SENATOR COLEMAN FLOOR SPEECH ON THE FINANCIAL CRISIS
September 26th, 2008
AS PREPARED
Mr. President, a man well-acquainted with crisis, Abraham Lincoln said this, “I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts.”
I rise to affirm his confidence and lay out some of the basic facts and principles as we face this unprecedented financial crisis.
Fact number one: we live in a world which is very different from the realities of a decade ago. The financial world is interconnected and reacts at the speed of digital transactions. There are no borders to hide behind or “cooling off” periods in which to contemplate at our leisure. Problems arise quickly and solutions must be found quickly, yet responsibly.
Fact number two: this crisis touches each and every American. As the recent market events have proven, the crisis has entered a new and critically dangerous phase in which our entire financial system and economy hang in the balance. The crisis we face today is as serious as any I’ve faced in my 32 years of public service.
Money market accounts, retirement savings, college and small business loans, and home mortgages are all at stake. This isn’t about Wall Street but about Main Street and it’s about every street American families live on.
Fact number three: this crisis, not unlike energy or health care, is too big for one party to solve. We must work together, Democrats and Republicans, House and Senate, Administration and Congress. Outright greed and mismanagement, coupled with an outdated financial regulatory system, have brought us to this point. People were sold loans they could not afford, yet the sellers of these mortgages simply packaged them into securities and sold them to investors throughout the country. Now it seems these securities aren’t worth what was paid for them, which has not only put companies in dire straights but our entire financial system as well. So Mr. President, our obligation now, as Americans, not as Democrats or Republicans, is to come together and do the right thing, and to do it now.
And fact number four: the American people are watching. Already I have heard from over 11,000 Minnesotans who have called or written in to my office, to express their deep concerns over what is happening and what is being proposed. Last week, Secretary Paulson proposed a $700 billion plan to rescue our financial system. And people were right to be concerned about the plan as initially presented. That it lacked transparency and oversight. That it amounted to a bailout of Wall Street. While I share the Administration’s sense of urgency to act, I share the concerns of Minnesotans from all across the state. I want to assure the folks back home that I will not move forward on a plan unless it puts taxpayers first and holds Wall Street accountable.
I will not support a plan that lacks effective oversight and transparency – we must not give the Treasury Department a blank check.
I will not support a plan that fails to hold Wall Street executives accountable for the terrible mistakes they made that got us into this mess. Any institution that is thrown a life preserver must do so at a cost. Its executives must not receive bonuses or golden parachutes. Further, we must look into whether individuals enriched themselves on mortgage-related assets while fully knowing of their dangers. In the long run, shareholders must have a greater say about executive pay.
I will not support a plan that fails to get taxpayers the best value for their dollar. If we ultimately go forward with Treasury’s plan, we must ensure that the distressed assets are bought at prices that are fair to the taxpayer. And any returns we get must be used for debt reduction, not to expand government.
Over the longer term, we cannot go back to business as usual. We need to aggressively undertake fundamental financial regulatory reform. First and foremost, any reform must include stronger regulatory oversight over the entire financial system.
Our current system, some of which goes back to the Civil War era, is like trying to fight a building fire with a bucket brigade. It's marked by ineffective coordination among regulators and redundant oversight in some areas and lack of oversight in others. Greater transparency and accountability must be factored in. We must ensure that market participants have a direct stake in their own actions so that taxpayers are not left holding the bag for their actions.
At the same time, we must put more “cops on the beat” to better detect possible threats to the financial system, such as conflicts of interest that could undermine the integrity of the system. And finally, we must ensure greater regulatory flexibility in order to keep up with market innovations. Regulators should have the ability to intervene before a crisis reaches critical mass.
What happens after the opening bell each day affects the folks in Hibbing just as much as the people in New York City. Wall Street executives must shoulder a great deal of responsibility for this crisis. If taxpayers are being asked to sacrifice, Wall Street too must share in the cost of rescuing the financial system.
Hard working Americans deserve to have the peace of mind that their stake in the financial system is appropriately safeguarded and that they are not put on the hook for the mistakes of corporations.
Times are tough. Folks are having a hard enough time dealing with high energy costs and making ends meet. In the short term, we need to act for the sake of our economy. In the long term, we need major reform that protects the American taxpayer and works for our economy. Maintaining a viable and robust financial system is critical to each and every American’s future.
The American people throughout our history have mastered every crisis that has threatened our national or economic security. We in the Congress, working closely with the Administration, must protect their interests by working quickly and in a bipartisan way to help bring about a better, safer and sounder tomorrow.
From skyrocketing gas and food prices to the weakening job market to surging foreclosures and falling home prices, Minnesotans from all across the state are feeling the terrible effects of the current economic downturn. Throughout my travels and visits with Minnesotans, I have seen and heard firsthand the troubles many Minnesotans are having making ends meet, not to mention the deep concerns they have about their financial futures.
In an effort to provide a measure of relief to struggling Americans and encourage economic growth, Congress and the President came together earlier this year on an economic stimulus package providing rebates to Americans – including to 20 million seniors and 250,000 disabled veterans – as well as critical pro-growth incentives to get the economy moving again. Although the stimulus package provides much-needed short-term help for Minnesotans, the rebate checks are not the silver bullet to all of the current challenges facing Minnesotans and our economy. Given the current state of the economy, I believe that additional stimulus measures such as extending unemployment benefits are important to helping out families who have been hit hard by the economic downturn.
