Small Business Financing Improvements Act of 2008

Mr. Chairman, if I may just make a comment in the beginning here and ask you the question:

Is it correct to say that nothing in this act is meant to distract from any rights of recovery against private parties to redress wrongdoing that exists under Federal or State law?

Thank you, Mr. Chairman.

Madam Speaker, I rise today with a heavy heart. The reality is, as my friend from Virginia (Mr. Davis) said, we don't have a perfect bill here. We do have a perfect storm, however, and we have a bad situation. The inaction, or the failure to act, could be exacerbating to this situation to the extent that most of us can't even imagine how bad it could get.

I'm not here in defense of Wall Street fat cats nor am I here in defense of those who perpetrated this greed and this expansion over the last 5 to 7 years that has caused this problem. I'm not here as a faultfinder of who is responsible politically, economically, socially or otherwise.

I am here because I recognize that there is going to be hurt, extreme hurt, if we do nothing, and I want to make sure that my constituents and that the rest of the public watching this understand that we're not bailing someone out in a far-off place called Wall Street. We're making sure that next week and that next month a worker in my hometown of Nanticoke, Pennsylvania will be able to go to his ATM machine and draw out money, that he will be able to be paid by a check or by a cash transfer that will give money to his account so that he can spend it on his family. I'm here so that he can continue to negotiate to buy a new home or a used home or so that he can provide for his family goods or services that are necessary and that may disappear.

So often, many of us get so far removed from history and from circumstances of the past that we hardly remember or recall what people told us could be. I think it would be a good thing for all of us to refer back to some of the movies that depicted the Great Depression and for all of us to just look at what can happen when there is the total collapse and failure of an economic system. I don't want to see that happen again in America.

In order to see that that does not happen, it is necessary that we take action on this bill. This is not an easy vote for any Member in this Chamber, and I will be the last one who will cast dispersions as to what the motivations for voting ``yes'' or ``no'' will be by my fellow Members. However, I will tell you this:

It is time for all good men to come to the defense of their country and to the times. In my opinion, that means we must put aside our own personal careers and our own personal thoughts and even our own ideas of what would be the right thing and vote to save this country's economic system. If we fail to do this in this 11th hour, we are already starting to see around the world, through the window of television, just what can happen to the markets of this world and, eventually, to all of the small towns across this world.

I think that we've done a hard job in trying to put into this bill the safeguards for the taxpayers, the modifications that are necessary. It was an extreme bill, three and a half pages, giving total dictatorial power to the Secretary Treasurer.

We have modified it over these last 7 to 10 days to make it more livable, but not perfect. What I urge my colleagues to do is put aside partisanship, put aside fear, and realize why we're here. Only a couple of times in a decade are we asked to stand up and be counted; this is one of those historic moments. I urge my colleagues to show the fortitude to vote ``yes.''

Introduction

Madam Speaker, as our great Nation faces one of the most severe economic crises in its history, I share the sense of outrage of the American people that we find ourselves in this situation. I am angry at our regulators who did not do enough to prevent this deeply troubling situation. I am angry that we have reached a moment in which those who followed the rules are now being asked to help those who flaunted the rules. But most of all, I am furious at the greed of the fat cats on Wall Street who created the financial products that led to this mess.

Today, the Members of this storied institution must choose between two bad alternatives. First, we could opt to do nothing. According to many reputable economists, this choice carries the grave risk of resulting in an almost certain global financial meltdown. Second, we could choose to act by voting for the legislation before us. This choice--while admittedly an expensive and imperfect one--provides the urgent injection of vast government resources to unclog the financial arteries of our capital markets so that our economy can, hopefully, begin to function more normally once again.

Ironically, the choice of inaction, which is the risky choice for the good of our Nation, is the safer choice for the good of the lawmaker. But political expediency must sometimes yield to practical necessity. In this situation, we ultimately have to do what is right. So, to resist the call of duty by voting against this package is, for me, simply not an option. I urge my colleagues to be brave, put partisanship aside, and send a message of consensus to the Amierican people. By working to restore confidence in our credit markets, we will ultimately prevent severe economic consequences for the families living and the small businesses operating on Main Street.

In the midst of another global economic crisis 75 years ago, President Franklin Roosevelt said, ``One thing is sure. We have to do something. We have to do the best we know how at the moment. If it doesn't turn out right, we can modify it as we go along.'' I have concluded that this bill is the best we know how to do at this moment. We should all support it for the good of our Nation, and we can always change it later.

In sum, only action will protect the hard-working American people who, if we do not act, will lose their jobs, their paychecks, their pensions, their homes, and their very way of life as a result of the severe hardships a severe economic downturn will bring. Because I cannot in good conscience sit idly by as disaster is looming, and because I understand the potentially devastating effects on middle class families and retirees if we fail to act, I must vote for this bill.

How the Economy Reached this Point

The causes of our current financial turmoil are many. Some of the contributors to this paralyzing credit crisis include an environment of easy credit and low interest rates, lax mortgage underwriting standards, and a national housing bubble, wherein prices rose to levels well beyond the reasonable values of homes.

My concerns about the rapid growth in home values led me in July 2002 to question Alan Greenspan about the potential of a valuation bubble in the housing markets and about what could happen to the economy if the bubble burst. Chairman Greenspan responded that he saw ``no evidence'' of ``a national bubble in home values'' and that the matter did not need to be addressed by policy reforms. If only he had answered differently, we might have been able to take action in time to prevent the economic turmoil that we are now experiencing.

The unfettered creation of new, complex financial products also contributed to the present crisis. Financial wizards first packaged faulty loans into securities and then divided and combined these financial instruments into novel products like collateralized debt obligations, which received strong estimates of creditworthiness from ratings agencies. The geniuses of Wall Street also insured their bets with flawed credit default swaps. They additionally developed and sold financial derivatives whose risks few participants in the marketplace fully appreciated.

This financial house of cards began to collapse once borrowers with subprime mortgages began to default on their loans in greater and greater numbers. These defaults undermined the associated mortgage- backed securities, collateralized debt obligations, credit default swaps, and derivatives. Eventually, the

collapse of the subprime mortgage market infected the prime mortgage market, which in turn infected the American financial system.

Once the contagion spread into our increasingly interconnected global financial system, banks and other financial institutions began to lose confidence in one another as they could not determine the true exposure of their partners to the underlying problems. As a result, they stopped lending to one another.

Our present predicament also results from one of the cardinal sins: greed. The titans at investment banks simply could not make enough money, and they increasingly leveraged their investments with fewer and fewer assets. Further, they created, bought, and sold financial instruments for which they neither completely understood nor fully appreciated the risks. In pursuit of the dream of homeownership, far too many Americans also borrowed too much and lived beyond their means with the help of low interest rates and access to easy credit.

Rather than lament the past, however, we must rise up to overcome this challenge, correct our mistakes, and reestablish an economically sound America for ourselves and future generations. The economy is a man-made construct. Man made it, and man can fix it. We are working to fix our economy with this legislation.

Why We Must Act Now

We should not underestimate the urgency that this credit crisis demands. Money and credit are the lifeblood of an economy, and during the last year the credit markets have become increasingly clogged as financial institutions' trust in one another has worn away because of the troubled assets that they hold. As a result of this lack of confidence, bank lending to other banks has come to a virtual halt. When banks stop lending to one another and hoard their cash reserves, small businesses and consumers are the ones who are ultimately hurt the most.

Lines of credit that were once open could be, and in some cases have already been, closed. Without access to credit, businesses might not have the money they need to pay their workers and workers could lose their jobs. A shutdown of the credit system would also result in difficulty in getting loans to go to school, buy a home, pay for emergency needs, or expand a business. It could also result in further significant drops in the prices of stocks and bonds held in the retirement plans of workers and the pensions of senior citizens.

Moreover, a pervasive lack of confidence by the participants in our capital markets has now created a vicious cycle. After pursuing in recent months a number of piecemeal, makeshift fixes at several financial services companies to address specific problems resulting from the credit crisis, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke determined on September 18 that they needed even more power to repair the problems in the credit markets, restore confidence, and promote a sense of optimism.

