Executive Session
Floor Speech
EXECUTIVE SESSION -- (Senate - March 12, 2009)
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SECRETARY GEITHNER
Mr. ALEXANDER. I thank the Senator from Vermont.
Mr. President, this morning Secretary Geithner appeared before the Budget Committee. He had good humor. He was resilient. He did a good job in his testimony. He said, a variety of times, approximately this: There would be no economic recovery until we fix the banks and get credit flowing again.
I would like to make a constructive suggestion to our new President, who I think is an impressive individual, and to Secretary Geithner, because while that may be the goal of the Government, the country is not yet persuaded the Government will do that or can do that.
I asked Secretary Geithner whether he is familiar with a book by Ernest May, a longtime professor at the Kennedy School of Government at Harvard University. The book is called ``Thinking in Time: The Uses of History for Decision Makers.'' The reason I asked Secretary Geithner about that was because Ernest May's book ought to be required reading for any governmental decision maker. The thesis of the book is that any crisis one may be presented--if you are Secretary of Treasury, Secretary of Defense--usually has something in history to teach you a lesson. For example, if you are the Kennedy administration dealing with the Cuban missile crisis in the early 1960s, you may want to look back to Hitler's invasion of Rhineland in 1936 to see whether we should have stopped him then and avoided, perhaps, World War II.
Professor May often says one has to be very careful in thinking about the different analogies because you might pick up the wrong analogy and the wrong lesson from history. I would like to suggest to the President and to the Secretary of Treasury, in the spirit of Professor May's book, a couple of analogies from history that I believe would help this country deal with the banking crisis, deal with getting credit flowing again, and begin to get us back toward the economic recovery that we all want for our country and that we very badly need.
The first example comes from President Franklin Delano Roosevelt, who was elected after a deep recession, and maybe even a depression was already underway, much worse than today. Mr. President, 5,000 banks had failed, and deposits were not insured. What did President Roosevelt do? He did one thing: Within 2 days after taking the oath of office, he declared a bank holiday, from March 6 to March 10, 1933. Banking transactions were suspended across the Nation except for making change. He presented Congress with the Emergency Banking Act. The law empowered the President, through the Treasury Department, to reopen banks that were solvent and assist those that were not. The House passed it after 40 minutes of debate, and the Senate soon followed. Banks were divided into categories. On the Sunday evening before the banks reopened, the President addressed the Nation through one of his signature fireside chats. The President assured 60 million radio listeners in 1933 that the crisis was over and the Nation's banks were secure. By the beginning of April, Americans confidently returned $1 billion to the banking system; the bank crisis was over. Now, there was a lot more to come. That was not the end of the Great Depression, but it was the end of the bank crisis, and it came because of swift and bold Presidential leadership.
The lesson I would suggest from that analogy to our nation's history, is that President Roosevelt did not try to create the Tennessee Valley Authority and the Civilian Conservation Corps and the PWA and the WPA and pack the Supreme Court all in the first month of his term of office.
He declared a banking holiday within 2 days after taking office. He assured the country that he would fix the problem. He went on the radio not for the purpose of talking about the whole range of problems but to say, on March 12, 1933: I want to talk for a few minutes to the people of the United States about banking. And he explained what was going on. He said: We do not want and we will not have another epidemic of bank failures. He said: We have provided the machinery to restore our financial system.
The people believed him. They put money back in the banks because the American people were looking for Presidential leadership at that moment. They knew that the Congress or the Governors or other individuals in the country could not fix the bank problem. They knew the President had to fix it. When the President took decisive action and said he would fix the problem, the country responded and that part of the problem was fixed. The bank crisis was over. That is analogy No. 1.
Analogy No. 2--and I believe the analogy is closer to today's challenge facing President Obama and Secretary Geithner and all of us, really--is President Eisenhower's speech in October 1952 in which he declared he would end the Korean war. I'd like to read a paragraph from that speech because it seems to me so relevant to the kind of Presidential leadership that might make a difference today.
President Eisenhower said:
The first task of a new administration will be to review and re-examine every course of action open to us with one goal in view: to bring the Korean war to an early and honorable end.
In these circumstances today, one might say to bring the bank crisis and the credit freeze to an early, honorable end.
