[Congressional Record (Bound Edition), Volume 154 (2008), Part 16]
[Senate]
[Pages 22212-22217]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            FINANCIAL CRISIS

  Mr. DORGAN. Mr. President, the discussion late last night and many 
days before, and perhaps tonight and beyond, is about the financial 
crisis that is described in this country by the

[[Page 22213]]

Treasury Secretary and the chairman of the Federal Reserve Board. They 
have been indicating to us most of this year that we have a strong 
economy in this country and indicated that there have been some 
problems with toxic mortgage-backed securities that have gone sour and 
so they have dealt with them in a number of ways, but still indicated 
that the economy is essentially strong and the fundamentals are all 
right.
  But in recent weeks, especially, step after step taken by the 
Treasury Secretary and the Federal Reserve Board is to commit American 
taxpayers' dollars to try to remedy some very serious problems in the 
economy. The discussion these days--especially in the last few days--
has been about a proposal by the President and his Secretary of the 
Treasury for $700 billion as a rescue fund for the economy. What most 
people are not talking about is the fact that we have already committed 
$1 trillion for this purpose before the Congress would vote on $700 
billion more. Let me describe why.
  When Bear Stearns went belly up, the Federal Reserve Board provided 
$29 billion to buy Bear Stearns to J.P. Morgan, so that was taxpayer 
money. That is our guarantee: $300 billion through the Fed window 
direct lending to investment banks. For the first time in the history 
of this country, the Federal Reserve Board opened its lending window to 
nonregulated, unregulated banks. So investment banks go to the Fed: 
$300 billion.
  Fannie and Freddie. We assumed the liability of Fannie and Freddie. 
That is $200 billion.
  When Lehman went belly up, the funding was provided by the taxpayers 
for J.P. Morgan to buy Lehman Brothers: $87 billion. American 
International Group: $85 billion. Propping up money market funds: $50 
billion.
  That is $1.7 trillion in total, $700 billion of which is before this 
Congress as a proposition by the President for a rescue fund.
  Now, the reason I wanted to visit about this today is it seems to me 
this is a proposition--if you equate it to a bathtub--of suggesting 
that we put water in the bathtub before we plug in the drain, you are 
not going to fill the bathtub. You are just going to put water in the 
top and it is going to drain out the bottom.
  This morning I woke up, as did most Americans, to discover one of 
America's largest banks had failed and had been purchased by an 
investment bank overnight. The purchase was arranged by the Federal 
Reserve Board. So I was curious about this: Washington Mutual, one of 
America's largest banks. I went back to take a look to see what the 
president of Washington Mutual earned last year. Obviously, the bank 
was headed, apparently, toward a crash landing someplace. Well, Mr. 
Kerry Killinger, the president of Washington Mutual, which was bought 
last evening by J.P. Morgan, earned $14 million in compensation last 
year. Fourteen million dollars was paid--to the CEO of a company that 
last night we were told was going belly up--with insured deposits, so 
our Government arranged a purchase by an investment bank called J.P. 
Morgan.
  Now, there is another piece to the story. Washington Mutual, which 
failed last evening, not only paid its CEO $14 million last year; it 
hired a new chief executive officer weeks ago. By the way, the new 
chief executive officer 3 weeks ago signed with a bonus of $7 million. 
And we are told this morning that the new CEO, having been on the job 3 
weeks for Washington Mutual, now purchased by J.P. Morgan, will keep--
likely keep--the $7 million bonus signed 3 weeks ago, and 12 million 
additional dollars as a severance. Three weeks' work: $19 million.
  Now, I was trying to figure out: Here are some folks at the top of 
the food chain on these big companies, how much money they are making. 
Well, as I said, last year the CEO of a company that went belly up last 
night made $14 million, and the replacement, working 3 weeks, will make 