Secretary Paulson and Chairman Bernanke, along with many highly regarded experts, have therefore advised the Congress to take bold action to shield average Americans from the harm caused by the credit crisis. In analyzing the contributing factors that led to the Great Depression, many have concluded that the Government should have taken decisive action earlier to prevent, forestall, and lessen the effects of that sizable economic downturn. By taking bold action now in response to this latest economic crisis, we are learning from the lessons of the past.

Many Americans view this Government intervention as a bailout of Wall Street and as an unjust reward for bad decisions and irresponsible behavior. Americans have good instincts, and they are not wrong to view the situation in this light. After all, irresponsibility and greed on Wall Street have provoked anger in nearly all of us in recent days.

Americans also feel isolated from the consequences of the current economic strife because most of them have yet to experience its direct effects. As countless economists, however, have warned us, Americans have a false sense of security about their current economic prospects: They wake up, go to work, get paid, make a withdrawal from an ATM, fill up their gas tank, buy some food, and go home. To them, things still seem relatively normal.

To protect hard-working Americans and retirees from this economic tidal wave, the Congress must act now before it is too late. In voting for this legislation, I am not voting to help Wall Street fat cats. Instead, I am voting to safeguard the jobs, paychecks, pensions, savings, homes, and security of average Americans. In short, I am voting to protect their very way of life.

The Faulty Initial Plan

Like every American who read the initial 3-page legislative proposal, I had very strong concerns about the plan that Treasury Secretary Paulson sent to the Congress to create a program of $700 billion to permit the Government to purchase the troubled assets of financial institutions. It would have essentially provided the Treasury Secretary with an open-ended, blank check. It lacked needed controls, it failed to reform business-as-usual on Wall Street, and it did not do enough to protect the interests of taxpayers. Moreover, the initial plan would have granted the Treasury Secretary vast, unchecked powers without oversight by the courts and the Congress.

This unacceptable package would have given Americans a raw deal because executives suffered no consequences for their reckless behavior. Taxpayers also received no promise of repayment for their contribution. Corporations additionally would have been bailed out by the taxpayers and then allowed to walk away with all of the profits, leaving average Americans to fall behind even further.

In sum, the first version of the plan that the Congress received from Secretary Paulson was ill-conceived and unfair to the taxpayers. The Congress rightly rejected this first draft.

The Vastly Improved Plan

Fortunately, we live in a democracy, and as the Chairman of the House Financial Services Capital Markets Subcommittee, I worked with Financial Services Committee Chairman Barney Frank and other leaders in the Congress to make significant changes, negotiate a bipartisan compromise, and improve this legislation as much as possible and as quickly as possible. In brief, we revised the plan to protect taxpayers, limit executive pay at distressed companies getting help, establish strong oversight and accountability, and cut overall costs. As a result, the original proposal of less than 3 pages grew into a final bill of 110 pages.

The final bill protects taxpayers in many ways. It cuts the initial outlay of $700 billion in half and conditions the installment above $350 billion on legislative review. It also gives taxpayers an ownership stake in the companies assisted by the program. This change will ensure that Americans share in any future profits of the distressed entities that it helps with the chance to buy stocks low and sell them high. The bill also protects taxpayers by requiring the program's managers to minimize short-term costs, maximize long-term gains, establish fair contracting procedures, and curtail conflicts of interest.

This bill now protects taxpayers in one other important way. During my opening comments to Secretary Paulson and Chairman Bernanke at last week's hearing of the Financial Services Committee, I said that we needed to seek ways to pay for this massive Government intervention, including placing surcharges on millionaires' incomes and raising fees on securities transactions. I am therefore pleased that the final bill now before us guarantees that taxpayers will be paid in full, if other protections have failed to produce a profit. Specifically, if after 5 years the program has a shortfall, then the President must submit to the Congress a proposal that recoups from the financial industry any projected losses to the taxpayer. This reform is sensible and prudent.

In developing this bill, I also sought to prevent those who contributed the most to this crisis from further profiting by revising the initial Treasury plan to ensure that the Wall Street executives who ask for the Government's help do not continue to get fat paychecks. The final bill also blocks multi-million dollar golden parachutes at distressed companies so that CEOs land just as hard as average workers when they lose their jobs. Moreover, the final bill claws back big bonuses earned by CEOs as a result of financial statements later found to be false or inaccurate.

The final bill also checks the Treasury Department's power in several ways. The Congress will now have the full authority and resources to examine executive decisions with a Congressional Oversight Panel. The revised legislation additionally provides for meaningful judicial review. Our constitutional system works well because of a balance of powers among the branches of government. In short, the final bill recognizes the importance of this balance. These changes helped to correct some of the most flagrant excesses of the initial Treasury plan.

In addition, I worked to ensure that the final bill provides for strong accountability and real transparency. The final bill puts in place a permanent, in-house watchdog to stop waste, fraud, and abuse. It also provides for the real-time disclosure of business transactions on the Internet so that the American public can inspect the assets they are buying. I strongly support the provisions in the bill to force Federal financial regulators to cooperate with the Federal Bureau of Investigation in its efforts to find the wrongdoers who committed crimes in the development, advertising, and sale of the financial products that contributed to this crisis.

This final bill, moreover, will help struggling homeowners because it allows the Government, as the holder of mortgages and mortgage-backed securities, to do all that it reasonably can to prevent foreclosures through loss mitigation efforts. Among these provisions is a new duty for servicers to modify loans based on the best interest of all investors in a

pool of mortgages rather than the interest of any individual investor. This change in the law is based on those reforms found in the Emergency Mortgage Loan Modification Act, which I introduced with the gentleman from Delaware (Mr. Castle). This reform and the other foreclosure mitigation requirements in the final bill will help to keep people in their homes and spur economic recovery by preventing real estate prices from falling further and perhaps even helping prices to rise.

Providing Oversight and Regulation Going Forward

The public should view passage of an economic stabilization package to forestall disastrous consequences for average Americans as only the beginning of our work in the Congress. In the months ahead, we must all commit to examining what went wrong and to writing tough new laws to improve the regulation of our financial system and safeguard consumers. We must also enact new laws to control excessive greed and protect against future risks to our entire economic system.

Our capital markets have evolved significantly in recent years, and our outdated regulatory structure was clearly not up to the task of regulating today's marketplace. Moreover, the recent events in our markets have clearly put a tombstone on the era of deregulation. As many of us on this side of the aisle have long believed, only Government can save capitalism from its own excess. To control a free market, I therefore believe that we need sensible regulation and strong enforcement. We also need greater coordination in our financial regulation, as is the case in other countries like the United Kingdom.

Our regulatory system must also have the flexibility to respond to innovation. The financial services industry has created a number of complex products like derivatives and credit default swaps in recent years, but we have yet to properly regulate these instruments. In July, before American International Group collapsed under the weight of its sizable credit default swaps, I began working with the Government Accountability Office to identify appropriate legislative and regulatory reforms to improve the oversight for structured finance products.

Because we live in a global economy that is interconnected, protecting against systemic risk must additionally become one of our highest reform priorities. If one proverbial domino falls, we cannot allow the chain to continue. The recent crisis has vividly demonstrated the consequences of not effectively regulating against systemic risk. Failure in one segment of the market inevitably brings other segments down with it.

Still further, we must act to pass new laws to protect consumers from lax underwriting standards, compromised appraisals, and faulty mortgage servicing practices. I introduced a strong consumer protection bill to achieve these goals more than 3 years ago, and last year the House passed H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act. This latest bill to crack down on predatory lending practices is substantially similar to the content of the bill I first proposed in 2005. The Senate now needs to complete its work on these matters.

summation

In conclusion, the bill before us is still imperfect, but for the good of our Nation we should pass it. The adoption of this legislation will, first and foremost, help to safeguard the jobs, pensions, and paychecks of average Americans. We have made significant improvements to this bill during the last 10 days to protect taxpayers, provide robust oversight, and limit excessive compensation for CEOs and executives, among other things. This bill is now much better, and it deserves everyone's support because our Nation's economy depends on it.

