January 13, 2008: Wall Street Banksters are Coming Back to Mama
America, pay attention. Batten down the hatches. Let your Member of Congress know the banksters are coming back to mama.
We are about to be taken for a ride by the banksters again. These banksters bank on us making the taxpayers pay again.
Don't let them do it. Why? Because what they are doing istrampling our democracy. We are getting set to have another piece oflegislation crammed through the Congress regarding the bailout. Theycall it TARP, the Troubled Assets Relief Program. It's the old bankbailout bill from last year.
Despite the fact that due deliberation is required of us asMembers of Congress through regular order of this House, and, frankly,our Constitution, this new cram down comes with a twist. Instead of notholding any hearings on the reform of the TARP, like happened lasttime, and only letting us see the bill 18 hours before $700 billion ofthe taxpayers' money was to be put on the table, one hearing is beingheld, exactly one, tomorrow, and it happens to be being held at thesame time that amendments to that bill are supposed to be filedupstairs in the Rules Committee.
So Members who spent over 20 years on that committee areunable to take what they hear at the hearing, and the informationlearned, to make recommendations for amendments to the Rules Committee.Any Member who might not be on the committee, and who wants to go tothe hearing and listen, and then maybe propose amendments, well, youcan't do that because it's being held at the same time.
The committee will be holding the hearing here in theCapitol where most Americans can no longer afford to travel. They arenot bothering to go out to the country, to the communities that havebeen so badly devastated by the rising foreclosure crisis, that theTARP, the bank bailout bill is not solving.
No, the public won't be included, and the subpoena power ofthe committee will not be used. So here we go, the banksters are back.They want another $350 billion of our taxpayers' money, and thedeliberations inside this Chamber are throttled. Isn't that sad,particularly given what happened to the first 350 billion. Once again,we are being pushed and told we have to hurry this up. We are going tohave a new President. So we are told to hurry up and be hasty and notbe thoughtful, because, of course, something might happen. But you knowwhat? It's already happening.
What we are doing isn't working. But we are going to haveto be voting this week on a big unthinkable wad of our taxpayers'money, $350 billion more. And if we learned anything from the releaseof the first half of the TARP funds, it's that hurried legislativeaction brings undesired and sloppy results.
Back in the fall we were told we didn't have the time to bedeliberative, that if we didn't pass it, the economy was going tocontinue a downward spiral, that the economy would crash, and we wouldbe to blame.
Well, some Members voted for it, and it passed, and guesswhat happened? What they said wouldn't. Never mind that SecretaryPaulson's management of the economy and the bailout still has resultedin 1.2 million jobs lost in November and December. Believe me, peoplein my State know what those numbers really mean.
One in 10 homeowners are in arrears or in foreclosure, imagine that, 10 percent of the people who own homes in this country.
And $4 trillion of wealth has been lost by our families. TheAmerican people were played, and $350 billion later Secretary Paulsonhas given us no progress for the American people. We are in a deepereconomic hole than when we began.
TARP isn't working. It hasn't stemmed the foreclosurecrisis, which is at the heart of what is wrong with our economy. Itdidn't help unfreeze credit inside our financial system. The autoindustry didn't go into a nose-dive because people didn't want to buycars.
They couldn't get the loans from the banks to buy the cars because thehousing foreclosure crisis froze up the credit system. Instead, TARPhas brought the auto industry and hundreds of thousands of businessesacross our country to their knees.A staggering 693,000 jobs were lost across this country in thelast month, three-quarters of a million, following 533,000 jobs themonth before, half a million more. There are now nearly four jobseekers for every one job opening. And, again, one in ten homeownersnationwide are now in arrears or facing foreclosure. My advice topeople in that position: Don't leave your property. You claim your ownproperty, because chances are if you had a good lawyer and they went tocourt on your behalf, they couldn't find who really holds yourmortgage. If they go to the Truth in Lending laws, you might besurprised. The law might be on your side. Don't leave your property.
