Helping Families Save Their Homes in Bankruptcy Act of 2008

Madam President, as to that last unanimous consent agreement, let me translate that into English. Sometimes these unanimous consent agreements get a little confusing. What we are going to try to do over the remaining 3\1/2\ hours or so is to divide the time equally. The minority side has agreed to limit their Members to 10 minutes each. I have not made a similar request here, but I will at some point if Members are not understanding of the desire of everyone to be heard--or almost everyone--on this matter.

At a point in the next few minutes, I will share some remarks that will explain how this bill has arrived to the point that it has and why I think it is important we support this effort this evening.

Again, I am very grateful. I will have some comments to make about Judd Gregg, my colleague from New Hampshire. Certainly, Max Baucus, the chairman of the Finance Committee, has been an incredible ally and supporter over these last 2 weeks trying to fashion something that would give us a sense of confidence about emerging from this economic crisis. But I will reserve some comments in a few minutes about all that.

I see my colleague from Tennessee, who I would like the Record to reflect, while he is, I think, the most junior member on the minority side in the Banking Committee, his contribution should never be calibrated by the seat in which he sits in terms of seniority. I want my colleagues to know while Bob Corker has not been a longtime Member of this body, his contribution is that of a very senior Member of this body. It has been invaluable.

He is knowledgeable, thoughtful, pragmatic, and made wonderful and comprehensive suggestions to the product we have before us today. I want my colleagues to recognize that. So I thank Senator Corker of Tennessee for being a very good Senator in a moment such as this, which is a sad day, as I said earlier, but a day which we must address.

So with that, let me yield the floor for Senator Corker to make some comments.

Madam President, I thank my colleague from Tennessee. Again, I appreciate his tremendous efforts that have brought us to this moment.

Amendment No. 5685

I have an amendment at the desk and ask for its immediate consideration.

Madam President, I ask unanimous consent that the reading of the amendment be dispensed with.

Madam President, I wish to take a few minutes to describe this amendment to my colleagues at this hour. I wish to talk as well about some of my colleagues who have helped us get to this point.

There is a crisis in our country. That has been said so many times now. I hope the impact of that statement is not being lost because of the repetition of it. We need to address it swiftly and forcefully. That is why we are here today.

Normally, when you talk about bringing up a bill, there is a certain amount of joy involved in putting something together that you think is proactively going to make a difference. In this case, we are coming together around a proposal and a bill that is in response to a situation that has angered millions of Americans and angers most of us here to be in this situation but also heightens the sense of responsibility that requires us to act. Therefore, we will spend the next few hours sharing with each other, as well as with the American people, why we are in this situation, to some degree, but clearly what our response is to it and our hopes that this proposal will make the difference that many Americans expect.

If Americans doubt we are living in perilous times in our Nation's history, they need to look no further than at what is happening in the financial markets over the last few days. Clearly, this is no ordinary time, no normal economic downturn. This is a day unlike other days. This crisis, and the choice it demands, is unlike few we have ever seen before, even those who have served in this Chamber for several decades. This Chamber may not be full, but millions, in time, will hear the words we speak, and millions will feel the vote we cast around 7 p.m. this evening. In the end, once the reputations we stake, for good and ill, have long since gone to dust; once this day has turned from flesh and blood to textbook page for a child who is not yet born; one of two things will be said about us and how we acted on this heavy day. They will say the Senate did what was right, or they will say the Senate washed its hands of this problem and walked away.

If this bill could be written as starkly as that, the vote would be unanimous. But bills never are. They are full of jargon and verbiage and compromise, and as necessary as they are, they can crust over and obscure the essence of our choice. We read stories of foolish choices in our history books and from our safe distance, it is so easy to shout: Why didn't they know any better? But up close, in the flesh and blood of the moment, even on a day such as today, making the wrong choice can be supremely easy.

Nearly eight decades ago, the men who sat in these chairs--and there were only men in those days--were faced with a crisis not unlike the one we face today. They faced a recession that threatened to turn much worse. They did what was easy. They lashed out at the world and threw up huge barriers to trade. They found someone to blame--not because it was good economics but because it felt good. President Hoover signed the 13 letters of his name with six gold pens and launched a trade war. The world retaliated. Commerce shut down. And passing a bill that felt good drove us deeper and deeper into depression.

This week, on both sides of the Capitol, I could imagine how pleasant it would feel to vote no. In that respect, those who stand on the other side of this issue will have a much happier week. What a rush of affirmation they will get as they stick a finger in the eye of the bankers and the tycoons whose greed brought us to this crisis. Believe me, I can sympathize.

But after the vote has been cast for pique and for spite, what then? After the rush of righteousness fades, what then? It has been said: ``Let justice be done, though heavens fall.'' It is a noble thought, but it is much easier to say when the heavens are in no danger of falling on you. Who will they fall on? They will fall on the million or more families who can lose their homes. They will fall on the mothers and fathers telling their children that the college loan isn't coming through and struggling to explain why. They will fall on workers laid off all over this country as credit dries up and as businesses fail to make their payrolls and as they send their employees home with pink slips through no fault of their own.

We are one Nation, one economy, and one body. We can take a cut at Wall Street, but Wall Street will not feel the worst of the pain--not by a long shot. The blood will not come from them. My colleagues know who will feel the pain, who will be bled the most by this crisis: those whose economic world is made up of credit cards and mortgage payments, not hedge funds and credit default swaps. The men and women and families we represent will feel the pain of a ``no'' vote.

The world will feel the pain, too, I might add, men and women and families just like ours who don't speak our language, who are asleep on the other side of the world as I speak these words right now but who are bound to us in a web of commerce more tightly than ever before in world history. They are watching, too, I might add.

Today's Washington Post quotes a banker in Germany, a man who did nothing to cause this crisis but who will suffer from it as much as if he did. And his faith in America, even now, even today, ought to inspire each and every one of us in this Chamber.

Let me quote him for you:

All I can say is that I simply cannot imagine that the

Americans will not come up with some sort of a solution.

Anything else is outside the realm of my imagination.

Outside the realm, Madam President, of his imagination that this Senate of ours will not solve this problem, in conjunction with the work of the other body. He is speaking of a nation of doers, of fixers, of problem-solvers, of people with optimism and confidence in our future. We can be that Nation again. In fact, we must be.

Madam President, I love my job here in the Senate. I normally sit in the seat right behind me here, my father's desk. I sit it in every day, have for 28 years. I love that desk, love this Chamber, and today there is not a place I would rather be. I am sure my colleagues, each one of them, have their own stories, 100 of them, of their love of this job and of this place and what it means to be a Senator. But how can we possibly weigh those hundred jobs, if you will, against the 600,000 or more that have been lost in America just this year alone and the million more that could follow if we could save those jobs by giving up our own? How could we not? Who could come to this floor and say with a clean conscience: I will save my job but put hundreds of thousands of jobs at risk all across this great country of ours. I don't believe a single Member of this body, regardless of party, would ever make that trade. They would be willing to give up their job to save that of others.

As Edmund Burke said to his constituents centuries ago:

The legislator's ``unbiased opinion, his mature judgment,

his enlightened conscience, he ought not to sacrifice to you,

to any man, or to any set of men living. These he does not

derive from your pleasure; no, nor from your law and the

constitution. They are a trust from Providence, for the abuse

of which he is deeply answerable.''

I am answerable today, as are all of us in this Chamber, and I intend to answer correctly. I intend to answer yes, we ought to do this to get our country back on its feet again. That is the job of a Senator.

By now, it is well known how we arrived at this critical moment. Years of what Secretary Paulson himself has called bad lending practices went essentially unchecked by a regulatory system that was not on the job. These bad lending practices have been primarily in the area of mortgage lending.

As we all know, culpability for these practices exists in every link of the lending chain, from mortgage brokers to lenders to the investment banks. Certainly there are many borrowers who acted irresponsibly. They should not be excused for the consequences of their actions but neither should those whose culpability was significant and catastrophic in terms of their impact on mortgage lending and on the credit markets.

Almost 2 years ago, the Senate Banking Committee held the first congressional hearing of the new Congress on predatory lending. At that hearing, I and others of that committee, Democrats and Republicans, warned of a coming wave of foreclosures that could devastate millions of homeowners and have a devastating impact on our economy. Some, unfortunately, scoffed at those predictions. Well, no one is scoffing anymore. Financial market turmoil is affecting families and businesses all across this country, and the contagion has spread beyond the shores of our own Nation.

A paper in my State, the Connecticut Post of Bridgeport, CT, reported that, at Sacred Heart University, Julie Savino, dean of student financial assistance, is fielding calls from parents who never before sought financial aid. Laid off or without medical insurance or unable to secure a home equity line of credit, parents are suddenly on the hunt for alternative means to pay for their children's education. Some students have had to walk away from their educations all together, she points out.

Reuters News Service reported that Kansas City cabinetmaker Anthony Gallo had no debt 18 months ago. None. Now he is being forced to borrow just to make payroll.

Let me quote Mr. Gallo:

My line of credit has been cut to nothing. We are all

hurting and wondering what is going to happen. They have got

to do something to save the banks. They can't kill our

economy.

The fact is, the banking and financial system is an essential part of our Nation's economy. A halt in the flow of money threatens not only Wall Street firms--which would not bring us here today--but endangers the way of life for millions of Americans far beyond Lower Manhattan. Right now, banks are afraid and in some cases unable to lend money, money companies need to make payroll, money families need to pay medical bills, money students need to pay for college, money small businesses need to stock their shelves with inventory, money a gas station needs to supply its pumps with gas, and money investors provide to entrepreneurs to start new businesses and create new jobs. We know that money isn't moving. That is what the credit crunch means.

Very few Americans have ever heard of something called the LIBOR, which stands for the London interbank offered rate. This is a rate banks charge when they make loans to other banks. It is also the rate that is used to calculate the cost of home loans, student loans, auto loans, and small businesses. Yesterday, LIBOR jumped over 400 percent in just 1 day.

In many ways, this is the canary in the coal mine, if you will. It is a sign of the strains that are threatening the essential flow of credit to the people of our country and, indeed, the industrial world.

