[Congressional Record (Bound Edition), Volume 156 (2010), Part 5]
[House]
[Pages 7187-7195]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       THE REFORM OF WALL STREET

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2009, the gentleman from California (Mr. Garamendi) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. GARAMENDI. Mr. Speaker, thank you so very much.
  What we intended to talk about was the Wall Street meltdown and the 
necessity of the reform of Wall Street. However, having listened to our 
colleagues on the Republican side carry on for the last hour, there are 
some things that need to be said about their discussion.


                              Health Care

  First of all, they started off with this issue of health care, with 
the government takeover of health care. That is absolutely not true. We 
have passed major health care reform, and it is not a government 
takeover. In fact, it builds on the present American system. There is 
some government--some very, very good government programs.
  You tell me what senior in America wants to have Medicare done away 
with. None of whom I know. There is always room for improvement. In 
every program, there will be problems from time to time, but no senior 
of whom I am aware anywhere in America wants to do away with that 
government program.
  What this bill really does is to help organize the American health 
care system so that it will be more effective

[[Page 7188]]

and efficient and so that it will build on the private insurance 
system, which is much a part of America.
  I know this business because I was the insurance commissioner in 
California for 8 years, and I regulated the insurance company. In this 
legislation, there is heavy-duty regulation of the insurance industry 
because there was a lot of talk--a lot of talk from our Republican 
colleagues--about a death panel. I'll tell you what the ``death panel'' 
is. It is the private insurance company that has heretofore denied 
coverage for people who have been seriously ill. When people would have 
illnesses, they would just dump them from the rolls. They would not 
insure people who had preexisting conditions.
  I will tell my Republican colleagues and the American people that 
those days of insurance excesses and that those days of insurance 
discrimination are over. They are over. For men and women who are 
working their 8-, 10- and 12-hour shifts every day, they will be able 
to have their own doctors. That is what this reform does. It is not a 
government takeover. In fact, it builds upon the American system, which 
is unique here, and that is a fact.


                                Taxation

  They also talked about taxation. Well, let's understand that more 
than 80 percent of the Bush tax cuts went to the top 10 percent of 
wealthy people in America. They got the tax break, and the other 
Americans got the shaft. That is not the way we see tax cuts on our 
side. In fact, my colleague from Minnesota, who will join me in just a 
moment, was there to vote for the American Recovery and Reinvestment 
Act. That is the largest middle class tax cut in America's history.
  The issue here is that Democrats will cut taxes for the working men 
and women--for middle class America. As for the wealthy, that's where 
the Republicans are. They will cut the taxes of the wealthy every 
single time.
  If you listened carefully to the previous discussion from our 
Republican colleagues, they said it very clearly. They were talking 
about taxes for those who have limited liability companies. You tell 
me. Do small businesses out there in my community--the painting 
contractors, the plumbing contractors--have limited liability 
companies? No. No. They are sole proprietors. Their taxes were cut by 
Democrats, and Republicans cut the taxes for Wall Street.
  My good colleague from Minnesota (Mr. Ellison), you had some thoughts 
about this as you were sitting there, listening to them talk about the 
things that are going on. Please share with us your thoughts.


                       The Reform of Wall Street

  Mr. ELLISON. I thank the gentleman for yielding. I also thank the 
gentleman for holding down this Special Order tonight. It is very 
important to talk about the American economy, so let me dive right in, 
as there are a few facts the American people may want to consider.
  Barack Obama took office on January 20. George Bush was the President 
that whole month. There were 741,000 jobs lost to the American economy. 
There were 741,000 jobs lost under the Republicans when they had the 
Presidency, even back when they had majorities in both the Senate and 
the House of Representatives.
  I think this board is very revealing. On the vertical axis, it 
demonstrates Time, which is months during the year--'07 all the way to 
March 2010. On this vertical axis are Job Changes.
  Here we see, in January 2008, Bush begins to lose jobs, and they very 
clearly go down to hit the very bottom when we see December 2008-
January 2009.
  What we see during the Obama administration is a steady climb back up 
from the abyss. Very recently, we have even seen positive job growth 
for a few months.
  This is an important fact to point out in the very beginning because, 
as we talk about who ran the economy into the ditch, it is very clear 
that our Republican colleagues managed that on their own and that it is 
the Democrats who steered the American economy back to a point of 
safety.
  Let me also say this: When it comes to financial deregulation--and of 
course, tonight, we're going to be talking about the Wall Street Reform 
Act and about accountability. The fact is it was during the Bush 
administration that the climb on foreclosures began and that we saw 2.8 
million people face foreclosure. In the last year, we saw foreclosures 
begin, and we have yet to see an antipredatory lending bill passed 
under any Republican regime. While the Republicans were in the 
majority, they did not do anything about foreclosures. They did not do 
anything about predatory lending. They did not do anything about yield 
spread premiums. They did not do anything about 2/28 mortgages and 3/
27s. This is when people were being encouraged and persuaded to sign 
these fine-print, no-doc, low-doc mortgages. At the end of their teaser 
rate periods, they would see these mortgages explode, and they would 
find themselves in foreclosure.
  The fact is the Democrats have taken the bull by the horns, and we 
have begun to right our ship of state to bring the American economy 
back to health. We have seen increases in the gross domestic product. 
Under the Democrats, we have seen increases in the number of jobs and 
decreases in the rate of unemployment. Thank goodness, we are here on 
the verge, hopefully, to pass Wall Street reform in order to really put 
the American economy back in the shape it deserves to be in.
  I yield back to the gentleman.
  Mr. GARAMENDI. Mr. Ellison, thank you so very, very much for pointing 
out what was the history of the great 2008 collapse.
  You saw those enormous job losses that were occurring during the Bush 
period and then the slow but steady improvement in the number of jobs 
that were lost so that now we are in a situation where we are actually 
seeing jobs added. We don't see the unemployment rate coming down as we 
would like to, but we are on the correct road, and we are making great 
progress on that.
  I would like to ask my colleague to join us in carrying on this 
discussion, if you would.
  Mr. DRIEHAUS. Thank you, Congressman Garamendi. I appreciate very 
much your taking the leadership tonight on this issue, which is so 
critically important.
  There is a tremendous amount of misinformation out there about what 
has gone on in terms of the financial markets. I happen to sit on the 
Financial Services Committee, so I've seen firsthand what we have been 
able to do in terms of structuring a fix for what is going on on Wall 
Street and for what happened on Wall Street.
  Yet it would be a mistake just to talk about the fix without talking 
about the history. Far too often, the Republicans would have us believe 
that all of this history began in January of 2009, which is when Barack 
Obama took the oath of office and when we took the oath of office. The 
facts are far different, and I think it is important to help voters and 
folks out there to better understand exactly how we got to where we 
are.
  I remember as a State legislator, when I served in the Ohio House 
from 2001-2008, that these issues of predatory lending and of 
foreclosure came up over and over again. I pushed Governor Strickland 
to create a foreclosure task force in the State of Ohio, and I was 
proud to serve on that task force. Yet what we realized way before the 
task force was formed was that so many of these problems were Federal 
in nature. They were Federal in scope; though, the Federal Government 
was doing very little to regulate Wall Street, to regulate the mortgage 
industry.
  My colleague Mr. Ellison mentioned predatory lending and the failure 
to enact predatory lending legislation. I will remind the viewers and I 
will remind this body, Mr. Speaker, that it was in 2000 that 
Congresswoman Stephanie Tubbs Jones from Ohio--God rest her soul--
introduced predatory lending legislation here in the House. They could 
have enacted that in 2000. They could have enacted it in 2001, in 2002, 
in 2003, in 2004, in 2005, and in 2006. Every year, she brought forward 
legislation concerning predatory lending because she understood the 
impact this was having in neighborhoods across Ohio