$19 million. What does $19 million equate to? Well, I figured at 
$50,000 a year for an average salary in this country, it would take 382 
years for a worker to earn what this man is going to get in severance 
payments and bonuses for a 3-week stint in a failed company. 
Unbelievable. Absolutely unbelievable. But it is a hood ornament on a 
carnival of greed that has existed now for some while, unabated, in 
which people at the top have made massive quantities of money. Then the 
whole thing comes crashing down because they began creating exotic 
securities that were supported, in some cases, by worthless mortgages, 
placed by bad brokers and, in some cases, bad mortgage companies; sold 
up the chain to hedge funds and investments banks, all of them making 
massive quantities of money, and then it goes belly up and everybody 
wonders why.
  So I asked the question: What do all of these folks make? How much 
money did they make as this was collapsing? Well, some of these, I am 
sure, are perfectly good people with good reputations. Stanley O'Neal, 
people tell me he is a good guy. Last year he made $161 million with 
Merrill Lynch. Lloyd Blankfein, Goldman Sachs, last year he made $54 
million. John Thain, Merrill Lynch, he made $83 million last year. I am 
just talking about 2007 published compensation numbers. John Mack at 
Morgan Stanley made $41 million. James Cayne at Bear Stearns made $34 
million. Poor Martin Sullivan down here at AIG, that went belly up, he 
only made $14 million, and we had to come up with $85 billion of the 
taxpayers' money to backstop this company. The CEO made $14 million 
last year.
  I mentioned Washington Mutual went belly up last year; the biggest 
bank failure in the history of this country. What did the CEO make last 
year? Fourteen million dollars in compensation.
  So the question is: What does all this mean? On Wall Street--on Wall 
Street alone--in the past 3 years--not salaries, bonuses--have 
represented $100 billion. Let me say that again. It is almost too big 
to comprehend. In the last 3 years on Wall Street, bonuses equaled $100 
billion.
  In 2007, the 500 largest businesses in this country, the CEOs 
averaged $14.2 million. That is about 350 to 400 times the salary of 
the average worker. Thirty years ago, the average CEO made 30 times 
what the average worker made.
  Let me go back to ground zero and explain what caused all of this and 
then why I am concerned about what is happening around here. I have 
spoken on the floor many times, but I am going to do it again, because 
I want people to understand what is at the root of all of this. They 
say: Well, there are toxic securities being held by all of these 
institutions, and when you have toxic assets that have devalued and 
aren't worth anything, it threatens the lifeblood of the institution. 
Some of them go belly up, right? So how do they have all of these toxic 
mortgages, these securities? Here is what they did. A bunch of the 
smartest guys in the room, a bunch of high flyers, said: You know what 
let's do? Let's securitize things and then we can move them up the 
chain and sell them and resell them.
  It used to be: You want to get a home mortgage? Go downtown. Go to 
the businesses that make home mortgages--a bank or a savings and loan--
sit across from somebody who knows about it and negotiate it and sign a 
paper, and then they held your mortgage. And if you had a little 
trouble, you said: I am having a little trouble making this month's 
payment. That is the way it used to work. Kind of a sleepy industry 
that allowed people to get home mortgages in their hometown and that is 
where the mortgage paper was.
  Now, if you go down and get a mortgage, or perhaps a broker will call 
you and solicit you to get a mortgage under this regime, and they will 
sell it immediately, and then they will sell it up and somebody will 
securitize it with a bunch of other mortgages. Then they will resell 
that, and pretty soon you have mortgage securities. As I have said 
often, it is like packing sausage in sawdust and slicing them up and 
selling them up the line. They didn't have the foggiest idea of what 
was in these securitizations.
  So this is all about big yields. This is all about greed. Here is the 
origin of