Another canary in the coal mine is the rate on Treasury bills. Several days ago, fearful investors rushed into safe Treasury securities, sending yields on Treasurys into negative territory for the first time in at least half a century. When people see that the money they have placed in banks and money market funds is earning negative interest, they may feel compelled to pull their money out of such financial institutions. This could result in even further erosion of the supply of money in our economy.

Our economy is on a precipice--and that is not an exaggeration, that is not hyperbole--and we must do what we can to move it back from that brink. The legislation before us and the amendment I have offered, this comprehensive amendment before the Senate today, represents an effort to do just that.

Just 10 days ago, the administration--if I may just remind my colleagues, this is the bill, I hold it in my hands, three pages long-- the administration sent to us a bill that called for $700 billion to go out without any questions asked, without any oversight, any accountability, or any taxpayer protection. Three pages. I might point out, as I said to some, a no-documentation loan for $100,000 to a subprime borrower a few years ago was four pages long. Here is a request for $700 billion that is three pages long. And my colleagues on both sides here said no to that, we are not going to do that.

As a result, over these last 2 weeks, we have put together a piece of legislation that gives us much more heightened protection about how this program would work. There are a lot of people who deserve tremendous credit, but I thank my colleagues for rejecting this offer of three pages for $700 billion in return for drafting a comprehensive bill that I believe will provide the kind of security people are looking for with a plan of this magnitude. I refused, along with my colleagues, to provide a blank check on this not just for this administration--I would do it with any administration, and my colleagues did as well. This crisis demanded we bring together Members of the House of Representatives, the Senate, Republicans and Democrats, and hammer out a better solution for the American people.

Our leader, Senator Harry Reid, the majority leader, deserves incredible credit for his determination to stick with it and not walk away and demand each and every day, when things began to fall apart, that we stay and work at it. He was joined by the minority leader, Senator McConnell, equally committed, I would point out, to the same efforts, as well as a number of others who played significant roles.

Judd Gregg of New Hampshire I have been talking about and spending a lot of time with over these last 2 weeks, working out this particular bill that we brought together, and I thank him for his efforts.

Jack Reed of Rhode Island was the principal author of the warrants in this bill, to make sure the American taxpayer comes first. If these instruments turn out to be more profitable and they actually are sold and we make our money back, the people who will get the benefit of that first are the American taxpayers, and Jack Reed demanded that.

Pat Leahy looked at the provision of this original proposal which suggested that no court of law, no agency could ever question how this $700 billion was going to be used, and the chairman of the Judiciary Committee said that passage will not last and struck it and offered new language that provides judicial protection in this bill.

I have mentioned Bob Corker already, Senator Corker of Tennessee, who was valuable over the last 2 weeks, and Mel Martinez and Chuck Hagel.

My colleague from New York, Chuck Schumer, who is knowledgeable about this subject matter and who represents the State of New York--I can't begin to describe how valuable Chuck Schumer has been in this process. From the very beginning, there hasn't been a meeting that has occurred or a discussion held where he hasn't played an invaluable role in seeing to it that we stayed with it.

Dick Durbin, the majority whip, and Bob Bennett of Utah--again, the ranking Republican on the Banking Committee historically has played a very important role on so many issues during his tenure here and again was tremendously helpful.

Max Baucus, whom I have mentioned--chairman of the Finance Committee--played a critical role as we fashioned this together.

My dear friend and colleague, Kent Conrad, the chairman of the Budget Committee, was incredible in his determination that this package be fiscally sound, that we have provisions that would guarantee our debt would be retired as part of the effort here when resources are sold and the profits are gained. So I thank my friend. He is here, in fact, on the floor. My colleague has been a tremendous help in all of this, Madam President.

I want to also mention, from the other body, Barney Frank of Massachusetts, my counterpart on the House Financial Services Committee, was, again, tireless over the last couple of weeks in this effort, and Congressman Roy Blunt, Speaker Pelosi, Representative Boehner as well, and Rahm Emanuel.

There are so many people, and I want to be careful, but clearly this was a huge effort. I wish in many ways that the American people could have been a witness to these gatherings that went on day after day. I think they would have been proud of their Congress at a time when Congress's reputation is not great. I think they would have been proud to see the effort that was being made, not where people were running to a political corner wearing a Republican or Democratic hat but coming together as Senators and Congressmen, along with those from the Treasury Department, to make a difference. All of these Members of Congress undertook the enormous and in many respects thankless but nevertheless vital task of crafting this proposal which we offer to our colleagues this afternoon--the Emergency Economic Stabilization Act of 2008.

This legislation would address, we hope, our Nation's economic emergency in three key ways: economic stabilization, taxpayer protection, and home ownership preservation.

This bill gives the Treasury Secretary the authority to respond quickly, forcibly, but responsibly to the current crisis. It authorizes him to buy a total of $700 billion in troubled assets, broken down into three separate tranches, with the final tranche subject to congressional review and approval.

Madam President, $700 billion is a staggering amount of money. We all understand and share the anger of the American people that they are being asked to commit that sum. But in a $14 trillion economy, this is the kind of financial firepower that must be brought to bear to contain the financial crisis.

Secondly, in consideration of the extraordinary burden this bill potentially places on the taxpayer, we maximize, to the extent possible, protections of the taxpayer.

The bill establishes an oversight board to review and shape the policies of the Treasury Department in carrying out this program. Unlike the original Treasury proposal, this bill subjects the actions of the Treasury Secretary to strong judicial review that would prohibit actions that are arbitrary, capricious, or otherwise unlawful. It places firm limits on executive compensation to help ensure that corporate executives whose companies receive taxpayer benefits do not walk away with golden parachutes and are not otherwise rewarded for wrongdoing.

We require taxpayers to receive warrants so that they can benefit when a company benefits from taxpayer assistance. In addition, we require that any profits generated from the sale of these assets purchased with public funds go to reducing our national debt.

We provide for extensive reports so that Members of Congress and the public at large will know how every dime of this program is being used. Within 48 hours of any transaction, the Treasury Secretary will have to report the amount, the terms, and the participants associated with that transaction. The General Accounting Office will have immediate and ongoing audit authority and report to Congress every 60 days. A special inspector general will be established to monitor and police the program's activities and its participants.

The third priority advanced by this legislation is home ownership. This is not an ancillary objective; it is inherent, in my view, to our efforts to resolve this economic crisis.

Chairman Bernanke himself has spoken forcefully on this point. Our economy will recover only when we put an end to the spiral of foreclosures that are pulling down our entire financial system. To that end, the legislation requires that all Federal agencies that own or control mortgages or mortgage-backed securities preserve home ownership. In addition, the legislation expands eligibility for the HOPE for Homeowners program, which allows lenders and borrowers to access Federal mortgage insurance in order to put homeowners on a path to security, not financial ruin.

This is not an easy vote. There will be no balloons or bunting or parades for Members at the end of this process, only the knowledge that at one of our Nation's moments of maximum economic peril we acted, not for the benefit of a particular few but for all Americans so that they and those who come after them may enjoy the full blessings of life in this great Nation of ours.

We are a nation of optimism and confidence. Americans deserve to have that restored. Our job tonight will give them a chance to do that. I urge my colleagues to support this amendment.

I yield the floor.

Madam President, I want to recognize the Senator from North Dakota.

I ask unanimous consent that the Senator from Rhode Island be recognized for 6 minutes, the Senator from Pennsylvania for 5 minutes, and then my colleague and friend from New York for 6 minutes.

Madam President, for how long would the Senator from Illinois like to be recognized?

I am in control of the time. How much time?

Madam President, I yield the Senator from Illinois 10 minutes.

I ask unanimous consent that the Senator have as much time as he would like to have.

Mr. President, I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Yes, under current law and under the provisions in this bill, that authority exists.

Yes.

I thank the Senator from Vermont for his passion, eloquence, and commitment. He is never shy. This institution could use a little bit more of similar expressions of feelings for constituents. I thank him for that speech.

I see my colleague from Alabama. We are going back and forth. At that point after Senator Sessions, Senator Schumer is next in line.

Madam President, the Senator from New York is next.

I will give the Senator an additional minute.

Madam President, I yield 5 minutes to my distinguished friend and colleague from New Jersey.

Madam President, I have a unanimous consent that has been cleared on both sides. I ask unanimous consent that an additional 30 minutes be allocated for debate with respect to H.R. 1424, equally divided and controlled between the leaders or their designees, and that the debate with respect to the House message on H.R. 2095 be delayed accordingly, and that any other provisions remain in effect.

I yield 5 minutes to Senator Nelson of Florida.

Madam President, one quick thought. We are all entitled to our opinions. Pat Moynihan used to say everyone is entitled to their own opinions but not to their own facts.

As I listened to my friend from Florida, Senator Nelson, talk about the executive compensation section of this bill, I must respond.

As to this legislation, section 111, negotiated by Senator Max Baucus, myself, and others, let me be very clear. When Treasury buys assets directly, the institution shall observe standards limiting incentives allowing clawback and prohibiting golden parachutes. When the Treasury buys assets at auction, an institution that has sold more than $300 million in assets is subject to additional taxes, including a 20-percent excise tax on golden parachute payments triggered by events other than retirement. And also we eliminated the deduction for compensation above $500,000, and we prohibit golden parachutes at other certain institutions--anything but mild. It is the first time ever in the history of the Congress that we are actually going to pass legislation dealing with golden parachutes. More will be done, but this bill does take very concrete, specific actions in that regard.

Again, you are entitled to your own opinions but not your own facts.

I yield 5 minutes to Senator Kerry of Massachusetts.

I yield 1 additional minute.

Madam President, I thank my colleague from Massachusetts for an eloquent statement and a strong one.

Madam President, I yield to my distinguished friend and colleague from California 5 minutes.

If I may inquire of my good friend and colleague who has been very generous, I may ask for a little generosity in terms of time. I am running into a crunch, and I have a couple Members who may wish to speak for a couple minutes. But let me get to that point.

I yield 5 minutes to the Senator from Washington.

Mr. President, the Senator from Illinois wishes to speak. I ask for 5 minutes.

Mr. President, I yield 3 minutes to my colleague and friend from California.

I absolutely agree with the gentleman from New Jersey. The scale of this undertaking is vast, and the exposure to the taxpayer must be well managed. Therefore, I urge the Secretary to look broadly for the best expertise in assisting him in managing this program.

Madam President, I ask unanimous consent to be recognized to speak for up to 15 minutes.

