[Congressional Record (Bound Edition), Volume 156 (2010), Part 6]
[House]
[Pages 8126-8132]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           PROGRESSIVE CAUCUS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2009, the gentleman from Minnesota (Mr. Ellison) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. ELLISON. Mr. Speaker, I am claiming the time on behalf of the 
Progressive Caucus, which is that body within the Congress itself, that 
group of people who are dedicated to the ideals that have made America 
fairer, America more open, America more inclusive, and America more 
peaceful over the years. The Progressive Caucus, who believes that 
working people of America deserve fair wages, workers' rights, and 
things like that; who believe that our country should be at peace with 
the rest of the world, and who believe in diplomacy and who believe in 
talking it out and who believe war is rarely a good idea, and when it 
is, it should be executed with the most amount of care for our soldiers 
and our veterans, and who believe diplomacy is almost always the right 
answer.
  The Progressive Caucus, who believe immigration reform should be 
humane and that we should put ideas of family reunification and a path 
towards citizenship up front. The Progressive Caucus, which believes 
that during this time of financial fragility and uncertainty that we 
need a robust, strong reform bill that will hold Wall Street 
accountable so that the money of the American people is cared for in a 
safe and proper way. This is the Progressive Caucus, and this is the 
progressive message where the Progressive Caucus comes to the House 
floor to talk about issues of and concern to the American people, to 
explain the position of the Progressive Caucus to the American people 
and to talk about things that really matter and to make sure, Mr. 
Speaker, that the American people know that there is a progressive 
voice in Congress. That voice is the Progressive Caucus, and this is 
the progressive message.
  Mr. Speaker, today the topic for the progressive message is Wall 
Street reform and jobs. Wall Street reform and jobs. A lot of people 
think about this Wall Street reform package that is moving its way 
through Congress and they think, You know what? I know this has a lot 
to do with me, but I am not exactly sure what. People know it was tax 
money that was pulled together during September and October of 2008, 
and that the Troubled Asset Recovery program was pulled together and 
salvaged some American banks to stop the whole system from going down. 
The American people know that. It was unpopular, nobody wanted to do 
it, but people knew it had to do with them and their tax money. The 
American people also know it had something to do with credit-default 
swaps and it had something to do with mortgage-backed securities; but 
the fact is, Mr. Speaker, this stuff is a little confusing and it makes 
a lot of sense for us to talk about it. But it makes sense to talk 
about it from the standpoint of jobs and businesses, particularly small 
businesses, and it makes sense to talk about it from the point of view 
of the consumer. So we will be talking about that today over the course 
of the next hour.
  But before we do, I want to dive into a few things about jobs, about 
the state of our economy. The fact is that it is good news that we have 
seen some positive job news. On May 7, just a few days ago, the 
Department of Labor reported that 290,000 jobs were created in April. 
This is a good thing, but I am quite certain if you look around the 
neighborhoods and the farms and the rural communities and the urban 
centers and in the suburbs of the United States, there are still a lot 
of people not working. Positive job growth, yes, because the Democratic 
Caucus, led by a progressive voice, helped to make that happen. But the 
fact is that there are still a lot of people out of work.

                              {time}  1430

  Much has been done. Much needs to be done because this 290,000 jobs 
in April is good, but the fact is we need about 300,000 jobs added per 
month in order to keep up with population. If we do less than that, the 
unemployment rate will remain high, and that is something that is wrong 
and we should do something about.
  But I do want the American people to know that we've seen 290,000 
jobs added in April. Good sign. And then we saw 231,000 created in the 
private sector, and that's a lot of jobs, and that's good, most of that 
growth coming from the private sector.
  Those 290,000 jobs, new American jobs added in April, larger than 
expected and the largest gain since March 2006, that goes to show that 
addressing health care, addressing the stimulus package and the 
American recovery package are things that really help the American 
economy and are getting our economy back on the road to health.
  But the question is, Mr. Speaker, what does it mean for so many 
people, still out of work. We still need a jobs bill. We still need to 
do something about jobs. And we need something to stimulate job growth 
in our public sector and in our private sector. This is undone work, 
still needing to be done.
  We want to celebrate the good news, but we want to also talk about 
what else needs to be done. The good news is that this is the fourth 
consecutive month of job growth with 537,000 jobs added since December. 
So this is nearly a half a million jobs added, 84 percent of which is 
in the private sector.
  So some friends on the Republican side of the aisle have said, oh, 
well, yeah, you know, you spend a lot of money in the recovery package 
and, yeah, you're going to get positive job growth in the public 
sector. But these jobs, the growth has been in the private sector, 
which means that the stimulus bill worked, and the American people are 
benefiting from it right now.
  Also, it's true that in March sales of new homes increased about 27 
percent, to 411,000 at an annual rate, the strongest since last July, 
the biggest monthly increase in 47 years. The biggest monthly increase 
in 47 years.
  Home prices in February rose 1.4 percent, posting the first year-to-
year gain in more than 3 years.
  The unemployment rate, as I mentioned before, unfortunately, 
increased to about 9.9 percent. It went down to 9.7 and dipped back up 
to 9.9, about 10 percent. But this is a result of over 805,000 people 
entering the workforce because people feel that this is a time they 
might be able to find a job again. These people need to find that job 
opportunity, and that's why the Congress needs to pass more job 
legislation.
  Over the past 3 months, we've added an average of 187,000 jobs per 
month, in contrast to 727,000 average jobs lost per month during the 
last 3 months of the Bush administration. No one should ever forget 
that in the last month of the Bush administration, January 2009, 
January 2009, this economy lost 741,000 jobs. And that was about 
average for the last 3 months of the Bush administration.
  Right now, we've seen a 290,000 job increase. The stimulus package 
worked. The Democratic Caucus is working, and we need more job growth 
in order to make sure that young people coming out of school in the 
next few weeks will have a job to do, and those folks who are still 
among the ranks of the unemployed can get work.
  So since the Recovery Act, stocks have gone up across the board, the 
Dow has gone up over 70 percent, and the S&P 500 is up 80 percent, 
NASDAQ is up about 100 percent.
  Last year, Americans' tax bills were at their lowest points in 60 
years, since the Truman administration.
  So just going on, Mr. Speaker, talking about the state of our 
economy, before we get to Wall Street reform, job growth seems to be 
moving up. We

