[Congressional Record (Bound Edition), Volume 154 (2008), Part 16]
[House]
[Pages 22842-22850]
[From the U.S. Government Publishing Office, www.gpo.gov]




            CURRENT FINANCIAL SITUATION OF THE UNITED STATES

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 18, 2007, the gentleman from New Jersey (Mr. Garrett) is 
recognized for 60 minutes.
  Mr. GARRETT of New Jersey. Mr. Speaker, we come to the floor tonight 
to speak about an issue that has eclipsed all other issues, that has 
been in the media and on the public's minds of recent date, and that, 
of course, is the financial situation that the United States currently 
finds itself in.
  As we go through this evening, we will talk about deals or no deals, 
the underlying fundamental problems that the situation has brought us 
to this point, who and how we got here, what was the makeup of the 
market and the Fed and the Treasury that may have helped to facilitate 
the problems that we face today.

                              {time}  2130

  And, finally, what are some of the solutions that are potentially out 
there that can move us from where we are today to a more stronger and 
safe economy?
  I'll just start for a moment, before I yield to some of my colleagues 
who have joined me, to suggest to the American public that tonight they 
should be concerned, not just about what is occurring on Wall Street, 
but what is occurring right here in Washington, D.C. as well.
  With regard to the situation on Wall Street, although as difficult as 
it may be, I have, deep down inside of me, the utmost faith in the 
American people and the American worker and the America businessman 
that, when faced with this challenge, that they will be able to 
overcome it and to strive and make a stronger economy tomorrow that 
will be beneficial for our farmers, for our families, for our 
manufacturers, for our economy throughout the United States.
  And yes, there may be some need, as we will discuss, for the 
intervention by Washington, but the reason why I say that the American 
citizen should be concerned tonight--not so much about Wall Street, but 
about Washington--is what may come out in the form of legislation 
tonight--or in the next day or the day after that. Because, you see, we 
are being asked to sort of rush through this process, where as normally 
we would come to this body and maybe spend hours upon hours debating 
whether we should spend a million dollars on this bridge over in this 
State or a million dollars in this program in that State.
  And we will go through committee hearings and markups and 
subcommittees and the like and then finally get to the floor of the 
House and pass it here. And then it will go over to the Senate, and it 
will go through the same arduous process of subcommittees and full 
committees and markups, and then to the Senate floor, where they will 
have debate on it infinitum. And maybe even then we'll go to conference 
committee and come back here to the House where we will have to discuss 
the issue all over again. And that may be only for a matter of only a 
million dollars or two.
  But what we are talking about here is potentially spending $700 
billion, and we're being asked to basically decide that issue in a 
matter of hours. Mind you, we may, hopefully--as the optimist as I 
always am--get just the right answer. But the reason I say the American 
citizen should be warned is that history does not indicate that. And 
many times, in the rush to judgment, when we are pushed to make a 
decision at the end of the day, at the end of the week, at the end of a 
session when a crisis is looming over our heads, we are sometimes 
pushed in the wrong direction.
  And I would also ask the American citizen to consider this; you know, 
the overwhelming calls to our offices I think across the board, across 
both Democrats and Republicans as well, would say that they have been 
opposed to spending $700 billion of the American taxpayers' dollars to 
bail out, if you will, Wall Street. I would just advise the American 
public, as a plan finally does come through the process and is passed 
through this House and the Senate, I would advise them to look over it 
very, very carefully when they are told that this is not the same 
Paulson proposal, that the American taxpayer is not going to be on the 
hook. I don't know what that proposal will be--as negotiations are 
going on literally as we speak--but look at it very carefully to see 
that the proverbial wool is not being pulled over all of our eyes, and 
that we ultimately, and our future generations, our children and our 
grandchildren, will be held responsible for paying the debt. I hope 
that's not the case.
  I remain optimistic that we can work out a solution. And the House 
Republicans have actually proposed such a solution that would not put 
the American taxpayer on the hook. And we are willing to work with our 
Democrat colleagues across the aisle to make any changes or additions 
or alterations to that so that it can be palatable to all parties in 
both Houses to get through the process, but let's see how the final end 
result is.
  And with that, I yield as much time as he may consume to the 
gentleman from Texas (Mr. Gohmert).
  Mr. GOHMERT. I appreciate my friend, Mr. Garrett's, comments. I heard 
him earlier tonight on Fox Business News. That's the first I had seen 
that channel, and it was quite good. Perhaps if they had been on the 
air longer, maybe we wouldn't be in this

[[Page 22843]]

