WORDS MATTER -- (Senate - September 18, 2008)
Mr. ISAKSON. Mr. President, I want to open my remarks by simply stating that words matter. And to the distinguished Senator from Ohio, for whom I have the greatest of respect, I gained a lot of concern yesterday when I heard the words used in so many speeches given on the floor, especially at this disconcerting time, when the American public is so worried about our marketplace and our financial markets.
As Members of the Senate, I think it is very important we be conscientious, that we be positive and prudent in every word we use. Words matter. We have seen a savings and loan in California fail because words got out that there might be a failure and it became a self-fulfilling prophecy. We have seen things happen in the economy in large measure that were reactions to words that were said which should not have been said at all.
In making that statement, I am going to make a speech about what is happening right now on Wall Street and about our role in the Senate, and I will remember the admonition I gave that words matter. The words I want to use are words that I think are in the best interests of the people of the United States, but more importantly of this institution.
We can't play this historical blame game and set a precedent for the cause of what is going on in the financial markets today. We have to recognize that we equally, as Republicans and Democrats, have a responsibility to work together and to recognize the things we have done that have contributed to the problem. And I will give some examples.
One of the problems with the American economy today is the deficit of $407 billion, which we will realize at the end of this month when the fiscal year ends. Yes, part of that deficit is because we have been at war. And had we not gone to war, we might be in the throes of terrorism. But that is another debate. But a lot of that deficit is about Federal spending. A lot is about the budget process. As Members of the Senate, we have yet to take up a single appropriations bill on the floor of the Senate, yet in less than 2 weeks, this fiscal year will end. I think it is our responsibility at a time of deficit, at a time of spending difficulties to get that debate to the floor of the Senate and for all of us, Republicans and Democrats alike, to recognize we have a role in what that deficit is.
Secondly, the concerns regarding the financial markets now started back in May and June, when oil prices went to $147 a barrel. We are within a week, almost a week, of adjourning, yet it is patently clear there will be no resolution by Congress to any way forward in terms of domestic exploration or dealing with all the other energy issues out there. Those are two things that, had we been doing them this month and in the months previous, might have helped to ameliorate at least part of the concerns on Wall Street.
So I think all of us, Republicans and Democrats alike, must understand that we share part of the blame as an institution, and not just as one political party blaming the other. It is time for cool heads and prudent minds in the Congress to prevail. Americans are concerned. We should not play politics with their future. By way of example, the previous speaker brought back the entitlement debate of 2005 and the challenge of privatization. We must remember today that the debate we had was about one of the problems that Congress has contributed to, and that is a Social Security system from which we have borrowed all of its trust fund and spent all of its money. Because of the way we have managed the fiscal house of the United States, we will dissipate the trust fund in its entirety by 2043. That is something we ought to be addressing. We can have differences on the way to address it, but to try to stigmatize a sitting President or a future candidate when they were trying to address a problem that we all know exists is not the way to deal with these financial difficulties.
On the question of regulation, I am not so sure it is a question at all of needing more regulation as much as it is a question of using the regulatory powers that we now have to address some of these problems. I will give a couple of examples.
On Wall Street, within the Securities and Exchange Commission, there used to be an uptick rule. And the uptick rule basically was that as the market was going up, you could play the market game with speculation. But if it was going down, you couldn't short sell it. What is happening on Wall Street now is there are a lot of people selling short, and they are selling short to the detriment of the American people but to the benefit of the individuals themselves. That is part of the problem. We should ask the Securities and Exchange Commission to look deeply into regulations that worked in the past and see if they can't bring back the uptick rule to stop what has been an abuse in terms of short selling.
Secondly, I have said on the floor of the Senate three previous times--and I will repeat it today because I believe it strongly, and because I think it is more true now than ever before--a significant contributor to the problems we are facing today is an absence of transparency and accountability on behalf of investment banking. The subprime securities that were created on Wall Street, and were rated investment grade by Moodys and Standard & Poor's, are the fundamental foundation of these financial collapses not just in the United States but around the world because those securities were bought as capital basis for many of the lending and financial institutions.
As we look to the future, and the recovery which we will see--because America always recovers--it is important that we never allow something like the securitization of high-risk paper and rating as investment grade to ever happen again without some level of transparency and an absolute level of accountability on behalf of the institution.
I want to tell a brief story, only for the purpose of letting people know what a small world we live in and how our words matter and the consequences to our actions. I traveled to Kazakhstan in August with the majority leader, Senator Reid. It was an educational trip of immense benefit to me, and I think of immense benefit to the country, in terms of what we did. Kazakhstan is a country of 16 million people with the largest find of oil in all of Asia. It is a wealthy country that built its capital city of Astana from scratch 10 years ago.
When we landed in Astana and left in a vehicle provided by the embassy and drove into town, there were landscaped gardens, beautiful buildings, gold-domed mosques--obviously, the best of everything because of the wealth they had.
But I noticed something interesting. I counted 17 buildings, midrise and high-rise, partially completed, cranes up, with nobody working. When we got to the embassy I asked our ambassador when he said, Are there any questions: Is there a holiday?
He said: No. Why do you ask?
I said: Nobody is working on all these unfinished buildings. Why is that?
He said: The U.S. subprime mortgage crisis.
I said: I don't understand.
He said: The bank of Kazakhstan bought a bunch of the subprime securities in the United States, and when Merrill Lynch wrote their portfolio down to 22 cents on the dollar, the bank of Kazakhstan did the same thing. And when they did, they had to stop funding construction and stop funding mortgages.
If we do not think we live in a small world, if we don't understand the consequences of our words and the policies that are initiated in terms of our financial products, we have another thought coming.
Last, I compliment the Congress and use as an example the housing bill, where we have the power to address and strengthen our economy. In July, this Senate passed, by a vote of what I remember to be 83 to 14--it may have been slightly different--a bipartisan housing bill that did a number of things: It modernized FHA, raised loan limits, provided a refinance mechanism for subprime loans rather than foreclosure, but also answered the question of Freddie and Fannie and provided an opportunity for the Secretary of the Treasury and the Federal Reserve to address Freddie Mac and Fannie Mae should those institutions get in trouble.
While we were gone in August they got into trouble. They got in trouble in part because of their own doing but in trouble in part also because of a lack of confidence. If we had not passed that bill that allowed Secretary Paulson to come in and stabilize Freddie and Fannie, the source of mortgage money for the people of the United States of America, the problems we are experiencing now are nothing compared to what would have happened.
Our actions matter and our words matter. We should be careful to understand that in a time of uncertainty in our financial markets and of concern by all Americans, rich and poor, Republican and Democrat, our words matter. We should work diligently to give people confidence in our system of government and our financial system, provide the intervention and the appropriate aid while necessary but not overregulate or stigmatize a system that has worked for the better part of two and a quarter centuries.
I love this country, and I appreciate the people I represent. I suffer as they do today with the uncertainties in the financial markets. I hope all of us will commit ourselves to do those things within our grasp to see to it that we have a sounder economy, a sounder dollar, and a sounder America. Let's do our appropriations. Let's have an energy policy that works. Let's look at those positive things that have happened in the past on Wall Street that can bring back a level of accountability and transparency that are absolutely essential in the United States of America.
I yield the remainder of my time.