[[Page 22214]]

that greed. The biggest mortgage company in the country is bankrupt 
now, taken over by somebody else. In fact, the guy who ran this, Mr. 
Mozilo, escaped this with over $50 million, so he is sitting pretty 
well. This company, Countrywide, here is what they advertised. They 
said: Do you have less than perfect credit? Do you have late mortgage 
payments? Have you been denied by other lenders? Call us. We will give 
you a loan. Bad credit? Call us. Biggest mortgage banker in the 
country.
  Mr. Mozilo, who grew this company, was given the Horatio Alger Award 
a couple of years ago, listed as one of the most respected top 
businessmen in America. The company is gone, of course, now.
  Millennia Mortgage. I don't know who ran Millennia Mortgage. Twelve 
months, no mortgage payment. That is right; we will give you the money 
to make your first 12 payments if you call in 7 days. We will pay it 
for you. Our loan program may reduce your current monthly payment by as 
much as 50 percent and allow you no payments for the first 12 months. 
Call us today.
  Here is the example that all of us have seen. Zoom Credit. I don't 
know who ran this company. Credit approval is seconds away. Get on the 
fast track at Zoom Credit. At the speed of light, Zoom Credit will 
preapprove you for a car loan, a home loan, or credit card. Even if 
your credit is in the tank, Zoom Credit is like money in the bank. We 
specialize in credit repair and debt consolidation. Hey, listen: 
Bankruptcy, slow credit, no credit, who cares? Come get a mortgage from 
us.
  All over this country, people filled with greed, companies saying, 
Come and get a mortgage. In fact, I tell you what. We will allow you to 
get a mortgage from us with what is called a no doc loan. What does 
that mean? It means you don't have to document your income. It is 
called a no doc loan. We will give you a mortgage and you don't have to 
document your income. In fact, here is what you find on the Internet 
about that. No doc and low doc. Is that English? Yes, it is English. No 
doc. These mortgage companies said, We would like to give you a 
mortgage, a home mortgage, and you don't have to document your income 
for us. You just heard me say these companies say: You got bad credit, 
slow credit, no pay, been bankrupt? Come to us. They also say this: We 
will give you one without having to document your income to us.
  Then they say this: You know what. You don't have to pay any 
principal--interest only. No documentation of your income and interest 
only. But they say, If that is not good enough, we will tell you what. 
You not only pay interest only, we will make your first 12 months 
payments for you, and then you pay interest only. But if that is not 
good enough, you don't pay any principal and you don't pay full 
interest; we will actually cut part of your interest and have no 
principal and add it to the back end of your loan after you have gotten 
a loan from us with no documentation of your income. Been bankrupt? Are 
you a bad credit risk? Come to us.
  So now here is the trick, and here is how it all worked. Once they 
got you to do this, they locked in what was called prepayment 
penalties, and they said: If you get this mortgage, you should 
understand we are going to cut your monthly payment by a fourth. Are 
you paying $800 a month now? Get a mortgage from us, it will cost you 
$200 a month. That is a good deal. Now, it is going to reset with a new 
interest rate in 3 years. We want you to know that. We won't exactly 
tell you what that is going to mean; we will fuzz that up for you. But, 
of course, they never said you won't possibly be able to afford the 
payments in 3 years because the interest rate is going to go to 10 
percent.
  What they did is they put in a prepayment penalty that was very 
substantial which meant that when this reset with a much higher 
interest rate and a much higher payment, people could not repay it, 
they could not prepay it to get out of the mortgage. That is the basis 
on which they slice up these mortgages and send them forward because 
they said these have very high yields with these prepayment penalties; 
