A resolution expressing the sense of the Senate on the need for Iraq's neighbors and other international partners to fulfill their pledges to provide reconstruction assistance to Iraq.

Mr. President, I have often over the years reminded my colleagues of a verse of a song of Bob Wills and the Texas Playboys from the 1930s. The verse in the song from the 1930s by Bob Wills and the Texas Playboys was:

The little guy picks the cotton, but the big guy gets the

money. The little bee sucks the blossom, and the big bee gets

the honey.

Never is that more evident in almost every decade than it is evident today, at this point, in this decade, with what is happening in Washington, DC.

Some big economic interests get a headache, the Federal Reserve and the Government rush with a pillow and aspirin to see if they can put them to bed, help them out, give them some comfort. Sure enough, we are now told for the stability of the financial system, a big investment bank has to be bailed out. We will assume $29 billion worth of risk for the American taxpayer, and another investment bank will be able to buy the investment bank that is failing for about $1.2 billion. So J.P. Morgan will buy Bear Stearns, it will cost them $1.2 billion, and the American taxpayers will offer $29 billion as a backstop to at least what is in some cases bad commercial paper by the investment bank that was failing.

I do not come to the floor suggesting we should do nothing, and I do not even know whether what the Fed has done is the right thing. All I know is if ``too big to fail'' really means too big to fail, not just for banks but for investment banks that are unregulated, or for hedge funds that are unregulated, if they are then ``too big to fail'' how about having some regulators look over their shoulder to see what they are doing.

If the American taxpayer is going to have to bail out their mistakes, how about let's have some regulators take a look at what is going on in some of these organizations.

Now, I want to give a little history before I talk about the bill on the Senate floor, which I support. I want to talk about a little history of where we are. I am not going to talk about the excessive speculation of the price of oil that now has the price of oil $20 or $30 a barrel over where it ought to be--that is, hedge funds and investment banks, an orgy of speculation in the oil futures market. I am not going to talk about that. I am not going to talk about our trade deficit that is $2 billion a day, every single day, $800 billion a year at this point. I am not going to talk about how much we have to borrow in budget policy. That is $800 billion in the coming year--combined, by the way, that $800 billion. That is $1.6 trillion on a $14 trillion economy in a single year. It does not take a genius to take a look at this country and see that this administration's fiscal policy and trade policy is way off track and dangerous to this country.

But I am going to talk about the subprime loan scandal and about the decision that we are not going to regulate anything. Now I know regulation is a four-letter word to some. But let me describe what the new head of the Securities and Exchange Commission said in 2001 when he came in. He announced that it was going to be a new day at this Federal agency, at the SEC. It was going to be ``a business-friendly place.''

So we have regulatory agencies that are supposed to be wearing striped shirts. They are the referees. They announce: Look, it is a different day. It is going to be business friendly around here.

Well, it sure was business friendly. And look at what is going to happen to the American taxpayer as a result of what was going on. I want to recite a few things of what has happened. We are talking about legislation that results from the subprime loan scandal.

Most people would not know a subprime loan from any other term. I mean, that sounds like foreign language, subprime loan. All of a sudden now it is in our lexicon. We understand it is a scandal.

Let me describe part of what it is. Home ownership is part of the American dream. I mean it is what people aspire to become, homeowners. And we understand, and we have also understood, people cannot lay out the cash for the home they want to buy. As a result, we have had a home mortgage system in this country. It has worked pretty well.

It used to be kind of a sleepy industry, kind of quiet. It was an industry where when you needed to buy a home, you needed to borrow money because you did not have the cash for it, so you went to a savings and loan, a lending institution. You sat across from someone who was wearing a gray suit and a nice white shirt and maybe a red tie. They were very understated. They knew their stuff.

They said: Look, let's figure out whether you can afford this home. Tell us what your income is. We will go through all of the numbers and see if you can afford this home. They were very careful on both sides to determine is this a home you should buy. Then they got the mortgage and put them in the home. They made monthly payments and realized the American dream.

The reason the housing industry and home ownership is so important, is that it is a barometer of this country's economic health. It is about employment, it is about putting people to work, not just building the homes but building the refrigerators and the heaters and the carpet and all the things that go into those homes as well.

Now, for many decades the home mortgage industry had a lot of good people working in it. Still does. There are a lot of good people out there today who are going to sit across the desk from somebody who wants to own a home and are going to give them a home mortgage, and they are going to abide by all of the rules. They are going to make sure the person can afford that home. There are some good people working in this industry. No question about it.

Then there are some real shysters, some real carnival barkers. I want to talk a little bit about them. Now, this industry has spawned a new breed of people in addition to the good ones I

have talked about. This was a sleepy, time-honored activity to write mortgages. All of a sudden it is like a Roman candle. Someone put some powder in it, and, boy, it has been a go-go industry.

The problem is, as I described the regulator in 2001 who took office and said: It is going to be more business friendly around here, the problem is it was too business friendly. No one was watching.

Oh, we all watched in the morning when we brushed our teeth. If you had a little television set in the bathroom as you were brushing your teeth you would see the commercial come on the television.

It would say this--this is a real one, by the way. Zoom Credit--I do not know this company, but here is what they said: Credit approval is just seconds away. Get on the fast track at Zoom Credit. At the speed of light, Zoom Credit will preapprove you for a car loan, a home loan, a credit card. Even if your credit is in the tank, Zoom Credit is like money in the bank. Zoom Credit specializes in credit repair and debt consolidation too. Bankruptcy, slow credit, no credit--who cares. Come to Zoom Credit.

What an unbelievable business plan. Well, this would have to work in a business-friendly administration because if anybody was watching, they would say: What are you thinking about? What are you doing? That is not a business plan. That sounds like the front end of a sideshow in a carnival.

Well, Millenia Mortgage, here is what they said as you are brushing your teeth watching a little television in the morning. Here is the advertisement: 12 months, no mortgage payment. That's right. We will give you the money to make your first 12 months' payments if you call in the next 7 days. We pay it for you. Our loan program may reduce your current monthly payments by 50 percent and allow you no payments for the first 12 months.

Now, what they did not tell those folks is what you do not pay goes on the back end of the loan. It is going to cost you much more later. By the way, this reduction of 50 percent, that is a front-end teaser rate. When it resets in 3 years, you are not going to be able to pay your mortgage. I am sorry, you are not going to be able to pay it. They did not say that.

Then the largest mortgage broker in the country, Countrywide, Countrywide Financial--by the way, they went broke. Bank of America is buying Countrywide. And now some Countrywide executives are starting a new business, a new corporation, just announced in the Wall Street Journal last week, to buy distressed mortgages and resell them for a profit.

From the executives of this company, Countrywide, the largest mortgage broker said: Do you have less than perfect credit? Do you have late mortgage payments? Have you been denied by other lenders? Call us.

That is unbelievable. Now, let me tell you a little bit about Countrywide Mortgage. I do not really know them either except I have read the newspapers and read the reports.

Mr. Mozilo was the CEO of Countrywide. And in 2005, a couple of years ago, Countrywide Financial was named to Fortune magazine's prestigious Company of the Year Honor Roll. Company of the Year Honor Roll.

Mr. Mozilo, the CEO, received the Horatio Alger Award, and Barron's magazine named him as one of the world's 30 most respected chief executives. In 2006, Mr. Mozilo earned $142 million and was celebrated as the growth executive taking this high-flying mortgage lender into new heights.

Even as he was touting his company's success, he was selling $138 billion worth of his company's stock from August 2006 to 2007. He sold $248 million in stock, according to the Associated Press.

Most people don't know what this kind of carnival atmosphere was about. It gets to something I wished to talk about with respect to the legislation. Some people say: If you had a mortgage and couldn't pay for it, that is your fault. That is the victim's fault.

I understand. I believe those who have been victimized have some responsibility. But I wish to tell you about what happened. We had a new breed of mortgage brokers cold calling people who lived in their homes and had a mortgage, predatory lending with high-pressure tactics, calling them on the phone and saying: I have a better mortgage for you. You can cut your monthly house payment in half.

What they didn't tell them was this new teaser rate was going to reset at an unbelievably higher rate later, and they would have prepayment penalties in this mortgage so they couldn't get out of them. They didn't disclose that. They didn't disclose there were also going to be escrow payments on top of that. So a lot of people got duped by these carnival barkers portraying themselves as brokers to put them in a new mortgage they couldn't possibly afford. It is called subprime.

We now understand, from statistics I have seen, that 60 percent of the people who got subprime mortgages actually would have qualified for regular mortgages at much better and more desirable rates. But they were stuck in subprime. Do you think they are not victims? Let me say again, 60 percent of the people put in subprime loans shouldn't have been there. They should have gotten regular mortgages. But if you put somebody in a million dollar mortgage in subprime with a prepayment penalty and a teaser rate, a broker could get up to $25 or $30,000 in a front-end bonus for writing that mortgage. That is what was happening.