Madam President, I rise today to speak before we take what will be one of the most important votes, unrelated to war, many of us will cast in the U.S. Senate.

The proposal before us provides $700 billion to buy illiquid assets from financial institutions. The stated goal of this scheme is to return confidence and liquidity to our credit markets.

We did not get into this situation in a matter of days, and we are not going to fix it with a piece of legislation quickly cobbled together in back rooms of the U.S. Capitol.

In fact, this crisis has been years in the making. Over the last decade, trillions of dollars were poured into our mortgage finance markets, often at the direction of well-intended, albeit ill-conceived, Government programs.

At first, the money backed conventional mortgages with standard downpayments and properly verified incomes.

Over time, the number of home buyers who met conventional loan requirements dwindled. In order to fuel the upward spiral, mortgage products became more exotic, requiring less of borrowers and involving more risks.

Without regard for fiscal prudence and simple economics, mortgage brokers, realtors, homebuilders, mortgage bankers, and home buyers created the conditions that helped inflate the housing bubble.

At the same time, Wall Street was developing ever more sophisticated finance vehicles to ensure that money continued to flow into the mortgage markets to meet the demand.

Mortgages were pooled, packaged, and rated ``investment grade'' by the credit rating agencies. They were then sold into a market eager to purchase securities with a wide range of risks and yields.

Many purchasers employed massive amounts of leverage, layering risk upon risk in an effort to maximize return. To cover their risks, many of these buyers also bought credit protection from one another, entering into derivatives contracts with nominal values in the hundreds of trillions of dollars.

Eventually, economic reality caught up with us. Housing prices stalled and then began falling.

Many who bought homes with unconventional loans were unable to afford their rising payments. Because home values were dropping, they were unable to refinance and delinquency rates skyrocketed. This trend has not yet abated.

Once homeowners began defaulting, the value of mortgage-backed securities plummeted.

Collateralized debt obligations, or CDOs, that were comprised of the riskiest mortgage-backed securities became worthless. As a result, financial institutions holding securitized assets have suffered enormous losses and have been desperately trying to raise new capital.

I have been a member of the Senate Banking Committee for over 20 years. When I joined the committee, the savings and loan crisis was just beginning to unfold.

Let me remind my colleagues that it took nearly 10 years, five Congresses, and 3 administrations until that smaller, more contained crisis was resolved.

Personally, I learned a few solid lessons from that experience. I came to understand that bank management, bank capital, and sound regulatory policy make a major difference.

What I learned then has guided me ever since.

For example, in 1995, I opposed the expansion of the Community Reinvestment Act. I did not take this position because I am against lending to minorities or low-income individuals. My concerns were based on the simple fact that credit cannot be safely extended on any basis other than risk, and risk cannot be mitigated through social engineering.

The appropriate allocation of credit is not political, it is based on merit. Those with good credit receive the best terms and lowest rates. Those with bad credit receive the worst terms and the highest rates, or in some cases, no credit at all.

The CRA was an attempt to get around this fact and it failed. I remind my colleagues of this as we prepare to buy assets backed by the very same mortgages born of this flawed policy.

I find it ironic that many of those who supported the legislation that upended the basic concept of risk-based lending are now saying that our present circumstances are an indication that the free market failed. Federal policy, not free market decisions, fueled risky loans to unqualified borrowers.

In 1999, I opposed the financial modernization bill. Despite Alan Greenspan's proclamations, I did not think it provided a sufficient regulatory structure to oversee the financial system it created. I was also concerned that it lacked some basic consumer privacy protections. Many are now claiming that deregulatory effort led us directly to where we are today.

In 2001, I became concerned about the banking regulators' effort to modernize bank capital standards through what is known as Basel II. While it was very important to update those standards, it appeared to me that ``modernization'' was focused more on reducing bank capital levels than improving bank capital standards.

During the process, it often seemed that the regulators were more interested in industry priorities than protecting the banking system. I spent nearly 5 years trying to ensure that the regulators produced a balanced rule that focused on safety and soundness.

When I became chairman of the Banking Committee in 2003, I immediately became concerned with the financial health and regulatory structure of the Government sponsored enterprises, Fannie Mae and Freddie Mac.

I did not think the entities had sufficient capital, management controls, or regulatory oversight. I was particularly troubled about their size because their combined portfolios amounted to nearly $2 trillion at that time.

I believed that their operations posed a systemic risk to the financial markets. After each disclosed that they had committed serious accounting fraud, my concerns grew more focused and I stepped up my efforts to pass legislation.

Those efforts were rebuffed by the Democrats on the Banking Committee. And, let us be clear as to what the GSEs were doing at this time.

From 2004, when we began considering GSE legislation, up until very recently, the GSEs went on a nearly trillion dollar sub-prime and Alt-A mortgage-backed security buying spree. Madam President: $1 trillion.

I do not know for sure what motivated them in this effort, but I do know the GSEs were spending hundreds of millions of dollars lobbying Congress in an effort to stave off additional regulation.

Fannie's and Freddie's greatest allies were those that advocated and, at times, demanded that the GSEs continue to facilitate sub-prime and Alt-A borrowing. As long as they complied, real regulation was dead.

This symbiotic relationship, in turn, fueled an already over heated market to grow even hotter.

As the driving force in mortgage finance, this purchasing effort also broke down what scant underwriting standards remained in the market place. Many, if not most, of the toxic assets that this taxpayer-funded bailout is designed to buy were originated in an atmosphere created by the GSEs and facilitated by their supporters here in Congress.

During the securitization boom that took off in the last 5 years, I also became very concerned about the regulatory oversight of the credit rating agencies whose ratings were crucial to getting securities sold.

When I looked at the system in place, I soon realized it was dominated by two companies and that the regulatory structure provided no real oversight and actually prevented competitors from entering the market.

Considering the value that mutual, money market, retirement pension funds, and insurance companies, and other important investors place on the ratings, I recognized that immediate legislative action was necessary to address the shortcomings of the oversight regime. We took that action in the fall of 2006.

Unfortunately, it now appears even that effort came too late. The rating agencies provided investment-grade ratings on securities worth hundreds of billions. A large percentage of those ratings have since been downgraded.

I remind my colleagues that those securities also happen to make up the troubled assets that are now the focus of this bailout.

Finally, in 2007, I publicly questioned the adequacy of the Securities and Exchange Commission's Consolidated Supervised Entities Program.

This nonstatutory program was put in place by the SEC to allow the five big investment banks to meet European regulatory standards without having to submit to Federal Reserve

supervision as provided in the Financial Modernization Act. The program also allowed the investment banks to significantly reduce their capital requirements.

Because I already felt that the 1999 act did not provide adequate supervision, I was troubled that the investment banks continued to chafe even at this minimal supervision.

With their trillions in assets, global operations, and hundreds of thousands of employees, they were content to be ``regulated'' by a program with a staff of less than 20 people, and they vigorously lobbied the Banking Committee to keep it that way.

Needless to say, I had serious concerns about this arrangement.

These concerns crystallized when Chairman Dodd marked up legislation that would not only have codified the SEC's regulatory concoction, but also would have expanded the powers of the investment banks, allowing them access to taxpayer-insured funds through ownership of insured depositories.

I requested that the Banking Committee hold hearings to examine this structure in greater detail before we ratified that which the SEC created through regulatory fiat. Once again, we did not.

Instead, my Democrat colleagues voted not only to codify the CSE program, but also to expand it. My Republican colleagues voted to reject it and argued for additional committee action.

Today, the CSE program is gone because our investment banks have either gone bankrupt, merged, or become that which they fought so hard to avoid: Bank holding companies supervised by the Federal Reserve.

I would also like to point out to my colleagues that a large number of the assets that will be purchased under the Paulson plan were either originated or held by the CSE regulated firms: Bear Stearns, Lehman Brothers, Merrill Lynch, Morgan Stanley, or Goldman Sachs.

We did not get to where we are today by accident, it was a path we chose.

My warnings about the risk of basing credit decisions on well- intended social mandates rather than sound, fact-based underwriting were dismissed.

My concerns about the inadequacy of the regulatory structure put in place in the financial modernization legislation went unacknowledged.

My efforts to ensure that bank capital standards were designed to ensure safety and soundness, rather than industry concerns, were conducted largely alone.

When I urged focus one of the SEC's Consolidated Supervised Entities Program, my Democrat colleagues ignored me and instead voted to ratify and expand the program.

When we attempted to pass meaningful GSE reforms, we were repeatedly stopped.

I commend Senator Dodd, who in the end, worked with me to pass a bill. Unfortunately, that effort came too late because the GSEs had already gorged on billions of dollars of toxic sub prime paper and no longer could function on a stand-alone basis.

As often as I have argued that we needed to address systemic risks in the financial markets, my advice has been dismissed, and my concerns have proven to be fully justified.

I now have serious concerns about the bailout package we are preparing to pass.

My foremost concern relates to the manner in which we are attempting to address the problem.

The Paulson plan focuses on a single problem--illiquid assets held throughout the financial system.

I believe we have a number of interrelated problems that need to be addressed in order of their significance.

First, and most urgent, is liquidity. Then we must address the solvency of our financial institutions and declining home values, not to mention our entire regulatory structure.

I believe Congress can address the liquidity issue by increasing the combined resources of the Federal Reserve System and the Treasury.

By enhancing the Federal Government's existing lending facilities and guarantee programs, we can help stabilize money market funds and provide loans to troubled financial institutions without exposing taxpayers to massive losses. This act alone would allow us some time to consider thoroughly our next steps.

Thereafter, we must determine how to address the troubled assets on the books of financial institutions and continue the process of dealing with declining home values. This will likely be a long and difficult process, a fact that is not being shared with the American people.

As long as we address the immediate liquidity problem by expanding lending facilities using the illiquid securities as collateral, we can then take the necessary time to do our work in a more responsible and thoughtful manner. It appears, however, that we are not going to subject this bill to our normal process.

With that in mind, I would like to take some time to look more closely at what this unprecedented piece of legislation would do.

The Emergency Economic Stabilization Act of 2008 would create the Troubled Asset Relief Program.

It would authorize the Treasury Secretary to purchase up to $700 billion worth of troubled assets from just about any type of institution.

In exercising this authority, the Secretary would be vested with nearly unfettered power.

