[Congressional Record (Bound Edition), Volume 155 (2009), Part 21]
[Senate]
[Pages 28795-28796]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              THE ECONOMY

  Mr. NELSON of Florida. Mr. President, I want to take this time to 
talk about this terrible economic recession. To those people, by the 
way, who do not have a job, it is not a recession, it is a depression. 
The times are difficult economically all over this country but 
especially in my State of Florida which has an unemployment rate that 
is well above the national average, and there are pockets in Florida 
where the unemployment rate is exceptionally soaring, such as southwest 
Florida. It is this continued economic devastation from home 
foreclosures, business closings, and high unemployment rates that is 
threatening the prosperity of the country and particularly States such 
as mine, Florida.
  For example, in southwest Florida, we learned last week that another 
local bank had been shut down by Federal regulators. It is the sixth 
bank failure to hit that region this year. On the housing front, 
numbers were released that indicate Fort Myers still has a long way to 
go to climb out of the housing mess. While the positive news was that 
foreclosures had declined 20 percent from September to October, the 
area still ranks fifth in the country in foreclosures.
  We need to continue the steps to get the housing market back on its 
feet. One of those steps we did included the $8,000 tax credit for 
first-time home buyers. That goes through next spring. Most recently, 
we took one step further when we passed a $6,500 tax credit for 
existing homeowners who sell their home and want to buy another. That 
has spurred home sales.
  We need to stabilize the prices, which remains the top priority. We 
also need to keep the pressure on the banks, the lenders, to work with 
folks who are losing their homes.
  Many places across the Nation, and specifically Florida, are 
responding to the crisis by adopting mandatory mediation as an 
alternative to foreclosures, thereby forcing banks to modify mortgages 
and avoid a foreclosure altogether.
  A great success story is a program in Philadelphia where borrowers 
can keep their homes in a program that is being looked upon as a model 
for the rest of the Nation. Under a plan put in place by the city's 
civil court, no property can be foreclosed in that court and sold by 
the sheriff until the mortgage company sits down with the homeowner to 
try to find a solution.
  Unlike the administration's effort to stem foreclosures, which relies 
on giving incentives to mortgage companies to encourage them to work 
with homeowners--a program that has not worked as the Obama 
administration has intended--the Philadelphia program, in contrast, is 
not a voluntary program. Mortgage companies are forced to participate. 
While that Philadelphia program will not result in every troubled 
homeowner getting the outcome they are looking for, making those 
lenders come to the table is a step in the right direction. But if we 
are going to bring back health to our banking and financial system, we 
are going to have to fix the problems that are driving our community 
and regional banks to insolvency. The crisis in residential and 
commercial real estate values, home foreclosures, and nonperforming 
commercial real estate loans is wiping out those regional and local 
bank balance sheets.
  In response, those regional banks are desperately hanging on to their 
deposits and other assets. I wish I didn't have to say this, but the 
Obama administration, particularly Secretary Geithner, has not done a 
good job in leading our banking system and real estate markets to 
recover. Their response to the collapse in residential real estate was 
a tepid loan modification program which in most cases

[[Page 28796]]

kicked the can down the road for the few underwater homeowners who were 
fortunate enough to qualify. Their response to the crisis in commercial 
real estate has been absent altogether. The consequence is that the 
commercial real estate market is on the verge of its own collapse as 
creditors are reluctant to refinance commercial projects.
  Half way through the year, Florida banks had over $5 billion of 
commercial real estate loans in default. Commercial real estate makes 
up over one-third of the assets of Florida banks. These growing 
liabilities are putting the brakes on bank lending in Florida, and they 
are hurting creditworthy small businesses and prospective home buyers. 
It is a vicious downward spiral that is not easily broken. One thing is 
clear: The Troubled Asset Relief Program has not been the answer.
  When then-Secretary of the Treasury Hank Paulson, the former head of 
Goldman Sachs, first proposed TARP, there were a number of us on this 
floor who opposed and voted against it. I thought it was massive and a 
wasteful bailout of the Wall Street banks with zero accountability and 
no meaningful reform. What have we found out about it? Of the $700 
billion that Congress appropriated for TARP, over $220 billion has yet 
to be loaned out and only some $70 billion has been repaid. I believe 
we should end the program once and for all and return those funds to 
the U.S. Treasury to prevent us from falling deeper into fiscal debt 
and a fiscal black hole. Bringing the deficit under control would then 
help stabilize interest rates. It would hold borrowing costs down, and 
it would reduce the growing debt burden on future generations. That 
still leaves roughly $400 billion of TARP funds outstanding.
  Bank of America, Citigroup, and Wells Fargo need to repay the TARP 
funds that have propped them up for more than a year. They need to 
stand on their own feet. Banks such as Goldman Sachs that have repaid 
their TARP funds still owe a tremendous debt to American taxpayers. 
Goldman Sachs, Merrill Lynch, and a slew of other banks all profited 
from the dollar-for-dollar taxpayer bailout of AIG's credit default 
swaps, those insurance policies. Under that AIG bailout, the most 
outrageous of all the bailouts, $70 billion of American taxpayer funds 
was put at risk to ensure that speculators in credit default swaps were 
fully protected. The head of Goldman Sachs recently apologized for his 
firm's reckless behavior and pledged to commit $500 million for small 
business lending. That sounds like a serious commitment, until we 
consider that Goldman Sachs has set aside $17 billion for year-end 
bonuses. So while Main Street is tightening its belt and preparing for 
a lean holiday season, Wall Street is still living high on the hog. 
That must change.
  As banks repay their TARP loans, we need to consider how we use those 
funds, how we reform the financial sector. To get us back on track, we 
will have to be creative and find new solutions to ensure that 
businesses have access to the capital they need to grow, prosper, and 
hire new workers.
  I have a few suggestions. First, we need to scrap the trickle-down 
TARP model and start working from the bottom up. We need to focus on 
access to capital for small businesses and ways to shore up residential 
and commercial real estate values. TARP has focused far too much on the 
largest Wall Street banks at the expense of community and regional 
banks, the backbone of finance in Florida. We need to increase Federal 
support and assistance to community banks and credit unions.
  Second, we need to look at other ways to improve access to capital 
such as promoting direct lending by the Small Business Administration.
  Third, we need a flexible approach to dealing with underwater 
homeowners, those whose value is now less than the value of their 
mortgage, which is so typical in the State of Florida. A flexible 
approach would be like the one in Philadelphia which is undertaking to 
require mediation and loan modifications.
  These are a few suggestions I have in this very tough economic time.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Arizona.
  Mr. KYL. I ask unanimous consent to speak up to 20 minutes in morning 
business.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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