The techniques were almost unbelievable. The mortgages were not like the old days where you just go get a mortgage. Here is what Countrywide and others did. Through financial engineering, they sliced and diced a lot of new things. They said: We are going to offer something new. These are called affordability loans, adjustable rate mortgages, interest rate only loans, reduced documentation or no-doc loans. Interest-only loans, with those loans the borrower was told: You don't have to pay any principal at all. You just pay the interest. The principal, of course, goes back on the back side at a much higher rate. Then they were told there is a pay option, the adjustable rate mortgage, which allowed the borrower to pay only a portion of the interest and none of the principal. So you could pay only a portion of the interest, not even the full interest, none of the principal. Then, if you decided you would select the no doc, you had an option of not documenting all your income. You didn't have to have full documentation of the ability to pay. For that you paid a little higher rate, but you actually get a mortgage that said: You don't have to pay all your interest; you don't have to pay any principal; and you can decide that you want to get a no-documentation loan.

Does this sound like good business? It doesn't to me. Why were they offered that? High rates, high yields? Because if you package this up, if you can convince somebody through a cold call to dump their current mortgage, take a new mortgage with a teaser rate, and then you put these all together in a big old basket, mix them up like you mix sausage with hamburger, this is akin to putting sawdust in sausage, as they used to do in the old days as a filler, you put sawdust in sausage, what these financial engineers did and the mortgage banks and the hedge funds, they securitized it all. As they put these subprimes in with the other mortgages, then they would slice them up and dice them and resell them. They had a pretty decent rate on them. So this is all about profit and greed. If you have one of these securities that is backed by these new mortgages, it paid a higher rate.

That is a good thing; right? Hedge funds are buying it. Investment banks are buying it. They are all up to their necks wallowing in the corncrib similar to a bunch of hogs making a lot of money. I described yesterday how much money the executives at Bear Stearns made in bonuses in 5 years leading up to last year; hundreds and hundreds of millions of dollars for the top three guys. They have the money, JPMorgan and their investment bank, and the American taxpayer is on the hook for $29 billion worth of risk.

I don't wish to come and talk about the bill on the floor without understanding how we got here. It goes back to Harvey Pitt and what he said when this administration made him the head of the SEC. He said: This is going to be a more business-friendly place. I guess it was. I sure guess it was. Now, 7 years later, we have a Secretary of the Treasury prancing around town saying this is not a regulatory problem. This is not about a lack of regulation.

That is exactly what it is about. If you don't understand that, I am sorry, you need glasses. That is exactly what this is about.

Who sat around on their hands and allowed predatory lending to take place? Who sat around and watched these brokers make massive amounts of money? Watched Countrywide run up these mortgages where you don't have to pay all the interest, don't have to pay any of the principal? Who sat by and watched that happen? Does anybody think there are not victims out there? Of course, there are. But does anybody think there aren't a lot of winners? You bet your life there are a lot of winners. They made a massive amount of money, and now the American taxpayer is being told: You are going to have to provide the backstop because these companies are too big to fail.

If investment banks and hedge funds and others that were wallowing in this corncrib grunting and shoving, if they were too big to fail, then, in my judgment, they have a responsibility to accept regulatory standards by those in the Federal Government who are responsible to make sure the American taxpayer is protected.

I have been on this floor now for 4 years or so talking about the need to regulate hedge funds. Hedge funds are only about a $1.2 to $1.5 trillion value. But they are responsible for one-half of all the trades on the New York Stock Exchange every day. Think about that. Think of the impact they have. We are now securitizing everything. All these financial engineers are creating all this dark money that is not transparent to anybody, moving back and forth. They are all making money. Mr. Mozilo, head of Countrywide, made a massive amount of money, hundreds of millions of dollars, was feted as a genius. I noticed the other day he and the No. 2 person at Countrywide, as a result of this acquisition, the two of them get $19 million as a part of the acquisition by Bank of America.

So is it a case where the good bee sucks the blossom and the big bee gets the honey? It looks that way to me. The good little guy picks the cotton; the big guy gets the money. The question is, What do we do?

This administration, for 7 years now, has said: We don't need to regulate. We don't need to look over anybody's shoulder.

You would have thought we would have learned that with Enron. I chaired the hearings where Ken Lay came to the Senate and took the fifth amendment in front of the Commerce Committee. I chaired those hearings. I would have thought perhaps we would have learned something, that the administration would have learned something about the need for effective regulation. With Enron, the top folks got rich as well. They made a lot of money. Guess what. All the rest of the families who invested in that stock at the advice of the chairman who was dumping his at the same time, all those families ended up with nothing. You would have thought we would have learned something.

Let's learn something from this. The legislation on the floor today is a piece of legislation I strongly support. It is not all that we have to do, but at least it is a step we have to take now. I commend Senator Reid and others, Senator Dodd, many others who have worked on this legislation. It will not wave a wand and fix everything, but at least it begins to answer the question: If we are willing, if the Congress and the Federal Reserve Board and the administration are so anxious to promote financial stability by saying those that have been unregulated are still going to be too big to fail and the American taxpayer must ante up the money for the risk, if we are going to do that, why would we turn a blind eye to so many victims who now are losing their homes? It is estimated, in the next couple years, we will have 5 million people who will be moved out of their homes. I am talking about 5 million. All those families are going to come home someday and find out: We can't live here anymore because we are being evicted. The question is, Can we help some of them?

One of my concerns has been, I don't want the American taxpayer to be required to help somebody who saw this big old housing bubble begin to develop and decided, I am going to ride the top of that bubble. I want to invest in some things and flip it every 6 months, make a bunch of money. It is not in my interest to say the American taxpayer should finance that speculation. If they made those judgments and were wrong, I am sorry, that is a penalty they have to pay. But those folks who live in their residence and were victims of predatory lending, those folks who got bad mortgages, whose terms were not disclosed--and we have had testimony before the Commerce Committee about this, that the materials given to some of the homeowners never even disclosed what the reset interest would be, at least in language that could be understood by the average homeowner, did not even disclose there was going to be an escrow payment on top so, when the reset occurs in 3 years, you go from a mortgage payment you can easily handle to a mortgage payment there isn't anyway you could make, that family then is out of luck. I think for purposes of stability and for purposes of fairness we ought to reach out and provide some assistance. That is what this piece of legislation does. As I indicated, the legislation applies only to owner-occupied primary residents. They are the only ones who would be eligible. It has five principles and those five principles are sound. Long-term affordability, we are trying to create some new equity for troubled homeowners. The new loans will be based on the family's ability to repay. That will provide some stability for sustainable home ownership. This is not an investor or lender bailout. We are not bailing out investors or lenders. What we are doing is helping those who are in the home, only owner-occupied homes. There is no windfall for borrowers. The borrowers will share their new equity and future growth appreciation equally with the FHA. It will, I think, do something to provide some stability and some confidence and some liquidity and some transparency in the credit markets, which is very important.

I have spoken longer than I intended, but I did wish to give some background to why we find ourselves in this position. We should not be here. I don't know anybody here who thinks it is smart for a company that decides it is going to advertise, if you have bad credit, if you have been bankrupt, you can't make your payment, come to us, we want to loan you money. That is a business plan? Not where I come from. Yet that is what has been going on. It has been akin to a carnival.

Now all this inept business practice comes crashing down, and guess who gets hurt. The American taxpayer and the homeowners. The question is, What can Congress do? We know what the Federal Reserve Board has done. The Federal Reserve Board has responded with cuts in their interest rates. They have a couple different interest rates that they apply, and they have been cutting those interest rates.

One of my major concerns is the Federal Reserve Board and the Secretary of the Treasury misunderstand a portion of what has caused this critical area that we are in. Yes, the subprime loan scandal was the fuse. When that fuse was lit, the explosion occurred. Yes, that is the case. But it is also the case that the electronic herd in this world, the currency traders, those who take a look at what are the fundamentals, what is the foundation of the economy of a country, they look at this country, and they see an economy that is desperately off track. They see an administration that decided long ago we are going to fight a war, and we will not pay for it. We intend to fight a war, and we will send the soldiers overseas. They can strap on ceramic body armor in the morning and be shot at in the afternoon. But we will not ask the American people to pay a penny for it. Two-thirds of a trillion have been added on top of the debt by this President, all of it requested as emergency funding. Two-thirds of a trillion, and we are told as of yesterday he is going to ask for another $100 billion. We are going to have to borrow in budget policy $800 billion in this coming year.

On top of that, we have the highest trade deficit in the history of the country. I have written a book about that issue. It is the highest trade deficit; $2 billion a day we import more than we export. Currency traders look at that. They look at the budget problem. They look at the trade problem, and they say: That doesn't add up. That can't be sustained.

Warren Buffett has always said: Every bubble is always destined to burst; the question is when. The housing bubble burst. Probably not surprising. But he has also said this fiscal policy and this trade policy is not sustainable. I use him as a quote because I have a lot of respect for Warren Buffett. He analyzes pretty well what is going on. We have a responsibility to do what is right. On fiscal policy, if we are going to spend money, we have to pay for it. If that is difficult, if it is tough to ask the American people to do that, maybe then we shouldn't spend it. If it is important to spend it, then maybe we have a responsibility to say to the American people: Here is why. Here is why it is important for the future of this country.

