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Restoring American Finacial Stability Act of 2010 - Continued

Floor Speech

Location: Washington, DC


Mr. COBURN. Mr. President, I wish to spend a few minutes kind of general talking. I wish to give an example because this is a very big bill with a lot of hard work by the Banking Committee and their staffs. I want Members to compare this bill to a loved one who gets pneumonia. They go to the doctor and they have a cough and a fever and chills. They feel terrible. Think about it. If you would take your loved one to the doctor and the answer you would get is: I think I can take care of that. I can give you something for the cough that will suppress the cough and I will give you something to take care of the fever and I will give you a little something to take care of the pain in your chest. You go on home. You come back if you don't get better. Of course, 2 days later your loved one ends up in the hospital with raging, now bilateral pneumonia and sepsis, bacteria in the blood. This bill is kind of like that. It is kind of like a doctor treating symptoms instead of the real disease.

The real disease was Congress. The real disease was poor underwriting standards, actually no underwriting standards. The real disease was Fannie Mae and Freddie Mac, and the real disease was the rating agencies that haven't been controlled effectively by this proposed legislation. This legislation does nothing for the real disease. It treats a lot of symptoms. It grows government gigantically. It will create more bureaucrats and rules than we can shake a stick at. But it does not fix the underlying problem.

When people dispute that, ask the following question: If you are at home, working and paying your mortgage, guess what. The reason we are not fixing Fannie Mae and Freddie Mac is so you can continue to pay more taxes so Freddie Mac can solve those mortgage problems through your tax dollars and other people not being responsible for theirs.

That is what is going on here. That is why you are going to see $500 billion in additional losses with Fannie Mae and Freddie Mac, because we are going to get them to keep going until we have satisfied all this, not doing the hard work, not recognizing that we are actually going to need $5 or $600 billion more in taxes or we are going to borrow that to take care of this problem.
So everybody who is out there today who is working hard, paying the mortgage, and keeping up is going to get to pay extra because we are not going to fix Fannie Mae and Freddie Mac in this bill.

That is why this amendment is so important. We decided in this country a long time ago that we were going to set forth a policy to help people own homes, except we overdid it. We created incentives that would bring out the worst nature in people. If you don't believe that, look at Long Beach Mortgage, where 90 percent of the mortgages they wrote prior to them folding were totally fraudulent. Where was the oversight? There wasn't any--the Office of Thrift Supervision, but we didn't oversee the Office of Thrift Supervision. We created the symptom and a set of incentives and now we want to leave them right there.

This underlying bill does not address the three main diseases that caused the problems we have. Congress genuflects and redirects any criticism from us to the greedy banks or the greedy loan originators, but they never say anything about us not doing oversight. They never say anything about us not reforming Fannie and Freddie when we knew what was coming in terms of their losses and also the financial difficulties they had. We have a bill that doesn't fix it--a lot of hard work, a lot of good intentions, but it doesn't fix the core problems so they will not occur in the future.

As the Senator from New Hampshire said, if you combine strong underwriting standards and transparency associated with limiting the loss the American taxpayer is going to take on with Fannie Mae and Freddie Mac, you will do something. But the way the bill is now, we will have created big theatrics. Everybody will shake hands and holler and dance around when the bill passes, except the dirty little story will be that we didn't fix the real disease. When that loved one in ICU with double pneumonia and sepsis dies, we go after the person who didn't fix it, who should have fixed it, who had the knowledge to fix it, and we say: You are liable.

Well, we are liable. We ought to be fixing this. The very fact is we are not.

The McCain amendment is a commonsense amendment. I understand the reservations. They don't want another $400 billion of recognized debt. They don't want to account for the losses that are continuing to flow, $20 billion so far in the first quarter of this year, out of those two institutions. The Senator from New Hampshire way underestimated the cost to the American taxpayer and what it will ultimately be by not fixing this.

My appeal to the chairman of the committee is to seriously look, give us good answers on why we are not fixing Fannie Mae and Freddie Mac. What are the real reasons we are not fixing that? What are the real reasons we are not creating strong, transparent underwriting standards so the problem doesn't occur in the future? What is the real reason? What is the real reason we don't hold accountable the rating agencies and take away the conflict of interest thoroughly--not partially but thoroughly--from the rating agencies?

The rating agencies are supposed to be a check. Had they been doing their jobs, we wouldn't have had all these securities sold that were worthless or were nonperforming. But they don't do their job. We didn't do our job. Fannie Mae and Freddie Mac didn't do their job. Yet we are not going to address the core issues that created the setup and framework we are now experiencing as an economy. To me, that creates a tremendous amount of liability on our part. We ought to have to be in explanation of every ounce of our being on why we don't fix the real disease that caused this problem.

I yield the floor.


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