[[Page 8127]]

seem to be moving from this state of job loss to now job growth. Still 
we have 10 percent unemployment, and we've got to do something about 
it.
  During the 111th Congress, this Congress, Democrats have taken a 
series of steps to make these positive job numbers a reality. I want to 
talk about those tonight, Mr. Speaker, because it's important that the 
American people know that, with the progressive vision, often led by 
the Progressive Caucus, that this Democratic Caucus has been doing the 
right thing for the American economy. For example, we passed the HIRE 
Act. This is a bipartisan bill to create 300,000 jobs with tax 
incentives for businesses that hire unemployed Americans. This is 
helping people out. And the HIRE Act is helping small business add 
people on their rolls so that they can work.
  The American Workers State and Business Relief Act, this bill offers 
tax incentives, again, to spur business innovation and tax cuts for 
families with kids headed to college and disaster relief for States, 
combined with economy-boosting unemployment benefits and health care 
for Americans hit by the recession.
  We also passed the Small Business and Infrastructure Jobs Act. This 
bill extends aid to States to provide subsidies to employers, including 
small businesses who hire unemployed workers that is on track to put 
over 160,000 Americans back to work. That's good news.
  And then of course, last week, we passed the Home Star Bill, which 
will create much needed jobs in the manufacturing sector by--we passed 
the Home Star Bill, which gives tax incentives to renovate homes.
  But also one bill that's been introduced is an important bill that 
will create much needed jobs in the manufacturing sector by providing 
tax rebates to homeowners who install energy-saving products. That's 
right. So that's the Home Star Bill.
  Mr. Speaker, also, the Congress and the President have worked 
together to enact a whole array of broad tax cuts that working families 
and middle class families and small business owners can have, which 
ends the era of Republican tax breaks focused only on the wealthy.
  It's important to point out, Mr. Speaker, that Democrats, even 
progressives, don't object to tax breaks. We just object to tax breaks 
for the people who don't need a tax break. American people working hard 
every day can use them, and we've been in favor of them.
  All told, Congress has enacted more than 800 billion tax cuts with 
another 285 billion making their way through Congress in order to help 
spur innovation and employment for people who actually need it and can 
use it.
  Congressional Republicans threaten to take us back to the failed 
policies that created the economic crisis. In fact, Mr. Speaker, I'm 
going to be talking about Wall Street reform, which actually is the 
kind of reform that we need to correct what the Republicans have 
created, which is a failed economy, which the Democrats, right now, are 
trying to pull the American people out of.
  Congressional Republicans are trying to take us back to these old 
policies. They want to side with the special interests, with Wall 
Street banks, credit card companies, Big Oil, and insurance companies. 
This is wrong, Mr. Speaker. And we're here to do something about it.
  These economic and fiscal policies created by the Bush administration 
created the Bush recession, the worst financial crisis since the Great 
Depression of the 1930s, with job losses of nearly 800,000 a month 
during the Bush administration, and nearly doubled our national debt.
  It's amazing when you hear Republicans talking about spending, given 
all the spending that they did, putting our economy at risk.
  Republicans have voted against every single piece of economic 
legislation, from the Recovery Act to the Wall Street reform, choosing 
the special interests over the American worker and families and small 
businesses.
  So, Mr. Speaker, the Democrats, the Democrats in Congress will 
continue to take America in a new direction, working to create American 
jobs and a new strong foundation for our economy, protecting Main 
Street and the middle class, and getting results.
  I'm going to talk about one of those major reforms in just a moment. 
But during the last 3 months of the Bush administration, we lost an 
average of 726,000 jobs, Mr. Speaker. In the last 3 months we've 
created 186,000 jobs. The current unemployment rate is 9.9 percent. So 
we're coming back. We're moving up. We've got much more to do, but that 
then sets the stage, Mr. Speaker, for the Wall Street reform discussion 
we're going to have tonight.
  Mr. Speaker, let me start out with a very simple proposition, a very 
simple proposition. Wall Street reform is good for Main Street. Very 
simple proposition. Wall Street reform is good for Main Street. Wall 
Street reform is good for Main Street because if Wall Street creates a 
situation where they've got to have massive bank bailouts, that's 
coming out of the taxpayer, which is represented by Main Street.
  We've got to make sure that we pass financial reform legislation that 
stops the bailouts, that stops the tricky and fine print and the hidden 
terms and the nonunderstandable and indecipherable contracts for 
credits cards. Wall Street reform is good for Main Street.
  We need to create a situation, Mr. Speaker, where people who want to, 
if you want to sell a loan or you want to sell a mortgage you've got to 
keep some skin in the game. You can't just sell that mortgage and now 
you don't care if it's well underwritten. You don't care if you've made 
sure somebody's going to pay that loan back, because you sold the paper 
that's all you need to know. That's something that's got to change. All 
those things represent Wall Street reform. Wall Street reform is good 
for Main Street.
  Main Street, whether Main Street's in Minneapolis, which is my town, 
or in Los Angeles or in Peoria, Illinois or in Laverne, Minnesota or 
any small town across America, or any big town across America, or any 
suburb or anywhere, Wall Street reform is good for Main Street. It 
protects our tax dollar. It protects the consumer, and it makes sure 
that there are fair, clear rules for Wall Street to live by. Not unfair 
rules, not rules that are bad for Wall Street, but rules which allow 
good actors on Wall Street to remain good, and allows the unscrupulous 
actors to get some punishment for what they have done.
  But you've got to understand that if we don't have clear rules, clear 
rules of the road, then some actors on Wall Street will think, you 
know, by not doing shady things, we're losing out, so we'd better go do 
them. We don't want that. We want to have clear, fair rules to keep 
good actors good and to keep bad actors out and accountable when 
they're not out.
  So that's what the main message is for today, Mr. Speaker. Wall 
Street reform is good for Main Street. Very important.
  Mr. Speaker, I just want to talk to you for a moment about what Wall 
Street reform means. Some people think, well, what does Wall Street 
reform mean? This is a lot of complex stuff. Are we talking credit 
default swaps? Are we talking about derivatives? Are we talking about 
resolution authority? What does all this stuff mean?
  Well, you know what? It's not very complicated at all. It's actually 
pretty simple, Mr. Speaker. Wall Street reform means policing Wall 
Street, meaning have real regulators up there to actually hold some 
people accountable, no more Bernie Madoffs, no more folks who made off 
with the money.
  Wall Street reform means ending bank bailouts. Everybody hated the 
bailout. In my opinion it was a necessary thing to do, but it was one 
of those kinds of things that we all hated to do. We need to end 
taxpayer-funded bailouts forever, and that's why we need resolution 
authority. And I'll talk about what that means.
  And we need, also, Mr. Speaker, to stabilize the economy. We need to 
stop these wild bubbles. This bubble during the first decade of this 
century created a housing bubble which led to a, what, a bursting of 
the bubble, and we saw