Today, the eye of an economic hurricane is fast approaching. To protect the way of life for average Americans, we must rise up to meet this challenge and come together. We cannot sit on our hands. Instead, we must act and pass this bill. As my fellow Pennsylvanian, Benjamin Franklin, said at the founding of our country, ``We must all hang together, or surely we will all hang separately.'' I urge support for the Emergency Economic Stabilization Act of 2008.

Madam Speaker, the Constitution of the United States is present to protect Main Street. The full faith and credit of this constitutional document will protect the men and women of America.

I will not stand here today and suggest that we do not have some challenges. I frankly believe that the bill we have before us is a miracle, and I thank the leadership for their strength in recharacterizing the two-page bill that anointed the Secretary of the Treasury that came from the White House.

But my question is, where was the Securities and Exchange Commission? Where was the FDIC, the Federal Reserve? Under the control and domination of this administration. So when we ask the question why, we need to look back at those who controlled the policies of America for the last 8 years. Where was the Secretary of the Treasury?

But I don't stand here to cast aspersions. I will say to you that this has been diagnosed, but America needs a second opinion. There is no enforcement in this legislation. The Financial Stability Oversight Board, no enforcement provisions; the Congressional Board, no enforcement provisions; the Inspector General, no enforcement provision. There are no criminal penalties for those who have been charged with malfeasance and criminal activities, no barring of individuals who are convicted of malfeasance and criminal activities from doing business with the United States.

So, in essence we give this money, and who does it go to? No listing by the Secretary of the Treasury where the first dollar will go. No separating a certain amount to help those in foreclosure in America in the small towns, hamlets and villages, when in fact we know that we could establish a Homeowners Loan Corporation and help those on Main Street.

Yes, I do believe we are challenged. But I believe we can come back, watch the markets, and work forward. This is a bill that hands out; it doesn't hand up. I ask my colleagues to consider the fact that we are protecting Main Street, not Wall Street.

Madam Speaker, I rise with great concern regarding H.R. 3997, the Emergency Economic Stabilization Act of 2008. I would like to thank Chairman of Financial Services Barney Frank for bringing this important piece of legislation to the floor. I also rise with a sense of the solemness of this moment. However, I rise today with the confidence that our system of Government is strong and the constitutional protections of the full faith and and credit of our Government will protect Main Street America while we reform America's Wall Street.

Leadership has worked without tiring to alter the language provided by the administration for the betterment of the American people. Our leadership has created a miracle by modifying the 2 page document sent by the Treasury Department last week into a 109 page document. I thank leadership for that. We toiled long into the night to incorporate Democratic principles--many of which have still not been included.

Where was the FDIC? Where was the SEC? Where was the Federal Reserve?

I have worked with leadership to offer consistent amendments that would have strengthened the punitive measures over the past week to change the administration's proposal to make it more encompassing, effective, and better for the American people. While the present legislation is impressive, it is also impressive regarding what is absent from this legislation. For example, the legislation is devoid of bankruptcy restructuring, devoid of real enforcement, and devoid of any meaningful judicial review. These are all issues that I have been very concerned about.

In fact, it is because I am concerned and desire that the maximum number of Americans get relief from this bill, that I offered amendments yesterday. To ensure that this bill provides relief for Americans, I offered the following amendments:

Set aside $125 million (in fact the amount could been more) as a firm allotment to address the question of individual American homeowners facing foreclosure in light of the absence of a bankruptcy provision;

Add Sense of the Congress language that Bankruptcy Code should be reviewed and amended in the future to permit bankruptcy judges to address the question of individual home mortgage restructuring;

Allow the courts to exercise rigorous judicial review and provide those courts with the discretion to grant injunctive and/or equitable relief if the courts determine that such relief would not destabilize financial markets;

Create a new, independent commission to exercise oversight over the current financial situation with enforcement powers;

Allow criminal liability for persons or corporate entities that have engaged in criminal malfeasance;

Bar persons/corporate entities found to have engaged in criminal malfeasance with malicious intent in financial markets from doing business with the Federal Government in the future.

The bill in context

Segments of the economy have the ability to be strong. America needs to employ its full faith and credit to back its commitments. I feel strongly that this bill should have set aside $125 million to help homeowners who are facing mortgage foreclosure. This is important because it is money that would have been used to help the aggrieved: Main Street.

It is important to note that all five big investment firms--Bear Sterns, Merrill Lynch, Lehman Brothers, Goldman Sachs, and Morgan Stanley have altogether disappeared or morphed into regular banks. Given this phenomenon, the question arises and no one has or can seem to explain: Is this bailout still necessary?

Dr. James K. Gailbraith, of the University of Texas, wrote in the Washington Post on September 25, 2008, that the bailout is not necessary because the point of the bailout has been articulated as buying assets that are illiquid ``but not worthless. But regular banks hold assets like that all the time. They are called `loans.'

With banks, runs occur only when depositors panic, because they fear the loan book is bad. Deposit insurance takes care of that.''

Deposit insurance presently is capped at $100,000. We should have considered raising the FDIC insurance cap, increased the amount of capitalization in the FDIC corporation, increased the amount of reserves in the Treasury Department.

Dr. Galbraith wrote, ``In Texas, recovery from the 1980s oil bust took 7 years and the pull of strong national economic growth. The present slump is national, and it can't be cured by legislation alone. But it could be resolved in 3 years, by a new Home Owners Loan Corp., which would rewrite mortgages, manage rental conversions, and decide when vacant, degraded properties should be demolished.''

As I consider this piece of legislation, three of the themes are consistent throughout it are (1) where is the enforcement; (2) who receives the first dollar; and (3) what is the disastrous and catastrophic event that will occur if this bill is not passed today? Because of the complexity of the nature and extent of the problems within the financial markets, I would rather that Congress carefully review and consider the right solution.

Congress should order the SEC, FDIC, the Federal Revenue Service to use their current powers and prevent the consequences with some extraordinary powers such as cited above regulating lifting the caps at the FDIC and allowing the SEC to suspend certain accounting practices; all this can be done without the massive bailout all at once.

This legislation was considered at 10 p.m. in a closed rule last night; debate on the rule immediately transpired with fewer than 10 members participating at approximately midnight. In less than 10 hours, members are expected to have read, understand, and speak intelligently upon this complex piece of legislation.

When we consider the magnitude and extent of the financial problem, we must consider how America has gotten here in the first place. During the past administration, America underwent a housing boom. Depressed housing markets around the country experienced unparalleled increases in price. Middle-class, working Americans sought to achieve the American dream by purchasing a home.

At the same time, banks and financial institutions were selling unsophisticated consumers unconventional and creative mortgage financing alternatives. Financial institutions were apt to qualify borrowers for more house than they could afford. Financial institutions were lending subprime mortgages and engaged in predatory lending. Adjustable rate mortgages, which had an interest rate that would adjust within 1, 3, or more years, became more common within the last 7 years. Interest-only names became common names within the first home purchaser's market. Borrowers who were considered a credit risk were allowed to purchase home. The banks and financial institutions were not paying attention to a borrower's credit rating, their ability to pay, or a borrower's potential to default.

Present Financial Situation

According to Bloomberg, this morning stocks around the world tumbled, the euro and

the pound plunged and bonds rose as governments raced to prop up banks. Hong Kong's Hang Seng Index plunged 4.31 percent to 17,876.41, and Tokyo's benchmark Nikkei lost 1.3 percent to close at 11,743.61.

Europe's Dow Jones Stoxx 100 Index declined 3.2 percent. MSCI Asia Pacific Index lost 2.7 percent after Dexia SA sank the most since it began trading 12 years ago, and ICICI Bank Ltd. retreated to a 2-year low. Futures on the S&P's 500 Index fell 1.7 percent as Wachovia Corp. tumbled 91 percent. Citigroup Inc. agreed to buy the company's banking operations in a transaction the Federal Deposit Insurance Corp. helped arrange.

The British pound dropped the most against the dollar in 15 years, and the euro weakened after European governments stepped in to rescue Bradford & Bingley Plc, Fortis, and Hypo Real Estate Holding AG.

So far, the $700 billion package to shore up banks hammered out by Treasury Secretary Henry Paulson and congressional leaders over the weekend failed to convince investors it will shore up banks saddled with growing mortgages losses. The crisis that began with bad home loans to subprime borrowers in the U.S. is threatening to push the global economy into a recession as consumers lose confidence as banks cut back on lending.