Beyond the stimulus package, it is absolutely critical to our economy’s short-term health that we responsibly address the subprime-led foreclosure crisis that is hurting families, communities and our economy at-large. As a former Mayor, I strongly believe that home ownership brings about almost every social good we can think of. With foreclosures continuing to increase in the state, the longer we wait to take action, the greater the collateral damage will be on our economy, communities and families. While I strongly oppose any bailouts of lenders and speculators, I believe it is in our economic interest to prevent unnecessary foreclosures from occurring. As part of my efforts to address the housing crisis, I have introduced the Home Ownership Mortgage Emergency Act (HOME) Act to help folks who are trying on their own to keep their homes. This important piece of legislation would give homeowners who are 60 days late in their mortgage payments the option of withdrawing up to $100,000 penalty and tax-free from their retirement accounts so long as they pay back such funds within three years. At the end of the day, I do not believe that we should be penalizing homeowners who are tying to keep a roof over their heads. I have also introduced the Community Foreclosure Assistance Act of 2007 with Senator Patrick Leahy (D-VT) to provide $1 billion in emergency Community Development Block Grant funding for communities to respond to the housing crisis. Communities could use the funding for services such as preventing neighborhood blight due to abandoned or foreclosed properties, providing relocation assistance for renters who have lost their homes due to foreclosure, and supporting mortgage counseling for distressed homeowners.
Also hurting our economy these days is the soaring increase in gas prices. The impact on the economy and family budgets is painfully clear. Gas money doesn’t go as far as it used to, and more money at the pump means less money for food, clothes, tuition and bills. Unfortunately, there is no single one solution that will immediately lower gas prices but there are steps we can take that will not only lessen the financial burden on Minnesota’s families but also our dangerous dependence on foreign oil. First, I believe we need to offer short-term relief to families being strained, which is why I would support temporarily suspending the 18.4-cents-per-gallon federal gas tax for the summer driving season. More importantly, we need real, long-term solutions to end our addiction to foreign oil. Most recently, we passed an energy bill that will dramatically increase our use of renewable fuels by increasing the current requirement of 7.5 billion gallons per year to 36 billion gallons by 2022. Minnesota is already leading the way in the production of renewable fuels, boasting eighteen ethanol plants with the capacity to generate 730 million gallons of ethanol. Additionally, the 2008 Farm Bill, which is now law, includes another priority of mine to help lessen our dependence on foreign oil: a sugar ethanol program. This additional option for ethanol will help diversify our reliance on corn ethanol and provide another market for thousands of Minnesota farmers.
Ensuring our nation’s economic well-being is also about keeping our workforce healthy by ensuring they have access to affordable health insurance and the flexibility to keep their coverage from job-to-job. This has been a major concern I have heard from Minnesota’s small businesses owners throughout my travels across the state. As our nation’s chief job provider, small businesses make up the backbone of our economy and in these challenging times we need to provide them with the support they need to provide affordable health care for their hard-working employees. With that in mind, I introduced the Small Business Health Options Program (SHOP) Act, which would provide small businesses with this much needed relief through targeted tax credits, expanded risk pools, and lower and more predictable premiums for their employees. Too many of our entrepreneurs are being forced into making the impossible decision between putting money into growing their business or providing their employees with healthcare and this bill will help relieve that anxiety.
For the longer-term, one of the most important things we can do for our economy is to keep taxes low for hard-working families and small businesses. The very last thing families need to worry about is whether their tax bill will be going up. And with our economic future tied to the growth of small businesses, it is critical that we do not cripple this country’s great entrepreneurial spirit with higher taxes.
But securing Minnesotans’ longer term economic well-being is more than just about keeping taxes low.
It is ensuring that hardworking average Minnesotan can make ends meet by raising the minimum wage.
It is fighting for programs such as the Community Development Block Grant (CDBG) program that make a positive difference in Minnesota communities.
It is addressing globalization’s effect on jobs. To that end, I am a part of a bipartisan effort to ensure that workers affected by trade receive assistance are able to transition to another job. I have long supported the Trade Adjustment Assistance program, which allows the U.S. to maintain the most highly trained, innovative, and capable workforce in the entire world and provide security for American workers. I am a cosponsor of the Trade and Globalization Adjustment Assistance Act of 2007 (S. 1848), which would ensure that workers who lose their job because of trade can receive occupational training which would allow them to rejoin the workforce in better, higher-paying jobs.
It is also ensuring that we are fiscally responsible with Minnesotan’s hard-earned tax dollars by balancing the budget and eliminating waste fraud and abuse. Like many Minnesotans, I have serious concerns about the growth in federal spending and the reemergence of higher deficits after several years of falling deficits. Working families across Minnesota make tough choices to live within their budgets and the federal government should be no different. To that end I have used my position as chair and now as ranking member of the Permanent Subcommittee on Investigations to focus on wasteful spending in the government, and have so far identified over $14 billion in potential taxpayer savings as a result of these investigations. I also strongly support giving line-item veto authority to the President, as well as efforts to balance the federal budget.