[Congressional Record (Bound Edition), Volume 155 (2009), Part 19]
[House]
[Pages 26593-26599]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              THE ECONOMY

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2009, the gentleman from Ohio (Mr. Driehaus) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. DRIEHAUS. Thank you very much, Mr. Speaker.
  I appreciate very much listening to my Republican colleagues. I, too, 
came in in the freshman class, along with my Republican colleagues, and 
I came to the floor tonight, Mr. Speaker, to talk about the economy and 
to talk about regulatory reform and what we're doing to address the 
foreclosure crisis here in the United States. But I can't allow some of 
the comments that I just heard go without challenge.
  I heard it said that we've only been given 72 hours to read the bill. 
Now I think, Mr. Speaker, you probably remember back at the end of 
July, there was a push to try to vote on the health care plan. I, along 
with you, I believe, and many others suggested that the American people 
have time, that they have time to read the health care bill, that we 
have time to digest this. We went home. We held town meetings. I don't 
know about the other Members of Congress. I know I had more than 100 
meetings on health care during that time period. So we have had far 
more than 72 hours.
  But then they said, We need 72 hours for this particular bill. So the 
bill, itself, which is simply a modification of bills that we have been 
discussing, that we've been hearing in committee, bills that we have 
been meeting on for months was introduced on Friday. I put it on my Web 
site. Many people put it on their Web site. There has been plenty of 
time. If you want to oppose health care, then obviously that is up to 
you to oppose health care. But let's not hide behind this thing about 
72 hours. We have had months to discuss this. We will have far more 
than 72 hours to look and review the bill at hand.
  I also want to talk about small businesses, because I know, Mr. 
Speaker, you and I have worked very closely on this in protecting small 
businesses in the health care reform bill. As you recall, the bill as 
originally introduced had a threshold of $250,000 for payroll. That is, 
any small business that had more than $250,000 in payroll would be 
subject to a surcharge, a surcharge where they pay their fair share. 
That has been increased in this bill to $500,000, a significant 
increase for small businesses. I don't know what businesses my 
colleagues from the Republican side are visiting, but I can tell you 
when I go out to small businesses, be they Democrat or Republican, 
they're talking about their premium increases. They're talking about 
their premium increases of 20 percent, of 30 percent. The fact of the 
matter is, Mr. Speaker, this is all about small businesses. This is 
about protecting small businesses. Because right now in the State of 
Ohio, the State I hail from, less than 50 percent of small businesses 
are able to provide health care to their employees; less than 50 
percent. It's because of those rising costs. So while they say it does 
nothing for individuals, well, they're absolutely wrong. If you're an 
individual working for a small business and the employer cannot afford 
health care, this bill helps you; it helps you, and it helps your 
family. If you're an individual with a preexisting condition, you 
happen to be ill and you need to get health insurance, you can't do it 
right now. Does this bill help those individuals? Absolutely. If you're 
an individual that has health insurance and you happen to get sick, and 
you need to draw upon that health insurance, right now you can be cut 
off. This bill says, No. You can't do that any longer. The insurance 
company can't stop covering you for your illness. So this bill is all 
about helping small businesses and helping individuals.
  I would encourage my colleagues to read the bill. Yes, it's long. But 
we're beyond chapter books at this point. We are able to read long 
bills. It's long because this is a comprehensive piece of legislation, 
and I think it deserves debate. It deserves far more than rhetoric. But 
rhetoric is what you tend to hear when you come down to the House 
floor. Rhetoric is what you tend to hear when Republicans line up and 
give 1-minute speech after 1-minute speech after 1-minute speech, be it 
about energy or health care or the economy. The other side of the aisle 
is big on rhetoric, but they're not big on solutions, nor are they big 
on taking responsibility. They act as if they weren't here. They act as 
if they weren't in charge since 1994, that they weren't elected in the 
Newt Gingrich majority, that they didn't have power until 2006. But the 
fact of the matter is that they were the party in party. They were the 
party in control. They were the party as this housing crisis spiraled 
out of control. They were the party as the rising costs of health care 
kept mounting and mounting and mounting and harming our small 
businesses and harming our economy.


                            The U.S. Economy

  For the 8 years prior to being elected to Congress, Mr. Speaker, I 
was a State representative in Ohio. I come from a working-class 
neighborhood in Cincinnati, and I saw house after house being 
foreclosed on. Now I didn't know what was happening in 2001. I didn't 
know what was happening in 2002. So we put together a housing task 
force, and we started asking questions. We started looking into some of 
these loans that were being floated to my neighbors, to folks in my 
neighborhood to figure out why these houses were

[[Page 26594]]

going into foreclosure. And it was interesting. We found that people 
who never should have qualified for loans were suddenly qualified. 
People that couldn't even document that they had the income to purchase 
a home were qualifying for home loans. Then, of course, they couldn't 
afford to pay the mortgages, and those were the houses being foreclosed 
on. We call these subprime loans. When people who can't afford to pay 
their bills, people who have poor credit scores are able to get a loan, 
those are subprime loans, as opposed to people who do pay their bills 
and they do have high credit scores. Those are prime loans.
  So we looked at this, and we looked at some of the practices of the 
financial institutions, and we just scratched our heads and said, Well, 
how is it that a financial institution can float a loan to somebody 
that can't prove their income, can float a loan to somebody that has a 
poor credit history, yet they're purchasing an $80,000 home, they're 
purchasing a $120,000 home? How is this happening?
  Well, the answer is, Mr. Speaker, it was all about what was going on 
on Wall Street. It was all about what was going on on Wall Street 
because what was going on on Wall Street was that people were making a 
lot of money, and they were making a lot of money off of these products 
that are called derivatives or mortgage-backed securities or credit 
default swaps.