problem, people would be watching that.
  But I heard one lady comment that there is an adage that ``Europe was 
formed by history and the United States was formed by philosophy.'' And 
there really is something to that. We were founded on the basis of 
people coming together. And of course at the Constitutional Convention 
they couldn't come up with a constitution, the Articles of 
Confederation had all fallen apart, no common currency, it just didn't 
work, too loose of a web. And so they came together 4 years later, 
1787, in the Constitutional Convention, and for merely 5 weeks couldn't 
agree on anything. And that's when the very elderly Benjamin Franklin 
gave his speech, that during the war in the early days, they never let 
a day go by without prayer, and they saw prayer answered. And so he 
made the motion that they begin each day with prayer, and that began. 
And now, all of a sudden we're able to come together with all these 
different philosophers through the ages and come up with what was the 
Constitution. Amazing.
  But they had seen the New Testament practice early in the church, 
when they had everybody bring everything into a common storehouse and 
gave out equally. And that eventually results, as it always has to, 
when people see someone else is not working as hard as they are and 
they're getting an equal share, then they quit working and everything 
falls part. That led to the Apostle Paul coming around and saying, If 
you don't work, you don't eat. At Jamestown, we saw where the pilgrims 
tried the same thing. And then we saw in the Soviet Union--and you've 
got to give it to the Soviet Union, they made it 70 years under that 
premise, that you could bring everything into a common storehouse and 
give out equally, and they made it 70 years. That's got to be a record 
for that.
  But here, they're wanting to take this government in the biggest 
socialist step in the history of the western hemisphere, $700 billion; 
and we're supposed to be comforted because our government may be able 
to make a profit on the taxpayers' money. The trouble is, government 
never makes the kind of profit that individuals could, and the 
government is not supposed to be in the business of making a profit. 
That is free enterprise. That's what we were founded on.
  And, you know, I heard this quote years ago, I don't remember who 
said it, if they were quoting someone else, but especially since I've 
been in Congress I've found it to be true. And it may very well be true 
in this situation, it sure seems to be, because we've got people on 
Wall Street who are screaming, you have got to come in with this 
infusion of $700 billion of taxpayer money to bail out the banks. What 
is that going to do? As I understand it, it's going to buy mortgage-
based securities--at a rate above where they may even be marked down 
to--and save those people that have stock in that bank, the officers 
that got them in that trouble, and that will keep their stock from 
being worthless. And the quote that I was alluding to is this, ``Hell 
hath no fury like a vested interest masquerading as a moral 
principle.'' And boy, have we been hearing that. ``You can't let the 
country fall.'' ``You can't let this panic ensue.'' We were told 
Friday, a week ago, 8 days ago, if we didn't have a deal by Monday, 
then the banks were going to start falling and it would be a domino and 
we would never get it back. It didn't happen. Some of us wanted to be 
more cautious.
  But anyway, as I heard the gentleman say earlier, if the majority, if 
the Speaker wants to pass a bill, she sure doesn't need us. And I heard 
Madam Speaker say just earlier today on the news that it was very 
unpatriotic for the Republicans not rushing in sooner to be part of 
this $700 billion bailout discussion. And that was really striking 
because they didn't ask for our input when they ran in here and crammed 
down a non-energy energy bill that didn't allow any amendments. They 
didn't need our votes. They were going to cram it down the Nation's 
throat and tell them we gave them energy when there was not a drop of 
energy ever going to come from it. And then shortly thereafter the 
majority leader said, oh, one of the first orders of business, we'll 
put the moratorium back. So they don't need us, really, to pass a bill.
  And another thing that I haven't heard talked about in these 
mortgage-based securities is actually who those are. Now, at one end--
and people don't want to talk about this--but at one end you've got 
people who thought if they could run in, get a no-money-down mortgage 
on a house that was a lot more than they could afford--when it was $1 
million or $2 million or half a million--more than they could afford 
and they could hold it for a year, they could turn it, double their 
money, they never had to make a payment, and wow, they just doubled the 
value of the home and then came away with all this cash. When the house 
didn't double, then they had been in the house for a year and hadn't 
made a payment, didn't pay anything down--as the saying goes, ``no skin 
in the game''--and now we're supposed to bail them out? That's at one 
end.
  In the middle, we have people who were really legitimately hurt, and 
not so much of their own accord. They knew what kind of house they 
wanted to look at. They were talked into, by bankers or realtors that 
shouldn't have, into buying more than they could afford. They got a 
mortgage that they really couldn't afford, thinking the house would 
greatly be enhanced in value and they would come out ahead. And they're 
truly suffering, and my heart goes out to them.
  Then the other thing--and I haven't heard anybody talk about it on 
the floor here--but as it turns out, there are apparently a lot of 
illegal aliens who got mortgages. Because I know I had seen Bank of 
America advertising that they wanted to help the aliens, and under 
certain circumstances, gosh, we can get you a mortgage. So we're going 
to bail out mortgages for illegal aliens.
  Let me tell you, back in the eighties, when the FDIC and RTC had 
taken over so many banks, what we saw was people come in and say, you 
know, I've been making my payment every month, and I'd like to 
negotiate a better deal. And they were told, well, heck no, you keep 
making your payments. I mean, I did outside counsel work for the RTC 
and FDIC. You would have some people come in later and say, okay, you 
wouldn't work with me before when I was making my payment every month, 
now I haven't paid for 6 months and they say, okay, now we'll work with 
you. We're sending the wrong message. And it is so critical that we not 
come out of this Chamber with a bill that hurts the America that we 
know and love so much.
  There have to be consequences. And it troubles me much that the 
administration, the Secretary Treasurer has been forecasting this gloom 
and doom; ``there's going to be widespread panic.'' ``If Washington 
Mutual goes down it will be a domino and we will not stop the 
depression.'' Normally, it's the administration saying, nobody panic, 
we're going to get through this, this will all be okay, just stay with 
us, let's have faith in each other. And instead, all we're hearing is 
``you've got to do something immediately or it's all going to fall 
apart.''
  Well, it seems like, if you allow me to borrow from Kipling's poem 
and paraphrase a little bit, if you can keep your head while all those 
about you are losing theirs, you're probably the reason they're losing 
theirs. And that's what we seem to be seeing around here.
  I appreciate the time and Mr. Garrett yielding. And I will yield 
back.
  Mr. GARRETT of New Jersey. I thank the gentleman. And hopefully, 
Members on both sides of the aisle will be keeping their heads as we go 
through the debate and the seeking of a deal on this, and a deal that, 
at the end of the day, is a benefit to the taxpayers of this country.
  While we try to seek out that debate and try to seek out the 
solution, one axiom that we should probably go by is ``Do not go back 
to the same people who brought you this problem in the first place.'' 
And I will speak on that in a little more detail to take a look at

[[Page 22844]]

who it was actually that brought us to this problem. I know some people 
are pointing their fingers exclusively at Wall Street on this, and 
clearly they have some blame to lay there because, for various reasons, 
executives and otherwise made truly imprudent decision making, maybe 
it's in part because they really did not have the information on hand, 
maybe it's because of lawsuits in the pasts when analysts were pushed 
out of the Wall Street, out of the cell side of the equation, or maybe 
it's because with all the Ph.D.s and what have you brought in and 
brought in all the new modeling on Wall Street and what have you, that 
made it almost impossible for the CEOs of these investment firms and 
otherwise to really know what it was exactly that they were buying down 
below.
  Whatever the excuse, whatever the reason, there is some blame to be 
laid at Wall Street, to be clear, but we also have to look to see where 
some of that blame lays here in Washington, D.C. And that's why I said, 
do not return to those who brought us here.
  And if you want to look to a place where you can get a little bit of 
information about how we got here, as we're all done here listening to 
this program right now, our speakers here on the floor, I went to a 
place earlier today--or somebody sent this to me as an e-mail, and it 
was an e-mail for a YouTube site, and it's called ``Burning Down the 
House.'' And it's a 9\1/2\ minute YouTube presentation done with music 
and what have you that gives you a nutshell explanation of exactly how 
did we get to where we are in the first place.