It is difficult to have a $700 billion dollar rescue bill when the President failed to sign for $60 billion dollars to provide economic stimulus to working-class Americans.

In September, Fannie Mae, Freddie Mac, and Lehman Brothers all filed for bankruptcy. Merrill Lynch agreed to sell itself to Bank of America, MG was taken over by the Treasury, and Washington Mutual was seized by regulators in the biggest U.S. bank failure in history. Financial institutions worldwide have reported more than $550 billion of credit losses and asset writedowns since the beginning of 2007, according to data compiled by Bloomberg.

Even after the announcement of the rescue package, the worldwide markets are still declining. I fail to see the specific catastrophic events/consequences that the U.S. public will experience if this bailout does not occur.

I am cautious because I believe that we as members of Congress need to take the time to craft a real recovery plan for our economy, a plan that puts people first and addresses our multiple economic crises, including good jobs, affordable housing, health care, retirement security, infrastructure, and disaster relief (Katrina, Ike, etc.).

Last week, New York Mayor Michael Bloomberg announced $1.5 billion in public spending cuts. I do not believe that this was prudent. Schools, fire departments, police stations, parks, libraries, and water projects are getting cut. The persons who are feeling the effects of this economic decision are the more vulnerable populations, the elderly, the children, and the working- class. Mayor Bloomberg's reaction is not the solution either.

It is clear that something must be done, but this bill does not provide the answer that America seeks.

Recently, Congress sent an economic stimulus package to the President that would have provided $60 billion dollars in relief to middle-class working Americans. The President vetoed this bill. However, the Administration sends to us today this bill requesting $700 billion dollars to bail out Wall Street.

I would offer that we need to restructure our present financial system. However, the kinds of reform that I believe are necessary are not included in this bill. For example, the Federal Reserve itself needs to be reformed. As members of Congress we should be looking at establishing greater oversight, preventing predatory practices, and establishing public alternatives to the reckless privatized system that brought us the crisis in the first place. We need to prevent the victims of predatory lending from losing their homes and restrict lobbying by the financial sector.

I have heard from my constituents that they are not supportive of this bill. Many themselves were community bankers. One community banker, for example, wrote:

``I am a community banker who is deeply concerned about the recent developments on Wall Street and the bailouts that our government has undertaken. The great, great majority of banks in this country never made one subprime loan, and 98 percent are well-captialized . . . we don't ask for or need a bailout.''

Little Relief for the Nation's Homeowners

Because of the way that the bill is written, few if any homeowners will get mortgage relief, which is why I offered an amendment that would give $125 million directly to the homeowners facing mortgage foreclosure. The bill does not contain any provision allowing the terms of a mortgage to be changed without the consent of all the investors who own the mortgage. Few homeowners will benefit. For example, the bill would not provide relief to the majority of homeowners. The bill is little more than a Wall Street earmark and is not really a bill for homeowners. Although the bill does not provide for parachutes for executives, the executives' compensation remains the same.

This is because the Treasury will chiefly purchase mortgage-backed securities which will make the Federal Government one of several co- owners of millions of mortgages. Whether or not any mortgages modified will be determined by the loan servicer acting on behalf of all the various investors who own a piece of the mortgage. That is why Section 108(d) states in part ``The Secretary shall request loan services servicing the mortgage loans to avoid preventable foreclosures.'' Congress has already requested all loan servicers nationwide to avoid preventable foreclosures, so an additional request from the Treasury is unlikely to change current behavior.

Republican Commentary

Republican critics of the bill argue that the bill rescues persons that lack financial responsibility because they were living beyond their means or that the bill helps minorities who did not exercise fiscal responsibility. There is simply no credibility to these arguments. As I have attempted to stress today, the mortgage foreclosure crisis affects all Americans. Financial institutions engaged in speculation on Wall Street that we now see has had a deleterious effect on Main Street.

Speculation, in a financial context, is the assumption of the risk of loss, in return for the uncertain possibility of a reward. Speculation is one of the main causes of various economic crises around the world. In fact, speculators have played a major role in the present crisis. The speculators were greedy.

Nonprofits such as ACORN, NACA, and Homefree USA, among many others, have long been waging consumer campaigns to educate borrowers about the various financial instruments. And I am resoundingly grateful to them for their hard work. We cannot make them the scapegoats. These organizations have allowed persons who might not otherwise have the knowledge or the opportunity to purchase a home, the opportunity to do so in the right way. These nonprofits should be applauded.

Everyone deserves the economic dream of owning their own home. But the financial institutions were dilatory in their responsibility to assess the borrower's ability to pay for loans and purchase a home. It was the squandering of this responsibility and preoccupation with greed and avarice that has led us to where we are today.

There are substantial improvements in the present version of the bill compared to the Bush administration proposal. However, the bill as it is presently written does not provide the necessary relief to middle- class America. Frankly, the bill provides no panacea to our present economic woes. Our markets will have the full faith and credit of the United States. This bill has not sent a sufficiently clear message because it lacks enforcement.

There are provisions now that address accountability measures by requiring a plan to ensure the taxpayer is repaid in full, and requiring congressional review after the first $350 billion for future payments.

Principally, there are three phases of a financial rescue with strong taxpayer protections: reinvest, reimburse, and reform. One of the phases is to reinvest in the troubled financial markets to stabilize the markets. Another reimburses the taxpayer and requires a plan to guarantee that they will be repaid in full. The last is to reform how business is done on Wall Street. The current legislation provides for fewer golden parachutes and, to its credit, provides sweeping congressional oversight.

There are critical improvements to the rescue plan that yield greater protection to the American taxpayers and even to Main Street. The protection for taxpayers include the following:

Gives taxpayers a share of the profits of participating companies, or puts taxpayers first in line to recover assets if a company fails; and

Allows the Government to also purchase troubled assets from pension plans, local governments, and small banks that serve low- and middle- income families.

For companies publicly auctioning over $300 million: There will be no multi-million dollar golden parachutes for top five executives after auction, although nothing prevents these executives from still reaping enormous salaries. There will be no tax deduction for executive compensation over $500,000.

However, with a ``pause'' we can help the financial markets and make America secured.

my amendment language

While the bill has some improvements, what is missing from the bill are serious enforcement mechanisms. The language of the bill was good and was marked improvement over what the administration sent to us last week, but more work needs to be done on the bill. There are still elements that need to be added to the bill.

The bill provides for the creation of a Financial Stability Oversight Board in Section 104. The bill also establishes a special inspector general for the troubled asset relief program in

Section 121. Last, section 125 establishes the Congressional Oversight Panel. Importantly, these sections lack any real enforcement. These sections require reports and investigation; however, there is no criminal sanction for any malfeasance perpetrated by employers.

One of my amendments would have established an Oversight Board that would have had the authority to issue criminal penalties and civil sanctions. My amendment would have provided a strong enforcement mechanism and would have been effective in ensuring that this crisis does not occur again. It would send a clear message to Wall Street.

Another of one of my amendments would have added serious judicial review to Section 119. Section 119 presently provides that no injunction or other form of equitable relief shall be issued against the Secretary other than to remedy a violation of the Constitution. My amendment would have allowed meaningful judicial review because it would have allowed injunctive and other forms of equitable relief insofar as the grant of such relief did not disrupt financial markets. These are remedies available at law and in equity. I see no compelling reason why such relief should not be granted in the financial context.

The bill has no bankruptcy provisions. The bill does not permit homeowners who are presently in mortgage foreclosure from declaring Chapter 11 and 13 bankruptcy. Importantly, my amendment would allow homeowners in default of their mortgages to restructure their loan, thus providing immediate relief to the homeowner.

Because the bill is devoid of bankruptcy relief, I offered another amendment to set aside $125 million as a firm allotment to address the question of individual American homeowners facing foreclosure. I believe that this would have provided relief in the absence of any extension of the bankruptcy code to address current homeowners in mortgage foreclosure.

I believe that Wall Street is an important and vital part of the Nation's economy. I believe that the people who work there are good. It is a well known fact that financial markets do not always serve small businesses and minorities. I have personally had experiences where good, hardworking people and small business owners were denied access to financial markets.

