CONSOLIDATED SECURITY, DISASTER ASSISTANCE, AND CONTINUING APPROPRIATIONS ACT, 2009 -- (Senate - September 27, 2008)
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Mr. SPECTER. Madam President, I have sought recognition to comment briefly on a letter which I am sending today to the executive officials, to Secretary Paulson and Chairman Bernanke, and to the legislators who are involved in the negotiations on the economic proposal, with the suggestion that extensive consideration be given to loans instead of purchasing the toxic securities.
I think the model of AIG would be very appropriate to use as opposed to the purchase of those toxic securities. It will be very difficult to ascertain what is fair value for those securities when there is no market. But the AIG example was a good one, with the Government securing a preferred position, substantial interest rate, and excellent opportunities to get the money paid back.
I also urge the negotiators to give consideration to the proposals by the House Republicans on the so-called insurance fund. I believe all the options ought to be weighed when we are dealing with a matter of this magnitude. When we deviate from the regular legislative course, we are in a very difficult area.
As to the proposal of the $700 billion, I believe we have not yet had a sufficiently specific description on that figure. It is a gigantic figure, and the public response, understandably, is why and what are the causes for the problem. That is my view, too, as to why the figure has been advanced. There has been no specification as to why we need that figure.
On the proposals to advance part of it initially, I think that is a good idea. I don't know that the figure has to be as much as $250 billion. There ought to be justification for why that figure is selected. And then the proposal for an additional $100 million, with the request of the President, I think is sound, to have a procedure for staged installments. But even as to the President's request, there ought to be some standards specified.
Then, as to the balance of the $350 billion, or whatever sum that is, we have to be careful that we do not violate the holding of the U.S. Supreme Court in INS v. Chadha, where there was an effort to have legislative refusal of certain executive action by the Attorney General, the Supreme Court said where there is deviation, you have to follow the regular legislative process--passage by both Houses and approved by the President. So we are in a very complex legal area, which I urge the negotiators to study carefully before coming to any judgment. When regular order is not followed, we are on thin ice.
The executive branch negotiators, Secretary Paulson and Chairman Bernanke, would not have any reason to know the intricacies of the legislative process, but they have served our country very well for more than 200 years. As we all know, it starts with a bill, a bill we can read. Well, we still don't have a bill, and we are talking about passage within the next couple days. After you get a bill, you have hearings. There have been some hearings, but not in the context of a specific bill. Then the proponents of the legislation are asked to testify, and there are people opposed to it or people with other ideas who testify before the relevant committee--which would be the Banking Committee in this situation. They are subject to examination and cross-examination and pushed as to exactly what they have in mind.
Then, after the hearing, or hearings, are completed, there is committee action and what we call a markup, where the committee goes over the proposed legislation line by line and decides whether there should be changes and then votes on the changes. The committee then files a report. It is usually thick and complicated. It comes before the Senate and we debate it and we offer amendments.
The same thing happens in the House. Finally, when each House has acted and there is passage of the bill proposed, it goes to conference, where it is further refined and then is presented to the President. The President takes an additional look at it to see if he thinks it ought to be approved or if it ought to be rejected.
Well, that is a very lengthy process, and I think we ought to be very careful when we deviate from that process so we know what we are doing. Perhaps there is not time--well, there isn't time to go through the exhaustive process, which would take a considerable period of time--but when we deviate from that process, we ought to be careful that we know what we are doing and not set arbitrary time limits which are very brief.
I have taken a look at the Dow for the intervening period between Friday, September 19, and Friday September 26--yesterday. When the proposals were made over the last weekend, there was an urging of Congress to act before the 26th, which was our scheduled date for adjournment. Then we thought: Well, maybe Saturday or Sunday or maybe Monday morning. Next week we have the Jewish holidays, and Yom Kippur in the week that follows. But on the Dow, which closed at 11,388 on Friday, September 19, it declined 2.15 percent over a week to close at 11,143 on September 26. By measuring from September 19, on September 22 it was down 3.27 percent; on the 23rd, it was down 1.47 percent; on the 24th, it was down .27 percent; on the 25th, it was up 1.82 percent; and on the 26th, it was up 1.1 percent. So the net figure was down 2.15 percent.
We would rather see the Dow go up, but that is not a precipitant decline. It is my sense that the market--Wall Street, that entity which calibrates the market--would understand it takes some additional time. As long as they have seen that Congress is working as promptly as practicable, then I do believe there would be a sufficient opportunity without having a precipitous slide. Obviously, we can watch it on a day-by-day basis, and we ought to move as promptly as we can, but I do believe it is not a matter which has to be done yesterday or tomorrow. We have to do it promptly and show that we acknowledge the problem.