we locked them into big interest rates in the outyears.
  Two million Americans are going to lose their houses this year 
because of this kind of trash. This is not good business. This is not 
capitalism as we know it. This is unfettered greed.
  Two million Americans will lose their homes this year. Think of that. 
Think of 2 million supper tables across this country, sitting around 
with the kids and the spouse saying: We are going to lose our house and 
there is not a thing we can do about it. Two million times this year?
  In addition to that, which I think is the most important piece of 
this sad story, in addition to 2 million people losing their homes, 
then we see the consequences of all these bad, toxic securities, 
mortgage-backed securities lying in the bowels of these big investment 
banks and regular banks as well, whose deposits are insured by the 
Federal Government. When they turn sour, it goes belly up. Then we wake 
in the morning and we hear big firms whose names we have been 
accustomed to for years that have been beneficial to this country, 
providing investment capital for expansion of this country's economy, 
all of a sudden they have gone belly up. Why? Because they are laden 
now with these toxic mortgages.
  I went to the Internet yesterday and I found 300 examples of 
companies that want to provide loans today; 325 examples under ``home 
loans with no credit check.'' Just today. Try it. Go to the Internet 
and see if you can find companies advertising: Come to us. Bad credit? 
Been bankrupt? No credit check. Hundreds of them are still doing it. 
The question is, Why is that being allowed? ``You have bad credit? Get 
approved today.'' These examples I have taken off the Internet in the 
last 24 hours.
  Let me go back to one more part of the story. I wish to read 
something Franklin Delano Roosevelt said on March 12, 1933. I know with 
all the newfangled securitization, the new rules, new approaches, the 
growth of the investment banks and all that, what we have seen, I know 
it is probably old-fashioned to think this way, but here is what 
Franklin Delano Roosevelt did.
  The banks went belly up during the Great Depression. He created a 
bank holiday and then reopened. But he wouldn't let them do what they 
used to do. The reason they went belly up is because banks were 
investing in real estate and securities and they were merging what has 
to be inherently safe and secure--that is banking, and it is not just 
being safe and secure with their balance sheet; it is having the 
perception of being safe and secure. If people think you are not safe 
and secure and they run on the bank, I don't care how strong your bank 
is, your bank is going to close its doors. A run on the bank and it is 
over. The perception of safety and security is critical.
  What we had in the Great Depression is banks merging up with real 
estate. It was go-go time in the roaring twenties. We had banks with 
real estate and securities and so on. Back in the Great Depression, 
Franklin Delano Roosevelt created something called the Glass-Steagall 
Act. He said: No more. We are separating basic banking from risk. You 
want to gamble, I say go to Las Vegas. He didn't say it that way back 
in 1934. He said you can't gamble with respect to banks. If you want to 
do securities, buy, sell, make money, lose money, God bless you, you 
have the right to do that in this system. If you want to do real estate 
speculation, you have a right to do that. But no longer will anyone 
have the right to do that with respect to fundamental banking 
enterprises. He separated them.
  In 1999, on the floor of this Senate, a financial modernization bill 
called the Financial Modernization Act came to this Senate. Senator 
Phil Gramm, Gramm-Leach-Bliley--we have to modernize the financial 
system. We are going to take apart Glass-Steagall. We are going to let 
financial homogenization occur. You can do one-stop shopping. Let 
everything happen under one big roof. We will create firewalls. It 
turns out the firewalls were made of thin paper.
  Eight of us voted against that Financial Modernization Act that 
stripped

