[Congressional Record (Bound Edition), Volume 154 (2008), Part 16]
[Senate]
[Pages 22164-22165]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            FINANCIAL CRISIS

  Mr. SCHUMER. Mr. President, of course, we live in very perilous 
times. Our economy, particularly our debt markets and our credit 
markets, is in very serious shape. To paraphrase Chairman Bernanke, the 
arteries of the patient--our financial system--are clogged and the 
patient will have a heart attack. We don't know if it will be tomorrow 
or 6 months from now or a year from now but, unfortunately, if we don't 
unclog those arteries, a heart attack will occur. So we must act.
  I know there are some--particularly some very ideological people on 
the hard right--who say do nothing and let everyone learn their lesson; 
there are a lot of people, particularly at the high end of the economic 
spectrum, who should learn their lesson. But there are millions of 
innocent people who will be hurt if we do nothing: the auto worker who 
will be laid off because we sell fewer cars; the small businesswoman 
who has struggled to build her business over 15 or 20 years and can't 
get a loan; the waitress at a restaurant of a chain that has to shut 
down because it can't get credit. Average people get hurt when our 
financial arteries are clogged, even though they are blameless. That is 
the difficulty of our world. It is not fair, it is not right, but it is 
how it is.
  We must come together and work in a bipartisan way to unclog those 
arteries, and we must do it soon. We should not leave here until we 
have a plan, whether it takes a day, several days, 1 week, or even 
more. We cannot abandon our responsibilities, and we should work. I 
believe we will stay here and work until a plan is agreed upon and we 
see some light at the end of this rapidly darkening tunnel. That is the 
first point I wanted to make.
  Second, we need to pass a good plan. The President's initial offering 
was received with, let's say, lack of popularity, to put it kindly, by 
both Democrats and Republicans in this Chamber and people out in 
America. It is because it was a $700 billion blank check. There was no 
help for taxpayers' protection so they got paid back first. There was 
no help for homeowners.
  Chairman Bernanke tells us that housing is the root cause of the 
problem and if we don't find a floor to the housing markets, we may 
need bailout after bailout, unfortunately. This bill had no protection 
for homeowners.
  I know Secretary Paulson said the Government owns a large share of 
the bonds, that they will have more ability to renegotiate mortgages 
and avoid foreclosures but, frankly, that is hope over reality because 
the bonds are now broken up in 40 tranches. If the Government owns 10, 
15, 20, 25, or even 30 of them, if 1 tranche holder objects to 
refinancing, it won't happen.
  We need help for homeowners beyond what is in the legislation. We 
need oversight, tough oversight. This is a democracy. We are known for 
our checks and balances. It has served America well for over 200 years. 
And all of a sudden, in an unprecedented taking of power, to give so 
much power to the Treasury Secretary with no one looking over his 
shoulder would be, frankly, not the American way. So we need tough and 
strong oversight.
  Point 1, we will work until we get this done, even if it means 
staying past recess. We must. We have an obligation.
  Point 2, we will pass a better plan than the President's plan. We 
will work with the President, but we need protection for homeowners, 
taxpayers, and oversight.
  The third point I wish to make is this: This cannot pass without 
strong bipartisan support. There will be some in both parties who will 
not vote for any plan. So neither party has a majority, neither the 
Democrats--we are a majority by a small margin--nor the Republicans, 
who are close to a majority. But we will need strong bipartisan support 
as many on each side of the aisle will not vote for a plan, and that is 
their prerogative.
  We need the President to get the Republican house in order. Even if 
we were to want to pass a bill with just Democratic votes, we could 
not. It is obvious. Look at the math. We need to have this bipartisan 
support.
  We began it yesterday under Chairman Dodd and Chairman Frank's 
leadership when we met in this building and crafted a very good 
compromise that was a basis to take to Secretary Paulson. It did far 
more for taxpayers, for homeowners, for oversight than the existing 
bill.
  Unfortunately, however, we needed a four-legged stool, and one leg 
just vanished--the House Republicans--in a way that none of us still 
understand. In addition, Senator McCain's desire, even though he had 
not been involved in this legislation at all, to fly in put another fly 
in the ointment and created more trouble. I have not heard Senator 
McCain offer one constructive remark. We don't know what he supports. 
