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Mr. COBURN. Mr. President, I wish to spend a few minutes talking about a perspective that I think is lacking, and I hope we have an opportunity to gain. I was intrigued and interested as I listened to the senior Senator from New Hampshire explain to the American people what actually is going on in terms of our financial system. I don't believe there is anybody in the Congress, or anybody in the country, who is happy about where we are today: contemplating putting the Federal Government as the owner of a bunch of toxic assets that were accumulated on the basis of greed, poor policy, bad management, and bad regulation. I don't believe anybody is happy we are here. I don't believe the regulators are; I don't think Members of Congress are; I don't think people in this country are.
But from that, we can learn something. My worry is that we will not. I heard this morning the majority leader--and I have a great deal of respect for him--laying this all at the foot of President Bush. Presidents can do very little other than what we let them do. When we talk about the lack of oversight and regulation, the problem is, we were not watching the regulators, and our constitutional duty is that we should have been.
There is a lot of blame to go around--and it is not partisan--Republicans and Democrats, the executive branch, even the judicial branch in some of their rulings that created some stupid consequences to things that were never intended by Congress.
But what we ought to learn, and what I think is most important is, if you are an American right now and you are worried, you have a great reason to be worried. It is not about some impending financial crash. What you should be worried about is the Congress is not listening.
Let me explain what I mean.
We are going to finish at the end of this year with over $10 trillion in debt. That is over $33,000 for every man, woman, and child. We are about to pass some type of system to salvage credit liquidity in this country that is going to cost another $2,000 to $3,000 per man, woman, and child in this country.
We are going to have a continuing resolution that comes to this body this evening or maybe tomorrow morning that continues to do the wrong things that got us into the mess in the first place.
The financial mess we are in is because confidence in the country and our response has been eroded. As I got on a plane to come back to Washington, I talked with a businessman from eastern Oklahoma who has a worldwide business. He talked about on August 20, he saw this tremendous worldwide drop in demand for his product. It didn't have anything to do with his product. It had everything to do with people now worried about if they should hang on to cash because the economics don't look good.
Whatever they do here, the No. 1 goal has to be reestablishing a confidence in this country that, yes, we can have an economy that works, we can rebuild faith in the financial institutions, and we can do that, best of all, by not repeating the mistakes we have made in the past.
To outline, the Defense appropriations bill has over $10 billion in it for airplanes the Air Force doesn't want. Think about that. There is $10 billion worth of airplanes in the Defense appropriations bill that is going to pass that they are going to have to buy that they neither want nor need. Why is that happening? Because we are putting local, parochial politics ahead of the best interests of the country.
We are going to buy some ships the Navy doesn't want. Same reason, different area of the country. But we are going to buy them because we are going to put a parochial benefit to a Member of Congress ahead of the best interests of the country.
There isn't a family out there who doesn't have to weekly or monthly make hard choices about how they spend their money. We, unfortunately, continue to make decisions on how we spend your children's money and your grandchildren's money on a parochial or political interest that benefits Members of Congress. That is what has to change.
If there is a lesson in what has happened to us in terms of the loss of confidence in the financial system in this country, all I have to say is Congress earned it. We created it. We expend 100 times more effort trying to create new programs and new ways of spending than we do managing the very Government you send us here to put under control.
I take the Constitution literally. It has a section in it called the enumerated powers. It is article I, section 8. It spells out exactly what the role of Congress is. If you look at how we got into this mess, every example of that goes back to the fact that Congress is violating what the Constitution says is our legitimate role, is doing something that is outside the legitimate role, and we rationalized it for the political benefits for either career politicians or party, one side of the aisle or the other. That is why Congress has a 9-percent approval rating, because we are more interested in us than we are the best interests of the country. And it shows.
We have the financial debacle in front of us today to prove it. Imagine what would have happened had Congress been aggressive in its oversight. Imagine what would have happened after the failed attempt 4 years ago to try to put the controls of Fannie Mae and Freddie Mac that we had a monthly hearing outlining the worsening--worsening--condition so we could have avoided this situation. Instead of us doing that, we did what was easy. We took the easy road, the wide road. We didn't do what our oath calls us to do.
I think we are going to see some very different behavior when it comes to us approaching the financial package that we are going to put together that will enable an economic recovery in this country. I believe you are going to see people vote for bills they basically don't like because it is in the best interest of the country. My hope is that when we do that, it would not be a one-time happening; that we will, in fact, move back to the position to take a decision on how we vote on something and not do a finger to the wind on how it looks back home or how it looks for our political career but, in fact, look at the U.S. Constitution and say: Does it square with that, and does it match our oath to do what is in the best interest of the country?
