[Congressional Record (Bound Edition), Volume 154 (2008), Part 17]
[Senate]
[Pages 23532-23537]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            FINANCIAL CRISIS

  Mrs. CLINTON. Mr. President, I appreciate very much the extraordinary 
work that has been done with respect to the rescue package, led in a 
bipartisan fashion, which has certainly produced significant changes in 
the original request that came to the Congress from the Treasury 
Department. Tonight we will vote on legislation none of us wish we were 
considering and none of us can afford to see fail.
  The costs of inaction are far too great. We are already seeing the 
consequences of a freezing credit market that will only worsen. I hear 
across my State of New York that small businesses are struggling to 
find affordable loans to keep their doors open and their inventories 
stocked. Even larger businesses are being pushed to the breaking point. 
Throughout the country, the impact of this credit crisis is beginning 
to be felt with students who are seeing the sources of student loans 
dry up, interest rates on car payments are rising, families who had 
saved up and acted responsibly are seeing higher mortgage rates 
shrinking their dream of home ownership.
  Our economy runs on credit. Underlying that credit is trust. Both the 
credit and the trust is running out. Essentially, what we are doing in 
an intangible way is restoring trust and confidence, and in a very 
tangible way helping to restore credit. Banks will refuse to lend to 
businesses and even to one another; investors continue to withdraw to 
the safest investments: Treasury bills, even cash. Tens of thousands of 
jobs in New York have been lost. A study this morning projected that 
New York alone would lose at least 120,000 jobs.
  I think we are here in some respects because we failed to tackle a 
home mortgage crisis. Now we are facing a market crisis. If we fail to 
tackle the market crisis, we risk an even deeper economic crisis. I do 
not think any of us want to see irresponsibility on Wall Street 
compounded by ineffectiveness in Washington.
  That is why we must act, even as we do so with regret and 
reservations, because we have little choice. The proposal we are 
considering is far from perfect, but it is a far cry from the original 
plan sent over by the Treasury Department that instilled virtually 
unlimited powers in the hands of the Treasury Secretary. As I said when 
we first examined that original three-page proposal, we needed a plan 
that included checks and balances, not a blank check.
  Thanks to the leadership in the Senate and in the House, we have 
negotiated through the Congress, on a bipartisan basis, a better 
alternative that instills taxpayer protections, asserts oversight, and 
maintains greater accountability.
  As is the case very often in effective compromises, no one is happy. 
But we cannot let the perfect be the enemy of the good--or in this 
case, the enemy of what is necessary. But as we vote for this proposal 
tonight, we must do so considering what steps we will take next.
  On the floor at this moment are three of the leaders who shaped this 
plan under the very able leadership of Chairman Dodd, and the chief 
Republican negotiator, Senator Gregg, and, of course, the chairman of 
the Finance Committee, Chairman Baucus. But I think we all recognize 
this is not the end but the beginning of what we must do. I believe 
there are three big goals we will have to address even after we pass 
the rescue package tonight in the Senate and send it over to the House.
  First, we must address the home mortgage crisis. For 2 years, I and 
others have called for action as wave after wave of defaults and 
foreclosures crashed against communities and the broader economy. We 
are not yet through the woods. Millions of mortgages are underwater or 
under the specter of adjustable rates set to rise.
  I am proposing what we are calling the Home Owners Mortgage 
Enterprise, an acronym obviously spelling ``home,'' to rewrite 
mortgages and homes so that creditworthy, responsible families can keep 
their homes and keep making affordable payments. Through such a HOME 
program we would also be able to consider freezing adjustable mortgage 
rates and even placing a short-term moratorium on foreclosures.
  When our country enacted a similar program in the Great Depression, 
we saved 1 million homes without costing the taxpayers a dime. In fact, 
the program ended with a surplus. Only by rewriting the terms of the 
debt held by families whose mortgages can be salvaged will we recoup a 
great deal of the value of the debt we are purchasing from Wall Street 
firms.
  I also believe we need to consider a real tax credit for home buyers 
to jump-start the housing market. This has been an effective tool in 
the past, and it can be an effective tool again. We have too much 
supply and too little demand. Getting the liquidity that will be 
injected into the credit markets to work its way through the entire 
economy will take time. I think we need not only a supply of liquidity 
but an increasing demand, particularly in the housing market.
  Second, we must be vigilant on behalf of taxpayers, putting in place 
safeguards so the Treasury is maximizing the value of the assets 
purchased with taxpayer dollars.