                              {time}  2145

  So I recommend people to go to YouTube's ``Burning Down the House'' 
and they will be educated on it.
  But right now we're going to be additionally educated by the young 
lady from Minnesota.
  I yield such time as she may consume to Mrs. Bachmann.
  Mrs. BACHMANN. I want to thank the gentleman from New Jersey for his 
leadership on this issue, which is perhaps the most important vote that 
Members will take during their entire congressional career. I know for 
me, this is my first term in Congress. This is the pivotal vote that I 
will be taking. And my heart has been breaking. I have been despairing 
over this vote that is coming before us not because I am afraid to take 
the vote but because I am despairing over what could be the outcome 
because I grieve over the fact that we may reject, for the first time 
in the history of our country, in a wholesale manner, free markets, 
free answers and free capitalism.
  And what that means is freedom. And there is nothing more important 
in this country than freedom. It's why a mom would put her 5-year-old 
in an inner tube in Havana and brave the shark-infested waters for 90 
miles to get to Florida so that she could see her son enjoy something 
she never knew. And that is a concept called ``freedom.''
  And what does that have to do with the bailout? It has everything to 
do with the bailout because what this bailout represents is the 
wholesale leap downward towards socialism, towards saying that we can 
never have failure again. Nobody can ever have a bad day. Congress has 
to jump in and make it right every time, because government has to take 
up risk and back up everybody's risk.
  I wrote something earlier this week that I would like to share in the 
course of my remarks this evening. When Bear Stearns hit bottom in 
March of this year in 2008, the credit crisis claimed the first big 
Wall Street victim. Treasury Secretary Hank Paulson said, we had to 
bail out this bleeding financial giant at the cost to the taxpayers of 
$29 billion. Even for Washington that is a lot of money. Secretary 
Paulson said that would stabilize the markets. But it didn't.
  Next, Treasury Paulson said that we had to bail out mortgage giants 
Fannie Mae and Freddie Mac. All roads in this big fat mess go through 
Fannie Mae and Freddie Mac. It is a monster of ugly proportions created 
by the government. That should be our first lesson. Government should 
never create a private business. But it created this private 
monstrosity and then decided it would back up with a wink and a nod any 
risky, hare-brained loan or mortgage-backed security that Fannie and 
Freddie came up with.
  The starting price of that bailout was $200 billion and climbing. And 
that is on top of $300 billion that was passed by Congress only a month 
or so earlier in another massive housing bailout bill. We were told 
then that this would surely calm the markets. But it didn't.
  Treasury Secretary Paulson and Federal Reserve Chair Ben Bernanke 
then siphoned $85 billion from taxpayer coffers to save another private 
company known as AIG from bankruptcy, and again with the stated purpose 
of stabilizing the markets. Did it do the trick this time? No. Things 
appear only to have gotten worse.
  More than $600 billion into these market-calming bailouts, the market 
turmoil has only ramped up. And it's continuing. In fact, it has now 
grown to such an incredible crescendo that here we are tonight, and the 
Treasury Secretary and the Federal Reserve Chair has told Congress, in 
no uncertain terms by the way, that we must spend another $700 billion 
in taxpayer funds. We are told we must do this now, without delay, 
without deliberation, as Congressman Garrett has said, without answers 
to most of our questions.
  This would bring the bailout tally to well over $1 trillion, now that 
is real money, even for Washington, approaching half the size of 
America's entire budget.
  In other words, every American who has played it safe and has played 
it smart to avoid being in debt is now being asked to spend the rest of 
his or her life paying off the debts of Washington and the debts of 
some miscreants on Wall Street. We are well on our way to privatizing 
profit but socializing risk. And we are well on our way to eliminating 
moral hazard from economics altogether. This is antithetical not only 
to the free-market basis of the United States economy, but also to the 
rich heritage of liberty, that is called freedom, that we've long 
enjoyed. It runs counter to the American Dream, to what we hold dear, 
unless you're a fat cat that is rolling the dice with taxpayers' money. 
Then who cares?
  American taxpayers are chumps here in this equation because American 
taxpayers are being asked to clean up a mess that the American taxpayer 
didn't create. Congress must not rush to judgment on this matter. We 
can't do that. It's a complicated issue. That is true. This isn't easy 
for any of us to sort out. All Members of Congress, I think, are going 
through a crash course in a Ph.D. in high finance all within less than 
1 week's time. And the consequences could threaten generations with 
lack of prosperity.
  We can't just stick a $1 trillion Band-aid on that problem. We don't 
have that kind of money in our back pocket, because after all, when 
Uncle Sam opens his cash box this week, there are no greenbacks in 
there. There are only feathers flying out that cash box.
  We have to examine the root causes of this problem. And we have to 
seek to address the core issues. It's real simple. Government got 
involved where it shouldn't get involved. We spent more money than what 
we had. It's not too tough to figure out. Otherwise it's only a matter 
of time before we find ourselves right back where we were.
  The recklessness of government is the primary culprit here. Once 
again, just like on energy, it is Congress that created this problem. 
For years Congress has been pushing banks to make risky subprime loans. 
You heard me right. It wasn't the lenders on their own. Congress passed 
laws that said we're going to fine you and we're going to file lawsuits 
against you lenders if you don't make risky loans. And using the 
authority of the Community Reinvestment Act, the big push for subprime 
mortgages began in earnest during the Clinton administration. 
Republicans aren't completely lily-white here with hands. The Clinton 
administration however ramped this up. And banks that didn't play ball 
were subjected to serious fines and lawsuits,

[[Page 22845]]