When we get through with this exercise, as far as this economic recovery, I think the country can once again maybe start to have confidence in Congress; that we will, in fact, address the issue; that we will vote against our political best interests, but we will vote in the best interests of the American people.
Senator Gregg has outlined very eloquently what is happening, what has happened, what the response has been thus far, and what needs to be done in the future. If you have not heard him speak to this, I would suggest my colleagues listen to him. You can get it, what he spoke about this morning, before lunch, an understanding of what is necessary to reestablish confidence. It is not a time for politicians to win, it is a time for the American people to win. The only way they win is when we put them first and us second.
Mr. GREGG. Will the Senator yield for a question?
Mr. COBURN. I will.
Mr. GREGG. Mr. President, I ask unanimous consent that at the conclusion of the time the Senator from Oklahoma has used, I be recognized for 10 minutes under morning business; and at the conclusion of my time, Senator Alexander be recognized; and if a Democratic Member wishes to speak, that they be inserted in the proper order.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GREGG. Mr. President, I wish to congratulate the Senator from Oklahoma. He has made an extraordinarily statesmanlike presentation. This isn't about the politics of the day, it isn't
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So, first, I wish to say I have unlimited praise for the position the Senator has taken, and he has not only done this in this Chamber but he has done it in meetings with membership, and it has had a huge impact on my colleagues because he is so highly regarded on the issue of fiscal policy especially. But I guess my question is: We have Senator McCain basically suspending his campaign to come back and try to work on this, and Senator Obama has been very constructive. It is time to move forward in a bipartisan way. Doesn't the Senator from Oklahoma believe this has to be done in a bipartisan way and done in a very timely way; otherwise, we will lose the opportunity to settle this situation out, and we may see a disastrous event occurring which affects every American's pocketbook and their lifestyle, basically?
Mr. COBURN. First of all, I thank the Senator for his comments, and to answer him: What we saw on the market today, we saw a period of time when there was zero interest on a 2-month T-bill. What that is saying is people have lost interest on anything other than a government security, and they are willing to give the Government their money for that security with no interest. That is fear talking. What we have to do is drive out fear. We have to drive back confidence.
So I believe, Senator Gregg, that we will see a bipartisan vote in the Senate and the sooner the better. Because every day we are not fixing this, it is costing jobs, it is costing the ability to promote new jobs in our economy, and it is costing savings for those people who are no longer working but living off retirement. So I feel this body is going to stand and do the right thing.
I have been impressed with Senator Schumer, Senator Jack Reed, whom I just saw. The questions he asked and the answers that were put forth by both Secretary Paulson and Chairman Bernanke yesterday, I thought, were right on the money. I don't think we are far apart. But even if we are not far apart, we have to be able to do what is right and we have to do it timely. We should not leave here. There should be no leaving and coming back until this is solved.
Our future depends on what we do and how fast we do it. That doesn't mean we should not do it right. It doesn't mean we shouldn't be thoughtful about what we do. But the degree and the magnitude of this problem is something I have never seen in my 60 years, and I doubt the Senator from New Hampshire has ever seen it. Very few people in the history of the world have ever seen the kind of risk this country is facing at this moment.
So it is important it have nothing to do with Republicans or Democrats; that it have nothing to do with the Presidential election; that it have nothing to do with anything except the best interest and the future of this country.
With that, I yield the floor.
The PRESIDING OFFICER. The Senator from New Hampshire.
Mr. GREGG. Well, Mr. President, I wish to continue the dialogue the Senator from Oklahoma has begun because I believe it is critical.
There are times when our Nation faces a crisis of incomprehensible threat--incomprehensible in terms of the size and the effect of it--and at those times we have united as a nation. This is a time when we have to do that. Most of those threats have been physical events, the most recent being Katrina and, obviously, 9/11, and the attack on Pearl Harbor. These were physical events that caused us as a nation to pull together and act in an extraordinary way and as a government to do the same. What we are facing is an event that will create a massive disruption of our economy and will have a huge impact on individuals. That is the point. People will be unable to get credit.
If you run a small mom-and-pop grocery store or a small business, and this month or this week you don't make enough money to meet payroll, you are not going to be able to borrow money to meet payroll, so people will not be paid. If you have a child in college and you want to borrow to keep them going in college, you are not going to be able to borrow that money. If you have a house you want to refinance or add on to, you probably would not be able to borrow to do that. The credit markets are locked down and will lock up if we don't take some action to try to relieve this pressure.