So what have the banks done with all this money? Shouldn'twe know that before we vote to give them more? I ask every Member ofCongress, shouldn't we know where the money went and what they did withit? Have they reworked mortgages and started lending again? No. No,they have not. Instead, they have had a party buying one another up.The big banks, particularly the Wall Street banks, they are gettingbigger. Community banks are under stress. Many State-Headquarteredbanks are being bought by the bigger banks.
PNC, already one of the Nation's largest banks, boughtNational City Bank in Ohio. They are throwing 4,000 people out of workin Cleveland, Ohio. But PNC became, hold on to your seats now, thefifth largest bank in the United States from the infusion of TARP fundsit received. The fifth largest bank in our country, and their corporateexpansion bought and paid for by you, our taxpayers.
Now, look at who else is getting bigger. Last night, CBSnews reported on CBS.com that Bank of America received $15 billion, andthen they bought Merrill Lynch, that had gotten $10 billion even as itwas put up for sale. Total that up. That is $25 billion. Now MorganStanley, the recipient of $10 billion, is buying China Trust Bank.Another half dozen banks, including M&T, Capital One Bank, USBancorp, Hampton Roads Bankshares and PNC, got bailout money, and thenthey bought up other banks. They just keep getting bigger. And what isinteresting about that, under the law, when they buy another bank, theycan probably book losses on their 2008 tax returns.
It is very interesting how the financial system works onbehalf of the big, and yet for those losing their homes, they havealmost no one to represent them. They are having a royal time with ourmoney, the banksters up there on Wall Street.
Money Morning reports the 116 banks that are receivingbillions in taxpayer-provided bailout money this year actually paid out$1.6 billion in compensation to their executives, plus benefits, eventhough the results at some of these institutions were so poor that theywould soon have to turn to Washington for government-engineeredrescues. The $1.6 billion in compensation and benefits to the banksterswas paid out to nearly 600 executives at the 116 banks that have so faraccepted Federal money to bolster their financial situation.
The Associated Press concluded after a review of U.S.security filings that in addition to salary, the compensation includedbonuses paid in both cash and stock. The benefits reaped by topexecutives included the use of company jets for personal purposes,personal chauffeurs, home security services, country club membershipsand professional wealth management services, the news service said.
Now, let's give them credit. These banksters know how towalk our money around. They even know how to create money when thereisn't any there. They create fancy names; derivatives, credit defaultswaps and collateralized debt obligations. But those instruments arenot worth anything, because the underlying assets cannot pay back themoney if someone tries to collect it. That is usually called fraud ormoney laundering.
But could it be a cruel twist of fate that the Secretary ofthe Treasury, Mr. Paulson, former chief executive officer of GoldmanSachs, oddly took care of Goldman, his firm, first during all of this,making it a bank holding company, so it could get its nose under thetent cover--I mean qualify for Federal insurance, like the well-runbanks do, which had paid into the insurance system. He did that for hisown institution, but then he shed crocodile tears and he pushed LehmanBrothers overboard with no mercy. I would really like to know the fulltruth behind that story.
But then Mr. Paulson, by coincidence surely, picked his topmoney man at Goldman Sachs and moved him too, lock stock and barrel,into the U.S. Treasury to hand out our cash. Now, this surely must havebeen done accidentally. How can you have two men from the same WallStreet firm delegated all this power? Oh, you might have heard hisname. It is Mr. Kashkari. Yes, Neel Kashkari. He came from Goldman.
It must surely be another coincidence that Goldman was alsoWall Street's largest contributor to Federal campaigns last year. Checkit out yourself at opensecrets.org. That is a Web site,opensecrets.org. In fact, Wall Street overall became the largest donorto Federal elections. And they are not showing any signs of slowingdown. According to the Wall Street Journal, 90 percent of donationsreceived so far for the Inaugural Committee have been raised bywell-heeled fund-raisers, including Wall Street executives whosecompanies have received billions of dollars in Federal bailout money.