[[Page 8128]]

real, real pain: 2.8 million foreclosures last year alone, Mr. Speaker. 
We cannot revisit that kind of situation again.
  And stop gambling with worker pensions. Some folks don't really 
realize how deeply involved Main Street is in Wall Street. But if you 
have a 401(k) or a pension or anything like that, Mr. Speaker, your 
retirement money is on Wall Street. We can't allow it to be gambled by 
people who are looking for no more than a quick return with very little 
accountability. That's what it means. Wall Street reform means policing 
Wall Street, ending bank bailouts, stabilizing the economy and stopping 
gambling with worker pensions.
  Now, Mr. Speaker, I think it's important for people who are out there 
listening, Mr. Speaker, to understand what it is, who's on the side of 
the people and who isn't. Who's side are you on is what this bill, this 
board asks, Mr. Speaker. Who's side are you on?
  And the question is, Democrats represent Main Street. And that's why 
Democrats support jobs bills, as I just talked about, support 
unemployment insurance. Democrats support curtailing excessive Wall 
Street bonuses. We'll talk about those in a minute.
  Democrats represent creating new consumer protection agencies so that 
the fine print, the tricky terms, they say 9.9 percent on the credit 
card until it's not. When is it not? Whenever they say it's not. We've 
got to stop that kind of thing.