I believe in America, and I believe in its Constitution. I believe that we can create a bill that would allow constant monitoring and vigilance and would help the American people.

I am reminded of the Preamble to our Constitution, which reads:

``We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States America.''

I would like to end with a quote from Alexander Hamilton: ``The sacred rights of mankind are not to be rummaged for, among old parchments, or musty records. They are written, as with a sun beam in the whole volume of human nature, by the hand of the divinity itself and can never be erased or obscured by mortal power.''

Let us work to provide the American people with the sun beam. Let us work to provide legislation that works and that serves the American people.

Madam Speaker, pursuant to House Resolution 1517, I call up from the Speaker's table the bill (H.R. 3997) to amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes, and offer the motion at the desk.

Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days to revise and extend their remarks and include extraneous material on H.R. 3997.

Madam Speaker, I yield myself such time as I may consume.

Madam Speaker, rarely have the Members had so many reasons for wishing we weren't here.

First, it's a couple of days into what was supposed to be the time when Members can return to their districts to engage in campaigning. Members had a number of important events scheduled with their constituents, with their families, with others that have already had to be cancelled, and we are into the third day of that.

Secondly, Members would rather not be here because this is a tough vote. This is a vote where many of us feel that the national interest requires us to do something which is in many ways unpopular because what we are talking about, to many of us, is the need to act to avoid something worse from happening than is already happening.

It is hard to get political credit for avoiding something that hasn't yet happened but you think is going to happen.

Most of all, though, we regret being here because we all deeply regret the economic conditions which have made this decision day necessary. No one is happy that we have seen the failures that we have seen in our economic system. We differ as to whether or not those failures, as they have had a cumulative effect, require us to act. I believe it is possible to debate whether or not 2 weeks ago it was necessary to act quickly. I believe that it was. The bad news continues. There has been a lack of confidence in the financial system that is pervasive. Unfortunately, a lack of sensible regulation allowed the financial system to get itself into a position where so many people owe other people so much more money than they have or can reasonably be expected to get, that as confidence ebbs and people are called upon to make good on promises they should never have made, we face a declining cycle of activity.

People have said, well, you're bailing out Wall Street. The people in the financial industry who made a lot of money still have it. Their institutions may not have it, but they do. No high executive of a failed institution will be showing up soon at the unemployment office. None of them will be hurting. They will be fine personally. The people who will be hurt, in our judgment, are those who are trying to buy or sell cars, because there won't be credit for the automobile industry. There won't be ability to refinance your house or buy a house because there won't be any money there for any purchase that requires credit of any size, people will get hurt and it will have a cumulative effect.

Now you might have argued that the tremendous lack of confidence that is causing this over-leveraging to be a problem would not have had to be addressed a week ago. But let's remember what happened. Ten days ago, on Thursday, not far from here, in the office of the Speaker, the bipartisan congressional leadership and those of us who have leadership roles in the Financial Services and the Banking Committees were asked to meet with the Secretary of the Treasury and the Chairman of the Federal Reserve. In our country, under our system, the executive has a lot of the initiative. We have an ability to shape. We have an ability to respond. But in emergency situations--let's be clear--the initiative is inevitably with the executive. And the two leading appointees of President Bush concerned with economic activities, the people the financial community looks to, came to us and said, you need to give us this authority, and if you don't give it to us very quickly, there will be a disaster.

We have not given it to them as quickly as they asked because we felt that we needed, even if we agreed with the premise of the need for action, that we had to make some improvements. And we have made many of them, not as many as I would like, but we have made many of them. But we were able to do that, I believe, because we have been able to show progress.

At all times from the time they came on Thursday night, this body has been engaged. I have been here 27, 28 years. I have never seen a piece of legislation which was so open to Member participation in which there has been so much discussion. People have said, not enough time is being spent. Well, let me say this. The hours spent on this bill exceed the hours spent on most bills. And the staffs of the committee I chair, of other committees of Members, have done extraordinary work. What we have done is substantially change what they have done, but we have been able to say at all points that we're making progress.

Today is decision day. I wish it weren't the case. But I am convinced that if we defeat this bill today, it will be a very bad day for the financial sector of the American economy. And the people who will feel the pain are not the top bankers and the top corporate executives, but average Americans. They don't see it yet. And pain averted is not a basis on which you get a lot of gratitude. But that is what is coming if we do not do something today, in my judgment, positive. If this bill dies, I think we get negative.

And again part of the reason is this--and I disagree with Secretary Paulson and Chairman Bernanke on some policy issues. I regard them both as men of high integrity and total commitment to the national interest. And I believe they are absolutely and legitimately convinced about this. And by the way, they cannot, in my judgment, be accused of excessive pessimism. If anything, they can be accused of being too optimistic. Because you will recall that beginning with the Bear Stearns intervention, they have tried a series of interventions much less intrusive than this and they haven't worked. These are not men whose first impulse was to do something this broad. These are men whose experience was that something systemic was required because, again, of the depths of the problem.

Let's not forget the cause as we debate the consequence. The cause was too little regulation and the financial market getting itself into serious trouble. And now we have to, through government action, work with them to clean this up. And by the way, we have committed, I think almost everybody in this Chamber, certainly a large majority, that next year we will put in place the kind of regulations that we wish we had had before so this won't recur. So nobody needs to worry that we do this once and we will have to do it again another time and another time. We know how, I believe, to prevent this from recurring. But that doesn't help us as we deal with it today.

And the point is this: No matter what you thought about the crisis 10 days ago, when these two internationally respected highest officials of the Bush administration of the greatest economic power in the world come up and say, if you don't do this, we will have a crisis, then even if that hadn't been true before, they have made it more true. And I don't accuse them of doing it for that reason. That is just the reality.

If we repudiate George Bush's Secretary of the Treasury and Chairman of the Federal Reserve, joined as they were by previous Secretaries of the Treasury, if we repudiate them and say, nah, calm down, we'll get over it, I believe the consequences will be severe.

So I hope that this bill is passed. It is a first step. We have a task next year to do with regulation. We have oversight that must be done about how we got here. But here is the choice: George Bush's two chief economic officials have said to us, if you do not act, there will be terrible, negative consequences for the financial sector, and they will very soon exacerbate an economy that is already troubled, that already has 6 percent unemployment and is on track already to lose more than 1 million private sector jobs in the year. If we add to this weakened economy, and this is the headline, ``The House Repudiates Top Economic Advisers,'' there is nothing, I believe, that will then stand between us and--it's not the end of the world, this is a strong country, people will still get up the next morning and still send their kids to school, but fewer of them will be going to work. And fewer of them will be buying cars. And fewer of them will be able to refinance their homes. And the consequences will be a much more dismal near economic future for the United States.

So I hope the bill passes.

I reserve the balance of my time.

I yield 3 minutes to one of the most thoughtful members of our committee and a gentleman who represents in North Carolina one of the banking centers and has a great deal of knowledge of the subject under discussion, the gentleman from North Carolina (Mr. Watt).

I thank the gentleman for his words, and I now recognize the gentlewoman from California (Ms. Woolsey) for 2\1/ 2\ minutes.

Madam Speaker, I yield 2 minutes to the gentleman from Virginia (Mr. Moran).

I yield the gentleman an additional minute.

Madam Speaker, I now yield 3 minutes to the chairman of the Armed Services Committee, the gentleman from Missouri (Mr. Skelton).

I yield 2 minutes to the gentleman from Texas (Mr. Doggett).

Madam Speaker, I yield 2 minutes to the gentleman from California (Mr. Costa) for the purpose of a colloquy.

Yes, this reaffirms existing law, but we did it explicitly to underline its importance. There is very legitimate concern in this body on both sides of the aisle for the community banks. They are, in many cases, victims of practices from which they, themselves, abstained.

There is language in here that tries to give them some relief that they would get from the preferred tax situation with Fannie Mae and Freddie Mac. Other Members have raised the question of increasing the FDIC insurance limit next year, and this one in particular on the accounting, obviously none of us want the legislative accounting. But the gentleman has raised a very important point, and yes, we agree absolutely with how he has framed it.

The gentleman is again correct. It does not require it, but we would clearly hope that they would look at this very seriously.