[[Page 7189]]

and across the country, but they failed to act. We knew that these 
things were being created on Wall Street, things like mortgage-backed 
securities and credit default swaps, which backed up the mortgage-
backed securities, and collateralized debt obligations, which backed 
those up. The vast majority of the people had no idea that these things 
even existed much less what they were doing.
  What we soon found out was that these mechanisms on Wall Street were 
allowing for the bubble to occur, which then led to the collapse when 
we found out what was actually contained in them.
  For just a minute, Congressman, I'll talk about how the risk was 
shifted, because this is fundamental to what happened. You know, years 
ago, you would go to a savings and loan or you would go to a bank, and 
you would try to get a mortgage on your house. The risk would be shared 
between the financial institution and the homeowner, and they would 
hold onto the paper. The financial institution would hold onto that 
mortgage paper, and it would be part of their investment portfolio; but 
that is not what happened in the 2000s.
  What happened in the early 2000s was that investment vehicles were 
created on Wall Street that no longer required that bank or that 
savings and loan to hold onto that paper. They sold it immediately. 
They sold it immediately onto a secondary market that was created. 
These things were then brought together in thousands of mortgages, 
called ``mortgage-backed securities.'' They were then sold to 
international investors, to pension funds--to all kinds of entities.
  In the meantime, the rating agencies were rating these things at AAA 
despite the fact that many of the mortgages contained in these packages 
were bad mortgages. Oftentimes, they were 2- or 3-year adjustable rate 
mortgages to subprime borrowers. ``Subprime borrowers'' are simply 
borrowers who have poor histories of paying back in the first place.
  So what behavior did this incentivize? Well, at the front end, I will 
tell you what it incentivized.
  You had mortgage brokers and financial entities going out there 
trying to qualify anybody they possibly could for a mortgage at the 
highest prices they could possibly get because they were no longer 
holding onto the paper. It was no longer a long-term investment of the 
property value of that home; it was at the close of the deal. If it's 
at the close of the deal, you're going to close as many deals as you 
possibly can. That's why they were qualifying people who should never 
have qualified for mortgages. That is how this bubble was created.
  Now, I have heard a lot of my colleagues come down here and blame the 
Community Reinvestment Act over and over again. If you listen to 
conservative talk radio, they say the banks were forced to lend into 
these neighborhoods and the banks were forced to make bad loans. Now, 
I've never come across a bank that didn't have the power to say ``no'' 
to a loan, but they would have you believe that it was the banks that 
were forced to do this because of the Community Reinvestment Act. So I 
just want to bring a few things to the attention of the public.

                              {time}  1745

  First of all, the Community Reinvestment Act was established in 1977. 
So if the Community Reinvestment Act was the problem, you would think 
that maybe we would have seen this in the 1980s and the 1990s. But we 
didn't because the Community Reinvestment Act wasn't the problem.
  What the Community Reinvestment Act did was it provided incentives 
for financial institutions to go into neighborhoods where there were 
depositors in those financial institutions but folks weren't qualifying 
for loans because they had red-listed entire areas. They weren't 
required to make bad loans. They were just required to go into the 
neighborhoods and make good loans.
  And if I can just refer to Ben Bernanke in a letter November 25, 
2008, who said this, and he's responding to one of our Senate 
colleagues:
  ``Thank you for your letter of October 24, 2008, requesting the 
Board's view on claims that the Community Reinvestment Act is to blame 
for the subprime meltdown and current mortgage foreclosure situation. 
We are aware of such claims but have not seen any empirical evidence 
presented to support them. Our own experience with CRA over more than 
30 years and recent analysis of available data, including data on 
subprime loan performance, runs counter to the charge that CRA was at 
the root of, or otherwise contributed in any substantive way to, the 
current mortgage difficulties.''
  The fact of the matter is over 80 percent of the bad loans that went 
into default, that caused the foreclosure crisis, over 80 percent, were 
from financial entities and nonfinancial entities that didn't even 
participate in the Community Reinvestment Act.
  Mr. GARAMENDI. You have raised a very, very important point, and it's 
the history of how all of this came to pass, about a mortgage industry 
that had run amok, that had engaged in predatory pricing and predatory 
mortgages and selling products, mortgages and loans, that they knew the 
homeowner could not possibly afford, maybe during the teaser rate 
period, but when that teaser rate was over in a year or two and the 
rate readjusted and reset, it was all over. That's the history of what 
was going on. It was Wall Street and its minions out there throughout 
the United States, the mortgage companies, that were all playing a part 
of this game.
  It comes down to basic American values that were not honored. The 
basic American value. You know, you work hard, you get a wage, you can 
get a home. But in this case, they were selling people products and 
mortgages that no way could they possibly afford, and they had no skin 
in the game. They had no ongoing obligations. You explained it so well, 
Mr. Driehaus, how that was going on.
  It comes back to certain values. Wall Street's value was greed is 
good. That's not an American value. That's a unique Wall Street value. 
Greed is not good. Greed leads to some real serious problems. You go 
back through all of the writings in the Bible and other religious 
writings down through the millennium, and it comes down to the same 
thing. Greed's not good, folks. Yet Wall Street was engaged in that 
very un-American practice of extraordinary greed, unbridled greed that 
led to the creation of these bogus and unsubstantiated mortgage 
instruments that were--by their own admission 2 weeks ago or a week ago 
when Goldman Sachs testified here, the guy that created them used some 
extraordinary language, that these were monsters, these were things 
that were unintelligible, that couldn't be understood and couldn't be 
priced, and yet that was Wall Street. Why did they do it? They did it 
because they wanted the money and they played the games.
  This was a chart that was used last night by Congresswoman Jackie 
Speier as she explained one of the things you talked about, Mr. 
Driehaus, how Goldman Sachs would create a mortgage-backed security. In 
fact, this one didn't even have mortgages backing it. It was totally 
ephemeral. It was a figment of the imagination of Wall Street bankers. 
They created this thing.
  Then down here at the bottom, these were the less risky portions of 
it. Each one of these are what they called tranches. They would sell it 
off, saying this was an A-rated. That's relatively good strength. Then 
down here at the very bottom, which was pure junk, they managed to get 
the rating houses, Standard and Poor's and other rating houses, to say, 
well, maybe this piece of junk is actually of some value if we go back 
and look not at the ability of the homeowner to pay but rather at the 
FICO score. Well, they did, and they rated it as an A, and then they 
sold it to unsuspecting investors, and the result was, at the end of 
the day, junk is junk and the thing collapsed. So we had the great 
collapse of 2008. So what do we do about it now?
  And, by the way, you mentioned the Community Reinvestment Act. I was 
the insurance commissioner in California for 8 years, and I watched the