Does he support the House plan? Does he support the President's plan? 
Does he have his own plan? By all reports, he hardly spoke at the 
meeting, which was his opportunity to try and do something. He spoke at 
the end and didn't say what his views were as to whether he supported 
each plan.
  So we need two things on the Republican side: We need President Bush 
to take leadership. We need President Bush, first and foremost, to get 
the Republican House Members to support his plan or modify it in some 
way to bring them on board yet keep the Democratic House Members, the 
Republican Members of the Senate, and the Democratic Members of the 
Senate on board. Second, we need the President to respectfully tell 
Senator McCain to get out of town. He is not helping. He is harming.
  When you inject Presidential politics into some of the most difficult 
negotiations, under normal circumstances, it is fraught with 
difficulty. Before McCain made his announcement, we were making great 
progress. Now, after his announcement, we are behind the eight ball and 
we have to put things back together again.
  So this is a plea to President Bush, for the sake of America: Please 
get your party in line. Get the House Republicans to be more 
constructive. Get Senator McCain to leave town and not feed the flames 
and maybe we can get something done. In fact, not maybe, we have no 
choice but to get something done.
  So, again, to reiterate my three points: No. 1, we will work until we 
have a product. The perilous state of our financial markets and our 
national economy, the danger to average Americans, now unforeseen but 
real and lurking behind the shadows, says we can do nothing else. No. 
2, we will continue to work for a better plan than the one the 
President proposed, with protection for taxpayers, homeowners, and real 
oversight. No. 3, the President must get his Republican House in order 
by getting the House Republicans in line and asking Senator McCain, 
respectfully, to leave town. Because without Republican cooperation, we 
cannot pass this bill.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The assistant majority leader is 
recognized.
  Mr. DURBIN. Mr. President, I know there is an order for Senator 
Harkin to speak next and I saw him in the cloakroom and told him I 
would speak for a moment until he is prepared to come to the floor. So 
I ask unanimous consent to speak next in order.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. DURBIN. Mr. President, I thank the Senator from New York for his 
comments. Of course, being from the State of New York, he feels 
intensely and personally what is happening with many of these economic 
decisions on Wall Street. This involves not only the savings of 
millions of Americans but the jobs and careers of many people who are 
working hard in the financial sector.
  I am sorry we have reached this point, and I am also sorry that of 
all

[[Page 22165]]

the things being proposed so far there are two glaring omissions. I 
understand time is a constraint on our activities, but we have to come 
to grips with the fundamental issue that is at stake. What we have done 
on Wall Street over the years is create a shadow credit industry with 
no oversight and little regulation. As a result, this has been an 
anything-goes-capitalism on Wall Street, which, sadly, has led to the 
demise of major investment banks and brokerage houses. It isn't just 
their misfortune, it is the misfortune of their employees and 
investors, savers and retirees who counted on them for their future.
  Well, the idea that we would step aside and let the magic of 
capitalism work its will has shown us we should have thought more about 
this. It wasn't that many years ago on the Senate Floor that I was 
debating Senator Phil Gramm of Texas. He was high priest of this theory 
of fundamentalism--free-market fundamentalism. He would argue we needed 
to get Government out of the way; that all Government can do is get in 
the way by creating red tape and slowing things down and diminish 
profit taking and wealth creation. Well, he carried the day for a long 
period of time. He had this Svengali influence on many Senators, 
including the Republican nominee for President, John McCain.
  Look what we have reaped from this. We have now an economic crisis--
to quote the Secretary of the Treasury and the Chairman of the Federal 
Reserve--that has been generated by this market philosophy. So at the 
end of the day, we need to put in place sensible regulation so the 
taxpayers are protected and the people who count on these investment 
houses can have some assurance their money will be returned. That is 
the bottom line, and we will not have time to do that before the end of 
this year. It will take time to do it carefully. It must be part of it.