My hope is we will pass the HOPE for Homeowners Act of 2008 as a first step--just as a first step. I think there is a lot to commend it. But there is so much more to do.

The book that McCullough wrote about John Adams was a fascinating book, going all the way back to the start of this country.

John Adams, as they were trying to put this new country together, traveled a lot. He traveled to Europe and elsewhere, representing this new set of colonies trying to put a nation together. He would write home to his wife Abigail. As McCullough has chronicled, in the letters to Abigail Adams, John Adams would lament. He would say: Where will the leadership come from to start this new country? Where will we find the leadership? Who will be the leaders? And then he would lament: There is only us--Washington, Jefferson, Franklin, Madison, me. Well, in the rearview mirror of history, the ``only us'' represented some of the greatest human talent gathered on this planet.

But I think every generation of Americans has a right to ask and an incentive to ask the same question: Where is the leadership? Who will be the leaders to steer this country and put this country on track for the future? That is an important question now.

We answer a question with a piece of legislation today. I hope we will move to this and move rather quickly to pass this legislation. But it is just a portion of the question the American people have a right to ask: Where will the leadership come from? Who will be the leaders to put this country back on track?

Madam President, I yield the floor and suggest the absence of a quorum.

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

Mr. President, I ask unanimous consent to speak in morning business.

Mr. President, at this moment in the Senate, we are awaiting a bill that is being written by Senator Chris Dodd of Connecticut, the chairman of the Banking Committee, and Senator Richard Shelby of Alabama, who is the ranking Republican on that committee. It is an attempt to come up with a bipartisan bill to deal with the housing crisis in America. We hope this is going to be successful. We are anxious for this bill to come to the floor. It is needed-- desperately needed. We felt at least this effort to work together on a bipartisan basis was a move in the right direction.

A few feet away from here in front of what we call the Ohio Clock out in the corridor, Senator Harry Reid, the Democratic majority leader, and Senator Mitch McConnell of Kentucky, who represents the Republican Members, had a joint press outing yesterday and announced this effort in the hopes that we can come up with a bill. This is overdue, and it reflects the fact we observed, over the 2 weeks of our Easter recess, that there has been a lot of activity in this country at the executive level when it comes to our economy and the housing crisis.

We all recall that the head of the Federal Reserve, Ben Bernanke, came forward and opened what they call the discount window for nondepository banks. To try to put that in common words, banks across the United States, which are regulated and are facing oversight by the Federal Government, have a way of borrowing money from the Federal Government so they are solvent and can continue to do their business.

A few years back, there was a change in what is known as the Glass- Steagall law, which gave nondepository banks--in other words, banks that are basically investment houses--lending opportunities, credit opportunities. There has been a dramatic increase in this activity. Much of that activity from nondepository banks has created credit across America but also has fueled the fires of this subprime mortgage crisis.

One of the major institutions, Bear Stearns, got into trouble a couple weeks ago and faced what appeared to be failure or bankruptcy. The Federal Government stepped in at that point and put a $30 billion guarantee so Bear Stearns would not fail. It allowed JPMorgan Chase to step forward in that circumstance and to back up Bear Stearns.

At the time, Bear Stearns, an investment house, was leveraged dramatically, which means that for virtually every dollar of assets they had, they had $30 in debt. So there was a fear

that if they failed, the stock market and the American economy would suffer.

I give this by way of background because this all occurred while we were out of session. When we returned, the Democratic leadership said: We have to get into this housing issue from a much more local and a much more personal level. If we are going to stand as a Nation to back up investment banks, if we are going to put the full faith and credit of America to the tune of $30 billion and more behind major institutions so they do not face the pain and dislocation that might come from their bad decisions, the obvious question is: What are we going to do for 2 million Americans who are about to lose their homes?

If America is going to ride to the rescue of investment banks on Wall Street, will it at least provide some shelter, some rescue to those who are about to lose their homes on Main Street? I think it should because it is not just a matter of those poor, unfortunate people facing foreclosure. A mortgage foreclosure is not an isolated, single-family event. It is not just a matter of a family losing their home. That lost home foreclosed upon, sold in your neighborhood, brings down the value of your home.

So 2 million Americans facing foreclosures has a ripple effect. It means 44 million homeowners who are making their mortgage payments every single month will see the value of their homes decline. As I said on the floor yesterday, what is the value of my home in Springfield, IL? If I ask an appraiser, they will say: I will look around your neighborhood; let's see what similar houses are selling for. If the comparable values are going down because there is a foreclosure, a distress sale involved, the value of my home has diminished. That will happen to 44 million homeowners across America because of 2 million mortgage foreclosures. So this has a negative impact on a lot of innocent people and innocent families.

It is not a matter of crossing our arms and saying: Well, those folks made a bad decision; they are going to lose their homes, and isn't it a darn shame; maybe they will be more careful next time. It has an impact on the community, neighbors, and neighborhoods, and it has an impact on consumer confidence. Over 70 percent of Americans today say they will not buy a home, not because they cannot find financing, but because they don't think it is a good investment. They don't want to stretch themselves, as many of us have in our lives to get into a home, for fear that investment of $500,000 today may be worth only $450,000 a year from now.

As a result, our housing industry is flat on its back. It is not just developers. It is not just realtors. It is homebuilders, it is skilled craftsmen, it is the suppliers of carpeting, furniture, and all the items that make a new home. They are all hurting because of the housing industry.

We returned to Washington and said: What can we do to stimulate the housing industry that will be positive? And we came up with a package to present.

First, we provide counselors who are available to those facing foreclosure to tell them what their options might be, to find a way out of this situation.

Second, we found tax provisions to help these homebuilders who are facing hard times get through it.

Third, we want to change the way people buy homes in America so there is more disclosure and transparency.

I had been a lawyer for a number of years before I came to Congress. I used to sit through these real estate closings. I would watch as the bank would bring out that stack of papers, plop them on the table in front of the new homeowners and say: Start signing. We will turn the pages, you sign. They would stop once in a while and say to the lawyers: What is this? Just another Federal form, a disclosure form; it is Form 237. At the end of the day, few, if any, homeowners knew what they were signing.

Jack Reed of Rhode Island, my colleague, has a simple provision that we would have a disclosure statement on the top of that stack written in English so people could understand what is the interest rate; how much am I borrowing; what will the monthly payment be; can this interest rate go up; can my monthly payment go up; can I prepay without a penalty? Some basics. I hope we adopt that proposal.

There is another provision that I think is critically important and has become very controversial. I don't understand why it is controversial. I cannot understand why, if someone facing bankruptcy wants to go into court under what we call Chapter 13 and take a look at all their debts and all their income and restructure their debt so they can pay back in a reasonable way, I do not understand why you cannot put your mortgage on your home in that court proceeding for modification. You cannot now. You are prohibited by law, under Chapter 13, from the court modifying the terms of the mortgage on your home. But the court can rewrite the terms of a mortgage on your vacation condo. The court can rewrite the terms of your mortgage on your farm. The court can rewrite the terms of your mortgage on a ranch. The court can rewrite the security instrument you used to buy that boat that is out in the harbor. All of those things can be modified, but not your home. I have asked why. Why in God's name would you prohibit the modification of a mortgage on a home? There is no explanation. And so the provision I put in the bill said that the court would have that authority. They wouldn't be required to, but they would have that authority.

Now, what is the protection here? The lenders want to know if they will be protected. Will they end up with a mortgage being rewritten in terms they do not like? So here is what we put in as protection:

First, you have to qualify to go to bankruptcy court. It isn't easy. We rewrote the rules for that a few years ago, and I don't change them at all. In order to get into court, it is a question of what your income is, what your debts are, and whether you have a chance of working it out. That is step No. 1.

Step No. 2, the real estate we are talking about has to be your home and primary residence. I am not interested in helping real estate speculators. Frankly, they may have some advocates here, but I am not one of them. I want to be sure we are dealing with home ownership.

Third, it only applies to mortgages which are in existence at the time this bill is enacted into law. So it doesn't project into the future, it is a specific group right now.

Fourth, this court--this bankruptcy court--cannot lower the principal on your mortgage in modifying it lower than the current fair market value of the home. There is a protection for the lender. You know that the principal can't be pushed down below fair market value.

Let me add as a footnote that many of these lenders facing foreclosure would be darned lucky to get fair market value on the property. If you have ever seen how these homes in foreclosure are sold, if they are sold, it takes a long time and sometimes results in an auction. We are finding in my State of Illinois that people are not even bidding for fair market value. So fair market value is the low-end protection of the lender.

Next, the interest rate the bankruptcy court can put on the modification cannot be lower than the prime rate on interest plus a premium for risk.

Next, the mortgage itself can't be for a term longer than 30 years.

Next, if in the 5 years after the modification in court the value of the home appreciates or goes up, that increase in value goes to the lender--not to the home owner, to the lender.