[[Page 7190]]

banks use the Community Reinvestment Act to bring bank offices and 
branches into the underserved communities. It ended the redlining. It's 
a very, very good law. If only the insurance industry had a similar law 
so that they would provide insurance products in those communities, but 
it doesn't. The Community Reinvestment Act isn't to blame here. Greed, 
unbridled greed is the problem.
  And to our Republican friends that ranted for the previous hour about 
government regulation, we need it, serious government regulation of 
Wall Street.
  Let's talk about where we go from here. Mr. Driehaus.
  Mr. DRIEHAUS. I think it's a good point, Congressman. There was no 
regulation. There was no regulation of mortgage-backed securities. 
There was no regulation of credit default swaps. So when folks get up 
and say we have enough regulation on Wall Street, well, there may be 
regulation, but the regulation was in the wrong place.
  So if you look at the bill that came through the House when it comes 
to regulatory reform, we focused on some sound principles. First, the 
creation of a Consumer Financial Protection Agency, an independent 
agency that provides consumers with information, good information, 
about the products that they are being offered. Now, this isn't a crazy 
idea. You know, we often said in the State of Ohio that you were safer 
purchasing a toaster than you were a home loan because you had more 
consumer protections purchasing a toaster. And that's true. You have 
consumer protections when it comes to purchasing a vehicle. You have 
consumer protections if you purchase toys for your kids. But you don't 
have those same consumer protections when it comes to a home loan.
  Mr. GARAMENDI. That's in the bill that you and the other members of 
the Financial Services Committee put together. It was voted on here on 
this floor in December, as I recall. I had the pleasure of being 
elected in November, and I was here for that vote. Very, very 
important.
  I am going to just put this up here, and maybe the three of us 
together can refer to this as we go on. Right there, number one, 
consumer protection, watchdog with teeth.
  I know, Mr. Ellison, you were talking to me earlier about some of 
these things.
  Mr. ELLISON. Yes. If the gentleman would yield, I want to just say 
that this is an excellent list and really helps listeners to sort of 
zero in on some of the key features that we will elaborate on right 
now.
  Let me just give my own take on consumer protection. There are about 
seven different agencies that had some responsibility for consumer 
protection. The Federal Reserve Bank, for one, has some responsibility. 
Actually, it was in 1995 that Congress passed a law that said that the 
Fed could regulate in the area of mortgage lending, and they didn't do 
so.
  What this Consumer Protection Agency would do is to say, you know 
what? We're not going to spread the responsibility so that everybody 
says, well, I thought somebody else was going to do it. What we do is 
we concentrate it and say we hold this agency responsible for consumer 
protection. The Fed, as you know, is responsible for monetary policy 
and responsible for unemployment, keeping the economy going for 
employment. It also has responsibility historically for consumer 
protection. What we're saying is that it makes sense for an agency 
which will have the responsibility for rulemaking with regard to 
consumer protection, enforcement of consumer protection rules, and 
examination of companies that have a responsibility to comply, to make 
sure that if you are going to sell a product, a financial product, a 
loan, that the terms are clear, that people understand the terms, that 
people know what they are getting into, that there's transparency, that 
there is real information that a person could make a good decision on. 
And then also there might be some products that are just completely and 
patently unfair that consumers ought to be able to not have to be part 
of.
  Let me just say there's something going on here when we do financial 
transactions known as information asymmetry. Let's just face it, folks. 
Look, I'm a 46-year-old man. I bought only one house in my life. I have 
been at a closing once and only once. I went to college. I even went to 
law school. I was a State legislator. I am no match, no match at all, 
for somebody who wants to sell me a mortgage that maybe I don't want. 
The terms and conditions are just too opaque. It's too much 
information. If you've ever been to housing selling, you're just 
signing documents, one right after another. People don't get it. We 
need a Consumer Protection Agency that will say, look, this has got to 
be a fair transaction, this has got to be disclosed, it needs to be 
clear, and that way we may be able to have some good decisionmaking and 
better decisionmaking on behalf of consumers.
  Mr. GARAMENDI. Mr. Driehaus.
  Mr. DRIEHAUS. I appreciate that. And picking up on that point, the 
CFPA is critical to provide consumers information. But if you go back 
down to No. 5 on that list, strengthening community banks, this 
strengthens community banks because so much of the problem occurred 
outside of the financial institutions in the first place. Many of these 
subprime mortgages, many of these bad loans didn't originate with 
community banks. The community banks were doing the right thing. But 
there was no regulation of the behavior of these nonfinancial entities. 
So for the first time, the CFPA will step in and provide regulation 
over the product itself. So it doesn't matter how you structure your 
entity to avoid regulation. The regulation will come in the form of the 
product. So if you're offering a consumer product which is determined 
to be a bad product for consumers, you will be prohibited from offering 
that, regardless of the type of entity that you are.
  This is important because banks are very wary of regulators and for 
good reason, especially community banks, who have regulators coming in 
all the time to make sure that safety and soundness is being complied 
with and to make sure that consumers are being treated fairly. But what 
the CFPA gets at isn't additional burdens on community banks, but it's 
going after those previously nonregulated entities to make sure that 
they are following the law and that the products they are offering are 
fair and that the disclosures they are providing are clear, that 
they're transparent, and consumers know what they are getting 
themselves into.
  Mr. ELLISON. Could I ask the gentleman a question?
  Mr. GARAMENDI. Please.
  Mr. ELLISON. And I will ask both gentlemen a question.
  Now, if the Consumer Protection Agency is going to actually provide 
regulation to nonbank lenders, most of whom generated these subprime 
and predatory loans, will that help community banks by taking away the 
competitive advantage some of those unregulated lenders had?
  Mr. DRIEHAUS. Yes, I believe it will absolutely strengthen the 
community banks.
  And as you know, many of the community banks were provided additional 
protections, Mr. Speaker, by making sure that the CFPA was only part of 
the regulatory structure when we went into community banks so that we 
didn't place yet an additional burden in terms of an examination on 
that community financial institution.
  So I believe this is an additional protection because for far too 
long, these entities were existing outside of a regulated marketplace, 
which put community banks, the guys that were doing the right thing, 
the guys that so many of us rely upon, and lend to small businesses, 
lend to people trying to purchase their homes--they were at a 
competitive disadvantage, and this really does strengthen those 
community banks because it forces everybody to have an even playing 
field.
  Mr. GARAMENDI. It's really very, very important that we do focus on 
the community banks. This is Main Street. This is where the small 
businessman--the men and women that own the local grocery store, the 
shop, the person who is the carpenter, the painter, this is

[[Page 7191]]

where they will get the money that they need, the loan that they need 
to carry on their business. It's the community banks. But what has 
happened in America over the last decade is a concentration of economic 
strength in the hands of just a few.