Yes. There are two separate things here. One is the mark to market accounting due to the consequences that follow that.

I yield an additional 30 seconds.

One thing we talk about as you study what the appropriate accounting ought to be, not legislative but as they study it, there is room for flexibility in how quickly various consequences attach to that, and we are discussing that with the regulators.

Madam Speaker, I yield to the gentleman from Indiana (Mr. Visclosky) for a unanimous consent request.

(Mr. VISCLOSKY asked and was given permission to revise and extend his remarks.)

Madam Speaker, I yield 2 minutes to the Chair of the Financial Institutions Subcommittee, a very creative legislator, the gentlewoman from New York (Mrs. Maloney).

Mr. Speaker, I'm sure the Members will be relieved to learn that I have no matching metaphor.

I recognize for 3 minutes the gentleman from California (Mr. Sherman).

Madam Speaker, for the purpose of a colloquy, I yield 2 minutes to the gentleman from Georgia (Mr. Marshall).

Will the gentleman yield?

I think the gentleman makes a very good point. It's not anything obviously that we would legislate. I know he knows better than most, and he's not asking for that. But it is something I will join him in urging on the Federal Reserve.

The community banks are the innocent victims overwhelmingly of this. They were regulated. They didn't make subprime loans. By the way, they were

the ones covered by CRA. The bad loans were made by the institutions not covered by the Community Reinvestment Act.

But the gentleman is right. These banks play a vital function that will be even more vital as other sources dry up, and I will work with him to try to get that kind of relief.

Madam Speaker, there's been reference in this debate to very good provisions that help community banks and others that are tax provisions.

I now want to recognize for 3 minutes the author of those, the chairman of the Committee on Ways and Means, the gentleman from New York (Mr. Rangel).

(Mr. RANGEL asked and was given permission to revise and extend his remarks.)

I yield 2 minutes to the gentlewoman from California (Ms. Lee).

Madam Speaker, I now yield 4 minutes to the very able Chair of our Capital Markets Subcommittee, a man who has played a very important role in our trying to stabilize this situation, the gentleman from Pennsylvania (Mr. Kanjorski).

If the gentleman would yield, he is absolutely correct.

By the way, one of the points in the original bill the Treasury Secretary gave us inappropriately freed him from a number of judicial restraints. We have restored those, and we have taken away no existing legal right whatsoever in this bill.

I yield the gentleman an additional 30 seconds.

Madam Speaker, one of the most valuable members of the Finance subcommittee, the gentlewoman from New York (Mrs. McCarthy), is recognized for 2 minutes.

I yield the gentlewoman 30 seconds.

Madam Speaker, I yield 2 minutes to the Representative from one of our great urban quarters, the gentleman from Philadelphia, Mr. Fattah.

(Mr. FATTAH asked and was given permission to revise and extend his remarks.)

Madam Speaker, while I believe the gentleman is a little bit too harsh on the Bush administration, I understand his point of view.

Madam Speaker, I now yield to the gentleman from Michigan, the dean of the House, for purposes of a colloquy.

(Mr. DINGELL asked and was given permission to revise and extend his remarks.)

I thank the gentleman, who comes to us with great authority here because of having chaired the committee for years and had some of this jurisdiction, and having been right when other people were resistant, he speaks with a great deal of credibility. And the answer to his question is, yes, it does require that there be consultation with the Chairman of the Federal Reserve, but the Treasury Secretary is empowered to do exactly that.

And I would add, as the gentleman knows, in my judgment, one of the major areas of damage we will see if this bill fails is that we will start to see a real contraction in credit for automobiles. So the automobile makers and the people who sell automobiles will all be hurt. And the answer is yes to the gentleman's question.

If the gentleman would yield, yes. Again, that is well within the legal authority that this Federal Reserve Chair has described to us that he has under the statute from the Depression.

And given the centrality of the automobile industry--and we're talking, I want to again stress, not just making cars, but selling them and servicing them and repairing them, and of course providing great mobility to the American people. Clearly, this a worthy subject for the Federal Reserve to intervene with, when appropriate.

If the gentleman would yield, that would mean a great deal to me coming from anyone, but from the gentleman from Michigan, with his long record here in these areas, it means a particularly great deal.

Madam Speaker, I now yield 2 minutes to the gentleman from Oregon (Mr. DeFazio).

Madam Speaker, no one in this House has done more to fight for affordable housing and to prevent foreclosures and no one has had more of an impact and is trying within this bill to do the maximum that political constraints allow. So I now recognize for 3 minutes the Chair of the Housing Subcommittee, the gentlewoman from California (Ms. Waters).

I yield an additional minute to the gentlewoman.

Madam Speaker, I yield myself 30 seconds to correct an egregious misrepresentation of history.

The gentleman just said that the Democratic leadership, I'm sorry, he said the Democrat leadership, I wouldn't want to misquote his adjective. He said the Democrat leadership, a point of great rhetorical significance to the large-minded on the other side, says that the Democrats fought GSE reform.

The Republicans controlled this Congress from 1995 to 2006. No bill passing GSE reform went through. The Democrats took over in 2007. Within a couple of months this House, 4 months, this House passed----

I yield myself 30 additional seconds.

The House passed the GSE reform that the Bush administration requested. We then asked the Secretary of the Treasury to put that into the stimulus. He said no. The Senate then did it in July--and the bill became law. So 12 years of Republican rule, zero action on GSE reform, a year and a half of the Democrats being in power and GSE reform was passed.

I now yield 3 minutes to the gentleman from Tennessee.

(Mr. TANNER asked and was given permission to revise and extend his remarks.)

Madam Speaker, I yield myself 15 seconds. On page 58 the gentleman was right to object to the provision in the original bill sent to us by the Secretary exempting him from judicial review. We have disexempted him. If Members will look at page 58, he is now subject to appropriate judicial review.

I now yield 2 minutes to the gentleman from Minnesota.

I yield the gentleman another 15 seconds.

I yield 2 minutes to the gentleman from Oregon (Mr. Blumenauer).

I yield 2 minutes to the gentlewoman from Michigan (Ms. Kilpatrick).

(Ms. KILPATRICK asked and was given permission to revise and extend her remarks.)

Madam Speaker, our committee was joined this year by an extremely thoughtful Member who brings a wide range of relevant experience, the gentleman from Illinois (Mr. Foster). I yield him 2 minutes.

I yield the gentleman an additional 30 seconds.

I ran for Congress because of the widespread feeling that Washington was broken. I believe that what is needed to fix it is a little less pandering to the ideological extremes, and a lot more compromise by reasonable people in both parties--particularly in this time of national crisis.

So, will the spirit of bipartisan compromise carry the day? In less than an hour, I guess we will find out.

Madam Speaker, I yield for a unanimous consent request to the gentleman from New York (Mr. Engel).

(Mr. ENGEL asked and was given permission to revise and extend his remarks.)

Madam Speaker, there has been a great deal of discussion about the budgetary implications. No one in my experience here has had a better mastery of that process and had a more responsible approach to it than the current chairman of the Budget Committee, and I recognize for 4 minutes the gentleman from South Carolina (Mr. Spratt).

Madam Speaker, the gentlewoman from Illinois (Ms. Bean) is a member of this committee who brings great business experience. I am delighted to yield her 2 minutes at this point.

Madam Speaker, I yield the gentlewoman an additional 15 seconds.

I yield for a unanimous consent request to the gentlewoman from California (Ms. Loretta Sanchez).

(Ms. LORETTA SANCHEZ of California asked and was given permission to revise and extend her remarks.)

Madam Speaker, I yield 2 minutes to the gentlewoman from Ohio (Ms. Kaptur).

Madam Acting Speaker, the leadership that we have been given throughout this crisis by the permanent Speaker of this House has been extraordinary, and I am honored to yield her 1 minute.

Madam Speaker, I yield 2 minutes to a

Member who has played a leading role in bringing us together, the gentleman from Illinois (Mr. Emanuel).

Madam Speaker, I yield an additional 20 seconds.

Madam Speaker, I yield 2 minutes to the gentleman from Ohio (Mr. Kucinich).

I yield 1 minute to a very committed member of our committee, the gentleman from New York (Mr. Meeks).