                              {time}  2030

  The world had changed in the area of mortgage finance in the early 
2000s. The world had changed dramatically. What had happened was this. 
Where in the past if you wanted to buy a home, you wanted to achieve 
the American Dream, you would go down to your bank, you would go down 
to the savings and loan, and you would talk to the loan officer. They 
would work with you to negotiate a mortgage. They would work with you 
to negotiate that loan, and then they would hold on to the mortgage 
paper. And this is important. They held the mortgage paper as part of 
their portfolio. It was their investment portfolio. It was a long-term 
investment on the part of the financial institution.
  But what we found out was that the world had changed. No longer were 
these financial institutions holding on to that paper. In many cases, 
no longer were they the local bank or the local savings and loan. They 
were out-of-town entities who had never seen your house, and who had 
never looked at the appraisal. The reason they were closing those loans 
was because of those mortgage-backed securities on Wall Street. You 
see, they were able to close those loans and they would immediately 
sell them. They would sell them on the secondary market, and then they 
would bundle the loans into thousands of mortgage loans that were sold 
on Wall Street as a security, a mortgage-backed security.
  So what happened? Well, the folks that were closing the loans, 
because they were no longer holding the paper, because they no longer 
had any skin in the game, they were qualifying everybody that walked in 
the door. They were qualifying everybody that walked in the door at the 
highest prices they could possibly get. So, rather than saying, you 
know, we are going to put you in a 30-year fixed because it is a more 
stable product or a 15-year fixed because it is a more stable product, 
we are going to get you in this 3-year, adjustable-rate mortgage. And, 
oh, by the way, this rate, yes, it is a good rate right now, but it is 
going to adjust in 3 years. Oh, and there is this little prepayment 
penalty that is also in the loan. So, yes, I know it is a stretch for 
you right now, you who are a subprime borrower, you who don't have a 
steady job, and you who may be making a stretch to make this loan 
payment every month, yes, I know it is a stretch, but you can qualify. 
You can achieve the American Dream.
  The reality was this, in those 2 or 3 years when that interest rate 
started adjusting, and in some cases it was adjusting every 3 or 4 
months, when it started adjusting, that stretch was no longer a reality 
for many of those families. They tried to get out. They wanted to 
renegotiate, but they couldn't renegotiate because they had this 
prepayment penalty of a thousand dollars or $2,000. So if they couldn't 
afford their $600 a month loan, they are not going to be able afford 
the $1,000 or the $2,000 in the prepayment penalty. So they give up. 
They throw up their arms and walk away. That is a foreclosure. That was 
happening time after time after time in my neighbor and neighborhoods 
across Ohio and across the country.
  So what do we do? Well, we in the State legislature said wait a 
minute, we have to do something about this. We have to stop this 
predatory behavior. And we tried. We tried in the State of Ohio. But in 
the State of Ohio, like so many other States, we had very little 
authority because the financial institutions were regulated by the 
Federal Government.
  So we turned to the Federal Government to help us out. This is where 
we get back to who was in charge. In 2001, Stephanie Tubbs Jones, a 
tremendous Congresswoman from Ohio, introduced predatory lending 
legislation. And we had predatory lending legislation introduced in 
every session of Congress after that. So in 2001, we could have done 
something. In 2002, we could have done something. In 2003, we could 
have made a difference. In 2004, we could have enacted predatory 
lending legislation. In 2005, we could have protected those homeowners. 
In 2006, we could have done something about it.
  There were millions of homes going into foreclosure, but this body 
stood silent. This body, controlled by the Republican Party, stood 
silent, and they didn't address the foreclosures. They didn't address 
the runaway greed on Wall Street in the form of mortgage-backed 
securities and derivatives that were leveraged up to 30 and 40 times. 
They didn't address any of it. They said the markets will work it out. 
We don't need government intervention.
  But when housing prices went south and the investors in those 
mortgage-backed securities soon learned, you know, those mortgages 
aren't worth much, all of a sudden the bottom fell out of the market. 
And that inaction, it is that inaction that caused this recession.
  This was a recession precipitated by the financial markets. It was 
precipitated by what was going on in mortgage finance, and it caused 
the near collapse of our economy. It caused the near collapse of 
financial institutions across the globe.
  So at the end of last year, in September of last year, the Congress 
was asked, President Bush pleaded with the Congress to pass a bailout 
for the banks, a bailout that many Americans never wanted to see. But 
the reality was that things had gotten so bad that but for the 
intervention of the Federal Government, we could have had the collapse 
of the financial markets globally all due to the inaction of the 
Federal Government.
  That's where we were. And so now we hear Republicans come down to the 
floor of the House and act as if the world just began in January of 
2009, acting as if all of these problems started just this January. I 
liken it to this, Mr. Speaker. When I go out and talk about the 
mortgage crisis and the calamity that has occurred, I say it is like 
somebody causing a 20-car pileup on the highway and then we show up 
with the tow truck to try to clean things up, and they start yelling at 
us for blocking traffic.
  You see, we have been elected to clean up the mess, we being elected 
to clean up the mess caused by the inaction. That is what we are doing. 
That is why in the Financial Services Committee we are working on 
regulatory reform. That is why this Congress has passed predatory 
lending legislation. That is why this administration has worked to save 
thousands of homes across this country.
  I am joined tonight, Mr. Speaker, by my friend, also a new 
legislator, from the State of Connecticut, Jim Himes, who has been a 
tremendous member of the Financial Services Committee, bringing both 
experience on Wall Street as well as in the neighborhoods.
  Jim, why don't you talk a little bit about from your perspective and 
what you have seen.