[[Page 22215]]

bare the protections put in place in the 1930s that has served us 80 
years. The Senator from Iowa voted against it. Eight of us voted 
against it. I voted against it.
  I wish to show my colleagues what I said on May 6, 1999, during 
debate on that bill. I wish I had not been right. But here is what I 
said:

       The bill will also, in my judgment, raise the likelihood of 
     future massive taxpayer bailouts.

  I sure wish I hadn't been right. That is exactly the position we find 
ourselves in now.
  I said during that debate:

       Fusing together the idea of banking, which requires not 
     just the safety and soundness to be successful but the 
     perception of safety and soundness, with other inherently 
     risky speculative activity is, in my judgment, unwise . . .

  I said on November 4, 1999, when the conference report came to the 
floor of the Senate:

     . . . we will in 10 years' time look back and say: We should 
     not have done that because we forgot the lessons of the past.

  As I say, I wish I had not been right.
  What I see happening these days are proposals I call no-fault 
capitalism. Things go bad, things turn sour, things go under, you know 
what, we will have the taxpayer take care of that. That is not the way 
capitalism is supposed to work.
  I am not interested in seeing this economy go down or seeing the 
wreckage of this economy, but I am interested in seeing if we can 
discover, even as we try to think through how we fix this situation, 
putting in place protections that will give us some notion of safety as 
we perceive it.
  Here is what I think we should do:
  Restore the firewalls that existed in Glass-Steagall in some form. We 
are going to propose a massive rescue fund of hundreds and hundreds of 
billions of dollars and not fix this situation? That is unthinkable to 
me, absolutely unthinkable. It makes no sense.
  Address the wildly excessive compensation on Wall Street. I described 
the company that went belly up last night. The CEO of that company made 
$14 million last year. For what? The CEO they hired 3 weeks ago got a 
$7 million bonus for signing a new contract and has a $12 million 
termination contract. So working for 3 weeks in a company that is now 
failed, bought by an investment bank that is undergirded by the U.S. 
taxpayers, being able to go to the Federal Reserve bank window for 
direct lending, a guy who works 3 weeks is going to get $19 million. 
Does anybody think we have solved this problem of wild speculation and 
wild CEO salaries? I don't think so. At least it doesn't seem that way 
to me.
  Next, we have to regulate speculative investments by hedge funds and 
investment banks. I have been talking about this for 10 years in the 
Congress, and we cannot get it done. If we are not prepared to regulate 
hedge funds and regulate the trading in derivatives, of which, by the 
way there is $46 trillion to $56 trillion of notional value of credit 
default swaps right now in this country--think of that--and nobody 
knows exactly where they are, nobody knows who has them all, nobody has 
the jeopardy of where they exist on someone's balance sheet. We don't 
know because we have had lots of people in this Congress willing to 
protect the institutions so they don't have to be regulated.
  If we decide we are going to do something to provide stability to the 
financial system and decide we are not going to regulate hedge funds, 
we are not going to regulate the trading in derivatives, shame on us. 
Shame on us. Yet there is no discussion of that because, well, that is 
too complicated. Oh, really? That is more complicated than putting 
together $700 billion in a bailout or rescue package? I don't think so.
  At the bottom of this discussion are the 2 million people who are 
sitting around the supper table talking about losing their homes. 
Wouldn't it have been smarter and would it not be smarter that while 
this repair is taking place that we decide to repair it at the bottom 
rather than pouring at the top, with respect to these toxic mortgages? 
How about working out family to family, by county, by city, working out 
the ability when a family can make payments, even at a lower interest 
rate, to keep that family in their house, to begin putting a floor 
under those mortgages? Wouldn't that make much more sense for 
everybody, including the American taxpayers, including the financial 
institutions for whom it costs much more to have an empty home 
foreclosed upon, to dispose of that? Wouldn't it make sense, especially 
for the families who would like to find a way to work out their 
mortgage? It sure seems so to me.
  The problem is, they cannot even find somebody to talk to because 
that mortgage has been put in these little pieces of security sausage, 
so exotic a lot of people don't understand them, and sold upstream 
three times, and they have all made a fortune. The problem is, the 
family is now going to get kicked out of their house, and all those 
folks who bought these now have toxic mortgages on their balance 
sheets, and we are told: You know what, we should bear the 
responsibility to solve that problem. I don't think so.
  We ought to create a taxpayer protection task force to investigate 
and claw back the ill-gotten gains in this whole system. There has been 
no oversight. Regulators have been dead from the neck up for 10 years. 
We pay them. They are on the job, but they are woefully blind, and 
shame on them. We have a right, it seems to me, and an expectation of 
aggressive oversight to find out who cheated, who engaged in predatory 
lending, and who will be made accountable for it. Where is the 
accountability?
  Finally, this Government has already done almost $1 trillion, let 
alone this $700 billion that is being proposed. Anything we do ought to 
make certain that the U.S. taxpayers share in the increased values of 
the very firms that have received the benefit of the backstop of the 
American taxpayers.
  I see no discussion about these issues. All I see is a roundtable 
discussion about who is going to provide the money and when and can't 
we hurry up.
  I will say one additional thing. It is curious that this 
administration and others spend most of their day talking this economy 
down and raising panic. The fact is, this country would be a whole lot 
better off talking about how we fix that which caused this problem, 
beginning with step 1.
  What Franklin Delano Roosevelt did was not old-fashioned. In fact, it 
is exactly what we need to do now. We need to decide that we are going 
to get in some control of this financial system. Financial 
modernization, my eye. That is what they called it, financial 
modernization. It took apart the protection. It allowed an unbelievable 
carnival of greed to occur with massive money being earned by a few. We 
are not talking about a lot of people. But virtually all the American 
people now are being asked by some to pay for it. I think it makes no 
sense. I do not intend to support any plan that does not begin to 
address these issues.
  Again, I am not somebody who thinks you ought to put water in the 
bathtub before you put the drain in the plug. That is exactly what we 
would be doing financially if we marched down this road and don't 
restore Glass-Steagall, don't regulate hedge funds and derivatives, 
don't deal with the wildly excessive compensation. If we don't do that, 
count me out; I am not part of this process.
  Mr. HARKIN. Mr. President, will the Senator yield?
  Mr. DORGAN. Yes, I will be happy to yield.
  Mr. HARKIN. First, I thank the Senator from North Dakota for perhaps 
the most lucid and unencumbered description of where we are now and how 
we got here. So many times we hear these people from Wall Street and 
the investment firms and they talk in a language that not too many 
people understand. But when the Senator from North Dakota boils it 
down, he can get it down to its simple structures so people can 
understand. That is the great service that the Senator from North 
Dakota has done, to bring it down, as they say, get the hay out so the 
cows can have at it, eat it. That is what he has done. He has gotten it 
down so we

