[Congressional Record (Bound Edition), Volume 154 (2008), Part 15]
[Senate]
[Pages 20719-20721]
[From the U.S. Government Publishing Office, www.gpo.gov]




                         FINANCIAL RESCUE PLAN

  Mr. MARTINEZ. Mr. President, let's now talk about the moment at hand. 
The seriousness of the moment could not be more overstated or 
understated. This Congress is about to consider the most important 
legislation affecting our financial markets, I would say for a 
generation and possibly in the history of our country.
  The American people must understand exactly what is at stake as we 
begin to consider this legislation. This is something we have to do, 
putting aside partisan rhetoric, putting aside the fact that in 40 days 
we have a Presidential election.
  We have to put aside the partisanship and shed ourselves of that 
rhetoric. That rhetoric just invites more and more acrimony. The fact 
is, we have to come together not as politicians but maybe in a rare 
moment of statesmanship to look at this legislation and this serious 
and sober moment that our country faces.
  What happened is that the credit markets have quit functioning. 
Credit cards, car loans, home equity loans, home mortgages, business 
loans--all of these loans are impacted. Business loans, which keep 
large and small businesses operating, have ceased to exist. They cannot 
get the credit that is necessary to operate their businesses. The 
financial markets are not functioning, putting in jeopardy our entire 
economy. The entirety of our economy is at stake in what we are dealing 
with now.
  Without timely Government intervention, the financial system as we 
know it no longer will exist. This will impact each and every American 
family, and it will impact them not just for the next month but for 
years to come.
  This isn't a Wall Street versus Main Street argument. This isn't 
about dividing us and trying to gain political advantage by the 
division it creates. This is about every American's ability to pursue 
his or her American dream. Without liquidity in the marketplace, 
financial transactions just come to a halt. That will create a complete 
collapse of our financial system as we know it.
  So the need to act has become clear. Treasury Secretary Paulson has 
asked for the authority to purchase illiquid assets from financial 
institutions in an