I yield 1 minute to the chairman of the Oversight and Government Reform Committee who has been playing an important role here, the gentleman from California (Mr. Waxman).

I yield to the gentleman from New York (Mr. Crowley) 1 minute.

Thank you very much, Madam Speaker, for recognizing me, and also to the distinguished chairman for his extraordinary leadership which I will address in a moment.

Madam Speaker, when was the last time anyone ever asked you for $700 billion? It is a staggering figure. And many questions have arisen from that request, and we have been hearing I think a very informed debate on all sides of this issue today. I am very proud of the debate. Seven hundred billion dollars, a staggering number, but only a part of the cost of the failed Bush economic policies to our country, policies that were built on budget recklessness.

When President Bush took office, he inherited President Clinton's surpluses; 4 years in a row budget surpluses on a trajectory of $5.6 trillion in surplus. And with his reckless economic policies, within 2 years he had turned that around. And now 8 years later, the foundation of that fiscal irresponsibility, combined with an anything-goes economic policy, has taken us to where we are today.

They claim to be free market advocates when it is really an anything- goes mentality. No regulation, no supervision, no discipline. And if you fail, you will have a golden parachute and the taxpayer will bail you out. Those days are over. The party is over in that respect.

Democrats believe in a free market. We know that it can create jobs, it can create wealth and many things in our economy. But in this case, in its unbridled form, as encouraged, supported by the Republicans, some in the Republican Party, not all, it has created not jobs, not capital, it has created chaos. And it is about that chaos that the Secretary of the Treasury and the chairman of the Fed came to see us just about a week and a half ago. It seems like an eternity, doesn't it. So much has happened, the news was so bad.

They described a very, very dismal situation, a dismal situation describing the state of our economy, the fragility of our financial institutions, and the instability of our markets--our equity markets, our credit markets, our bond markets. And here we were, listening to people who know of what they spoke. The Secretary of the Treasury brings long credentials and knowledge of the markets. More fearful, though, to me, more scary, were the statements of Chairman Bernanke because Chairman Bernanke is probably one of the foremost authorities in America on the subject of the Great Depression. I don't know what was so great about the depression, but that's the name they give it.

And we heard the Secretary and the Chairman tell us that this was a once in a hundred-year phenomenon, this fiscal crisis was so drastic. Certainly once in 50 years, probably once in 100 years. And how did it sneak up on us so silently, almost on little cat's feet, that they would come in on that day. And they didn't actually ask for that much money that night. It took 2 days until we saw the legislation that they were proposing to help calm the markets. It was on that day that we learned of a $700 billion request.

But it wasn't just the money that was alarming, it was the nature of the legislation. It gave the Secretary of the Treasury czar-like powers, unlimited powers, latitude to do all kinds of things; and specifically prohibited judicial review or review of any other Federal administrative agency to review their actions.

Another aspect that was alarming, it gave the Secretary the power to use any money that came back from these infusions of cash to be used at the discretion of the Secretary, not to reduce the deficit, not to go into the general fund so we could afford other priorities, to be used at the discretion of the Secretary. It was shocking.

Working together in a bipartisan way, we were able to make major improvements on that proposal even though its fundamental basis was almost arrogant and insulting.

The American people responded almost immediately. Overwhelmingly they said that they know something needs to be done. Seventy-eight percent of the American people said: Congress must act. Fifty-eight percent said: but not to accept the Bush proposal.

And so here we are today, a week and a couple of days later, coming to the floor with a product, not a bill that I would have written, one that has major disappointments for me beginning with the fact that it does not have bankruptcy in this bill, and we will continue to persist and work to achieve that.

It is interesting to me, though, when they described the magnitude of the challenge and the precipice that we were on and how we had to act quickly and we had to act boldly and we had to act now, that it never occurred to them that the consequences of this market were being felt well in advance by the American people. That unemployment is up; and, therefore, we need unemployment insurance. That jobs are lacking; and, therefore, we need a stimulus package.

So how on the one hand could this be so urgent at the moment, and yet so unnecessary for us to address the effects of this poor economy in the households of America across our country? We will come back to that in a moment.

Working together, we put together some standards. I am really proud of what Barney Frank did in this regard.

That first night, Thursday night when we got the very, very dismal news he immediately said: If we are going to do this--and Spencer Bachus was part of this as well--if we are going to do this, we must have equity for the American people. We are putting $700 billion; we want the American people to get some of the upside. So fairness for the American people.

Secondly, as they described the root of the problem as the mortgage- backed securities, Barney insisted that we would have forbearance on foreclosure. If we are now going to own that paper, that we would have forbearance to help responsible homeowners stay in their homes.

In addition to that, we had to have strong, strong oversight. We didn't even have to see the $700 billion or the full extent of their bill to know that we needed equity and upside for the taxpayer, forbearance for the homeowner, oversight by the government on what they were doing, and something that

the American people understand full well, an end to the golden parachutes and a review and reform of the compensation for CEOs.

Let's get this straight. We have a situation where on Wall Street, people are flying high. They are making unconscionable amounts of money. They make a lot of money. They privatize the gain. The minute things go tough, they nationalize the risk. They get a golden parachute as they drive their firm into the ground, and the American people have to pick up the tab.

Something is very, very wrong with this picture.

So just on first blush that Thursday night, we made it clear--meeting much resistance on the part of the administration--those four things, equity, forbearance, oversight, and reform of compensation.

Overriding all of this is the protection of the taxpayer. We need to stabilize the markets, and in doing so, we need to protect the taxpayers. And that's why I'm so glad that this bill contains suggestions made by Mr. Tanner that if at the end of the day, say, in 5 years when we can take a review of the success or whatever of this initiative, that if there is a shortfall and we don't get our whole $700 billion back that we have invested, that there will be an initiative to have the financial institutions that benefited from this program to make up that shortfall. But not one penny of this should be carried by the American people.

People ask--and Mr. Spratt spoke with great knowledge and eloquence on the budget and aspects of the budget--$700 billion; what is the impact, what is the opportunity cost for our country of the investments that we would want to make?

Okay. Now we have it at a place where the taxpayer is going to be made whole, and that was very important for us. But why on the drop of a hat can they ask us for $700 billion and we couldn't get any support from the administration on a stimulus package that would also help grow the economy?

People tell me all over the world that the biggest emerging economic market in the world is rebuilding the infrastructure of America: roads, bridges, waterways, water systems in addition to waterways, the grid, broadband, schools, housing. We're trillions of dollars in deficit there. We know what we need to do to do it in a fiscally sound way, in a fiscally sound way that creates good paying jobs in America immediately, brings money into the Treasury by doing so and, again, does all of this in an all-American way: good paying jobs here in America. We can't get the time of day for $25, $35 billion for that which we know guarantees jobs, et cetera, but $700 billion.

So make no mistake: When this Congress adjourns today to observe Rosh Hashanah and have Members go home for a bit, we are doing so at the call of the Chair because this subject is not over, this discussion about how we save our economy. And we must insulate Main Street from Wall Street.

As Congresswoman Waters said, Martin Luther King Drive, and in my district Martin Luther King Drive and Cesar Chavez Road, and all of the manifestations of community and small businesses in our community, we must insulate them from that.

So we have difficult choices, and so many of the things that were said on both sides of this issue in terms of its criticisms of the bill we have and the bill that we had at first and the very size of this, I share. You want to go home, so I'm not going to list all of my concerns that I have with it.

But it just comes down to one simple thing. They have described a precipice. We are on the brink of doing something that might pull us back from that precipice. I think we have a responsibility. We have worked in a bipartisan way. I want to acknowledge Mr. Blunt and Mr. Boehner of the work that we've done together in trying to find as much common ground as possible on this.

But we insisted the taxpayer be covered. We all insisted that we have a party-is-over message to Wall Street, and we insisted that the taxpayers at risk must recover; any risks must be recovered. I have told you that already.

So, my colleagues, let's recognize that this legislation is not the end of the line. Mr. Waxman will be having vigorous oversight this week, hearings this week, on regulatory reform and other aspects of it. I hope you will pursue fraud and mismanagement and the rest.