  The second point I will make is this--and I see Senator Harkin has 
come to the floor: There is a great deal of empathy and concern for 
those on Wall Street whose businesses are facing failure. I have some 
concern too. But I have more concern for the homeowners across America 
who are losing literally thousands of homes to foreclosure because of 
the tricks and traps which these same entities put in their mortgage 
instruments.
  I think of people I have met in Chicago--retirees living on Social 
Security lured into these rotten mortgage arrangements, about to lose 
their homes because of someone who brought them into a room and had 
them sign a stack of papers with a reset that took the home away when 
the monthly costs went beyond their Social Security check. That is an 
outrage. How many tears have been shed on the floor of the Senate or in 
Washington for these people? None.
  What we hear from this administration is it is their misfortune; they 
made bad decisions. We have to honor the sanctity of the contract. 
Sanctity is a word that, in my religion, connotes holiness--a sacred 
quality. What in the world is holy or sacred about these subprime 
mortgages, which were brokered for the purpose of making a fast buck 
and getting out of town, leaving victims behind who are about to see 
their homes foreclosed. I would like to see at least a modicum of 
sympathy for some of the people facing foreclosure. But when we bring 
this up in the negotiations over this bailout plan, we are told 
absolutely, no. We can do nothing for the homeowners at the end of the 
day.
  Well, I will tell you, it isn't just a matter of sympathy or a matter 
of taking a moral position, it is good economics. If we don't stem the 
tide of foreclosures among homeowners at the base of our economy, then 
these mortgage instruments will continue to decline in value and there 
will be further instability in the credit markets. It is not just a 
matter of doing the right thing, it is the proper thing economically to 
get us back on track. But I can't sell that. You know why. Because the 
banks and the mortgage lenders, the same people who authored this mess, 
oppose it.
  The sanctity of the contract. Well, I wish to tell you something: If 
we were dealing with the sanctity of the contract, we wouldn't be 
talking about bailout, we wouldn't be talking about $700 billion from 
hard-working taxpayers in Iowa or Illinois coming to the rescue of a 
lot of people who have been reaping multimillion dollar annual bonuses 
from the mess they have created on Wall Street. The sanctity of a 
contract. Give me a break.
  Let's have some respect for the people across America--the families 
who are the strength of this Nation; those middle-income and hard-
working Americans who get up and go to work every day and struggle with 
this economy and who may have been lured into a bad mortgage and now 
face the greatest economic catastrophe of their lives. How much help 
will they get from this bailout? Exactly nothing. Nothing. There is 
nothing on the table to help them. That, to me, is unconscionable and 
unacceptable.
  I think we should have a balanced approach. Yes, take this economic 
crisis seriously at the top, but don't forget that at the bottom of the 
pyramid are the hard-working families of America that have been 
exploited by these people on Wall Street and deserve a break as part of 
our conversation.
  The final point I will make is I am glad John McCain is back on the 
Presidential trail. His visit to Washington didn't help a bit. It hurt. 
It riled up and roiled up all the political forces in this town because 
he summoned the Presidential campaign to Capitol Hill. That didn't help 
one bit. He needs to get back running for President. He needs to show 
up in Mississippi tonight for this critical Presidential debate. We 
need to roll up our sleeves, on a bipartisan basis, and find a good 
solution to this crisis we face.
  I yield the floor
  The ACTING PRESIDENT pro tempore. The Senator from Iowa is 
recognized.
  Mr. HARKIN. Mr. President, first, I wish to thank Senator Durbin for 
what he said because I have come to the floor to talk about that bottom 
of the pyramid; to talk about a vote we will be having in another hour 
and a half or so on a stimulus package that goes directly to the kind 
of people Senator Durbin is talking about, the people at the bottom. 
They are unemployed. They need help--they need food stamps, they need 
unemployment benefits extended, and they need infrastructure jobs to 
rebuild our economy. Yet we are not talking about that.
  So I wish to thank Senator Durbin so much for pointing that out 
because I wish to talk about that for awhile.
  Before I do that, I ask unanimous consent that following my remarks 
Senator Grassley be recognized to speak for up to 30 minutes.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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