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attempt to get the markets functioning again.
  With that authority comes great responsibility, and Congress has an 
obligation to the U.S. taxpayers to ensure that any program is crafted 
and carried out with appropriate oversight.
  Congress should consider limiting executive compensation in any 
package we discuss. Congress will have to engage in active oversight of 
Treasury as they implement whatever plan we ultimately approve. So 
there should be no blank check, and there will be no blank check.
  Let me also mention I am very pleased to learn of ongoing 
investigations into the activities of Fannie Mae, Freddie Mac, AIG, and 
Lehman Brothers. This is the worst financial crisis our country has 
encountered in recent history, and we owe it to the taxpayers to get to 
the bottom of any wrongdoing that may have occurred. That is welcome 
news. The American people ought to be reassured by the fact that there 
is not going to be any whitewashing of wrongdoing when it comes to this 
very serious crisis.
  We need to prosecute any inappropriate behavior on the part of these 
companies to the fullest extent of the law. If we are going to have to 
fix this problem, those who created it need to be held accountable.
  After the dust clears, Congress cannot lose sight of one of the main 
reasons we are so heavily encumbered by this crisis--why our financial 
system is so deeply troubled at this moment in time. Fannie Mae and 
Freddie Mac were huge contributors to the problem because of their thin 
capitalization, ever-expanding portfolios, and risky practices. I add 
to that, that was made possible by weak regulation, by the kind of 
regulatory scheme designed by Fannie Mae and Freddie Mac so they could 
keep doing business as usual, so they could continue to make the 
political contributions and continue to run the Congress as they 
wished. I recall on more than one occasion we were trying to push that 
legislation that Senator Dole originally sponsored, which I was proud 
to cosponsor with John McCain, so that we would have an effective 
regulator over Fannie and Freddie. It was really about Fannie Mae was 
not going to go for that, so that meant it was dead on arrival and we 
could not get it done. As they were able to have their say in terms of 
the type of regulator they wanted, then they were able to create the 
kind of crisis we have come to today.
  They fueled and funneled the risky securities that Wall Street bought 
and sold and made lots of money, while ignoring the systemic risk that 
move posed to the financial system.
  In 2003, when I was HUD Secretary, I came before the Congress with 
Treasury Secretary Snow and warned of the loose regulation of the GSEs 
and the risk posed by their undercapitalization.
  We asked Congress to create a world-class regulator to properly 
provide oversight to these financial entities that had become so large 
that they had an implied guarantee of the Federal Government, and they 
were deemed too big to be allowed to fail.
  In 2005, Federal Reserve Chairman Alan Greenspan told the Congress 
how urgent it was for it to act, and he said in the clearest possible 
terms, if Fannie and Freddie ``continue to grow, continue to have the 
low capital that they have, continue to engage in the dynamic hedging 
of their portfolios, which they need to do for interest rate risk 
aversion, they potentially create ever-growing potential systemic risk 
down the road.''
  Well, we are now at the end of that road. As we go forward, not only 
will Congress have to determine the future role of these entities, we 
need to take a very close look at the practices that brought us to this 
place.
  Throughout all of this work, we cannot lose sight of the root cause 
of this financial debacle--the housing crisis. What are we going to do 
to avert an ever-deepening housing crisis? When we ask Secretary 
Paulson what is the reason we are where we are, obviously, the lack of 
regulatory scheme appropriate for Fannie and Freddie is part of it, but 
they say that mortgage-backed securities continue to have no value. The 
markets for mortgage-backed securities, which has essentially locked 
down the entire lending system of our country--and I daresay the 
world--came about as a result of the deepening crisis in home prices, 
the fact that home values continue to decline, so mortgage-backed 
securities continue to have little or no value.
  So what are we doing in this scheme that we are discussing to avert 
an ever-deepening housing crisis? How are we going to try to put a 
floor on those declining home values that are creating the type of 
crises in mortgage-backed securities that brought us to this brink of 
complete financial collapse of our financial system?
  Floridians are among the hardest hit in the Nation. Our State is 
suffering mightily because of the deepening housing crisis. I have, for 
a long time, been saying, as we talked about a stimulus package some 
months ago--and we got them out the door and a lot of families have 
been helped by that, and I voted for that package--I said then: What 
are we doing not to treat what is apparent in our economy, which is 
that people are hurting, but the root cause of the pain, which was the 
housing economy? The fact is, folks who work in home construction are 
out of work, homebuilders are not being able to keep their employees 
going and give them the health insurance they provided for them, and we 
have that entire cycle in the homebuilding industry that is, today, not 
working as it should, which is providing us with the kind of economic 
pain so many Floridians are feeling.
  In addition, we have people now in foreclosure or are facing it. That 
will continue, as will the decline of neighborhoods. As the 
neighborhoods decline, the communities decline. How are we going to 
help that situation? I believe it is inevitable that, whether we do it 
now or later, we have to seriously address the issue of the declining 
home values. One way of doing it would be to provide a healthy $15,000 
tax credit to those who would invest in a new home and help them with 
the downpayment by that particular means. That is a solution that I 
have been advocating that may be of significant help in bringing down 
the huge inventory of unused homes that we have, particularly in places 
such as Florida.
  Housing prices continue to fall, inventories continue to rise, and a 
growing number of homeowners are facing their own personal foreclosure 
crisis.
  To find the bottom of the housing crisis, to stabilize prices, we 
need Congress to act. We can approve home-buying incentives. Congress 
can approve a tax credit for downpayments. That would at least 
encourage people to enter the marketplace, would reduce housing 
inventories, and get the money flowing back into the market.
  As Congress debates this package, let's remember whom we work for--
the American taxpayer. Our priority should be making decisions that 
serve their best interests. No blank check, strict oversight, 
accountability, and taxpayer recourse.
  It is in every American's best interest that we act. I look forward 
to creating the right legislation that averts a financial crisis that 
will affect every single American--a financial crisis perhaps bigger 
than the Great Depression. That is what is at stake today.
  So this is a moment when we have to get away from the usual partisan 
rancor. We have to get away from thinking about how we might gain a 
political advantage over the other side. The fact is, we need to put 
aside the fact that we have an election coming up, put aside all of our 
differences, and we have to come together--Republicans and Democrats, 
liberal and conservative--for the good of our country. This is a moment 
that doesn't call for politics as usual. I believe it is a moment that 
calls for something a little bigger than that, a little greater than 
that.
  I look forward to working with my colleagues on both sides of the 
aisle to come up with the best ideas that we can. But at the end of the 
day, I believe the failure to act would be so cataclysmic, so 
devastating to our country that we have but only one course, which is 
to find the best way to get this done, with the right oversight and the 
right checks and balances, but act we must.

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  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator from New Mexico is recognized.
  Mr. DOMENICI. Mr. President, I understand we are in morning business.
  The PRESIDING OFFICER. That is correct.
  Mr. DOMENICI. I ask unanimous consent that I may speak until about 
11:45.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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