How many more protections can we build into this? We have narrowed the people who would qualify, and we have tried to do it in a way that is sensible and protects lenders in the process. So who would oppose a bill that is that narrow in changing the Bankruptcy Code? I will tell you: The mortgage bankers oppose it. The same people who brought us the subprime mortgage crisis are now telling the Members of the Senate: We find this unacceptable; we don't want the bankruptcy court to have this new authority. And what is their argument? The sanctity of the contract. Sanctity. When I grew up, sanctity connoted holiness, a sacred quality. Have you taken a look at some of these subprime mortgages, the ones we are talking about? I have. I have sat down with some of the borrowers in Illinois to see what they went through

and what they ended up signing up for. Time and again, these were elderly people, the ones I have met, who ended up signing up for mortgages which made no sense at all--misled, deceived into signing on to a mortgage they could not sustain personally.

The elderly lady who had retired in Chicago saw a number on a television ad, called the number, and in 24 hours there is a fellow at the door saying: You bet, we are going to consolidate your debt. This poor lady goes into a closing--she had limited education, she had retired, and she was trying to save her home--she signed all the papers, and in a matter of a year the monthly payment doubled on her home. Here she is living on Social Security and about to lose her home. The sanctity of the contract. The holiness of the contract. The sacred document the mortgage bankers want us to honor, bow to. Obeisance.

Another case. This poor lady, her husband had a serious illness. He could no longer climb the stairs in their home to get upstairs to the bedroom. He was sleeping on the couch in the living room. His wife was beside herself. They were both retired. She sees a nice little one- story bungalow, a smaller home but one story, with the bedroom on the first floor for her husband. She goes to buy it, and a so-called business adviser says to her: Oh, this is your chance to consolidate all your debt in this new mortgage. Do you know what this charlatan did? He took a zero-percent loan this lady had from the city of Peoria to put insulation in her home and consolidated it into the new mortgage, so she is now paying interest on the zero-percent loan. The sanctity of the contract. The holiness of the contract. This sacred document.

The mortgage bankers say we can't touch these things. My goodness, they have to be protected. Where were these mortgage bankers 3 years ago when we rewrote the Bankruptcy Code, when we said all existing contracts in America that are taken into the bankruptcy court will be treated differently? I didn't hear one word about the sanctity of the contract. No. Why? Because the changes in the Bankruptcy Code were to their advantage. So now, on the chance that they may have to keep a family in a home facing foreclosure, they are opposing it, opposing this change.

What a real test of the Senate this will be if we end up letting the mortgage bankers--the people who brought us this subprime mortgage mess--dictate to the Senate about changing the Bankruptcy Code. Shame on us. Why in the world, if we can stand up for saving an investment bank on Wall Street, can we not stand up to save the homes of millions of people who are about to lose them across America? A lot of them will never qualify for this assistance in this bill. I know it. But for some, a limited group, it is the only way they can keep their homes. That is what this debate is all about.

I read in the paper this morning that many of my colleagues on the other side of the aisle said this is a poison pill; changing the Bankruptcy Code, invading the sanctity of these contracts is a poison pill; we can't consider it. I don't want to be unreasonable about this. I want an up-or-down vote. I want people on the record. I want Senators to stand up and say whether they believe families facing this kind of foreclosure, with communities facing the impact of these foreclosures, will have a fighting chance.

This isn't just my theory, incidentally, on what we need to do. Recently, Newsweek magazine, in its March 31 issue, asked a lot of prominent people in different walks of life what we should do about the economy and particularly the housing crisis. I wish to quote a few for the record.

First, Bob Rubin, chief of the executive committee of Citigroup and former Treasury Secretary, maybe one of the most successful Treasury Secretaries in the history of this Nation. This is what Bob Rubin said:

We should consider higher capital requirements for banks

and investment banks, plus higher margin requirements for

other investors. Putting up more of their own money would

make people focus on risk.

That is a balanced and sensible statement. What he is saying is when we get into this whole question about the future of our economy, let's understand that there is risk on both sides and let's demand responsibility on both sides.

Carly Fiorina. Now, she is an adviser of Senator McCain's campaign, chairperson of the Republican Victory '08 committee, and former CEO of Hewlett-Packard. Listen to what she says:

I think the mortgage companies and the banks should step to

the plate and say, ``We have put products out there that have

harmed our customers, either because we didn't explain them

well or because we pushed them into homes or mortgages that

they couldn't afford.'' And those lenders need to sit down

with their creditworthy but cash-strapped customers and say,

``How do we help you?''

She is the adviser to Senator McCain's campaign. She is a person with a background in business. Her suggestion is consistent with my change in the Bankruptcy Code. It is exactly what I am saying.

Some of the others. Gene Sperling, an adviser to Senator Clinton's campaign:

How can you have a housing-led recession and have no

housing-based remedies?

He gets to the heart of it. The housing-led recession was the catalyst for our economic problems. Ignore it, and I am afraid our economy won't get well very soon.

Joseph Stiglitz, university professor from Columbia, former chief economist of the World Bank, and economic adviser to Bill Clinton. Here is what he says:

There needs to be an immediate write-down of mortgages--

perhaps encouraged through a homeowners' Chapter 11, which

would allow them to discharge a part of their debt and still

stay in their homes.

That is exactly what this amendment does.

He goes on:

Of course, there is something peculiar about what has been

going on. While the administration has been vetoing any

suggestion of a bailout for poor homeowners who have been

taken advantage of by predatory lenders, there has been a

bailout for investment banks. The Fed has lent money to

facilitate JPMorgan's takeover of Bear Stearns, and has

evidently underwritten the risk. It has accepted risky

mortgages as collateral--again putting taxpayers' money at

risk. These bailouts for those responsible for the mess

have been done in a totally nontransparent way. We really

don't know much about the values assigned to the

collateral and what the risks are. It seems fairer to help

poorer American households, rather than putting taxpayers'

money at risk without even charging appropriate insurance

premiums for bearing this risk.

Mr. Stiglitz has hit the nail on the head. We are ready, with few questions asked, to put $30 billion in taxpayers' money behind a failing investment bank, but when I come to the floor and suggest we ought to try to stand behind a few homeowners across America who stand to lose their homes, oh no, the mortgage bankers won't hear of it; some of these people may not be worthy borrowers in the future. Was Bear Stearns a worthy borrower? I don't even know if the question was asked, and neither does Mr. Stiglitz.

Robert Shiller, Yale professor of economics and founder of Macromarkets LLC. Among the things he says, he quotes a woman I respect very much, Elizabeth Warren, a Harvard law professor, who has proposed that the Government create a Financial Product Safety Commission which would work like the Consumer Product Safety Commission but would monitor lending and financial practices.

How in the world can this Senate stop and say we give tacit approval to the decisions of the Federal Reserve Board and the Treasury Department to put the credit of the United States behind investment banks that we literally don't know their circumstances and then turn around and say we would not let a bankruptcy court even consider changing the terms of a mortgage for someone facing foreclosure? If it is a vacation condo, fine; if it is a farm, fine; if it is a ranch, fine; if it is a big boat, fine, but not your home. You have to lose your home. That is what the law says today. Is that reasonable? Is that what we are all about? Is that what the Senate is all about? Are we here to follow the agenda of the Mortgage Bankers Association that created this mess, or are we here to serve the needs of families across this country struggling to keep a roof over their heads? I hope that answer will be obvious to my colleagues, and I hope that when we get this bipartisan bill that is

being worked on very soon that it includes this provision so that we can have an up-or-down vote.

This provision is limited. It will not impact future borrowers in any way. The Georgetown Law study said it will have little or no impact on interest rates to come. I think it is fair for us to consider it. It is supported by a substantial group: the AARP, Leadership Conference on Civil Rights, the NAACP, the National Council on La Raza, Consumer Federation of America, Center for Responsible Lending, SEIU, AFL-CIO, and many others. It has the diverse support of Jack Kemp, former conservative Republican Congressman and candidate for Vice President, and Larry Summers, who was Secretary of the Treasury in the Clinton administration and who wrote op-eds in support. It has the support of the Credit Union National Association and the National Association of Federal Credit Unions.

Who opposes it? The big banks that created this mess in the first place. I am sorry, they have had their day. They have had their chance. Most of them have made plenty of money, and their CEOs are going to escape unscathed from this terrible economy. But for the rest of America that is paying the price for their bad lending practices, all I am asking is a chance, a chance that in court the bankruptcy judge will allow these people to stay in their homes.

I yield the floor.

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

Madam President, I understand we are in morning business; is that correct?

Fine. I will use such time as I might use that I am entitled under that procedure.

Madam President, a few minutes ago, I was over at the Joint Economic Committee, where we had Mr. Bernanke, who is the head of the Federal Reserve, talking about the economic challenges we are facing in this country and what the administration, and Federal Reserve are going to do about it. I must say, we were long in analysis in terms of how we got here but very short in terms of giving a great deal of hope to the American people as to the next steps that are going to be taken by the administration to help resolve this problem. That is, I find, enormously distressing.

I think American families ought to be certainly encouraged by the efforts that are being made in this body to try to develop a housing program, led by Senator Dodd and also by Senator Shelby and a number of others. I understand the leaders are going to have some announcements later on in the day about the progress that is being made, which is, I think, a very important and significant effort. Hopefully, it will result in providing some help and assistance to families so they can remain in their homes and, hopefully, permit some of those who have been foreclosed on to regain the opportunity to return to their homes.