  We need to have the flexibility to ensure we are not just subsidizing 
investors and executives, but we should tie this debt relief to strong 
recapitalization requirements and greater accountability.
  I also want to be sure that companies do not take undue advantage of 
this program and sell securities to the Treasury with one stroke of the 
pen and claim a deduction for the losses on those assets--in essence, 
double dipping, dumping their bad assets on taxpayers and getting a tax 
break as well.
  I am proposing we build on a very creative provision in the bill 
before us and establish an e-TRUST program.

[[Page 23533]]

That will stand for Transparent Rules Used to Safeguard Taxpayers. In 
the bill there is a provision that transactions be put on the Internet. 
I wish to ensure that the assets bought and sold by the Treasury 
Department are reported online in real time so any American can log on 
and see how their tax dollars are being spent. All assets bought and 
sold must be available on a publicly accessible Web site that discloses 
the buyers, sellers, and values of these assets. The American people 
are buying these securities, and so the American people must have easy 
access to their portfolio.
  It is also important to the American people to understand that lying 
behind these complex transactions with all kinds of long names that you 
read in the newspaper--collateralized debt obligations and credit 
default swaps and all the other words that are used to in some way 
explain the complex financial transactions that brought us to this 
place--are real assets. There are real homes owned by real people on 
real land in real communities across America.
  So we want to know how those securities that stand in for these real 
assets are being traded, bought and sold, and we want to be sure we 
realize for the taxpayer the benefits of these transactions.
  Third, I think there is general agreement we must pursue a broader 
reform. That is one of the lessons of this turmoil. I know Chairman 
Dodd and others will be holding hearings to try to untangle how we got 
to where we are. We know we have to rein in executive compensation by 
giving shareholders a greater role in and eliminating loopholes that 
allow boards to conceal the value of salary packages. We have to end 
the quarter-by-quarter mentality in which long term prosperity is 
subverted by short-term stock valuations. Obviously, we have to end the 
culture of recklessness in our financial markets endorsed by an 
ideology of indifference in Washington.
  If the American people invest in these companies, I think we should 
ask the companies to invest in the American people. I think we should 
consider requiring financial institutions participating in this 
Treasury plan to create an American priorities fund, to be part of 
their portfolio, to invest in clean energy, infrastructure, mass 
transit, manufacturing, education and other public goods and goals that 
would be well served by greater private investment.
  Along with the rescue package will be a number of tax credits that 
will be passed by the Senate tonight. Again, Chairman Baucus has done 
yeoman's work getting these tax credits put together. The Senate 
supported them before. In it is a fix for the alternative minimum tax 
and an energy production tax credit.
  In fact, we will be stimulating the economy for Main Street while we 
pass this rescue package for our credit markets. I think that is the 
right combination. But we need to do more. Instead of toxic securities 
that nobody can understand, are so complex and lack all transparency 
and accountability, banks should be investing in clean energy 
facilities in Buffalo or new auto manufacturing plants in Detroit to 
build more fuel-efficient cars.
  We should be repairing our bridges, our roads, our tunnels. We should 
be investing in high-speed rail and making sure Amtrak is not a second-
class railroad but competes with the best anywhere in the world.
  I think the agenda before the Congress is a very important one for 
our country. We cannot continue to shuttle from crisis to crisis. This 
is a sink or swim moment for our country. We cannot merely catch our 
breath. We must swim for the shores and we must do so together, not 
only as a united Congress but as a united country. There is so much 
work to be done in America, so many investments that make us richer and 
stronger and safer and smarter that will enable us to look in the eyes 
of our children and grandchildren and tell them we are leaving our 
country in as good, in fact, better shape than when we found it.
  At this moment, we cannot say that. But I am absolutely sure, based 
on the bipartisan cooperation we saw on this bill, in responding to a 
real crisis, that we will see more of that in the months ahead.
  Our new President will certainly demand it of us, but we should be 
demanding it of ourselves and demonstrate to the American people that 
the Congress will lead the way into a much more confident and 
optimistic future for America.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Connecticut.
  Mr. DODD. Mr. President, I wish to thank the Senator from New York. 
She was eloquent and hit right on the exact theme. I think this is a 
sad moment in many ways but a moment we have to confront. As she so 
aptly describes, it is our job now not just to deal with this crisis 
but to put our country on a better footing. So I thank her for her 
message and her words today.