                              {time}  1800

  A very, very few of the large banks, Wall Street banks now, control 
80 percent or more of the American financial strength. We need to take 
that into account, not only because it will give the community banks an 
opportunity to compete and to have capital available to them so that 
they can make those loans, but also because of this problem of too big 
to fail. Too big to fail. That's what happened over the course from 
2000--maybe beginning in the nineties--until 2008, when the great 
collapse occurred. The banks grew bigger and bigger and fewer and fewer 
so that at one point just a handful controlled most of the financial 
assets of America. And they grossly mismanaged those assets. AIG, a 
famous name. Lehman Brothers, another bankrupt company. All of the 
games that they played, those roosters came home to roost and the 
droppings were on American homeowners and the hardworking men and women 
of America that lost their jobs as a result of Wall Street excesses.
  So now what are we going to do about too big to fail? The Senate, 
which is now moving a piece of legislation that would accompany the 
House bill, which we passed 4 months ago, that piece of legislation may 
be amended to say that no financial institution in America can control 
more than 10 percent of the financial strength of this Nation. That is 
something I really like. Back in college, I learned about the need for 
competition. I took an economics class. You have to have competition. 
You've got to have a lot of players. You've got to have a robust free 
market. Well, we don't really have that in the financial institutions 
anymore because they've grown too big. Well, if we just make them a 
little smaller: You get to 10 percent, I'm sorry, you're going to have 
to shed some business. We'll have to have others pick up the rest of 
it. But this too big to fail is part of the reform bill. Exactly how 
it's going to come out of the Senate, we don't know for sure. But it is 
certainly going to deal with this issue.
  Mr. Ellison, I know that you worked on this.
  Mr. ELLISON. Well, the gentleman, I'm glad, talks about this issue of 
too big to fail. If either the gentleman from Ohio or California want 
to elaborate, I'd just like to pose to both of you gentlemen a 
question, and that is: If some banks are too big to fail, are there 
then other banks that are too small to save?
  Mr. GARAMENDI. Well, now that's an interesting question. Clearly, we 
have institutions that are too big to fail. That's where the TARP 
legislation that was the last act--one of the last acts of the Bush 
administration--came into being. The Treasury Secretary, Mr. Paulson, 
who actually was the CEO of Goldman Sachs, as I recall, came to this 
House, came to the Senate, and said, Oh, my. Oh my. The world is going 
to collapse unless you immediately cough up a trillion dollars to the 
banks to stabilize the banks. Fortunately, this House said, Wait a 
minute. Let's see what we're doing here. Instead of a 1-page bill 
giving the Treasury Department a trillion dollars, the TARP program was 
put in place. And it did stabilize the financial institutions but it 
was a clear sign that Wall Street banks had become too big. AIG. How 
much have they taken? Twenty-three billion dollars of our money. Are we 
going to get it back? We don't know.
  Mr. Driehaus, if you will carry on here. I know that you were 
involved in that TARP legislation. Share with us.
  Mr. DRIEHAUS. Getting back to the issue of too big to fail, because I 
think this is really a critical issue for people to get their arms 
around. I think it's important that we have strong capital markets; 
that the private sector works well in providing capital to allow our 
businesses to grow, to allow people to invest in the economy. That's 
critically important. But the issue of too big to fail really comes 
back to our responsibility, because when an entity is too big to fail, 
then it suggests that they go well beyond losses that might just impact 
the shareholders or losses that might just impact the owners or the 
employees of a business, but in fact it impacts all of us.
  We then have a responsibility so that when the harm that's caused by 
these institutions is so great that it impacts the public good, then 
the United States Congress has a responsibility. In this case, the 
foreclosure crisis. Not only have we seen the greatest recession in our 
lifetimes but we have seen neighborhoods just devastated by 
foreclosures all across this country. Certainly, in the State of Ohio, 
where I come from.
  The cost is enormous. That's not being repaid by Goldman Sachs. 
Lehman Brothers isn't around to do it. The big investment firms on Wall 
Street aren't there when we're having crime in our neighborhoods due to 
the foreclosures. It's the residents and the local governments that are 
left to pick up the pieces. That's what we mean by too big to fail.
  So never again will we allow an entity to get so big that its failure 
will cause such a calamity not just to the economy but to our 
neighborhoods, to our communities, and obviously to jobs across the 
country. So we've put mechanisms in place to prohibit entities from 
growing that large. And if they are so large that their collapse would 
have this tremendous impact, we provide for a provision to allow the 
Fed to wind them down and allow Treasury to wind them down--not at 
taxpayer expense but at their own expense and at the expense of 
financial entities who are contributing to a pool. We don't believe in 
the government bailouts. We are trying to put an end to government 
bailouts. What we are trying to do is allow these to be dissolved in a 
way that's fiscally responsible. That's what we mean by too big to 
fail.
  Mr. GARAMENDI. That's a very, very important point about how things 
will move forward. It's also extraordinarily difficult for me to 
understand the Republican Party in this matter. On the Senate side, at 
the moment it looks as though they want to maintain the status quo. 
They want to maintain business as usual. That business as usual took 
this economy and nearly the entire world's economy into the tank. We 
need change. We need to put in place the reforms so that these kinds of 
financial meltdowns don't occur again. And for too big to fail, the use 
of wise processes within the government to unwind those companies that 
are too big, bring them back to size; when they're in financial 
trouble, unwind it and to bring us back to some sane situation.
  There are a couple of other things that are in this thing that are 
really important. This number three of the kinds of reforms that the 
Democrats want to put forward: Stop Wall Street firms from betting 
against their customers. Also, Wall Street is not a gambling house. 
Wall Street isn't the shore of New Jersey or Las Vegas. Wall Street is 
where the financial strength of this Nation and indeed the world should 
be, based on fundamental American values of fair play, of honesty, of 
no games, straightforwardness, of visibility, of what is going on.
  We have seen far too much of Wall Street hiding the ball, of gambling 
as though they were some casino in Las Vegas, and creating products and 
selling products that they know are detrimental to their customers' 
well-being--their financial well-being. So this is part of the reform 
that's going to go into place when the Republicans in the Senate 
finally allow the Senate to move forward with its reform.
  I know you were involved here in the House as you took up this issue, 
Mr. Driehaus. Share with us, if you would, some of the things that took 
place that are in the House reform.
  Mr. DRIEHAUS. I think it's critically important as you move through 
this list to help people better understand exactly what it is that 
we're doing. One of the big issues that comes up time and time again is 
the issue of transparency. Because transparency

