Financial Crisis

Floor Speech

FINANCIAL CRISIS -- (Senate - September 26, 2008)

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Mr. DURBIN. Mr. President, I thank the Senator from New York for his comments. Of course, being from the State of New York, he feels intensely and personally what is happening with many of these economic decisions on Wall Street. This involves not only the savings of millions of Americans but the jobs and careers of many people who are working hard in the financial sector.

I am sorry we have reached this point, and I am also sorry that of all the things being proposed so far there are two glaring omissions. I understand time is a constraint on our activities, but we have to come to grips with the fundamental issue that is at stake. What we have done on Wall Street over the years is create a shadow credit industry with no oversight and little regulation. As a result, this has been an anything-goes-capitalism on Wall Street, which, sadly, has led to the demise of major investment banks and brokerage houses. It isn't just their misfortune, it is the misfortune of their employees and investors, savers and retirees who counted on them for their future.

Well, the idea that we would step aside and let the magic of capitalism work its will has shown us we should have thought more about this. It wasn't that many years ago on the Senate Floor that I was debating Senator Phil Gramm of Texas. He was high priest of this theory of fundamentalism--free-market fundamentalism. He would argue we needed to get Government out of the way; that all Government can do is get in the way by creating red tape and slowing things down and diminish profit taking and wealth creation. Well, he carried the day for a long period of time. He had this Svengali influence on many Senators, including the Republican nominee for President, John McCain.

Look what we have reaped from this. We have now an economic crisis--to quote the Secretary of the Treasury and the Chairman of the Federal Reserve--that has been generated by this market philosophy. So at the end of the day, we need to put in place sensible regulation so the taxpayers are protected and the people who count on these investment houses can have some assurance their money will be returned. That is the bottom line, and we will not have time to do that before the end of this year. It will take time to do it carefully. It must be part of it.

The second point I will make is this--and I see Senator Harkin has come to the floor: There is a great deal of empathy and concern for those on Wall Street whose businesses are facing failure. I have some concern too. But I have more concern for the homeowners across America who are losing literally thousands of homes to foreclosure because of the tricks and traps which these same entities put in their mortgage instruments.

I think of people I have met in Chicago--retirees living on Social Security lured into these rotten mortgage arrangements, about to lose their homes because of someone who brought them into a room and had them sign a stack of papers with a reset that took the home away when the monthly costs went beyond their Social Security check. That is an outrage. How many tears have been shed on the floor of the Senate or in Washington for these people? None.

What we hear from this administration is it is their misfortune; they made bad decisions. We have to honor the sanctity of the contract. Sanctity is a word that, in my religion, connotes holiness--a sacred quality. What in the world is holy or sacred about these subprime mortgages, which were brokered for the purpose of making a fast buck and getting out of town, leaving victims behind who are about to see their homes foreclosed. I would like to see at least a modicum of sympathy for some of the people facing foreclosure. But when we bring this up in the negotiations over this bailout plan, we are told absolutely, no. We can do nothing for the homeowners at the end of the day.

Well, I will tell you, it isn't just a matter of sympathy or a matter of taking a moral position, it is good economics. If we don't stem the tide of foreclosures among homeowners at the base of our economy, then these mortgage instruments will continue to decline in value and there will be further instability in the credit markets. It is not just a matter of doing the right thing, it is the proper thing economically to get us back on track. But I can't sell that. You know why. Because the banks and the mortgage lenders, the same people who authored this mess, oppose it.

The sanctity of the contract. Well, I wish to tell you something: If we were dealing with the sanctity of the contract, we wouldn't be talking about bailout, we wouldn't be talking about $700 billion from hard-working taxpayers in Iowa or Illinois coming to the rescue of a lot of people who have been reaping multimillion dollar annual bonuses from the mess they have created on Wall Street. The sanctity of a contract. Give me a break.

Let's have some respect for the people across America--the families who are the strength of this Nation; those middle-income and hard-working Americans who get up and go to work every day and struggle with this economy and who may have been lured into a bad mortgage and now face the greatest economic catastrophe of their lives. How much help will they get from this bailout? Exactly nothing. Nothing. There is nothing on the table to help them. That, to me, is unconscionable and unacceptable.

I think we should have a balanced approach. Yes, take this economic crisis seriously at the top, but don't forget that at the bottom of the pyramid are the hard-working families of America that have been exploited by these people on Wall Street and deserve a break as part of our conversation.

The final point I will make is I am glad John McCain is back on the Presidential trail. His visit to Washington didn't help a bit. It hurt. It riled up and roiled up all the political forces in this town because he summoned the Presidential campaign to Capitol Hill. That didn't help one bit. He needs to get back running for President. He needs to show up in Mississippi tonight for this critical Presidential debate. We need to roll up our sleeves, on a bipartisan basis, and find a good solution to this crisis we face.

I yield the floor

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