There is a consensus, with very few dissenters, that something needs to be done and something very substantial.
Our actions need to be very thoughtful and very careful. We also need to assure the American people that our actions are thoughtful. Senator Casey and I had an open forum on Pennsylvania Cable Network on Tuesday, where we had call-ins, and the temperature out there is 212 degrees Fahrenheit or higher. It is boiling. We have a responsibility in the Congress to make judgments and we listen to our constituents but, in a representative democracy, as Edmund Burke said several hundred years ago, it is our responsibility to exercise our best judgment.
The intervening days have given us an opportunity to see the issue percolate in the country, where people consider it, where there are talk shows and radio and television and op-ed pieces, and we get to digest it and sleep on it for a few days, which is a very healthy thing.
I heard a suggestion from the former Speaker of the House, Newt Gingrich, that whatever the proposal is, it ought to be on the Internet for 24 hours. Maybe that is not quite long enough, but it is projected that in 24 hours you would have thousands of responses, or perhaps millions of responses the way the Internet is watched. That would put us on guard that something has not been slipped in. These bills turn out to be very voluminous. It started off as a 3-page memorandum; now it is more than 100 pages. America could provide us with some good ideas so that we are alerted to something being slipped in that we can't rectify after the fact, or alert us to some unintended consequences.
In conclusion, it is my hope the Congress will act in a way which will be effective, after we have given the entire matter appropriate consideration and consider views beyond those expressed by Secretary Paulson and Chairman Bernanke. There has been some significant movement, movement toward oversight, not allowing the people who have gotten us into this mess to profit--the golden parachutes, et cetera. But we are on the road to acting. I think we have to do it in an appropriate timeframe.
I ask unanimous consent that the letter I am sending to the executive branch, those involved in the negotiations, be printed in the Record; in addition, a letter which I sent to Secretary Paulson and Chairman Bernanke dated September 23 be included in the Record; and a letter I sent to Majority Leader Reid and Republican Leader McConnell, dated September 21, be printed in the Record.
There being no objection, the material was ordered to be printed in the RECORD as follows:
September 27, 2008.
Secretary of the Treasury HENRY PAULSON,
Chairman of the Federal Reserve BEN BERNANKE,
Speaker of the House NANCY PELOSI,
House Republican Leader JOHN BOEHNER,
Senate Majority Leader HARRY REID,
Senate Republican Leader MITCH MCCONNELL,
Chairman CHRISTOPHER DODD,
Ranking Member RICHARD SHELBY,
Chairman KENT CONRAD,
Ranking Member JUDD GREGG,
Chairman BARNEY FRANK,
Ranking Member SPENCER BACHUS,
Senator BOB BENNETT.
GENTLEMEN AND SPEAKER PELOSI: I write with some suggestions on the prospective legislation to deal with the economic crisis and to urge you to take the time necessary to give appropriate consideration to it without rushing to judgment. In the past week, I, like many members, have been reaching out to economists and other experts and have had suggestions coming in from economists and other experts, as well as listening to the suggestions made by other members of Congress.
I urge you to consider lending federal funds with senior security as opposed to having the federal government buy toxic securities. The AIG model could be used. The obvious difficulty for the federal government to go into the market to buy toxic securities is the difficulty in assessing realistic value in the absence of a market. With a lending approach, the government is likely to be able to have lesser expenditures with a better chance of repayment. I further urge a real consideration to the proposals made by House Republicans for an industry-financed insurance program for mortgages which are in default.
As to the overall figure of $700 billion, Congress should have a detailed explanation as to how at which that figure was arrived and the necessity for such a large sum. I favor the proposal to have the federal funds advanced in installments. Consideration should be given to having the first installment less than the $250 billion as currently proposed. On additional installments, it is a good idea to require a presidential certification with the legislation specifying standards which the President should use.
On the stipulation to give Congress to the option to object to the final $350 billion, care must be exercised not run afoul of the Supreme Court decision in INS v. Chadha which requires following regular legislative process with passage by both houses and presi action and perhaps inferentially legislative conditions.
In a letter dated September 21, 2008 I wrote to Majority McConnell urging that we not rush to judgment. Many have argued that the situation is so dire that there must be immediate Congressional action in order to avoid a cataclysmic result in the market. My view, as expressed in my letter to Secretary Paulson and Chairman Bernanke on September 23, 2008, is practicable to enact a serious, substantial program since there is a solid consensus that some major government aid must be and will be forthcoming.