and regulatory obstacles were placed in their way.
  Expanding access to the American Dream is a worthy goal. We all agree 
with that. But by blindly pursuing that goal and allowing the end to 
justify means, we put millions of Americans today at financial risk. 
Although we question what that risk might be.
  Because many of these home loans are backed by mammoth government-
sponsored enterprises, Fannie Mae and the Freddie Mac, kind of like 
your weird uncle and weird aunt, Wall Street was more than happy to 
trade on these egregious loans. The assumption, which was proven right, 
was that Uncle Sam would guarantee them. Fannie and Freddie quickly 
grew too big. And all calls to regulate them, made even in fact by this 
administration, more closely to reform their structures were ignored, 
ignored I would say by the current Chair of the House Financial 
Services Committee of which I'm privileged to serve on.
  In fact, leaders in Congress such as Representative Barney Frank, 
chairman of the House Financial Services Committee, resisted reforming 
Fannie and Freddie at every turn. When former Treasury Secretary John 
Snow pleaded before Chairman Frank before his committee for Fannie and 
Freddie reform, the chairman responded, ``Fannie Mae and Freddie Mac 
are not in a crisis. I think we see entities that are fundamentally 
sound financially.'' O, that Barney Frank were right. But Treasury 
Secretary Snow was right.
  And millions of homes and a mountain of wealth were built on a 
foundation of sand. And when the housing bubble burst, it all began to 
collapse. And suddenly, the homeowners who took out loans that they 
couldn't afford had homes that were worth less than when they bought 
them. And stalwart financial giants were left holding on to billions in 
securities that they just couldn't cash, what are called ``illiquid 
assets'' that you read about in your morning paper. And without 
liquidity and without the free flow of credit, the market ground to a 
halt, and companies began to buckle.
  Endless government bailouts will not prevent this crisis from 
repeating itself. We need to remember that. It will further cement the 
precedent that got us here in the first place. There are other options 
to bringing much-needed liquidity to the market, including infusing the 
market with new capital by suspending the business tax and the capital 
gains tax.
  Also Fannie Mae and Freddie Mac need to be dismantled and quick. Now 
that the implicit taxpayer guarantee that they enjoyed for years has 
been made permanent, we have to make a clean break with them.
  Accounting that artificially devalued securities and other assets 
could be temporarily suspended. And before Congress jumps to a full 
trillion dollar plus bailout, it should explore these and other market 
reforms. Congress should look for the best way to provide the greatest 
stabilization in the markets with the least taxpayer exposure.
  And that is where House Republicans come in. We do not want the 
American taxpayer to bail out this $700 billion tab. It isn't about 
Wall Street. It's about this street, Washington, D.C. The Congress 
created this problem. For 2 years, the Democrat-controlled Congress, 
while this head of steam has been building, has failed to dismantle 
Freddie and Fannie. They have failed to dismantle the Community 
Reinvestment Act.
  But the real issue here is the forgotten man. That is the issue. It's 
the forgotten man. It's the poor, beleaguered American taxpayer. Who is 
going to be left to bail him out?
  Mr. GARRETT of New Jersey. I thank the gentlelady for your comments. 
And your opening comments were quite instructive.
  You say we have a problem today. That we all agree on. But we should 
not be moving forward expeditiously without all the evidence before us 
so we can make the right decision. It was just the other day that 
during the course of this week I was in contact with a notable 
economist who made that point to me as well, that we should have all 
the data before us so that we can make a correct determination as to 
what is the right reform in Washington to address the problem on Wall 
Street. And he referred me to some data. And the data is not mine. It 
is not his. It is published data from the Federal Reserve. I will just 
spend 30 seconds on it to put it in perspective. We do know we have a 
problem. If you talk to most people on Wall Street, they will tell you 
there is a problem in the credit markets.
  You have to put things in perspective with respect to where we stood 
before. If you look at commercial and industrial loans, seasonally 
adjusted, it goes from July of last year to September of this year, and 
you will see that leading into this week, actually commercial and 
industrial loans were at historic highs. And yes, on the other end of 
the chart it just begins to tip down, the chart shows it goes down just 
a little bit. And the latest data we have is from I think just 1 week 
ago. The next data for this week will be coming out.
  It's probably telling that we can't get this information, quite 
honestly. I believe maybe only the Federal Reserve may have this 
information. But for Congress really to act intelligently, it needs 
information like this. This is why I threw the chart up, because the 
gentlelady from Minnesota said we should have information.
  Here is another chart. And I will end on this because charts are hard 
to follow here. This is commercial paper here of nonfinancial 
companies, again seasonally adjusted, again from the same time frame, 
July of last year to September of this year. And you will see where we 
are, on average at the 190 level, we were peaking just going into this. 
Now it went down. But you see those spikes going down all the time.
  On the very end of the chart, pointing over here, there is a little 
bit of an uptick. I can't tell you what the actual data is 
conclusively, whether that little uptick then goes up. I doubt it. It 
probably begins to spike downwards again. It is that sort of 
information that we would like to have specifically before us so we are 
not relying on anecdotal evidence. And I don't discount that, or the 
phone calls we receive from the street or the articles that we receive 
as well. We do know there is a problem out there.
  I'm just pointing out, as the gentlelady from Minnesota has said, it 
would be a lot more beneficial before we start spending $700 billion, 
or for that matter even $100 billion. Because we may see a so-called 
``compromise'' piece of legislation come out that says, American 
taxpayer, don't worry. We're not going to spend $700 billion to bail 
out Wall Street. We are only going to spend $100 billion. And now you 
should thank Washington for only spending $100 billion. So come on 
board with that. Some of us still have a problem with spending $100 
billion on a problem that is part Wall Street's but also part 
Washington's.
  If it were ever to again regain credibility with the American people, 
Congress really has to address a fundamental problem and a fundamental 
question, and that is to answer to the American public how come it was 
that for so many years, when the evidence, true evidence, data 
evidence, coming into Congress was showing us that this housing growth 
model could not sustain itself, why Congress did not pass legislation 
to rein it in, to reform the system, and to put into checks and 
balances in the past?
  Well again we can go into the details why Congress didn't do that. 
But to get the credibility back before we move forward on new 
legislation involving tens or hundreds of billions of dollars, we need 
to answer that question.

                              {time}  2200

  With that, I would like to yield the floor to the gentleman from 
Michigan.
  Mr. McCOTTER. I thank the gentleman from New Jersey for yielding. I 
also wish to take this moment to thank him for his strength of 
character and his depth of intellect and leadership on this issue.
  It has been said if you don't know where you are going, any road will 
take you there. Unfortunately, we find ourselves in such a situation, 
as America finds itself amidst a potential economic meltdown of its 
financial sector.

[[Page 22846]]

