and others, some of whom are facing foreclosure on their 
     churches and homes, the Rev. Jesse Jackson called on Obama to 
     use federal fair-lending laws to force the banks to help 
     struggling communities.
       ``Banks got federal money at zero interest, but homeowners 
     and churches are paying pre-TARP prices for their loans,'' 
     Jackson said. ``The banking system must be made accountable. 
     The attorney general should have been in that meeting.''
       The Congressional Black Caucus and other Democrats, who are 
     concerned that administration efforts to slow foreclosures 
     have come nowhere near meeting their stated goals, have also 
     been pressing for additional steps to help distressed 
     homeowners.
       The banking industry has reduced lending for five 
     consecutive quarters, even as it has regained profitability 
     thanks to vast public aid. The amount of money on loan from 
     banks fell by about $600 billion, or 7.2 percent, from 
     September 2008 to September 2009, according to the Federal 
     Deposit Insurance Corp.
       The White House initially portrayed the meeting with 
     bankers as an opportunity to discuss strategies for 
     increasing lending. But the president set a sterner tone over 
     the weekend, telling the CBS show ``60 Minutes'': ``I did not 
     run for office to be helping out a bunch of fat-cat bankers 
     on Wall Street.''

[[Page H15476]]

       One day later, the president was more temperate, saying 
     that he did not intend to ``vilify'' any company or industry 
     and that he appreciated existing efforts to increase lending, 
     such as reviewing rejected applications to see whether loans 
     can be approved. The president suggested Monday that banks 
     should review applications three and four times if necessary.
       Bankers also emerged from the meeting in a conciliatory 
     mood, saying they share the administration's goals.
       ``Every bank in that room talked about adding many, many 
     small-business originators and setting very aggressive goals 
     for small-business lending next year,'' said Richard Davis, 
     chief executive of US Bancorp.
       Bank of America plans to increase small-business lending by 
     $5 billion next year. J.P. Morgan Chase has committed to an 
     increase of $4 billion.
       ``This is simply what a bank should do,'' J.P. Morgan chief 
     executive Jamie Dimon said in a statement released before the 
     meeting.
       This is the second time the president has convened bank 
     executives to urge increased lending. The first meeting, in 
     March, did little to slow the slide. The president said 
     Monday that he continues to get ``too many letters from small 
     businesses who explain that they are creditworthy and banks 
     that they've had a long-term relationship with are still 
     having problems giving them loans.'' But the White House on 
     Monday defended the value of the rhetoric.
       ``I think that the bully pulpit can be a powerful thing,'' 
     said press secretary Robert Gibbs.
       Obama said he also discussed the need for financial reform, 
     urging the bank executives not to lobby against proposals 
     such as the creation of an agency to protect borrowers from 
     lending abuses. And the president said he once again urged 
     moderation in executive compensation.
       ``I made it clear that it is both in the country's interest 
     and ultimately in the financial industry's interest to have 
     updated rules of the road to prevent abuse and excess,'' 
     Obama said afterward. ``I have no intention of letting their 
     lobbyists thwart reforms.''
       Bank executives, however, say that they strongly favor 
     reform--they just differ with the administration about some 
     of the particulars.
       The guest list for the meeting included the top executives 
     of 12 of the nation's largest banks, but there were three 
     late scratches. Goldman Sachs's Lloyd C. Blankfein, John Mack 
     of Morgan Stanley and Citigroup's Richard Parsons 
     participated in the meeting by telephone because the flight 
     all three had planned to take from New York to Washington was 
     delayed by fog.

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