On September 19, 2008, there were predictions of dire consequences if legislation was not passed by September 26th. The Dow declined by 2.15% from September 19th from 11,388.44 to September 26th to 11,143.13. During this time, there was no major deviation from September 19th: 9/22--down 3.27%; 9/23--down 1.47%; 9/24--down .27%; 9/25--up 1.82%; 9/26--up 1.1%. It is noteworthy that the market ended on a positive note at the end of e week, even though Congress had not passed legislation.
I urge time for due deliberation because of the risks when we do not follow regular order. For those who are not acquainted with the details of the legislative process, there should be a focus on the institutions of Congress which have served this nation so well for more than 200 years. The legislative process begins, as we all know, with the introduction of a bill. As yet, we do not have in writing the traditional starting point, a bill which we can study and analyze. Next there are hearings on the bill with testimony from its proponents. Then the committee of jurisdiction listens to opponents or those with other ideas and all the witnesses are subject to questioning, really cross examination, by members of the committee.
Then the committee sits in what is called a markup going over the proposed legislation line by line with votes on suggested changes. A committee report is then filed and the measure is called for floor action in each house with debate and opportunity for amendments. The bills passed by each house are then subjected to a conference where further refinement is made before the legislation is presented to the president.
When we depart from regular order, we are on very risky ground. I am not suggesting that this full time-consuming process legislative be followed; but we should take great care in the consideration of this legislation to compensate as much as possible for the departure from regular order.
I pass on, for your consideration, an idea proposed by former Speaker of the House Newt Gingrich who suggests that the final proposal be put on the internet for 24 hours. Speaker Gingrich suggests, and I concur, that such a proposal would be read by thousands if not millions of people who could then inform the Congress of provisions which are so often slipped into legislation unbeknownst to the members and further give us appraisals of unintended consequences.
As already noted, I wrote to Secretary Paulson and Chairman Bernanke by letter dated September 23, 2008 (copies enclosed for the additional addressees), not yet answered, which raises questions which I would like to have responded to before I am called upon to vote.
We have a duty to the American people to act responsibly to address the problem, protect the taxpayers, and take every measure to ensure that this does not happen again.
Thank you for your consideration of these suggestions.
COMMITTEE ON THE JUDICIARY,
Washington, DC, September 23, 2008.
HENRY M. PAULSON, Jr.,
Secretary of the Treasury, Department of the Treasury, Washington, DC.
BEN S. BERNANKE,
Chairman of the Board of Governors, Federal Reserve System, Washington, DC.
DEAR SECRETARY PAULSON AND CHAIRMAN BERNANKE: I write to you because I am in the process of deciding how to vote on legislation to deal with the economic crisis. I agree that there is need for federal action; but I am concerned that we not rush to judgment without giving sufficient attention to the many complex issues which are involved.
At the outset, the, or a, precipitating cause was the fact that hundreds of thousands of people, perhaps as many as five million, faced an inability to make their mortgage payments and eviction from their homes. These mortgages were ``securitized,'' divided up and sold in packages to many people or entities. As a result, it was not always clear who had the authority to adjust these mortgages, and when it was clear, adjustments were not made quickly enough. Last November, Senator Durbin introduced S. 2136 and I introduced S. 2133 to give the bankruptcy courts authority to revise homeowners' financial obligations. Keeping people in their homes should be a, if not the, fundamental object of congressional action.
After assisting homeowners, a decision should then be made as to what additional federal aid is necessary to unclog the lending pipelines and restore confidence and stabilize the economy. I am very skeptical about granting authority to spend $700 billion on other aid without standards as to who should get the funds and a requirement that there be demonstrated necessity that such additional expenditures are indispensable to stabilizing the economy.
Then there is the question of oversight and regulation. Obviously, there must be oversight and some regulation to prevent a recurrence. As I see it, the regulation must be calibrated to those objectives and not go too far. Vigorous enforcement of our laws to prevent market manipulation, as well as added transparency, should be a priority.
I hear tremendous resentment from my constituents on this matter. In a free enterprise society, entrepreneurs may undertake whatever risks they choose to secure big profits, but when there are losses, they should not turn to the government for a bailout which puts the burden on the taxpayers. The firms/corporations and their executives who created the crisis should not profit from a federal bailout. If it is not already a part of your proposal, you should consider structuring the funding in a way that gives the Government a preferred creditor position and a share in ultimate profits, rather than simply buying up debt which has declined in value. And any aid should be conditioned on the elimination of golden parachutes or large compensation packages.
Also, I am concerned about reports that foreign corporations, with a United States affiliate, will participate in a federal bailout. If foreign corporations are to get funding, then foreign governments ought to bear their fair share.