[[Page 26595]]


  Mr. HIMES. I thank the gentleman from Ohio, Steve Driehaus, for 
yielding and for organizing this discussion on this important topic, 
which is how we restore prosperity to the U.S. economy, how we generate 
jobs to replace those that have been lost in this, the most challenging 
recession that we have seen in decades.
  I am glad that the gentleman from Ohio talked about foreclosures. I 
represent Bridgeport, Connecticut, which is a wonderful city that also 
happens to have the highest density of foreclosures in the State of 
Connecticut. Bridgeport is a city full of people who were on the verge 
of becoming middle class homeowners, who were nurses and teachers and 
scraped together the money to buy their first home. And now we talk 
about these foreclosures. These are families that find themselves 
having lost the money that they scraped together to become American 
homeowners, and worse, having lost their homes. If you don't have a 
stable home, you do not have the foundation that you need to access the 
American Dream.
  Our home is that spot that determines where we work. It determines 
the community in which we are a member. It is just about everything in 
terms of building that foundation for economic prosperity. And as we 
saw, there were far, far too many shenanigans in the mortgage market. 
The gentleman from Ohio and I have been working very hard in the 
Financial Services Committee on something that is technical, it is 
esoteric, it is unglamorous, it is never going to appear on a campaign 
bumper sticker, but it is terribly, terribly important, and that is 
reforming this Nation's financial services regulatory regime which 
failed us miserably. It failed us absolutely miserably in the last 10 
years.
  This is technical work. We are talking about really toeing a very 
tough line here between making sure that our banks and our financial 
services institutions are here, employing Americans, paying taxes in 
cities like Stanford and New York City and Chicago and Los Angeles, 
innovating, being a world beating industry, but of course never again 
putting us in the position that we find ourselves in today, millions of 
jobs lost and billions of dollars of taxpayer money brought to the 
table in the last Congress to bail out these institutions because had 
they not been bailed out, we would have seen a global financial 
meltdown.
  People forget what it felt like 9 months ago when we really worried 
that the major financial institutions of this country and of the world, 
frankly, could go under. Think about what that means. A major bank 
simply goes under. That bank is a lender to small businesses that make 
payroll. Except when the bank goes under, all of a sudden the payroll 
money is not there, and the workers of that small business go to the 
ATM and there is nothing there. That is global financial crisis, and 
that is what, obnoxiously, this government had to bail out.
  So how do we prevent that from ever happening again? The gentleman 
from Ohio and I, we have spent hours and hours listening in Financial 
Services, listening to the minority party tell us what we are doing is 
going to cost jobs, that this is the end of capitalism, that this is 
not a market economy, and they are dead wrong about that. They are dead 
wrong about that because they forget about something critical to our 
entire financial services business. They forget that without the faith 
of the American consumer, the American investor, the American bank 
customer, without that faith, we do not have a banking sector.
  I have been sitting in Financial Services now hours and hours and 
hours listening to this, this is the end of capitalism, this is going 
to kill jobs. We have seen this movie before. We have seen exactly this 
movie with exactly this script with exactly the same players. It 
happened in 1933 and 1934 when this government, the government of the 
United States, last set about to rise from the wreckage of an economic 
catastrophe caused by, amongst other things, financial 
irresponsibility, and this House was left to pick up the pieces.
  This House put in place in 1933 and 1934 the fundamental legislation 
that came to be what governed our banks and our securities companies 
for the next 70 years. And if you look at what was said in 1933 and 
1934, you could be here today. You would have heard about the death of 
capitalism and how this didn't make sense in a market economy and about 
how jobs would be lost; and they were wrong then, as they are wrong 
now.
  In fact, in 1933 and 1934 when regulatory laws were passed, with 
which I am deeply familiar, having spent some time in the banking 
sector, when those laws were passed, we created that thing which is 
necessary for a robust capitalist system to survive. We created a level 
playing field in which your average American family, your average 
American business could have confidence.
  And what happened after 1933 and 1934, after seeing decade after 
decade of financial crisis, every 7, 8, 9 years, starting in 1933 and 
1934, we saw, and the regulations that this House put into place 
contributed mightily towards the single longest period of prosperity in 
American history and in human history. Why, because people had faith. 
Why, because until regulations were loosened, there were no mortgage 
brokers saying you have no income, you have no job, no problem, we have 
a mortgage for you. We didn't have securitized products whereby you 
took paper that you knew was questionable and you bundled it all up, 
you got yourself a AAA rating and you sold it down the road.