[[Page 22216]]

can understand what we are talking about.
  There is no real magic--``Harry Potter'' magic--in this stuff. This 
is basic finance that can be distilled down to its fundamentals. When 
we look at those fundamentals, then we can begin to understand what was 
going on. I thank the Senator from North Dakota for, again, a very 
lucid presentation.
  I ask my friend from North Dakota, one of the issues they are talking 
about in this bailout is oversight. James Galbraith, an economist from 
the University of Texas, has suggested strongly that we should--if a 
bank or one of these investment firms is going to offer this worthless 
paper for the taxpayers to buy--and, by the way, I keep seeing this as 
a government bailout. I think we should call it what it is: a taxpayer 
bailout. The taxpayers have to fund this. But he suggested we should 
look and make sure we understand and get the internals.
  It is like when a company is going bankrupt and it comes into a bank 
to get a loan. The bank doesn't just say: Show me your balance sheet; 
they want to know how you got there, what were your internals, what 
were your models you used to build all this up so we can understand 
what is going on. I suggested this to Secretary Paulson the other 
evening. Oh, he said, this is too involved, too difficult to 
understand. Well, we better understand it.
  I ask the Senator from North Dakota if he doesn't think it would be 
wise to have some kind of an inspector general, a special kind of 
person set up to get expertise from outside of the industry, and to 
demand that if they want to have the taxpayers buy their worthless 
paper, we ought to at least look at everything to see how they got 
there and what are the models they used. Because I suspect--and this is 
only my suspicion--that one of the reasons they do not want us to see 
that is because, as the Senator from North Dakota has pointed out, 
there has been a lot of accounting fraud going on here.
  It is like my buying something, then I sell it to the Senator from 
North Dakota, and he turns around and sells it back to me, and I sell 
it back to him, and everybody makes a profit along the way. Isn't that 
neat? So I ask the Senator from North Dakota if he doesn't think it 
would be wise, in order to protect the taxpayers now and in the future, 
to demand that we see all the internal operations of their company and 
how they got there?
  Mr. DORGAN. Well, Mr. President, the Senator from Iowa makes a good 
point. I know Professor Galbraith. He also said we should regulate 
hedge funds. Certainly we must do that, he said, in the context of all 
this.
  It is interesting. My dad said: Never buy something from somebody who 
is out of breath. There is a kind of breathless quality to what has 
happened to us in the last week, with the Federal Reserve Chairman and 
the Secretary of the Treasury saying, things are going to hell in a 
hand basket; you need to act in 3 days. And they send us a 3-page bill 
saying, we want $700 billion and we insist no one be able to review our 
work. There is a kind of a breathless quality to that, isn't there?
  The Senator asked a question: If there is an investment--and we have 
already made a good number of investments, almost a trillion dollars--
if there is an investment in public firms, shouldn't there be some 
responsibility for the Government and the taxpayer to have access to 
and to understand what is in the balance sheets of those firms? The 
answer is: Absolutely.
  We don't even have a standard. You wouldn't give kids an allowance 
with the standard we have, would you? Almost every kid, in exchange for 
getting an allowance, has to own up to some sort of chores or some 
duties. This proposition is: Time is of the essence, we have a crisis, 
load up the money and deliver. That makes no sense to me. I know others 
are waiting to speak, but I started yesterday with a quote that I have 
used often, and somehow, at the end of every single major debate we 
have in this Congress, it ends up going back to that quote from Bob 
Wills and the Texas Playboys. Most of my colleagues know it, from my 
having used it so often, but it is:

       The little bee sucks the blossom and the big bee gets the 
     honey. The little guy picks the cotton and the big guy gets 
     the money.