Well, think about that one. Of the 207 fund-raisers thathave collected $24.8 million of the $27.3 million in contributionsthrough Thursday for the coming inauguration, according to an analysisby the nonpartisan campaign finance group Public Citizen, Wall Streetemployees as a group have been the biggest single source of thesedonations. Much of their donations, in fact $5.7 million total, hasbeen channeled through financial services executives who each havebundled together donations worth hundreds of thousands of dollars.
Goldman Sachs has provided $175,000 in donations primarilythrough the bundling efforts of Jennifer Scully, who has raised over$100,000; Bruce Heyman who raised $50,000, including $10,000 of his ownmoney; and another gentleman, David Heller, who donated another$25,000. Think about what is going on here.
But, you know, a lot of people say they don't influencepeddle. Banksters don't influence peddle. They just want goodgovernment. Sure they do. Of course, all this is accidental. Nobodyplanned it this way. Just like Bernie Madoff. Oh, he didn't plananything either. Some might believe what these banksters
do in their private affairs has absolutely no relationshipto what happens here in Washington, and if you believe that, you wereborn yesterday. Fool me once, shame on you; fool me twice, shame on me.
There are problems with the bill drafted to address theadministration's mishandling of the bailout. This is the bill that isgoing to come before us, we think, H.R. 384, the TARP ReformAccountability Act of 2009. TARP doesn't need reforming. We need tokill it. We need to put the attention at the Federal DepositionInsurance Corporation and the Securities and Exchange Commission inorder to resolve the interbank lending problem and the foreclosurecredit crisis. We don't need to give this job to the Treasury. Thewrong agency has the lead.
Let's look at title II, called ``foreclosure relief.''Number one, the legislation provides no new plan to stop foreclosures.That is what it was passed to do in the first place. This bill doesn'thave it either. It continues to do more of the same, which simplyhasn't worked. Servicers are not motivated through this bill to modifyloans, because they are making money hand-over-fist servicing defaultedloans, foreclosing on loans and profiting from real estate that theyhave come to own. And they are awaiting booking huge tax losses ontheir 2008 income tax filings. The Tax Code favors them, not us, notthe people who sent me here.
This legislation that is proposed does not help homeownersdefend themselves against criminal acts of fraud being perpetratedagainst them in processing foreclosures. A majority of the loans originated between2000 and 2008 have legal defenses against foreclosures, but because thescheme has drained consumers of financial resources and because thereare so few consumer law attorneys who know how to raise these defensesin a court of law, consumers have no access to their rights, forexample, under the Truth in Lending Act.
The legislation continues to shift both the risk and the costof the program off corporations who perpetrated the scheme and on tohomeowners, our American taxpayers. The legislation does not addressthe root of the problem and it will be just as ineffective as the firstround of TARP funding in addressing the core problem, the homeforeclosure crisis. The current loan modification restrictions areunsustainable and they will redefault.
Let's go to title V, and I can't go through every titletonight, called Hope For Homeowners Program Improvements. Hope forHomeowners consist of industry players who created the mortgage mess tobegin with. They are milking the system and not providing any relief tohomeowners now. New nonprofit companies and loan modification companiesare cropping up all over, and most of these have been established bythe very mortgage brokers who defrauded consumers and sold them intosubprime slavery. They should not now be rewarded with a new businessopportunity to revictimize the victims.
So let's look at some recommendations that make sense. Thebill that will be sent to us will not correct the root of the problemand it will not achieve the goal of preventing foreclosures and keepingpeople in their homes. There are many effective foreclosure preventionstrategies being deployed by attorneys and advocates, and we need totranslate these into systemic solutions.
We need to investigate, and it is a sham that this Congressis not doing appropriate oversight; how the shadow banking sectorcreated by the Wall Street investment banks after the repeal ofGlass-Steagall, which was called Gramm-Leach-Bliley, constructed aprivate money creation system that in a short 10 years equals orexceeds the assets of all regulated banks nationwide.
In short there are solutions. We need a consumer-centricmodel. What we have now is a creditor-centric model. It will eventuallylead to a complete collapse, because consumers and taxpayers cannothandle this burden.