                              {time}  2045

  It's like musical chairs, right? You get paid, and it doesn't matter 
because the problems, the time bombs are in somebody else's portfolio. 
These were things that developed as our regulatory apparatus failed to 
keep pace with changes in the financial services industry.
  What we are doing now, if we do it right--and I have confidence that 
we are doing it right--we will restore that faith, we will restore that 
confidence and once again set us up for the kind of prosperity that we 
saw for decades after 1933 and 1934.
  What are we talking about here?
  Mr. DRIEHAUS. Well, you know, I just want to echo your comments, 
Congressman, because what I see is fierce defense of the status quo by 
the Republicans, and I think it's important to remind people what the 
status quo has brought us.
  I mentioned earlier I come from Cincinnati, Ohio. Just last year, 
this is what Hamilton County looked like in terms of the foreclosure 
map. You can see there were thousands of foreclosures in Hamilton 
County. There were thousands of foreclosures across the State of Ohio. 
And when there is a foreclosure next door or when there is a 
foreclosure across the street, it doesn't just affect the family and 
the financial institution that agreed to that mortgage. It affects the 
neighbor next door; it affects your property value; it affects the 
schools when kids have to be pulled out of the schools; it affects the 
small businesses down the street when doors are shuttered, when windows 
are shuttered in neighborhoods. It costs entire neighborhoods.
  Mr. HIMES. That is such a critical point. I would just like to 
emphasize that is such a critical point. There has been so much 
discussion about the irresponsibility of some homeowners who bought 
houses they couldn't afford, who had mortgages they knew they couldn't 
repay sold by people who knew there wasn't a chance that they were 
going to get repaid.
  Many of those criticisms are exactly right, and we have a whole other 
conversation to have about how we make the American household more 
responsible, save more, take on less debt, be more responsible like our 
grandparents were. That is a whole other conversation that we need to 
have.
  But the point is so important that this isn't just about individual 
irresponsibility; this is a public community problem. As the gentleman 
says, when you see a foreclosure on a block, every other property value 
on that block goes down. This has been shown time and time again by the 
economists.

[[Page 26596]]

  So irresponsibility, if it was that, affects the neighbors. And there 
is no way that this Congress, when faced with that kind of a problem to 
the community, should stand silent and watch people's property values 
go down and neighborhoods crumble, dark houses, lack of commerce. We 
have to stand up and say we have to put a stop to this.
  Mr. DRIEHAUS. But, again, I go back to this time period when we saw 
thousands of foreclosures across our States and we were begging the 
Federal Government to do something about it. And what is the response 
we hear today from the Republicans who were in charge at that time? 
They blamed the Community Reinvestment Act, passed in 1977, a bill that 
incentivized financial institutions to make loans, to make good loans 
in the neighborhoods where loans weren't going. The Community 
Reinvestment Act didn't say make bad loans. It said make good loans, 
and we, the Federal Government, will give you credit for making loans 
in those communities. It has worked well, and it has served our 
communities well.
  You have worked in community development just like I have, and we 
know how valuable the Community Reinvestment Act is to those 
communities. But the Republicans, in order to hide from the failure of 
inaction, want to point to an act passed in 1977 and say somehow that 
this Community Reinvestment Act was forcing banks to loan into these 
neighborhoods. Ben Bernanke, the Chairman of the Federal Reserve, said 
that's ridiculous, that just didn't happen. And the Community 
Reinvestment Act has served us well. But enough, enough of the blame. 
There is so much blame that is offered in this Chamber.
  What do we know? The fact is we were elected to do something about 
the crisis. We were elected to clean up that pileup on the road. So 
when we came in with this administration, this administration acted 
very aggressively in terms of addressing foreclosures. We passed a very 
aggressive bill that cracks down on predatory lending.
  The administration, working with the Department of Housing and Urban 
Development and working with the Department of the Treasury, has 
initiated a foreclosure prevention program that has already saved 
hundreds of thousands of homes in the United States. We passed a credit 
card bill that protects consumers and protects consumers against credit 
card companies who are increasing interest rates and increasing fees on 
consumers.
  We just, last week, passed the Consumer Financial Protection Act, 
which again brings financial protections to consumers around financial 
products. You know, it was often stated in the State of Ohio that you 
had more protections purchasing a toaster than you did a house. In many 
cases that's true because we do have consumer protections when it comes 
to products, and we do have consumer protections when it comes to toys; 
but we didn't have much in the way of consumer protection when it comes 
to the most valuable purchase of your life in the case of many of us.
  Mr. HIMES. So many of the ideas that are incorporated into the 
legislation that we have been working on are fundamentally commonsense 
ideas. This notion that you should be able to sell a mortgage to 
someone who doesn't have an income or who is unwilling to show you the 
documents that verify his or her income, what flavor of insanity is 
that? Why is it controversial that a consumer finance protection agency 
should take a hard look at that? This is common sense.
  You know that derivatives, which so few people understand, but people 
know that derivatives, credit default swaps at AIG were a huge 
contributor to the meltdown. AIG was writing contracts, making bets 
that it didn't have a prayer of honoring when things went bad. So you 
look at that and you say, gosh, they didn't have a regulator, nobody 
was looking at it. And there are whole swaths of financial services 
that didn't have regulators. There were plenty of areas that did, but 
there's AIG writing credit default swaps without any oversight.
  So in the derivatives bill--and for the life of me I don't understand 
why that one became a partisan issue. We didn't say you can't do 
derivatives; we didn't even put limits on the amount of derivatives 
that you could assume. We did say, however, that if you're going to buy 
yourself derivatives, you're going to clear those derivatives on a 
clearinghouse if the clearinghouse will take it. You're going to trade 
them on an exchange so that there is transparency, so that we know 
who's doing what to whom, what the price is, what the volume is, so we 
get to see and the regulators get to see and the markets get to see 
who's taking what kind of risk.
  This is a fundamental notion of a market economy, transparency and 
good information, which is at the heart of that derivatives bill, and 
somehow that was opposed. Common sense, critical to the markets--going 
to be awfully important to making sure that an AIG never occurs again--
and yet it was controversial.
  Mr. DRIEHAUS. Well, talking about the credit default swaps at AIG, 
not only did you have the people engaging in the sale of credit default 
swaps, which they knew they could never honor, but they were getting 
bonuses for doing it. There were perverse incentives at play at AIG and 
at other financial institutions that incentivized payment structures 
for the sale of these very instruments. So when we wanted to look at 
executive compensation, we were criticized by the other side. And we 
said, look, we're not trying to take away people's pay; we believe in 
fair pay for hard work. But what we don't believe in is these 
compensation packages that incentivize incredibly risky behavior when 
the individual engaging in the practice doesn't have any skin in the 
game.
  Mr. HIMES. You're right about that. There was so much hysteria about 
the discussion around compensation, that somehow the U.S. Government is 
going to start determining what people should be paid. And the reality 
is, in all honesty, this House from time to time contributes to that 
kind of hysteria. But here's another example of just pure common sense.
  All we're saying, and I think all the Federal Reserve and the 
Treasury and those who are concerned with compensation, all we're 
saying is this: we're saying exactly the same thing that shareholders 
and owners of every company believe to the core, which is, if you're an 
executive and you create good value in the long term, you're a long-
term value creator, get paid well. That's the American way. But you 
don't get to be paid well for failure. You don't get to be paid huge 
for taking enormous risks that look good on day two, but which bring 
the system down on day 10. The interest of this institution has been 
exactly the interest that shareholders have: let's make sure that the 
system is set up to reward people for good, long-term value creation.
  People get very concerned about the TARP and the compensation within 
the TARP. Very special case. And I know that everybody in this Chamber 
hopes that we never see another TARP again. The TARP of course made the 
government a major shareholder in many institutions which, of course, 
as I have been saying, gives you a pretty significant vote on 
compensation. But again, common sense going forward, let's make sure 
our executives are rewarded for that which benefits the shareholders, 
good long-term value creation.
  Mr. DRIEHAUS. And as you know, we are now looking at the systemic 
risk that is involved in all of this, that is, what is the risk 
inherent with some of these products? What is the risk inherent with 
some of these institutions that have been deemed too big to fail? 
Shouldn't we regulate that? Shouldn't we regulate those institutions? 
Shouldn't we regulate those products so that they don't get too big 
that their failure could bring down the economy? Shouldn't we regulate 
those instruments, those financial instruments that if they fail would 
cause hundreds of thousands of foreclosures across the United States? 
Isn't that in the best interest of the people of the United States, to 
step in and actually