[[Page 7192]]

was a big problem. It wasn't that the regulations didn't necessarily 
exist on some of these products, but people didn't know what was in the 
products. And so the Wall Street banks were intentionally hiding the 
risk associated with some of these derivative products.
  Derivatives by their very nature are derived from other capital. But 
they're critically important. They're critically important to our 
system, our economic system, because they provide capital investment 
that creates jobs in our economy. So we don't want to stop derivatives. 
We want to create investment vehicles. Derivatives are okay, but these 
investment vehicles need to be transparent. That's all we're asking 
through the legislation, is that the risk associated with the product 
be clear so that the people investing in these products know the risk 
associated with their investment. This is basic. This is basic finance, 
that people asking to invest in products should know the risk 
associated with those investments. That's what we're trying to achieve 
through the regulatory reform bill.
  Mr. GARAMENDI. It's one of those basic American values that Wall 
Street seems to have forgotten and the Republican Party seems to want 
to be absent from Wall Street, and that is honesty, transparency. That 
is, explain what this product is all about, and also, the requirement 
that when you're selling something in a financial institution, you have 
the obligation of good faith to your customer; that you're being 
honest--a fundamental American value that was largely forgotten by Wall 
Street. As this reform goes into place, I think we will see it 
returned, because it will be the law. Sometimes you simply have to say 
you have to change because the law now requires you to be honest, to be 
straightforward, to be transparent; that is, to explain your product.
  I notice that we have now been joined by your colleague from Ohio, 
the gentlewoman, Ms. Kaptur. She has a chart up there that I think goes 
right to the heart of this. If you would, please, share with us.
  Ms. KAPTUR. Thank you very much. I appreciate the gentleman yielding 
this evening and I thank you both for sponsoring this Special Order. 
Part of our responsibility is to restore trust in the most important 
financial institutions in our country--restore trust to the American 
people in those--and to change the laws in order to make sure that that 
trust in our capital markets and in our banking system is restored. 
We're a long way from doing that, and financial reform is a part of it. 
I hope that the bill improves as it moves through the Senate.
  The chart that I brought to the floor tonight--and this is just one 
chart. I would like to put in the Record, CBS News Investigates Goldman 
Sachs' Revolving Door, with a full list of individuals just from that 
company. There are many other companies, but the kind of incredible 
power that they wield in this city.
  If you just look at Goldman Sachs and then at people from Goldman 
Sachs who came to work for the government of the United States in the 
highest positions, you begin to question whether they were representing 
the public interest or their personal interest in many of the dealings 
that occurred on Wall Street.
  For example, you have an individual during the last administration 
that worked for President Bush by the name of Joshua Bolten. He was the 
President's Chief of Staff during the time when the TARP was voted 
through this Congress in the bailout in the fall of 2008. He had been 
the director of OMB through most of the Bush administration. But what a 
lot of people don't know is that before that he had been the Executive 
Director of Legal Affairs for Goldman Sachs based in London. That is 
the bank's chief lobbyist to the European Union. So when you look at 
the collapse of institutions in Europe, whether it was Dresdner Bank in 
Germany or Societe Generale, which was a counterparty in the AIG 
insurance situation, those deals were brokered through London. And 
there he sat for the whole decade of the nineties, putting together the 
architecture that then collapsed in this decade.
  But he's not alone. It's important that people understand this just 
didn't start in 2007 or 2008 or 2005. The pieces were put together 
starting in the 1980s, and then the foundation stones and all the 
regulatory changes were made that allowed this type of hyperinflation 
of the housing market and the pyramiding of equity to a point that it 
simply couldn't hold. These men were a part of that.
  If you look at the former Secretary of Treasury in the past 
administration, before President Obama and during President Clinton, he 
had come from Goldman Sachs, Robert Rubin, and he was Secretary of the 
Treasury from 1995-1999, when so much of the deregulation was done. But 
they all go back to Goldman Sachs. That's the beehive. The bees come 
out, they go somewhere else, and then they come back. We have to begin 
to unpeel this and unwind and understand who these individuals are. We 
heard the name of Hank Paulson, who was Secretary of the Treasury 
during the period time that the bailout was voted. He was the CEO of 
Goldman Sachs. So they come in, collect a little bit of honey, and then 
they go back. What the American people have to understand is what 
exactly did they do; who made these decisions.
  Now, we have over at the Secretary of Treasury the chief of staff to 
the Secretary of Treasury, Mark Patterson. Guess where he came from? 
Goldman Sachs. And the recent general counsel from the White House, Mr. 
Craig, he left the White House. Where did he go? Goldman Sachs.

                              {time}  1815

  So it rises above party. We have to stand up for what's right for 
America, and we have to unwind these private interests that have caused 
such harm to our country.

               [From CBS News Investigates, Apr. 7, 2010]

                     Goldman Sachs' Revolving Door

                            (By Paula Reid)

       A CBS News analysis of the revolving door between Goldman 
     and government reveals at least four dozen former employees, 
     lobbyists or advisers at the highest reaches of power both in 
     Washington and around the world.


                The Influence and Power of Goldman Sachs

       For example, former Treasury Secretary Henry Paulson is a 
     former Goldman CEO; Arthur Levitt, the head of the Securities 
     and Exchange Commission is a now a Goldman adviser; and 
     former House Majority Leader Dick Gephardt is now a paid 
     lobbyist for the firm.
       Our alphabetical list:


                             Joshua Bolten

       Government: President George W. Bush's Chief of Staff from 
     2006-2009; Director of Office of Management and Budget from 
     2003-2006; White House Deputy Chief of Staff from January 20, 
     2001-June 2003.
       Goldman: Executive Director of Legal Affairs for Goldman 
     based in London, aka, the bank's chief lobbyist to the EU 
     from 1994-1999.


                            Kenneth D. Brody

       Government: President and Chairman of the Export-Import 
     Bank of the United States (1993-1996).
       Goldman: Former general partner and member of the 
     Management Committee at Goldman Sachs where he worked from 
     1971-1991.


                             Kathleen Brown

       Government: Former California State Treasurer.
       Goldman: Senior Advisor responsible for Public Finance, 
     Western Region.


                              Mark Carney

       Government: Governor of the Bank of Canada since 2008.
       Goldman: Mr. Carney had a thirteen-year career with Goldman 
     Sachs in its London, Tokyo, New York, and Toronto offices. 
     His progressively senior positions included Co-Head of 
     Sovereign Risk; Executive Director Emerging Debt Capital 
     Markets; and Managing Director, Investment Banking. He 
     started at Goldman in 1995.


                             robert cogorno

       Government: Former Gephardt aide and one-time floor 
     director for Steny Hoyer (D-MD.), the No. 2 House Democrat.
       Goldman: Works for [Steve] Elmendorf Strategies, which 
     lobbies for Goldman.


                            Kenneth Connolly

       Government: Staff Director of the Senate Environment & 
     Public Works Committee 2001-2006.
       Goldman: Vice President at Goldman from June 2008-present.


                           E. Gerald Corrigan

       Government: President of the New York Fed from 1985 to 
     1993.
       Goldman: Joined Goldman Sachs in 1994 and currently is a 
     partner and managing director; he was also appointed chairman 
     of GS

[[Page 7193]]

     Bank USA, the firm's holding company, in September 2008.


                              Jon Corzine

       Government: Governor of New Jersey from 2006-2010; U.S. 
     Senator from 2001-2006 where he served on the Banking and 
     Budget Committees.
       Goldman: Former Goldman CEO. Worked at Goldman from 1975-
     1998.