  Right now, the U.S. Congress is being asked to vote upon the Paulson-
Bush-Obama-McConnell-Pelosi-Reid plan. I myself will be up front and 
say I think it is a disastrous policy that House Republicans should 
continue to resist. What we are asking Americans to do, quite simply, 
is to send money to the very people who caused this problem and expect 
them to fix it.
  If I can put this in the simplest terms that even I could understand, 
we have a liquidity crisis in our financial markets. That means that 
private investors are standing on the sidelines. They do not want to 
put their money into purchasing toxic assets. What they are now doing 
is asking Congress to put your money into purchasing toxic assets, and, 
if you do not, then these private investors have promised to wreak 
havoc upon your personal savings, upon your credit ratings, upon your 
financial existence. And for what sin? For not giving them $700 billion 
to fix the problem that they caused.
  House Republicans have stood against this. We have consistently tried 
to keep ahead of the crisis atmosphere, and we have succeeded. What we 
instead offered is a responsible position that protects the taxpayers, 
that puts private recapitalization first, so that Wall Street can bail 
itself out of its mess before going to the taxpayers, and putting an 
appropriate backstop in place.
  Now, we have been reviled for our principled opposition to what we 
believe is an extortion of taxpayers' precious resources. For this we 
have been condemned in the liberal media. For this we have been 
condemned by the majority Democratic Party in this House. We have been 
condemned by the Democratic majority in the Senate. We have been 
condemned by our own Republican President and his Secretary of the 
Treasury and the Federal Reserve Board Chairman.
  In fact, I think we have recently reached the height of the 
disapprobation heaped upon us when earlier the Speaker of the House, in 
response to our refusal to spend $700 billion of taxpayer money on this 
problem, we were labeled ``unpatriotic.'' I suppose this should not 
surprise us the least bit. We had earlier heard from the Democratic 
vice presidential nominee, Senator Biden, that Republicans, because we 
would not raise your taxes, were also unpatriotic.
  Now, there has been some debate whether there is a new Democratic 
Party in America. If I may link these two statements to disprove that 
notion, according to Senator Biden and Speaker Pelosi, if you do not 
support raising the American people's taxes and spending $700 billion 
of it on Wall Street, you are unpatriotic.
  I disagree with this assessment, and I trust that the American people 
do. In fact, in many ways it tends to point out the politics that are 
being played here. The reality is, as has been shown so often in the 
past, the Republican Party in Congress is the minority party. In the 
House of Representatives especially, the minority has acute pangs, 
because we do not have the power to obstruct a single thing the 
majority wants to get done. Let me draw a quick comparison.
  When we were debating increasing American energy production to help 
our constituents and ease their pain at the pump by increasing supply, 
we were denied a bipartisan vote on an all-of-the-above energy 
strategy. Today, in the debate to bail out Wall Street, we see the 
Speaker demanding a bipartisan vote to bail them out.
  The dichotomy proves the point that if this Democratic majority truly 
believes, as does their Speaker and Senator Obama and others, in 
President Bush's plan, yes, I know that sounds dysfunctional, but these 
are the times in which we live, they would then take it upon themselves 
to do one of two things: They would run us over; or instead they would 
choose the prudent course, to work with us.
  Today they are beginning to show signs they may work with us. But, 
unfortunately, the political games continue. We continue to hear now, 
in addition to being unpatriotic and obstructive, which is impossible 
as the minority party in the House, we continue to hear that if we 
resist an arbitrary Sunday midnight deadline, we, who cannot stop this 
bill from being passed, are going to cause the meltdown of the American 
and the global economy.
  We instead as House Republicans are going to do what you sent us here 
to do, which is guard your money with which you have entrusted us. What 
we are going to do is reject arbitrary deadlines, for two very critical 
reasons important to the American people.
  One is we will have no rush to misjudgment, whereby a bad bill is 
passed for the sake of meeting an artificial deadline that winds up 
being either passed into law or being forced into a no vote defeat in 
this House, the result of which could be the very economic meltdown we 
are trying to prevent.
  The other alternative is if prudent consultation with Republicans and 
Democrats continue and we pass the arbitrary deadline, if investors' 
expectations are raised improperly and irresponsibly, if we do the 
right thing and take a prudent course with this legislation towards a 
pro-taxpayer outcome, the economic meltdown may still occur.
  This is why House Republicans refuse to put a deadline on these 
economic negotiations, which are of critical interest to the American 
people, the same way we opposed putting artificial deadlines on our 
troops in Iraq. One is dedicated to preserving the prosperity of the 
American people, just as the other was dedicated to preserving the 
liberty of the American people by expanding it to the Iraqis.
  We have failed to do so in the past in our negotiations with the 
Democratic Party to make it clear that we have learned our lesson. We 
will not legislate defeat, either of our troops or of the American 
taxpayer, and we will continue to stand strong in their defense.
  Why is this critically important? If one looks at the lessons of 
history, we see critical times where decisions are made that affect 
future generations. This is such a time.
  This is the first economic panic of the global economy. The precedent 
that we set as your servants in Congress will be followed for decades 
to come. If we are rushed into this by a market bent upon getting their 
billions from taxpayers, we will set a precedent that we will rue. If 
we take our time and have prudent, responsible progress towards a pro-
taxpayer result, such as embodied in the Cantor-Ryan plan, we will have 
done our job, not only for the crisis of the present, but for future 
generations to come.
  This is why today I say I have never been more proud to be a House 
Republican, because in many ways the more you are reviled for not 
abandoning the hard-working, responsible American people, for not 
abrogating their trust in you to protect their tax dollars and their 
futures, we wear it as a badge of honor, because that is precisely what 
we were elected to do as the party of Lincoln, as the party of Reagan.
  And I have a history lesson as I conclude for the party of Andrew 
Jackson. Andrew Jackson stood tall for the working people of America in 
the face of every rich special interest that this Nation had. When they 
demanded a Bank of the United States and got a servile Congress to pass 
it for them, he vetoed it, not once but twice, because he knew that the 
best way America could grow was from families, communities and 
neighborhoods, not from a centralized Bank of the United States.
  Today we face a centralized shadow bank of the United States on Wall 
Street, and this is precisely the forces that we are standing up to for 
the responsible, hard-working people of America. And when Andrew 
Jackson for the second time vetoed a charter for the Bank of the United 
States, he said something that I would ask every Democrat in this 
Chamber to remember: ``There are no necessary evils in government.''
  So that when this Democratic majority brings a bill to the floor, 
make sure that you believe in it; because if you do not believe in it 
and you do not vote for it, or you do, do not go home and tell your 
constituents that this was a necessary evil to get through this time. 
And we as Republicans on our part will

[[Page 22847]]

always remember the words of Ralph Waldo Emerson: ``If one man plant 
himself upon his convictions and then abide, the whole huge world will 
come around to him.''
  We will stand our ground, backed by principle and the American 
people, and we will do our duty.
  I yield back to the gentleman from New Jersey.
  Mr. GARRETT of New Jersey. I thank the gentleman. We hopefully will 
learn from our history that there are no necessary evils in government. 
And it may well be if the unfortunate compromise comes about, that that 
is the arguments that will be made by those who propose that, that you 
just have to suffer a little bit in government expenditures on that; 
that is a necessary evil.
  That is when the actual question will come about probably, is when is 
$700 billion not $700 billion. And the answer that may well be given, 
well, it is not $700 billion when we pay it out over time; $100 billion 
this month, $150 billion a couple months from now, $150 billion in 
January, $200 billion after that; and as the numbers go up, eventually 
to $700 billion, and maybe even more. Because that is where we stand 
right now with the administration and the Democrat majority essentially 
having originally said that there was a deal, and that means the 
Democrats having signed on to or basically accepted the outline of the 
original Paulson plan, the Bush administration plan, saying we should 
spend $700 billion. Anything less than that from their perspective, 
which we don't just do it at one time but do it over time, to the 
American taxpayer should be seen as the exact same thing.
  That is why I said in my opening comments, don't let anyone pull the 
proverbial wool over your eyes by saying we have ratcheted this down 
somehow by making a compromise that they are going to spend it in a 
different manner, because to you and I it is the same thing. Also to 
our children and our children's children, it will be the same thing, 
inasmuch as the devastating impact it will have on future economies 
with regard to inflation, inflation, one of the most onerous taxes of 
all, as it steals from us without us even seeing it, as the value of 
our dollar goes down and down and down as the American government 
prints more and more money to do a bailout.
  With that, once again I am pleased to be joined now by another leader 
on this issue, the gentlewoman from North Carolina (Ms. Foxx).
  Ms. FOXX. I want to thank Mr. Garrett, my colleague from New Jersey, 
and say that I am happy to come and join him and my other colleagues in 
this. I wish I were as eloquent as they have been tonight, because they 
have certainly described the situation we face in very, very eloquent 
terms.
  I would put it in some very plain terms, I believe. We can act in 
haste and repent at leisure. That is something I think the American 
people understand as well as they have understood the wonderful things 
said here.
  We have been told again that we must act immediately or, as Speaker 
Pelosi has said, we are being unpatriotic. I don't believe that. I 
think we are being patriotic by taking our time and holding the Speaker 
to the promises she made in 2006: All bills would go through regular 
order, go through committee, come to the floor, be allowed to be 
amended. It would be the most bipartisan Congress ever in the history 
of the Congress. We have not seen that, and the taxpayers of this 
country deserve that.
  I want to say also again, this is not a failure of our markets. It is 
a failure of our government, as has been said over and over and over 
again.
  As Congresswoman Bachmann has said, we have many options, contrary to 
what Secretary Paulson has said when he presented this to us. And to 
reiterate what Congressman McCotter from Michigan said, it is important 
that the American people know the Democrats are in charge of this 
Congress. They have 231 votes. It takes only 218 to pass a bill. If 
they want to pass a bill, they can pass any bill they want to. They 
have done it this whole 20 months without our help. They don't need 
bipartisan support for this.