  Mr. GREGG. I ask unanimous consent that I be recognized for 10 
minutes, and at the conclusion of my remarks, the Senator from Montana 
be recognized.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. GREGG. I further ask unanimous consent that when we get into the 
debate and the time has been divided, the Republican Members have 10 
minutes to speak on the matter.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. GREGG. Mr. President, first, I wish to recognize and acknowledge 
the Senator from Connecticut, the chairman of the Banking Committee, 
for the tremendous work he has done over the past few days to bring 
this piece of legislation to this point.
  This is an emergency. This is a crisis. Those terms are often 
overused. In this instance, they are not being overused. We know the 
financial markets are under extreme duress. We have seen some of our 
largest and most significant financial institutions fail or be 
reorganized in the last few weeks.
  We also know, regrettably, that the credit markets are basically 
locked up and that credit on Main Street is disappearing, that people 
are not able to get financing for the payrolls, financing for 
inventory, financing to buy a car, send children to school, rebuild the 
local hospital, rebuild the local school system. This is not a virtual 
event, it is not an event of theory, this is a real event of very 
severe economic consequences.
  Action has to be taken. The chairman of the committee, working under 
a bipartisan, bicameral format with the Secretary of Treasury, has come 
up with this proposal to try to address this issue. Is this the answer 
to the entire problem? Obviously not.
  The way I describe this is we have a patient who has suffered a 
severe wound and is bleeding profusely. We are going to try to put a 
tourniquet on that patient so we can stabilize their condition, get 
them to the hospital, and hopefully take other action which will cure 
them and get them back on their feet, specifically get the economy back 
on its feet, make sure Americans are able to go to work and enjoy a 
prosperous lifestyle.
  This proposal, as it came from the Treasury, was simple, with a 
purpose of basically going forward with a significant amount of 
taxpayers' dollars, $700 billion, taking those dollars and buying 
investments. That is an important point to remember, because there has 
been a lot of misrepresentation, regretably, demagoguery and hyperbole 
about how we are throwing money at Wall Street. That is not the case.
  What is happening is we will be purchasing assets, assets that have 
value. The Federal taxpayer will own those assets. Down the road, we 
will probably sell those assets, and we will actually get money back in 
for the taxpayer, into the Federal Treasury. We may actually break 
even, we may lose some money, but it is more likely, in my opinion, 
that we will come close to breaking even, and we may actually, some 
people tell us, make money for the taxpayer. But this is not $700 
billion out the window.
  In doing this effort, we are going to free up credit, credit on Main 
Street, that makes it possible for people on Main Street to do what 
they usually

[[Page 23534]]

do. America runs on readily available, reasonable, affordable credit. 
Every American has credit on something: their credit card, their home, 
their car, their kids going to school, the little company they work 
for, if they work for a mom and pop, and even a middle-sized company 
probably has credit to make their payroll, probably has credit to buy 
the inventory. All this is necessary in order to keep the economy 
going. Yet today we are seeing it dry up and we are seeing it freeze 
up.
  We are going to try to relieve that pressure so Main Street can 
operate as it should. In addition to what the Treasury Secretary felt 
he needed to free up that credit, we as a Congress felt we needed to do 
some other things. We needed to protect the taxpayer, and we have done 
that in this bill. Every dollar that comes into the Treasury as a 
result of reselling these assets will go to reduce the Federal debt, it 
will not go to create new programs, it will go to reduce the Federal 
debt.
  In addition, we wished to make sure nobody is going to game the 
system, nobody is going to make a lot of money on this at the expense 
of the taxpayer. So we have language in here that limits, and 
eliminates in some instances, any sort of golden parachute, limits the 
salaries of the heads, the CEOs of these major companies who may take 
advantage of this, and basically eliminates, as a result of the efforts 
of the Senator from Montana and his good ideas, eliminates the tax 
deductions for high-income individuals above a reasonable amount.
  In addition, as a result of the leadership of the chairman of the 
committee, again, we focused a lot of attention on making sure we can 
keep people in their homes. We do not want people foreclosed on, and 
interestingly enough, as a result of the Federal Government buying 
these assets, which we will be buying, which are mostly mortgages, 
mortgage-backed securities, which we will be buying at 20 or 30 percent 
below face value, we as a government are going to be in a position to 
reorganize the mortgages of people who today cannot meet their payments 
because they bought a subprime mortgage and, as a result, they could 
not make the mortgage payments when the mortgage reset.