                              {time}  1445

  And Democrats support tax cuts for small businesses and worker 
families, just as I got through talking about, and Democrats support 
regulating Wall Street and preventing foreclosures. All these things 
are what the Democrats are all about. All these things help the 
American people.
  Now, what are the Republicans talking about? Because they are 
complaining a lot, and they always have a lot of criticism for our 
side. But Republicans, they opposed the jobs bills and the unemployment 
insurance. You know, Mr. Speaker, I don't believe one of them, not even 
one of them, voted for the stimulus bill that helped to create that 
290,000 job bump that we saw in April. None of them even supported the 
stimulus bill which has led us back to positive job growth. They were 
against it, even though they spent money on wars, spent money on Iraq, 
spent money on giving the richest people tax cuts. They oppose it when 
we are trying to get average working Americans some jobs and some 
unemployment insurance.
  By the way, it's amazing, but they are against curtailing excessive 
Wall Street bonuses. They actually have the nerve to say stuff like, 
well, should we curtail the bonuses of professional athletes? Should we 
curtail bonuses of this person or that? Look, that's irrelevant. Those 
guys aren't asking for the American people to bail out their bank. This 
is about saying if a big Wall Street CEO wants to get a golden 
parachute after running the company into the ground like Stan O'Neal 
did Merrill Lynch, then maybe the American people should have something 
to say about it. If you want a bunch of money from the public trough, 
you shouldn't be flying around on jets just to come testify, getting 
excessive bonuses, stuff like that. It's just fair. So this is what we 
are talking about.
  The Republicans opposed creating a new consumer protection agency. 
Wait a minute. You mean to tell me the American people haven't gone 
through 2.8 million foreclosures in 2009 alone all based on no doc 
loans, liar loans, loans where nobody even wants to figure out whether 
you can pay back the loan, where they just put pressure tactics on you 
to just sign, sign, sign, sign, sign. You mean to tell me you don't 
want somebody to watch and make sure that these loans are fair, that 
the terms of the loan are clear, that people understand what the 
interest rate is going to really be, that they really understand that 
the total amount you are going to have to pay for this house over the 
term of the loan, that you understand what negative amortization is, 
that this teaser rate is not going to stay at 700 bucks, it's going to 
jump to 1,100 bucks after the 2-year or 3-year period is over? You mean 
to tell me you don't want anybody to protect the American people from 
that kind of stuff? They say no. They say buyer beware, caveat emptor, 
that is their problem.
  Democrats say you know what, if you have a fair product at a fair 
price that you are willing to disclose, go out there and use the 
American enterprise system to do it. But don't trick the people, don't 
sell somebody a horse that can't see and then when the person asks 
about it you tell them it sees just fine. Don't do that. Be honest. Be 
a good businessperson. That's what the Democrats are saying. The 
Republicans are saying buyer beware. They are saying we don't care. 
Just sell anything you want to whoever you want at whatever cost you 
want.
  They oppose tax cuts for small businesses and working families. The 
American Recovery and Reinvestment Act, Mr. Speaker, actually gave tax 
cuts to about 95 percent of the American people. The American 
Reinvestment and Recovery Act gave tax cuts to about 95 percent of the 
American people. How many votes did the Republicans give us to help the 
American people get some tax cuts as opposed to the rich Wall Street 
types? None. They didn't want to help on that one. They were busy. They 
were against it. They were all worried about other things when we were 
talking about helping the American people out.
  So, they oppose regulating Wall Street and preventing foreclosures. 
They are not in favor of that. Let me tell you, Democrats, Mr. Speaker, 
were working on antipredatory lending legislation during 2005, during 
2006, during 2007, but we were in the minority. During 2008, the 
Republican caucus blocked it every step of the way. And now that the 
Democrats are in charge, we are moving full steam ahead to pass bills 
that will prevent predatory lending and stop foreclosure. And we would 
like a little help, but so far, Mr. Speaker, we haven't gotten any.
  I talked a moment ago, Mr. Speaker, about Wall Street's pay record. 
And I talked about how the Republican caucus was against bringing in 
these excessive bailouts and these excessive bonuses for Wall Street 
CEOs, who by the way get TARP money, the public money. Wall Street's 
record pay. After receiving trillions in taxpayer-funded bailouts, the 
top 38 financial firms gave record pay to their employees in 2009. They 
gave your money, Mr. Speaker. They gave them the taxpayers' money. We 
are trying to stop that. We are trying to make sure they don't do that. 
But we are not getting any help from the other side of the aisle.
  So they gave record pay to their employees during 2009. During the 
great recession, Wall Street pay in the billions. 2007, their bonuses 
were $137 billion. 2008, $123.4 billion. 2009, $145 billion. That's 
incredible, particularly during a recession. But the Democrats are here 
to say no more. We will not allow you to do that.
  Now, Mr. Speaker, as a result of Democrats working hard to pass jobs 
bills, to push on this issue of consumer protection, to passing the 
Credit Card Holders Bill of Rights, what we have seen is this downward 
trend in the economy during the Bush administration breaking sharply 
upward during the Obama administration. During the Bush administration, 
$15 trillion in wealth was destroyed between July 2007 and 2009 as home 
values plummeted during the foreclosure crisis. This is what happened 
during the Bush administration.
  But when Obama comes in, the numbers start going all the way back up 
again. The road to recovery. U.S. household net worth going back up. 
And it's going back up every day. What we have got to do is stay the 
course and keep on building and strengthening our economy by holding 
Wall Street accountable, by passing job-promoting legislation, and by 
letting consumers keep some of their money and given a fair deal.
  So Mr. Speaker, let me just talk a little bit about some of these 
issues about how Wall Street reform is good for working Americans. So I 
want to go back to my first board. So Wall Street reform is good for 
Americans.
  Mr. Speaker, we are here today to talk about ending decades of failed

[[Page 8129]]