The Secretary could purchase any financial instrument he deems necessary to promote financial market stability. He could purchase not only mortgage-related assets, but securities based on credit card payments, auto loans, or even common stock.

The Secretary could purchase assets from any institution, not just financial institutions so long as they have ``significant operations in the United States.''

What constitutes ``significant operations'' is left undefined, leaving the Secretary a great deal of latitude in determining which institutions would qualify for the program.

Certainly the Secretary could purchase assets from private equity firms and hedge funds, but also corporations and State governments. Given the lack of standards and the breadth of the Secretary's authority, it should be no surprise if politically connected entities get special treatment under this program.

Under a provision hidden deep in the legislation, the Treasury Secretary also has the authority to purchase troubled assets from foreign central banks and governments.

The Secretary has unlimited authority on how the purchased assets are managed and sold. Treasury could even set up Government-run hedge funds that compete with private companies.

While the Treasury Secretary's authority expires at the end of 2009 and can be extended for only 1 additional year, the Treasury's authority to manage purchased assets is perpetual.

Treasury could also purchase assets after the termination of its authority, if it has entered into agreements to purchase prior to the termination date. This program will be with us for decades to come.

The few restrictions imposed on the Treasury Secretary's authority could undermine the effectiveness of the program. If the Secretary purchases more than $100 million in troubled assets from an institution, he must obtain non-voting common stock or preferred equity in the institution.

To complicate matters further, the bill does not provide clear guidance on how many warrants the Secretary should obtain or what their terms should be.

If the Secretary makes direct purchases of troubled assets, the selling institution must adopt standards on executive compensation and corporate governance.

If the Secretary purchases more than $300 million in troubled assets from an institution, the institution must adopt restrictions on executive pay and golden parachutes for any new senior executives it hires.

The legislation also restricts the amount of executive compensation participating institutions can deduct for tax purposes. While this may make us feel good, these provisions will likely limit the number of institutions that utilize the program.

Not to mention that the compensation restrictions are prospective. In other words, the people who created this mess get to walk away with cash in hand, and the people hired to clean it up get penalized.

This will no doubt undermine their efforts to resolve their financial problems by hindering their ability to hire new management

Upon enactment of the legislation, the Treasury Secretary is authorized to purchase up to $250 billion in troubled assets. This purchase authority can be increased by another $100 billion if the President certifies that such additional authority is needed.

The Secretary's authority can be, and likely will be, increased to $700 billion if the President certifies the need and Congress does not enact a joint resolution of disapproval.

It is extremely difficult to obtain the two-thirds votes in both the House and Senate to override a veto. Therefore, for all intents and purposes, this distribution system is a mirage. It does not effectively limit the Treasury Secretary's ability to spend $700 billion.

The bill would establish a Financial Stability Oversight Board to review and make recommendations on the Secretary's operation of the program. The oversight board is fatally flawed.

First, the Secretary of the Treasury is one of its members. This means that the Treasury Secretary is reviewing his own actions.

Second, the other members of the board include the Chairman of the Fed, the Director of the Federal Home Finance Agency, the Chairman of the SEC, and the Secretary of Housing and Urban Development. I think there is a constitutional question about whether a Secretary can have his actions reviewed by any person other than the President.

Even if the board is constitutional, why is the Chair of the FDIC not a member? After all, the FDIC has the most experience of any Federal agency in buying and selling bank assets. It also is concerned about resolving bank problems with the least cost to the taxpayers.

Regardless of who sits on the board, we will be setting a bad precedent by having heads of agencies oversee our Cabinet Secretaries.

Finally, the oversight board's authorities are not well defined, so it is not clear what happens if the oversight board disagrees with the Treasury Secretary's actions. Can it prevent him from acting? Will disagreements result in litigation? Such bureaucratic infighting could very well undermine the effectiveness of the program, to the extent it can be effective at all.

The bill also establishes a Congressional Oversight Panel, whose members will be selected by the leaders of the House and Senate. The panel is charged with providing reports on the program, the effectiveness of foreclosure mitigation efforts, and the state of our financial regulatory system.

This is work the Senate Banking Committee and House Financial Services Committee should be doing.

The bill also provides for oversight of the program by the Comptroller General, establishes an Office of the Special Inspector General for the program, and subjects the Secretary's actions to judicial review.

While I think it is important to oversee this new entity's activities, this hodgepodge of authority is likely to hamper the program's effectiveness as it struggles to satisfy redundant and time- consuming requests for information.

These oversight bodies might not check the Secretary's authority, but they will ensure that this program generates lots of paper. More importantly, they do nothing to address the fundamental flaws with this plan.

The Secretary is required to issue regulations to address conflicts of interest. Interestingly, the Secretary may start buying assets before these rules are put into place. This is a loophole that could have serious long-term consequences for the program.

The bill does not require that taxpayer losses be repaid by its beneficiaries. It only directs the President to present a legislative proposal to recoup such losses from the financial services industry.

This is something that the President could do even without this legislation. Furthermore, there is no guarantee that the beneficiaries of the program will pay.

Indeed, it is likely that companies that did not participate in the program would end up covering its costs.

The bill would grant the SEC the authority to suspend mark-to-market accounting, establishing a dangerous precedent that could lead to the politicization of our accounting standards, something I have fought for years.

The newest addition to the bill is a precipitous increase in the deposit insurance amount from $100,000 to $250,000. We are about to more than double the exposure of the already depleted deposit insurance fund, and by extension, the American taxpayer, on a whim.

I will remind my colleagues that the track record for overnight increases in deposit insurance is not pretty. In 1980, Congress increased deposit insurance coverage for all accounts from $40,000 to $100,000 without the benefit of hearings or open discussion.

At that time, proponents argued such a change was necessary to stabilize the banking industry. What followed was a massive bailout of the savings and loan industry to the tune of well over $100 billion.

This time around, we are proposing a 150 percent increase when the deposit insurance fund is already stressed and in need of recapitalization.

At a time the FDIC's problem bank list is growing and more failures are anticipated, this higher deposit insurance coverage will increase the FDIC's expected payments for failed insured depositories. Those costs, which would ordinarily be passed on to the banking system in the form of higher premiums, will instead be placed directly on taxpayers.

Let's also be realistic about this. To the extent this measure is intended to address the concerns of those who handle large transaction accounts, such as corporate treasury deposits, those people are not going to be comforted by additional coverage levels.

If they believe a bank is in trouble, they will withdraw their money because deposit insurance does not increase confidence in a failing institution.

Let's also be clear about what this means for taxpayers.

If, on the front end, the $700 billion bailout is not enough to shore things up, rest assured, there will now be more insurance on the back end should banks begin to fail. The American taxpayer will pay, both coming and going.

The bill does do some good things, however. It permits the Federal Reserve to pay interest on reserves, which will improve its ability to conduct monetary policy and serve as a lender of last resort.

The bill does marginally increase the availability of the HOPE for Homeowners program and requires the Secretary to implement a plan to assist homeowners to the extent it acquires mortgages or other assets backed by mortgages.

While I generally do not support bailing out corporations or individuals, if we are going to get into the bailout business, then funds should be directed to individuals as well. The provisions in this bill for individual homeowners, however, are inconsequential compared to the $700 billion going to Wall Street.

As I said, I am no advocate of bailouts. I voted against the Chrysler bailout. I can not say I would have supported a bailout in this instance, but I can say the chances would have been much greater if the underlying plan had been subjected to greater scrutiny and examination. That said, I agree that we need to do something to address the current liquidity crisis in the marketplace.

My greatest concern is that we have not spent any time determining whether we have chosen the best response. There are many well informed people who argue that we have not.

In fact, just this morning, a Nobel prize winning economist indicated that using a reverse auction program to buy distressed assets from financial institutions was not going to be enough to ``revive the operations of the banks.''

I am not sure whether he is right or wrong. I am also not certain whether the Secretary is right or wrong. To the extent other options exist, I believe we failed the American people greatly in not examining them.

Many around here are finding comfort in the notion that ``something is better than nothing.'' I believe that is a false choice. The choice we faced was between pursuing an informed response or panic.

Unfortunately, we chose panic and are now about to spend $700 billion on something we have not examined closely. Yes, in the end, we will have ``done

something.'' At the same time, however, we will have done nothing to determine whether it will accomplish anything at all.

I yield the floor.

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Madam President, I appreciate the unanimous consent request that allows me to spend a little bit of time on this bill. Before I get into the bill, I wish to answer the most senior Senator we have in terms of the President's request for flatlining a lot of DHS.

I happen to be on the Homeland Security Committee, and I can tell you, outside the Pentagon, there is no agency in the Government that has more waste, fraud, and abuse than the Department of Homeland Security. Any business manager or any family could quickly see that you could easily flatline it and make it much more efficient and do a good job for the taxpayers. So the motivation by flatlining is to try to generate some efficiency in the Department of Homeland Security.

I also wish to associate some of my words with the Senator from Mississippi on terms of process. We have a tremendous amount of money-- $643 billion--that this bill has. Here is the bill. It is another one of those thick bills we are going to send over. There are going to have to be technical corrections--we know that--in any big bill we do this way. But there is something fundamentally flawed, and it doesn't have anything to do with the bill; it has to do with the process.

We have an Appropriations Committee that does generally a very good job on most of these items, but what we have done is excluded the whole body from their input into making decisions about some $640 billion worth of spending. As far as the discretionary budget, it is about 65 percent of the total discretionary budget that we are going to pass, and it is not going to have any input except for 29 Members of this body--no input, no chance to change policy, no chance to put limitations, no chance to truly do what should be done. We have to ask the question: Why is that? Why is it that appropriations bills did not come through this body this year? I think the reason is, not because they didn't really want people to try to improve and perfect the legislation, it is that we didn't want any votes that might make some political party--one or the other, ours or the majority--to have a political advantage through a vote. That is a very terrible way for this body to descend into politics instead of policy. This bill contains tons of earmarks. Some are bright, some stink. Some, when the light of day is shone on them, the American people will actually gasp and say: Where was the common sense? How in the world are my children paying for us spending money like this?