We have seen in recent weeks a widespread breakdown in the financial markets. The crisis has had far-reaching effects on the rest of the economy, leaving 7.4 million Americans unemployed and 2 million families at risk of foreclosure. Approximately 7,000 families a day are facing that. It is true in my State of Massachusetts. It is true throughout New England and other parts of the country.

We need to act quickly now to keep families in their homes. We are looking forward to our committees making a recommendation on legislation that will permit us to do so.

It is time to restore confidence in our credit markets. That means cracking down on abusive practices in the mortgage industry and shining more light on the operations of investment companies such as Bear Stearns.

The Federal Government stepped in with nearly $30 billion to bail out Bear Stearns. That is a lot of corporate welfare coming before any relief for the millions of families on the brink of losing their homes. Hundreds of billions of dollars in subsidized loans are being given out freely to banks and investment houses, but the administration is telling millions of Americans struggling to find work that it is too soon to give them additional unemployment benefits. That is unacceptable, and Congress needs to act.

I reviewed at the meeting earlier today the general economic circumstance we find ourselves in as a result of these costs over these last

years. Since the President took office, the dollar has lost a third of its value. The Federal debt has skyrocketed by nearly $4 trillion. Our debt to foreign investors has increased by $1 trillion. The stock market on average has grown by only 2.5 percent each year since 2001, far lower than the 7.5-percent annual returns it averaged since 1968, and it lost $2.7 trillion in value since last May--$2.7 trillion in value since last May. Finally, this crisis has wiped out $2.7 trillion in home values in the past year alone. Some economists believe we could lose as much as $8 trillion before the crisis is over.

So I reminded Mr. Bernanke of what I hear from my constituents in Massachusetts who see their hard-earned savings being wiped out. Now we are reading in the papers that older workers are being forced to put off their retirement because of losses in the values of their home and retirement savings. So we ought to know what we can do to help respond to the staggering loss of the Nation's wealth and how working families can cope with their lost savings and wealth. That is a fair question, and I must say I didn't feel we got much of an answer during the course of the hearing this morning.

Some have said we have a devalued dollar and this will increase our exports. But it is true that after the dollar has been weakening for 6 years, the value of our imports is still roughly twice that of our exports, and we are still running a huge trade deficit. Some have said the Fed is taking appropriate steps by lowering interest rates and offering discount loans, but it is true that even after an extended period of lowering interest rates, the economy is still floundering.

One of the very important and significant consequences of this whole economic dilemma is its impact upon the States. States are finding enormous challenges in dealing with their economic situation, and they have two alternatives. They have two alternatives and both of them are bad and will have very adverse impacts on middle-class and working families. First, they can raise their taxes which, at a time when families are hard-pressed to make ends meet, is the wrong policy. Secondly, they can reduce or cut back on services such as Medicaid and other programs that reach out to the neediest in the community. That, obviously, has enormously adverse impacts.

There are ways of helping the States. We have done it in the past. When I asked Mr. Bernanke whether he would favor this administration providing some help and assistance to the States so they don't have to reduce services for their neediest people, he said that is a decision for Congress to make. Well, I asked him. He is the head of the Federal Reserve. Where is the administration? What is their position? I know the power of the Congress on fiscal policy, but where is the administration? We want to work with the administration to try and restore our economy. When Mr. Bernanke says: Well, we are trying to develop a policy of economic growth and price stability, we are all for that. We have seen that. We saw it in the early 1960s with President Kennedy and we have seen it at other times, including in the 1990s. That is a desired goal. But just stating that as being the desire for the administration at a time when we are facing these serious economic challenges remains, I think, an inadequate answer. The idea that the Chairman of the Federal Reserve would state to the Congress that he effectively has no position and the administration has no position on fiscal policy, on providing help and assistance to the States, is mind- boggling to me--mind-boggling--a complete failure to understand the economic challenges people are facing.

I asked the Chairman whether he thought we ought to have a system to effectively regulate the safety of financial products at a time when the financial community has been involved in products that are risky for consumers. We have a regulatory agency--the FDA--that tries and does a pretty good job of addressing the increasing challenge in terms of food safety. We have an FDA to try to deal with and make sure our prescription drugs are going to be safe and efficacious. It does a pretty good job. We are working to try to strengthen those agencies. We have a regulatory agency, the Consumer Product Safety Commission, to try to keep toys that are dangerous to children away from children. So we have a tradition of establishing regulations and regulatory agencies to help protect the consumer. Given the abuses we have seen with financial products in recent times, should we not have a similar agency to help protect consumers from unsafe financial products? Consumers are hard working. They spend a good deal of their time working all day and the rest of the time trying to look after their children. They spend some time with their children helping them to read and with their education, and they don't have a lot of time to go through the various complex financial statements that have become the common rather than the rare. Generally, we had what I consider to be kind of a wishy-washy answer on this one: That the Federal Reserve has some powers--it is useful to have some power--but no precision with regard to what can be done in order to protect average working families from the existing abuses that are out there.

I was discouraged by these responses at a time when we have a serious economic challenge. Families in my State are working and trying to keep their homes, trying, even at this time of the year, to get sufficient resources for home heating oil. Families who may experience the joy that many have in the last week when they receive the notices from colleges in my part of the country that have accepted their children to go on to higher education and then are sobered up by the extraordinary costs and wondering whether they can afford it. Frequently, they use their house as collateral, and now they wonder whether they can afford it. They see the ever-increasing cost of gasoline, and they are struggling and wondering if they can hold onto their jobs, let alone their health insurance.

Serious economic times demand leadership at the executive level and demands leadership in the Congress and demands a bipartisan response to these challenges. We do not have that at this time.

I will review briefly for the Senate about where we are in terms of our economic challenges.

I was asked yesterday morning--or 2 mornings ago, Monday morning--in Boston whether we were in an economic recession. I answered yes. When asked how one would describe it, Americans surveyed think the economy now is in recession; 76 percent say there is good reason why they should believe so. We have seen the response to these economic challenges. We have seen some $260 billion in subsidized loans to banks by the Federal Reserve. We don't know how the public taxpayer is being protected with these loans. We don't understand how the public interest is being protected. We have seen public loans at other times, and the most dramatic one was the automobile industry when the Congress actually was repaid for the loans. It was a successful negotiation, without which we would have seen the complete collapse of the automobile industry in this country and the loss of millions of jobs. It was carefully worked out and the public interest was protected. We don't know what those $260 billion in subsidized loans now will mean. Yet when we asked: Could we get the administration to help and assist us with the extension of the unemployment benefits, the answer was no. No. No to $10 billion to help individuals who work and who want to work, who have a history of working and are losing their jobs because of the economic downturn and need to have that help and assistance in the interim before they get the next job. Would the administration help them? The answer was no. Yet there is $260 billion in loans to the banks. This isn't right. This isn't fairness. This isn't being responsive to the needs of families and working people in this country.

This chart gives an idea about what is happening. While wages have been stagnating, consumers have been facing increasing costs, including the 84-percent increase in gasoline. We have seen health insurance costs continue to rise by 44 percent, college tuition by 47 percent, and wages effectively stagnant over this period, putting enormous pressure on these families.

This chart shows that millions of American families face losing their homes. The number of foreclosures were in the thousands in January of 2006, 100,000 in 2007, and 150,000 in January of 2008; it is up 124 percent from 2006. These are families who are losing

their homes. This is a reflection of the loss of homes by hard-working people in this country.

We have now seen the growth of a tent city, something that I think none of us ever thought would again take place in this country. All of us are mindful of the extraordinary pressures that still exist on families as a result of Hurricane Katrina and the hardships those people are facing. But by and large, we don't generally think that because people are going to lose their houses to foreclosure, they are going to be pushed outside. The growth of this tent city has been a new phenomenon in the landscape of America.

This shows that home prices in major cities have fallen now by 11 percent in the last year alone. This chart shows what has been happening in different parts of the country, and it has generally been going down across the country. Some areas are suffering a great deal more than others. The losses in California, Las Vegas, and some of the States in the South have gone down a good deal more than others, but nonetheless it has been across the board, and it has been serious.

This chart demonstrates that the economy is shedding more and more jobs. In January of 2008, 22,000 jobs were lost. In February of 2008, 63,000 jobs, meaning 85,000 jobs were cut in just the past 2 months. We are going to get more jobs numbers on Friday of this week, and most believe we will see this continued trend of individuals losing their jobs. How many more indicators do we need? When you find out you are losing your home, you are unable to keep your job, the costs of all kinds of essentials which you need to have any quality of life are going through the roof--not to recognize we have some important responsibilities to our fellow citizens.

This chart shows 7.4 million Americans are competing for 4 million jobs. These are the numbers of Americans who are unemployed. These are the job openings that are out there at the present time. So we have many more unemployed than there are job openings. If that is the case-- and these people want to work, they are glad to work, we want to give them an opportunity to work. Historically, we have said to those people: We are going to give you some unemployment compensation to carry you for a while until we get this number of job openings up, a restoration of our economy, and then you will be able to get the job. But these same people who have worked hard to try to provide for their family, they need to be eligible for some unemployment compensation. The trust fund itself is in surplus at this time. Workers have paid into the fund--and if they haven't paid in, they are unable to gain resources, generally speaking.

