Paul Wellstone Mental Health and Addiction Equity Act of 2008

Floor Speech

PAUL WELLSTONE MENTAL HEALTH AND ADDICTION EQUITY ACT OF 2008 -- (Senate - October 01, 2008)

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Mr. FEINGOLD. Mr. President, I will oppose the Wall Street bailout plan. Though well intentioned, and certainly much improved over the original Treasury proposal, it is deeply flawed and in effect asks the taxpayer to bear the burden of serious lapses of judgment by private financial institutions, their regulators, and the enablers in Washington who paved the way for this catastrophe by enacting measures removing the safeguards that had protected consumers and the economy since the Great Depression.

I regret Senate leadership has opted to add a number of unrelated measures to this package. Whether this was done as a sweetener to make the bailout pill go down a bit more easily or as a way to dispose of remaining legislation in one giant package, the end result is a package that is less straightforward and much more likely to spur doubts among voters about the bailout portion of the package. The bailout package was already a big enough question mark in the public's mind before this dubious maneuver was concocted.

I strongly support some of the unrelated measures being added to the bailout package. The mental health parity provisions are long overdue. And I was pleased to support the tax extenders, disaster tax relief, and mental health parity package when it was considered by the Senate just a few days ago. But that legislation could have proceeded on its own, without being attached to the emergency bailout bill.

There is one new provision being added to the bailout proposal that is not only relevant but makes good sense, and that is the language raising the cap on the size of an account that can be insured by the FDIC. I have supported raising FDIC insurance limits for many years. It should go a long way toward helping our community banks continue to attract and retain the deposits so critical to their ability to provide credit to consumers and Main Street businesses.

That brings me to the rest of the bailout measure. Though it is lacking in several areas, I will focus my attention on three critical defects in the legislation. First, it places the financial burden squarely on the average taxpayer. In fact, because it is funded through increased debt, the burden is actually placed on future taxpayers. Regrettably, no offset was seriously considered, and as a result, our debt is at risk of rising by another $700 billion. That is $700 billion more that must be paid off by our children and grandchildren in the form of increased taxes or fewer government services.

A second defect of the bailout bill is its failure to adequately address the housing crisis which underlies much of the financial market collapse. It does not include meaningful provisions to help individual homeowners stay in their homes. As foreclosures continue to increase throughout the country, including in Wisconsin, we need to ensure that any legislation actually helps actual homeowners, not just Wall Street banks and investment firms. This is not just a matter of fairness, though it is surely that. It is also common sense. It is the housing crisis that underlies the collapse of the credit markets. Without addressing those root causes, any bailout is less likely to succeed.

This does not mean that we should reward homeowners who took out bigger mortgages than they could afford to repay or who sought to flip homes for investments. But for the homeowners who were misled or who fell prey to predatory lending, Congress should do something to ensure that those homeowners have the ability to work with their servicers to modify their home loans. Unfortunately, this bailout bill is too skimpy on protections for the individual homeowner.

I am also disappointed that this bill does not include language that would allow bankruptcy judges to alter the mortgage terms of a homeowner's primary residence when that homeowner has declared bankruptcy. These sorts of loan modifications already can take place for vacation homes and other types of personal debt. It is troubling that the Bankruptcy Code would allow these modifications to take place on different types of debt but not a family's primary residence. Congress should address this issue and pass legislation to reform the Bankruptcy Code to permit loan modifications to owner-occupied primary residences.

It is true this bailout bill contains provisions directing the Secretary of the Treasury to implement a plan to ``encourage'' servicers to take advantage of various programs to minimize foreclosures. But unfortunately, the legislation seems to lack real teeth to ensure that these servicers actually modify the terms of nonfederally owned mortgages in order to prevent foreclosures. As we have seen with the Bush Administration's Hope Now Alliance, voluntary encouragement of loan modifications is not enough. While there are a number of factors contributing to the high rates of home foreclosures around this country, I am worried that unless Congress passes stronger legislation to do more than encourage servicers to modify the terms of these mortgages, we will continue to see high foreclosure rates plague our communities.

Finally, and perhaps most importantly, this legislation fails to include steps to reform the financial markets to ensure that we will not need another bailout in the future.

If the taxpayers are being asked to bail out Wall Street, the least we can do, the very least, is to ensure it will not happen again. Nothing in this legislation does that. Indeed, the administration has pushed hard to keep the bill free of the kinds of regulatory reforms we need to prevent this kind of financial crisis from occurring again. We are told that such reforms should be the focus of future legislation.

This is an old tactic. In my days in the Wisconsin State senate, we used to call that the ``trailer bill'' promise. Of course, after promising all would be made well in some future ``trailer bill,'' that mythical legislation never materialized, or if it did, it failed to accomplish what it was promised to do.

If anyone fell for the ``trailer bill'' maneuver once, I can tell you that they didn't fall for it a second time, and no one should fall for it now.

The bottom line is this, Mr. President. Any regulatory reform legislation considered separately will almost certainly be inadequate, and it might even do further damage, because of the influence of the financial industry. The last two decades have seen a string of almost uninterrupted victories by that industry in these halls. We have seen sound laws and regulations that protected consumers and the stability of the financial system repealed or weakened. Just 9 years ago, the icing was put on that deregulatory cake with the enactment of the Gramm-Leach-Bliley Act, a law which tore down what was left of the protective firewalls in our financial system. Little surprise, then, that without those firewalls the fire has indeed spread across the financial landscape.

We are paying the price for years of regulatory neglect, and the responsibility for that neglect is truly bipartisan. Both parties rushed to enact those measures; both parties have worked to ensure that financial derivatives--what Warren Buffett has called financial weapons of mass destruction--remained largely unregulated. Both parties worked to prevent the inclusion of even the most modest reforms in this bailout package. And I am concerned that any separate reform package we might consider in the next Congress will also be bipartisan in its inadequacies.

There is a chance that Members will have learned a costly lesson, and that meaningful reform may yet be enacted. But I am skeptical. The leverage for meaningful reform was this bailout package. Once that passes, the financial interests that have had their way in this building for the last two decades will be free to lobby against anything that may inconvenience them.

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