  We are going to be able to adjust those mortgages. If a person lives 
in their property as a personal residence, and if they have a 
reasonable income, hopefully, we will be able to structure it so they 
can stay in that property today, something they most likely would not 
be able to do if the economy played out in the present scenario.
  So we are going to keep people in their homes and protect their 
opportunity to participate in a reasonable mortgage; at the same time, 
maybe make money for the taxpayer, because once those mortgages start 
to perform again, they become more valuable, and we can resell them 
into the market.
  Fourthly, we address the issue of oversight. We create massive 
transparency so everybody is going to know what is happening. As was 
mentioned earlier by the Senator from New York, things will be going up 
on the Internet, so people know what is happening, plus we have 
significant oversight. We have a board headed by the Federal Reserve 
Chairman to oversee the Treasury Secretary; we have a board for the 
Congress to oversee the Treasury Secretary. We have a new inspector 
general just for this issue, a new GAO initiative just for this issue.
  There will be significant oversight so taxpayer dollars are watched 
carefully so we know proper actions are being taken. We heard from our 
colleagues in the House of Representatives that they had concerns in 
the area of give us an option of an insurance program. So as the 
negotiations went forward, we put in the option of an insurance 
program.
  We heard from colleagues on the Democratic side: Make sure the 
taxpayers have an option, so if we do not recover all the money we put 
in, if there is some shortfall, there is an ability to go back to these 
financial institutions 4 or 5 years from now, when they are a little 
stronger, and get a payment to cover that shortfall. That option is in 
there.
  Then, in addition, we have expanded the FDIC coverage with this bill 
so people can have confidence in the money they are putting in their 
savings accounts, in their checking accounts, in banks, is going to be 
safe, and they do not have to move it around and maintain these 
artificial caps in their accounts. So that step is forward.
  This is a plan that addresses the needs of the Main Street America 
through freeing up credit, but it also does it with a lot of efforts to 
protect the taxpayer, protect the mortgagee, have the proper oversight, 
and do it in a way that is constructive and, hopefully, returns revenue 
to the Treasury rather than cost the Treasury revenue.
  Is it the answer to the whole problem? No. Please do not assume that 
after we pass this bill--and hopefully we will pass this bill--suddenly 
the light is going to shine on the American economy. We are in for a 
difficult economy for a considerable period of time. We know that. 
Other institutions will be under significant pressure. Regrettably, 
probably some of these institutions will not survive this economic 
situation.
  But the option of not doing anything at this time is to virtually 
guarantee that we as economy will begin a very significant downturn of 
disproportionate impact on people on Main Street. People will lose 
their jobs, people will lose their savings, people will find that they 
cannot get the credit necessary to keep their businesses open or to 
function at a reasonable level.
  There is no question that if we do not get the credit markets working 
again, we will face a dramatic downturn of proportions which we have 
not been seen in my lifetime in the United States of America and in our 
economy
  It is something we should not risk. We should not roll those dice. 
This is a program which we can do. It may not cost taxpayers anything. 
But if it does cost taxpayers something, it is not going to be a 
dramatic amount of money. We can do it with proper safeguards, as we 
have. As a result, it is an action we should take as a Congress, as 
representatives of our citizenry, in order to fulfill our obligation to 
make sure that when you see an impending crisis you know is going to 
have a huge adverse effect on the people you represent, you move on 
that crisis, you take action, and you try to revolve it.
  That is what this proposal does. It is not the answer to all the 
problems we have in this economy, but without it, we are going to have 
a much more severe and difficult time.
  I yield the floor.
  The PRESIDING OFFICER (Mrs. McCaskill). The Senator from Connecticut.
  Mr. DODD. Before yielding to Senator Baucus, I announce that I have a 
number of Senators who I ask consent be recognized for 5 minutes: 
Senators Baucus, Mikulski, Brown, Cantwell, Harkin, Conrad, Casey, Bill 
Nelson, Reed, Durbin, Obama, Schumer, Boxer, Menendez, and Kerry.
  The PRESIDING OFFICER. Is there objection?
  Mr. BAUCUS. Madam President, reserving the right to object, I wonder 
if I could amend that to 15 minutes.
  Mr. DODD. Let's make it 12 minutes for my colleague from Montana.
  Mr. BAUCUS. Given the gravity of this legislation, that time was a 
little short.