So this is the reason we have been struggling to get some help and assistance in unemployment. This is a rather ominous chart because this says economists predict unemployment will skyrocket next year. This says in 2007 the unemployment rate was 4.5 percent, 4.8 percent in 2008, and in 2009 it will be 6.5 percent. The lag time, historically, has reflected itself in the increasing numbers of unemployed. In 2009, we are going to see increasing unemployment across this country. That is the phenomenon.

If we know unemployment will continue to increase--and that was the testimony before the Joint Economic Committee--why aren't we preparing ourselves to reach out and make sure this kind of pressure that is on these families is reduced or at least accommodated to some extent? We know what is going to happen.

This administration missed the boat, so to speak, in understanding where we are going in terms of the economy. They should have known, but they didn't know. For some of us who look at the record of the administration, whether it is on Katrina or Iraq, we can understand how they have missed the boat on a number of different issues. We are finding out they certainly missed the economic boat.

Millions of Americans could lose their health insurance in a recession. We are seeing job losses and workers' declining bargaining power and benefit cuts. In a mild or moderate recession, 4.2 million Americans will lose their health insurance. We know when that happens, when they lose it, effectively the waiting room becomes the emergency room; that becomes their primary care. The average cost is $423 for a visit to the emergency room. When families lose health insurance, they go to the emergency room. And who picks up the tab if they don't have the money? It is the taxpayers who pay for it one way or the other. This will mean additional pressure on local taxpayers who are going to be increasingly pressured themselves because they will lose benefits and they are going to have to pay more in taxes, and the spiral continues.

Yet we have very little willingness from the administration to assist States and local communities to help permit these families to retain their health insurance, which they could do, and which we have done at other times.

This chart is a sad indicator. This says food stamp use nears record levels as the crisis squeezes workers. We have 28 million Americans who are projected to receive food stamps in 2009--record numbers in the history of this country, with families needing to use food stamps because they are desperate. This program was meant to be an emergency program, and it is. But we are finding more and more Americans dependent upon it. Just visit the food banks as I have. We have such superb food banks in Boston and in Massachusetts which have been enormously effective. They are well run, and they involve the community. We are finding out about the difficulty they have in getting good food and also the kind of pressures they are seeing every single day at the food banks.

This is what is happening. This puts millions more into poverty by 2011. The number of people in poverty has grown during this administration by nearly 5 million people, and over 1 million children have gone into poverty. This is going to get even worse in a recession. These numbers are growing.

I listened this morning with a good deal of interest about the increasing number of school dropouts. Colin Powell was on most of the morning programs talking about it. It is directly attributable to the increased poverty. When you get increased poverty in communities, you are going to have increasing numbers of children who will drop out, increasing amounts of gangs, and increasing amounts of violence, make no mistake. We have seen the complete insensitivity of the administration to providing assistance to local communities, whether it was in the COPS community policing program which was such a success or the Byrne grant programs that assist local law enforcement. The administration says: no, no, we have to cut those programs back. We are seeing increasing poverty, with all of its dangerous aspects.

These are very interesting charts. This one shows 22 percent more workers are exhausting Federal unemployment benefits today than at the start of the 2001 recession. Since 1991, we have extended unemployment compensation by 13 weeks some seven times. That's seven times. In the last 20 years--listen to me now--we have not had as high of a rate of long-term unemployment at any time Congress has first extended benefits as we have at the present time. This is an extraordinary phenomenon. These are fellow citizens who have worked hard, want to work, are continuing to look for jobs. They haven't even dropped out of the job market. Yet they are being cut loose here and being denied the unemployment compensation. So what we are demonstrating is increasing insensitivity to these families.

I will just take a few more moments. There are things that can be done. If we were able to get Mr. Bernanke to indicate that he believed some economic stimulus program could be put into place, we are looking for those that have been tried, tested, and demonstrated to have been effective.

You can see on this chart that for every dollar invested in food stamps, it had $1.73 of impact in boosting the economy. For unemployment, it was $1.64 of growth that you were buying for every dollar invested. For infrastructure, it is $1.59. The tax cuts the administration favors do not have as positive an impact. That is what we need. We need to have programs that will provide help and assistance for them.

This chart illustrates how the costs are rising faster than the rate of inflation. So I think we know what needs to be done. We need an economic stimulus

program that is targeted to middle-class and working families and will benefit them. We heard today in the Joint Economic Committee about what we have been doing for the large investment firms which get hundreds of billions of dollars, but still there is not the will or desire to try to help real families who are having a most difficult time of it. That is wrong. I don't think the American people will tolerate that. They should not. They should be assured that there are many of us who will not tolerate it and will work effectively until we develop the kind of economic program that is really going to reach out to these families and say to our fellow citizens that help is on the way.

Madam President, I suggest the absence of a quorum.

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

Mr. President, I come to the floor today to talk about what is happening in the housing crisis, which I know we are all extremely concerned about, and to talk about what is happening to families across the country. We are in a crisis in America.

Few States are being hurt as much as my State of Michigan, which currently rates sixth in the Nation in mortgage foreclosures. Families are seeing their life's dream--their home--being lost as a result of the crisis. Last year, over 87,000 households were in foreclosure-- 87,000 families faced with the loss of their piece of the American dream.

Every day we delay passing legislation, thousands more families lose their homes and are stripped of their American dream, their home. I thank Senator Reid, our leader, and Senator McConnell, the Republican leader, for coming together for the leadership of our colleagues on both sides of the aisle to forge an agreement, because it is absolutely critical that we come together and take action as soon as possible.

I know that right now we are seeing the final stages of putting together a substitute amendment. I know it is our majority leader's position to move this legislation as quickly as possible.

This year alone, over 20,000 households, 20,000 families, are in foreclosure in Michigan. This crisis is only going to get worse, which is why we have to act now. We are hearing about the broader ramifications--first starting with subprime loans, and then to larger home loans, and now to the larger financial markets, where there is no certainty, and capital is drying up so that entrepreneurs who want to start a small business may not be able to do so.

The young person getting ready to go to college who is looking to get a student loan might not be able to do so. There are broad implications because the way the financial markets are intertwined right now has created a situation where it is imperative we act. We have to go to the heart, to the central piece that has started all of this, which is to address what is happening as it relates to home ownership and financing.

It has become clear, unfortunately, because of many hearings that have been held and criminal investigations that have been launched on the issue of subprime lending that we have seen manipulative practices and tactics as a part of this problem--not the whole problem but certainly a very important part of it.

It has become clear a considerable number of mortgage brokers targeted subprime loan products to minority borrowers, folks who are out doing a sales job, making something sound a whole lot better than it is, such a good deal, when maybe you have a senior who needs a home repair, a roof done, a new furnace, or a young family trying to get into that first home and they were told things that were not true and, in some cases, were sold a bill of goods.

On top of that, many of these borrowers, many of these families, would have qualified for a prime mortgage with better terms.

We are only beginning to see the effects of this crisis and the results of this kind of targeting. Foreclosures have already led to the loss of property values throughout entire communities in Michigan. It may be that only one home in a neighborhood has a foreclosure sign in front of it, but what happens to the values of the houses on either side, the house across the street, the house in the next block? This is impacting whole communities. The result is a credit crisis that is making safe, affordable mortgages less available for aspiring homeowners, putting the American dream further at risk.

Families across Michigan are struggling. Families across the Nation are struggling. We know that for most people, it is getting that home. It is going from a renter to a homeowner, to tucking away that equity in the home that brings someone the opportunity to be a part of middle- class America. We know that home equity has paid for young people to be able to go to college and for future dreams of those families. That equity, that value of that home, in too many cases is slipping away.

That is why I am proud to be part of a majority in Congress that has already acted on a couple of key points. Last December, we acted to pass my legislation that would make sure at least, as people are filling out their taxes before April 15 of this year, they would not be penalized with additional taxes if they lost their home or had to lose money on a refinancing. We passed together--and I am very appreciative of the fact that we were able to do this--and President Bush signed the bill that would basically indicate, as an example, if you have a $100,000 mortgage and you are in a situation where you have to sell for $80,000 or there is a foreclosure and a resale of $80,000, that you do not pay taxes on that $20,000 difference that is forgiven by the bank, for instance. That does not count as income toward you. What we have done is eliminate the added insult to injury. You lose your home and then you get another tax bill. We acted last December to make sure that would not happen, and I am very pleased to have led that effort.

We also passed provisions in the economic stimulus package, as well as increasing FHA's ability to help families facing foreclosure. We know we are in the very final steps of having a conference committee report done, and this is a very important part of what needs to happen.