  It is always that way, it has always been that way, and it will 
always be that way, unless we decide to change it. The question is 
whether in the next days we will decide to do the right thing or we 
will rush off breathlessly to, one more time on behalf of the American 
taxpayer, bail out those at the top of the food chain--one of whom made 
$14 million last year as one of the largest banks in the country that 
he ran and was apparently headed right into the ground.
  I tell you what: There is a right way to do things and a wrong way to 
do things, and the wrong thing for us at this point is to decide that 
we have to meet a midnight hour and ignore the basics of what ought to 
be done--regulate hedge funds, regulate derivative trading, and 
reinstate some basic modicum of protection that existed from Franklin 
Delano Roosevelt forward dealing with Glass-Steagall and protecting our 
banking institutions from the riskier enterprises. If we don't do those 
things, we will be back again because we will not have solved the 
problems that caused this crisis.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. INHOFE. First, before my friend from North Dakota leaves the 
floor, let me say there is a big problem out there, and I agree with a 
lot of the things he has said. I took a position. I waited 4 days to 
take a position against the particular approach that the Secretary of 
the Treasury is recommending, and I did so because I wanted to wait 
until I understood as much of it as I could.
  One of the biggest problems I saw is that, first, the magnitude of 
$700 billion is awfully hard to get your arms around; secondly, who 
would make the determination as to which institutions we would be 
approaching, and within those institutions which assets, and how do you 
qualify those assets. Then I found out it would be asset managers. Now, 
would that be 500 asset managers, 5,000? Maybe it will be some of these 
same people who created the problem in the first place.
  These are questions that I know people who have their hearts in the 
right place are trying to address. And I agree there is a problem 
looming out there and we need to correct it, but I am not in any hurry 
to correct it by doing the wrong thing. It is too big a problem.
  Mr. DORGAN. If the Senator from Oklahoma will yield for a question.
  Mr. INHOFE. Certainly.
  Mr. DORGAN. I thank him for his courtesy in yielding.
  I want to say one additional thing which I forgot to say, and ask a 
question while I do that.
  No. 1, it may be that the cure that is being proposed is much worse 
than the potential that exists without it. Let me tell you what I mean 
by that.
  On Monday of this week, we had the largest 1-day drop in the value of 
the U.S. dollar in history. We had the largest 1-day increase in the 
price of oil in history, accompanied by a 350-point drop in the stock 
market. The analysts say it was because they thought people were 
worried about the unbelievable amount of debt, our fiscal policy, our 
trade policy, and now the proposed bailout debt, but the unbelievable 
amount of debt that would erode the value of the U.S. currency.
  If the electronic herd of currency traders goes after our dollar and 
collapses our dollar, the consequences for this economy can be far 
worse than that which is described by the Treasury Secretary and the 
Fed Chairman. And I am saying it occurs to me that if $700 billion plus 
tips the balance in terms of currency traders evaluating whether they 
want to come after the dollar, we face a greater peril than that which 
they suggest if we do nothing.
  I appreciate the Senator for yielding, because I wanted to make the 
point about indebtedness. The Government is deep in debt, and we have 
to somehow put it back on track. This issue that is being proposed, as 
you know, increases to $11.3 trillion our indebtedness.
  I appreciate the Senator's yielding.
  Mr. INHOFE. That is true, and I think anytime you increase that debt,

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you are going to be selling to large purchasers somewhere, and those 
could be foreign countries and others.
  Another thing I would observe is that things don't happen in a 
vacuum. The Senator from North Dakota mentioned it could result in a 
devaluation of the dollar. If that happens, one of the major reasons we 
have high gas prices at the pumps--the major reason is supply and 
demand, but the other reason is the devaluation of the dollar. So that 
would be affected also.
  We need to consider all these things and we need to be deliberate. I 
know a lot of smart people are in rooms now trying to figure out some 
solutions, and I hope they come up with a good one and something I can 
support.

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