  The PRESIDING OFFICER. So amended. Without objection, it is so 
ordered.
  The Senator from Montana.
  Mr. BAUCUS. Madam President, a cloud hangs over the American economy. 
It is a cloud made up of thousands of failures, and it is casting a 
shadow over our country. This cloud of failure is so vast that we have 
a hard time seeing where it starts and where it ends. This cloud is so 
thick, we cannot see all the dangers it hides. We cannot tell even if 
there is light right on the other side. And this cloud is moving fast. 
It is speedier and stormier than most of us have seen in our lifetimes. 
This cloud over the American economy contains the failures of people 
whom we trusted to make this country prosper. It holds the failures of 
many national institutions, their failure to be prudent, to be honest. 
This cloud is made up of the failures of the private and public 
institutions that are supposed to safeguard our financial security. 
Instead, they let it slip away.

[[Page 23535]]

  Americans are frustrated by the negligence that let this cloud of 
economic crisis take shape. This week, many Americans were angry that 
the Government seemed at first to want to shelter Wall Street from the 
rain but not America's working families. I share Americans' concerns. I 
share Americans' frustrations. I share their anger.
  I am pleased today because the Senate has heard America's voice. The 
bill the Senate will consider today improves the Treasury Department's 
original plan. We made it better. We made this bill work better for 
working families who are already weathering financial storms and who 
now face more rainy days because of Wall Street's greed.
  The collapse of the financial markets does not sound like Main 
Street's problem. Most Americans are too busy making ends meet to 
figure out how frozen credit markets and a shortage of commercial paper 
affect their lives.
  To most Americans, banks not lending to other banks sounds like a 
bank problem, not their problem. But these haywire markets are 
everyone's problem, and here is why.
  If a bank cannot get credit, neither can its customers. Its customers 
are the local hardware store, the car dealership down the street. Its 
customers are college-bound young people and the new neighbor who just 
bought the house next door. These good people rely on their bank to pay 
their invoices and make payroll on time. The funds they depend on are 
also now beginning to dry up. For example, a Montana businessman called 
me this week. His company has an $11 million outstanding loan, a 3-year 
loan. He uses it to keep his business stocked with inventory. The bank 
has called that loan in. That 3-year loan is now being called in. He 
must pay it off, according to the bank, in the next 90 days--not 3 
years, 90 days. The crisis is coming home for him now, that is for 
sure, and that threatens other good people.
  If the hardware store and the car dealership lose business, pretty 
soon employees and suppliers get hurt. If a neighbor cannot get a 
mortgage, painters, movers, and handymen will have one less paying job. 
The young person who cannot afford college without a loan and the lady 
hoping to rent out her basement apartment or the guy who sells school 
books might come up a bit short. This financial crisis is closer to 
home than we realize. It affects Americans who earn an honest living, 
follow the rules, and work hard.
  Honest Americans about to get hit harder by the financial storm are 
the reason I worked to improve this plan. Working families are the 
reason I insisted on tax relief for struggling homeowners who can't pay 
the mortgage and can't afford a tax hit when their indebtedness is 
forgiven. Working families are the reason I insisted on help for 
hometown banks in Montana and elsewhere that suffered when stock prices 
fell because of Wall Street's greed--not their fault at all, not the 
bankers, the Main Street bankers in our States. Working families are 
the reason we all insisted on finding a way to get back much of the 
money spent on this plan.
  The Treasury will buy assets with the money it spends. Later, the 
Treasury can sell those assets or hold them to maturity. In either 
case, there is a good chance the Treasury will get back some or all of 
these dollars. When I say the Treasury, those are taxpayers' dollars. 
This bill, therefore, gives American taxpayers a stake in the companies 
they are helping and a share in their future profits. The American 
taxpayer's pocket should be the last place companies look for a 
bailout, but when these companies do ask for help, the American 
taxpayer should be the first to benefit when the firms get back on 
their feet. This bill makes sure of that.
  Americans taxpayers are the reason I insisted on cutting paychecks 
and closing golden parachutes of Wall Street executives. In just the 
past 5 years, the five biggest Wall Street firms paid more than $3 
billion to their top executives--5 years, five biggest firms, $3 
billion to their top executives. That is not right. It is not right for 
executives to get more big paychecks while their companies are getting 
assistance from the Government. If companies ask for taxpayer help on 
the one hand, they can't give out big executive bonuses with the other. 