We also know that is not enough. There is much more to be done, not only to directly help families and communities, but to create certainty within the marketplace so that lenders who are operating under the rules are regulated, so our traditional lenders feel confident to once again lend to others, to each other, to be able to continue our economy moving forward. That is why I am very proud of, again, Senator Reid, our leadership, Senator Dodd, Senator Baucus, and others who put together the Foreclosure Prevention Act of 2008 to help over 1 million people stay in their homes and accomplish three important goals that I hope will be included as we come to a larger agreement with colleagues across the aisle so we have an approach that can pass with strong bipartisan support.

We have brought to the floor of the Senate and have asked for action--we asked 3 weeks ago for action and we are now back hopefully to the point where we can get action on issues such as keeping families in their homes by increasing the preforeclosure counseling funds so people can get help figuring out the maze. Because of the financial structuring, you can get a mortgage and you can go back and those folks don't own the mortgage. In fact, they are packaged together, securitized, sold in the marketplace, maybe even divided up. Maybe you don't have one entity that owns your mortgage but maybe two or three. It is an extremely complicated question. So being able to help people get through that situation with preforeclosure counseling is very important.

Allowing State housing agencies to issue $10 billion more in refinancing bonds has been a part of our package and I hope will be in the final package; also, allowing homeowners in bankruptcy to modify their mortgages. We also include in our plan the ability to help communities harmed by foreclosures by allowing them to use community development block grant funds, very important funds to support local communities to purchase and rehabilitate foreclosed properties therefore, enabling struggling communities to focus on their properties.

We also have focused on businesses--homebuilders and others--that at this point need assistance through the Tax Code to apply excess net operating losses to prior years that were profitable to allow them to manage the excess in inventory and be able to move forward and be profitable.

Our plan also includes help for families to avoid foreclosures in the future by requiring mortgage documents be simplified.

These are important steps that will help millions of hard-working Americans and address the most important issue causing our economic problems, which is the issue related to housing and financing.

I urge colleagues to come together to act as quickly as possible as final plans for a bipartisan bill are being put forward.

I would be remiss if I did not also speak to one other piece of this, particularly for a State such as Michigan. For us, it has not been the high values on homes or even the financial mechanism of adjustable rate mortgage arms and so on. For us in Michigan, our main cause of this problem relates to the fact that people are losing their jobs. It is unemployment, people losing their jobs or finding themselves in a situation where their income is cut in half from $28 an hour now at $14 an hour. The mortgage has not changed. The cost of food has not changed. In fact, it has gone up. Gasoline costs have gone up. Everything is going up, but wages are going down if they exist at all.

In Michigan, these are not families who were flipping their houses or speculating on real estate. These are hard-working men and women who played by the rules all their life, patriotic Americans who have been devastated by the current economic downturn, devastated by policies that have allowed us to export jobs rather than products, which is what we need to be doing.

In Michigan, we have been in recession for quite some time now. Middle-class families are losing everything in terms of jobs, homes, so on. Although I have to say, we are tough in Michigan and resilient and working hard to bring new opportunities and new industries to Michigan, but it has been very challenging for us at a time when since 2001, since this administration came into power, we have lost over 3 million manufacturing jobs in this country. It is hard to believe. These are the jobs that created middle-class America, good wage, good health care, good pensions, good way of life, good standard of living. We have been at the forefront, unfortunately, in a global economy where we are not enforcing our trade laws adequately, where we are not addressing health care costs in a way that makes sure everyone is covered but does not cause us to have health care costs going through the roof.

By not addressing those issues--even though I have to say I am very proud to be part of a caucus that has tried at every effort, tried in every form we can to address those issues, but despite that, we have not seen what needs to be done in this country to create a level playing field, to create a race to the top so other countries are coming to us. Instead, we see pressure for a race to the bottom.

In Michigan, families are seeing, unfortunately, their American dream turn into an American nightmare because of lack of action on those issues that relate to fighting for middle-class America in this country and to keep middle-class America in this country.

I do not want to lose sight of these families. The housing bills in front of us are very important to help families, but I hope that in the not too distant future we will do something else that is incredibly important to help these families keep making the mortgage payments, and that is to extend unemployment benefits. In every other time of economic downturn, a recession, this Congress has responded, whether it be a Democratic President or Republican President, to extend the benefits to those hard-working Americans who have lost their jobs through no fault of their own so they can continue to put food on the table, to pay the mortgage, keep a roof over their head while they work very hard to find another job.

No one gets rich on unemployment compensation. People are getting on average 40 cents on every dollar earned. Nobody is operating without an extreme struggle even on unemployment compensation. But we know it is the right thing to do, the moral thing to do for families.

We have been told that one of the two things that have the most economic stimulus is extending unemployment compensation. Why? Because if you are unemployed, you are not deciding: Gosh, do I save that money coming in or do I spend it? You have to spend it. You have to spend it to keep a flow for your family. So we know it has a tremendous economic stimulus effect.

The other point that is so critical--and I want to give tremendous credit to our Presiding Officer, the great Senator from Iowa, the chairman of the Agriculture Committee, for his incredible commitment to extending and strengthening the food programs in this country--food stamps, nutrition, school nutrition. But as he has said so eloquently on so many occasions, increasing the dollars for food stamps immediately goes into economic stimulus because when you receive that help, you are going right to the grocery store and you are buying the food your family needs. There is something wrong in this country when the best we can do at the moment is $1 per person per meal. I thank the Presiding Officer for his efforts. This is one of the key things we can do to help families.

In Michigan right now, we not only have an unemployment rate that is the highest in the Nation, 7.2 percent, but we also have one out of eight people on food stamps. These are folks who never thought in their life they would need help, never dreamed they would need help and now find themselves in a situation.

We have heard a lot over the last months from the administration that things are not as bad as we think, that the underlying economics are fine, although that has changed in the last 3 weeks. But we keep hearing that there is not enough evidence to show that we need to increase unemployment compensation or help people put food on their tables. But we also know that every economic indicator says exactly the opposite. And we are now hearing from the Bureau of Labor Statistics and Goldman Sachs that by the beginning of next year, which is coming faster than we would like, in January of

next year, the national unemployment average will be 6\1/2\ percent.

Families expect us to act and do something when this kind of evidence is available in terms of the economy. We took action in 2002 across the aisle in extending unemployment benefits, and yet I don't understand why that is not at the top of the list right now. Over 41,000 people in Michigan lost their unemployment insurance benefits in the first 3 months of this year, and millions more across the country will lose that help for their family by the end of the year. Something has to be done.

We are talking about people who were working, the middle class of this country who have lost their jobs, probably related in some way to this economy and what is happening. The job may have gone overseas, it may not, but they are in a situation where they are losing their jobs. We can not turn our backs on them.

The housing package in front of us is a critically important step, and I want to congratulate again everyone involved in coming to this point. I hope we have something we will be able to move quickly on, with a very strong bipartisan vote. Then I hope we are going to move just as quickly to those areas we know are desperately needed for families and that will have an immediate economic stimulus effect; to be able to do those things that will support the dignity of work.

The majority of Americans are not looking for a handout from anybody. They are looking for an opportunity to care for their own family and to work hard and to be able to have the American dream. They are looking to us to understand what is going on not only in Michigan but across the country and to act to support them.

Mr. President, I suggest the absence of a quorum

Mr. President, I thank my colleague from Illinois for his statements and leadership on this issue. I serve on the Judiciary Committee with him. I thank him for bringing forward this proposal. I think it is critically important to a large number of homeowners who find themselves in bankruptcy that they get the help the bankruptcy courts were designed to create. It was to take a look at the financial ability of the person going into bankruptcy, to take a look at their assets and to make a fair arrangement for the creditor and the debtor. But the bankruptcy courts today cannot do that in regard to your primary residence. As my colleague points out, if it is your boat and you have a chattel mortgage on it, they can work that out. If it is your vacation home, they can make accommodations. But for your principal residence, they cannot do that. That makes no sense at all, and I thank my colleague for bringing this forward. I think it is a critical part of the legislation before us, and I look forward to supporting the effort to make sure that stays in the legislation.

Mr. President, 2 weeks ago I visited a Baltimore neighborhood, Ednor Gardens. That is near the Memorial Stadium, the old stadium where the Baltimore Orioles and Baltimore Colts played, and it is in the neighborhood where I went to high school, Baltimore City High School. It is a middle-class neighborhood, but today there are vacant homes and a lot of ``for sale'' signs. The entire neighborhood is affected by our current housing crisis. Some are in danger of losing their homes. Obviously, that is the most dramatic impact all of us hear and we want to do something about. We do not want to see people lose their homes.

It was James Truslow Adams who first coined the term ``the American dream'' in his book ``The Epic of America'' in 1931. He talked about the American dream as the opportunity to achieve in this great Nation, that every family should have that opportunity. The most visible sign of achievement is owning your own home. It is devastating if you lose your home.

Many Americans are in danger of losing their homes today because of the housing crisis. It not only affects individual homeowners who could lose a home through foreclosure or the inability to pay the mortgage and they just walk away from their home, but it affects every home in that neighborhood. There is a Chicago study that shows a single foreclosure, just one foreclosure in your neighborhood, will have the immediate impact of reducing your property value by about 1.5 percent or about $3,000, on average. The U.S. Conference of Mayors pointed out that the current decline in home values across the Nation reflects a loss of value of over $1.2 trillion, having a major impact on property tax revenues of local governments. The whole community is affected by the housing crisis, not just the individual homeowner who may lose his or her home.