                              {time}  2215

  I would like to speak about an article from the Wall Street journal 
entitled ``A Mortgage Fable.''
  I am not going to read this article tonight, but I do want to point 
out some things again, some which my colleagues have already pointed 
out, but just to hit some high spots. It talks about the problems, the 
people and the agencies that have created the problems that we are 
facing.
  I will quote here, ``But Washington is as deeply implicated in this 
meltdown as anyone on Wall Street or at Countrywide Financial. Going 
back decades, but especially in the past 15 or so years, our 
politicians have promoted housing and easy credit with a variety of 
subsidies and policies that helped to create and feed the mania. Let us 
take the role of political cause and financial effect.''
  Again, I am going to hit the high spots here. ``The Federal Reserve. 
The original sin of this crisis was easy money.
  ``Fannie Mae and Freddie Mac. Created by government, and able to 
borrow at rates lower than fully private corporations because of the 
implied backing from taxpayers, these firms turbocharged the credit 
mania. They channeled far more liquidity in the market than would have 
been the case otherwise.''
  Fannie and Freddie's patrons on Capitol Hill didn't care about the 
risks inherent in their combined trillion dollar plus mortgage 
portfolios, so long as they help meet political goals on housing, even 
after taxpayers have had to pick up a bailout tab that may grow as 
large as $200 billion, House Financial Services Chairman Barney Frank 
still won't back a reduction in their mortgage portfolios.
  ``A credit-rating oligopoly. Thanks to Federal and State regulation, 
a small handful of credit rating agencies pass judgment on the risk for 
all debt securities in our markets. Many of these judgments turned out 
to be wrong, and this goes to the root of the credit crisis: Assets 
officially deemed rock solid by the Government's favored risk experts 
have lately been recognized as nothing of the kind.''
  ``Banking regulators. In the Beltway fable, bank supervision all but 
vanished in recent years. But the great irony is that the banks that 
made some of the worst mortgage investments are the most highly 
regulated.''
  ``Meanwhile, the least regulated firms--hedge funds and private 
equity--have had the fewest problems, or have folded up their mistakes 
with the least amount of trauma. All of this reaffirms the historical 
truth that regulators almost always discover financial excesses only 
after the fact.''
  ``The Community reinvestment Act. This 1977 law makes banks to make 
loans to poor borrowers who often cannot repay them. Banks that failed 
to make enough of these loans were often held hostage by activists when 
they next sought some regulatory approval.''
  ``Our point here isn't to absolve Wall Street or to pretend there 
weren't private excesses. But the investment mistakes would surely have 
been less extreme, and ultimately their damage containable, if not for 
the political support and subsidy for mortgage credit.''
  Mr. Speaker, I would like to submit for the Record the article from 
the Wall Street journal I just referred to, entitled ``A Mortgage 
Fable.''

             [From the Wall Street Journal, Sept. 22, 2008]

                            A Mortgage Fable

       Once upon a time, in the land that FDR built, there was the 
     rule of ``regulation'' and all was right on Wall and Main 
     Streets. Wise 27-year-old bank examiners looked down upon the 
     banks and saw that they were sound. America's Hobbits lived 
     happily in homes financed by 30-year-mortgages that never 
     left their local banker's balance sheet, and nary a crisis 
     did we have.
       Then, lo, came the evil Reagan marching from Mordor with 
     his horde of Orcs, short for ``market fundamentalists.'' 
     Reagan's apprentice, Gramm of Texas and later of McCain, 
     unleashed the scourge of ``deregulation,'' and thus were 
     ``greed,'' short-selling, securitization, McMansions, liar 
     loans and other horrors loosed upon the world of men.
       Now, however, comes Obama of Illinois, Schumer of New York 
     and others in the fellowship of the Beltway to slay the Orcs 
     and

[[Page 22848]]