[[Page 26597]]

regulate this behavior? That's what we're taking on right now.
  But every step of the way, Congressman, every step of the way when we 
tried to protect consumers from the credit card companies, so many 
Republicans said no. When we tried to establish the Consumer Financial 
Protection Agency to protect consumers who were trying to buy homes, 
the Republicans said no. When we're looking at systemic risk, we're now 
hearing it on the other side: no, let the status quo rule. The status 
quo has brought us the worst recession in our lifetimes.
  Mr. HIMES. And this is another good example of common sense.
  At the core of what we are trying to do is to make sure that no 
institution ever gets bailed out again with taxpayer dollars, that we 
never again see an institution too big to fail. So what are we saying? 
Are we coming up with something new and radical? No. What we're saying 
is that if you are large and interconnected and create some systemic 
risk, you will be more closely scrutinized by the regulators than if 
you're just a small community bank. You will be required to hold more 
capital against your activities. Commonsensical stuff.
  And maybe most important--and this is where we get to doing away with 
the concept of too big to fail--if you make bad decisions, if you as a 
systemically important institution are in danger of failing, we're not 
going to do something radical; we are going to do something that this 
country has been doing for 70 years, unwinding, in an orderly fashion, 
the operation of that bank.
  The FDIC has had resolution authority and has been unwinding failed 
banks in a calm and orderly way for decades. And now we are saying, if 
you blow it, you fail, but you're going to do it in such a way that 
there is no risk that you bring down the financial system. That is 
hardly anything other than a nod of our hats to what has been so 
successful in this country for decades.
  Mr. DRIEHAUS. In the end, Congressman, this is about protecting jobs 
because this recession has cost millions of jobs across this country. 
We have millions of families suffering today because of the inaction of 
Congress, the inaction of the Federal Government when it came to the 
runaway greed on Wall Street. We've paid the price, so now we are 
picking up the pieces. But we see unemployment in the double digits. We 
are now seeing some improvement when it comes to those unemployment 
rates; we are seeing fewer people losing their jobs.
  But we are joined now by our good friend, Congressman John Boccieri, 
my colleague from Ohio. And certainly in northern Ohio just as southern 
Ohio we have seen tremendous job loss. But we are about action. We are 
about picking up the pieces and trying to put it back together, as 
opposed to the inaction of the other side.
  Mr. BOCCIERI. Well, I thank the gentleman from Cincinnati. And I 
thank him for his previous work in the State legislature together as we 
tackled the very insidious predatory lending practices that were 
plaguing our part of Ohio.