I know there is concern that Congress must act promptly or the economy may deteriorate further. It seems to me that Wall Street should and would understand that legislation on this complex matter requires some time. If it is seen that Congress is moving as swiftly as practicable, that ought to stem the tide. But we can only do it as fast as realistic to work through the legislative proposals and resolve these intricate issues.
These are issues which come to my mind at the moment and I am sure there will be more as the hearings progress and the debate occurs. I would appreciate your responses as promptly as possible.
Washington, DC, September 21, 2008.
Senator HARRY REID,
Majority Leader, U.S. Senate,
Senator MITCH MCCONNELL,
Minority Leader, U.S. Senate,
DEAR HARRY AND MITCH: As you project the Senate's schedule, I urge that we not rush to judgment and take whatever time is necessary on any proposed legislation to deal with the nation's economic problems. The public, our constituents, have a great deal of skepticism, which I share, about legislation which will let Wall Street ``off the hook'' and pay insufficient attention to Main Street, middle class Americans.
It is important to focus the legislation on the hundreds of thousands of homeowners who are at risk of losing their residences to foreclosure.
In deciding what additional powers to give to the federal regulators, I believe we should give careful consideration to not extending those powers beyond the current crisis and steps to prevent a recurrence.
I have read reports that some Wall Street firms, whose conduct has created the crisis, will benefit from a congressional legislative fix. We should do our utmost to see to it that those responsible for the crisis bear the maximum financial burden on any bailout in order to minimize the taxpayers' exposure.
There are reports that the bailout might be extended to foreign firms with United States affiliates. In my view, the legislation must be carefully tailored for United States' interests and if foreign firms, even if United States affiliates are to be involved, then consideration should given to appropriate contributions from those foreign governments.
I realize there is considerable pressure for the Congress to adjourn by the end of next week, but I think we must take the necessary time to conduct hearings, analyze the Administration's proposed legislation, and demonstrate to the American people that any response is thoughtful, thoroughly considered and appropriate.
Mr. SPECTER. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. DeMINT. Madam President, I ask unanimous consent the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered. The Senator is recognized for 15 minutes.
Mr. DeMINT. Madam President, as we try to end the session today, I think I am looking for some silver lining in all we are doing here, with the panic I believe we here in Congress have created in our markets and credit industry and passing this conglomeration of bills without adequate debate. There is one silver lining for me that I think we need to mention to the American people. A number of families are suffering for a lot of reasons, but one of the greatest is the high cost of gasoline in this country--and now even shortages. But because of the anger of the American people, because of the e-mails that have come in, this continuing resolution we will be voting on today includes a huge victory for the American people because the moratorium on oil and gas leasing on most of the Outer Continental Shelf and on oil shale leasing on Federal lands will expire.
Many thought this was a law that we couldn't change, but the fact is this was a year-to-year rider on spending bills that had to be included every year or it would expire. But because Americans got engaged in this whole idea of making October 1 Energy Freedom Day, our Democratic colleagues have backed down and have not included an extension of this moratorium in this year's bill.
So at midnight on October 1, 2008, because it is a start of a new fiscal year, the current prohibitions on oil and gas leasing on most of the Outer Continental Shelf and on oil shale leasing on Federal lands will expire. That is something to celebrate here in America.
Estimates from the Minerals Management Service and the Bureau of Land Management indicate there are upwards of 18 billion barrels of recoverable crude oil on the currently off-limit areas of the Outer Continental Shelf, as well as more than 55 trillion cubic feet of natural gas.
Estimates of American oil shale vary widely but range from the hundreds of billions of barrels to trillions of barrels of oil. Many believe we have more oil in oil shale than Saudi Arabia has.
Taking advantage of America's resources will increase the worldwide supply of petroleum and bring down prices at the pump. The very access to these resources will send powerful price reduction signals to the futures market, providing immediate price relief, even if the actual leasing does not commence for months.
Everyone is familiar with the crisis on Wall Street. The coverage dominates every media outlet. But we also have a crisis on Main Street, where people are paying outrageously high prices for gasoline and having to wait in long lines to fill up their cars.
Here are only a few headlines we are starting to get from newspapers. The Associated Press headline: ``The Southeast Shortage Squeezes Small Retailers and One Gas Station Owner Says It's A Panic.''
CBS News reported in their headline in North Carolina: ``Gas Shortage Leaves People Panicked.''
Washington Post, ``Gas Shortage in the South Creates Panic and Long Lines.''
It goes on and on. This is very real. This is not something we are manufacturing and it is a direct result of bad policy here in Congress that has restricted the development of our own energy here in America.