                              Gavyn Davies

       Government: Former chairman of the BBC from 2001-2004.
       Goldman: Chief Economist at Goldman where he worked from 
     1986-2001.


                              Paul Dighton

       Government: Chief Executive of the London Operating 
     Committee of the Olympic Games (LOCOG).
       Goldman: Former COO of Goldman where he worked for 22 years 
     beginning in 1983.


                              Mario Draghi

       Government: Head [Governor] of the Bank of Italy since 
     January 2006.
       Goldman: Vice chair and managing director of Goldman Sachs 
     International and a member of the firm-wide management 
     committee from 2002-2005.


                             William Dudley

       Government: President Federal Reserve Bank of New York City 
     (2009-present).
       Goldman: Partner and Managing Director. Worked at Goldman 
     from 1986-2007.


                            Steven Elmendorf

       Government: Senior Advisor to then-House minority Leader 
     Richard Gephardt.
       Goldman: Now runs his own lobbying firm, where Goldman is 
     one of his clients.


                              Dina Farrell

       Government: Deputy Director, National Economic Council, 
     Obama Administration since January 2009.
       Goldman: Financial Analyst at Goldman Sachs from 1987-1989.


                            Edward C. Forst

       Government: Advisor to Treasury Secretary Henry Paulson in 
     2008.
       Goldman: Former Global Head of the Investment Management 
     Division at Goldman where he worked from 1994-2008.


                            Randall M. Fort

       Government: Assistant Secretary of State for Intelligence 
     and Research from November 2006-Jan 2009.
       Goldman: Director of Global Security 1996-2006.


                            Henry H. Fowler

       Government: Secretary of the Treasury from 1965-1968.
       Goldman: After leaving the Treasury Department, Fowler 
     joined Goldman Sachs in New York City as a partner.


                            Stephen Friedman

       Government: Chairman of the President's Foreign 
     Intelligence Advisory Board and of the Intelligence Oversight 
     Board; Chairman Federal Reserve Bank of New York from 2008-
     2009; former director of Bush's National Economic Council. 
     Economic Advisor to President Bush from 2002-2004.
       Goldman: Former Co-Chairman at Goldman Sachs and still a 
     member of their board. Joined Goldman in 1966.


                              Gary Gensler

       Government: Chairman of the U.S. Commodity Futures Trading 
     Commission since 2009; Undersecretary to the Treasury from 
     1999 to 2001; Assistant Secretary to the Treasury from 1997-
     1999.
       Goldman: Former Co-head of Finance for Goldman Sachs 
     worldwide. Worked at Goldman from 1979-1997.


                          Lord Brian Griffiths

       Government: Head of the Prime Minister's Policy Unit from 
     1985 to 1990.
       Goldman: International Advisor since 1991.


                               Jim Himes

       Government: Congressman from Connecticut (on Committee on 
     Financial Services) since 2009.
       Goldman: Began working at Goldman in 1990 and was 
     eventually promoted to Vice President.


                           Robert D. Hormats

       Government: Under Secretary of State for Economic, Energy 
     and Agricultural Affairs-designate since July 2009; Assistant 
     Secretary of State for Economic and Business affairs from 
     1981 to 1982.
       Goldman: Vice Chairman of Goldman Sachs International and 
     Managing Director of Goldman Sachs & Co. He worked at Goldman 
     Sachs from 1982-2009.


                              Chris Javens

       Government: Ex-tax policy adviser to Iowa Senator Chuck 
     Grassley.
       Goldman: Now lobbies for Goldman.


                           Reuben Jeffery III

       Government: Under Secretary of State for Economic, 
     Business, and Agricultural Affairs from 2007-2009; Chairman 
     of the Commodity Futures Trading Commission from 2005-2007.
       Goldman: Former Managing Partner of Goldman Sachs Paris 
     Office. Worked at Goldman Sachs from 1983-2001.


                               Dan Jester

       Government: Former Treasury Advisor.
       Goldman: Former Goldman Executive.


                             James Johnson

       Government: Selected to serve on Obama's Vice Presidential 
     section committee but stepped down.
       Goldman: Board of Director of Goldman Sachs since May 1999.


                            Richard Gephardt

       Government: U.S. Representative (1977 to 2005).
       Goldman: President and CEO, Gephardt Government Affairs 
     (since 2007). Hired by Goldman to represent its interests on 
     issues related to TARP.


                             Neel Kashkari

       Government: Interim head, Treasury's Office of Financial 
     Stability from October 2008-May 2009; Assistant Secretary for 
     International Economics (confirmed in summer 2008) Special 
     assistant to Treasury Secretary Henry Paulson from 2006-2008.
       Goldman: Vice President at Goldman Sachs from 2002-2006.


                             Lori E Laudien

       Government: Former counsel for the Senate Finance Committee 
     in 1996-1997.
       Goldman: Lobbyist for Goldman since 2005.


                             Arthur Levitt

       Government: Chairman, SEC 1993-200;
       Goldman: Advisor to Goldman Sachs (June 2009-present).


                             Philip Murphy

       Government: U.S. Ambassador to Germany since 2009.
       Goldman: Former Senior Director of Goldman Sachs where he 
     worked from 1983-2006.


                             Michael Paese

       Government: Top Staffer to House Financial Services 
     Committee Chairman Barney Frank.
       Goldman: Director of Government Affairs/Lobbyist (2009).


                             Mark Patterson

       Government: Treasury Department Chief of Staff since 
     February 2009.
       Goldman: Lobbyist for Goldman Sachs from 2003-2008.


                         Henry ``Hank'' Paulson

       Government: Secretary of the Treasury from March 2006 to 
     January 2009; White House Domestic Council, serving as Staff 
     Assistant to the President from 1972 to 1973; Staff Assistant 
     to the Assistant Secretary of Defense at the Pentagon from 
     1970 to 1972.
       Goldman: Former Goldman Sachs CEO. Worked at Goldman from 
     1974-2006.


                              Romano Prodi

       Government: Two time prime minister of Italy.
       Goldman: From March 1990 to May 1993 and when not in public 
     office, Mr. Prodi acted as a consultant to Goldman Sachs.


                             Steve Shafran

       Government: Advise to Treasury Secretary Henry Paulson.
       Goldman: Worked at Goldman from 1993-2000.


                               Sonal Shah

       Government: Director, Office of Social Innovation and Civic 
     Participation (April 2009); advisory board member Obama-Biden 
     transition Project; former previously held a variety of 
     positions in the Treasury Department from 1995 to early 2002.
       Goldman: Vice President 2004-2007.


                             Faryar Shirzad

       Government: Served on the staff of the National Security 
     Council at the White House from March 2003-August 2006; 
     Assistant Secretary for Import Administration at the U.S. 
     Department of Commerce in the Bus Administration.
       Goldman: Global head of government affairs (Lobbyist) since 
     2006.


                            Robert K. Steel

       Government: Under Secretary for Domestic Finance of the 
     United States Treasury from 2006-08.
       Goldman: Former Vice Chairman of Goldman Sachs where he 
     worked from 1976-2004.