                              {time}  2100

  I think that we have got to break this down for the American people 
and explain to them that what is happening on Wall Street is affecting 
their pocketbooks today. When you walked into a bank or when you walked 
into a lending institution in Canton, Ohio, and when you asked them for 
a loan several years ago for a mortgage on a new house, they made it 
relatively easily, and oftentimes they would loan at 120-130 percent of 
the value of that asset, of that home, oftentimes hedging that risk or 
putting that risk in that note and then selling it to some investment 
bank on Wall Street.
  Now, when they sold that, when that small mom-and-pop lending 
institution sold that loan and sold that note, they then bundled these 
things together on Wall Street. Then we had folks who were betting on 
these mortgages lasting a long, long time, but there were also folks--
bad actors--who were betting that people were not going to be able to 
pay their mortgages. They were betting on Americans failing. I think 
that that is what we have got to tackle in this regulatory reform--
making sure that this does not happen again.
  You know, we look at it on the oil market and on the commodities 
market. We have folks who are betting on the price of oil going up and 
who are betting on people failing to pay their mortgages. Is there a 
bet that Wall Street won't make against the American people? I think 
enough is enough, and we have got to stand for reforms that are going 
to make sense.
  I agree, like my colleagues here, that the government should set the 
out-of-bounds markers. We should set the goalposts. We should allow the 
free market to operate in between but be a good referee. When someone 
goes out of bounds, throw the flag and say that they committed a 
penalty. Now, we can have this debate, a robust debate, about where we 
put these markers. Do they start here or do they start in a much wider 
fashion? Yet we have got to find some way to make certain that the 
regulatory reform is going to catch these bad actors and will not allow 
them to bet against the American people. I think we owe that to the 
people we represent.
  Mr. DRIEHAUS. Well, I think the point is well taken because this is 
about creating boundaries.
  You know, we often have this discussion back home about free markets 
and capitalism and about allowing free markets and capitalism to 
thrive. That's what we're all about. We support that and we support 
that wholeheartedly, but when the behaviors of certain actors on Wall 
Street or when the behaviors of people acting within the free market 
cause harm to the public good and cause harm to neighborhoods, it is 
the job of the government to step in and say, Hold it. Wait a minute. 
It's okay if you make a profit. It's okay if you sell your goods. It's 
okay if you produce those goods, but if it's causing harm to the people 
we are sent here to protect, then maybe we need to intervene. Maybe we 
need to regulate in a reasonable fashion. That's what we've been doing 
on Financial Services. It's all about commonsense regulation. It's 
about stepping in and protecting consumers.
  On the other side, all we hear is ``no.'' It's just like health care. 
It's just like energy. Yeah, they'll step up and say, Yeah, this is a 
problem. Oh, yeah, this recession is a problem. This double-digit 
unemployment that we see in our States, yeah, that's a problem.
  When it comes to solutions, the book is really thin on the other 
side.
  You know, yeah, we introduced big bills on health care. We introduced 
bills on energy to protect our energy security across the United 
States. Yeah, we introduced several bills to regulate properly the 
financial markets.
  We're doing the work of the people, and we're fixing what is broken. 
The other side is saying, Let's leave it broken because the solution is 
not something we want to see. That's the problem.
  Mr. BOCCIERI. Well, we know what they're against, but what exactly 
are they for? Are we going to fix our energy crisis that we have in the 
country? Are we going to fix the economic situation we find ourselves 
in? Are we going to stand up and fight for the American people or are 
we just going to push for the status quo and allow these things to 
happen?
  Let us be clear. There are some very good people who work on Wall 
Street. There are some very conscientious people who work in our 
financial markets, but there are also some folks who have been pushed 
and moved and who have accelerated their behavior by greed, by avarice. 
That is what we want to catch. This is what we want to prevent. Can you 
imagine this?
  You know, as for folks who traditionally want to hedge on the price 
of a barrel of oil or on the price of gasoline, we want to allow them 
to do that--the folks at aviation and trucking companies in Ohio who 
want to hedge and lock in a price of fuel today--but when we allow big 
corporations, national governments, multinational corporations, and big 
pension funds to bet on the price of oil going up, that no longer is 
reflective of a very conscientious market.

[[Page 26598]]