     restore the rule of the regulator. So once more will the 
     Hobbits be able to sleep peacefully in the shire.
       With apologies to Tolkien, or at least Peter Jackson, 
     something like this tale is now being sold to the American 
     people to explain the financial panic of the past year. It is 
     truly a fable from start to finish. Yet we are likely to hear 
     some version of it often in the coming months as the barons 
     of Congress try to absolve themselves of any responsibility 
     for the housing and mortgage meltdowns.
       Yes, greed is ever with us, at least until Washington 
     transforms human nature. The wizards of Wall Street and 
     London became ever more inventive in finding ways to sell 
     mortgages and finance housing. Some of those peddling 
     subprime loans were crooks, as were some of the borrowers who 
     lied about their incomes. This is what happens in a credit 
     bubble that becomes a societal mania.
       But Washington is as deeply implicated in this meltdown as 
     anyone on Wall Street or at Countrywide Financial. Going back 
     decades, but especially in the past 15 or so years, our 
     politicians have promoted housing and easy credit with a 
     variety of subsidies and policies that helped to create and 
     feed the mania. Let us take the roll of political cause and 
     financial effect:
       The Federal Reserve. The original sin of this crisis was 
     easy money. For too long this decade, especially from 2003 to 
     2005, the Fed held interest rates below the level of expected 
     inflation, thus creating a vast subsidy for debt that both 
     households and financial firms exploited. The housing bubble 
     was a result, along with its financial counterparts, the 
     subprime loan and the mortgage SIV.
       Fed Chairmen Alan Greenspan and Ben Bernanke prefer to 
     blame ``a global savings glut'' that began when the Cold War 
     ended. But Communism was dead for more than a decade before 
     the housing mania took off. The savings glut was in large 
     part a creation of the Fed, which flooded the world with too 
     many dollars that often found their way back into housing 
     markets in the U.S., the U.K. and elsewhere.
       Fannie Mae and Freddie Mac. Created by government, and able 
     to borrow at rates lower than fully private corporations 
     because of the implied backing from taxpayers, these firms 
     turbocharged the credit mania. They channeled far more 
     liquidity into the market than would have been the case 
     otherwise, especially from the Chinese, who thought (rightly) 
     that they were investing in mortgage securities that were as 
     safe as Treasurys but with a higher yield.
       These are the firms that bought the increasingly 
     questionable mortgages originated by Angelo Mozilo's 
     Countrywide and others. Even as the bubble was popping, they 
     dived into pools of subprime and Alt-A (``liar'') loans to 
     meet Congressional demand to finance ``affordable'' housing. 
     And they were both the cause and beneficiary of the great 
     interest-group army that lobbied for ever more housing 
     subsidies.
       Fan and Fred's patrons on Capitol Hill didn't care about 
     the risks inherent in their combined trillion-dollar-plus 
     mortgage portfolios, so long as they helped meet political 
     goals on housing. Even after taxpayers have had to pick up a 
     bailout tab that may grow as large as $200 billion, House 
     Financial Services Chairman Barney Frank still won't back a 
     reduction in their mortgage portfolios.
       A credit-rating oligopoly. Thanks to federal and state 
     regulation, a small handful of credit rating agencies pass 
     judgment on the risk for all debt securities in our markets. 
     Many of these judgments turned out to be wrong, and this goes 
     to the root of the credit crisis: Assets officially deemed 
     rock-solid by the government's favored risk experts have 
     lately been recognized as nothing of the kind.
       When debt instruments are downgraded, banks must then 
     recognize a paper loss on these assets. In a bitter irony, 
     the losses cause the same credit raters whose judgments 
     allowed the banks to hold these dodgy assets to then lower 
     their ratings on the banks, requiring the banks to raise more 
     money, and pay more to raise it. The major government-
     anointed credit raters--S&P, Moody's and Fitch--were as 
     asleep on mortgages as they were on Enron. Senator Richard 
     Shelby (R., Ala.) tried to weaken this government-created 
     oligopoly, but his reforms didn't begin to take effect until 
     2007, too late to stop the mania.
       Banking regulators. In the Beltway fable, bank supervision 
     all but vanished in recent years. But the great irony is that 
     the banks that made some of the worst mortgage investments 
     are the most highly regulated. The Fed's regulators blessed, 
     or overlooked, Citigroup's off-balance-sheet SIVs, while the 
     SEC tolerated leverage of 3o or 4o to 1 by Lehman and Bear 
     Stearns.
       The New York Sun reports that an SEC rule change that 
     allowed more leverage was made in 2004 under then Chairman 
     William Donaldson, one of the most aggressive regulators in 
     SEC history. Of course the SEC's task was only to protect the 
     investor assets at the broker-dealers, not the holding 
     companies themselves, which everyone thought were not too big 
     to fail. Now we know differently (see Bear Stearns below).
       Meanwhile, the least regulated firms--hedge funds and 
     private-equity companies--have had the fewest problems, or 
     have folded up their mistakes with the least amount of 
     trauma. All of this reaffirms the historical truth that 
     regulators almost always discover financial excesses only 
     after the fact.
       The Bear Stearns rescue. In retrospect, the Fed-Treasury 
     intervention only delayed a necessary day of reckoning for 
     Wall Street. While Bear was punished for its sins, the Fed 
     opened its discount window to the other big investment banks 
     and thus sent a signal that they would provide a creditor 
     safety net for bad debt.
       Morgan Stanley, Lehman and Goldman Sachs all concluded that 
     they could ride out the panic without changing their business 
     models or reducing their leverage. John Thain at Merrill 
     Lynch was the only CEO willing to sell his bad mortgage 
     paper--at 22 cents on the dollar. Treasury and the Fed should 
     have followed the Bear trauma with more than additional 
     liquidity. Once they were on the taxpayer dime, the banks 
     needed a thorough scrubbing that might have avoided last 
     week's stampede.
       The Community Reinvestment Act. This 1977 law compels banks 
     to make loans to poor borrowers who often cannot repay them. 
     Banks that failed to make enough of these loans were often 
     held hostage by activists when they next sought some 
     regulatory approval.
       Robert Litan, an economist at the Brookings Institution, 
     told the Washington Post this year that banks ``had to show 
     they were making a conscious effort to make loans to subprime 
     borrowers.'' The much-maligned Phil Gramm fought to limit 
     these CRA requirements in the 1990s, albeit to little effect 
     and much political jeering.
       We could cite other Washington policies, including the 
     political agitation for ``mark-to-market'' accounting that 
     has forced firms to record losses after ratings downgrades 
     even if the assets haven't been sold. But these are some of 
     the main lowlights.
       Our point here isn't to absolve Wall Street or pretend 
     there weren't private excesses. But the investment mistakes 
     would surely have been less extreme, and ultimately their 
     damage more containable, if not for the enormous political 
     support and subsidy for mortgage credit. Beware politicians 
     who peddle fables that cast themselves as the heroes.

  The last thing that I would like to say, because I want to give some 
more time to my colleague to New Jersey, is that one of the areas that 
I think has not been properly discussed in the last couple of days is 
the fact that Republicans have put out a set of economic rescue 
principles. They are on my Web site. I think they are on probably many 
other people's Web sites. I am only going to highlight these very, very 
quickly. These were put together by a working group, established by 
Republican Leader Boehner and released earlier this week.
  Again, I think it's very important to that the taxpayers know we have 
put them first, not Wall Street. These are the three major components, 
a commonsense plan to have Wall Street fund the recovery, not 
taxpayers. You heard that first from Republicans. ``Have Private 
Capital Injection to the Financial Markets, Not Tax Dollars.''
  ``Immediate Transparency, Oversight, and Market Reform.''
  Mr. Speaker, I would submit Economic Rescue Principles for the 
Record.

                       Economic Rescue Principles


 Common Sense Plan to Have Wall Street Fund the Recovery, Not Taxpayers

       Rather than providing taxpayer funded purchases of frozen 
     mortgage assets to solve this problem, we should adopt a plan 
     to insure mortgage back securities through payment of 
     insurance premiums.
       Currently the federal government insures approximately half 
     of all mortgage backed securities. (MBS) We can insure the 
     rest of current outstanding MBS; however, rather than 
     taxpayers funding insurance, the holders of these assets 
     should pay for it. Treasury Department can design a system to 
     charge premiums to the holders of MBS to fully finance this 
     insurance.


   Have Private Capital Injection to the Financial Markets, Not Tax 
                                Dollars

       Instead of injecting taxpayer capital into the market to 
     produce liquidity, private capital can be drawn into the 
     market by removing regulatory and tax barriers that are 
     currently blocking private capital formation. Too much 
     private capital is sitting on the sidelines during this 
     crisis.
       Temporary tax relief provisions can help companies free up 
     capital to maintain operations, create jobs, and lend to one 
     another. In addition, we should allow for a temporary 
     suspension of dividend payments by financial institutions and 
     other regulatory measures to address the problems surrounding 
     private capital liquidity.