I am concerned, not because of the present crisis we have in front of us. I think this body, by the time this weekend is completed, will have addressed that issue and started down the road. But what we are doing is treating a symptom of a disease Congress has, and that disease is lack of oversight to see how we are spending the money, lack of metrics to be able to measure the effectiveness of programs. We are highly resistant to holding administrative agencies accountable, and we are restricting the ability of individual Senators to offer positions for the body to consider. Not that they may be won, but that the whole country loses when we don't have the debate.

There are many egregious earmarks that are in this bill, and I will tell you I think our appropriations process this year is broken, that it doesn't serve the country well. There is no question we need to fund the agencies, but what we are doing is we are taking three agencies and we are funding them--we will not allow amendments or allow the body to work--but the rest of the agencies will run in a status quo until March 6. Now, let me give you an example of why that is bad.

I had the good pleasure of meeting with a couple of Oklahomans who happened to be traveling back here last Monday. They happen to work for the weather service. They are both acquisition officers for the weather service, and here is what happened to them last year--and it is going to happen again this year. They are going to get their final numbers sometime in late March. We will pass the information on for them as to what they are allowed to spend. They will have less than 3 months to contract and acquire everything for 12 months. They are telling me it is impossible for them to do a

good job; that there is no way they can be frugal, efficient, and get great value for the American public the way we are running the appropriations process.

Now, that has nothing to do with my colleague from Mississippi. His desire would have been to bring these bills to the floor, have them amended, have them voted on, and send them to the House. But a leadership decision was made that we could not do that.

Now, I want you to multiply these two gentlemen who were acquisition specialists in the weather service, multiply that across the whole Government, and what we have done is we have squeezed, into a 3-month period of time, acquisitions that normally take 6 to 9 months to do properly and efficiently and in a frugal way for the American taxpayers. Consequently, we are going to waste another 10 or 15 percent of the money in these appropriations bills.

Then, when it comes to the end of the year, if any money is left over, here is what they told me they have to do. They have to spend the money to make sure the Appropriations Committee will give them the money next year, even though they had trouble spending the money this year because we put a time constraint on them.

None of us would run our businesses, none of us would run our families that way. Yet we are telling the rest of the Federal Government--great employees whom we have--to do something that is impossible to do in an efficient and orderly manner.

There are a lot of things that have happened in the last 2 years in the way this Senate is run. I believe most of them were for political reasons. They were not intended to hurt the policy, but nevertheless the policy is tremendously damaged. It is my hope that come January, when we have a new leader in the White House, no matter who it is, he will recognize the severity of the appropriations process and its impact on waste in this country.

As I frequently do, I wish to raise again to the American public and this body the fact that the Government Accountability Office, the various inspectors general, the Congressional Research Service, and the Congressional Budget Office can specifically lay out for the American people at least $300 billion a year of spending that is either pure waste, fraud or total duplication. At a time when we are going to have a $600 billion accounting deficit--because you have to add what we are stealing from Social Security to what we spend to get what our real deficit is--does it make any sense that we would continue to have $300 billion worth of waste, fraud or abuse and duplication in these bills? There is not one attempt in this bill to eliminate that. Not one. Not one.

So as you think about your quarterly tax payments or you think about your paycheck stub and the taxes taken from you, your income tax and estimated payments, and you think about what we are not doing, you ought to be awfully dissatisfied as an American taxpayer. We have failed the test. We have failed the test. Why it is important is because what we have done is mortgaged the future hopes, freedom, and prosperity of our children and our grandchildren.

I am disappointed, to say the least, with the process. But I am more disappointed in the fact that we are going to earn a reputation that we have not done our jobs.

Serious concerns with the economy should turn the attention of Congress away from parochial interests toward national interests.

Congress has focused on parochial interests for far too long, spending more time securing earmarks than doing the business of the American people.

Our Nation faces an economic challenge today equal to any challenge we have previously faced and now requires our full attention.

The following snapshot of our economy should impress upon everyone the seriousness of the job ahead.

The national debt currently stands at over $9.58 trillion, the largest in world history.

This year's deficit, in real accounting terms, stands above $600 billion.

This year alone, taxpayers will spend more than $230 billion just to pay the interest on the national debt.

Since 2006, gas has risen from $2.24 per gallon to nearly $4 a gallon.

More Americans are out of work; the unemployment rate has increased from 4.9 percent in January to 6.1 percent in August.

In 2008, over 600,000 jobs have been lost.

According to USDA projections, the Consumer Price Index--CPI--for all food is forecast to increase 4.5 to 5.5 percent in 2008. For example, since 2006 the price of milk has increased approximately 16 percent.

According to Reuters news service, the total tab for government rescues and special loan facilities this year is more than $900 billion, not including the proposed $700 billion rescue of the financial markets in the Paulson plan.

Already this year, the Federal Government has taken drastic steps to stabilize the economy, all using taxpayer dollar. While several of these amounts may be fully repaid to taxpayer, they involve huge liabilities and expenditures:

$200 billion was authorized for use in rescuing Fannie Mae and Freddie Mac. The Treasury will inject up to $100 billion into each institution by purchasing preferred took to shore up their capital as needed;

$300 billion for the Federal Housing Administration to refinance failing mortgages into new reduced-principal loans with a Federal guarantee;

$4 billion in HUD grants to banks to help hem buy and repair homes abandoned due to mortgage foreclosures;

$85 billion loan from the Fed for AIG, which would give the Federal Government a 79.9 percent stake and avoid a bankruptcy filing for the embattled insurer;

At least $87 billion in repayments to JPMorgan Chase & Co. for providing financing to underpin trades with units of bankrupt investment bank Lehman Brothers;

$29 billion in financing from the Fed for JPMorgan Chase's Government-brokered buyout of Bear Stearns & Co. in March;

At least $200 billion of currently outstanding loans to banks issued through the Federal Reserve's Term Auction Facility, which was recently expanded to allow for longer loans of 84 days alongside the previous 28-day credits;

Starting last year, Social Security and Medicare projected expenditures exceed revenues. Over the next 75 years, this will cost $41 trillion in present value terms. Of that amount, $34 trillion is related to Medicare and $7 trillion to Social Security. By one account, the current unfunded liabilities of Medicare and Social Security are above $100 trillion.

If we think that the current economic troubles are a concern, wait until the bill comes due for all of the reckless spending Congress is engaging in today.

Members should focus like a laser on these issues rather than concentrate their efforts on political games and earmarks.

Instead of doing any of this, Congress is now planning to ram through an irresponsible continuing resolution to keep the Government operating during fiscal year 2009.

None of these issues are addressed in the bill but only compound the problems. Congress seems to have not learned its lesson.

The appropriations process is broken and excludes Members from considering serious issues.

The Senate is preparing to vote on an appropriations bill that will cost $634 billion, which will include funds for all of our national security agencies, disaster relief, and a continuing resolution for the 2009 fiscal year. Yet the text of the bill only came available late on Tuesday night, with no one having seen a word of it except for a few Democratic staff and Members in the House. Further still, a joint explanatory statement was released yesterday afternoon.

This must be what the House Appropriations Committee chairman meant when he said that the continuing resolution would be drafted in ``secret.''

The following is an excerpt from an article yesterday in Bloomberg News.

The plan outlined by Obey would give Republicans less than

24 hours to scrutinize legislation spending more than $600

billion on the Defense, homeland security and veterans'

affairs agencies including thousands of pet projects known as

earmarks.

Asked if the process has been secretive, Obey said:

``You're d**n right it has because if it's done in the public

it would never get done.'' He said he wanted to avoid his

colleagues' ``pontificating'' on the content of

the legislation, saying ``that's what politicians do when

this stuff is done in full view of the press.'' He said

``we've done this the old fashioned way by brokering

agreements in order to get things done and I make no apology

for it.''

It is easy to understand why the House Appropriations Chairman would want to conduct his business in secret, as one who received $51.5 million in earmarks for his district.

The one constitutional duty of the Congress is to pass legislation funding the operations of Government, and yet his duty has been entirely abandoned by the majority.

Congress is now less than 1 week away from the beginning of fiscal year 2009, and yet it has not passed one appropriations bill.

The only bill to receive a vote by either body is the Military Construction--Veterans Affairs appropriations bill that passed the House of Representatives.

No appropriations bills have even been brought to the floor of the Senate during the entire calendar year 2008 thus far--though the Senate is now expected to vote on three of the largest bills having had 36 hours to review the $634 billion in spending they contain.

The appropriations process should have begun long ago. It is unfair to taxpayers when Congress chooses to pass large legislation in the dark of night rather than debate them for all to see.

Congress now finds itself considering major national security legislation in one day under pressure of both a Government shutdown and delay on an important piece of economic legislation.

Had the majority leader taken action earlier this year, Members would be free to concentrate fully on the Treasury proposal. Instead, they are distracted by making sure that their earmarks and pork-barrel projects are in the CR.

The CR has been loaded down with billions of dollars in wasteful earmarks.

Despite having had only 1\1/2\ days to look over the bill, it is plain that there are a large number of highly questionable earmarks set to receive funding in 2009.

In just the three appropriations bills for the Department of Defense, the Department of Homeland Security, and the Department of Veterans Affairs/Military Construction, there are 2,627 earmarks worth $16.1 billion.

This means that without even funding the remaining nine appropriations bills, Congress has nearly reached the dollar value of all earmarks in fiscal year 2008.

According to Citizens Against Government Waste, there were 11,620 earmarks worth $17.2 billion for all 12 appropriations bills in 2008.

In fiscal year 2008, the average dollar amount of each earmark was $1.48 million.

In the continuing resolution before the Senate, the average dollar amount for each earmark is $6.1 million-- more than five times higher.

Every dollar that goes to an earmark in this bill is a dollar that will not go to important national security programs at the Departments of Homeland Security and Defense.

What kind of projects are receiving earmarked funds out our national security agencies in 2009?

$3.2 million for the High Altitude Airship--Senator Sherrod Brown. After spending millions to investigate and develop a blimp-based platform for ICBM surveillance, the Missile Defense Agency--MDA-- cancelled the program--called the High Altitude Airship--due to myriad capability limitations.

MDA did not request funding for the program for 2008. However, $2.5 million in earmarks in the 2008 Defense appropriations bill revived the cancelled program, despite the fact that no one else at the Pentagon had expressed interest.

After shopping the program around, Lockheed Martin managed to pass the program to Army Space and Missile Defense Command, which will now begin investigating if there is any utility for them with the program.