  Quite frankly, what we've found is that artificially we're driving up 
the price of a barrel of crude oil even though we have more supply than 
we did years ago. Demand is down. People aren't driving as much because 
of the economic situation, but we find ourselves at a point where 
gasoline prices are on the rise because of what is happening on Wall 
Street. People now are starting to bet that the recovery is coming 
soon, and they're betting that the price of oil is going to go up. 
We've got to stop this.
  Mr. HIMES. You know, there's a point that can't get lost here, and 
I'm conscious, as we're having this discussion, that we're all fathers.
  You know, there is blame everywhere to be had for where we are today, 
and we, day to day, are focused on what we can do better as a 
government--to better regulate, to better create opportunity, to make 
these products more understandable to people so that they can make good 
decisions--but it does at some level come down to good decisions, and 
we shouldn't let that point, particularly as fathers, go away.
  I reflect, as we sort of not just take up financial regulatory reform 
but as we talk about energy policy and as we talk about health care, if 
we as families had the same kind of values that our grandparents had--
saving and shying away from debt. Of course, we can help on this stuff, 
right? We've made it awfully easy in this country for people to get 
into debt without ever knowing about it. Yet, if we were healthier, if 
we were more responsible about how we used energy and if we were more 
responsible about when and how we took on debt, like the other problems 
I've been talking about, we would take huge problems, and we would make 
them, Mr. Speaker, much more addressable problems.
  I'm very interested in this question: How do we as legislators assist 
in that process?
  I don't know that there is a good answer. I do know that, as fathers, 
there is a good answer. We as a country, I think, need to look back at 
our grandparents' generation and say, You know what? They got some 
things right. We need to work with our own families and with our own 
communities to just say basic things: If it looks too good to be true, 
it probably is. You'd much rather have some money in the bank than have 
to go into debt. That's a key point that we, I think, need to get right 
in this country as well.
  I notice that we're joined by our colleague from Virginia, 
Congressman Perriello.
  Mr. PERRIELLO. Thank you very much, Mr. Himes.
  I just want to pick up on what you said about the Greatest 
Generation. I think part of what made the Greatest Generation great was 
the concept of deferred gratification--the concept of responsibility. I 
am going to step up and take care of my family. I am going to save 
ahead of time. I am going to take that opportunity of the GI Bill, that 
unprecedented opportunity, to invest in my own education and to help 
move my family into the middle class.
  You look throughout history at empires in decline, and you see this 
idea--the bread and circus period--in the empire of Rome, and you say, 
What is it about that? Well, it's the difference between being a 
culture of instant gratification--I want it for me right now--and a 
culture of deferred gratification, or a culture of responsibility.
  I think what we've seen in the last few years in this country is 
really a deterioration of culture and not just of policy and of the 
market. We really have to point the finger in all sorts of different 
directions--at the private sector, at the household sector, at people 
buying homes they couldn't afford, at the government sector of turning 
the other cheek--and not in the good way but in the way of saying, I'm 
going to ignore what's happening on the other side. We know right now 
what we need is this new era of responsibility, which isn't antimarket; 
it's pro-market.
  What I hear from so many of my friends who are in the investment 
community is that I'm sick and tired of being the responsible investor 
who makes the right decisions, who doesn't take the high-risk 
investment, and then I see my colleagues or my peers who did take the 
high-risk, high-return investment get bailed out.
  This has to be about a system of rules and predictability that 
encourages responsible investing. That includes the diversified 
portfolio, as we all know, whether it's a fewer thousand dollars of our 
personal money or whether it's someone taking a larger amount to invest 
for other people. This is that moment where we can say we want those 
rules of predictability, where we want to close those loopholes so that 
we're rewarding good behavior and responsible investing in the same way 
that, in the energy sector, we need to start rewarding innovation, not 
rewarding the status quo.
  What that means is, instead of always being focused on how can we 
cash in on other people's misfortune or hedge against that risk, it's 
how can we create a system that is going to perpetuate the very balance 
that we need in our market in order to move things forward.
  So I think what you and others have been saying tonight is crucial in 
terms of that sense of not just a shift in policy but a shift in each 
of us as consumers, as politicians and others, about whether we're 
going to reward the responsibility of the deferred gratification that 
the Greatest Generation understood and which will make us stronger than 
ever before and whether we're going to recreate that comparative 
advantage.
  With that, I yield.
  Mr. DRIEHAUS. Well, Congressman, I appreciate the remarks about 
responsibility because we started this off by talking about 
responsibility.
  You know, it strikes me that the four of us are freshman Members of 
Congress. When we started running for Congress 2 years ago, none of us 
knew that we would be walking in the door in January with record job 
loss in the United States, that we would be in the middle of the worst 
recession that we have seen in our lifetimes and that we would be 
walking into a catastrophe. Now, we could run away from that, and we 
could say these are tough responsibilities, and we need to just say 
``no'' and pretend like none of that responsibility falls on us or we 
could do something about it.
  I think that I, like all of you, came here to fix the problems. We 
came here to step up to that responsibility. We came here to protect 
those American families who were losing their jobs, those American 
families who were losing their health care, those American families who 
knew that Congress for so many years had protected the barons on Wall 
Street but failed to protect them around their kitchen tables.
  We hear all the time on the other side that it's not their fault. 
They weren't here. They weren't in power for 14 years or 16 years or 
however many years that was. Apparently, they weren't here. Well, it is 
our job as Members of Congress to take responsibility, and that's what 
we're doing.
  So, when we look at commonsense regulatory reform around financial 
institutions, when we look at protecting consumers, when we look at 
stepping up and at modifying mortgages to keep people in their homes, 
when we look at stepping up and at addressing issues like health care 
or energy, it is all about our taking responsibility. It is all about 
this Congress' stepping up and working together to achieve the common 
goals that help all of our families across this country. We can say 
it's not our responsibility, and we can take a backseat and just say 
``no,'' but that's not what we were elected to do. We were elected to 
lead, and I think that is what we are doing in Financial Services.
  Mr. BOCCIERI. I further agree, if the gentleman will yield for just a 
moment, that we do have a responsibility to the American people and 
that we will be judged by action or inaction, quite frankly. In these 
troubling economic times in which so many Ohioans find themselves, as 
Teddy Roosevelt said, In a moment of decision, the worst thing that you 
could do is nothing. I think there is this call to action from the 
American people to this legislative body to make sure that we set the 
boundaries, that we set the out-of-bounds markers, that we set the 
goalposts, and that we make sure that the