          Immediate Transparency, Oversight, and Market Reform

       Increase Transparency. Require participating firms to 
     disclose to Treasury the

[[Page 22849]]

     value of their mortgage assets on their books, the value of 
     any private bids within the last year for such assets, and 
     their last audit report.
       Limit Federal Exposure for High Risk Loans: Mandate that 
     the GSEs no longer securitize any unsound mortgages.
       Call on the SEC to audit reports of failed companies to 
     ensure that the financial standing of these troubled 
     companies was accurately portrayed.
       Wall Street Executives should not benefit from taxpayer 
     funding.
       Call on the SEC to review the performance of the Credit 
     Rating Agencies and their ability to accurately reflect the 
     risks of these failed investment securities.
       Create a blue ribbon panel with representatives of 
     Treasury, SEC, and the Fed to make recommendations to 
     Congress for reforms of the financial sector by January 1, 
     2009.
  I thank my colleague from New Jersey for allowing me to do this. I 
want to leave with a quote that our colleague, Trent Franks from 
Arizona, gave me tonight, in an e-mail. ``If you love wealth better 
than liberty, the tranquility of servitude than the animated contest of 
freedom, go from us in peace. We ask not your counsels or arms. Crouch 
down and lick the hands which feed you. May your chains sit lightly 
upon you, and may posterity forget that you were our countrymen.''
  It's from Samuel Adams, and I say to those who want to support the 
Paulson socialism plan, this is my message to you.
  Mr. GARRETT of New Jersey. I thank the gentlelady from North Carolina 
for joining us and also for your leadership on this crucial issue, 
perhaps as others have said, one of the most crucial issues we in 
Congress will ever vote on.
  As the lady as said, as the speakers before have as well, we 
recognize the severity of the problem on the U.S. economy, and the 
global economy as well. We recognize that some action by Congress is 
necessary, but we suggest that the proposal that has been proposed by 
Secretary Paulson and ostensibly supported by the Democrat majority is 
the wrong proposal. Therefore, we have stepped up to the plate and 
suggested a House Republican proposal.
  It is not simply us, we here in the House Republicans that suggest 
that the Paulson-Pelosi proposal is not the way to go. In my hand here 
is a list of, I think, several hundred economists, 192 economists from 
around the country, who reviewed it and expressed their view and, very 
briefly, they say we want to express to Congress our great concern for 
the plan proposed by Treasury Secretary Paulson to deal with the 
financial crisis.
  ``We see three fatal pitfalls in the current proposed plan. One, its 
fairness, the plan is a subsidy to investors at taxpayer expense. Two, 
its ambiguity, neither the mission of the new agency, nor its oversight 
are clear; and, three, perhaps most important, it's long-term effects, 
if the plan is enacted, its effects will be with us for a generation.''
  I know the President heard those remarks, it was reported on ABC. 
When he saw this, he said, ``I don't care what someone on some college 
campus says,'' ABC reports. Instead he says he trusts his Treasury 
secretary.
  Well, quite candidly, as a representative of Congress, I trust what 
my constituents are saying about this situation. They realize it's an 
important matter. They realize it's a tightening of the credit markets. 
They realize that something must be done, but they also realize, as the 
economists do, that we should not be putting this on the backs of the 
taxpayers, but, rather takes gentlelady from North Carolina suggests, 
come up with an alternative proposal where the Wall Street players 
would actually be underwriting the cost of the proposal.
  As the gentlelady has put into the record and outlined it, in essence 
what we are doing there is setting up a guaranteed fund, if you will, 
or backing for those mortgage-backed securities.
  I will just digress on how that would work for 30 seconds, think of 
it this way. If you are confident in the way that Washington handles 
your tax dollars today, if you are confident that the way the American 
government, Washington, handled your tax dollars when it came to 
Katrina, if you are confident with the way that Congress handles your 
tax dollars when, year after year, we can't balance our budget like the 
American family has to balance their budget. If you are confident in 
the way that the American government in Washington handles your tax 
dollars when we run deficits of $100 billion, $150 billion, then $200 
billion and $300 billion, now over $400 billion. With this, of course, 
on top of it, would be over a trillion dollars.
  If you were confident with the management of the assets of the 
American government over the past years, then you should be absolutely 
confident that we would be able to set up an agency, either external to 
the Treasury or within the Treasury, to be able to handle $700 billion 
of mortgage-backed security, and that would mean, on the back side of 
those, all the assets of those foreclosed properties that would 
possibly come from that as well.
  Somebody on a TV show earlier said well we did it with the RTC, and 
Secretary of the Treasury Paulson said, well, this is not like the RTC. 
But in a the way it is. We were handling those assets. At some point 
along the line I had to remind the commentator on the program with the 
RTC, it ended up costing the taxpayer around 127 to 147 billion 
dollars, which in today's dollars is around $220 billion. Here we are 
talking about $700 billion.
  If you are confident the American government can do this better than 
anyone else, then support either the initial Paulson-Pelosi proposal or 
any hybrid or compromise from that that still involves that.
  But if you are not so confident, if you have a question of the 
ability of Washington adequately handling those dollars, and if you 
have a question on how this may impact upon the economy and the 
monetization of that debt and the rise in inflation that may have 
followed it this year. But next year, if the production in this country 
does not increase, then you should be looking for an alternative, and 
that alternative is just what the lady from North Carolina has raised.
  As I started my comment, I said, let us therefore not look to those 
who have brought us to this point in the first place, whether it be the 
Federal Reserve, with the loose lending policies that they have had for 
years, or the Congress who refused to step in, as I said, when evidence 
indicated that had there was a problem in the housing market, that a 
bubble was coming, that there was a problem with the GSEs, that's 
Fannie Mae and Freddie Mac but Congress refused to act.
  Let's not go back to those individuals who brought us to that 
particular point for a solution, let's maybe think out of the box and 
look for a solution.
  Another economist recently was published on this matter, to address 
more of the global issue, the larger issue. I will read from this, he 
is Chicago economist Robert Schimer from the University of Chicago. He 
States, as follows, ``Let me mention one other issue that I take very 
seriously. I recognize that this might not matter much to my 
Congressman, but in my view it may be the most important issue for 
global welfare. The U.S. has long been a beacon of free markets. When 
economic conditions turn sour in Argentina or Indonesia, we give very 
clear instructions on what to do: balance the budget, cut government 
employment, maintain free trade and the rule of law, and do not prop up 
failing enterprises. Opponents of free markets argue that this advice 
benefits international financiers, not the domestic market. I have 
always believed (at least since I began to understand economics) that 
the U.S. approach was correct. But when the U.S. ignores its own advice 
in this situation, it reduces the credibility of this stance. Rewriting 
the rules of the game at this stage will therefore have serious 
ramifications not only for people in this country but for future of 
global capitalism. The social cost of that is far, far greater than 
$700 billion.
  So I end where I began, the social cost of our adopting a program, on 
this country, and our children and our future generation will be far, 
far greater than anything we can imagine if we do not do it right.

[[Page 22850]]



                          ____________________