The project has been based in Akron, OH, funded by a $1 million earmark toward the program by Senator Brown, who has a long record in opposition to missile defense.

$2 million for Hibernation Genomics--Senator Ted Stevens. This earmark would provide funding to the University of Alaska for research into the hibernation genomics of Alaskan ground squirrels.

University of Alaska lobbyist, Martha Stewart--no relation--claims that the research into squirrel hibernation will one day help wounded soldiers in the battlefield.

According to Ms. Stewart, the university is well equipped to do the work. She insists: ``We have a number of ground squirrels that are in various stages of hibernation in Fairbanks.''

And $800,000 for the Columbia College Chicago Construct Program-- Senator Dick Durbin. Columbia College claims to be the ``Nation's largest private arts and media school in the Nation.'' It offers a wide selection of coursework in audio arts, dance, film, journalism, poetry, and radio. According to the school's annual report, it received $2.7 million in Federal grants during 2007 from the Department of Education, U.S. Army Research Laboratory, Corporation for National and Community Service, the National Endowment for the Arts, and the Department of Health and Human Services.

Since 2000, Columbia College Chicago has received over $275 million in grants, cooperative agreements, and direct payments from the Federal Government.

And $800,000 for Partnership in Innovative Preparation for Educators and Students and the Space Education Consortium--Senator Wayne Allard and Senator Ken Salazar. The Space Education Consortium was created by the Air Force in 2004 as a partnership with the University of Colorado and others to promote science education for professionals as well as ``getting space technology and curriculum infused throughout the U.S. education system from kindergarten to post-graduate work.

``It is a chance to grow a cadre of space professionals from the launch pad to the stars,'' said Air Force General Lance Lord, commander of the Air Force Space Command.

A July 2008 report by the DOD Inspector General stated that this earmark was not consistent with the department's mission ``to provide the military forces needed to deter war and to protect the security of our country.''

And 24.5 million for the National Drug Intelligence Center-- Representative John Murtha. Every year, millions of dollars for our national defense are siphoned away from the military's budget to pay for a single program administered not by the Pentagon but by the Department of Justice.

This funding is directed to the National Drug Intelligence Center-- NDIC--which the Department of Justice has asked Congress to shut down.

The former director of NDIC even confessed to U.S. News, ``I recognized that a lot of [NDIC] reports were God-awful, poorly written, poorly researched, and, some cases, wrong.''

Another former director even admitted, ``I've never come to terms with the justification for the NDIC'' and ``the bottom line was that we had to actually search for a mission.''

According to an investigation by the Government Accountability Office, NDIC duplicates the activities of 19 drug intelligence centers that already existed.

Since 1992, the center has received over 500 million in federal funding.

$15 million for Waterbury Industrial Commons Redevelopment Initiative--Senator Joe Lieberman and Representative Chris Murphy. According to Taxpayers for Common Sense, ``This would clean up a decades old munitions factory to be used as a city-owned industrial park.

The Fairfield Weekly reports that the State of Connecticut has turned down requests to fund this project--each year the Mayor of Waterbury ``makes the trip to Hartford seeking the money, and each year comes back empty handed.''

Why should the American taxpayer fund that which State of Connecticut will not provide funding?

And $4 million to the Go For Broke National Education Center. This earmark is aptly named in light of the fact that Congress is helping the Nation ``go broke.''

And $9.9 million for the U.S.S. Missouri Memorial Asociation. Visitors can go aboard the battleship from World War II that survived the attack on Pearl Harbor in Hawaii.

While preserving the Nation's history is important, this is not only something that could be funded privately, it is not a priority at this time.

And $1.6 million for New Electronic Warfare Specialists Through Advanced Research by Students Representative David Hobson.

And $4.5 million for the 2010 Olympics Coordination Center Senator Patty Murray and Representative Rick Larsen.

And $800,000 Pseudofoliculitis Barbae--PFB--Topical Treatment--this goes to ISW Group in St. Louis, MO--Senator Kit Bond.

There is $10 million for the Intrepid Museum Foundation.

And $4 million for the Nimitz Center.

And $1.2 million for the Center for Nonproliferation Studies, Monterey Institute for International Affairs--Representative Berman.

And $10 million for the New Mexico State University Institute for Defense and Public Policy----Senator Jeff Bingaman.

I yield the floor.

Mr. President, I thank Senator DeMint for his principled leadership and his willingness to talk about some difficult issues. I want to talk about some of those today.

I absolutely believe the question of energy is a major contributing factor to the fundamental difficulties we are having in the economy today. We calculated--my staff--that the average American two-car family is paying $105 more per month today for gasoline than they were a year or so ago. This is, in effect, a gas tax, and if a particularly onerous event occurred--and today I heard that after the University of Alabama had a little football game with Clemson University and pulled off a victory, they were saying there was not enough gas for Alabamians to go to Georgia to play the University of Georgia football team today. Well, they would have walked over there, if necessary. It would have been an exciting game.

But there is a problem out there, and it has been unaddressed by this Congress. So we are now in the closing days of the 110th Congress. Although some work may be completed, it appears that we are soon--in a matter of hours--going to adjourn.

I would note that today is September 27, 2008. The Senate has been in session for 148 days this year. There are 96 days left on the calendar, but on September 30 the fiscal year ends. October 1 is a new fiscal year, and the fundamental responsibility of the Congress and the Senate is to authorize and appropriate the moneys necessary to run this Government. We are within days--a couple or 3 days--of that deadline arriving. We have yet to do it. So what we will be seeing here is a very unfortunate event where everything will be completed in a matter of a few hours.

They are saying that this is an election year and we need to get out of Washington and go home and campaign. I understand that. People do need to see their candidates, and certainly campaigns are important to America. They help the electorate become more knowledgeable and select the best candidate. But I want to be clear, the decision to adjourn this week is a completely arbitrary decision. It is nothing more than a date circled on a calendar. It would not set back the pace of democracy in America for Congress to stay here and work and to actually cast votes and to be held accountable for what it does. How much more time would it take? I do not think a lot. But we certainly would not hurt the Republic doing that. In my opinion, this Congress and this Senate are failing the American people.

Senators and their staff are already scurrying around the Capitol trying to tie up the loose ends to justify a departure. Members also will soon hit the trail, making the case for why the people should send them back here. It might be a tough case to make for some of us. I am up this time. I am certainly working, and have been for some weeks, trying to discuss with the people of my State the issues they think are important and how I hope to address some of those.

A recent Fox News poll reports that only 17 percent of the American people approves of the way Congress does business. That is a really distressing number, 17 percent. It may be the lowest we have ever had. It means that 8 out of every 10 Americans are unhappy with the Congress. And if the American people really knew how this great heritage of debate, amendments, and discussions that this Senate has, how that has been eroded, I think they perhaps might be even more unhappy with us.

While it is typical that the last week of Congress is rushed and a lot happens, and I understand that, I do not recall a time since I have been in the Senate that we have rushed through so many important issues in such a very short time. Over these closing hours, the Senate will likely call up and vote on three major pieces of legislation, huge pieces of legislation. These huge pieces of legislation will pass, I predict, with no opportunity for amendments and no real debate.

First, we considered, without debate, a $56 billion new stimulus package. We did $150 billion earlier, sent out the checks and that sort of thing. I have to say, I did not support it. It certainly has not gotten us out of the fix we are in, almost doubling the projected deficit for this year, every penny of that stimulus package--emergency spending, on top of the debt--every penny increasing the debt. And this stimulus package, thank goodness, that was proposed by the Democratic leadership was defeated and did not pass, which would have added another $56 billion straight to the national debt. It included a $7.5 billion bailout for automobile companies. But it has been put back in the CR, even though it failed in that package, and presumably will pass, as I will discuss.

Second, we are considering a continuing resolution, with an omnibus spending bill attached, that will fund military projects in the Department of Defense and Homeland Security.

Third, we will consider an unprecedented $700 billion financial industry saving--economy saving, they say--bailout. I think we do have a problem with the economy, and this Congress needs to act and we need to act quickly, so certain normal processes will have to be truncated. We have some good people who are focused on that. But it is a closely held deal, very few people meeting in private meetings, unavailable to the public, writing the legislation that will dispense with $700 billion. In truth, I do believe and hope and pray that even though we are exposed for $700 billion, we will not actually, as a government, take that big a hit. I think there will be a recoupment. I certainly hope and pray it will be recouped.

So these are three extraordinarily important pieces of legislation, each of which is being moved through Congress in the closing hours of the session with virtually no public, open debate. I suggest it raises questions about the historic purposes of the Senate. None of the three bills have been subject to the traditional legislative process.

We only received the continuing resolution from the House last night. It is 344 pages involving hundreds and hundreds of billions of dollars. How is it possible that we could fully understand its impact before we vote today?

I have been a Member of this Senate for 12 years. There was one thing that slowed down the trains. You know what it was--the sheriff, Senator John McCain. He would come down here, to this chair right here--I have seen him do it--not for some political gimmick but because he was concerned about this process--and he would object to any UCs until he had a chance to read the bill, and he would come down and highlight what he considered bogus and wasteful spending. He even opposed some spending I put in those bills. But that was healthy. But they wanted to pass those bills, the powers that be, without any debate, without anybody reading them, just pass them. That is not a healthy thing for the great Senate of the United States of America to do.

Well, we have not seen a firm legislative proposal regarding the bailout yet, but we are going to vote on it today, tonight, tomorrow, Monday. The Senate has been called the world's greatest deliberative body, but if we are honest, we will have to admit we have fallen far from it. In fact, I think we are standing on the cusp of the greatest legislative failure of Senate leadership in my tenure here for sure.

The growing trend to procedurally, through manipulation and other efforts, limit free and open debate, to block the ability to improve legislation through the technique of filling the tree, which the majority leader, the Democratic leader, Harry Reid, has done--it has been done by Republicans in the past. It has reached a new height, anybody would have to agree, under Senator Reid, all of which is designed to avoid the committee process traditionally available in the Senate. And they use small groups of Senators--I have taken to calling them masters of the universe--to negotiate deals behind closed doors and deposit that bill on the floor of the Senate with the idea that: It has to be passed. We are going to recess. We have no time to discuss and debate and vote.

Mr. President, I would ask that I be notified when 20 minutes has passed.