Let's go back to Ohio and take the case of National City,which has been an institution headquartered in Ohio, in Cleveland,since 1845.
Now, Treasury's money, the taxpayers' money, our money, went toanother out-of-state bank, PNC, of Pittsburgh, whose vice president,Mr. Demchuk, invented the derivative instrument. They came to Ohio,PNC, and they bought National City Bank, putting all the National CityBank employees on notice with pink slips, 4,000 of them, that theywould be out of work on the tape. PNC became bigger.
So what Mr. Kashkari did was take our money and give it toPNC, that hasn't worked out any of its mortgage loans. They, then, cameto Ohio and bought out National City Bank. So PNC got bigger, ourbanking system gets more concentrated, and PNC became more powerful.Some say they actually have price control power now over all of WesternPennsylvania.
So, PNC got $7.5 billion from us. Cleveland and Ohio lose aFortune 500 company. They lose 4,000 National City Bank workers, and inOhio, foreclosures are raging. And Ohio, it gets nothing. We getnothing. We need $20 billion just to fix what's wrong in Ohio. But allwe get is more foreclosures.
Now, take another institution. In 2008, Citigroup, one ofthe main culprits that caused the financial meltdown, was bestowed $25billion. They got more than PNC. They got it from us, the taxpayer. Andthen they just kept foreclosing. In my district alone, another 235families just were told, you're out of your house.
Last November I found an advertisement in my local paperthat said there was going to be an auction in my home community, and Iwas surprised. I didn't know the company coming in. It was calledHudson and Marshall of Dallas, Texas. So I went to the auction.
And guess what? Citigroup was one of the banks selling theproperties through Hudson Marshall. I attended. And I watched homes inmy community sold for as little as $7,900, a price so low that we couldhave put the original owners back in those homes.
Not only was Citigroup auctioning homes that night, but sowere lots of other bailout recipients. Those are the banks that got themoney from Treasury through us. Here they are: Wells Fargo, US Bank,Deutsche Bank, ABN/Amro, Chase Home Finance, Fifth Third Bank, StandardFederal, and LaSalle. They all got the money, and then they turnedtheir backs on the very people that they were meant to help. That'swhat the people who passed the bailout bill last year said, that wewould help those being foreclosed. But that hasn't happened.
It is clear that the recipients of the Treasury money areunwilling to craft real workouts. And so what happens in our region ispeople just keep getting kicked out of their homes.
Wall Street hired the auction company from Dallas, Texas.They didn't even hire an Ohio auctioneer. They came to our region. Theysold all those properties for very little money. And they're going toget big, huge tax losses written off their IRS filings for the tax yearof 2008.
But where are our families who lost their homes? Out on thestreet. Our people lost their homes and they lost their way of life.
I would like to invite Mr. Kashkari and Secretary Paulsonand all the PNC executives to come to Ohio. I want you to live in oneof the neighborhoods that your actions have affected. We're going togive you a little heater, a Bunsen burner heater overnight so you don'tget too cold in those houses. And we'd like you to experience theresults of what you are doing to the American people. You're holed uphere in Washington with lots of security.
We need to get people back on Main Street. That's where werepresent. Last year 4,100 homes, just in my home county, wereforeclosed. And in the last 2 1/2 years, 10 percent of the propertiesin my home community foreclosed. 10 percent of the entire housingstock. And as foreclosure rates continue to rise in places like Ohio,it's pretty obvious that's what's happening here in Washington isn'tconnecting to Main Street.
Why don't people here see that? Why are people afraid tolook at the details of what's being proposed to us and say, no, no, tothe banksters?
Sadly, Hudson and Marshall, the auction house that WallStreet hired to sell all those homes in my community, they're coming toyour town too. This month alone they're slated to be in several cities,in Michigan, Arizona, Connecticut, Massachusetts, Rhode Island, NewJersey. Think about this. Think how much money they are making. Andthey're going to auction at least 1,455 properties. They've now soldover 70,000 homes just in the last few years, and they are expecting,just this one company, to sell another, to auction another 30,000properties in 2009.
