October 1, 2008
Statement
Floor Statement on the Emergency Economic Stabilization Act
Mr. REED. Madam President, first let me commend Senator Dodd for his extraordinary leadership and also my colleagues Senators Conrad, Baucus, Gregg, Schumer, Corker, Bennett, and our colleagues in the House, particularly Barney Frank and Spencer Bachus. Last Thursday, under the direction of Chairman Dodd, we worked on a bipartisan and bicameral basis and sketched out the outline of the bill we have today. We reacted to the blank check presented to us by the Treasury Secretary. We provided detail. We provided oversight. We provided protections for taxpayers. Now, this much-improved proposal has now come to this floor for a vote. I hope we can support it.
We are in the midst of a terrible economic crisis. The American people are justifiably outraged that they have been put in a position where they must essentially contribute $700 billion to stabilize our financial system and, indeed, the global financial system. They are also outraged that this is the result of lax oversight over many years. It is a result of indifference to the plight of homeowners and workers, because they have seen very little in terms of real, tangible support from this administration with respect to their problems and concerns, such as making a decent living, educating their children, and providing for health care for their families.
But we have to act, and we have to act decisively. Because what is threatened here is the welfare not just of a few but of all Americans. What is at stake is their financial welfare and their financial future.
It would be nice to say this proposal is a cure but, frankly, it is a tourniquet for a hemorrhaging economy. If we don't apply this tourniquet today, the chances of reviving the economy and restoring it are diminished dramatically. I believe we must act along the
lines outlined by Senator Dodd and our colleagues in the Senate and the House. If this problem were only restricted to Wall Street, this would be a different bill. But every American feels the effect of this financial crisis, from the value of their pensions, their investments, and their overall wealth. It has spread beyond Wall Street and is affecting Main Street and the credit markets that are so central to everything we do. Auto sales are plummeting this month because credit is difficult to obtain. That means our car companies are facing an additional hurdle in terms of keeping thousands of Americans employed in good jobs. The cost and availability of college loans will be impacted if the credit crisis continues. The cost of small business expansion will increase. There are homeowners who are rushing to closings and discovering that the loan has been pulled because the banks won't lend. Their affairs are in disarray. We have to act and we have to act smartly.
What we have seen over the last several weeks and days is a deterioration in the financial and credit markets, and we have to counter that. The plan presented to us by the Secretary of the Treasury was virtually a blank check: Give me $700 billion and I will take care of things.
We would not accept such a blank check. We insisted, first, that there be an oversight mechanism so the Secretary's actions were not the only actions in terms of sound policy moving forward. Then we insisted, at my suggestion and the suggestion of others, that we provide for an equity interest that the taxpayers would receive in those companies that participate in this program. There would be an equity participation with warrants, so that taxpayers share in the recovery of these companies, not just the shareholders and executives of these companies. That is not only fair, it is sensible. When you assume risk on Wall Street, you get paid to do so. The American taxpayers deserve their share from the risk they are bearing. This is an improvement.
In addition, we addressed an issue that is critical to all hardworking Americans; that is, imposing restraints on excessive compensation of some executives.
However, we have to do much more. In fact, as soon as we conclude this debate, Chairman Dodd will organize hearings so that we can get on with another fundamental responsibility--the restructuring of the regulatory framework for banking and finance. Part of that includes reviewing executive compensation and ensuring that shareholders have a say in compensation decisions. That is just one aspect of an elaborate agenda of reform that has to be undertaken. To stop now and simply provide support to the current crisis without a refinement and a rebalancing of our regulatory structure would be a terrible miscalculation on our part. We have to move forward.
In addition to the efforts underway today, we have to renew our focus in providing an approach to regulation that is sensible, sound, and does not interfere with innovation and ingenuity, but does not result in the indifference and lack of oversight that is a large part of this problem.
There are other aspects within this bill we need to address. First, there is language with respect to mark-to-market accounting rules. What we have done is affirmed the SEC's authority to enforce proper accounting practices. I hope, in response to this crisis, that we do not abandon the principle of mark-to-market accounting rules. Essentially what some people are urging is that we cook the books because we have a huge problem. In other words, let's make it go away with accounting techniques. That is how we got into this situation. To use that approach is adding, in my view, insult to injury. I hope we can maintain strong accounting standards and work our way through this problem without sacrificing these standards.
There is something else we have to recognize. We have to do more to help Americans who are facing foreclosure. It is only through helping the homeowners that we will we get to the bottom of the crisis.
I thank the chairman for his kindness and leadership on this bill.
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