I think this is bad for America. It is a bipartisan bad thing. It was not good when Republicans were doing it, and it is not good now that the Democrats have carried it even further.

This Congress is no longer serving in its traditional role of protecting and allowing the American people to see the issues before them, to be the saucer that allows the debating issues to be cooled and debated. I worry about it.

There was a time when, if you look back at debates, according to a gentleman from Harvard who studied this, the debates focused on what was in the long-term interests of the country, and people debated that and they said: Well, if we give money to people who invested recklessly or people who are lazy and will not go to work, will we not encourage reckless investment, or when we encourage people to stay home and draw a check? I mean, they asked these kinds of questions and they discussed them because what we do here has certain importance. But it is too rare today.

The legislative process, I have to say, is broken. The congressional budget and spending process is broken. The American people need to know what is happening and what is not happening here.

So in the spirit to reach the finish line, I am going take a few moments to highlight some items that I see as an example of the broken nature of the process.

There is no better scorecard for how a Congress operates than the tally of appropriations bills that are actually debated. There are 12 appropriations bills we must pass each year. Traditionally, each one is brought up and voted on, and each one of those bills should be passed before October 1. They fund certain parts of the Government. As of this minute, this day, on the eve of our adjournment, this year's legislative score on the 12 bills is zero, none, not one. This is the first time it has happened in my 12 years in the Senate, that Congress failed to pass a single stand-alone appropriations bill on time. Failure to move individual bills is more and more a common thing. Republicans and Democrats have both been guilty of this, but this year is the worst ever.

The congressional budget and spending process is broken. Since 1980, only three times has Congress enacted all its appropriations bills, as they should, by the start of the fiscal year, October 1. Only three times in 28 years have we done our job on time. Mr. President, 138 continuing resolutions, however, have been needed to keep the Government running. The reason for this is that any Government agency cannot expend a dime that is not appropriated by Congress. If we don't appropriate money for the next fiscal year beginning October 1, they cannot pay payrolls. They cannot pay the light bill. They cannot do necessary things. The Antideficiency Act says it is a crime for them to spend money not appropriated by Congress, and it violates the Constitution.

These stopgap measures, these continuing resolutions, have been used as a method to keep the Government open. We can't agree on the appropriations bills, so we just continue funding at the present level without any real review or priorities, and it avoids discussion and debate. The American people should know a continuing resolution represents, in truth: a failure of Congress to get its job done.

Also, over the past 12 budget cycles, Congress has passed 10 big omnibus bills, averaging about seven or eight bills each. They are put in massive form, as we will see, hundreds of pages oftentimes, with just a few hours to debate and very limited ability to file amendments. They have been rammed through the Senate and the House in the last hours of a session. Now the masters of the universe say: If we bring this bill up, people might actually offer amendments, and they might ask us to change the Tax Code. Somebody might want to raise or lower the capital gains rate. We would have to vote on that. We would be put on record as having to vote. We don't want to go back home and have a voting record. We are going to see if we can't bring it up at the end of the session.

Don't think this is by chance. This is by design, to bring it up at the end of a session so there is little time for debate and discussion. Nobody can deny that. We know that, those of us who have been here.

This year we are going to have both. We will have an omnibus bill where some actual appropriations bills are put together, and then we will have a continuing resolution. We will vote on the Department of Defense bill representing $487 billion. That is a pretty good chunk of money, not $700 billion but a lot of money. We will not have amendments on that bill. I am not happy with some of the things that happened that moved some money around since it left the Armed Services Committee, of which I am a member. As a practical matter, there is no way, I am told, I can get a vote from this body to try to correct it. We either take the bill, as the group of people who put it together approved it, or not.

Let me move along and share this thought with my colleagues. It is something we have to do. I offer this as a bipartisan solution that I believe would make a big difference. There is no single cure for what we are doing. It takes a determination by each of us that we want to do a better job of affirming and defending and validating the historical prerogatives and responsibilities of the Senate.

Let me suggest that a biennial, 2-year budget process would be a tremendous step in the right direction. It is good Government reform. Biennial, 2-year budgeting has been supported by the last four Presidents, Democrats and Republicans. It has strong bipartisan support in this Congress.

Some people know every time a bill passes--and they are skilled at it--they can stick something on it. They believe if the bill isn't passing but once every 2 years, they might have less opportunity to stick some special interest pork project on it. But whatever, we would be doing 2-year budgets, and a change from that would have benefits. By eliminating the budget decision to every other year, Congress would have considerably more time to spend passing critical legislation such as this bailout package, actually giving it thought. Two-year budgets would allow more time for considering things such as the energy crisis, for heaven's sake. That is critical. It would also allow much better oversight of existing wasteful programs that are not achieving what they are supposed to.

Two-year budgeting would provide Federal agencies such as the Department of Defense more time to complete their core missions. They are over here all the time, every year, trying to work through congressional arguments and fusses over what DOD needs.

Process does drive policy. The current budget process, the current appropriations process, is not working. It is an embarrassment to the heritage of the Senate. Two-year budgeting will not solve all our spending problems, but it would be a positive step. I believe this is a matter that would strengthen the Congress, our traditional role, improve the way we do business, and make our Government better.

Putting together in a CR the appropriations bills points out the need for more oversight, more serious congressional action, including the fact that there is over $16 billion worth of earmarks in the bill that were not really brought forward in a way that somebody could pass them or reject them, based on whether they are legitimate. Senator DeMint mentioned some of those earlier today. I will mention one.

The LIHEAP legislation eligibility was changed from 60 percent to 75 percent of a State's median income for one to be eligible. That means more people would be eligible to have the Government pay for their heating oil. It has been said that this program would be able to be accessed by people who have high electricity bills and heating bills, maybe in Arizona, Louisiana, and Alabama. But look at the $2.88 billion designated as emergency. Almost all of this is going to be earmarked in a way that it is going to go to the Northeast. So it is not fair, No. 1, and No. 2, I am not sure why people's gas bills are not going to be paid. Why are we picking on that?

One more thing about that: I think it is particularly odd that Members of the Northeast who oppose consistently drilling off our shores, who consistently oppose natural gas pipelines, who oppose nuclear power oftentimes, they are now demanding that the U.S. taxpayers give them a subsidy so they can buy at below-market price dirty heating oil to heat their homes with. We hear we need to use more solar and geothermal and wind. Maybe we ought to give money for that if it is so wonderful. But this is an increase of a $2.8 billion emergency expenditure for LIHEAP.

I think it is bad policy. In this crisis of time and overspending and deficits I don't believe another new $2.8 billion in emergency spending is good policy. I don't believe it is good for America. Sure, it is great if you have a check for your heating oil. You would say: Thank you, Uncle Sam. But somebody paid for that check. If not the taxpayers, our grandchildren.

I would note, by the way, since we are already in deficit and this is emergency spending, every single dollar of that $2.8 billion increases the debt of the United States. There is no money to pay for it. There is lots of that kind of thing in there.

I will not use the rest of my time to go through these kinds of matters, but I will note that the automobile bailout that I thought we had defeated with the second emergency supplemental is now back in the bill. It is going to pass, $7.5 billion to guarantee $25 billion in loans for automobile producers. We have to be careful about this. We have criticized the Europeans for subsidizing loans for their industries. Now we are in this hog wild. It is going to be a problem maybe in violation of the WTO agreements we have made.

The heritage of the Senate is indeed a great one. We have been slipping in recent years away from full and open debate. I see the Republican whip is here, Senator Kyl. He remembers many of the 3-week debates on issues of importance in the day. That has gotten less and less frequent as time has gone by. More and more power is asserted by fewer and fewer Members to move huge pieces of legislation without debate. It is not good.

I urge my colleagues to consider what we can do about it. This year the train is on the track. I assume it is going to be able to move forward and carry these bills through. That is what I am hearing. That is what I hear the votes are. But I do think we need to change this. We need to return to the great heritage of the Senate. If it means we have to stay here for a week and stay into the night so people can come in and engage on how to fix the energy crisis or how to create more liquidity in the markets or what to do about the fundamental problems this country faces--as USA Today said the other day, three things: We are an economy founded on excessive personal debt, excessive government debt, and a massive trade deficit. We can move around with a lot of things to try to help the financial markets not be bottlenecked. But I am really worried if we don't deal with those things such as energy independence, things of that nature, the economy is not likely to improve.

I yield the floor.

Mr. President, if the Senator will yield?

I thank him for making that explicit point. It is sad that I feel I have to vote against the continuing resolution. But the Senator is so right. You have seen this for a number of years more than I. If we do not begin to push back against this process--and I think we could make a difference if we fight--it is going to continue. So I thank the Senator for his leadership and his insight and his commitment to reform in the great traditions of the Senate.

Mr. President, I rise today to introduce the Child Soldiers Accountability Act of 2007. This narrowly-tailored bipartisan legislation would make it a crime and a violation of immigration law to recruit or use child soldiers. Congress must ensure that perpetrators who commit this war crime will not find safe haven in our country.

I would like to thank the other original cosponsors of the Child Soldiers Accountability Act, Senator Tom Coburn of Oklahoma, Senator Russell Feingold of Wisconsin, and Senator Sam Brownback of Kansas. This bill is a product of the Judiciary Committee's new Subcommittee on Human Rights and the Law, which is the first ever congressional committee dealing specifically with human rights. I am the Chairman of this Subcommittee and Senator Coburn is its ranking member.

Up to 250,000 children currently serve as combatants, porters, human mine detectors and sex slaves in state-run armies, paramilitaries and guerilla groups around the world. These child soldiers are denied the childhood that our children and grandchildren have and to which every child has an inalienable right. Moreover, their health and lives are endangered.

Children are recruited and used in combat situations because their emotional and physical immaturity makes it easy to mold them into obedient combatants who will witness and partake in horrific violence, often without comprehending their actions. Child soldiers are frequently recruited in areas of long-standing conflict where there are no longer eligible adults for recruitment. In many cases, they are provided with drugs and alcohol to numb them to the atrocities they are required to commit, as well as to increase their dependency upon the armed group.

Children are more likely to be killed, injured or become ill in combat situations than adults. In combat, child soldiers have been forced to the front lines, sent into minefields ahead of older troops or even used for suicide missions.