This bill limits compensation to executives with golden parachutes.
  The Treasury will have to issue guidelines on cutting executive 
compensation. The Treasury Secretary will have to say: You can't play 
if you are going to overpay. These provisions are helpful, but we have 
a lot more in this legislation, even more guidance given to the 
Treasury Secretary on executive compensation.
  I also developed some provisions to cut tax breaks companies get for 
executive pay and to make sure executives pay tax on more of their 
income than they do today. I don't want Main Street to subsidize 
severance pay on Wall Street.
  For taxpayers' sake, I also wrote a provision creating a special 
watchdog to track and protect taxpayer dollars. I said that American 
resources must be used wisely and efficiently. This bill includes my 
proposal to create an independent inspector general to oversee this 
effort, this effort and nothing else, solely designed for this problem. 
I designed the office of this inspector general to be truly 
independent, with the necessary resources to fight for every taxpayer 
dollar. I designed this inspector general to be accountable only to 
Congress and to the American taxpayer. It will be my personal mission 
to make sure this watchdog does his or her job. I want this inspector 
general on the ground in New York inside the firms that facilitate 
Treasury auctions, watching every dollar that comes and goes. This 
investigator will hear from the Finance Committee as we work to protect 
the American people's interests in this effort.
  Finally, America's working families are the reason I am so glad this 
bill now includes tax relief. Last night, Senators Reid and McConnell 
announced that this bill would include Senate-passed legislation--that 
is, earlier passed--that will create and extend tax incentives for 
renewable energy to protect 20 million Americans from paying what is 
called the alternative minimum tax and also extend a number of vital 
expiring tax credits for businesses and families. This is the right 
call. Adding this tax relief will ensure that regular working Americans 
get financial help in this time of crisis.
  As soon as this legislation passes, good-paying jobs will open in 
green energy, as wind and solar projects get up and running. Twenty 
million Americans who can't afford a higher tax bill are protected from 
the alternative minimum tax. Families will get a break on college 
tuition, classroom expenses, and State and local sales taxes, and 
companies will get tax relief to do research and development, to grow, 
to offer even more good-paying jobs. Adding tax relief that creates 
jobs, supports families, and secures a new energy future for the 
country makes this bill a lot fairer for hard-working Americans.
  A ``yes'' vote on the financial rescue plan is now a vote to rescue 
America's working families from this financial crisis with the right 
tax relief at just the right time. It is now time to act.
  As a Senator, I was disturbed by this administration's attempt to 
rush through a bill for business. But as an American, I am disgusted 
also by the negligence and greed that got us into this mess. But at 
this time of crisis, we must not let our anger paralyze us. So many 
have failed to act responsibly. We must do better. We here in the 
Senate cannot fail. Failure to act would make today's economic cloud 
even bigger and more dangerous. Failure to act could unleash the 
lightning bolts of recession and the downpour of unemployment. Failure 
to act could turn this cloud into a storm that tears through our entire 
economy.
  The plan in front of us is not perfect. I wish we did a lot more 
here. I wish we did not have to be where we are. I know many Americans 
do not want it. But this is the best way to quickly disperse this 
economic cloud and guard against a bigger storm. Like it or not, we 
must have a plan big enough to counter our economic woes in a 
systematic, comprehensive way.
  I will vote for this legislation because America is under a cloud, 
and we

[[Page 23536]]

cannot linger here. Congress must make sure this crisis does not get 
worse. With the addition of significant tax relief to this legislation, 
Congress can actually lift the cloud a bit. Tax relief will make things 
a little better for Americans feeling financial hurt.
  With this vote, Congress must also promise the American people that 
this will never happen again. The lesson of the cloud must lead us to 
build a strong financial framework that will not falter again. The 
lesson of the cloud must lead us to seek a brighter future for every 
American family that helps us to weather this storm.
  I yield the floor.
  Mr. ISAKSON. Will the Chair please notify me when 7 minutes has 
expired?
  The PRESIDING OFFICER. The Chair will notify the Senator.
  Mr. ISAKSON. Madam President, I stand before you today and perhaps 
later on this evening to cast what is without question the most 
challenging vote and the most important vote I have been asked to cast 
in 30 years as an elected official. I will vote in favor of the 
economic stabilization bill because it does precisely one thing that we 
can do to help unlock the credit markets and help the average working 
Georgian, the average Georgia retiree, the average Georgia child who is 
looking to the future, to benefit from what right now is a very 
difficult situation.