Mr. Paulson and Mr. Kashkari, your program isn't working.
What is happening is an outrage to the American people, andthey are being asked to pay for this. There shouldn't be any more TARPbills clearing this Congress. Full hearings must be held in thecommunities being affected, not some little hearing up here in one roomin the Capitol on one afternoon or in a couple of hours. We need to useour power to get to the truth and represent the voters that sent ushere.
Equity is bleeding profusely from our communities, and thesheer volume of the properties sold at auction is disturbing. Financialinstitutions which have been capitalized through the TARP program havefailed to do mortgage workouts. FDIC and SEC are the institutions totake care of this mess, and they must be required to do mortgageworkouts, rather than foreclosing on homes and participating in theseauctions.
Hudson and Marshall stated in a press release today thatthey have made over $1.2 billion recently doing auctions. $1.2 billion.These are dollars that could have been turned to do mortgage workoutsat the local level and put people back in their homes.
The intent of the TARP was to help stabilize our financialsystem, which includes, in large measure, our housing industry. Yet,what are the financial institutions doing? Enriching themselves,merging, creating mega-giant institutions and foreclosing on families,rather than working to stabilize families and neighborhoods across thiscountry.
A stable home permits people to focus on obtaining andmaintaining employment, purchasing food and contributing to society inpositive ways, rather than relying on Social Services funded by Stateand Federal dollars.
We see communities falling apart. Community members andlocal banks are effectively locked out of the opportunity to reinvestin themselves because monies from the Department of Housing and UrbanDevelopment, which we were told would get to the communities so theycould buy these homes, guess what? They're not there. They weren'tthere in October. They weren't there in November, they weren't there inDecember. They're not there in January. Now we're told maybe they'll bethere by March. Nobody seems to know. So all of these programs thatwere supposed to work to help the American people who are paying thebill aren't working.
No second round of bailout money, under TARP, should emergefrom this Congress unless real hearings are held under all thecommittees of jurisdiction, unless the subpoena powers of this Congressare used, and that the victims of this crisis can have their voicesheard in the deliberative process, not just here in Washington butwhere they live, where we live, in the real America. The committeesshould treat the American people with respect, and they should travelto the communities most impacted.
Why should we trust the banksters, those Wall Street banksthat are going to be up here again this week, as we watch families inour regions pushed over the edge every day of every month, as the yearproceeds?
Mr. Speaker, this is probably the worst financial crimeI've ever seen committed against the American people. And yet, Congressseems almost somnambulant. It seems to be walking around in a daze, theinstitution largely shut down, all of this happening before the newPresident even assumes office.
Think about the politics of the timing of this. I think thenew President should suspend foreclosures. He should make a statementon that, and he should ask that this action be suspended. What's goingto happen in 7 days that hasn't happened already? And then assumeoffice and appoint people at the FDIC and SEC who will use the normalmeans to resolve real estate problems across the banking system of thiscountry.
To give $350 billion more, 1/3 of a trillion dollars, tothe banksters who have led America to this precipice, is absolutelybackwards.
I ask my colleagues, wake up.
I ask the American people, get your calls coming in. Let'slet the new President and the new Congress use the full powers theyhave been given to address this deeply, deeply rooted economic crisis.Until we fix the housing crisis, and we get those real estate loansworked out on the books of institutions locally, and we stand up toWall Street, we are not going to fix this problem, and the Americanpeople are going to continue to bleed, and that is morally wrong. Thatis simply morally wrong.
I agree with the new President-elect who said he believesin a moratorium on foreclosures. That ought to happen until he putspeople in place who can remedy this problem without $350 billion moredollars walking out the door before he even assumes office. As a formercommunity organizer, he must know the pain that exists across thiscountry.
And just because Wall Street has more money and a lot ofpolitical power doesn't mean that it's right. We, as a Congress, mustdo what's right for the American people. We must say ``no'' to thesecond $350 billion, and we must represent the people who depend on usto do what's right for them and right for the country.