[Congressional Record (Bound Edition), Volume 156 (2010), Part 5]
[House]
[Page 7059]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     THE NEED FOR FINANCIAL REFORM

  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
Virginia (Mr. Connolly) for 5 minutes.
  Mr. CONNOLLY of Virginia. Mr. Speaker, as the economy faced imminent 
collapse in 2008, the choice between allowing a complete meltdown of 
the financial sector and initiating taxpayer funded bailouts was at 
best a choice between the lesser of two evils. It was reflective of the 
fact that a complete and thorough lack of financial regulation by the 
previous administration and previous Congresses had allowed years of 
abuse and risky behavior by many financial institutions to subject the 
entire economy to unparalleled peril.
  We know the system was broken. Consumers weren't protected. They lost 
trillions of dollars in their retirement funds, housing values declined 
to record lows, and bank lending dried up. Taxpayers weren't protected. 
They were forced to bail out the very companies that created the 
economic disaster. Even Wall Street wasn't protected, as the 
irresponsible and reckless actions of some institutions left the entire 
financial industry and the American economy in near collapse. When no 
one is protected, everybody is endangered.
  We know the results: the worst recession since World War II; the 
highest unemployment since 1983, peaking in January 2009 with 740,000 
jobs lost; a stock market that plummeted to less than half its peak 
value; housing foreclosures that increasingly cast families out of 
their homes; millions of Americans out of work, and a dramatically 
shrinking gross domestic product.
  Fannie Mae and Freddie Mac, holders of more than two-thirds of all of 
the mortgages in this country, nearly collapsed and are now in 
government receivership. General Motors and Chrysler emerged from 
bankruptcy only with Federal taxpayers owning significant amounts of 
those companies as well. The financial sector was the epicenter of the 
recession. Between 2000 and 2007, 27 banks failed. Since then, 215 have 
failed.
  The largest savings and loan failure in American history happened in 
July 2008 when IndyMac was seized. The largest bank failure in history 
happened just 2 months later when Washington Mutual, in existence for 
more than 100 years, collapsed, threatening its customers' $307 billion 
in assets. The largest insurance company failure in American history, 
AIG, also occurred in late 2008. Only the Troubled Asset Relief 
Program, initiated under President Bush, and its more than $170 billion 
taxpayer funded bailout kept AIG from actual collapse.
  It is important to ensure that taxpayer funds are never again used to 
bail out private companies. We must have a procedure in place that not 
only ends the concept of too big to fail, but also prevents the 
financial abuses from endangering the economy in the first place.
  The value of the derivatives market as of October 2008 stood at $668 
trillion. I did not misspeak. The value of the derivatives bought and 
sold, completely unregulated, totaled more than 15 times the entire 
world's gross domestic product. Although this does not represent $668 
trillion of real wealth, it does indicate hundreds of trillions of 
dollars worth of speculative investments, which remain void of any 
transparency today.
  How can we allow the massive derivatives market to remain completely 
unregulated after what we have gone through? How can we allow the risky 
and abusive actions of certain financial institutions to endanger an 
entire economy? How can we allow American taxpayers to be faced with 
the untenable choice of risking further economic collapse or funding 
financial institutions' misdeeds? Big banks and other financial 
institutions cannot with one hand wave a finger in America's face 
decrying any perceived threat to their autonomy while simultaneously 
holding out the other hand to the American taxpayer asking for a 
bailout.
  It is unconscionable to allow private risk to become public 
responsibility. That is why the House took action last December passing 
the Wall Street Reform and Consumer Protection Act. It is long past 
time for the Senate to join us and assure American taxpayers that never 
again will they be asked to bail out misbehaving financial 
institutions. We must not allow the near-criminal lack of oversight 
again. We must not continue to turn a blind eye to the abuses of the 
past. On behalf of the American taxpayers and consumers, we must enact 
financial reform now.

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