Unfortunately, we are still having to wait for a number of Members of Congress to allow this to proceed. It was announced earlier this week that the Democrats had given up on their efforts to block energy exploration, and America celebrated. But then not more than 24 hours later we learned the majority leader here was making plans to rob Americans of this victory by extending the ban on oil shale. Fortunately, that effort was defeated yesterday. Now media reports indicate that Democrats also have a plan to delay any offshore drilling using environmental lawsuits until after the November elections, when the Democrats can reinstate the ban on deep sea energy exploration.
In fact, House Majority Leader Hoyer told cnnnews.com on Wednesday that restoring the ban on new offshore oil drilling leases will be a top priority for discussion next year. If the Democrats retain control of Congress, he said, I am sure it will be a top priority for discussion next year.
This is outrageous. The American people will not tolerate it. That is why I have written a bill that is called the Drill Now Act, which will guarantee access to offshore and oil shale reserves. It will expedite the leasing and production of these energy supplies and provide States with a 50-50 share of the revenues with the Federal Government and prevent frivolous lawsuits from delaying the will of the American people. This is very simple and it is what Americans want. I hope my colleagues on the other side of the aisle will set aside their desire to punish Americans for buying gas and side with the American people.
Yesterday I asked unanimous consent that we bring this bill up and pass it, but it was objected to by the majority leader. We will continue this effort, to try to pass this bill that will expedite energy production in our country.
I wish to mention a few things we will be voting on in an hour because this is, frankly, an embarrassment in a time we are running around here like Chicken Little saying `` the sky is falling.'' The credit markets are seizing up--this has been a self-fulfilling prophecy. We have created a crisis in our country. But while we are talking about a financial crisis and an economic crisis all around America and the world, it is business as usual here in the Senate. When the Democrats took control 2 years ago, they promised we would end this wasteful spending and cut earmarks dramatically, but the continuing resolution we are voting on today goes right back to where we were, and worse. This bill includes $16.1 billion in earmarks--that is billion. There are over 2,620 earmarks in this bill. For all the appropriations bills last year, there were less than that, and this only includes three. There is more porkbarrel spending today than we did all of last year, at a time when we are saying the country is running out of money.
At this rate, for these three bills, the 2009 fiscal year budgets will see more earmarks than we have ever seen in history. Most Americans are beginning to understand how this wastes their money and corrupts the process. Let me mention a few of the earmarks that are in this bill.
There is $44 million for the National Drug Intelligence Center in John Murtha's district, a project the Defense Department has said repeatedly it does not want or need. But every year it comes back because it is in a Congressman's district.
There is $1.75 million for a heritage center that Speaker Nancy Pelosi put in for a museum that is negligible--it has no value to the men and women in uniform.
There is $1.28 million for a Navy museum included by Congressman Dicks. The military doesn't need another museum, they need the tools to fight the war. If we had billions of extra money sitting around, maybe we could talk about these extravagances, but when we are going into more and more debt, hundreds of billions of dollars a year, it makes absolutely no sense to be including over 2,000 earmarks, wasteful spending, in a bill that includes serious military needs.
Americans are angry. They are hearing we have to bail out Wall Street. They are angry at wasteful spending and they have every right to be. When the Democrats took control, the Congressional Budget Office projected an $800 billion surplus between 2008 and 2017. But after 2 years of Democratic control, that same budget office now projects a $2.6 trillion deficit over the same period. That is $3.4 trillion in deterioration of our budget situation. As I said, even worse; wasteful spending and secret earmarks are back in full force.
Americans have seen, over the last couple of years, this Congress do things and attempt to do things that they know are bad for our country. They saw a massive amnesty bill for illegal immigrants come through, but we were able to stop it because of the anger of the American people. They have seen this Congress for years stop the development of our own resources, our own energy, and now prices are through the roof and shortages are occurring.
But the anger of the American people is beginning to get the attention of Congress. We have stopped this moratorium, and we are making progress. Now we are talking about this massive bailout of Wall Street that was caused by bad policy here in Congress that we still refuse to change.
While this bailout may be necessary for reasons we have caused here in Congress, we need to do it in a way that protects the taxpayer and includes some free market principles. We need to do some things that actually solve the problems that caused what we are dealing with today. We need to do some things that support some free market principles and guarantee that the Government is not going to be a permanent player in our financial markets.
Americans are angry. I hope they will stay angry because the more they call and e-mail, the more we can get things done here that are right for American people. We stopped their amnesty bill, we have stopped the moratorium on drilling, and we have gotten their attention on this bailout. Now they are listening to some of the better solutions that have been brought up. So I thank the American people for being engaged. Because of their action, we have a chance now to make some major changes here in Congress.
I yield the floor.
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