policies that ultimately caused a near complete collapse of our entire 
economy. We are here today to talk about what brought us the greatest 
recession since the Great Depression. Wall Street reform is good for 
Main Street. The crisis is the product of reckless actions of massive 
private financial institutions coupled with deregulation and 
nonregulation and no oversight while the Congress was under the watch 
of the Republicans and the Bush White House. These policies have come 
with an enormous cost to the American middle class.
  Mr. Speaker, do you realize that $14 trillion of net worth has been 
lost when we watched home values plummet during the Bush 
administration? Twenty-two percent in decline in net worth for 
individuals. Pensions fell. Pensions, Mr. Speaker, fell by $28.4 
billion. Pensions, what Americans rely on to care for them during the 
golden years, the value dropped so that people have to work longer. 
People who are hoping to retire cannot do so. Last year alone 2.8 
million homes lost to foreclosure in 2009. Twelve million Americans 
relying on payday loans just to get by. Thirty-three billion dollars in 
bonuses for Wall Street executives.
  Mr. Speaker, when we pass financial reform, including the Consumer 
Financial Products Agency, those 12 million Americans relying on payday 
loans to get by will have a watchdog watching over them to make sure 
they are not abused by sharp practices, fine print, and tricky terms 
and conditions. So when you hear Republicans talking about financial 
reform and how we shouldn't do it, and they don't want this and they 
don't want that, just keep in mind those 2.8 million homeowners who 
lost their home in foreclosure or those 12 million Americans who are 
relying on payday loans just to get by, relying on credit cards just to 
get by.
  Who is going to make sure those terms are fair, that they disclose 
those terms, that somebody is watching out for that consumer? It will 
be the Democratic caucus and the President who passed financial reform. 
I do hope we get at least one Republican to vote for it, but I am not 
holding my breath.
  You know, it's important to point out, Mr. Speaker, that when you 
hear Republicans talking about cutting redtape or letting the market 
sort it out, actually that has very severe implications for the 
American people. Cutting redtape means getting rid of regulations. It's 
like calling the police officer on a beat redtape. It's like saying a 
regulator who makes sure that financial products are fair is redtape. 
It's not redtape. It's regulation that's necessary to make sure the 
American people are treated fairly.
  Let's talk about what they really mean when they say cutting redtape 
and letting the market sort it out. It means no accountability and no 
responsibility for multinational corporations and Wall Street CEOs who 
gamble with our national well-being. And it means a basic assurance 
that if they have their way we will be back in bailoutville again. We 
will be back in this mess again. And that's why we've got to pass 
financial reform.
  Since taking back control of the Congress we have seen the Democratic 
caucus take real action to help consumers. In December 2009, the House 
passed the Wall Street Reform and Consumer Protection Act. The Senate 
is moving its bill forward now. The Senate is currently working on that 
bill, and it looks like it's going to come up soon. The House bill will 
protect consumers and investors and small businesses and put our 
broader financial system on more stable footing. The House bill will 
place badly needed regulation of things like derivatives, hedge funds, 
and credit rating agencies.
  Mr. Speaker, let me just take a moment to help the American people 
understand what a derivative is. A derivative is kind of like a hedge. 
When the value of a particular security goes down, the derivative is 
supposed to cover that fall in value and make sure that you don't lose 
all altogether.
  A form of derivative is a credit default swap. And basically what 
that is is that when you have a mortgage-backed security, that means a 
security that's traded but is backed up by mortgages, that if the value 
of that security falls down that credit default swap is supposed to 
pay. Unfortunately, Mr. Speaker, this instrument, this credit default 
swap, is like insurance, but it's one of those air quote ``like 
insurance.'' It is not really insurance, but it's like insurance. 
Because if it was insurance, it would be regulated by a State insurance 
commissioner who would make sure that that insurance company had the 
money to cover claims if there would have been a claim.
  A regular insurance company says, you know what, if you are going to 
hold yourself out as an insurance company and you are going to write 
policies for people, you have to have enough money if there is an auto 
accident or a tornado or there is a loss of life or whatever we have 
insurance for. But when it comes to these credit default swaps, there 
was no such regulator. Nobody made sure that there was enough money to 
back the loss and pay the claims if those securities went down in 
value.
  And because of that, when the mortgage-backed security market went 
down because people were not paying on their mortgages because they 
were in foreclosure, and they began to make claims for those credit 
default swaps, there wasn't enough money to cover them. And the 
American people had to bail out AIG so they could pay those creditors. 
That's what a derivative is.

                              {time}  1500

  Derivatives are going to be regulated under the new financial reform. 
There will be that commissioner. There will be that regulator to make 
sure that this market works properly and that it doesn't cost 
catastrophic losses in our economy.
  Hedge funds. Hedge funds are large funds generally held by wealthy 
individuals. They'll be regulated.
  Credit rating agencies. These are agencies that issue ratings for 
bonds like a AAA rating or a AA rating or a BBB rating or other types 
of ratings that they can give. The fact is that these credit rating 
agencies, some of them, when they said that this security was AAA, it 
wasn't. Some of these assets that they said were good were not good. 
And when they went down in value, the people who relied on the credit 
rating agency were caught by surprise, and this is why these credit 
rating agencies are going to have reform. And it's a good thing, Mr. 
Speaker.
  Now, let me just say the other thing that we're going to do in reform 
is--I mentioned mortgage-backed securities. A lot of people don't--it's 
like, well, what is that? Well, a mortgage-backed security is a 
security where--imagine that you have a house and you have a mortgage 
on that house, and then the bank is going to receive the money that the 
homeowner is paying on their mortgage. And imagine that the bank says, 
You know what? This homeowner owes me a stream of income. If you want 
it, I'll sell it to you. And the person says, Well, I'll buy it. And 
the person starts buying up a lot of mortgages, and then they take 
those mortgages and they bundle them up. That's a mortgage-backed 
security.
  And then they take that mortgage-backed security and they bundle 
those up, and that's called a collateral debt obligation. Imagine a 
mortgage is an M&M, a bag of M&Ms is a mortgage-backed security, and a 
box of bags of M&Ms is a collateral debt obligation.
  Now, imagine all of a sudden that somebody were to take that box of 
bags of M&Ms and kind of slice them up and sell them off. What it might 
look like is something like this. You might have--these things are 
called tranches. A tranche is nothing but a French word that means 
slice, and a slice is something that you have if you look at this 
mortgage-backed security.
  This top tranche, mortgage-backed security, is made up of these 
tranches, each rated a little risker than the next. So this top tranche 
is a AAA tranche. That's the one that the rating agencies tell us is a 
AAA tranche, and we rely on them and expect that they are being honest 
and have done a good job in rating the risk of that top-rated tranche.
  But then the next tranche might be one down here. This is a B--AA 
tranche, and one of the riskier