The important point is this action is not that expensive in the context of the overall threat. The number $700 billion has been thrown around. That is a totally specious number. Yes, that is what will be borrowed, but it is not what it will cost us, because that money will be used to purchase assets, and those assets have value and the Government and the taxpayers will recover that value. The net effect of that borrowing and the assets purchased, when they are resold, could be zero, we could actually make money, or it may be $100 billion, which is a lot of money, but it is certainly not $700 billion.
So in the context of what the initial cost will be, it will hardly be anything on the deficit in the next year. It may be significant on the debt but not on the deficit. The practical effect of that in the long run will be that it would not be anything on the debt because the money will be repaid through the selling of the assets that are purchased. Compare that cost to what happens if we do nothing--if we have a total destabilization of our financial houses, if banks start to fail, if Main Street contracts, if people are put out of work, if revenues drop dramatically. You are talking about lost revenues to the Federal Government of an inordinate amount. You are talking about programs which will have to be added to take care of people in dire straits of inordinate amounts. I can't imagine what the cost would be if we went through a dire recession or worse. But it would be huge--huge--and dramatically more, by factors of multiples, multiple events compared to what the cost is of trying to do something now.
The point is we have to do it quickly. This is understood, by the way, by a lot of people around here. It is understood, fortunately, by Senator McCain, who has said he is going to suspend his campaign to come back and try to get this thing done. I believe it is understood by Senator Obama. I have been totally impressed with his very mature and appropriate response to this issue. I am hoping Senators McCain and Obama can lead us, in a bipartisan way, to resolve this. I have also been impressed with the leadership on the other side of the aisle, especially the role taken on by Senator Schumer, who obviously understands this intuitively and substantively, being from New York, But also other Members on the other side of the aisle. I think Senator Dodd, chairman of the Banking Committee has played a major role. Obviously, he was extremely critical, he and Senator Shelby, in the initial effort with Fannie Mae and Freddie Mac. Their work was extraordinary.
So there is the core and the energy in the Senate to do something aggressively, in a bipartisan way, and to do it right. I think the point is we need to do it aggressively and do it right and do it now. We can't wait.
I see my colleague, Senator Alexander, on the floor, and I know he has a number of thoughts on this, and so I yield to the Senator from Tennessee because he is a leader on this issue.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. ALEXANDER. Mr. President, I came to the floor to join with the Senator from New Hampshire in congratulating the Senator from Oklahoma for his statesman-like comments. And not just his comments on the floor because those of us who know Senator Coburn know that what he says in public he says in private and vice versa, and we respect his views on fiscal matters. What he said was that we in the Senate have a responsibility to make sure we do nothing to cause a crisis in confidence, or more of one.
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I thank the Senator from New Hampshire for pointing out to us that when you say $700 billion or a trillion dollars, you are not taking into account the real dollars--and I will not repeat his speech about the cost. In fact, I will ask, if I may, a question of the Senator from New Hampshire, and I will yield the floor for a moment.
We hear these numbers, a trillion dollars and $700 billion.
May I ask the Senator from New Hampshire through the Chair, what would he guess the real cost of this economic recovery plan to be, this Secretary Paulson plan that we hear about, based on what he knows now? What does he suspect the real cost would be?
Mr. GREGG. Well, nobody actually knows, is the answer to that. But there are some pretty good parameters you can put it within. We know the Bear Stearns situation, which was $29 billion by the Fed, is probably going to be a wash. We expect the AIG which again was the Federal Reserve action, not coming off our Treasury books, which was $85 billion--is probably going to be a winner. In other words, they will get more money back than they are spending. Freddie Mac and Fannie Mae, where we put up $200 billion, we essentially said we were willing to put up $200 billion and give the Treasury Secretary that type of authority. We have only spent $5 billion so far of that $200 billion. That $5 billion will net out, so the total cost of that $5 billion is going to be less than $5 billion, probably at the most maybe $1 billion, maybe $1.5 billion after you net out the assets.
So if you look at those parameters and look at the $700 billion number, what we are going to be buying is assets. Think of it this way: We are going to go out and buy a lot of cars that have been a little damaged; some have been really damaged. The pricing we pay for those cars isn't going to be what the person paid for them when they bought them off the lot. It is going to be what those cars are valued as damaged. There may be a premium, but I don't think it will be much. Then we will take those cars and either repair them and resell them or we are going to resell them, when the economy improves, as damaged cars. People will want them because they are going to repair them.
In either event, we are going to get back a fair amount of the money we invested because we have a physical asset. It is called a mortgage-backed security, most likely, and we own it and we can resell it or we can wait until it matures at face value and get the money back, having bought it at less than face value.
I honestly believe, and my guess is--and everything is going to be a guess, but my guess is the cost of this event will be less--less--than the initial stimulus package which we passed around here, which was $140 billion. That is a guess.