If you happen to live in a home that you need to sell--you move, there is a change of life and you need to deal with putting your house on the market; maybe you have a contract to buy another house and you plan to sell your house--I tell you, the housing market is not good today; you are affected by the housing crisis. It is hard to find people who are willing to buy a home. They are concerned about declining values. Everyone is affected by this housing crisis.

Home ownership is critically important to the safety of our neighborhoods. Study after study shows that where you have a large percentage of home ownership, you have better schools and you have less crime. That was actually documented in that Chicago study I referred to earlier, where they showed there was a direct relationship between foreclosures in a neighborhood and the increase of violent crime in a neighborhood.

I have heard many people say: Isn't this the problem of people who entered into mortgages they should not have entered into or bought homes they should not have bought or couldn't afford? In some cases, that is true. In many cases, it is not. But the declining economy and the housing crisis affects all of us. We have a responsibility to help and to do something that is positive for our economy and the housing crisis.

This is not an isolated situation, what was happening in this Baltimore neighborhood. In Maryland, the foreclosures have increased-- since June, where Maryland ranked 40th in the Nation, doing fairly well competitively, to now 18th in the Nation in the number of foreclosures. There was a 39-percent increase in foreclosures in the last quarter in the State of Maryland.

The Mortgage Bankers Association tells us that nationally the third quarter of 2007 was not only a record for the number of foreclosures, it was the highest ever recorded in the number of foreclosures in this country. Nationally, it is estimated that 2.2 million subprime mortgages, entered into between 1998 and 2006, are in jeopardy of foreclosure during the next 2 to 3 years, representing $160 billion of potential loss of wealth. The National Realtors Association has told us that home sales have dropped for the sixth consecutive month. Home prices are down, and they quantitated it, between February 2008 and February 2007, a decline of 8 percent. Our economy is hurting. It is not just the homeowner.

Let me just give one example. Housing starts are down. New housing starts are clearly down. It is difficult to see investors moving forward building new residential homes when we have a glut on the market of existing homes. What does that mean? I was talking to some people who work at the light truck transmission facility located in White Marsh, MD--General Motors. They are in danger of losing jobs because the people who work in the building sector, building of homes, use light trucks, and they are not buying as many light trucks because business is down. This is affecting jobs in Maryland and jobs in each one of our States.

The bottom line is that Congress needs to act. We need to act quickly. The Fed acted quickly to protect Wall Street. We have to act quickly to protect Main Street. There is a lot of question as to whether the Fed did the right thing for Bear Stearns. They acted quickly. We have middle-class communities, middle-class families who are in danger of losing their homes if Congress does not act quickly. We need to act quickly to help middle-class families who are caught in this economic downturn.

I am proud to have cosponsored provisions included in this underlying bill we are talking about. It is a very important bill. It includes provisions that I believe will really help the people in our States.

First, it provides counseling services--$200 million. We can help another half a million families get counseling.

One of the figures I find shocking is that for about half of the vacant homes we have today, people have just walked away from their mortgages, walked away from their homes. They have not even tried to work out their financial

problems. They have not sought counseling. They have not talked to the mortgage company. They have not made any effort to try to save their home. They think there is no possibility. In reality, there may be possibilities. We should be providing the wherewithal so that people who are in a distressed situation can get the counseling help they need.

When I had my gathering in the Baltimore neighborhood, there were representatives from the different counseling services that are available to the people of Baltimore--Healthy Neighborhoods, St. Ambrose Housing Aid Center. These are people who have found the number of people seeking help doubling and tripling since the middle of last year. They are being overwhelmed today by people seeking help. They need a Federal partner. They asked me specifically whether this part of the legislation can be enacted quickly. They need the help to keep the centers open and expand the centers.

Remember, I said half the people are not seeking counseling. If the number of people who could use counseling actually stepped forward, there would not be the counselors available to handle this. That is why it is very important for the Federal Government to be a partner in providing adequate counseling, independent information to homeowners as to what their options may be.

The second provision of this bill allows for the refinancing of subprime mortgages by giving our local revenue authorities additional revenue bond help from the Federal Government--$150 billion--so that they can be more actively involved. We know we have a credit crunch. Everybody knows that. You can't find mortgages today. You can't find ways of financing. This will help, by using revenue bonding authority with very little cost to taxpayers. I say that because in many cases the local revenue bonding authority, operating under the State, will be able to go in and purchase a distressed mortgage at market value. Market value is less than its full value. The person who made the loan is going to get a fair value for their investment. It is going to be a lower value than they want, but it is a fair value.

We are not bailing out the investor. What we are doing, then, is giving the homeowner an opportunity to have that mortgage refinanced through the State revenue bond authority at a fair amount, at a fair return, allowing that homeowner to stay in his or her home, protecting the home for the family--not protecting the investor, not protecting the person who made the loan, but protecting the homeowner. That is what we should be doing. That certainly is a tool I hope all of us will support, and we need to get that done quickly because of the credit crunch.

There is a lot of talk about whether individuals went into this with full knowledge of the problems. Let me tell you, there have been a lot of people who have been victimized by the practices that are out there. There are many people who could have gone into traditional mortgages who went into subprime mortgages. It is particularly true in minority communities. Between 2005 and 2006, 50 percent of all the mortgages sold in the African-American community were subprime--50 percent to African Americans; 40 percent to Latinos. My point is this: There were neighborhoods that were targeted for subprime mortgages that could have qualified for traditional mortgages. These individuals have been victimized. I think allowing our revenue bonding authorities, our local housing authorities, to be able to do more to restructure those mortgages is the right thing for Congress to do.

I hope we will provide block grant authority, to give block grants to communities that have been impacted by foreclosures. As I said earlier, if you have a foreclosure in a community, the entire community is impacted by it. We need to do something to help it.

I was very impressed when I talked to people at St. Ambrose when they explained to me that when you have a foreclosed property, the house deteriorates and the neighborhood needs help. A Federal block grant to the community will allow it to get the housing in the condition it needs in order to put new home buyers into these houses. That is another very positive thing we can do to help communities.

The legislation provides the relief from bankruptcy that my friend, Senator Durbin, talked about, a provision I strongly support. I don't need to go through all the provisions he went through, but it is targeted to residential mortgages that are in bankruptcy, it is targeted to mortgages that are currently in existence, targeted to those who can financially afford a refinancing structure. It is targeted in that if there is a resale and money that comes in that would have the lender held harmless, the money goes first to the lender.

All this is targeted relief to provide some degree of equity in a mortgage proceeding between mortgages that are taken out for our vacation homes and our large boats and those that are for residential mortgages. As Senator Durbin pointed out, a bankruptcy judge can adjust the mortgages for your vacation home and your chattel mortgage on your boat but cannot, today, on your residential mortgage. That makes no sense at all, and we should certainly include that provision.

There are provisions in this bill that will provide disclosure so, moving forward, homeowners have much more information before they enter into a mortgage.

I wish to refer to another provision I intend to offer as an amendment to the underlying legislation when we get an opportunity, and that is to provide a tax credit for first-time home buyers. I think we need to do something to stimulate the housing market from the point of view of more people willing to come out to a buy a home. Senator Durbin pointed out that today there are people reluctant to buy a home, who want to buy a home, but they are worried that the value may decline. If we give a tax credit, put money on the table, I think it is much more likely that individuals will want to take advantage of that. You do that and you help stimulate the economy with the exact sector that triggered the economic downturn, the housing market. Let's get the housing market reenergized. Let's put a tax credit out that helps home buyers buy a home in these distressed times.

Now, the legislation that I am going to propose is going to be targeted; it is going to be for principal residences only. I think that is what we should do. It will be middle class. We will have an income cap so it goes to those who need the help.

It will be first-time home buyers. Today, it is estimated that 40 percent of our market is first-time home buyers. In Baltimore City, we know about two-thirds are first-time home buyers. So it is to go to that part of the market that needs the help, that we need to get back into the market. It is temporary. It will expire in 2008 because we want people moving now, going back into the market now.

This is not a new concept. It has been used in the Nation's capital. We provided a tax credit that has helped 3,000 to 4,000 home buyers a year. I think it was a good policy for the Nation's capital. I think it is a good policy now for our country on a temporary basis.

I do acknowledge there are several of my colleagues who are interested in this legislation who have a slightly different approach. I hope we can come together, as Senator Stabenow has been interested in a housing credit for many years. Senator Isakson has come forward with his proposals.

I hope we all will be able to work together to bring forward a tax credit proposal that can help stimulate our economy. We need to act now. Two months ago, in a bipartisan action in this body, we passed the economic stimulus package. We did it quickly. That is what we needed to do. Well, we need to show the same commitment on the housing crisis. We need to work in a bipartisan manner to help middle-class families save their homes and to help our economy.

I urge my colleagues to take up quickly this legislation. Let's consider the amendments. Let's move forward. There are too many homeowners in our States who are depending upon us to act quickly for us to delay.

I yield the floor.