Mr. Frank and his committee will continue to pursue other avenues that we can stabilize the markets and protect the taxpayer.

For too long this government in 8 years has followed a right-wing ideology of anything goes: no supervision, no discipline, no regulation. Again, all of us are believers in free markets, but we have to do it right.

Now let me again acknowledge the extraordinary leadership of Mr. Frank. He's been an exceptional leader in the Congress, but never has his knowledge and his experience and his judgment been more needed than now. And I thank you, Mr. Frank, for your exceptional leadership, Mr. Chairman.

So many people worked on this, but I also want to acknowledge the distinguished Chair of our caucus, Mr. Emanuel. His knowledge of the markets, the respect he commands on those subjects, and his boundless energy on the subject served us well in these negotiations.

But this is a bipartisan initiative that we are bringing to the floor. We have to have a bipartisan vote on this. That is the only message that will send a message of confidence to the markets.

I know that we will be able to live up to our side of the bargain. I hope the Republicans will, too.

But my colleagues, as you go home and see your families and observe the holiday and the rest, don't get settled in too far because as long as this challenge is there for the American people--the threat of losing their jobs, their credit, their savings, their retirement, the opportunity for them to send their children to college--as long as in the households of America this crisis is being felt very immediately and being addressed at a different level, we must come back. And we will come back as soon and as often as necessary to make the change that is necessary.

And before long, we will have a new Congress, a new President of the United States, and we will be able to take our country in a new direction.

Thank you.

Madam Speaker, I want to commend the distinguished gentleman from Massachusetts for the outstanding job he and the leadership have done on crafting this legislation. They took a bad piece of legislation and they have significantly improved it to make it much better.

I rise to support the legislation. And I would like to engage in a colloquy with my dear friend, Mr. Frank. I would note that the colloquy is an important one.

Madam Speaker, the automobile manufacturers face the most difficult conditions they've faced in decades. We need to do something to help unfreeze the credit markets that are hurting our industry.

As I read the legislation, the Secretary has the authority to purchase from a motor vehicle finance company traditional car loans and mortgage-related paper, such as a home equity loan used to purchase cars or trucks. Is my interpretation correct?

I yield to my good friend.

I have an additional question to my dear friend. If the Federal Reserve Board were to use the authority it has to address extraordinary circumstances in the credit market, motor vehicle companies would have access to capital that would help them to finance dealer floor plans and to make consumer loans. Am I correct in this? And would my good friend support such a decision by the Federal Reserve Bank to make funds available as long as these companies face unusual and extraordinary market conditions?

Madam Speaker, I want to thank my good friend, the

chairman of the subcommittee. He has worked very hard on an extremely difficult subject, and has perfected a very difficult piece of legislation in a remarkable way. The House and the country owe the gentleman a great debt.

I thank my good friend.

Madam Speaker, in the last few months we have watched the Bush administration negotiate the sale of Bear Stearns and Merrill Lynch, nationalize Fannie Mae and Freddie Mac, take an 80 percent stake in A.I.G., and let Lehman Brothers enter bankruptcy. When it became clear that this inconsistent, ad hoc approach was not going to be enough to keep our Nation from economic crisis, the Bush administration presented Congress with a plan that would give the Treasury Secretary unfettered authority to purchase up to $700 billion in troubled assets. In 2 days of hearings, Treasury Secretary Paulson and Federal Reserve Chairman Bernanke were asked by members of the Senate Banking Committee and the House Financial Services Committee to explain why such unprecedented and unfettered authority should be granted to a single individual, and it was clear that there was no answer.

Since the Bush administration's proposal was first introduced, a consensus has emerged that this bailout package is needed but that it needs to be improved through the inclusion of a number of important provisions. I congratulate Chairman Frank and Ranking Member Bachus of the Financial Services Committee and Senators Dodd and Bennett of the Senate Banking Committee for working together to turn an unacceptable proposal into a bipartisan bill that will hopefully help bring us out of this crisis.

I had a number of concerns about what is in the President's proposal: I was concerned about the potential cost, I was concerned about how the Treasury would determine a price for these assets, and I was concerned that there may have been other, more effective ways of giving these institutions access to the capital they need. I am happy to say that thanks to the hard work of the congressional negotiators, many of my concerns have been addressed.

One concern that remains about this legislation is that it does nothing to address the underlying causes of this crisis. When Congress passed the Gramm-Leech-Bliley Act in 1999 and deregulated the financial sector, I warned my colleagues that tearing down the regulatory structure enacted after the Great Depression would lead to huge institutions that would be free to engage in risky behavior and that the failure of those institutions would result in massive government bailouts. I wish that my prediction had been wrong, but today that is exactly the situation we are faced with. The American people need to understand that nothing in this plan will address that issue. The plan does not reduce the amount of risk that these institutions are allowed to take on, it does not create a new agency or empower an existing one to review the actions of currently unregulated financial institutions, and it does not create any new standards to guide them in the future.

Many Americans, who have seen their paycheck shrink over the last 8 years, who have watched some of their neighbors lose their jobs, who are struggling to pay increased costs for things like gas, groceries, or health care services, and who resisted the temptation to take out a risky loan and instead bought a house they were sure they could afford and made every payment, do not understand this bailout. They do not understand what this plan will do, they do not understand why it costs so much, and they do not understand why their tax dollars are going to be spent to bail out the same Wall Street banks whose risky behavior contributed to this mess. Most importantly, they do not understand why the Government is offering so little to help their family.

To all of my constituents who want to know why they are being asked to foot the bill to pay for this bailout, I can tell you only one thing: The cost of inaction to you and your family is greater than the cost of this bailout. Should Wall Street decline further and the value of the dollar continue to fall, it will mean greater unemployment, even higher prices for basic commodities, and access to credit for things like college education or home improvements will be even harder to obtain. The impact on the broader economy will be felt by every American. In fact, the credit crisis is already having an impact on the automobile industry that is so important to my constituents in Michigan and to hundreds of thousands of families around the country. If access to credit continues to dry up, the automobile financing companies will be unable to keep vehicles on dealership lots and help customers obtain financing. The automobile financing companies are not responsible for the current credit crisis, but they will be eligible to participate in this program to obtain the credit they need to keep vehicle sales strong.

Furthermore, the package that we are voting on today is a far cry from the bailout proposal first offered by the President. It contains important provisions assuring greater transparency and oversight and ensures that there will be no golden parachutes for the executives whose recklessness contributed to this crisis. It also includes provisions that will assist families who are struggling to keep their homes by requiring the Federal Government to modify the terms of the mortgages it acquires.

Most importantly, Speaker Pelosi, Chairman Frank, and others were able to negotiate into this package important provisions designed to protect taxpayer dollars and ensure our investment is recouped. For example, the Government will have the option to take equity in the companies that participate in the bailout and will create an insurance program for and collect premiums from those holding toxic assets. If after 5 years these provisions have not allowed the Government to recoup 100 percent of the cost of the bailout, the losses will be recaptured directly from the financial industry itself.

I do not, however, want to commit to anyone that this imperfect bill will work. It may not. Scholars of the Great Depression have told us that had the Government addressed the liquidity problem the economic collapse might have been a lot shorter or less forceful in its impact, or both. This bill may not work. But we have to try. Inaction is not an option.

I understand the anger and frustration that exists about this bailout. I pledge to my constituents that this will not be the only congressional response to this situation. This legislation creates a Congressional Oversight Panel, tasked with drafting a special report on regulatory reform that will be ready in time for the 111th Congress. Should the voters in Michigan's 15th Congressional District see fit to return me to Congress next year I will work to see that report turned into legislation that restores the regulatory structure that is supposed to protect the financial system from this kind of failure and that provides much needed assistance to the hard working men and women who are suffering because of the economic climate created by irresponsible parties on Wall Street and here in Washington.

I again want to thank the leadership of both parties in both the House and the Senate, and in particular Chairman Frank for the work that they have done to improve upon the plan sent to us by the Bush administration. I know that many of my colleagues are as skeptical of this plan as I am, and I know that for many of you it may be easier to vote against this plan than it will be to vote for it and have to explain to voters back home why we had to take this difficult step, but we must join together and pass this legislation now for the good of the country. I urge my colleagues to support this bill.