Mr. ALEXANDER. Mr. President, whatever the cost is, I do not want to see the cost of what will happen if we don't take action in the next few days. After you have lived a while, and after you have seen a few things, you begin to make some decisions based not just on the heart or the mind but on the gut. This is a gut decision to me, with a little bit of experience thrown in.
When I was Governor of Tennessee in the mid-1980s, I had the misfortune of presiding over a situation where we had 40 or 50 banks that failed. I stayed up all night with Paul Volcker and watched the Federal Reserve pull its credit for one of the banks in Knoxville. And that set off a chain of events which, if it had been a national chain of events, we would have seen 1,000 or 2,000 bank failures. That is what we had to deal with.
That was a controlled, small event compared to what could happen if we do not take steps to avert a credit crisis in the United States. Last week, before Thursday night's events, I was at the Volkswagen headquarter's opening in Virginia. I spoke with the credit manager there for the part of the company that loans money to people who buy cars, and said to me that he and people similar to him, even companies that large, the largest European automobile maker, were finding it difficult to get dollars.
What if General Motors Acceptance Corporation or Ford or Volkswagen or Nissan Credit cannot go into the market to get some money? Then they cannot loan me money to buy a Nissan or a Ford or a Saturn. If I can't buy a car, then the new Volkswagen plant or the Nissan plant or the General Motors plant that we are so excited about, doesn't have any jobs.
I applaud Senator Coburn, I applaud Senator Gregg, and the Senator from New Mexico, and the Republican leader here. Inaction is not an option here. I can only speak for one Senator, but from what I have heard on the Republican side of the aisle, we understand the seriousness of this problem. From what I have heard on the Democratic side of the aisle, most Democrats understand the seriousness of this problem. We want to put our imprint on the proposal, but we want a result. In my view, we must have a result to avert a set of events that none of us would want to see.
For those watching the legislative process here in Washington, I want to make it clear to them that in my view, and I believe the sentiment of a great many Senators, is that we want and expect a result. We understand the seriousness of the problem.
Mr. McCONNELL. Will the Senator yield for an observation?
Mr. ALEXANDER. Of course.
Mr. McCONNELL. I was listening carefully to Senator Gregg and the Senator from Tennessee, Mr. Alexander, and Senator Coburn and I see another of my colleagues here, Senator Domenici. Let me give a real-world example from my State, information just received. Here is what this particular company experienced today.
``We were informed''--I will leave out the name of the bank. ``We were informed that an''--I will leave out the name of the county--``industrial revenue bond issued last year could not be resold this week in the market because of the freeze of the credit markets.'' Today. ``These tax free bonds totaling $10 million were issued last year on a variable interest rate basis, secured by a full irrevocable letter of credit from one of the nation's largest and most well capitalized banks.''
No credit problem at all, but no lending--freeze credit. This crisis we are all talking about here is not about a bunch of people on Wall Street. It is about a bunch of people on Main Street, and whether we are going to act on a bipartisan basis to restore confidence, restore confidence in our country and to prevent what could be a major catastrophic event.
Mr. GREGG. Mr. President, if the Senator from Tennessee would allow me to express a question to our leader: The point the leader makes is absolutely valid, but it is not unique to Kentucky. We are hearing all over the country that municipal--communities are unable to roll over their municipal bonds or are getting close to that threat. We have heard about major corporations that have been unable to move cash into franchises last week because the banks did not have the wherewithal to move cash because of the threat and the pressure that was being put on their money market accounts, which they had to protect and defend.
As you say, this is not a Wall Street event. This is going to be a Main Street event. People are going to be put out of work, they are going to lose their jobs, there is going to be a huge disruption. The potential for economic disarray is unprecedented.
I think it is very appropriate that the Senator from Kentucky, as the leader, has pointed out a very real-world event here because this is real-world stuff. This is not theory.
Mr. ALEXANDER. Mr. President, I see the Democratic whip here and I am glad to have an opportunity to make this point while he is here, since those of us on this side are Republicans.
I applaud the reaction of Senator Obama to this economic crisis. It is a Presidential reaction. It is restrained. It leaves room for discussion and it recognizes the problem.
I applaud Senator McCain's decision to involve himself, if he can, in a solution to the problem. That is the kind of leadership we should expect of both men, both of whom are Members of this body.
I can't emphasize enough how much I believe this situation cries out for measured but urgent reaction, in a bipartisan way, by the Senate. Because, as all the Senators have said, if it were Wall Street, we could leave them to pick themselves up. But we are talking about whether you can get a student loan, whether you can get a car loan,
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