[[Page 8130]]

tranches, so maybe down here, maybe you have BBB here.
  So these things, you get it in a document. It's usually a document, 
and you can buy this mortgage-backed security or you can buy a piece of 
it and you can have an interest in it, and it will entitle you to a 
stream of income. But how valuable is it? How safe is it? How sound is 
it? It all depends upon how well the rating agency has rated risks for 
each tranche.
  So if you look at this particular mortgage-backed security, this 
tranche's performance is referenced by multiple unrelated investment 
vehicles in 2006 and 2007. So if you have one of these things and you 
look at it, it will say that this is an index call, the ABX.HE, BBB 
rating, 0.06-2. Here it is. Then you have Mezzanine Fund, Hudson 
Mezzanine Fund. That means it has a lower rating for risk.
  And you have these down here. Abacus. You have this one. And they're 
all down here. So these are all down the line and these are all high.
  So this is what a mortgage-backed security could well look like as 
you look at the various tranches that descend in order of risk. The 
problem with this is that when they were--the risk was not properly 
assessed and evaluated, and when they began to decline in value, you 
began to have real trouble in our market. And it's because of a lack of 
regulation, which is going to be taken care of as Congress moves 
through financial reform.
  Now, what does all of this mean? And we'll return to this in a 
moment. What does all this mean for working families? Working families 
might think, you know what? I don't know what a tranche is. I don't 
know what a credit default swap is. I don't know what a mortgage-backed 
security is. All that's true. But perhaps the portfolio manager of your 
pension or your 401(k) knows what it is and, therefore, it affects you 
directly.
  Well, what this means, what it means is that financial reform is 
going to mean that bank loans, mortgages, and credit cards are going to 
be fairer, more affordable, more understandable, and more transparent. 
Financial reform is going to mean that there's going to have to be real 
disclosure and that the government is going to take some real 
responsibility to make sure that these credit rating agencies are 
properly assessing risk, are making sure that the companies that do it 
are properly assessing risk, are going to make sure that consumers are 
treated fairly, are going to prevent bailouts, and are going to make 
sure our economy has a more stable footing.
  Financial reform is going to mean that it's going to ensure that 
consumers get the information that they need in a clear, precise format 
regarding banks, mortgage services, and credit card companies.
  Financial reform is going to prevent the financial industry from 
offering predatory loans to people who can't afford the repayment and 
that these loans are going to be properly underwritten so that people 
don't get in over their head.
  Financial reform is going to put in place commonsense regulations to 
stop abuses by the financial services industry as payday lending and 
exorbitant overdraft fees. Overdraft fees. That's when you swipe your 
card, if you're 30 cents over, you may still have to pay $39 for that 
overdraft fee even if you went out and asked for a debit card so that 
if you did go over by mistake the charge would be denied. And you might 
have to solve that problem some other way, but at least you wouldn't be 
deep into your account and have a negative balance.
  Financial reform is protections against reckless Wall Street 
financial schemes, bad home mortgages for short-term profit, bad credit 
cards with hidden penalties for the average consumers, and it means 
protecting workers' life savings, pensions, and stopping Wall Street 
casinos. It means it guards against massive unemployment rates due to 
the near total collapse in our economy back in October 2008.
  Financial reform also, Mr. Speaker, means putting into ``too big to 
fail'' financial firms. Too big to fail means too small to save. Too 
big to fail means reckless behavior by firms that are so large that no 
matter what they do, they know that we've got to bail them out, because 
if we don't, it will have real harm to all of us.
  And that's what we're talking about. We're talking about doing 
something to stabilize our economy, defend our economy, protect our 
economy, and to make sure that the average American is not at risk and 
their financial future is secure.
  So let me just go through some of the highlights of financial reform. 
Before I do, I just want to talk about some of the root causes again. 
And to do that, I want to get this mortgage-backed security back up 
here.
  If you want to talk about what happened and, therefore, what we 
should do to fix it, you have to start at the fact that way back in the 
1930s, Mr. Speaker, our economy went through a catastrophic drop known 
as the Great Depression. And during that time, forward-thinking 
politicians put things in place to try to help protect our economy, 
things like Glass-Steagall, which said that if you're a financial firm, 
you have to do what your core competence is; meaning, if you're a 
depository bank, you go do that; if you're an investment bank, you 
focus on that; if you're an insurance company, you focus on that.
  And it went along that way very well, Mr. Speaker, right up until the 
mid-1990s, when Travelers Insurance and Citibank came together--an 
insurance company and depository bank coming together. They wanted to 
do it. There was a big court case about it, and a lot of people at the 
time thought, You know what? That old Glass-Steagall stuff is so 
yesterday. Let's do something new and innovative and really unleash 
innovation. That's what they said.
  It so happened that Glass-Steagall was not such a bad idea as we look 
back, but at that time they wanted to pass a bill called Gramm-Leach-
Bliley. This is a bill that would basically allow firms to basically go 
out of their area of core competence, and so you'd have a Citibank 
purchasing an insurance company or you'd have a depository bank 
purchasing a brokerage house or an investment bank, and you just had 
kind of everybody doing everything.
  What happened is you had bigger firms. They kind of dabbled in 
various areas. But as the business reality was changed because they 
were deregulated, Congress did not see fit to put in the kind of 
regulation that was required to make sure that the system was still 
essentially safe and essentially sound.
  Reckless schemes began to emerge. We began to see more deregulation. 
In fact, in 1999, when we passed regulatory reform in the financial 
world, we also said that things like credit default swaps would not be 
regulated. They would just be out there on the market, because they 
figured the people who deal in these things are arm's length and they 
are sophisticated investors and they know what they're doing and what 
they do won't harm the rest of us. I guess we were wrong about that.
  But what began to happen is that in the mortgage markets, we began to 
see people being--who wanted to buy a home, going into the mortgage 
market and they were beginning to be sold things that were called 
predatory loans. Now, this is what we call them. That's what they are. 
But what they were called is adjustable rate mortgages, ARMs. They were 
given ARMs, and sometimes they were given mortgages where they would 
get--for 2 years they'd pay a low rate, and after 2 years you'd have a 
balloon payment that would go up. Or after 3 years you'd pay a low 
payment, and then it would balloon upward.
  Now, the mortgage market, the housing market is a market that had 
consistently gone up, it had kept increasing. So even if that happened, 
when you got to your balloon payment, perhaps you could go back to a 
lender and you could simply refinance your mortgage. How many Americans 
try to do that? Let me tell you. A lot.
  But we assumed the housing market would always go up. But what if it 
flattened out or went down like it did over the course of the last 
decade?
  The fact is that it was in the mid-1990s when Congress passed the law