                              Adam Scorch

       Government: COO the SEC's Enforcement Division (October 
     2009-present). He was 29 years old at the time of his 
     appointment.
       Goldman: Former Vice President at Goldman Sachs where he 
     worked from 2004-2009.


                           Richard Y. Roberts

       Government: Former SEC commissioner from 1990 to 1995.
       Goldman: Now working as a principal at RR&G LLC, which was 
     hired by Goldman to lobby on TARP.


                              Robert Rubin

       Government: Treasury Secretary from 1995-1999; Chairman of 
     the National Economic Council from 1993-1995.
       Goldman: Former Co-Chairman at Goldman Sachs where he 
     worked from 1966-1992.


                               John Thain

       Government: CEO resident of NYSE (2004-07).
       Goldman: President and Co-Chief Operating Officer from 
     1999-2004.


                              Marti Thomas

       Government: Assistant Secretary in Legal Affairs and Public 
     Policy in 2000. Treasury Department as Deputy Assistant 
     Secretary for Tax and Budget from 1998-1999; Executive

[[Page 7194]]

     Floor Assistant to Dick Gephardt from 1989-1998.
       Goldman: Joined Goldman as the Federal Legislative Affairs 
     Leader from 2007-2009.


                             Massimo Tononi

       Government: Italian deputy treasury chief from 2006-2008.
       Goldman: Former Partner at Goldman Sachs from 2004-2006.


                            Malcolm Turnbull

       Government: Member of the Australian House of 
     Representatives since 2004.
       Goldman: Chairman and Managing Director, Goldman Sachs 
     Australia from 1997-2001 and Partner with Goldman Sachs and 
     Co. from 1998-2001.


                            Sidney Weinberg

       Government: Served as Vice-Chair for FDR's War Production 
     Board during World War II.
       Goldman: Worked at Goldman from 1907-1969, eventually 
     becoming CEO after starting as a $3-a-week janitor's 
     assistant.


                            Kendrick Wilson

       Government: Advisor to Treasury Secretary Henry Paulson.
       Goldman: Senior investment banker at Goldman where he 
     worked from 1998-2008.


                            Robert Zoellick

       Government: President of the World Bank since 2007.
       Goldman: Vice Chairman, International of the Goldman Sachs 
     Group, and a Managing Director and Chairman of Goldman Sachs' 
     Board of International Advisors (2006-07).

  Mr. GARAMENDI. Thank you very much. That history is not a good 
chapter in America, and these men that were involved in all of this, to 
whom did they owe their allegiance?
  I've said many times, it's about the fundamental American values. I 
know that in my community, a small community in California of farmers 
and hardworking men and women, that they go to work every day and they 
expect to be paid a fair wage, but they don't expect to make that wage 
by cheating somebody, by playing a financial game. They expect to make 
it by working hard and carrying on for their family.
  Mr. Driehaus, if you would share with us some of the additional 
experiences that you had on the Financial Services Committee.
  Mr. DRIEHAUS. Well, I would just share with you and share with 
everyone here that the reality is that, from a legislative standpoint, 
nothing has changed. Despite the fact that we're in the worst recession 
that we've ever experienced--we all know what caused this. We know how 
we got here. We know the lack of regulation on these very sophisticated 
financial instruments caused the mortgage meltdown which led to the 
recession. But the fact of the matter is, legislatively, nothing has 
changed in statute.
  We passed a good bill out of the House----
  Mr. GARAMENDI. Back in December.
  Mr. DRIEHAUS. We passed a good bill that had a lot of measures. 
Subsequent to that, after it went over to the Senate, there has been 
stalling by the Republican Senators. We've had closed-door meetings by 
leadership of the Republicans in the House and in the Senate, both here 
in Washington and on Wall Street, because the financial firms on Wall 
Street like the status quo. We've seen their profits. They're back to 
the days of big bonuses. But our neighborhoods are still struggling. 
Our neighborhoods are still trying to get out of the foreclosure crisis 
that has impacted them, And it's going to be years before they come out 
of that crisis. It's the most important thing that we can do here is 
make sure that this never happens again, but our Republican colleagues 
in the Senate are standing in the way. At least here, the Republicans 
just voted ``no,'' but they couldn't stop the process from moving 
forward.
  We, as a Congress, have an obligation to the people. We, as a 
Congress, have an obligation to the people to ensure that the crisis 
that we found ourselves in never happens again. We do that through 
strong regulatory reform. We've passed a strong measure in the House. 
We're waiting upon the Senate to tell the American people that we won't 
let this happen again. That is our responsibility, and that's what we 
need to impress upon people as we move forward.
  Enough of the closed-door meetings with Wall Street; it's time to act 
on behalf our constituents.
  Mr. GARAMENDI. Let's be very clear that those closed-door meetings 
were the leadership of the Republican Party sitting down with Wall 
Street and talking about how to preserve the present system that led to 
this great collapse.
  You said something that just ticked me off--not at you, but at the 
situation--and it's the Wall Street bonuses. At a time when hardworking 
men and women, more than 8 million Americans were losing their jobs as 
a result of the financial games of Wall Street, 8 million--in my 
district, tens of thousands of men and women that worked hard every 
single day to put bread on their table for their family, to keep their 
roof over their head lost their jobs because Wall Street was playing 
financial games, thinking of the financial market as some sort of 
gambling casino while my constituents were losing their houses, losing 
their jobs, forced to go on unemployment, losing their health 
insurance.
  What was going on, on Wall Street? Well, here it is: Wall Street was 
paying some of the highest salaries and bonuses ever in America's 
history. In 2007, before the collapse, look at that, $137 billion, $137 
billion in pay and bonuses. During the great collapse in 2008, when 
750,000 people were losing their job every month, Wall Street was 
paying its fat cats $123 billion. And then in 2009, using the recovery 
money, using our taxpayer money, what did Wall Street do? They paid 
themselves $145 billion.
  There ought to be a law--in fact, there ought to be a tax law that 
says when you get a fat-cat bonus and you've taken your company into 
virtual bankruptcy, we're going to tax that bonus and we're going to 
bring it back. We're going to bring it back to the local bank so that 
they can make a real loan to real businesses and put aside the 
financial gains. There ought to be a tax on those kinds of 
unconscionable bonuses and pays that are going to these Wall Street fat 
cats that nearly brought down the world's financial economy. There 
ought to be a law, and that law is being held up now by the Republican 
Party. We need Wall Street reform right now.
  Ms. KAPTUR. Would the gentleman be kind enough to yield?
  Mr. GARAMENDI. I would be delighted to yield.
  Ms. KAPTUR. Congressman Garamendi, I want to compliment you and 
Congressman Steve Driehaus of Ohio for putting this information on the 
Record.
  I think it's important to state that at the beginning of the 
financial crisis, these large institutions, the six of them that are 
the most culpable--JPMorgan Chase, Morgan Stanley, HSBC, Wells Fargo, 
Citigroup, Goldman Sachs--had one-third of the capital in this country, 
one-third of the assets in those institutions. And while they were 
taking all those bonuses and while this Nation has gone through this 
terrible washout, they now command 66 percent. They doubled the size 
and their importance inside this economy.
  So while they're taking those horrendous bonuses, they've also been 
gobbling up institutions. States like my own are losing their money 
center banks. The fees that banks that didn't do anything wrong are 
having to pay have gone up extraordinarily. We don't know if some of 
them will make it. But they are just huge leviathans that are taking 
over this economy, and look at what they've done.
  Mr. GARAMENDI. More like tyrannosaurus rexes.
  Ms. KAPTUR. I love that.
  Mr. GARAMENDI. Did you say at the beginning of this crisis in 2007 
they had something like one-third of the financial assets----
  Ms. KAPTUR. That's right.
  Mr. GARAMENDI. And today the largest five have over 60 percent?
  Ms. KAPTUR. Sixty-six percent.
  Mr. GARAMENDI. Sixty-six percent. Now we really have a serious 
problem called ``too big to fail.'' Now we're in a very, very serious 
problem.
  I want to refer back to this chart that we were using before. The 
legislation does deal with this issue of too big to fail.
  Now, we passed a good bill out of here in December that dealt with 
this,