President Eisenhower, then a general, not President, said:
This is my pledge to the American people. For this task a wholly new administration is needed. The reason for this is simple. The old administration cannot be expected to repair what it failed to prevent.
In other words, the issue in the Presidential election of 1952 was change. That is also familiar. It just happened to be the Republicans arguing for change at the time.
Then the President said:
That job requires a personal trip to Korea. I shall make that trip. Only in that way could I learn how best to serve the American people in the cause of peace. I shall go to Korea.
On November 29, in the same month he was elected to the Presidency, Dwight D. Eisenhower left for Korea.
The lesson from that instance in history, as Ernest May would have us look at, is not that President Eisenhower ended the Korean war by Christmas or even by Easter of the next year. The lesson is that he told the American people he had one objective in mind. Of all the things going on in 1952--inflation and other problems--he focused on the one that only a President could deal with. He did it in memorable terms. We remember the phrase today: I shall go to Korea. The people believed him. They elected him. They relaxed a little bit. The war was ended, and the 1950s were a very prosperous time.
I wish to make this a constructive and, I hope, timely suggestion because the President and the Secretary are about to tell us what they are going to do about banks. What I would like to suggest is this: they don't need to scare us anymore. Back in Tennessee, we are all pretty scared. There are a lot of people who are not sure what is going to happen with the banks. They don't need to explain the whole problem to us anymore. That is not what leaders do. Leaders solve problems. Maybe it needs to be explained enough so we grasp it, but basically Americans are looking for Presidential leadership to solve the problem.
I don't think we have to be persuaded that our impressive new President is capable of doing more than one thing at a time. He may have shown that better than anybody else in history. We have already had two summits--one on health and one on fiscal responsibility. I was privileged to attend one of the summits. I thought it went very well. The President has repealed some of President Bush's orders that he didn't agree with on the environment and stem cell research. The President has been out to a wind turbine factory in Ohio talking about energy. He has persuaded Congress to spend a trillion dollars, over my objection, but still he was able to do that in the so-called stimulus bill. The new Secretary of Education has worked with the President, and he made a fine speech on education the other day. He is doing a lot of things. A lot of things need to be done.
The point is, there is one overriding thing that needs to be done today, and that is to fix the banks and get American credit flowing again. President Roosevelt didn't create the Tennessee Valley Authority and the CCC and the WPA during the bank holiday. He fixed the banks. So my respectful suggestion is that our impressive, new President say to the American people as soon as he can, in Eisenhower fashion: I will fix the banks. I will get credit flowing again. I will take all these other important issues facing the country--health care, education, energy, on which I am eager to work--and I will make them subordinate to that goal. In the spirit of President Eisenhower: I will concentrate my full attention on this goal until the job is honorably done; that job being, fixing the banks and getting credit flowing again.
I genuinely believe that if this President did that, if he, in effect, made that speech, cleared the decks, gathered around him the bright people he has around him and said to the American people: Don't worry, a President can do this and I am going to. That statement would be the beginning of the economic recovery. Because lack of confidence is a big part of our problem. This crisis began with $140 oil prices. That was, in the words of FedEx chairman Fred Smith, ``The match that lit the fire.'' Then there was the housing subprime mortgage crisis and then banking failures.
Now, even in strong community banks in Tennessee, we have people who are out of work and who can't pay their small business loans or student loans. Some of those banks are beginning to have some problems.
We need to interrupt this train. We only have one person who can do it. A Senator cannot do it. The Vice President cannot do it. The Secretary of the Treasury cannot do it. No Governor can do it. The President can; only he can do it. Even though he may be able to do many things well at one time, he needs to do one thing until the job is honorably done.
My respectful suggestion is that Ernest May's book, which reminds leaders to think in terms of history, ``Thinking in Time,'' is a powerfully apt book for these times. As the Secretary and the President and his advisers think about how to present to the American people what their plan is, they should remember that a part of it is not only developing a strategy. The most important part is persuading at least half the people they are right. I believe that means clearing the deck: no more summits, no more trips in other directions. Focus attention on the problem facing the country until the job is honorably done.
In Eisenhower fashion, I hope the President will say: I will fix the banks. I will get credit flowing again. I will concentrate my attention on that job until it is done.
I yield the floor, suggest the absence of a quorum, and ask unanimous consent that the time during the quorum be split evenly between the parties.
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