[[Page 8131]]

that told the Fed that they could regulate the mortgage market to make 
sure that when people got into loans that were not good for them, that 
they could regulate.
  Some of these 2/28s and 3/27s I mentioned had terms like ``prepayment 
penalties.'' If you wanted to pay off the loan early, you couldn't 
really do it, or if you did, you had to pay an extra penalty.
  They had things like yield spread premium, meaning that if you sold--
if you were a mortgage broker and were able to channel somebody into a 
higher-cost loan, then you, as the person who brokered that loan, might 
be able to get the spread of the difference between the lower-cost loan 
that they were qualified for and the higher-cost loan that you got them 
to bite on. So you incentivize people, pushing people to get into loans 
that were not as good as the ones that they actually qualified for.
  Over time, we also had something called securitization, which meant 
that, as I said before, once that mortgage was inked and somebody 
bought the house and got the loan, that the paper on that mortgage 
could be sold and then pulled together into a mortgage-backed security. 
And we didn't require that the original lender keep any part of the 
risk of that loan, so they could just sell it off and it wouldn't make 
any difference to them if that loan was never paid off or no not. So, 
therefore, their responsibility for underwriting that loan carefully, 
making sure the person could pay that loan began to go down because 
they weren't going to keep it on their books anyway.
  So what began to happen over time, Mr. Speaker, is that we saw these 
instruments like mortgage-backed securities I mentioned before, 
mortgages being sold to somebody who packaged them together and then 
packaged them in an even bigger box and then set them up in these 
tiered investment vehicles, with the highest being supposedly the most 
safe investment, all the way down to the bottom, with the most risky 
investment being sold and then people buying parts of it; and then 
these instruments being hedged with things like credit default swaps, 
which didn't have anything to back them up if people made claims when 
these instruments lost value.