The devastating effects of war and abuse on the physical, emotional and social development of children are long lasting. Former child soldiers require extensive care and support from family and others in order to be rehabilitated and reintegrated into society. In the absence of such support, former child soldiers may comprise a generation of adults who will perpetuate conflict and undermine security, creating unforeseen challenges that our children will have to address.

There is a clear legal prohibition on recruiting and using child soldiers. Under customary international law, recruitment or use of child soldiers under the age of 15 is a war crime. Over 110 countries, including the United States, have ratified the Optional Protocol to the Convention on the Rights of the Child, which prohibits the recruitment and use of child soldiers under 18.

While there have been positive developments internationally in the prosecution of child soldier recruitment and use, especially by the Special Court for Sierra Leone, the ability of international tribunals or hybrid courts to try these cases is limited. The average perpetrator still runs very little risk of being prosecuted. National courts can and should play a greater role in prosecuting perpetrators.

Unfortunately, recruiting and using child soldiers does not violate U.S. criminal or immigration law. As a result, the U.S. government is unable to punish individuals found in our country who have recruited or used child soldiers. In contrast, other grave human rights violations, including genocide and torture, are punishable under U.S. criminal and immigration law.

This loophole in the law was identified during a hearing entitled ``Casualties of War: Child Soldiers and the Law,'' held by the Senate Subcommittee on Human Rights and the Law. Ismael Beah, a former child soldier and author of the bestselling book A Long Way Gone: Memoirs of a Boy Soldier, testified at this hearing. Mr. Beah said this gap in the law ``saddens me tremendously'' and that closing this loophole ``would set a clear example that there is no safe haven anywhere for those who recruit and use children in war.'' Mr. Beah also posed a moral challenge to all of us:

When you go home tonight to your children, your cousins,

and your grandchildren and watch them carrying out their

various childhood activities, I want you to remember that at

that same moment, there are countless children elsewhere who

are being killed; injured; exposed to extreme violence; and

forced to serve in armed groups, including girls who are

raped (leading some to have babies of commanders); all of

them between the ages of 8 and 17. As you watch your loved

ones, those children you adore most, ask yourselves whether

you would want these kinds of suffering for them. If you

don't, then you must stop this from happening to other

children around the world whose lives and humanity are as

important and of the same value as all children everywhere.

The Child Soldiers Accountability Act will help to ensure that the war criminals who recruit or use children as soldiers will not find safe haven in our country and allow the U.S. government to hold these individuals accountable for their actions.

First, this bill will make it a crime to recruit or use persons under the age of 15 as soldiers. Second, it will enable the government to deport or deny admission to an individual who recruited or used child soldiers under the age of 15.

This legislation will send a clear message to those who recruit or use child soldiers that there are real consequences to their actions. By holding such individuals criminally responsible, our country will help to deter the recruitment and use of child soldiers.

I urge my colleagues to ask themselves the question Ishmael Beah posed: Would we want our children or grandchildren to endure the pain and suffering that Mr. Beah and other child soldiers face? As Mr. Beah reminded us, the lives of child soldiers are just as important as those of our children and grandchildren. We have a moral obligation to take action to help these young people and to stop the abhorrent practice of recruiting and using child soldiers.

I urge my colleagues to support this legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, over 2 million families are going to lose their homes in the next few years. Mr. President, 28,000 of those families are in Illinois.

Why?

Because they are stuck in bad mortgages.

Homeowners across America don't need to hear from me to know that the housing boom has busted. From Wall Street to Main Street, we see the spillover effects on the economy.

I am pleased that in Congress we are now talking about how to tighten lending regulations so we don't repeat this type of market meltdown-- and there is certainly more work to be done on that--but in the meantime, millions of families are stuck in the current mess. They need our help.

It is true that some families knowingly stretched a bit to buy more house than they should have. But many families were sold mortgages they couldn't afford by unscrupulous brokers. Some families were given faulty appraisals, only to find later that their homes weren't worth as much as they thought. Still other families have been hit with a mountain of excessive fees that have pushed them over the edge.

Regardless of the reason, a family pushed into foreclosure is a disaster for the homeowner and the surrounding community, and it is a bad deal for the banks as well.

That is why I am introducing the Helping Families Save Their Homes Act, which will help around 600,000 families who have nowhere else to turn to save their homes.

I support the constructive efforts of all of my Democratic colleagues in both the Senate and the House to deal with this crisis, and with this bill I add one more targeted solution to that list.

Bankruptcy should be the last resort, to be sure, but this change in how family homes are treated in bankruptcy will help hundreds of thousands of families who would otherwise be out on the street.

Today, a bankruptcy judge in Chapter 13 can change the structure of any secured debt, except for a mortgage on a principal residence. When this exception was added to the law in 1978, mortgages were largely 30- year fixed rate loans that required 20 percent down and were originated by a local banker who personally knew the homeowner. In 1978, it was rare for the mortgage to be the source of financial difficulty that sent a family into bankruptcy.

The mortgage market has changed since then, to put it mildly. Now, unregulated out-of-town mortgage brokers can sell exotic ``no-doc,'' ``interest-only,'' ``2-28,'' or other mortgages to families, with few questions asked. The mortgages are then securitized by big banks and sold into the secondary market to investors who have no knowledge of the homeowner's financial situation. Risk is dispersed, but so is responsibility.

In 1978, when a family realized it might begin having trouble making the house payments, it could go down to the local bank and work out a new plan to keep up. Today, families struggle to even get a straight answer on the phone.

As the New York Times documented on Sunday, one homeowner made around 670 phone calls to her loan servicer over a 3-month period in an attempt to work out a modified mortgage that she could pay and that would still be profitable to the bank. She spoke to 14 different people and received nine different answers on how she should proceed. Community activists confirm that this type of struggle is not unusual. For millions of families who are nearing foreclosure, this just isn't good enough.

We need another solution for families that aren't being helped by their bank.

If mortgages on vacation homes and family farms can be modified in bankruptcy, why can't mortgages on primary homes?

My bill would allow bankruptcy judges to work out payment plans with homeowners and banks and would also protect families from excessive fees.

The bill would help families who are at risk of losing their homes. But it also protects property values for every other family on that block. In fact, this change in the way mortgages are handled in bankruptcy would save an estimated $72.5 billion in existing property values for the neighborhood, since each foreclosure on a neighborhood block reduces the property value for every other family on that block.

As for the banks? Foreclosures cost banks around $50,000 to process, so every home saved from foreclosure represents a good deal for them too. My bill would allow judges to modify mortgages only in ways that would still be profitable for the banks and their investors.

Everybody wins, right? Well, the banks are still opposing this bill, so I would like to take a moment to directly address some of the primary complaints that I have heard. There are too many families in need--and this bill makes too much sense--for the bill to be shot down.

While everyone seems to agree on the problem--millions of families are going to lose their homes when the variable rate loans that were originated in 2005 and beyond begin to reset, and fall--some argue that we shouldn't do anything to help these families keep their homes in bankruptcy. I have heard three main complaints, none of which stand up to scrutiny.

The first complaint is that banks are already helping homeowners with their mortgage problems, and so this change is unnecessary.

In fact, the banks aren't doing nearly enough. A recent study by Moody's Investors Service Inc. found that the 16 largest subprime servicers, which manage a combined $950 billion of loans, modified just 1 percent of the loans that were made in 2005 and that reset in January, April, and July. Shouldn't we try to help some of the other 99 percent of homeowners who are at risk of

foreclosure but who could make payments on a different mortgage that is still profitable for the banks?

The second argument is that Congress shouldn't modify the bankruptcy code again so soon after the 2005 amendments were implemented.

However, the changes made to the bankruptcy code in 2005 had nothing to do with mortgages on primary residences. My bill would change elements of the code that date from 1978.

Would the banks argue that the tax code shouldn't be changed in 2007 because a completely unrelated area of the tax code was modified in 2005? Not if they don't want to get laughed out of the Finance Committee room, they wouldn't.

Finally, I have heard that allowing mortgages on principal residences to be modified in bankruptcy would introduce ``uncertainty'' in the market and would cause the market for loans for low-income families to dry up.

But mortgage lending is a hypercompetitive market. There is no evidence to suggest that a full-scale exodus will occur because of a change to the bankruptcy law. Banks are still willing to lend for vacation homes and family farms and those mortgages can be modified in bankruptcy, so this argument has no basis in fact.

As a spokesman from JP Morgan Chase said in the American Banker: ``It is always in the best interest of the servicer, the borrower, and the investors if we can modify a loan, because foreclosure means there's no chance the investor is going to recoup their money.'' It should make no difference if a modification is agreed to outside of the context of bankruptcy or within it, if the modification itself is identical.

I would like to conclude by noting that only families that desperately need this help will file for bankruptcy, and only reasonable mortgages will result. My bill has been carefully constructed to avoid unintended consequences in several ways:

First, families that are helped by these changes to the law have to live within the strict IRS spending guidelines for Chapter 13 filers. Families that don't desperately need the help will be very unlikely to try to take advantage of this provision.

Second, every mortgage restructured by a bankruptcy judge will be a better deal for the banks and investors than foreclosure. The minimum value of the mortgage in a restructured deal would be the fair market value of the home, which is the same price the bank would earn if it sold the house after a foreclosure. Plus, the banks will avoid the average of $50,000 in foreclosure fees.

Finally, giving bankruptcy judges the flexibility to restructure mortgages should provide an incentive for banks and investors to do more to restructure mortgages outside of bankruptcy, which is in everyone's best interest.

I repeat that quote from a major bank: ``It is always in the best interest of the servicer, the borrower, and the investors if we can modify a loan, because foreclosure means there's no chance the investor is going to recoup their money.''

I agree. It shouldn't be so hard for customers to modify their loans outside of bankruptcy since it's in everyone's best interest to do so. But allowing families to modify loans within bankruptcy as a last resort so they can keep their homes is the right thing to do.

This bill is supported by the AARP, ACORN, AFL-CIO and SEIU, the Center for Responsible Lending, the Consumer Federation of America, NAACP and La Raza, the National Association of Consumer Bankruptcy Attorneys, the National Community Reinvestment Coalition, and many others.

I urge my colleagues to support this bill, and I look forward to helping families save their homes. Over the next few years, hundreds of thousands of families will desperately need it.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.