[[Page 7195]]

but on the Senate side there are some Senators who are progressive and 
thinking about this and they're saying, Wait a minute. Maybe we should 
limit to 10 percent, no company can have more than 10 percent of the 
total assets. When you get that big, that's it. You're going to have to 
shed assets. Someone else is going to have to pick it up.
  But now we have seen even more concentration in Wall Street. We can't 
wait any longer for the reforms. We can't wait any longer. America 
can't wait any longer. How many more hardworking men and women are 
going to lose their job as Wall Street continually declines to provide 
loans to Main Street?
  Ms. KAPTUR. Yes.
  Mr. GARAMENDI. Let's take a look at some of the facts about that.
  I heard you, in one of our discussions, talk about this and the 
effect in your community in Ohio, the men and women, the small 
businesses, their inability to get loans. Why don't you pick that up 
and share some of the stories.
  Ms. KAPTUR. I just did that again this weekend. I went into a bakery 
in our district, and the owner said, Marcy, I could hire three more 
people and I want to add some machines and so forth because I've got 
orders I can't fill, but I can't get operating loans from the bank.
  Credit is frozen across this country because they are these big, 
giant, inefficient institutions, and credit needs to be more 
decentralized. We need more financial institutions not fewer financial 
institutions. And the financial reforms that this Congress should pass 
should go to that level to restore a robust, competitive financial 
system in this country. And, by the way, we not only have to make the 
future better; we have to go back and catch the crooks that put us on 
this path.
  I have a bill, H.R. 3995, that would add 1,000 agents to the FBI, to 
the SEC, and to the FDIC in order to fully investigate and go after 
these big institutions, because what happened after 9/11 was that the 
White Collar Crime division of the FBI was reduced to 75 investigators, 
75. The SEC has 25 going after the largest financial institutions in 
this country? We need to, both on the civil side and the criminal side, 
investigate and prosecute.
  When you have this level of implosion in an economy and a few people 
are getting very rich and everybody else is suffering, doesn't that 
tell you that something was fundamentally wrong? Some people say it was 
rigged, that control fraud may be, in fact, what has riddled through 
the system from the very top down through every community that we 
represent. So H.R. 3995 would add 1,000 more agents and help beef up 
prosecution in this country.
  Mr. GARAMENDI. Well, just before we took the floor here for this 
discussion, I was listening to our Republican colleagues say that 
government regulation is wrong. Well, no, not in the case of Wall 
Street. The statistics you just gave us, did you say the FBI had 75 
agents for all of the United States to deal with Wall Street?
  Ms. KAPTUR. Yes.
  Mr. GARAMENDI. At a time when the Wall Street behemoths were going 
from 33 percent of their total financial wealth in the Nation to 66 
percent? And 30-something people for the Securities and Exchange 
Commission?
  I hope your bill passes. We need watchdogs. We need watchdogs with 
teeth that are willing to bite into the arrogance and the greed of Wall 
Street. We need those people there to watch and to make sure that the 
kind of financial rip-offs that occurred that nearly took down this 
Nation's economy--and the world's economy with it--and put hardworking 
men and women that were out there on the production lines in your 
community, that were building the homes in my community, the farmers, 
they're out of work. They are unemployed. Why? Because of the 
extraordinary greed, arrogance, and mismanagement of Wall Street 
thinking that the financial institutions of America are nothing more 
than a Las Vegas casino, where a bet is placed on a product that they 
could not even describe. Enough already. Enough already.
  The Republican Party has got to come to its senses and give us the 
opportunity to pass a strong financial reform of Wall Street. The 
people in my district, my homeowners, my small businesses are trying to 
get a loan at a time when we're seeing more and more concentration of 
power on Wall Street.
  Ms. KAPTUR. Would the gentleman yield?
  Mr. GARAMENDI. I would be delighted to share with you.
  Ms. KAPTUR. What is unbelievable is the public relations on this, 
because companies like Goldman Sachs now have whole new lobbying 
offices here in Washington to hire people to try to convince us that 
the real is unreal. And what they're saying is that, well, you know, it 
isn't our fault that this happened. It's the fault of those Americans 
down there who lost their jobs and they maybe won't be able to pay 
their mortgages, right? Well, wait a minute. Wait a minute. Why did 
they lose their jobs, and why can't unemployment benefits at least be 
used in the interim to help people stay in their homes for the next 
year until we can try to get this economy to recover?
  And so the very institutions that are not working out loans at the 
local level and making billions and billions and billions of dollars 
more in profits and in bonuses are saying to us, Oh, it's not our 
fault. It's the fault of the American people who wanted to own a house. 
You know, it's really their problem that they got put out of work, 
when, in fact, these institutions aren't loaning money to our small 
businesses that want to employ people. They're not doing mortgage 
workouts at the local level. They are not taking any principle write-
downs, which they could do, and in a formal FDIC bank regulatory 
process that would happen. They're not serious. They're not serious at 
the bargaining table. They are not even returning calls to our Realtors 
at the local level. We're trying to reach accommodation on short sales. 
We've been trying to reach accommodation on short sales for 2 years. 
They're standing up the Realtors across this country as we get more and 
more foreclosures around this Nation. We have to focus on the big six.
  Mr. GARAMENDI. Well, the big fix is available. The big fix is to 
reform Wall Street, to stop the kind of greed that has nearly destroyed 
this Nation's economy and the world economy along with it.
  The bill that was passed by the House of Representatives in December 
is a good, strong bill. We beg our Republican colleagues over in the 
Senate to stand aside. If you don't want to work towards a decent 
reform, then get out of the way and let the Democratic Party put in 
place a strong reform that will bring Wall Street to its senses, that 
will once again make Wall Street a legitimate, honest, transparent 
place where the financial inner workings of this Nation can take place. 
That's our plea, and we need to have it done, not next month. We need 
to have it done this week.
  Thank you so very much.
  I yield back my time, Mr. Speaker.

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