                              {time}  1515

  What began to happen is that credit began to get cheaper, low 
interest loans for long periods of time. As money was cheaper, people 
bought more houses. As people bought more houses, the price of them 
went up, obviously, and we began to experience a bubble in the housing 
market. And you began to see, like now, housing prices have dropped 
quite a bit. The problem is that people who bought at bubble prices now 
are underwater, meaning the loan on their house is higher than the 
amount of value that is in the house, which is a problem. Negative 
equity.
  But what began to happen, Mr. Speaker, is that these mortgage-backed 
securities, as people began to lose jobs, as the economy started to 
flatten out, as the housing market started to flatten out, people began 
to not be able to pay, and the people who probably never should have 
qualified for a loan couldn't pay, and the value of these mortgage-
backed securities began to decline.
  As that happened, people started to get in really difficult 
situations, because what began to happen is that in neighborhoods all 
over America, houses began to get abandoned, people began to be 
foreclosed on. Either they had a house that they never really could 
afford but they bought it on a teaser rate, and so when it ballooned 
they couldn't keep the house; or when people could not afford it when 
they would lose their jobs, and then the foreclosures began to 
seriously mount. They began to get really big.
  And then, as that began to happen to the housing market, people who 
wanted to go back and refinance their house didn't have any equity or 
had negative equity, and then the bank said: We just can't refinance 
you because there is no value in the home or maybe there is actually 
negative value in the home. At that point, we got to a crisis, Mr. 
Speaker.
  What happened? The fact is, is that we began to have a real 
catastrophe. Very little oversight from government, government allowing 
people just to do--to let the market just go on. As I said before, 
caveat emptor. And real pain began to happen as the foreclosures 
mounted, as the failures continued on, as unemployment began to slump, 
because housing is a huge part of our economy. And if the housing 
market isn't moving, then a lot of people aren't working, which began 
to increase the cycle of the bust.
  So, Mr. Speaker, what we see now is a real need to do something about 
the situation that we are in, a real need to take real affirmative 
action, to take real control over our economy.
  So let's talk about what we are going to do to solve this problem. We 
are going to talk about reforming the financial sector of our economy. 
We are going to talk about adding greater oversight. We are going to 
talk about what it is that we need to do to make sure that we don't 
find ourselves in a very difficult situation yet again.
  What we are going to do, Mr. Speaker, is we are going to do something 
about that predatory lending that I have talked about. We are going to 
stop predatory, irresponsible mortgage lending. Tough new rules on the 
riskiest financial practices; rules to stop excess speculation in 
derivatives and growing use of unregulated credit default swaps.
  We are going to require investment advisers to act for the benefit of 
their client under the law, exercising the highest standard of care. We 
are going to empower investors with greater say in electing the company 
board members, some of these companies that urged, urged, urged their 
employees to sell as many mortgages as they possibly could. Stories 
like from Countrywide, which was a huge predatory mortgage lender, 
which ended up having so many of the houses that they lended money for 
going into foreclosure.
  We're going to stop the shadow banking system of small predatory 
institutions such as payday lenders, check cashers, mortgage loan 
originators, and many others who have disappeared as quickly as they 
arrived on the scene, and we are going to start regulating the 
unregulated.
  We are going to stop ``too big to fail,'' Mr. Speaker. We are going 
to stop ``too big to fail'' by saying we are going to have a fund that 
these big firms have to pay into based on the riskiness of their 
activity, so that if one of them goes down, that the people who will 
pay their creditors will be from that fund, not from the American 
taxpayer. It is kind of like FDIC insurance. Banks pay into a fund so 
that if a bank goes down, depositors are covered. And that is the money 
that goes to make sure depositors are covered.
  This, what we call ex-ante, which means before the fall, fund would 
be paid, and it would make a lot of sense to do this, because the 
people who are in business who are doing these risky practices are the 
ones who should pay.
  Now some people say we need a fund after a company goes down. If that 
made sense, Mr. Speaker, that would mean that the one who engaged in 
the risky behavior would be gone after everybody else had to pick up 
the pieces. That's not good economics, Mr. Speaker. We oppose that 
idea. We are talking about the Consumer Financial Products Agency, and 
the CFPA would have the power to stop unfair, deceptive, and abusive 
consumer financial products.
  We would also have a board called the Financial Services Oversight 
Council, Mr. Speaker, who could study potential risks to our financial 
system and identify financial risks before it caused great harm to the 
economy.
  And so, Mr. Speaker, that is the basic heart of financial reform. We 
need the American people to embrace it. It is good: policing Wall 
Street, ending bank bailouts, stabilizing the economy, and stopping 
gambling with pensions.
  Now in the last few minutes, Mr. Speaker, I want to talk about a 
subject that I think every American should know about, and that is the 
effort by Wall Street leaders to stop reform of

[[Page 8132]]

Wall Street. There is a lot of money being spent, Mr. Speaker, to stop 
financial reform, a lot of money being spent to make sure that things 
like regulating derivatives, regulating of the credit rating agencies, 
regulating credit card companies, payday lenders, and making sure there 
is an ex-ante fund to resolve failing firms so that the American people 
don't have to fork it over. They are spending a lot of money, Mr. 
Speaker. Wall Street is spending billions to kill reform.
  In 2009, the financial industry spent $465 million in lobbying 
Washington, $1.4 million a day in lobbying Congress, $1.1 million per 
Member of Congress. Actually, more than that. Actually, more than $1 
million. That's a rounding down; $3.9 billion in the last decade, and 
employed 1,726 Washington lobbyists just to try to persuade Congress 
Members to not make changes to Wall Street.
  Now the American people ought to know what they are up against. But 
let me just tell you, a well-motivated constituent always trumps a 
lobbyist. So, Mr. Speaker, it wouldn't be a bad thing at all if people 
let their Member of Congress know how they felt about the importance of 
regulating Wall Street.
  The top eight banks, Mr. Speaker, spent about $30 million in 2009 
just on lobbying. JP Morgan Chase spent $6.2 million lobbying last 
year, all to try to make sure that whatever comes out of Congress looks 
good for them.
  During the first quarter of 2010, this year, the top 25 banks spent 
$11 million, which is an increase of 5 percent from the same time last 
year.
  What is going on during the first three months of 2010 that wasn't 
going on the same time last year? Financial reform, Mr. Speaker. That's 
why they increased their spending.
  I would like to hear Members of the Republican Caucus defend Wall 
Street's spending to kill financial reform. I hope they do say, Well, 
it's okay for Wall Street to spend all this money stopping reform, 
because--I don't know what they're going to say, but I would love to 
hear it.
  During the first quarter of 2010, the top 25 banks spent $11 million 
total, which is an increase of 5 percent. And the fact is, is that of 
that $11 million that the top 25 banking firms spent on lobbying, the 
top six of them, JP Morgan Chase, Wells Fargo, CitiGroup, Bank of 
America, Goldman Sachs, and Morgan Stanley spent $6.9 million on 
lobbying in the first quarter of this year. That's a lot of money. That 
marked a 4 percent increase from late last year, a jump of about one-
third from the first 3 months in 2009.
  But what is going on now that wasn't going on as intensely then? Wall 
Street reform. So they're putting more money in and they're trying to 
slow reform.
  With that, Mr. Speaker, I am going to yield back, and just say it has 
been a pleasure coming to the special order on behalf of the 
Progressive Caucus.

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