  I commend Senator Dodd for his leadership and Senator Gregg for his 
leadership. They have expended countless dollars in terms of political 
capital and countless hours to come up with a solution that works.
  There are so many misunderstandings in the public about what this is 
and what this isn't. So just for the few minutes I have, I wish to talk 
about the core of it, why it is so important, why it makes sense, and 
why in the end we as a country will not only benefit but, more likely 
than not, we will profit from the investment our Treasury makes.
  The core of this is the $700 billion authorization to buy mortgage-
backed securities that are on the books of banks, savings and loans, 
insurance companies, and other entities in the United States.
  The first misconception is that the money is going to Wall Street. 
Wall Street is not being bailed out. Everybody has forgotten that 
Lehman Brothers went broke. Merrill Lynch sold itself for 30 cents on 
the dollar. Bear Stearns sold itself or merged for 10 cents on the 
dollar. And AIG is paying the taxpayer 8.5 points over LIBOR to borrow 
$84 billion to dissolve itself. Those are no bailouts. This money goes 
to those who purchase the securities that were underwritten by Moody's 
and Standard & Poor's as investment grade and hold them on their 
balance sheets as an asset which is now valued virtually at zero.
  As the Treasury comes in and Secretary Paulson buys these securities, 
he will make a market in these securities. Once he makes a market, 
there will be attraction of other investors to jump in for a very good 
reason. I don't know what price they will establish, but say it is 50 
cents, 60 cents or 70 cents on the dollar. A lot of people don't 
realize that most of these securities, though some of them are in 
trouble, are not in trouble to the extent of 20, 30, or 40 percent.
  By way of example, the worst foreclosure rate in the United States is 
the State of Nevada--19 percent. If you had a mortgage-backed security 
that was 100 percent mortgages in the State of Nevada, then, with a 19-
percent foreclosure rate, if those foreclosures sold for nothing at 
sale, then that bond would be worth 81 cents on the dollar at maturity. 
If somebody paid 50, 60, or 70 percent for it, they would have an 11-, 
21-, or 31-percent margin in that security. The power to hold it to its 
maturity and the power to buy the security and make a market is what 
makes this a genius proposal from the standpoint of getting to the 
heart of the American problem.
  Then what it does is it establishes three things. One, it establishes 
a floor. I want to go back to what Senator Gregg said a few minutes 
ago. Inaction on the part of the Congress this week on this plan will 
continue a downward spiral that will accelerate, will deepen, and will 
touch the life of every American citizen, and it will touch it and harm 
it for a long period of time.
  If we are able to pass it, and quickly go to the marketplace and 
establish the market for these securities, we create a foundation from 
which, over time, we can grow out of this. Americans' credit will be 
back again, albeit much tighter than it has been before. And it should 
be because we should have learned the lessons from some of the excesses 
of lending operations before. But credit will return.
  What will happen is people will continue to have their jobs. What 
will happen is people who need to sell a house will now see that people 
are coming back into the marketplace so they can sell it. All in all, 
by loosening what is now a clogged credit system at mainstream banks 
and savings and loans all over the United States of America, we will 
return a sense of normality to the American economy. The failure of the 
Congress to do that will establish a continued downward spiral that 
will be a disastrous for the individual average American in whatever 
State they live.
  So for me this is a difficult vote because you never want to find 
yourself in this situation. But tonight is not a night to say no to the 
future of the American people. Tonight is not a night to say no, we do 
not have a responsibility to help. Tonight is not a night to try to 
find some philosophical way to figure out how somebody else ought to do 
it.
  It is on the shoulders of the Congress of the United States of 
America. The people affected are our citizens, the people who have 
voted for us and sent us here. It is absolutely critical we unclog the 
financial markets, free up credit to the average American and, over 
time, restore the American economy to what it has been and always will 
be: the best entrepreneurial capitalistic system in the world. But 
failure can sign an end to that very reputation this country so loves 
and so deserves.
  I yield back the remainder of my time.
  The PRESIDING OFFICER. The Senator from Maryland is recognized.
  Ms. MIKULSKI. Madam President, I believe I am part of the Democratic 
queue. Therefore, I seek recognition to discuss the so-called rescue 
plan.
  The PRESIDING OFFICER. The Senator is recognized for up to 5 minutes.