[[Page 26599]]

referees that we appoint are doing a good job.
  I have friends who have worked on Wall Street who have said, if we 
would have just enforced the regulations that we have, this would have 
been averted, that this catastrophe could have been averted. We have 
the housing sector and we have the commercial markets now showing signs 
of breaking, but we have got to have swift action, and we have got to 
make sure that there is a steady stream and that there is an equal 
playing field for the least among us--for those folks who are investing 
in Wall Street and in the markets. We have to make sure that their 
investments are protected, that their pensions are there for them when 
they retire, and we have to make sure that folks aren't gambling on 
their futures. In my humble opinion, that's what it's all about.
  You know, I follow Senator Webb quite a bit. He has quoted Teddy 
Roosevelt quite often in one of his most recent books. He has said 
frequently, as Teddy Roosevelt has said, that the welfare of each of us 
is dependent upon the welfare of all of us and that we have got to make 
certain that we are creating this level playing field for the least 
among us, like my grandparents who arrived here on the shores of 
America with nothing but the belief and the hope that, if they worked 
hard, if they persevered and if they gave back to their community, that 
America was a place where their dreams could be realized. That's what 
the American Dream is about.
  We have a responsibility to make sure that that playing field is 
level, is equal, so that it's not a slippery slope. It is so, when they 
begin their climb, their ascent, up the socioeconomic ladder, that 
America affords opportunity and prosperity. That's what this is about, 
and that's what the decisions that we are striving for are all about. 
So I appreciate the gentleman's remarks.
  Mr. DRIEHAUS. Mr. Perriello.

                              {time}  2115

  Mr. PERRIELLO. Well, I would just echo, I think you and I both come 
from similar roots from the mother country in Italy, the motherland, 
but also what we took from that immigrant experience of our 
grandparents was that idea that if you work hard and play by the rules, 
there will be an opportunity for you in this country. When this country 
rewards hard work and responsibility, this country is better than any 
on Earth.
  But when we get away from those fundamental ideals of American hard 
work and responsibility, we undermine so much of what makes us 
different, what makes us special. I was meeting with various members 
from the EU who were here today in part because Chancellor Merkel was 
speaking to us. They were talking about that quintessentially American 
spirit of innovation and entrepreneurship.
  The great threat to that in our society right now is not one 
administration or one policy. It's when the influence on this body and 
that on the other side of this building is such that it rewards what 
has worked for the last 20 years instead of what we could be 20 years 
from now. Capitalism is based on the idea of innovation, on the idea of 
competition and yet too much in our system we see a rewarding of what 
has worked, not what could work in the future.
  If we are going to deliver for the middle class and the working class 
of this country, for districts like yours and mine that once had strong 
factories and manufacturing bases, we must have the courage to think 
again about not just the financial sector policy, but an industrial 
policy, an agricultural policy, a jobs policy for this country.
  But the first piece of that has to be putting in place the rules that 
will allow lending to begin flowing again, not just on the macro-level, 
but to the small and medium-sized businesses that create two-thirds of 
the job growth in our areas in Ohio and Virginia. But the key to that 
is predictability. Predictability means that we have a system of rules 
that people can work within. Entrepreneurship works within a system of 
predictability.
  We need to have that system of accountability so that those who act 
according to those rules are rewarded for their innovation and success. 
That is a quintessentially American idea.
  Here we are challenged today because both parties in the Congresses 
before us have failed to live up to that standard. Many on Wall Street 
have failed to live up to that standard. But as Congressman Driehaus 
mentioned, the line we will draw is not between the right and the left, 
but between right and wrong, not between one side of the aisle or the 
other, but whether we will solve the problem.
  What we will hope people will judge us by is did we step up to the 
challenge of the time and try to solve that problem. I believe the 
people on this floor tonight are dedicated sincerely to the idea of 
problem-solving, not to ideology or to the next election cycle.
  Mr. DRIEHAUS. Congressman, I very much appreciate your efforts in 
those regards. Congressman Himes, if you want to wrap us up, I yield 
the floor to you.
  Mr. HIMES. Thank you, my good friend from Ohio, my two good friends 
from Ohio and Virginia. It's a pleasure to be out here tonight with 
you.
  We have talked about a lot of important issues, and one of the 
reasons I feel proud to be in this Chamber with you and with our 
colleagues is because we are in a moment of crisis, no doubt about it. 
We were called in a moment of crisis to lead.
  When you lead in a moment of crisis, you lead constructively. You 
take some risks. You acknowledge, as I know that each and every one of 
us does, that we won't get this perfect. Very little of what has been 
produced in history in this room has been perfect; but it has been done 
constructively, it has been done with the spirit that we will get it 
right over time, and it has been done by people taking some risks.
  In a moment of crisis, it is not leadership to say no. It is not 
leadership to simply snipe at those who are trying to solve the 
problems, the problems that affect every American family, the problems 
that mean that families don't have jobs. They worry about whether their 
kids will be educated. These are the things that we are trying to 
address, and it is just a fine moment that we have been called upon now 
to push these things to try to restore the opportunity that is so 
important to American families and to the sense of the American Dream.
  Mr. DRIEHAUS. Gentlemen, I appreciate you coming down to the floor 
this evening. This is about solutions. This is about stepping up to 
responsibilities. This is why we were elected.
  We hear so often on the other side the naysayers come down and talk 
about what won't work. They don't talk about the responsibility, the 
common responsibility we have. They run away from the years that they 
were in charge.
  But this is about stepping up to responsibilities and making a 
difference. While it's not always perfect, we are doing what's right by 
the American people and doing what's right by the families that elected 
us to represent them.
  Mr. Speaker, I yield back.

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