  Ms. MIKULSKI. Well, Madam President, I am here to talk about this 
rescue plan. Regrettably, a rescue plan is needed because I am afraid 
if we do not act today and we do not act with resolve, our economy 
could come to a crashing halt. I am afraid of massive layoffs. I am 
afraid of small businesses folding. I am worried that retirement and 
pension funds could shrink. Therefore, I will vote for this bill, but 
know that, like the taxpayers, who I know are angry and mad as hell, so 
am I. We all agree that greed on Wall Street and lax regulatory 
practices of this administration got us into this mess. Taxpayers who 
played by the rules are asking tough questions. What are their 
questions?
  Barbara, what did you do to prevent us from getting into this? What 
are you going to do to make sure it does not happen again? And what are 
you going to do to make sure that heads roll?
  Well, let me tell you this: Heart and soul, I am a regulator and a 
reformer. Time and time again, we have seen the consequences of a lax 
regulatory culture and very wimpy enforcement. Time and time again, I 
voted for more teeth and better regulation. I voted for regulation and 
more teeth in the Consumer Product Safety Commission to get lead paint 
out of toys and the lead out of the bureaucracy. I voted to strengthen 
FDA regulation to make sure it did not approve dangerous drugs. I also 
worked to stop predatory lending and flipping in the mortgage market.
  I remember way back in 1999 how all this banking mess got started. 
Phil Gramm, a Senator from Texas, and Bliley, a House Member, advocated 
something called the banking deregulation bill. It passed, and it got 
us into this mess because it got rid of the distinction between 
investment banks and

[[Page 23537]]

commercial banks, and lowered the bar on regulation. It allowed for 
casino economics.
  During that debate, and that vote, I was one of nine Senators who 
voted against it because I said with what we were doing we were going 
to create an environment where we were creating whales and sharks, and 
the minnows would be eaten alive. Well, regrettably, my prediction 
proved right. During that debate, I was told: Get with it, Barb. We are 
in a global market. You are kind of old-fashioned.
  You bet I am old-fashioned. I believe in old-fashioned values called 
honesty, integrity, putting the public good above private interests. 
Wall Street went around acting as if they were masters of the universe. 
Now they have taken us into a black hole in our economy.
  We need to get back to basics, whether it is regulating toxic 
securities or tainted dog food. Our leader, Senator Dodd of 
Connecticut, has done a masterful job in improving this bill.
  But while we are looking at reform and regulation and rescue, there 
are those who also say: Are there going to be any heads that roll? 
Well, you bet. What we are doing here is for those who said ``let the 
good times roll,'' we are making sure we are bringing in the FBI so 
that heads roll.
  I went to work when I smelled this crisis coming in January and at an 
Appropriations hearing said to Director Mueller of the FBI: What is 
happening in terms of mortgage fraud? He said: Senator Mikulski, we now 
have over 2,000 investigations going on. It has now tripled in number. 
I said: Do you need money?
  He did not want to answer because OMB, the Bush administration, did 
not want to say they did. But working on a bipartisan basis, we added 
several million dollars to hire more FBI agents. And right this minute, 
they are investigating mortgage fraud, predatory practices, deceptive 
marketing, lending schemes, and so on.
  So Senator Mikulski, while voting for reform, also made sure she has 
the FBI coming in against the scam artists who also helped get us into 
this mess.
  So, yes, I have supported reform. Yes, I have supported going after 
the real crooks and the bad guys. Because not everybody in the mortgage 
market or in mortgage securities or in our financial matters is a 
crook. But we have to restore confidence. The way we will restore 
confidence is to vote for this rescue plan. It will deal with the 
credit crisis. If we do not deal with the credit crisis, I believe that 
Main Street economies will pay the bill, we will have to pay the bill 
for the bailout, and we will pay the bill once again in lost jobs, the 
ability to get a loan, and also with shrinking retirements and 
pensions. So, Madam President, I will vote for this bill. But I have 
heard the taxpayers loudly and clearly.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Madam President, once again, I thank my colleague from 
Maryland. We have served together a long time here over the years, and 
her passion, her eloquence are consistent in that same voice I heard 
several decades ago as a new Member of the House of Representatives. 
She has never retreated from those values. Once again, I heard them 
again today.
  She is absolutely right, in my view, and I will speak at some length 
why this legislation is necessary, but also, as importantly, that the 
steps be taken so we never see America face another day such as this 
one again. So I thank my colleague from Maryland.

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